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The aims of this development is to centralize all the public sector department into a single building as the public sector departments are under different type of properties and location around the city. This approach is to determine the viability of the development and to develop more options for the development in order to ensure the development is value for money.
Generally, this report consists of 6 sections for the Value & Risk Management (VRM) approach to be carried out in conjunction with OGC 3 Procurement Lifecycle. It covers the tasks of identifying the business needs and options to meet business needs (confirm project required). The 1st section is defining the VM terminology and potential benefits of the approach. As for the 2nd sections, it involves on the introducing client's background and the project objectives based on the business needs of the client.
Meanwhile, the 4th section is to specify the requirement of the workshop need to be organized in order to provide all information of setting up, facilities and equipments to ensure the workshop being carried out smoothly and effectively. As for the 5th and 6th sections, it will provide a comprehensive procedure and agenda of the workshops.
Finally, the 7th section is the conclusion of the report and future recommendation for the development after the workshop has been carried out. The key for the successful VM workshops is to ensure all the involved stakeholders are reasonable, creative and commitment to public service in cooperating to provide the factual and supportive solution.
A successful project development are not only measured by how much is the cost saving has been achieved, how short is the construction period being executed or how great is the appreciation on the aesthetic of the building design. It is also need to meet client's needs in terms of business needs which create a strong value towards it business operation and supporting the operation leading to value for money outcome. Total cost of the development shall commensurate with the value of the development towards the overall objectives. Therefore, Value Management (VM) plays an important process in assisting client in deciding the suitable design or options for the development.
Based on definition by John N.C et al (1996), VM is defined as a structured approach of discovering the values that what the client valued which to achieve the perceived needs of the agreed on the clear project objectives and how the objectives can be achieved. Typically, it also will involve Value Engineering which defined as a systematic approach of conveying the required functions at the most economical cost without lowering the quality, performance and reliability (John N.C et al, 1996).
Figure 1: Relationship of VM & VE (John N.C et al, 1996)
Generally, a well structured VM application into a initial stage development will promotes positive impacts toward the project delivery as it able to verify the needs of the projects with supported data, project objectives are clearly identified with open discussion, design development works accordingly with agreed framework, alternative solutions are always considered and design proposal can be carefully appraised with agreed performance requirement (John N.C et al, 1996). Besides that, VM do provides other important benefits by improving communication and teamworking, a shared understanding among the project stakeholders, better project definition, innovative environment and elimination of unnecessary cost through capital saving of 10% to 25% of a construction project (with additional cost on VM by 0.5% to 1% of total project costs (John N.C et al, 1996).
Client's Background and Project Objectives
Client Name: City Authority of UK
Project Description: New Development of an Administrative Headquarters Building at city centre
Size of the building: approximately 12,500m2 (initial estimate)
Budget: approximately £25,000,000.00
Centralization of all the public sectors departments
Relocation of all staffs to a single location.
Rationalizing local government service departments in a high specification modern building that creates a progressive and visionary city.
Based on the information from the UK Cabinet Office (2011), there are several types of public departments which listed in a brief table as below:
Cabinet Office, Department of Health, HM Treasury & Ministry of Defence
Non-Ministerial Departments (NMDs)
Charity Commission, Food Standard Agency, HM Revenue & Customs, Office of Fair Trading, Gas and Electricity Markets Authority & etc.
Executives Agencies (General)
Executives Agencies (Trading Fund)
Highway Agency, HM Court and Tribunal Service, Identity and Passport Service & etc
Non-Departmental Public Bodies (NDPBs)
Arts Council England, British Council, Competition Commission, English Heritage, Environment Agency, & etc.
Advisory Council on the Misuse of Drugs, Boundary Commission, Diplomatic Service Appeal Board & etc
Foreign Compensation Commission, Office of Surveillance Commissioners & Valuation Tribunals
Ad Hoc Advisory Bodies, Task Forces and Reviews
Public Sector Working Groups
Internal Advisory Committee
*Further Info from Cabinet Office
Channel 4, Commonwealth Development Corporation, Royal Mail & Royal Mint
Other Types of Central Government Body
NHS Special Health Authorities
Statutory Office - Holder
Office of Civil Society (in Cabinet Office)& etc.
The Commissioner for Public Appointments & the CIC Regulator
The Parliamentary Ombudsman, the National Audit Office & etc
Table 1: A simplified categories of Public Bodies: A Guide for Departments (Cabinet Office, 2011)
Based on the above table, these are the potential end users of the future Administrative Building (potential stakeholders) which part of the objectives on the centralization of the public departments. However, it is clear that list of the departments of UK public sector are quite a lot and obviously it is not all the departments to be relocated under one Administrative Building as it may not able to achieve the improvement on efficiency of the government service. Therefore, VM is applied in order to determine real needs of the departments that required to be centralized under an Administrative Building.
Cost is the major issue of the client's concern as it requires proper spending on public funds on the project. In fact, this new development is beneficial to UK government as it has the potential of reduction on operation cost due to the sharing of facilities and infrastructures under the same building of administration.
In terms of quality aspect, the design of this development are very crucial as it may be one of the iconic building which representing the UK Government which turns into the visionary of the city. Therefore, engineering and aesthetics requirement may turn out to be complex in order to meets the client's long term usage of the building.
Criteria of the VRM Management Workshop
Based on the OGC 3 Procurement Lifecycle, currently it is the 1st stage of the assessment on development which the appointments such as below are done:
Senior Responsible Owner (SRO)
Project Sponsor (PS)
Independent Client Advisor (ICA)
Generally, a SRO is the Project Leader in managing the overall development. Eventually, project sponsor shall be the UK City Authority which the party who funds the project from the beginning until completion. Apart from that, ICA is assisting the SRO for the all related matters of the development including construction aspect and they can be external appointed Project Management Consultant in providing strategic management for client.
Apart from that, other stakeholders that may involved in this VRM workshop shall be government officers from public works department and land authority. As they able to provide all relevant info on the policy, regulations and issue that may affect the decision of the developments. At this moment, design consultant such as architects or engineers is not required for the VM workshops as it is still in the initial stage. However, cost consultants such as professional Quantity Surveyors (QS) are required to attend this VM workshop as to provide more indicators on the construction economy and financial aspects.
For these VM workshops, it is advisable to have a limitation of 8-10 participants during the workshop in order to have a better session on brainstorming and evaluation sessions. It is not advisable to have too many participants in the workshops as the generation ideas may turns out to be enormous which may lead to confusion.
The summary of participants will be:
SRO - 1 pax
PS - 1 pax
ICA & VRM Specialist - 2pax
QS - 1 -2 pax
Government Officer - Public Works Dept. (PWD) - 1-2 pax
Government Officer - Land Authority (LA) - 1-2 pax
Pre-workshop (Briefing of VRM Management Approach)
Before the kick start of the 2 workshops, it is a perquisite to organize a short briefing on the terminology of VRM and the basic functions on the approach. This is to aware all the participants on the importance of the VRM and to eliminate the doubts or confusion pertaining to the workshops. This briefing shall require only half day in delivering the VRM topic. Non-participants of the workshop or future potential stakeholder are encourage to attend this short briefing, if the available space of the venue is allow.
Layout of the Workshops and Facilities Required
Flip Charts with stand Table Door
Projector Screen Chairs Mini Pantry
White Boards Projector Photocopy Machine
*Not to Scale
Layout of VRM Workshop - Air-conditioned Conference Room
Based on the above plan, the 2 day workshops shall be held based on this arrangement and the basic equipment and utilities required are:
Table and chairs (in accordance with the plan)
Projector Screen, Projector and a Laptop
Flip Charts with stand
Mini Pantry (Light snacks and Beverages)
Stationeries (includes tri-colour maker pens, Laser Pointers, Post-ItÂ® Notes & etc)
"Do Not Disturb" door tag (to prevent interruption)
4.0 Length of the Workshop.
Generally, the VRM workshops shall be held in 2 days duration (8 hours /day) covering the job plan of Information, Setting Objectives, Speculation, Evaluation, Development and Risk Identification. The details of the Job Plan can be referred at Agenda of Day 1 VM workshop and Day 2 VRM Workshops.
VRM Workshops - Job Plan
The process of the VRM workshop shall be carried out in accordance with a job plan in accordance with John. N.C et al (1996) which consists of 5 main processes mainly Information, Setting Objectives, Speculation, Evaluation and Development. However, the OGC 3 Procurement Lifecycle at the 2nd stage of VM does come together with a risk management session. Therefore, upon completion of the all the VM main processes and risk identification session shall starts to finalize the whole workshop.
1st Day Workshop
2nd Day Workshop
1st Value Workshop (1 day duration)
Stage 1 - Information
At this stage, the main focus is on the purpose of the project by establishing the common understanding on the aims and constraints on the project. It is crucial at this moment as a brief statement of the project need to be prepared in order to elaborate all the needs of the project including client needs. As to ensure all the statements or objectives being discussed effectively, all of statements being made shall stand individually rather than reiterate of previous or others idea.
Stage 2 - Setting Objectives
In order to achieve value for money, this stage is crucial as to develop a list of clear objectives from the project. All the objectives has been discussed shall turn into a Value Hierarchy at this stage. From the higher order of objectives will be broken down into the lower order of objectives. It is important to take note that all the objectives are set based on consensus agreement.
Figure 2: An Example of Value Hierarchy at development during 1st VM Workshop
Stage 3 - Speculation
After setting all the objectives from high order to low order, brainstorming session shall kick start as this exercise is mainly involve creativity and innovation in providing more alternatives leading to cost saving and value enhancement. It is a good practice to attach all the ideas to the white boards during the workshop as the brainstorming session can be more effective rather than duplication of generic ideas.
Agenda - 1st Day Workshop
Setting Project Objectives
Development of Value Hierarchy
Brainstorming session 1
Brainstorming session 2
2nd Day Workshop (1 day duration)
Stage 4 - Evaluation
After the 1st day workshop, all ideas generated from the speculation stage shall be analytically being evaluated in order to filter out those lesser value added to the project by applying importance weighting to each of the ideas. Each of the idea needs to be evaluated through its perceived value and constant reference in the hierarchy.
Stage 5 - Development
This is the final VM approach and developing the costing on the desirable options shall take place. A simple preliminary cost estimate would be sufficient to have a clear picture of the development.
Stage 6 - Risk Identification
Besides having all the VM exercise, this is exercise is crucial in identifying all the potential risk to the development and evaluate client's capacity in undertaking the risks (risk register). The potential risks may occur such as economy, construction, material price, environmental and many more.
Agenda - 2nd Day Workshop
Recap of 1st Workshop
Evaluation and Weighting Ideas
Cost Study (Initial cost estimate)
Weighting of Risk
Continue weighting of risk and overall review
End of Workshop
Conclusion and Further Recommendation
After having a series of VM approach, it will enable all the participants to have clearer view of the development and knowing all the important needs of the project. Although, these 2 workshops coverage may seems to be not in depth but it has serve the main purpose by setting the right aim for the development to be proceeded. In addition, VM can be treated as the key of making decision on the development in order to reach the consensus of all the stakeholders.
It is advisable to go in depth of VRM analysis by having feasibility study on the development inclusive of structured cost estimates, sensitivity analysis, cost/value reconciliation, value improvement value engineering, risk assessment and SWOT analysis (if possible). Although, all these exercise may incurred cost of administration and consultancy but it will have the potential in value added to the development.