Value management of construction projects pdf


    Value Management is a philosophy, set of principles and a structured management methodology for improving organisational decision-making. Value Management is a well-established methodology in the international construction industry, and in the UK has been endorsed as good practice in a range of. PDF | For clients, owners and financiers of construction projects, construction Value Management (VM) is a business strategy tool to ascertain.

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    Value Management Of Construction Projects Pdf

    PDF | Paper presented at QSRBN Annual Conference of Registered Quantity Surveyors with the theme "Strategic Options for Nigerian. PDF | The concept of value management (VM) is becoming more relevant to Sri Lankan construction industry. Value Management provides. PDF | Construction sector in Northern Cyprus (TRNC) proved its potential of being locomotive in the economy after Increasing expectations to solve.

    Value Management VM is a business strategy tool to ascertain whether construction of a facility will provide best function at the lowest possible cost. This study examines the contribution of value management to construction projects with a view to assessing challenges and measures to improve adoption and application of the discipline. Primary data were collected through well-structured questionnaires administered on construction professionals within the study area and Mean Item Score was used for data analysis. The major contributions of VM to the South African construction industry include optimize value for money, creates a clearer focus on the project objectives and works towards arriving at a more effective design. However, poor communication, lack of interaction and unwillingness of clients to pay for VM service, were the challenges affecting the adoption of VM. In order to improve construction project performance using the process of value management, orientation meetings should be duly organised, team structure should be finalised and team members must be appropriately selected for construction projects. Built environment professionals - including construction and project managers, should familiarize themselves with VM and strive for its full adoption and implementation for construction projects in order to achieve best value at the lowest complete life cycle project cost for construction clients.

    The client will wish to be convinced of the need for rejection. Within the original scheme the design team had used considerable ingenuity to design an expansion in the boiler house facility around the constraint of the existing buildings. Advantages and disadvantages of the value engineering study A value engineering study is seen as being effective by reason of: The generation of alternative technical solutions to a problem which have been costed in initial and life-cycle cost terms.

    The fixing of a date for the completion of a sketch design. Although not a function of the study it has been suggested that the setting of a date for the study, forces the design team particularly the engineering designers, to a more advanced stage than would otherwise be achieved. In the majority of cases the costs of the study are a small proportion of the savings achieved.

    The problems associated with the study relate to conflict, time and resourcing. These problems are discussed further in Chapter 7 but centre around: The fact that the client may consider that the design team should arrive at the optimal solution without the need for a further exercise at additional expense.

    Sustainable Value Management for Construction Projects | Ayodeji E. Oke | Springer

    This criticism may be countered in two ways. Secondly, that a value engineering study is an analysis of the ideas which have been generated. Currently, designers are not expected to carry out nor paid for such an exercise. The interpretation of the exercise by the design team as a critique of their design judgement. This is a difficult problem which is hard to counter unless the original designer plays a part in the activity.

    The reason given by some value engineers for not including members of the original design team is the danger that old ideas are defended and their presence may stifle frank comments on the design. This potential area of conflict can be alleviated through the education of the designers in value engineering techniques, informing the members of the design team at the time of their appointment that the exercise is to take place and payment of an additional fee for implementing design changes.

    The time of the value engineering study. It is beyond dispute that the value engineering study will effectively take three to four weeks from the design programme. That is one week prior to the study for the distribution of drawings and information, the study week and the period of time following the study for the submission of the report, discussion and design changes.

    In some projects this period of time, during which the design will be at a standstill, will be unacceptable. However, in the majority of cases it is capable of being accommodated particularly in view of the fact that the study itself is a watershed between sketch design and working drawings and provides an immovable date for the completion of the sketch design.

    The resourcing of a study can pose problems associated with the withdrawal of professionals from their home office for a one week period. It is a condition precedent to a successful study that members of the value engineering team are isolated from their home environment for the study period.

    The study therefore is not without its problems but has consistently proved to be a very effective means for the application of value engineering. The value engineering audit The value engineering audit is a service offered by value engineers to large corporate companies or government departments to review expenditure proposals put forward by subsidiary companies or regional authorities. The procedures employed follow exactly those of the job plan.

    Following a proposal the value engineer will visit the subsidiary company or regional authority and undertake a study of the proposal from the point of view of providing the primary functions. The study may be carried out using personnel from the subsidiary company or regional authority or from another company within the group or another regional authority.

    The study is a global review and normally takes one or two days. It is therefore fast and relatively inexpensive. Following the review the value engineer will submit a report detailing the primary objective and the most cost-effective method for its realization. The audit may be criticized on the grounds that it is potentially conflict-orientated and that depth is sacrificed for breadth. However, the projects director of one subsidiary company stated that a value engineering audit on one proposal revealed a number of shortcomings with the statement of requirements to the extent that the company now adopts a policy of holding a charette before a proposal is submitted to the parent company.

    The United States Government include a clause in their conditions of contract which states that contractors are encouraged to submit ideas for reducing costs. The disadvantage of the clause is that the contract may be delayed while the design team investigate the viability of the change. For this reason changes tend to be relatively superficial.

    Variations on the formal approaches to value engineering Although the four approaches detailed above are most often described they are not suitable in every case. The following are applications of the job plan which have been used in practice but do not fall within the standard approaches.

    Similar to the charette, this meeting is a part of the value engineering procedure operated by New York City, Office of Management and Budget. The objectives of the meeting include: an opportunity for all taking part to understand project issues and constraints, to give and receive information, to determine whether all information for a 40 hour study is likely to be available by the date set for the study. This could be three people for two days with two extra days for the value engineer.

    This approach involves the design team themselves coming together on a regular basis under the chairmanship of the value engineer to review design decisions taken. The method has much to commend it in that it answers much of the criticism levelled at the standard 40 hour study.

    The extent of involvement of the value engineer needs to be determined in advance so that the fee can be established. The fee bid from members of the design team will also have to account for their extra involvement. The concurrent study is also suitable for construction management contracts in which the design is carried out in stages along with the construction, fast-tracking.

    At initial meetings the function of the spaces were analyzed and five adjacency diagrams generated. These were reduced to three for presentation to the client.

    For the selected plan a number of structural solutions were generated and analyzed on a matrix along with solutions for the electrical and mechanical installations. Once the building form was established construction work began.

    Meetings continued with the construction manager in attendance through to the end of the project. A disadvantage of the concurrent study is the difficulty of proving the value of the time expended, it is easy to say that the budget was too high. It shows that practice has adapted the job plan to suit the different stages of the project life-cycle at which VE services are procured. The chapter also demonstrates some of the advantages and disadvantages of each of the various approaches.

    Cognizance will be taken in the final chapter of these issues when a UK method is proposed. The next chapter outlines a series of case studies to demonstrate value engineering in practice. They have been chosen to illustrate the varied demands of the client and illustrate therefore a number of approaches with differing team members. Case study 1—Heat treatment facility for aircraft engines This project was for a specialized building to house vacuum furnaces for heat-treating aircraft engine parts.

    The project comprised ft2 to accommodate the furnaces, a KVA substation, a new access ramp, a 2. The value engineering exercise was undertaken to determine whether the cost of the proposed design could be reduced without compromising function. The workshop took on the standard format following the job plan. During the information phase a list of technical requirements were drawn up for the furnaces and a flowchart of the whole process was completed.

    During the creativity phase 70 ideas were generated of which 26 were selected for development. Of these ten were developed into recommendations. This case study was prompted by an overspend but demonstrated that even where the subject for design is complex, by introducing a team of the right professional mix, savings can be accomplished.

    Case study 2—Mass transit project This project comprised 9. Nine stations were to be included. The value engineering study, undertaken at the concept stage, followed the traditional job plan but was spread in time over four months. The total study time was eleven days. The project commenced with a one day pre-study session to advise the client and the project design team of the objectives of the study.

    Three months later a further one day session was committed to defining the features and the characteristics of the project. One week later a nine day study was commenced with team members made up of the proposed design team.

    Project costs were allocated to function. During the creative phase separate ideas were generated and these were narrowed in later phases to 11 detailed proposals. This case study demonstrates the worth of carrying out a detailed study at the concept stage using the proposed design team as members of the VE study. Case study 3—A hospital building This case study was undertaken during the attendance by the authors and a quantity surveying practitioner to a training workshop held in the US.

    Requirements for major surgery were dealt with by an Italian hospital located in the vicinity. The hospital was serviced and air conditioned throughout.

    7_Value Management in Construction(3).pdf -...

    Exchange rate fluctuations were causing the project to remain over-budget and it had therefore stalled. Due to problems within the group the team split into two analytical components; the author, the architect and the services engineer undertook a functional analysis of the project. The analysis of the project starting from this primary task lead eventually to the identification of three primary services delivered by the hospital: 1.

    This resulted in project costs being allocated on a m2 basis to each of the main service types rather than to a technical specification as in normal project costing. The remainder of the building was to be re-designed to maximize the use of natural ventilation and lighting with secondary heating support.

    This case study was particularly interesting from an academic viewpoint as it demonstrated quite clearly a number of factors. Firstly, good chairmanship and control of the group is vital. Secondly, if a breakdown occurs then perhaps it is better to operate as two groups. Fourthly, that it is much more profitable to study concepts, even at the late stage of sketch design, if the client can accommodate the consequent time delay. The project in question was located in a large secure site and was planned as a two-storey steel framed building with external works to reroute an existing road.

    Under the original scheme the road was to be broken up and landscaped. The team worked through the traditional job plan but did not compile a FAST diagram or analyze the building in terms of function. The information phase involved working through the drawings and specifications to obtain a full picture of the project.

    This was done partly as individuals and partly as an informal group without the active control of the chairman. The creativity session was not aimed at any particular function but tended to wander at random over all aspects of the building. Of the ideas 20 were worked up into fully costed proposals with a life-cycle cost component. The proposals included using part of the redundant road surface as a car park, and deleting part of the proposed new car park.

    In addition, the twostorey steel frame was re-configured as a single-storey framed structure. The air conditioning plant, originally located on the roof, was moved to a compound adjacent to the building.

    Also the internal layout was re-configured to reduce the circulation areas and rationalize the rooms on the basis of perceived organizational structure.

    This last case study illustrates what was perceived to be mainstream North American value engineering. Although it was effective there was a feeling that had the function of the spaces within the building been addressed in a structured fashion the building may well have been smaller and the cost reduction greater.

    Budget over-runs were subsequently turned into savings. This study is an illustration of the willingness of the existing design team to be involved in a VE study and where major savings were isolated. Firstly, the importance of group dynamics. Thirdly, to provide a comparison of the savings that could be made by using functional analysis, even in a short space of time, and cost reduction and substitution.

    Finally, even although the project task was redefined, client input is essential in order to validate the correctness of the task definition. Furthermore the largest savings are likely to be made within the overall parameters of changes to the project concept. The next chapter presents a series of case studies on the implementation of value engineering by client organizations.

    The case studies were undertaken using interview techniques on two visits to North America during September and April The initial implementation of the VE process was from top management down and the maintenance of this approach has resulted in its continued success. A large proportion of the projects relate to repair and maintenance and these are not subject to value engineering nor are they accounted for in any meaningful way.

    The money gained by savings through VE is transferred into other building projects. There are only two VE staff, the VE management group, in the Navy who can call on manpower within the organization if they are needed. In-house people are used to review projects or to participate in studies and their costs are additional to the total figure quoted for the cost of administration. Included in the administrative figure is the cost of re-design work.

    This can vary in any one year from a few hundred thousand to over a million dollars. The Navy have a policy of paying for re-design work consequent to a VE study. The Navy in common with other public services, is subject to open tendering in which the lowest bid must be accepted. Therefore, if a contractor can get bonding he can bid on and win a Navy contract. An incentive clause will be used in a project which has also been the subject of a VE study, however, contractors tend not to contribute anything meaningful.

    Electrical contractors appear to have the most success with the incentive clause although there was no reason for this. All members of the team shall be professionally registered architects and engineers with at least 12 years experience. They are to be completely knowledgeable of VE methodology by attending a certified forty-hour study. Changes or substitutions to the approved VE team configuration shall be submitted in writing to the contracting officer for approval.

    Team members must not have been associated with the original project design team.

    When preparing the fee for VE services the team leader, the VE contractor, is required to hire three of the six team members from local architect or engineers practices but no members of the practices of the design team representatives may be a member of the VETS Team.

    The VETS team are isolated from their normal work station in order to avoid the normal daily interruption such as: phone calls, quick questions and brief meetings, which come up and tend to be very disruptive to studies of this type. The team leader must deliver the VE report no later than seven days following the study. The VETS team is to meet on five consecutive working days 40 hours. A typical value engineering team and the anticipated input from team members is as follows: a b c d e f g VE team leader architect structural engineer mechanical engineer electrical engineer civil engineer typing 80 h; 40 h; 40 h; 40 h; 40 h; 40 h; 60 h; VE team study The VE study is a 40 hour five day programme for a multi-disciplinary team usually comprising six people although team numbers may increase or decrease depending upon the complexity of the work.

    Once a consultant is under contract the VE group will have a joint meeting with the lead architect or project manager from the Navy, the customer and the design consultant at which the information contained in the briefing document is discussed with specific reference to how the customer plans to own, generate and maintain the building. Closed-ended questions were used as they are very convenient for collecting factual data and are simpler to analyze because the range of potential answers is limited [8, 1].

    The respondents were asked to provide their views on the relative importance of the obstacles against VM using a 5-point Likert scale [8]. In a Likert scale, the respondent is asked to respond to each of the statements in terms of several degrees, usually five degrees [10].

    This type of scale has been found to be acceptable in other construction economics and management research. For example, [16] used a similar approach to study joint venture formation between construction organizations in Tanzania.

    Figure 1 shows a flow chart of the methods and outcomes as used in this study. Figure 1. Summary of Methods and Outcomes.

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    Adapted from [1] 4. Data Collection In general the data collection process through this method had been quite good. Multiple sources of evidence were used to collect data. Literature was reviewed to identify what has been written on VM practice in building projects as well as its obstacles.

    Questionnaires survey was used to collect primary data from clients, consultants and building contractors. Closed-end questions were mainly used for this research after considering the results of the pilot study. The respondents were requested to rank 9 obstacles with regard to their importance in VM practice in building projects. A total of 30 questionnaires were distributed to clients, questionnaires to consultants and 51 questionnaires to building contractors.

    The target respondents were technical directors of firms for consultants and building contractors and Heads of construction units for clients. In all, questionnaires were distributed and were returned.

    Of these, 22 responses came from clients, from consultants and 39 from building contractors. A summary of the response rates is provided in Table 1. Table 1. Response Rate of the Questionnaire All respondents had experience of more than 10 years in the construction industry which indicate that most of respondents are familiar with management of building projects.

    Results and Discussion 5. Data Analysis The researcher prepared and made use of a data analysis sheet to collate data extracted from the interview protocol. Non-parametric tests are also referred to as distribution-free tests. The main objective of using this coefficient was to determine the extent to which the two sets of ranking are similar or dissimilar [10]. It might be said then that sample estimates of correlation close to unity in magnitude imply good correlation, while values near zero indicate little or no correlation [15].

    Spearman's rank correlation coefficients between the ranks of obstacles associated with clients and consultants, clients and contractors and consultants and contractors were 0. The rankings by the different categories are substantial positively correlated. The strong correlation implies that all the parts had similar emphasis on the different obstacles that they consider important for VM practice.

    Table 3. Ranking of Obstacles against VM Practice 5. Table 4. Obstacles against VM Practice Respondents were required to respond on the obstacles against VM practice in building projects by ranking them according to their relative importance. The obstacles listed to them are; wrong choice of procurement route, failure to admit ignorance in certain specialized aspects in project development, lack of understanding of VM in the construction industry, lack of contractual provisions to support VM, poor human relation, conflicts of interests and jealous among project stakeholders, rigid application of standards and traditions, lack of good communication among project stakeholders and lack of trained value managers in the construction industry.

    In a research by [3] design and build is the best choice of procurement route to allow VM implementation as it provides more flexibility to VM studies in the sense that designers and contractors effectively belong to the same team under procurement routes. Thus frequent communication and close ties exist between the two parties. Conclusions The aim of this study was to investigate the obstacles against VM practice in building projects of Tanzania. The study employed a quantitative survey method of research to extract responses from respondents who practice professionally as part of the construction industry in Dar es Salaam, Tanzania.

    Descriptive statistical tools were used to analyse collected data. The Spearman's rank correlation coefficient was used to examine the similarity or dissimilarity in the ranking of the VM practice obstacles amongst the respondents, which were categorised into clients, consultants and contractors for the purpose of this study.

    The following are the three most highly ranked obstacles: 1 Lack of understanding of VM in the construction industry, 2 Wrong choice of procurement route and 3 Lack of trained value managers in the construction industry.

    Significance test was carried out to determine whether the parties displayed significant agreement in their rankings. This demonstrates the validity and reliability of information and findings from this research. Information collected from this study is expected to be useful both in practice and academics. In practice, the results can assist in the identification of potential areas of weaknesses in practice so that suitable standard remedial measures based on VM attributes can be proactively taken.

    In academic arena, the research has endowed with some insights on the existing knowledge and theories in the area of construction economics and management, particularly with regards to obstacles against VM practice. This contribution is potential for being used to improve the contents and curriculum of educational programmes for the betterment of project managers and stakeholder management in construction. This research was limited to identifying and analysing obstacles against VM practice in building projects, future studies could be focused on finding out the drivers that would stimulate VM practice in Tanzania construction industry.

    Recommendations The following recommendations are made based upon the findings of the study. In order to build the practice of VM, efforts should be made to create awareness of VM.

    Providing the workshops and seminars to construction project practitioners for the purpose of creating awareness among stakeholders of the construction industry on the effective use of VM, together with its benefits and shortfalls. In addition it is necessary to introduce VM courses into undergraduate programmes of engineering and construction based universities.

    That a clause to be introduced in conditions of contracts of construction projects that supports VM practice. In advanced countries introduction of value incentive clauses into conditions of contracts has been practiced for years Fong and Shen, This clause when introduced will encourage contractors to bring change proposals.

    It is important that practitioners should change their behaviour towards project development. First published: Print ISBN: About this book Value Management is a philosophy, set of principles and a structured management methodology for improving organisational decision-making and value-for-money.

    In particular, the new edition responds to: Research in Value Management undertaken since publication of the first edition. Changes in Value Management practice particularly in Programmes and Projects. It will also be of interest to researchers and students on construction rela. Author Bios John Kelly was until his recent retirement the principal of Axoss Ltd, a company promoting and undertaking consultancy, training and research in value management, value engineering, whole life costing and whole life value.

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