Value Management As Strategic Tool

Value Management as a Strategic Project Management Tool Value Management has its origins in the American value engineering concepts, structured by Lawrence Miles during World War II. As a procurement engineer for General Electric, Miles was concerned with the provision of manufacturing components at the lowest possible cost. Miles’ insight lay in the realization that the purpose of a product - its function – was relatively independent from the physical item itself. Thus, the same function could theoretically be performed by several objects. He introduced the concept of “value analysis” (later on dubbed “value engineering”) as a systematic effort of identifying functions and their costs. Therefore, value engineering was initially conceived as the activity of finding the best substitute at the lowest possible price. The overall concern with cost reduction has been maintained particularly in the ‘value engineering’ approach. Value engineering continues to be favored by the influential Society of American Value Engineers (SAVE) which established several franchises throughout the world. From the USA, value engineering spread across the globe in the 1960s and 70s, currently being employed in many parts of the world. As more and more countries took the value engineering concept and adapted to their own needs, the field of value engineering itself began to be included within a larger framework of business strategy. Value Management is now a key tool of connecting tactical projects within the wider framework of organizational strategy. VM does not seek to find the right answers like value engineering, but to achieve a way forward through an understanding amongst stakeholders. The focus is on communication and on dealing with dynamic, unstructured issues. The strength of current VM perspective lies in its team-based process-driven approach. Value Management is centered on the VM workshop, and is structured into three phases: • Orientation & Diagnostic Phase – preparation for the Value Management study, including selection of workshop attendees, venue, analysis of information, and compilation of workshop agenda. • Workshop Phase – the actual exercise where the consensus of stakeholders on value is sought. • Implementation Phase – follow-up and review of the implementation of value through further meetings. The following prerequisites are paramount to the success of a VM workshop: • Agreement by stakeholders to participate • Senior Management support • Experienced facilitators • Team skill mix • Presence of client decision takers • Isolated workshop environment The VM workshop is structured around Functional Analysis, particularly FAST (function analysis system technique) diagramming. FAST is a systematic approach that encourages effective interdisciplinary communications. The FAST diagramming includes the following steps: • Issues analysis aims to identify all factors concerning a proposed project. • Project Drivers re-focuses the stakeholders in the direction of achieving the project objectives. • REDReSS aims to correct misconceptions regarding a project’s purpose.

Other tools employed during VM workshops include:

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Goals and Systems Modelling: using functions to match with existing organizational systems.

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Functional Space Analysis: this technique is used in building projects, to understand a structure subdivided into functional space.

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Group Presentations: These are used to analyse the best team-based ideas for a project.

The outputs of the VM workshop include a Workshop Report, detailing the outcomes of the workshop and an Action Plan. As it is structured, a Value Management process should give a comprehensive framework for the implementation of organizational strategy into project form. However, in order to succeed, the process must be applied in a coherent and systematic fashion, and requires the participation of all the stakeholders in the process. Therefore, reaching strong consensus and bias for action should be one of the main goals of a VM workshop.