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VALUE MANAGEMENT
Whether you are regularly involved in Value management is a structured approach to:
construction projects, or have a one-off need to ƒ establishing what value means to a client in
commission construction work, you will be meeting a perceived need by,
interested in securing a final product which offers ƒ clearly defining and agreeing the project
value for money and satisfies the users/owners objectives and
needs. Value management is a technique which ƒ establishing how they can best be achieved.
is being used successfully on increasing numbers
of construction projects to help achieve both of Value management incorporates value
these goals. It can also be used to determine engineering which is a systematic approach to
whether a construction project is the right solution delivering the required functions at optimum
to a client’s needs. whole life cost without detriment to quality
performance and reliability.
Value management usually incorporates a series
of workshops, interviews and reviews, through :+(1 "
which the project requirements are evaluated The application of value management as a formal
against the means of achieving them. technique will largely depend on the value of a
particular project and the level of risk involved.
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This fact sheet is designed to provide the clients +LJKYDOXH /RZYDOXH
and contractors with a basic introduction to value
management, explain what it can do for them, +LJK 6WUDWHJLFFULWLFDO 6WUDWHJLFVHFXULW\
and detail where to obtain further information and ULVN
guidance.
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The approach taken to value management will ULVN
vary depending on the procurement route
chosen, but generally it is a technique which can For strategic critical projects (high risk, high
be usefully applied on any construction project. In value) a full value management procedure is
particular, it should be an integral part of any almost always justified. For strategic security
projects viewed on a whole life basis (e.g. Private (high risk, low value) and tactical profit (low risk,
Finance Initiative schemes). high value) projects, desktop value management
studies will often suffice providing there is input
:+< " from all the stakeholders. For tactical acquisition
Any construction project should only be (low risk, low value) projects a value
commissioned following a careful analysis of management exercise is not usually necessary.
need. Failure to think through the needs a project
must satisfy will cause problems for subsequent
design and construction stages. Many projects
suffer from poor definition due to inadequate time
and thought being given at the earliest stages.
This is likely to result in cost and time overruns,
claims, user dissatisfaction or excessive
operating costs. Value management can help to
avoid these problems.

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A careful analysis of need is much more than
compiling a “wish list” of all possible
requirements. It requires a consensus from all the
stakeholders about needs and objectives of the
project, giving due weight to their relative value
and importance.

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In order to get the maximum benefit from a The decision to appoint either an internal or an
value management approach it is important to external facilitator should be made taking a
make somebody within the organisation (usually number of considerations into account. Both
the project manager or a representative from options have pros and cons:
the project team) explicitly responsible for value
management. $Q LQWHUQDO $QH[WHUQDO
This individual will need to establish a general
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understanding of the techniques and processes 3URV 9IDPLOLDULW\ ZLWK 9IUHVK LGHDV DUH
involved to allow management of the overall WKH SURMHFW JHQHUDWHG

process, including scheduling of workshops and 9FDQ KHOS WKH 9WKH GHVLJQ FDQ EH
reviews at appropriate points in the project WHDP DFKLHYH D FULWLFDOO\ DSSUDLVHG ZLWKRXW
process. The value manager will also be GHHSHU KDYLQJ WR GHIHQG H[LVWLQJ
responsible for implementing any actions
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arising from the process.
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The appointment of an experienced facilitator
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(either from within the organisation or as an
external consultant) is critical to making any &RQV 8 PD\ QRW EH DEOH 8 SRWHQWLDO FRQIOLFW

value management exercise a success. This WR DSSUDLVH WKHLU EHWZHHQ H[WHUQDO DQG
facilitator should have a thorough knowledge of RZQ ZRUN FULWLFDOO\ LQWHUQDO SDUWLHV
and experience in value management methods,
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and techniques and should apply them
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rigorously. This requires competence in a range
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of skills including:
ƒ the organisation and management of 8 DUH PRUH OLNHO\ H[WHUQDOO\

workshops WR FRQILUP WKDW 8 WKH RZQHUVKLS DQG

ƒ communication with both technical and lay WKHLU RULJLQDO OLDELOLW\ IRU GHVLJQ LGHDV
project participants DSSURDFK LV WKH PD\ EH XQFOHDU
ƒ provision of conditions to challenge project
assumptions about needs and approaches PRVW HIIHFWLYH RQH 8 PD\ H[SHULHQFH D PRUH
ƒ motivation of project participants towards GLIILFXOW OHDUQLQJ FXUYH

achieving objectives
ƒ the ability to analyse complex problems In certain cases, if suitably trained and
ƒ provision of conditions to seek innovative experienced, the role of the value manager and
solutions to project needs, that of the facilitator may be carried out by the
ƒ the ability to tease out issues from a project same individual.
background
ƒ leadership and authority.

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The South Wimbledon Refurbishment Project is part of a programme of major improvements to 10
stations at the Northern Line’s Southern end aimed at enhancing the passenger environment and
improving the operational functionality. The project’s tactic is to incorporate a number of asset
improvement works on the station in a single time slot, minimising future disturbance. Reductions in the
availability of capital funds made it essential that savings were made or the implementation of the project
would have been at risk.

As a result of an intensive value management workshop the project developed an implementation plan
that achieves a considerable number of the originally identified key benefits. At the same time it reduced
the funds required by almost half, releasing £1.75M.

For further information on this case study contact Mike Yardley or Simon Springate of London
Underground’s Project Management Services on Tel. 0171 308 4709.

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In early 1997 Pizza Hut were anticipating a programme of 25 refit projects (Pizza Delivery Units) at an
estimated/budget value of £145,000 each, amounting to a programme value of over £3.5 million. In order to
review the projects before going on site, a series of three half-day VM workshops was convened
comprising client representatives (Area Manager and Property Manager) and the consultants (Designer,
QS and Services Engineer). The workshops were facilitated by an experienced VM facilitator from outside
the project team.

The three workshops followed a traditional format of information exchange, functional analysis,
brainstorming of alternative solutions, evaluation of preferred alternatives, acceptance and implementation.
As a result of nine hours of workshop and a similar amount of work outside the workshops by members of
the team a total of £14,000 per project was saved, equivalent to £350,000 capital cost on the whole
programme. In some areas standards were actually raised, and longer term maintenance was reduced. A
shorter contract period was also established and shorter delivery times for certain long lead items.

The total cost of the VM exercise is estimated at less than £10,000, giving a return of 35:1 on the
investment. For further details contact Mike Thomas on 01582 738484.

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$SSOLFDWLRQ JXLGH  Building Services
9DOXH 0DQDJHPHQW LQ &RQVWUXFWLRQ $ &OLHQWªV Research and Information Association. Tel: 01344
*XLGH &,5,$ 6SHFLDO 3XEOLFDWLRQ . 426 511, Fax: 01344 487 575.
Construction Industry Research and Information
Association. Tel: 0171 222 8891, Fax: 0171 222 This guide explains the basic concepts underlying
1708. the techniques of value analysis including value
management, and in particular value engineering.
This guide provides a framework for the It demonstrates how these techniques might
systematic application of value management for influence the design of building services systems
different clients and types of construction project. and is intended for use by building services
It outlines how to deal with project which are designers who wish to offer clients a value
difficult to define because of their nature and the management/engineering service, or to prepare
range of ‘clients’ involved, how to deal with them for a value analysis process organised by a
projects which are easier to define where there is third party.
agreement over the main priorities and objectives,
and how clients who build regularly can +0 7UHDVXU\ &HQWUDO 8QLW RQ 3URFXUHPHQW 
implement value management in their *XLGDQFH 1RWH 1R  9DOXH 0DQDJHPHQW HM
organisation. Treasury Public Enquiries Unit. Tel: 0171 270
4558.
9DOXH LQ &RQVWUXFWLRQ  *HWWLQJ 6WDUWHG LQ 9DOXH
0DQDJHPHQW Building Research Establishment. This guide aims to assist those responsible for
Contact Carolyn Hayles, Tel. 01923 665241 public sector projects to recognise and
understand the benefits of value management. It
This guide is designed for small and occasional explains the project sponsor’s responsibilities for
clients. It introduces value management, optimising and achieving value for money on
demonstrates the benefits and shows how it can projects, from concept to handover, occupation
be used, in particular, for one-off construction and beyond. It outlines what is involved in a value
projects. management exercise, what may be achieved,
and explains when each of the main techniques
should be used.
&UHDWLQJ 9DOXH LQ (QJLQHHULQJ ,&( 'HVLJQ DQG
3UDFWLFH*XLGH Published for the Institute of Civil )257+&20,1*0$7(5,$/
Engineers by Thomas Telford Publishing. Tel.
0171 987 6999. Fax. 0171 537 3631
3UDFWLFDO*XLGHIRU9DOXH0DQDJHUV
This design and practice guide is primarily for Innovative Manufacturing Initiative. This guide is
those who are entering, or have recently entered due to be published in June 1998. Contact John
the civil engineering profession, but can also be Kelly on Tel: 0131 449 5111.
used by owners, designers constructors and
others involved in the built environment. Rather
than being prescriptive, it sets out some of the key
approaches and techniques which may be used to
improve value.

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The Institute of Value Management is working to establish value management in every sector of the
UK economy. They provide support to value management practitioners in the appropriate and
innovative use of the theory, frameworks, techniques and applications.

The Institute has over 200 members worldwide, mostly in the UK, and membership is growing steadily.
Members come from many business sectors and a large proportion work in construction. Their
membership includes client organisations, value management practitioners and organisations who can
provide in house training on value management.

For advice, further information on joining the Institute, for a list of members or for details of their other
services contact:

The Secretary
The Institute of Value Management
46 Passmore
Tinkers Bridge
Milton Keynes
MK6 3DZ
Tel/Fax: 01908 234 774

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The Board’s core activities are: Good Practice;
The Construction Industry Board is a Productivity and Cost Improvement; Research
partnership of the construction industry, its and Innovation; and the State of the Industry.
clients, and government working to improve The Board has three Panels of senior industry
effectiveness and efficiency in construction. practitioners and co-opted experts to lead the
The Board aims to secure a culture of co- implementation of these activities. The Board
operation, teamwork and continuous also has a number of Sub-groups advising on
improvement in the industry’s performance, and specific projects and issues in the industry
its principal objective is to implement the including: a Considerate Constructors Scheme;
recommendations of Sir Michael Latham’s 1994 a Strategic Review of Training; registration
report ‘Constructing the Team’. systems; and liability law reform. Many of these
activities result from the recommendations of
The CIB has six member bodies: twelve working groups originally established as
ƒ the Construction Industry Council, CIC, the first phase of implementing ‘Constructing
for professionals and consultants, the Team’ in 1994.
ƒ the Construction Industry Employers'
Council, CIEC, for main contractors, For further information contact:
ƒ the Constructors' Liaison Group, CLG, Construction Industry Board
for subcontractors and specialist trade 26 Store Street
contractors, London WC1E 7BT
ƒ the Construction Clients' Forum, CCF, Tel: 0171-636 2256
for the clients of construction, Fax: 0171-637 2258
ƒ the Alliance of Construction Product E-mail: [email protected]
Suppliers, ACPS, for materials Web site: http://www.ciboard.org.uk
manufacturers and product suppliers, &
ƒ the Government, led by the Department &,%)$&76+((76
of the Environment, Transport and the
Regions (DETR) and including the CIB Fact Sheets on the following subjects are
Health and Safety Executive, the also available:
Department of Trade and Industry, and
the Scottish Office. ƒ Productivity and cost improvement
ƒ Partnering
ƒ Benchmarking
ƒ Standardisation and preassembly

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