What are the Influencing Factors Contributing to the Perception of Value Amongst Construction Consultants, and Does Value Management Enable the Professionals to Portray a True Reflection of the Requirements of the Client?
Drucker (1985), Porter (1985), (1998), and Slater et al (1998) all agree on the importance of understanding that what buyers value in a given offering, creating value for them and then managing that value over time have been and are recognized as a critical element of the core business strategy for any market oriented company. The foregoing innovation applies to the construction industry as well and has been positively commented upon by Egan (1998) as well as Latham (1994) in reports that pointed out the need for the industry to implement improvements in key areas. The determination of what the customer wants in terms of a product as well as service provides firms with a means to formulate a clear vision of the value proposition and thus deliver upon this aspect. The importance of this view has been stated by Porter (1985) who said that the competitive advantage of a company emanates from its ability to create value for its clients that exceeds the expenditures of the company's cost to create it. The foregoing has broad implications in the construction industry, which includes consultants. Zeithaml's (1988) approach is that the perception of customer value has been viewed as a trade off between customer perceived quality as well as customer perceived price, and that the preceding is their judgment about a product's overall excellence Porter (1985) sees buyer value as a tradeoff of buyer perceived performance and cost.
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Value Management is a methodology that enables the construction consultant to deliver upon the foregoing. It seeks to find and thus achieve the most cost effective alternative to fulfill all performance and material aspects at the optimum cost. The process of Value Management is not a tool of last resort to be employed when things have not gone as planned and costs need to be reduced, it is a process to be employed at the beginning of the construction design, planning, procurement and building process as function of final delivery. Chang et al (1994) found that perceived value is positively linked to quality. The function of this paper will be to examine the influencing factors that contribute to the perception of value among construction consultants and if Value Management enables professionals to portray a true reflection of the requirements of the client.
Chapter 1 - Introduction
1.1 Value Management
The question of what Value Management is, is a central aspect in understanding its contribution to the process of whether or not it enables construction professionals to portray an accurate reflection of the client's requirements. The Institute of Value Management (2005) defines 'Value Management ' as a style of management' that is particularly dedicated to motivating people, developing skills and promoting synergies and innovation, the definition goes on to state that the purpose and aim of the process is to maximize the overall performance of the organization. Value Management has evolved from the process of 'value analysis' which was pioneered in the late 1940's and early 1950's by Lawrence Miles (Institute of Value Management , 2005). His method was a system to improve value in products that already existed. Value analysis initially was utilized to identify as well as eliminate costs that were unnecessary. In utilizing the process it was found that value analysis was effective in aiding to increase performance as well as addressing other resources as well. The preceding evolved the process into use for services, projects and administrative utilizations thus broadening its scope far beyond its original application parameters. As the utilization of value analysis evolved, it morphed into 'Value Management ' which consists of three base principles (Kirk, et al, 2000):
1. The ongoing awareness of value for the company along with the establishment of estimates of value and or measures to monitor and control these aspects,
2. The focusing on targets as well as objectives prior to looking for solutions,
3. The focusing on the process of function, which is the key to the maximization of innovation and attainment of practical outcomes.
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The process of 'Value Management ' occupies a key role in the quest of the construction industry for continued innovation as well as improvement. It is a progressive methodology that is applicable to strategic planning in the business function and improvements in performance, along with being instrumental in delivering the best value. The process from which the present process of Value Management emanated from, 'value analysis' is still utilized interchangeably today, along with value engineering. However, value engineering is increasing being seen as a subset of the process of Value Management which focuses on the improvement of value in the design as well as the construction stages (Kirk, 1997) and is the term, Value Management , which has been increasingly recognized as being appropriate for construction. Value Management 's applicability in the construction industry is a result of it encompassing broad problem areas as well as the individuals that are involved in the process who perform the technical analysis of structures being proposed. Kelly et al (1993) defined Value Management as a proactive, creative' and problem solving service which maximizes the functional value of a project They continue that it accomplishes the preceding by taking projects and managing its development from concept to completion' via the use of structured, team oriented exercises that make explicit recommendations and appraise subsequent decisions by reference to value considerations and requirements of the client. This definition offers a complete understanding of the entire process.
Value Management is an integral aspect of the construction business organizational delivery process concerning projects and is a forward planning methodology that looks at the components. The preceding taps more of the potential and purpose of VM, rather than being simply a review procedure which removes costs as opposed to adding value. As an intervention procedure, Value Management seeks to solve and identify problems through the utilization of the creatively applied skills of the construction team in a structured work process situation (Kelly et al, 1993). That period is estimated as taking between one to five days with the length finally being determined by the size, type, as well as complexity of the project being looked at along with the problems that need to be addressed. The aforementioned workshop is normally performed by an independent facilitator with the team generally running between five through twenty people. To exact the most from the process, these teams can consist of a mixture of client representatives along with the design and or construction team (Kirk, 1997). A client representative who has the capacity to make decisions at said workshop is beneficial if the dynamics of the project require this. Through the job plan, the workshop process is structured to represent sequences that reflect a problem solving approach as well as the precepts of good decision-making. Conducting the process in this manner ensures that the client is keep abreast of project development decisions in materials as well as methods, and adds to the value perception connotation.
Thus, Value Management is a process of varied regulatory as well as statutory requirements and definitions which encompasses the analysis of the differing functions that are performed by teams of qualified individuals and firms which is all directed at improving the performance of a the subject facility in terms of initial as well as ongoing cost through increased materials and or systems that produce or generate increased or improved reliability, safety, quality, duration and or life cycle to result in best value. The translation of the preceding into satisfaction quotients with respect to the client represents a fulfillment of perceived value and or worth in relationship to expenditure. The equation of best value is a representation that is associated with improvements, innovations or methods that increase the foregoing and as such reduce the ongoing costs associated with the functioning of equipment, maintenance, services, supplies and other elements that are a component of ongoing costs. Value Management seeks to maximize on the preceding through an examination of these variables by achievement of the best cost and efficiency alternatives (Spillinger, 2001).
At a minimum level, a sound Value Management process will be comprised of the following components:
1. initiatives that are identified,
2. invested resources,
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3. recommendations that can be implemented, and
4. identified return on the investment
The Value Management process represents a systematic search to uncover an answer that is as undiscovered. The process entails discovering the answer, or answers, through the utilization of the collective efforts of the Value Management team which consists of highly qualified as well as experienced professionals. The end goal of the VM process is to arrive at the point where the owner, user as well as other stakeholders receive a finished product that provides the greatest value and or return.
1.2 The Concept of Value
Of equal importance in understanding the key elements of the Value Management process, is the concept of value. The perception of this aspect, value, takes in consideration of a multitude of differing needs as well as resources utilized in implementing and bringing a project to completion. Kelly et al (1991) states that the equation of the fewer resources used, or the more needs are satisfied results in the opinion of a perceived value that is greater. It is important to understand that as a result of the various participants in the process, represented by stakeholders along with external and internal customers, there might be and frequently is, a number of different views of exactly what does represent value. Value Management's aim is to provide the means to reconcile these differing perceptions thus enabling the process to therefore achieve the most progress toward the goals and objectives through the utilization of a minimum of resources.
Within the indicated value equation, it is important to understand that value might be improved simply by increasing the satisfaction of need quotients. This can occur even in the face of having to increase the resources needed to make this happen, provided that the needs that are satisfied increase more than the increased resources utilized to make this occur (Kelly et al, 1991). Thus, the question of perception looms as a critical component in meeting the satisfaction expectation of clients. Some of the objectives of a value study are to look at the larger issues. This can represent aspects such as sustainability, operational enhancements, more building or structure flexibility, increased performance of engineering facets, visitor or client interpretation or simply the inspirational appeal. In any of the aspects which represent a value interpretation the task is to determine where the bulk of the funds being utilized in an operation comes from and goes. From this aspect, the next area is to determine where as well as how money is or would be wasted in daily procedures or operations. For example, in a hospital, approximately five percent of the overall cost may represent the capital expenditure used for construction, whereas up to ninety-five percent is represented by the ongoing costs to operate the facility. The typical breakdown in a corporate facility is usually thirty percent for the capital costs, with approximately seventy percent representing ongoing operating expenditures.
The purpose of the evaluation sessions is to constantly challenge the operating procedures looking into the potential for how to improve these areas through innovation and design modifications as well as what future generations of operating procedures might be like. Due to the relatively limited time frame as well as the tremendous complexity the preceding represents an exceedingly difficult task and mindset to attain as well as tackle. The process of Value Management allows for devising a strategy that can spend the same sum of money, but increases end productivity, or the process can be utilized to actually set higher initial first-cost expenditures that result in significant productivity increases. The methodology reveals that the object is to reach equations whereby productivity gains over the facility's life cycle are more than offset any additional costs to construct.
To summarize, value represents the relationship of worth to an item's cost utilizing the equation of the customer's needs as well as resources represented by a given situation. This ratio of worth and cost thus represents the principle measurement of value (Wade, 1986). With the foregoing understanding the employment of an equation to calculate value can be utilized to derive what is terms a Value Index:
Index = Worth = Utility
1.3 Key Principles in Value Management
The differences as well as attributes of Value Management is different from other construction management disciplines in that it includes aspects and attributes that are normally not found together. Its advantage is that it brings together the following components in a singular management process (Spillinger, 2001):
1. The Style of Management
. an emphasis on communication as well as teamwork,
. focusing on the things that need to be done as opposed to what those things are,
. the creation of an atmosphere which encourages innovation and creativity,
. focusing in on the requirements of the customer, and
. the commitment to look at and evaluate options in a qualitative manner to result in a dynamic comparison of options
2. Positive Set of Human Dynamics
This consists of:
. the utilizing of teamwork to encourage people to work as a unit to accomplish a defined common goal
. providing for individual satisfaction through the recognition of the efforts of team members,
. the utilization of communication to bring people together and increasing the communication quotient to derive results,
. the fostering of a better understandings of issues, problems and objectives to improve group participation and decision making,
. creation of an environment that encourages change to challenge the status quo,
. the assumption of ownership of the project to personalize the involvement and commitment of team members to encourage the climate for improved ideas and commitment
3. The Consideration of Environmental Perspectives
. taking into account external conditions, such as those which have or do exist that are outside of the new dynamics yet could or do influence or affect them,
. consideration of internal conditions that are within the organization that may or may not be resolvable yet need to be known,
. the relative degrees of freedom with respect to the internal as well as external conditions that could or do either influence or limit potential outcomes
4. The Effective Utilization of Tools as well as Methods
. the methodologies of achieving outcomes
1.4 Benefits of the Value Management Process
The VM process provides visible benefits as a result of the utilization of the Value Management mode, which are as follows:
. arriving at better decisions with respect to business through providing the decision makers with a sound platform from which to make selections,
. the improvement of services through a clear understanding of the dynamics of the 'real' needs involved,
. an enhancement of relative competitiveness as a result of utilizing a process that facilitates organizational as well as technical innovations,
. the utilization of a common culture the is geared to the attainment of value which enhances team member's understanding of the overall organizational goals,
. the enhancement of communications as well as the common factors with respect to knowledge of the success quotients,
. arriving at decisions which have been well thought out and as such will be supported by stakeholders
The preceding summaries of the key principles and benefits of Value Management are integral in understanding how the process contributes to the enabling construction professionals to understand client requirements and work within a process that aids in achieving such.
Chapter 2 - The Application of Value Management in Europe
2.1 An Historical Perspective
The process of Value Management is recognized by the Office of Budget and Management in the United States as the system to achieve maximized project benefits as a result of the collaborative process that examines variables to arrive at the attainment of the best alternatives thus producing value for clients and stakeholders. The United States Office of Budget and Management requires that Value Management be utilized for all projects under its auspices to ensure that the practices and processes utilized by management produce realistic budgets as well as result in a reduction in program as well as acquisition costs (United States Office of Budget and Management, 1997). It must be understood that the terms Value Management and value engineering are utilized interchangeably in terminology. Value Management is a legislated requirement that must be included in all projects under the auspices of the Office of Budget and Management of the United States for projects undertaken. The preceding is a result of the fact that the United States Government enacted the inclusion of Value Management into law under statute 104-106, February 10, 1996, under the amended Office of Federal Procurement Policy Act (41 U.S.C. 401 et seq.) (United States Office of Budget and Management, 1997):
Sec. 36. Value Engineering.
(a) In General - Each executive Agency shall establish and maintain cost-effective value engineering procedures and processes.
(b) Definition - As used in this section, the term 'value engineering' means an analysis of the functions of a program, project, system, product, item of equipment, building, facility, service, or supply of an executive agency, performed by qualified agency or contractor personnel, directed at improving performance, reliability, quality, safety, and life cycle costs.
The preceding 'legal' requirement is further mandated by a 'regulatory' requirement under the Office of Management and Budget Circular A-131, Value Engineering, May 21, 1993, which requires all United States Federal Departments and Agencies to utilize value engineering to identify and reduce non essential procurement as well as program costs. The foregoing regulatory process also mandates that the Value Management process is also to be utilized in (United States Office of Budget and Management, 1997):
. consonance with other cost-cutting techniques, such as life cycle costing, design to cost and concurrent engineering
. approaching facilities acquisition to incorporate environmentally sound and energy efficient practices and materials.
. Acquiring projects and programs; the resulting savings are reporting savings are reported annually to OMB and validated by the Inspector Generals.
. Annual budget submissions to ensure agency efforts are properly resourced.
The United States Government has passed the requirement that the utilization of Value Management must be used in all projects exceeding one million USD ($1,000,000.00). The business rationale for the United States Government enacting the inclusion of Value Management into law is that the industry benchmark for the expected return on investment in the utilization of Value Management is between 10:1 and 20:1. The preceding represents the most compelling reason for understanding the demonstrated importance and practical use of Value Management - results. Further qualification as to the mandate by the United States Government to utilize Value Management is its effect on return on investment. The United States General Accounting Office (GAO) has reported that VE generally produces a net saving of 3 to 5 percent of project costs while about 0.1 to 0.3 percent of total project costs (United States Office of Budget and Management, 1997). As is the case with any business process Value Management does not and has not generated the indicated returns on all projects. However, the preceding does represent the average recorded during the fiscal period FY89 and FY90 (United States Office of Budget and Management, 1997).
2.2 Value Management in Europe
The value of the utilization of Value Management applications in Europe has also been recognized for its problem solving and identification benefits. The European Council of Ministers in 1989 introduced the SPRINT initiative in order to strengthen the innovative capability and competitiveness of European firms. In said initiative, SPRINT, Value Management was a key component of this strategy. The foregoing resulted in the European National Value Associations to devise the following (European Standard, 2000):
1. the development of a European VM Standard that was approved in April of 2000.
2. the implementation of a standard European Training and Certification System.
3. BS-EN 12973:2000 as the European standard which defines VM
The European Standard for EN 12973 began development in 1991 in recognition of the previously mentioned benefits the process holds for the improvement of projects from the utilization of a team approach during the project planning stages and the successes recorded from decades of utilization and modification. The devising of the Standard called upon the experience of eight European countries to draw upon the differing expertise each represented to compile a balanced as well as comprehensive model that would serve the diverse European community. The resulting copulation brought together the best elements of the practice in a framework that would permit the utilization of Value Management across differing cultural lines through the standardization of the framework. The consensus provided a benchmark concerning best practices and thus provides a framework for utilization. The European Commission defines that the purposes of the standard are as follows (European Standard, 2000):
1. establishment of a common framework for practice,
2. providing of guidelines,
3. provisions for training and competence assessment,
4. establishment of a benchmark for the providers of VM services,
5. system for the certification of organizations,
6. improvement in the quality of service and to stimulate innovation,
7. to improve communication as a result of a common terminology foundation
The resulting Standard addresses the following three major groups (European Standard, 2000):
1. for senior managers looking to enhance value in their companies as well as for their clients and customers,
2. individuals involved in the application of Value Management ,
3. individuals as well as groups involved in development and training.
2.3 Value Management Assessment
The team oriented approach of the Value Management process represents the core strength of the application as it pulls together the diverse disciplines in the project planning stage to trouble shoot potential problems, solutions, approaches and solutions that include representatives of the client (Kirk, 1997). This qualified team of highly skilled professionals are committed to creating value through improved or increased safety, reliability, duration, quality and or project life cycle. The objective is to arrive at quotients that result in the fulfillment of value and or worth in relationship to the project expenditure. As identified by Kelly et al (1993), Value Management is a proactive, creative' and problem solving service which maximizes the functional value of a project They continue that it accomplishes the preceding by taking projects and managing its development from concept to use' via the use of structured, team oriented exercises that make explicit and appraise subsequent decisions by reference to value considerations and requirements of the client.
The Value Management process is an integral part of the construction delivery process and the methodology utilized by construction consultants to utilize a system that enables them to extract value in projects to meet the requirements of clients and arrive at satisfaction. As explained in Chapter 1.1, Value Management of this paper, the process consists of three base principles (Kirk, et al, 2000):
1. The ongoing awareness of value for the company along with the establishment of estimates of value and or measures to monitor and control these aspects,
2. The focusing on targets as well as objectives prior to looking for solutions,
3. The focusing on the process of function, which is the key to the maximization of innovation and attainment of practical outcomes.
The applicability of Value Management in the construction industry is due to its ability to encompass a broad set of problem areas utilizing the professionals that are an integral part of the process to review and analyze the technical aspects of the projects being proposed. It is this phase of the Value Management process that enables construction consultants to fulfill client expectations, as long as they include a client representative who is empowered to act on the client's behalf, and whom has the expertise to effectively contribute to the process. The workshop utilized to extract the maximum benefit from the process is usually overseen by an independent facilitator to ensure impartiality, with the overall team generally consisting of from five to twenty individuals. One of the principle influencing factors in the process is an understanding of the concept of value in terms of the client. Kelly et al (1991) states that the equation of the fewer resources used, or the more needs are satisfied results in the opinion of a perceived value that is greater. The varied stakeholders whom are a part of the process will frequently have differing perceptions of what constitutes value, thus it is the job of the team to establish a common ground for understanding this aspect of the process in order to achieve the purpose of the discipline. The aim of Value Management is to provide the means via which to reconcile these differing perceptions to enable the process to achieve the ends of satisfying client requirements and thus fulfilling the purpose of the process.
One of the advantages of the process is that it works well with clients whose expertise in evaluating project tenets is either limited or less experienced than the normal standard(s). In such instances the consultant has to be ready to educate as well as advise of the risks as well as benefits concerning differing delivery methods thus recommending the option that best suits project objectives. In the instance of sophisticated clients the consultant's responsibilities might simply be to understand his role in the process and elect whether to participate in the selected method. VM's principles are designed to elicit best practice applications and examples to aid in eh assessment of the benefits and risks of a delivery method in terms of the client's project. Via the aforementioned, the client as well as stakeholders can identify the method that promotes the best value of a project and serves to meet client requirements as well as objectives. To achieve said end an examination of fundamental aspects of the selection process was undertaken, and this resulted in the uncovering of the following:
1. Communication and Trust
The VM methodology establishes a climate of trust and fosters communication on an ongoing basis among the stakeholders.
It, Value Management, is responsive to the requirements as well as needs of the client as well as all stakeholders.
The VM process fulfills the client's quality objectives as an integral component.
This protects the interests of the public as well of the consultant.
The Value Management process is designed to ensure that the approach and thus resulting solutions are conducted with the view of meetings and delivering project value and requirement fulfillments to the client through a collaborative process. The Value Management process has been instrumental in providing clarity regarding the myriad of project delivery methods which encompass the construction process. The large number of variables contributed to confusion in terms of not only their number, but how they worked in consort with each other as most projects utilized the Design - Bid - Build methodology and also because varied laws as well as regulations did not include other methods. In addition, clients, consultants, contractors and design professionals were all used to the process which they had been utilizing for decades. The development of the Value Management process was an outgrowth of the aforementioned confusion, as well as the professional and legal responsibility of serving the client and retaining the ethical standards of the profession.
As a business discipline, an essential aspect of the construction industry is to engender trust in the processes utilized. The scope and size of the projects undertaken, as well as the relative costs means that the element of trust is a huge component in the business relationship with clients and stakeholders. To build upon the foregoing, trust, requires open communication that provides clarity with respect to the problems, advantages, benefits and related aspects of projects in all directions, from consultant to client, client to design professional, stakeholder and so forth. Any doubts, miss-understandings or other suspicions, regardless of the size can undermined the entire process. As a result, it is imperative that all participants in the process have a means to ensure open lines of communication, thus engendering trust. The collaborative participative process of the Value Management methodology establishes such a framework. The inclusion of the stakeholders in the process, along with the client's representative under defined procedural processes in the workshop environment establishes such a parameter. Within this process, there must be full disclosure of all relationships within the project to eliminate hidden agendas as well as deceptive practices. The guidelines to adhere to the foregoing are provided via the following basic tenets (ACEC, 2005):
. To recognize that each member of the team has responsibilities to set project goals directed at improving or adding to the quality of the project.
. To accept the expertise as well as judgment of the project participants.
. To provide a platform for open communication and exchange of important as well as critical information.
. To establish a defined as well as fair process to resolve disputes that involve the client.
. To disclose fully any and all conflicts concerning interest, relationships regarding contracts and all other situations which might potentially comprise the project.
. To work to ensure that the project addresses any and all safety as well as quality issues in the public's interest.
. To encourage and provide an open process that can be accessed by the public.
. To identify the needs of the client through the retention of an independent design professional to work with the client or in place of the client's in-house staff
The preceding establishes a defined process that effectively sees to the needs and requirements of the client in terms of portraying a clear and accurate reflection of his requirements, and seeing to their fulfillment.
The preceding, communication and trust, create the climate for responsiveness. It is imperative that all stakeholders have a complete and full understanding of the aspects that influence major decisions on the client's project, as well as the manner in which said factors act upon ach others interests, responsibilities and needs. A complete as well as full understanding of the responsibility of each stakeholder is absolutely essential in ensuring responsiveness during the project. The preceding includes the fact that appropriate actions and steps need to be taken to prevent as well as identify any and all conflicts of interest at the onset of the project as well as discussing relationships which might have an influence upon project actions (ACEC, 2005): Through the attention to the proceeding aspects all stakeholders are able to assess the costs as well as opportunities associated with project decisions. The full disclosure of the preceding presents the climate whereby said aspects can be resolved equitably, as well as in the best interest of the project and all concerned.
The aspect of responsiveness is essential for stakeholders to define project components in terms of scheduling, expenditures, costs, safety, quality and risk. Based upon the method of delivery, these aspects shift in terms of responsibility. The design professional's responsibilities as the client's consultant is to serve his interests governed by the standards of the profession's guidelines and conduct of actions. Said relationship is exclusive as the consultant can only represent one stakeholder's interest. The additional requirement that the consultant adhere to laws governing job-site safety issues, as well as public health as well as welfare, means they must balance these responsibilities to deliver the project in consort with the demands of the project. In keeping with such, the design professional's basic tenets with respect to responsiveness are as follows (ACEC, 2005):
. To understand the processes, as well as attributes of varied project delivery aspects along with how such affect the other stakeholders.
. To engage in discussions of behavior patterns as well as project restrictions concerning all participants in the project at the onset of the process.
. To identify as well as eliminate all potential conflicts concerning interest at the beginning of the project to ensure the client has the required expertise to participate in the process.
. To fully understand how each aspect of the value delivery system changes in terms of responsibility as well as risk allocation among the participants and define in clear terms the resulting expectations.
. To document fully the client's expectations in terms of the cost of the project, it's life cycle, and the schedule along with quality aspects at the beginning of the project.
. To educate the public concerning the correctness of the selected delivery system.
. To emphasize the necessity for an independent base of knowledge.
. To recognize the consultant's responsibility to discuss openly with the client as well as other stakeholder's all issues dealing with design, scheduling, cost and public interest.
. To permit the design professional the option to terminate their involvement in the project if the final mode of the delivery system is not acceptable by their standards.
. To understand the idea that there are some delivery systems which require the consideration of scheduling and cost issues as more important than quality concerns.
The primarily responsibility of the consultant is to understand, communicate and deliver to the client a project that meets their requirements in consort with the delivery of value and in keeping with recommendations and modifications deemed to increase or enhance the end result. The achievement of the foregoing represents a challenging as well as complex task that entails the understanding of varied laws, and other requirements. Quality in the project is attained as a result of contributions from all members of the project team and understanding that the best value is a balance between performance as well as price, and that quality is the important project requirement. The following represent examples regarding qualification based criteria selection which include the following, but are not limited to the items listed (ACEC, 2005):
. A demonstrated familiarity as well as experience with the project type, along with local standards and the client.
. The availability of experience and resources to meet and match the needs of the project.
. Accessibility to the client as well as the project.
. A demonstrated culture fit with the project team and client.
. An understanding of the local custom as well as practice in the area the project will be located.
. A demonstrated interest in the industry, project and applicable technology.
. Having the appropriate fiscal, insurance and resources for bonding.
In order to deliver on quality, the following basic tenets are required aspects (ACEC, 2005):
. To understand that the client's quality objectives are the subject of qualification by the client's qualified in-house design staff or through independent consultant.
. To establish an appropriate planning process that provides a baseline project scope as well as budget along with delivery system comparisons, acquisition strategies and other criteria.
. To solicit the advice and inputs of industry experts in the pre-planning stages.
. To plan for a complete acquisition strategy which includes objectives, goals and warnings relative to the delivery phase.
. To adopt reasonable as well as objective measures that compare quality facets at each project stage.
. To recognize client defined objectives concerning quality as the basis for the selection of the delivery method of the project.
. To identify as well as evaluate risk among the client and stakeholders.
. To assure that there is a common understanding concerning the scope of the project, scheduling, budget, risk allocation, responsibilities and other facets with all stakeholders.
. To recognize that the client does not require low-bid contracts as a means to control the project's costs.
. To foresee that risks are identified as well as evaluated and thus assigned to the appropriate parties.
. To ensure that risk is assigned to the stakeholders having the best ability to control this factor.
Delivering on Integrity in the project delivery includes adherence to the following tenets (ACEC, 2005):
. To clearly document the expectations concerning the finished product in all contractual requirements.
. To clearly define the responsibilities and roles of the design professional as providing the design documents which are based upon experience and knowledge acceptable to the needs of the client while adhering to the legal and ethical requirements of the industry.
. To recognize that the design professional must understand that their approach varies by necessity v=based upon the method and that they must adjust components as required.
. That as a member of the team the design professional must utilize appropriate qualifications based standards.
. That the design professional's client agreement to contract aspects respecting their obligation to act in the best interest of the public's trust.
. To exercise the proper due diligence with respect to technology, timesaving procedures, materials and procedures that are representative of similar projects.
. To respect as well as fulfill the terms of the contract's conditions and standards of performance.
. To recognize that the design approach might vary among differing delivery systems.
. That the design professionals need to understand that in the instance of a dispute resolution that they are part of a project team.
. That any method of delivery recognizes the construction of public facilities could impact on the difference in the project's life expectancy.
. That design professionals do not miss-represent their capabilities.
. To allows design professionals unable to fulfill ACEC Professional and Ethical Guidelines concerning conduct be permitted to withdraw without liability.
. To allow only registered design professionals to undertake design aspects.
. That design professionals must avoid project teams whereby the members attempt to resolve disputes, undertake the interpretation of designs and or substitute materials in a manner that the design professional determines is not in the best interest of the public.
The preceding lists concerning 1. Communication and trust, 2. Responsiveness, 3. Quality, and 4. Integrity are identified as the four principles to ensure the delivery to the client of a finished project that represents true value as well as quality.
Chapter 3 - Research Methodology
The examination of Value Management within the context of determining the influencing factors contributing to the perception of value amongst construction consultants and if Value Management enables these professionals to portray a true reflection of the client's requirements is an integral part of the process which finds its beginnings in value analysis (Institute of Value Management, 2005). The path to uncovering the basis for responding to the aforementioned was determined to lie in developing a full understanding to the Value Management process via an examination of its roots as well as the process the application utilizes. Information gleaned from the Institute of Value Management as well as data supplied by Stephen Kirk (1997), Value Management Assistance in design-build, as well as John Kelly and Steven Male (1993), Value Management in Design and Construction: The Economic Management of Projects, and Ralph Spillinger (2001), Adding Value to the Facility Acquisition Process: Best Practices for Reviewing Facility Designs provided the basis for understanding. The following summarizes those findings, as described in Chapter 1:
Value Management is a process of varied regulatory as well as statutory requirements and definitions which encompasses the analysis of the differing functions that are performed by teams of qualified individuals and firms which is all directed at improving the performance of a the subject facility in terms of initial as well as ongoing cost through increased materials and or systems that produce or generate increased or improved reliability, safety, quality, duration and or life cycle to result in best value. The translation of the preceding into satisfaction quotients with respect to the client represents a fulfillment of perceived value and or worth in relationship to expenditure. The equation of best value is a representation that is associated with improvements, innovations or methods that increase the foregoing and as such reduce the ongoing costs associated with the functioning of equipment, maintenance, services, supplies and other elements that are a component of ongoing costs. Value Management seeks to maximize on the preceding through an examination of these variables by achievement of the best cost and efficiency alternatives
The key component that provides the basis for the successful achievement of the end goal of attaining a true reflection of client requirements is through an understanding that the Value Management process is also an evaluative tool. The principles of Value Management are designed to aid the construction consultant, design professional and stakeholders in reaching a determination of which delivery method meets the goals as well as objectives for a project in consideration of the best fulfillment of requirements intended by the client. The foregoing includes, but is not just limited to:
1. Design - Bid - Build
2. Design - Build, and
3. Construction Management
as well as methods which include maintenance, finance and or operations. The principles of Value Management enables the workshop team to be applied to all options to evaluate the method or methods that meet the clients objectives and requirements. Research into industry standards as well as applications provided the basis by which to understand the dictates of the Value Management process and therefore the means via which to reach a determination of the answer to the questions as to whether in enables the professional to portray a true reflection of the client's requirements.
Chapter 4 - Literature Review
The uncovering of the key aspects of the Value Management process was reached through the literature examined to research the process along with the comments and views of varied qualified professionals. Ralph Spillinger's (2001) Adding Value to the Facility Acquisition Process: Best Practices for Reviewing Facility Designs provided the fundamental understanding for the process through his summarization of the process. He described it as varied regulatory and statutory requirements, along with definitions that encompass the different functions teams of professionals in the workshop process. The evaluations conducted in this aspect along with the client's representative are the means by which the fulfillment of the client's requirements is seen to as a consequence of the collaborative methodology.
John Kelly and Steven Male's (1993) book Value Management in Design and Construction: The Economic Management of Projects represented an older version of the updated explanation offered by Spillinger (2001). Their explanation of the process was less elaborative than Spillinger (2001), but the fundamental context remained the same.
An historical perspective on the developmental roots of Value Management was provided by The Institute of Value Management (2005) which explained that VM emanated from the process of value analysis that was pioneered by Lawrence Miles who devised a system to improve the value in products already in existence. His method was utilized to identify costs as well as eliminate those which were deemed unnecessary. Through years of utilization, the process of value analysis found applicability in other disciplines and eventually evolved into the current system of Value Management that is utilized today. The Institute of Value Management also provide insight as to the varied terminology that is interchangeability utilized in the industry, with value engineering being one of the principle substitutes terms, along with the original value analysis. Modern usage is converging upon the use of Value Management to refer almost exclusively to construction projects, whereas value engineering is increasingly being seen as a subset of VM. Value engineering focuses on improving the value in the design and construction stages and is not as comprehensive as Value Management which encompasses a broad perspective of problems in the project collaborative process. Peter Drucker (1985), Michael Porter (1985) and Slater (1998) all provided foundational perspectives concerning the understanding of what buyers value with respect to an offering and that creating value that they perceive as beneficial is a key component in the strategy of any business as it equates to client / customer satisfaction.
The key finding with respect to Value Management 's importance and acceptance was provided by its enactment into law by the United States under statute 104-106, February 10, 1996, under the amended Office of Federal Procurement Policy Act (41 U.S.C. 401 et seq.) which states:
Sec. 36. Value Engineering.
(c) In General - Each executive Agency shall establish and maintain cost-effective value engineering procedures and processes.
Definition - As used in this section, the term 'value engineering' means an analysis of the functions of a program, project, system, product, item of equipment, building, facility, service, or supply of an executive agency, performed by qualified agency or contractor personnel, directed at improving performance, reliability, quality, safety, and life cycle costs. (United States Office of Budget and Management, 1997)
The Value Management process for federal projects in the United States has been mandated for all projects exceeding one million dollars in cost as a result of the finding that the VM process, on averaged, represents of 3 to 5 percent of project costs and about 0.1 to 0.3 percent of total project costs as defined by the United States Office of Budget and Management (1997).
Equally important, was the finding that Value Management is also utilized under European Standard EN 12973 under the SPRINT initiative to improve the innovative as well as competitive situation of European firms. The preceding research conducted utilizing various secondary sources provided the foundation for understanding the depth and importance of Value Management in the construction industry, as well as its applicability with regard to the subject manner.
Chapter 5 - Conclusion
The accomplishment of delivering to the client not only value, but a project that portrays a true reflection of the client's requirements is the function as well as purpose of the Value Management process. It's various tenets, requirements, procedures and techniques as illustrated throughout this document have emphasized as well as shown the thoroughness and completeness of the procedures of the VM process which have been developed and refined over decades of utilization, as well as trial. Beginning with Lawrence Miles' introduction of the value analysis technique in the 1940's, the process has been tested, refined and has evolved into the comprehensive and accepted methodology that best sees to as well as protects the interest of the client and public in the planning, construction and delivery of projects through its system of procedures, guidelines and tenets.
As amply illustrated throughout the proceeding documentation, the Value Management process highly complex as well as comprehensive. Summing up the varied elements that provide the response to the question as to the ' influencing factors contributing to the perception of value amongst construction consultants, and whether Value Management enables professionals to portray a true reflection of the requirement of the client' is contained in the explanation of Ralph Spillinger (2001) who provided the basis for the following:
Value Management is a process of varied regulatory as well as statutory requirements and definitions which encompasses the analysis of the differing functions that are performed by teams of qualified individuals and firms which is all directed at improving the performance of a the subject facility in terms of initial as well as ongoing cost through increased materials and or systems that produce or generate increased or improved reliability, safety, quality, duration and or life cycle to result in best value. The translation of the preceding into satisfaction quotients with respect to the client represents a fulfillment of perceived value and or worth in relationship to expenditure. The equation of best value is a representation that is associated with improvements, innovations or methods that increase the foregoing and as such reduce the ongoing costs associated with the functioning of equipment, maintenance, services, supplies and other elements that are a component of ongoing costs. Value Management seeks to maximize on the preceding through an examination of these variables by achievement of the best cost and efficiency alternatives (Spillinger, 2001).
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