The Construction Sector In Mauritius Construction Essay

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Value and risk managements are essential tools for the efficient achievement of construction projects. Risk and value in a project are two essential factors which must be managed all throughout the life a project. The tasks involved in risk and value management are interrelated and should be carried out in parallel. The practice of integrating value management and risk management while applying it in a construction project has been initiated more than ten years ago as various professionals found out that it is impossible to make way between value and risk. The opportunity of integrating Value Management (VM) in conjunction with the formal risk assessment and analysis started in 1993 when a city port authority required a value engineering (VE) effort that would be augmented with an application of a risk assessment (Dell'Isola, 1997). In this essay, the current and future potential of value and risk management will be determined in the field of construction project management in Mauritius.

Value Management

In construction, value management can be defined as a service that maximises the functional value of a project by managing its development from concept to occupancy through the audit (examination) of all decisions against a value system determined by the client (G Bowles and J R Kelly, 2004). Value management, is a well-established methodology for defining and maximising value for money, can be applied to any type of project regardless of size or timeframe and at all stages throughout the life cycle of the project from inception to completion.

Value management assists the client in identifying the best way of meeting business need. Risk management is used to manage the risks encountered within a project through solutions providing value to the business. In practice, value management exercises are carried out prior to risk management ones, to determine exactly what constitutes value to the business from delivery of the project. The different phases in value management study are:

Information

All the necessary documentation and relevant inputs are gathered to identify the functions of the whole or parts of the project, as seen by the client

Creativity

Creative techniques are put forward during this phase to provide answers to the functions for example: brainstorming and the Gordon technique

Evaluation

The proposed ideas are assessed in order to choose the best one amongst them for further study.

Development

Once ideas have been selected, an investigation is carried out on their technical feasibility and economic viability. If approved, the next step would be to start working on the specifications and the designs for finalising the budget costs. This stage makes use of cost models and computer aided calculations. The ideas that cost more than necessary or of poor quality are rejected.

Presentation

A presentation on the selective ideas is prepared by the value management team to the body that commissioned the value engineering exercise including specifications, drawings, calculations and costs.

Feedback

The value management facilitator can view the details of those ideas that have been put into practice and the design and cost predictions of the team can be tested.

The construction industry among others is highly exposed to risks and uncertainty. The amount of risk and uncertainty is determined greatly by the 'uniqueness' in each project as each one of them is different. Risks are either controllable or uncontrollable depending on where in the project environment they stem from and elements of the environment are explained (G Bowles and J R Kelly, 2004).

Risk management

Risk means different things and has a variety of implications for different people and organisations in the construction industry. If risk is successfully managed and a project is delivered on time, within budget and to required quality standards, then that should be good for all participants in the process.

The PMI's Project Management Book of Knowledge (2000) describes Risk Management as 'the systematic process of identifying, analysing and responding to project risk. It includes maximising the probability and consequences of positive events, and minimising the probability and consequences of events adverse to project objectives. It includes processes of RM planning, risk identification, qualitative risk analysis, quantitative risk analysis, risk response planning and risk monitoring and control.'

Risk management is carried out to identify the risks at the initiation of the project and where possible to minimise the effects.

Risk management involves several stages:

Risk identification: determine the risks involved within the project

Assessment of risks: determine the likelihood of event and probable impact of the risk on the project.

Responding to the risks through proposed solutions to prevent aggravation f the situation or take any measures of prevention before it happens.

Monitoring, updating and controlling risks

Feedback on whether risks were managed and lessons learned.

Value and Risk management involving projects in Mauritius

The aim of using value and risk management for developing projects until completion is to satisfy the client until he rest assure that he has got value for money. Through the value and risk management, the benefits reaped are:

An enhanced understanding of the customer needs and requirements

Removing unwanted cost

Reducing project time

Improving communication and team working

Created, challenged and innovative ideas

Managing change orders effectively

In Mauritius, some of the private firms are currently using the value and risk management technique through the Project Procurement Lifecycle. Many small construction companies do not follow this cycle as they identify their business needs at the very beginning through their stakeholders. With the integration of Value and Risk management within the project, the outcome of the project might have been more appealing and of better quality. Furthermore, OGC (2003) mentioned that value management and risk management are interrelated tasks that should be carried out in parallel. According to OGC (2003), the application of value management will help client to identify the best way of meeting business need while risk management is used to manage the risks associated with the solution that offers the best whole-life value to the business and should not be seen as barrier to innovation.

The application of value and risk management is still a new technique in Mauritius. With the gradual implementation of these processes by some companies, VRM in construction project management will soon be on the news. With no value and risk management, construction companies often face chaotic situation during implementation of their design. There are many risks which have not been catered for initially and when the situation arises, it is difficult to take actions immediately. Meetings need to be held to find solutions to these problems when otherwise these risks would have been taken care of through risk management.

In order to encourage the value and risk management for construction project management to survive in Mauritius, it is primordial for the government and the private sector to combine their effort in order to reflect the importance of value and risk in their systems.

The existing level of construction management project knowledge is satisfactory based on the multidisciplinary interaction required to acquire and advanced level of VRM skills. The top management must encourage innovative solutions to enhance earned value through VRM processes. Reviewing the organisations' policies so as to include motivational clauses must be done to encourage employees to develop themselves and to acquire new techniques. Also, organisations must construct and enforce a standardised system for all managerial and technical processes in their work flow. To achieve the required added value, training programs should be controlled by monitoring outputs of these programs.

However there are also others which use it partly where they seem right or where it is profitable for therm. As Griffin (2006) argues, the issue is no longer whether they should be used but whether the processes should be integrated.

A VM workshop has recently been organised by the Ministry of Public Infrastructure with all office bearers and other interested members. The major aim of this workshop was initially to create an independent body to monitor, govern and standardise VM in the local industries. The proposed name was Mauritius Institute of Value and Risk Management (MIVRM), which was voted and amended in the general assembly. A two-year strategic plan was developed and documented based on a round table discussion between all members and head of several large organisations. The MIVRM will, in the future provide accreditation, memberships, training, and promotion of value and risk management in Mauritius. Experiences in many other countries show that the prosperity and development of VM applications rely heavily on government's support (Qiping Shen, 1997). MIVRM also aim to take the following actions:

To commence additional investigations to compare the benefits and drawbacks of VM practices currently present in Mauritius and to set up a benchmark of the finest practice for the local construction industry.

A standard and a certification program must be set up to clearly describe VM theories and practices locally. Moreover the level of competency and experience of each individual can be easily identified and recorded. International standards must govern all VM courses delivered in different institutions in Mauritius through an accreditation system.

Government should continuously support all large projects which are publicly funded to sensitize and promote the value of VM.

A sensitisation campaign should be conducted to promote the growing importance of VM in the local context through the production of good quality hand books and manuals as well as organising workshops regarding this subject. These activities will help to avoid misunderstanding, misconceptions and confusions.

In the future, in order to be able to face challenges, the value and risk management culture must be introduced and marketed. With the introduction of risk and value management in client's organisation, consultancy firms and contractors in the construction sector, professional would be more aware of the value of the project and the risks affecting it. Training and assistance should be given to encourage the professionals to manage successfully value and risk management studies.

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