QUS5207 COST CONTROL 2 VM: CONCEPTS, TERMS, RISKS & COSTS
- 1. The concept of Value Management GROUP MEMBERS: FONG HUI PING I14005404 NATALIE WONG YEE TONG I14005530 TAN ZHEN NI I14005407 SIM KIT MUN I15008570
- 2. DEFINITION OF VALUE MANAGEMENT • It is a multi-disciplinary, team orientated, structural, analytical process and systematic analysis of function which seeks best value through design and construction process to meet the client needs. • It is most promising method to coordinate professional from different disciplines to help the clients better achieve their goals • It is an emerging paradigm that focus on continuously increasing value provided to client •
- 3. AIM • To satisfy the client’s project requirements as well as it concentrates on improving the relationship between value and the client.
- 4. Terminologies used in Value Management Prepared by : Sim Kit Mun
- 5. TERMINOLOGIES USED IN VALUE MANAGEMENT • Value Methodology • Value Planning • Value Control • Value Analysis • Value Engineering
- 6. VALUE METHODOLOGY • o the process, principles and techniques adopted in the conduct and practice of value management and it includes those practised at value planning, engineering, and analysis phases.
- 7. VALUE PLANNING • an aspect of value management that is associated with achieving project value during the planning stages of a project. For instance, in construction this is associated with value at the early stage, namely, conception, inception, Value Management, Engineering and Analysis 19 feasibility, viability, and other planning-related activities of the project. • a sub-set of value control and they are both derived from the principle of cost planning and cost control, which are common terms for management of developmental projects.
- 8. VALUE CONTROL • concerned with managing value throughout all stages of a project where cost control is practised. • Indicates a direct link to cost control which is not the same as value management, justifying the reason why the term is not common among value management experts, analysts, or researchers.
- 9. VALUE ANALYSIS • Associated with the post-construction or completion phase, indicating that the practice is related to the value of completed project. • This is inclusive of the use and re-use stages of a project. Management is a general term inclusive of improvement and assurance, implying that ‘value improvement’ and ‘value assurance’ are synonymous with value management.
- 10. VALUE ENGINEERING • Equivalent to value management • A study of value at the design, construction and engineering stage of a project. • De Leeuw (2006) judging from the principle surrounding the concept and conduct of the practice • Value engineering = value planning by Karunasena et al. (2016) and value methodology by Leung and Yu (2014). • VM explains all the concepts, principles, processes, and participants required for each stage of the discipline in a project – for successful implementation of discipline.
- 11. Prepared By : Fong Hui Ping Risk of Value Management in Construction
- 12. 7. Representation of Original Design Team 8. Choice of Facilitator 9. Support for the Practice 10. Timing of the exercise 11. New concept for stakeholder Risk of Value Management in Construction 1. Sufficient Time for Study 2. Completeness of Cost Information 3. Related Functions of Components or Elements 4. Uniqueness of Construction Project 5. Quality of End Product 6. Selection of Team Members
- 13. • Initial period to complete an exercise - 40 hours workshop ( usually whole week ) - 3 days workshop • Adequate time devoted to complete each of the recognised stages 1. Sufficient Time for the study
- 14. • Lack of full and necessary cost associated elements or component • Fundamental principle of project planning and evaluation techniques is based on the probability of occurrence • Difficult to predict inflation and economic indices • Possible to make incorrect assumption and ruin the value management exercise 2. COMPLETENESS OF COST INFORMATION
- 15. • Difficult to quantify because: • Difficult to determine primary role of elements or components due to its serve more than one functions (e.g. window unit ) • Two or more elements perform same function (e.g. wall, door, windows) 3. RELATED FUNCTIONS OF COMPONENTS OR ELEMENTS
- 16. • The distinctiveness of a project affects the function of some elements and components E.g. column can be introduced as aesthetic feature and also serves as structural member. • Uniqueness of project need to consider in mind when identify the function of various elements. 4. UNIQUENESS OF CONSTRUCTION PROJECTS
- 17. • Predicting the end product quality by determine the best functions that it will perform at least cost • Best method is examination of current or past situation where the product has been used: • Availability of historical data and the required information • Analysis of the difference in exposure to weather and other conditions • Examining the conditions of the use of the product 5. QUALITY OF END PRODUCT
- 18. • Multi disciplinary of members • Selection of wrong people may contribute nothing or negatively to the success of the practice • Better if team member accept the practice or have pervious experience of VM • Project stakeholder of design team are expected to be members of the teams 6. SELECTION OF TEAM MEMBERS
- 19. • Existing design members involved in VM will make it more effective : - Generation of novel idea and ease with VM outcomes - But not all original team members become a part of VM team due to large number of them, only important and influential member are invited - Cost paying for existing design members 7. Representation of Original Design Team
- 20. • VM team leaders is who : - possess the necessary leadership, team control, management skills, competence to conduct VM exercise - Have knowledge, understanding, and experience of VM workshop - Able to direct, guide, and control team members in line with the principles and practice of discipline. 8. Choice of Facilitator
- 21. • Level of support from clients, statutory or regulatory bodies and top management staff of an organisation. • Most of the construction stakeholders still perceive the practice : - Cost cutting exercise, extorting more money from client - Outcome and recommendation from team may even be discarded - Wasting time and resources with no impact on the project at hand 9. Support for the Practice
- 22. • Choice of the right stage of a project to implement the VM : 1. Initial phase before production of final drawings Consequences: may not be sufficient information 2. After the production of detail drawings Consequences: delay at least a week for project and the amendments or alterations of existing design will leads to extra cost. 3. Commencement of site activities Consequences: slow down pace of work, rework, waste of resources 10. Timing of the Exercise
- 23. • Initial acceptance of the practice of VM by stakeholder and members of original design team because: - Conclusion and recommendations alter and change completely the existing proposal - Challenging their professional competence and capability. 11. New Concept for Stakeholder
- 24. COST INVOLVED IN VALUE MANAGEMENT 1. Cost of Facilitator 2. Cost of Other Participants 3. Cost of Venue 4. Administrative Cost 5. Information Gathering Cost 6. Indirect and Other Costs
- 25. 1. COST OF FACILITATOR • A facilitator responsible of planning, controlling, and managing a value management exercise, reporting the outcome to the clients • Facilitator is a professional who devotes his or her time to the success of the exercise and as such, must be paid accordingly. • Cost includes professional fee, transport costs, and others. • The payment depend on : • the experience of the facilitator, • the type and nature of the project, • the mode of engagement, • the size and cost of the project. • The payment may be made based on man-hour rate, or any other method which must be agreed upon and approved prior to the commencement of the exercise.
- 26. 2. COST OF OTHER PARTICIPANTS • Participants members of the value management apart from the facilitator. • They may or may not be experienced in value management, professionals, experienced in construction, and members of original design team. • Their payment depend on the same factors as for the facilitator: • Experience • Type of project • Mode of engagement • Size and cost of project • The payment method should be decided and settled before the exercise and it can be through any of the remuneration means discussed for the facilitator.
- 27. 3. COST OF VENUE • A conducive environment needed for conducting productive meetings. • Good venue allow members perform their function without any form of hindrance. • The cost of the venue does not only include the cost of securing or renting the venue but also that of siting the venue in the right environment. Depending on factors such as : • the type of client, • the nature of project, • and the procedure of the workshop to be adopted • 40-h procedure to be organised as a retreat in a secluded place (hotel or guest house with conference and accommodation facilities) • It reduces the stress of team members travelling from one area to the other will also ensure that members can have informal discussions after the official session is over. • Alternative E-workshop (internet workshop), thus eliminating the cost of a venue.
- 28. 4. ADMINISTRATIVE COST • Apart from the provision of basic social amenities, it is also necessary to allocate cost for administration purposes. • These may include: • insurance, • office supplies, • wages and benefits of accounting staff, • wages and benefits of secretary(s), • wages and benefits of legal personnel.
- 29. 5. INFORMATION GATHERING COST • A key principle of value management is the comparative analysis of alternatives. • More alternatives , the more detailed information is available about them, the better the ability of the value management team to brainstorm and identify the best alternative, using the principle of function and cost. • Cost such as : • collecting information regarding function, • cost (initial, annual, running, maintenance), • lifespan, • and the physical characteristics of elements or components to facilitate deliberation by team members.
- 30. 6. INDIRECT AND OTHER COSTS • Not directly associated with the actual value management exercise but are necessary in achieving the overall goal of the practice. • The indirect cost may include : • the cost of buying equipment • the costs required in altering or changing the original or existing design • and the general cost of following up on the understanding and the implementation of the recommendations.