Value Management in the Construction Industry

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Value Management (VM) is another popular approach for managing quality. Rangelova and Traykova (2014) defined it as “a systematic process that entails implementation of multidisciplinary effort in the analysis of project functions with the aim of realizing best value at the lowest lifecycle cost.” The concept of value management (VM) originated in the United States, in the 1940, as Value Analysis and later as Value Engineering (Ayodeji & Deji, 2011). Key drivers in the implementation of VM include teamwork, effective communication, and stakeholder involvement.

In his article, Olanrewaju (2013) described VM as both a problem solving and problem seeking method. It is a problem seeking method because it can be used to identify potential future problems and create solutions. It is a proactive method that seeks to elaborate client value at the conceptual stage of the project. Rangelova and Traykova (2014) explained that VM differs from cost management in that it takes a holistic view of the project and may involve changes in the project scope. VM seeks to optimize the creative potential of all participants in the project.

VM utilizes a wide variety of tools and techniques to facilitate analysis of functions and development of project plans. One of these techniques is life cycle cost (LCC). Olanrewaju (2013) described LCC as a tool for analysing the cost of constructed facilities in terms of cost of putting up the facility, as well as, operating and maintaining it. The technique is anchored on the principle that it is not adequate for project managers to consider the capital cost of building constructions only. It encourages project managers to use a more sustainable approach in planning by also factoring in the costs associated with maintaining and operating the building. Rahim, Muzaffar, Yusoff, Zainon, and Wang (2014) argue that the LCC techniques provide best value by facilitating the construction of structures that will meet all the principles of sustainability. It enables project managers to integrate all facets of sustainability: social, environmental, and economic.

Another technique that forms the core of VM is function analysis. This technique entails analysing and developing an abstract model for a new product known as the function structure (Spaulding, Bridge, and Skitmore, 2005). The function structure is often without material features such as dimensions, shape, and parts. It just describes the functions of the product, its parts, and mutual relationships. The function analysis technique is founded on the rationale that compelling stakeholders to think about the product in an abstract way fuels creativity and stops them from jumping to conclusion (Auricchio, 2013. Function analysis considers the product as a technical-physical system that comprises of various parts and components that fulfil sub-functions and interact to satisfy the overall function of the product. VM also entails arranging workshops were stakeholders such as the client, suppliers, contractors, specialists, and manufacturers put forwards suggestions for investigation and discussion.

VM is often implemented in five stages: pre-study, information stage, creative stage, evaluation stage, development stage, presentation stage, and post-study stage (Duarte & Cooke, 2013. At the pre-study stage, the project team identifies the area to be studied or potential area for improvement. The team also make arrangements such as securing a venue and briefing participants. The information stage focuses on gathering relevant, credible, and recent information regarding the issues identified in stage one (Olanrewaju, 2013). The creative stage focuses on generating alternative ideas using the information obtain in stage two. In the evaluation stage, alternative ideas are analysed and compared with the aim of identifying the best ideas. The development phase entails developing the ideas selected in the evaluation stage into a proposal with tangible action plans.  The presentation stage focuses on presenting the proposal to stakeholders while the post study stage focuses on implementing the action plans and evaluating results.

VM principles were developed for use in the manufacturing sector, but evidence shows that they can also be applied successfully in the construction business. Perera, Hyles, and Kerlin (2011) examined the extent to which the VM principles and procedures are applied in the Northern Ireland’s construction industry and their effectiveness. The researchers utilized a mixed method approach that combined the survey with case study design. Results of the study revealed that VM is utilized frequently in the Northern Ireland construction context with a high level of effectiveness. The study, however, exposed that VM is not usually implemented at the most appropriate stage of the project, which is the design phase. This finding suggests that VM can be more effective in promoting better outcomes.

In Malaysia, Jaapar, Maznan, and Zawawi (2012) noted that the VM concept was taking root after the government made its implementation mandatory for all public sector projects exceeding RM 50 million. The authors also found that stakeholders in the Malaysian construction sector have received the introduction this concept with a positive attitude. Saifulnizam and Coffey (2010) hypothesized that early implementation of VM in construction projects as a decision making would lead to better optimization of construction costs resulting in efficient and effective constructability.

VM is associated with a number of benefits including improved internal communication, organizational and technical innovation, better prioritization, improved services and products, and enhanced customer satisfaction (Ayodeji & Deji, 2011). In their study, Aghimein and Oke (2015) demonstrated that the benefits associated with VM can also be realization in the construction setting. The study utilized a case-study approach carried out a hypothetical VM analysis of four designated projects using a 40-hour workshop plan. The study established that, if fully implemented, VM can reduce cost while maintaining essential functions, as well as, eliminate unnecessary workmen time, processes, and material resulting in enhanced value for money.

The implementation of VM is, however, hindered by several factors including limited time and resources, and conflict among project stakeholders. Leung, Yu, and Liang (2013) noted that different project stakeholders often have incompatible objectives and interest. For instance, while a supplier would be interested in getting the highest price for the materials and services delivered to the project, the customer would be interested in incurring the lowest costs. Because of such incompatibility in interest and objectives, conflicts in VM workshops are inevitable. Consequently, the successful implementation of VM is largely dependent on the project manager’s capacity to manage conflict within the group. Jaapar, Endut, Bari, and Takim (2009) found that most of VM workshops held in the Malaysian construction industry were dominated by clients and consultants. This finding highlights the difficulties involved in mobilizing and recruiting all key stakeholders into VM workshops.