Value Management & Value Engineering

Question 1

What is ‘value’?

Answer 1

Value is the ratio between benefit (outputs) & the cost of (inputs) required to achieve it

Question 2

What is ‘Earned Value Management’?

Answer 2

• Different from VM / VE
• a technique used to measure the progress of a project and assess whether resources are being used efficiently
• Uses 3 different measures to assess EVM:
  
  • The planned value of work over time
  • The earned value of work completed
  • The actual cost of work completed

Question 3

What is a fundamental challenge of VM / VE?

Answer 3

The challenge is to understand the range of impacts that any particular decision may have, including their financial implications.

Question 4

What is Value Engineering?

Answer 4

• Originated in the 1940’s when resources were low after world war 2
• Alternative materials and designs that achieve the same outcome, perform better at a lower cost
• A focus of eliminating unnecessary cost
• NOT removing / omitting / downgrading specification
• A focus of eliminating unnecessary cost
• Focus on function of the project, then consider alternative approaches

Question 5

What is Value Management?

Answer 5

• A broader process to explore how value could be provided for a project at a strategic level by helping to develop the right project brief
• Can reduce design and construction time by giving the team a clearer focus on the client’s priority requirements

Question 6

When should you carry out VM / VE?

Answer 6

• As early as possible in the design stages
• The benefit from VM / VE decreases as the project progresses
• Early design stages - high impact of change and lower cost of change
• Later design stages - low impact of change and higher cost of change

Question 7

How does VM / VE get distinguished?

Answer 7

In the UK, it is generally accepted that VM takes place
during the earlier stages of a project and that, once
designs and specifications have been developed, the same process becomes VE.

VM and VE should be used to guide and direct project
design and construction

Question 8

What is the difference between VM / VE and scope omission?

Answer 8

• VM / VE is a positive process, focusing on value rather than cost
• VM / VE is structured, auditable and accountable
• VM / VE is multidisciplinary, involved the whole project team working together

Question 9

What are the benefits of VM / VE to clients?

Answer 9

• reducing unnecessary costs that might have been included within the project specification as a result of unchallenged assumptions
• Earlier consideration of design, buildability and maintainability resulting in more efficient / effective ways of achieving project objectives

Question 10

What are some similarities of a VM / VE study?

Answer 10

There are five well-established steps in a VM or VE study, as follows:

1) Understand the problem (workshops, desk study)
2) Identify different solutions (brainstorming, workshop)
3) Evaluate the different solutions (assess against value criteria, QS identifies costs)
4) Develop the shortlisted solutions in more detail (detailed costing by QS)
5) Identify the best solution and make recommendations (in the form of a report which documents the whole process)

Question 11

What is the output from a VM / VE study?

Answer 11

• VM = a report which outlines the different approaches to the relationship between project objectives and business needs
• VE = a summary of the different approaches to achieving the required functionality for a particular material, component or system, the comparative costs and the recommended approach that provides best value

Question 12

What are the differences of VM / VE?

Answer 12

• VM - a multidisciplinary approach carried out at a strategic level, aimed at stakeholders
• VE - a process which succeeds VM, project focused

Question 13

What is the link between VM / VE and risk management?

Answer 13

• As VM / VE introduce and recommend innovative solutions then a thorough risk assessment will need to be carried out as part of the VM / VE exercise

Question 14

What is the link between VM / VE and whole life / life cycle costing?

Answer 14

• As VM / VE is introducing innovative solutions it is beneficial to the client to understand the economic value of different design proposals in terms of their installation / operational / maintenance / replacement costs

Question 15

What is lean construction? How does this link to VM / VE?

Answer 15

• Lean construction is a process for identifying and removing unnecessary steps from a construction activity to reduce cost and improve quality
• Lean construction has many similarities to VM / VE

Question 16

What is the link between VM / VE and BIM?

Answer 16

• Both are concerned with preventing waste by avoiding overprovision = reduce costs
• Both incorporate a lifecycle view of the completion and operation of built assets

Question 17

What resources are required to carry out a VM / VE study?

Answer 17

• Time (allow enough time in programme, start early on in the design stages)
• Background details (Information about the project & details of the different technical solutions being considered)
• Skills and knowledge - a facilitator may be required for VM to guide the process, depending on project size / scale of the problem
• Facilities - workshop venues, access to professionals (design & cost)

Question 18

How did you report the outcomes of the VM / VE study?

Answer 18

• Executive summary and recommendation
• Introduction and context
• Required outcomes and value criteria
• Alternatives considered
• Value assessments of alternatives (how the potential solutions were rated + why proposals were rejected / accepted)
• Conclusions and recommendations
• Appendices

Question 19

Why should you issue a report for VM / VE?

Answer 19

• Present the information identified during process
• Technical recommendations
• Action plan to implement decisions

*to provide assurance to the client that a robust and detailed analysis has been undertaken

Question 20

What are some potential issues of carrying out VM / VE studies?

Answer 20

• Not enough time
• Lack of precision - margin of error in calculations especially in the early design stages
• Not starting the process early enough - less project costs if engaging client / design team early on than contractors / suppliers, more cost influence from feasibility
• Not including the appropriate stakeholders
• Revisiting previous decisions - sometimes done due to inexperienced facilitators / change in VM / VE participants / project is overbudget

Question 21

What is the role of a QS in VM / VE?

Answer 21

• Involved with process
• Pricing VE / VM
• As surveyors are usually among the first members of a professional team to be appointed by a client, they are in a good position to recommend that VM is used during briefing and feasibility studies.

Question 22

Name some stakeholders who could be involved in the process?

Answer 22

• occupiers
• public users
• third-party funders
• regulators
• local authorities
• internal departmental representatives
• delivery team representatives

Question 23

What if the project team does not have someone who can take on the VM / VE facilitator role?

Answer 23

In the absence of any other leads, suggestions
can be found on the website of the Institute of Value
Management (www.ivm.org.uk), or by searching online
for VM facilitators.

Question 24

What are some facilitation techniques?

Answer 24

• Generating ideas (brainstorming)
• Clarifying and grouping ideas
• Screening and prioritizing ideas (scoring / rating)