Value engineering and value management as significant features of capital projects are two project management techniques that identified as critical in optimizing project value for the target cost. Research has shown that value management and value engineering thrive on hard and soft system thinking paradigms, with value engineering mainly focusing on project plan and value management focusing on communication as the key component to optimize value. The ultimate goal of both techniques is to optimize project value for the target cost at every phase of project lifecycle.
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In addition to that, value management is a paradigm that focuses on communication and enables stakeholder understanding of the problem under consideration with clearly understood objectives. This research focuses on value engineering as a technique to optimize value for the target cost, endeavors to explain different approaches to value management and value engineering and the implications of both techniques on the ultimate benefits of value engineering and, management on project value. On the other hand, the research endeavors to establish the need to compliment both techniques. The inquiry is further informed by typical case examples particularly by examining the reasons for the failure to manage and engineer value in projects in Southeast Asia. The inquiry terminates with results and recommendations based on literature desktop literature reviews of available literature.
Value management in construction projects is a critical element in the attempt for projects to attain maximum value for the target cost of a specific project. Value management (VM) is intrinsically a team based managerial process that optimizes the best method of delivering products to a construction project by optimizing on the cost and product quality, thus making the overall project cost minimal. A continuum of studies show value management as a method to make the best use of top–level management skills in value systems by aligning with respect to the need to address problems to minimize cost while making the best of quality, reducing time scale for project implementation, and endeavoring to implement value at all levels of project key points. Thus, at each point of making the best value, the need for management to make the best use of and enhance decision-making skills is important.
In addition to that, value engineering and value system alignment is essentially on information alignment and problem solving strategy. On the other hand, value system reconfiguration is an independent variable that enables managers formulate methods for problem solving by restricting information on project value management, formulating problem solving strategies, aligning and realigning project progress to optimize project value with the consequent benefit to optimize value and reduce cost. On the other hand, value system audit is another component of value management, which enables managers to restructure relevant information that enables them optimize project value and consists of professionally qualified team members who contribute their expertise in information restructuring to attain higher levels of project value. On the other hand, value engineering (VE) is a function based thought process that endeavors to optimize product function to maximize value. The approach uses logic to identify the internal value of a product and the best method to optimize function and reduce cost.
Statement of the Problem
The goal is to optimise the project such that the maximum real value is achieved for the budgeted cost. Frequently this is done implicitly with minimal formal process but most modern project teams attempt to manage value through an explicit and formal process.
Thus, the main goal of the dissertation is to conduct an inquiry into value engineering and value management as techniques to make the best use of value in construction projects and as the best approach in project management.
The Research questions
- What are the differences between value engineering and value management?
- How can the Value Management process be optimised so that true value is identified and changes are made effectively and efficiently and in a timely manner?
- What are the consequences of ineffective and inefficient Value Engineering?
- What are the modern key value management techniques?
The research objectives are:
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- Examine the complementary aspects of both value management and value engineering in project construction projects
- Examine the different methods of analyzing and implementing value in a project.
- Distinguish between value engineering and value Management
- Examine the benefits of value management
- Examine the befits of value engineering
Value management and value engineering
According to Checkland (1981), value engineering and value management embrace diverse system thinking paradigms based on underlying assumptions about both disciplines. Checkland (1981) views value management as a paradigm that reflects on hard system thinking and as a strategy to optimize project value for a target cost. On the other hand, value management tends to focus on a specific design problem in a project and provides a basis upon which a common understanding by the project stakeholder is established. On the other hand, Male, s., et al., (2007) and Checkland (1981) both view value engineering is a paradigm that reflects the soft system-thinking technique which endeavors to optimize project value through cost reductions based on strategic techniques such as SMART. However, established facts in research literature show that value implementation based on a variety of techniques including the Value Adding Path Map (VAPM) is workable. In both cases, active participation of client in project design is a distinguishing characteristic inherent in both paradigms (Kelly & Male, 1988).
Both paradigms differ in the approach used to implement value in a project with the aim to minimize ultimate project costs.
It is important, therefore, to begin by examining the definitions of value management. Different authors have researched and coined different definitions of value management. Value management, Kelly and Male (1988) is “an organized approach to providing the necessary functions at the lowest cost” p.4. On the other hand, other authors define value management as a “structured process of dialogue and debate among a team of designers and decision makers during an intense short-term conference” (Yeo, 1993). Other definitions of value management include “systematic, multi-disciplinary effort directed towards analyzing the functions of projects for the purpose of achieving the best value at the lowest overall life cycle project cost” (Yeo, 1993).
On the other hand, value management is the “conceptualization of production (from value viewpoint): As a process where value for the customer is created through fulfillment of his requirements” (Yeo, 1993). In all cases of the definitions, value management is a tool used to optimize value in a construction project by enabling project stakeholders to optimize value at the lowest cost during the project implementation process. Thus, value management is not a multi-pronged approach, but focuses on the need for a common ground upon which value is management by project stakeholders in the construction industry. These definitions, therefore, focus on value management as a system thinking approach with the specific purpose to optimize value. In these definitions, value management focuses on a function aimed at minimizing cost (Chan & Kumaraswamy, 1997).
A critical evaluation of the above definitions shows a departure from other perspectives on value by emphasizing on cost. However, one important conclusion drawn from the value management defintions is that it provides a common framework on which project stakeholders base their decision-making when seeking for a solution to a problem. In addition to that, value management emphasizes on effective communication between parties involved in project development besides optimizing the cost function when implementing a construction project (Dell’Isola, 1982). Thus, value management optimizes on cost and communication in a construction project. Communication, as stated elsewhere in this paper is a critical component that enables understanding of project objectives, conflict resolutions, and a common understanding of the specific value desired by the end user (Dell’Isola, 1982). In addition to that, value management calls for project stakeholders at different levels of project implementation to endeavor to emphasize on project value to achieve project success (Dell’Isola, 1982; Yeo, 1993, & Kelly & Male, 1988).
From the principles of value management, Lincoln & Guba (2000) view value from the perspective of the correlation between cost, the ultimate impact of project design, and the decision making process that is enhanced through the component of effective communication. Thus, effective implementation of value management is on a framework involving effective communication, cost, and project design principles (Cheah & Ting, 2004).
On the other hand, it is important to note that value management thrives on objectives widely understood and accepted by each stakeholder in project undertaking. In addition to that, the function that correlates value in a value based management framework specifically draws its strength from the need to minimize and where possible reduce waste when project stakeholders are implementing a project. In addition to that, the value management function optimizes cost by reducing unnecessary expenditure and endeavors to create opportunities to reduce cost and increase value. However, there is need to test the basis for the value management assumptions (Cheah &Ting, 2004).
According to Lincoln & Guba (2000), one of the effective strategies to implement value management is the compartmentalization of a construction firm. Compartmentalization emphasizes on enhancing project value throughout the firm’s management structure and calls for a concerted effort at departmental levels to reduce waste and duplication of functions to achieve the ultimate goal of project value ((Cheah & Ting, 2004).Thus, value management is a strategy that endeavors to provide solutions to problems based on the economic sense of a project. However, to achieve project value, value management emphasizes on the following methods:
- By identifying unnecessary expenditure within a project, a departmental or within the management of an organization or a firm working in the construction industry and putting in place measures and communicating these measures throughout the organization on the best methods to minimize the expenditure (Cheah & Ting, 2004).
- Identifying best methods to challenge any assumptions made on all aspects of project implementation beginning from the design level to the implementation of the project (Barton, 2000).
- Being creative and innovative in value creation while providing innovative solutions to project design to ensure cost maintenance at the bare minimum while ensuring effective use of the communication component as a common function when implementing a construction project (Fan & Shen, 2011).
- Endeavoring to promote innovative solutions based on the communication function.
- Endeavoring to optimize the usage of resources in a construction project by identifying the best method to reduce costs at all levels of project implementation lifecycle while maintaining quality attributes.
- Value management is a strategy to save expenditure in terms of money and energy requirements for a construction project during the implementation process (Fan & Shen, 2011).
- Ensuring continuous communication within and outside of a project stakeholder continued usage as a critical tool in the implementation process.
Importance of value management
Winter et al, (2006) and Green (1990) have conducted research into the construction industry and have endeavored to identify the importance of optimizing cost based on the strategic use of different methods at management, project, and the entire organization levels (Green, 1990). Typically, according to Lincoln & Guba (2000), research as shown that value management is critical particularly in the construction industry as it comes with a number of benefits. Some of these benefits and the main purpose of value management are listed table 1 below:
Adopted from Green (1990) and Lincoln and Guba (2000).
Value management, as has been argued above, focuses on communication as the key component in the management strategy. Value management focuses on team building and team dynamics, organizational theory and psychology, and other strategies that focus on economic and cost restructuring. Kelly and Male (1993) have shown that communication plays a critical role in enabling clear understanding between all stakeholders involved in a project, such as enabling communication in a team to enhance team dynamics (Lincoln & Guba, 2000).
However, as discussed above other researchers enforce the fact that value management is exclusively a problem solving strategy using the communication component as a vehicle to achieve value management objectives. Thus, the entire focus of value management is to endeavors to minimize costs and economic restructuring as one of the methods of achieving value in a project (Lincoln & Guba, 2000). However, value is only identifiable in a project if costs and economic implications on the project stakeholder show evidence of being minimized based on the concept of value management. In addition to that, project stakeholders show utmost interest in a project if their interests are catered for and in particular, when the cost of investment is low while the profits or gains from a project are high. It is important to note therefore that a strong correlation exists between value management and the perspective of project stakeholders towards this management strategy (Lincoln & Guba, 2000). Moreover, if the stakeholder’s perceptions about value management strategy management approaches that do not factor value management, then little hope of adopting the value management strategy into an organization can be banked on (Kelly & Male, 1993). Thus, it is important to review some of the benefits of value management as a driving force behind the need integrate the value management strategy. According to industry research reports, Kelly and Male (1993) assert that adopting value management comes with the following benefits:
- Value management provides a clear understanding of project objectives, project costs, restructuring, and other issues related to successful project implementations.
- As mentioned elsewhere, value management enables project stakeholders clearly define project objectives and goals that are commonly agreed upon by all parties in a project.
- On the other hand, the need to make a clear definition of quality and performance measurements and standards agreed upon by the project stakeholders at every phase of project lifecycle relies on a value management framework.
- Based on a value management framework, researchers have noted that companies and particularly the top-level management are able to make clear briefs about all aspects of project progress and management.
- The construction industry projects are capital intensive and the risk of experiencing cost overruns is a real concern for project managers. It has been proven in industry that capital funds savings as resulted from the use of value management as a management strategy in construction projects.
- A successful construction project is an aggregate of different tasks effectively carried out. Thus, implementing a construction project based on the concept of value management has resulted in operational efficiency at different levels of project implementation.
- Team dynamics as already mentioned elsewhere is one of the benefits realized in practice in the construction industry. One of the attributes of team dynamics is team building (Barton, 2000). Team building as one of the benefits of value management is based on the ability, based on the concept of value management, to create an environment of shared understanding between team members, reduce and minimize the risk of conflicts between team members and within the whole team, and encourage an attitude of problem ownership within the team members. In addition to that, value management integrated into an organization enables team members become innovative and creative by adopting and testing the consistency of new ideas with the expectation of improving project outcomes. On the other hand, project participants need continuous and dynamic enhancement their skills for effective fulfillment of project objectives. Thus, value management provides a basis upon which team members in a project can enhance their skills. The ultimate benefit when team members involved in project implementation is to save on development time and better value for the final project product. Typically, therefore, team members attain between skills on achieving project objectives based on the theoretical proposition and application of VMI as discussed in another section of this paper (Barton, 2000).
Soft System thinking
From the foregoing study, value management focuses heavily on the best methods to optimize the overall cost while minimizing the target cost. Thus, the cost function always remains at a minimum (Checkland & Scholes, 1990). To attain this objective, a paradigm shift in value management based on soft system thinking bears significant implications on value management. A research paper by Checkland (2000) shows that soft system thinking is a methodology that benefits both public and private undertakings by endeavoring to factor the customer or end user perspectives in system attributes. Thus, the customer or the end user of a public or private utility has a share in decision making at the onset of project development, and in this case, at the design phase. Checkland (2000) argues that soft system thinking has the flexibility desired in decision-making and objectives formulation in different environments.
According to Checkland (2000), soft system thinking draws on finding or establishing the problem under investigation based on political or cultural values. Political and cultural values strongly influence the decision making process at the management levels that strongly influence the outcome in value management. Other studies agree on a common consensus based on common objectives, perceptions by the end user or the customer on the problem under consideration, and the political views and objectives. One distinguishing point and key at this stage is the problem under consideration. Thus, problem identification becomes a key point in soft system thinking. On the other hand, criticism of the perceptions about problem identification shows the approach as a distinguishing factor in value management. Thus, these approaches arrive at a common consensus that the key point is the problem to solve. In addition to that, these effects are the soft system thinking issues of conflicting objectives that seem to thrive on the contrasting political views and other internal problems (Jaselskis & Ashley, 1991).
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At this point, it is important to crystallize hard system thinking and soft system thinking in looking for optimal solutions to problems in the construction industry. Soft system thinking is therefore an approach that managers and other project stakeholders endeavor to factor in order to arrive at a structured approach to value management (Dell’Isola, 1997). The method is applicable project wise, covering all project team members such as designers, technicians, management, and operational level employees. On the other hand, hard system thinking thrives on technical specifications of a problem without the flexibility associated with soft system thinking. However, both approaches are complementary when faced with real life situations and problems that demand cost effective value engineered solutions (Dell’Isola, 1997).
Once the problem definition occurs based on soft system thinking, the solution to the problem is formulated on different system models specifically tailored for identified problems. Soft system thinking draws on other phases that are used as solutions points to the problem under consideration (Barton, 2000). Thus, the cultural perspectives and political views are made integral to solving the problem already identified within the system. On the other hand, the soft system-thinking paradigm calls for a feasible solution to the identified problem for which the solution seeking forms the fundamental part of the paradigm (Jaselskis & Ashley¸1991)
According to Checkland (2000), conflicts are bound to rise while seeking for solutions to the problem at hand. These conflicts take cultural and political dimensions in addition to conflicting interests specific at the design and commencement of a project. Drawing from the initial findings on value management, this stage calls for the communication component as a vehicle to enable understanding and conflict resolutions. Once the conflicts have been resolved, a consensus is arrived at which sets concrete foundation for progressing further into the project development process with complete agreement on the project development process (Dell’Isola, 1997).
SMART Value Management
Value management is an important component in the construction industry as the industry is one of the main contributing factors to a successful economy. Thus, one of the tools used in value management is SMART (Simple Multi-attribute Rating Technique) (Newall & Simon, 1972). Typically, SMART is one of the utility theories used to select among different competing options to gain the best value (Checkland & Scholes, 1990). From another perspective, given that one of the objectives of value management is to identify the best strategy to solve a specific problem, SMART is one of the best options and theoretical frameworks upon which such problems are structured while seeking optimal solutions. One of the critical distinguishing elements specific to the SMART approach is soft system thinking. Soft system thinking draws on the basic assumptions when making requisite decisions.
Typically soft system thinking allows top-level management of all project stakeholders to make decisions that are based on a common understanding of knowledge and consensus approach to a solution for a specific problem. Thus, the communication component is an essential element in decision-making for all project stakeholders making a common decision for a specific problem. In the practical sense of the paradigm, SMART emphasizes the gains made and endeavors to sustain the gains. However, the SMART paradigm lays special focus on investigations that enable appropriate decisions making to address specific problems with optimal solutions based on a common consensus. The common consensus draws on appropriate communication between project stakeholders. Thus, besides it being a theoretical framework upon which problems get optimal solutions, SMART reflects a methodological approach for managing value in the practical sense of value management (Newall & Simon, 1972).
One of the paradigms that SMART draws on in its framework is a consensus building at the design phase. Typically, at this stage, frequent meetings are held with special emphasis on the project problem identified at the design phase. Meetings are held with all project stakeholders where communication as an essential component that plays an important role in enabling understanding between the parties involved in the design. After that, stakeholders agree on a common consensus with the initial stage calling on the integration of VMI as a tool to evaluate the appropriateness of proceeding with the proposed project to the next phase. On the other hand, VMI enables decision making by the client, other stakeholders to evaluate the appropriateness of investing in a project before financial commitments are made, and the project commences. In any case, the primary objective of VMI is to ensure clear communication and understanding of project objectives to the client and other project stakeholders before the commencement of a project (Chan & Kumaraswamy, 1997). It is therefore appropriate to discuss the basic stages of VMI that project stakeholders and in particular, the client has to factor when making a decision to commit finance into a construction project.
- Stakeholder identification
- Formulation of project objectives
- Formulation of the value tree
- Creativity and innovativeness
- Evaluation of the current status
VMI has been identified as critical in value management. VMI is a value management technique that compliments other techniques in the construction industry with phases discussed below.
According to Lincoln & Guba (2000), stakeholder identification plays a critical role as one in representing all project stakeholders at the top-level hierarchy. Typically, at that level, a common consensus is arrived at in relation to project objectives and progress. It is also important at this phase to ensure a common understanding of the problem demanding a particular solution and other expectations. One critical element that forms a specific function is the communication function (Chan & Kumaraswamy, 1997).
Formulation of project objectives
Project objectives provide the basis for implementing a construction project. The client and other project stakeholders should comprehensively understand project objectives during the initial stage of project progress. Thus, there is need for the client and other stakeholders to identify project objectives establish a common understanding on the most appropriate objectives by all parties in the project. In addition to that, project stakeholders should formulate project objectives that all agree as the basis for implementing the project. After the client and other project stakeholders have established common objectives, the entire team proceeds to the next phase of formulating the value tree.
Formulation of the value tree
Decision-making is one of the most important drivers in directing a project towards success. In theory and practice, decision-making is based on different frameworks, and one of them based on value. Therefore, most project teams have realized the importance of making decisions based on the value hierarchy that draws on the value tree (Barton, 2000).
The core competence of the value tree to management in this case is to focus on project value amid competing options to select the best option that is cost effective. In addition to that, the options in a value tree are an aggregate at the top of the tree in terms of project objectives for the entire project. Once the objectives are clearly spelt at the top of the tree, it follows the phase for breaking the objectives into sub-objectives. At this point, the sub-objectives are evaluated and a clear understanding is settled upon as by all project stakeholders. Thus, the process demands a critical and detailed evaluation of all objectives and sub-objectives to attain the best economic and financial value form a project by all stakeholders. In this case, communication forms the basic component in enabling understanding by all project partners (Chan & Kumaraswamy, 1997).
In practice, it is at this point that a shared understanding and consensus between stakeholders paves the way for the next phase. At this stage of project design, the design optimizes on value, which becomes an integral component in the project. In addition to that, the performance criteria of the project is valuated at this stage to ensure standards for quality and performance are generally agreed upon by the entire force in the project implementation lifecycle. It is at this point that objectives generation to guide the implementation process occur (Checkland, 1981).
Creativity and Innovativeness
Creativity and innovativeness form the basic brainstorming stage for stakeholders to evaluate the level of attainment of project objectives. However, creativity plays a critical role in enhancing the consensus arrived at (Checkland & Scholes, 1990). Thus, creativity and innovativeness leads to the next phase of project implementation. In all these phases, value management plays the central role around which stakeholders make their decision. After the creativity and innovative phase, the evaluation of the status of the decisions made to enhance project value commences (Checkland & Scholes, 1990).
Evaluation of the status
A this value management stage, all ideas generated in previous stages are examined in relation to value based on economic and cost feasibilities. Each stakeholder represents one’s ideas, which are likely to create conflicts of interest. Thus, at this stage, a thorough evaluation process takes place to earmark the project for development. It is therefore important to note that earmarked projects reflect the entire value attributes agreed upon by all stakeholders (Barton, 2000).
It is important to note that value management is an iterative process. Thus, at the development stage, project stakeholders settle again to evaluate the project earmarked for development. The iterative nature of value management is to ensure project merited for development have no lagging issues to attract later conflicts and other problems during the implementation process by any stakeholder. At this phase, project attributes that reflect value and project objectives are agreed upon by the client to make stakeholders make financial commitments. It is however important for project participants and especially the top-level management to have a clear understanding of project objectives to enable accurate decision-making. That is partly because value management as a concept to manage project value does not provide an optimal solution, but should be perceived as a tool to enhance decision making in value management. In addition to that, it is important for the project manager to ensure the project team is well skilled in project management techniques so that decisions made reflect a combination of knowledge and skill on the value management framework.
Critical Success Factors in Value Management
As a management approach, value management endeavors to draw on the need to optimize limited resources as a management technique to optimize outputs from the entire product lifecycle. Of critical importance is the view that most literature generalizes critical success factors associated with value management without going deeper to identify the correlation of the factors with their strength in relation to value management and project success (Chua, Kog & Loh, 1999).
As has been mentioned elsewhere in the paper, several authors only associate and limit value management to product cost or minimal project costs. Thus, the focus is solely cost without due consideration of other variables such as product quality. However, other authors consider the issue of design along with cost and the associated problems the product or project for which the solution is under consideration. Thus, both sources of knowledge significantly contribute to the successful value management strategy (Chua, Kog & Loh, 1999).
It is important at this stage to view value management in the light of product and project design, by critically evaluating nominated factors in the industry based on available research literature. Chua, Kog and Loh (1999) report that previous value management methods laid emphasis on functional analysis, which deviates from the traditional cost oriented perspectives of value management critical success factors. While other authors challenge the cost reduction approach, others view the workshop as a critical factor in value management. The workshop is viewed as the sole contributing factors to success as most of the activities such as the personal characteristic of the participants, the technical competence of the facilitator, the role of the stakeholder, and the input from the design team critically influence the output from the project. That approach arguably is a limited to internal factors but fails to look at other factors such as continuous improvement programs that are external to the workshop and which are iterative in nature, internal, and external studies on value management, and training needs for stakeholders for effective implementation of value management within the stakeholder organizations. To that end, therefore, it is important to draw from different sources of knowledge that are complementary to the study. According to Male et al, (1998) the complimentary critical success factors provides a perspective that distinguishes success in the light of the following factors:
- Value management (VM) draws across different disciplines with a combination of different skills.
- The facilitator is central in enabling successful value management and needs therefore value added skills.
- VM is a structured process.
- Success draws on the knowledge of value management in the part of project stakeholders in contributing to the critical success factors.
- Decision-making is critical in providing a headway for project progress towards successful decisions.
- Prior preparations to participate in VM workshops are a pointer to one of the critical success factors.
- Functional analysis is one of the critical issues and factors to consider as a contributing factor to critical success factors.
- Top-level management is one contributing critical success factors in value management.
- A plan drawn and agreed upon by the entire team of project stakeholders to implement decision outcomes from the workshops is another critical success factor (Chua, Kog & Loh, 1999).
- However, each of the factors mentioned above have different levels of contributions and impact to the success of a project. It is arguable, therefore that each critical success factor has specific implications on the success of a project. While in theory, these critical success factors are central to implementing a successful project, yet it is important to have a clear understanding of earned value in relation to the customer, the product, and the project stakeholder. In this case, the product is the result of the utility created because of the investment made on the product (Chua, Kog & Loh, 1999).
Several authors have attempted to distinguish between value engineering and value management in the construction industry. One such definition views value engineering as “a disciplined procedure directed towards the achievement of necessary function for minimum cost without detriment to quality, reliability, performance, or delivery”. Other authors view value engineering as a Value Engineering (VE, or Value Analysis) is a management technique that seeks the best functional balance between cost, reliability, and performance of a product, project, process, or service”. A synthesis of both authors shows value engineering as a tool to enable project managers and other stakeholders optimize the value function to optimize economic and cost values in a project for all stakeholders (Male, s., et al., 2007).
Thus, value management emphasizes on problem solving with the communication component being central to the value management strategy. On the other hand, value engineering focuses on the project “job plan” and emphasizes on every aspect of the project lifecycle (Newall & Simon, 1972). Thus, each phase of the project lifecycle has to be value engineered to reflect design and redesign by focusing on problem under consideration. From the above definitions, it is clear that the entire lifecycle of a project remains the focal point to be value engineered (Romani, 1975). To fully comprehend and apply value engineering in the construction industry, it is critical to formulate clear objectives and incorporate specialized technical personnel, and other experts in different disciplines to borrow and combine knowledge from the disciplines to analyze a project from the cost and design perspectives (Novak, 1998). These perspectives are the evaluated on the theoretical proposition of the value tree. On the other hand, it is important, while stakeholders endeavor to incorporate value engineering into the entire concept of project management to realize and distinguish between traditional, traditional, and modern approaches to value engineering (Male, s., et al., 2007).
Studies in the construction industry by Sanvido, Parfitt, Guveris and Coyle (1992) indicate that traditional and modern approaches to value engineering draw on system thinking approaches that endeavor to search for efficient methods of implementing a project by searching for and formulating objectives that enable efficient utilization of resources. In addition to that, the traditional approach provides a framework upon which a project is value engineered on the assumption that the problem is well structured. Different authors argue in favor and against the assumptions on which the problem solving strategy based on value engineering approach is based. These arguments tend to indicate that different system thinking strategies and methods provides different solutions and flexibilities to solving problems. These approaches of system thinking include the soft and hard system thinking approaches. Hard system thinking approaches focus on well-structured systems operating on well-defined problems. However, hard system thinking as one of the traditional approaches of value engineering tends to fail in practical situations.
Typically, one of the propositions that identify system thinking as an approach that fails in the real world mainly borrows from the real world experience where systems are at times dynamic and change unpredictably with time. On the other hand, seeking solutions for problems based on the value engineering strategy sometimes fails to reflect on the problem, as some of the problems are not well defined and structured and fail to reflect the actual problem a solution is sought for. Thus, the system thinking strategy has eventually settled on another approach that tends to capture deficiencies inherent in the hard system thinking approach. Thus, that compels the adaptation of system thinking based on a methodology that allows for flexibility in perceiving a problem.
Typically, the entire solution lies in the soft system thinking methodology. Soft system thinking endeavors to factor flexibility in problem solving while not looking at a problem from a universal perspective. On the other hand, research has shown the difference between both approaches to system thinking eventually end up being complimentary in providing optimum solutions to a problem. Hard system thinking focuses on optimal solutions to technical problems while soft system thinking optimizes the human factor in problem solving. Thus, for eventual success in solving a social problem, it is necessary to strike a balance between hard system thinking and soft system thinking paradigms. It should be a shared reality. Having established a common ground upon which hard system thinking and soft system thinking strike a balance for optimal solutions, a typical analysis and evaluation of effective and ineffective value engineering methods has to be crystallized through the following study (Male, s., et al., 2007).
Effective Value Engineering
An overview of value engineering shows that value engineering to be a technique that thrives on the proposition to optimize cost and other project resources based on a specific function. However, from the above studies, limiting value engineering to just the cost function tends to leave other elements that have strong and significant contributions to the entire project value. In effect, the cost functions narrow value engineering and seems not to illustrate the need for value engineering if other management methodologies can optimize cost on a project without engineering project value. Therefore, according to Dell’Isola (1982), value engineering becomes effective in both theory and practice when other functions play roles in creating and optimizing value for the target cost. Value engineering becomes effective the quality function, the price function, which might translate to the cost function, and the functionality of the final project are factored into the entire value engineering process. That makes value engineering a complete functionality of a single whole of a project (Kepner & Tregoe, 1981). It is therefore important to revisit some of the core details that define value engineering as a management process, which endeavors to optimize value for a target cost.
Thus, management’s endeavors to optimize value and draws on a specific function to attain the objective of minimizing cost. On the other hand, as has already been coined, value engineering is defined as “a management technique that seeks the best functional balance between cost, reliability, and performance of a product, project, process, or service” (Dell’Isola, 1982). Indicating the approach focuses on other management, reliability and performance as key elements that define value engineering (Lincoln & Guba, 2000). Other definitions of value engineering already mentioned in the introduction section also agree on the proposition that value engineering is an approach to minimize cost and optimize other project outcomes. Other literature reviews view value engineering as a process and not a program.
Value engineering in another perspective and seen as an ongoing “methodology by cross functional teams to achieve organizational objectives” Cross-functional, in this perspective draws from different disciplines and expertise to arrive at a consensus on the best problem solving strategy in pursuit of specified objectives. Thus, a sanguine argument in favor of value engineering as a completely new approach to system thinking that triggers complete overhaul in system thinking particularly at the management level. It embraces alternate designs that capture innovation and endeavors to create optimal value in a product or approach to management style, leading to disruptive innovations in the style of management processes with the ultimate goal optimizing the cost and management approach to solving a problem at the least costs. Thus, there is need to examine effective value engineering approaches to enable managers and other project stakeholders make informed and well-calculated decisions at all levels of project progress to avoid conflicts, cost overruns, conflicts, poor project designs, and other project problems.
From the above-established basic definitions of value engineering, and having established a common understanding of value engineering, it is important to look at value engineering by examining the factors that make value engineering an effective management strategy (Dell’Isola, 1982).
The effectiveness of value management as a tool draws on systematic application of project management techniques widely tested and applied in industry aimed at a project to reduce cost while maintaining value at the lowest overall project cost. Thus, function draws on the uniqueness of the attributes of a project that makes the customer or the end user experience utmost benefits at the minimum costs.
Thus, to be effective, value derivation as to occur at the earliest phase of project lifecycle by targeting the design, making the project become effective in terms of cost, making it further experience project success factors. While different authors seek to identify effective value management with selecting the best alternative among competing alternatives, it is important to make a consensus on a common ground for effective value management (Dell’Isola, 1997).
Thus, value management becomes more effective when the following functions become integral of the entire whole (Ferry & Brandon, 1984).
Effective Value Engineering=Optimal target cost+ Quality Function Deployment.
Target cost=target price-expected profit (Ferry & Brandon, 1984).
Based on the above assumptions, value engineering becomes a sub-discipline of the quality and cost functions. Thus, value engineering in totality draws on the planning matrix, the design matrix, the operational matrix, and the control matrix. In addition to that, both attributes and approaches seem to define value engineering as viewed and discussed above.
While investigating the attributes of value engineering, it is important to examine and model the quality function deployment to inform the inquiry.
According to Pearson, Alidaee, Rego, and Kochenberger (2003), quality function deployment (QFD) plays a critical role in effective value engineering by factoring or capturing project attributes or end user expectations and translating these expectations into technical attributes of a project for each phase of project development lifecycle. Brash (1995) in effect argues that QFD factors cost into the house of quality through effective management of cost at the design phase (Pearson et al, 2003).That however, indicates a knowledge gap that is critical in formulating a solution to a problem at the earlier stages of project development and in this case at the conceptualization stage (Pearson et al, 2003). The knowledge gap is that several writers only consider the design phase without associating other factors identifiably characterized by QFD.
Ineffective value engineering
Ineffective value engineering, on the other hand, has no basis on salient information, which informs the project manager and other stakeholders on what should be done, what to be measured, the impact of the measures, alternative measures, and implications of the measures to optimize value. Without considering alternative measures, value engineering becomes ineffective. Other approaches making value engineering ineffective include poor measurement scales, lack of a job plan, failure to integrate the “why” and the “how” inquiries and failure to integrate follow-ups with the implications on the functions or variables used in value engineering.
Value Creation Processes
Value is the principal point of focus of concern in any project. The customer or the end user perceives value differently. In the construction industry, value is characterized by a project which meets end user expectations in terms of the functionality of a utility which is attained at the lowest conceivable cost without compromising the quality of a product or utility (Green, 1994). Project managers and other stakeholders view value from the cots benefits gained after implanting a given project. However, there is need to factor the needs of the customer and the project development firm in striking a balance on the best perceptions about value. It therefore is arguable that failure to integrate the concept of value engineering in project has led to problems with project quality and cost overruns, failure to factors issues related to proper project management, and failure to factors the real value expected from a project at the end of its implementation (Green, 1990).
Borrowing from other industries, value creation is essential in factoring quality into a product to meet end user needs and expectations. However, the parameters that define the value creation process that captures essential project components that include project stakeholders and other essential project components. Thus, the essential model of value the value creation process involves an effective staff. An effective staff should include the top-level management and other technical experts involved in project development (Green, 1990). On the other hand, value management process incorporates the technique and skills of other technical staff with other experience on project management. Borrowing from the software industry, value consumes tome and the time should be effectively applied in value creation to optimize time and cost respectively (Green, 1994).
On the other hand, it is important to consider value creation in terms of rework and project redesign at every phase of project development lifecycle. However, rework should be cost effective and optimize cost while creating value with the best and cost effective tools. In addition to that, the rework cost and time considerations are important in making decisions on the resulting value of a project. On the other hand, rework might lead to cost and time overruns, making it an essential component to consider rework against project schedule. On the other hand, value creation captures the effectiveness of a team in terms of its productivity. Productivity becomes an effective teamwork tool when team size is made a function of average team productivity in relation to the minimum composition of a team. In a team, and to be productive, communication forms a key component in determining the effectiveness of a team (Green, 1990). An ineffective team experiences, at most, poor communication and is always overly composed of a big number of participants. Thus an effective team should unusually consist of a small number of members. Typically, in the construction industry, effectiveness in teamwork should be built on a small number of experts drawn from different industry experts (Green, 1994).
On the other hand, to develop effective value, it is important to gain a clear understanding of the definition of value in relation to a utility in the construction industry. Researchers in the construction industry and other industries view value as an estimate of the current value of a product with all specification features were it delivered at the time value was considered. On the other hand, other researchers try to calculate value based on a profitability index in which they try to determine the ratio of the present value with the current cost of the project. On the other hand, to factor value accurately, it is important to incorporate the element of earned value, expected or planned value, and the actual cost of a to accurately and effectively estimate the impact of the value creation process. In this case, planed or expected value is based on the project budget up to a given point in time. On the other hand, earned value is the actual budgetary allocation for the actual work done on a project. In addition to that, the actual project cost in this case is the actual value of the money or cost incurred to bring a project to its completion (Green, 1994). A combination of the three variables has significant impact on the performance of a project in relation to project value. In totality, therefore, project value is based on performance metrics illustrated in the following figure.
Typically, the performance of the project is based on the metric related to schedule and cost variance. According to the above illustrations, cost and schedule performance form the basic component in defining the primary metrics of a value creation in the process. In the value creation process, it is important to factor the quality of a project baseline, the actual performance of a project, and management involvement in determining project costs and other influencing variables.
On the other hand, to establish a balanced view and approach to the value creation process in value management during the lifecycle of a project, it is important to consider the validity of underlying theories in project management as valid. One important argument underlying the proposition to the validity of the traditional approach to project management is that value management is a process, though other authors view value management as a set of programs that heavily draw on the concepts of traditional value management techniques. However, the value creation process tends to show a paradigm shift from the traditional project management techniques by drawing heavily on the perception of the customer or the end user of a specific project (Institution of Civil Engineers, 1996). Thus, the perceptions of value creation processes have its baseline on a radical paradigm shift, a departure from the original perceptions on project management.
However, a common understanding draws on the fact that the customer or the end user is the sole point of focus when endeavoring to create value in the value creation process. In addition to that, above arguments, further implications on value creation processes draw also from the concept of formulating a framework that defines the customer and the end user’s business needs. In this argument, therefore, one easily concludes that a company does not create value but mobilizes customers to create value based on the offerings from the target company. However, a critical evaluation of the entire value creation processes sees both the company and the customer as contributing factors in the value creation process. Thus, the company and the customer combine in creating value in the value creation process. Thus, the latter argument provides balanced views of both perspectives i.e. the customer, and the company or the construction firm. Thus, the above logic is applicable in project programs and other project processes (Institution of Civil Engineers, 1996).
However, a criticism of the above authors draws knowledge points as baselines for the value creation processes. The latter arguments seem to be a flattened approach to the value creation process while the former provides a framework that is hierarchical and focuses on cost. Nonetheless, both approaches, when amalgamated, provide a strong baseline upon which the argument on value creation processes act as learning points. In addition to that, both approaches provide a common understanding and logic for value management (Institution of Civil Engineers, 1996).
After an analysis of the value creation process in the context of a construction project, it is important to examine the techniques for implementing and analyzing value to serve as important tools in the value creation processes. Typically, the importance of analyzing value at the end of every phase of project lifecycle is on the principles of value management that demand the target cost to be minimized to the lowest level while maintaining other qualities to the satisfaction of the customer. Thus, minimizing cost, in this case should not compromise quality but maintain the operational functionality of a product to the expectation of the end user. Different researchers have coined different strategies for minimizing value in a project. Among these authors, include Lehman and Reiser (2000). By emphasizing heavily on the lean manufacturing concept, Lehman and Reiser (2000) have coined four point approaches to analyzing value, a concept worth borrowing and integrating into value management. The motivating factor impelling one to borrow from the concept of lean manufacturing are some of the striking similarities of the concept between value management and key some points that define lean manufacturing.
According to Lehman and Reiser (2000), value analysis is a four-point process that focuses on:
One basic component of value management at the commencement of the value process is a soft system strategy that captures the customer’s perceptions of value. In addition to that, value management calls for the stakeholder to come together and determine the cause of action such as formulating a design agreed upon by all stakeholders as the basis for moving forward. On the other hand, according to Lehman and Reiser (2000), the first step in value management is to establish and identify the key contributions of stakeholders by identifying their responsibilities. Thus, that reinforces the rationale to borrow from the concept of lean manufacturing as coined by (Lehman & Reiser, 2000). In addition to that, project attributes are examined to determine the best attributes to factor into the project.
The above follows the processes of establishing project objectives that are agreed upon by the stakeholders and any constraints on the objectives and project attributes. In addition to that, it is important to establish available resources in terms of people to be involved in construction work, the project schedule, and the site on which the construction process takes place. All these factors have significant implications on project value in relation to cost and other target cost influencing variables.
It is important to note that value in a construction project cannot be attained without the active participation of the workers. Thus, it is important, as a practical measure to ensure that the job site oriented goals that particularly impact of the variables that influence value in relation to the target cost be identified (Institution of Civil Engineers, 1996). In addition to that, these variables are made key function points for value creation and analysis. On the other hand, one key factor that has direct implications on value is productivity. Productivity is an important function as it relates inputs to outputs in a production process. In this case, vale relates to factors of production with the strong element of labor and capital and the outputs in terms of the product or desired outputs to meet project goals (Institution of Civil Engineers, 1996).
Value is attainable when parties to the project agree on common points or attributes of a project with special emphasis on project objectives. These are facilitated by holding regular meetings to examine and evaluate the level of project progress and fulfillment in line with project goals and objectives. On the other hand, it is important at every stage of project lifecycle for stakeholders to hold a common view of the value expectations to avoid sources of conflicts that might result in unanticipated loss. Typically, that is bearing in mind the basis of value management and value engineering and the perceptions of the customer. Here, it is worth noting that value engineering and value management concepts always converge, despite the hard and soft system thinking methodologies adopted by both approaches, at minimizing the target cost while optimizing value for the customer or the end user (Institution of Civil Engineers, 1996).
On the other hand, it is always important to establish and compare desirable attributes in a project with project progress to ensure no deviations occur during the implementation lifecycle.
The project implementation team should always compare the actual master plan with the plan under implementation to ensure value is maintained and project attributes are in line with previously stated objectives (Institution of Civil Engineers, 1996).
Reporting forms an important element of value management and implementation in a project as regular reports play a critical role in informing the implementing team on the level of project value attained and the relationship between cost and value. In addition to that, other factors that contribute to value creation and implementation are examined for consistency and continued availability. These include productivity, schedule, areas that need to address, reviews, and plans to attain the stated goals and project objectives (Institution of Civil Engineers, 1996).
According to Lehman and Reiser (2000), these factors bear a significant relationship with the gradual outcome on project value from a practical point of view. However, these is on value and the best approach to implement value have been formulated. However, these theories have different and are viewed from different perspectives and disciplines.
On the other hand, based on the above procedures, it is important to review effective value implementation in every phase of project lifecycle to optimize value against the target cost. Researchers have endeavored to examine different approaches of value management and in particular strategies to inculcate value into a project. Shi (2010) provides another approach to value implementation in a project by providing a value adding path map approach. Shi (2010) presents several arguments and propositions to support the value management as one approach adding value into a project. According to Shi (2010), value is viewed in the form of project success already discussed in another section in this paper. Typically, Shi (2010) and Lehman and Reiser (2000) agree that value as the ratio between the function of a particular product and the cost of that product. Thus, in project management particularly in the construction industry, value is the ratio between the functionality if the infrastructure or utility against the entire project cost.
To fulfill the objectives of the construction project several variables play critical roles in bringing the objectives to their gradually fulfillment. On the other hand, Lehman and Reiser (2000), and Shi (2010) view other methods of measuring value at every phase of value creation and implementation as return on investments, management ability and competence, and a balanced scorecard approach. Thus, to create value and implement is while evaluating the level of implementation and impact on a project depends on critical success factors. These factors are overly dependent on customer perceptions about the product, in this case the developed utility. On the other hand, critical success factors should also reflect customer or end user perceptions about a product. In all these, value must be maintained based on the overall project costs. Shi (2010) has coined to this effect, the Value Adding Path Map (VAPM) as a better value implementation approach. In this case, the VAPM borrows and integrates both the hard and soft system-thinking methodologies. In Shi’s (2010) research results, both the soft system thinking and hard system thinking methodologies when made complimentary produce such desirable results as illustrated in the diagram below.
Thus, the need to configure a project as illustrated above. According to the findings, it is clear that both system-thinking approaches play a significant role in enabling management and other project stakeholders attain the kind of value to reflect the skills of top-level management (Kelly & Male, 1993). In effect, value can be effected by training the management on the need to optimize value and strategies to achieve value based on target project costs (Jaselskis & Ashley, 1991). Thus the deviations from original or budgeted costs should be made as minimal as possible and be within agreeable range. On the other hand value management and particularly the implementation of value should be carried out on regularly training programs for the top-level management and other project stakeholders (Johnson, 1998).
On the other hand, the need for regular programs to train managers and other project stakeholders who have a share in project management on value implementation defines another approach is another identifiable factor critical in value evaluation and implementation (Kelly & Male, 1988). It is therefore important to review strategies and tools used in project management and which can be borrowed and integrated into the entire project value implementation process. Typically, based on the above arguments, it is possible to perceive the strategy as a value implementation lifecycle.
It is important to note that value analysis and implementation draws on modern techniques and tools sued to evaluate project progress in terms of inputs and other variables. These tools include software management tools such as cost management software. In addition to that, the cost management software is a powerful tool when complimented with project management techniques and value management objectives (Fan & Shen, 2011).
To completely implement value in a construction project, it is critical that other software tools complement the cost management software. Shi (2010) has identified risk management applications, quality management software, communication management applications, and the use of templates and procedures to effect value implementation and analysis at every level of project lifecycle.
Thus, Shi (2010) defines value implantation at the management level mathematically as:
Value (Pij) =value (Pkk). In this case k can be calculated based on the following mathematical expression as k=min (i, j). Thus, the value of project implementation is calculated based on the money spent on the project and other variables such as time spent to execute the project. Money and time have strong implications on the value of the project, as these are strong functions that influences the project path.
Research into the causes of project failure to identify and factor the value function has been due to management spending more time and resources in enhancing the hard system thinking without regard for the soft system thinking approach. On the other hand, the top-level management of a construction firm might spend more resources and time to enhance the soft system thinking without much regard for the hard system thinking approach. These approaches fail to deliver value if not complemented in the value management process. Thus, the need to complement the soft system thinking and the hard system thinking approaches. Thus far, when both approaches, as discussed elsewhere in the paper are viewed as complimentary, it becomes easy to synchronize both methods into value implementation process to attain project objectives at the lowest cost estimates (Joint Technical Committee OB/6, 1994).
By means of the value adding path map, an organization is always at a string position to capture entire value implantation into the overall lifecycle of a project to attain critical success factors at the minimum cost (Kaming, Olomolaiye & Holt, 1997).
A typical example of the value tree is detailed in the concept of the decision tree illustrated above. In the above example, one intends to install a smoke and motion detector and intends to evaluate the payoff from the system. Thus, a value chain is created for the smoke and fire detector and the motion detector. Typically, based on performance objectives, the payoff of the motion detector is it successfully works is $ 390,000 and for the smoke and detector is $900,000.
The current research on value engineering and value management will use qualitative research technique complemented by a thorough desktop literature review on the problem under consideration. Typically, that is because the current research falls under the tenets of a social research, an inquiry informed using social research techniques (Bartholomew & Knott, 1999). One approach of constructing knowledge within the social sciences is on theories that attempt to explain underlying assumptions about cause and effect. In addition to that, the theoretical framework exposes a problem to a number of explanations that provide the best explanations and option for a particular problem (Shank, 2002). On the other hand, qualitative research will further inform the inquiry by complementing other techniques that may be supplementary to the research. Both approaches will draw on the basic component, qualitative research. In addition to that, it is important to examine action research in the context of the research problems to establish the suitability of action research as a research approach suitably qualified to inform the current study and the intervention of the qualitative factor into the research (Bartholomew & Knott, 1999).
Lincoln and Guba (1985) view qualitative research as an approach that attempts to inquire into the meaning of knowledge on a highly subjective ground. According to Lincoln and Guba (1985), the research will draw from a wide body of knowledge from other researchers who are pioneers in the field of value management by looking at various perspectives of value management, value engineering, and attempt to develop a consensus on both theoretical propositions as a solution to the management problem of value management. Novak (1998) views qualitative research as a method that exhausts available knowledge along a specified line of thought by presenting a holistic view of a complex problem, then conducts an analysis of information discovered in the inquiries into the repositories of knowledge, and endeavors to capture and analyze meaning in a specific situation.
On the other hand, Shank (2002) defines qualitative research from another perspective by asserting that it is a “form of systematic empirical inquiry into meaning”. A comparative analysis of the definition by Novak (1998) and Shank (2002) agree on the view that qualitative research is empirical, naturalistic, and depends on meaning.
On the other hand, different researchers have approached qualitative research in different lights. However, the current research will focus on a desktop literature review to synthesize research conducted on the field of value engineering with associated variables. It will revolve around, the meaning derived from the researches in the context of the current problems, and review a cases study to further inform the inquiry to make a conclusion about the current problem of optimizing value on a target cost (Bartholomew & Knott, 1999).
Results and Discussion
From the research, inquiry focused on desktop published literature reviews on published literature, and cases studies, several established findings on value management aimed at managing the project to optimize the project such that the maximum real value is achieved for the target cost was conducted and revealed a number of issues.
According to the literature reviews, two methods have been identified as complimentary in achieving project value. These include value management and value engineering strategies at the entire project lifecycle. Further findings show that value management and value engineering have unique implications on a project value. On the other hand, different researchers into the construction industry have strongly agreed that value engineering and value management should be complementary in value creation and implementation. On the other hand, value engineering is a management approach structured around the project plan. It is an optimization technique structured around the quality of a product, the performance of the product, the reliability of the product, and project milestones.
In addition to that, value engineering seeks to impress and optimize value by optimally focusing on the economic function of a project (Cheah & Ting, 2004).Value engineering therefore seeks to emphasize on the entire project lifecycle by focusing on the project plan. However, other authors seek to link value engineering with the entire project lifecycle to optimize value. But, it is important to link value engineering with other project variables.Thus, value-engineering endeavors to focus at each phase of the project lifecycle where the entire development phase of a project have to be value engineered to reflect design and redesign by focusing on the project problem under consideration. On the other hand, most authors view value management as a management technique that focuses on the problem to be solved and relies on the communication as a strong component in effecting solutions to problems identified at the project conceptualization stage. On the other hand, the baseline for value engineering and value management are two system-thinking methodologies drawing on soft system thinking and hard system thinking paradigms.
From the above studies, it is clear that value engineering is a paradigm that revolves about hard system thinking while value management is a paradigm that draws on soft system thinking. On the other hand, both paradigms provide a significant variation from traditional management techniques, eventually leading one to develop a perception that implementing value in a project as two pronged. A two-pronged approach requires that soft system thinking and hard system thinking be integrated when implementing project with a balanced approach to optimize both paradigms to optimize project value (Yeo, 1993).
Further findings have shown value optimization for the target project cost is attainable by complementing both value engineering and value management. In addition to that, once integration of both approaches to value management has been attained, it is also important to factor both the soft and hard system thinking paradigms to further optimize value in a project. Thus, value management and value engineering appear from the research to be complimentary for optimal results. On the other hand, according to the case studies focus on above and plenty of published literature on the subject, a number of approaches have been suggested as approaches to integrate into the project management lifecycle to optimize value. A number of factors were established in the process (Cheah & Ting, 2004).These include:
- Implementing training programs at all levels management lifecycle.
- Configuring projects to conform to value and other value related variables.
- Establishing reliable communication between project stakeholders to resolve any problem that might be experienced to impede the implantation of value.
- Establishing good working and reporting relationships in relation to the established communications and reporting hierarchies.
- Conducting regular project meetings to evaluate project milestones in relation to value.
- Evaluating project implementation process with special emphasis on cost optimization, project quality, project functionality and reliability, performance of the final project in relation to customer needs, consensus in problem solving approaches, design and redesign consensus, conflict resolution at early phases of project lifecycle, and project design with special emphasis on customer or end user needs.
- Top-level management commitment to value engineering and value management.
- Communication as the key component that enables understanding of project values.
On the other hand, critical success factors that determine project success in value engineering and value management have to be integral to the entire project lifecycle. Thus, from the findings, the critical success factors are multi-disciplinary in nature, borrowing skill and knowledge from a spectrum of disciplines and knowledge. On the other hand, the inquiry shows that value engineering and value management appears to be hierarchical and highly structure, thus requiring further analysis. To completely implement value at the entire project lifecycle, there is need to incorporate frequent workshops to examine and analyze the degree to which value has been engineered and implemented (Cheah & Ting, 2004).
On the other hand, drawing from case studies of successful and unsuccessful applications of value engineering showed a number of findings.
One of the approaches used to inform the inquiry is a case study of successfully implemented construction projects that have endeavored to optimize value for the target cost. In addition to that, the case study provides a learning point for value engineering and value management at the entire project lifecycle.
This inquiry into value techniques to optimize value for the target cost draws from several industry and practical examples, which have successfully applied value management and engineering as a strategy to optimize cost and value in construction projects. Several industry players have realized the need for value management and have endeavored to adopt and learn from other industries. Case examples in the application of value management include the Southeastern Asia regions, USA, and many other regions in the world today (Dell’Isola, 1982).
This inquiry is informed by a southeast case example on a comparative basis with the USA cases studies of value engineering and value management paradigms.
Dell’Isola (1982) conducted a research to determine the causes of failure in applying value engineering and value management in project management techniques in optimizing project value for the target cost in the above-mentioned countries.
A critical review of the successful application of value engineering and value management had in the beginning successfully recorded in the US army. In the US, the successful application of value management and value engineering techniques in the US army and Navy led to the widespread adoption of the techniques in the construction industry. After the successful application in the construction industry and the US army, other industries followed suite in the application of the management techniques typically to optimize value in the different disciplines. It was after the successful application of the concepts of value management and value engineering that the technique became a popular management technique in other countries including Japan, Sweden, Germany, Switzerland, and Australia. In addition to that, other countries that embraced construction value engineering and value management included South Africa, France, India, and Sweden (Dell’Isola, 1982). On the other hand, value engineering and value management, as will here be referred to value engineering, embraced additional tools such as functional analysis and other suitable tools to capture and develop value in projects.
It was then that different disciplines applied value engineering as one strategy for project critical success factors. In addition to that, critical evaluation of value engineering in the above countries and across a spectrum of industries shows that value engineering was a tool applied by focusing on cost as the core function for the success of a project. However, other cross cutting benefits realized included innovation, cost reductions, quality, functionality, value, and other value related variables. On the other hand, research shows that value engineering has not been successful in Southeastern Asian region due to a number of factors. According to Dell’Isola (1982), a research into the causes of failure to successfully apply value engineering in the southeastern construction industry lack of knowledge on value engineering in the part of the project stakeholders, the management, and organizational employees. On the other hand, some of the project stakeholders, in a survey conducted to determine the reason for the failure to realize the benefits of value engineering were dominantly due to the misconceptions held by many stakeholders. On the other hand, there were noted misconceptions about value and cost and the relationship between both value and cost in a project.
On the other hand, the research findings had significant implications on the fact that most of the respondents surveyed in the industry were practicing professional and other experienced personnel in the construction industry. Studies in the knowledge of value engineering indicate that 22% of the respondents interviewed had no prior knowledge of value engineering while 52% of the respondents had heard of value engineering but were not sure if value engineering had any implications on project management. On the other hand, 17% of the participants identified value engineering as a strategy to reduce cost, while 9% of the respondents were quite knowledgeable on value engineering. Further research done by Dell’Isola (1982) to determine the applicability of value engineering in the construction industry in the southeastern Asian countries with Malaysian being the region of focus showed that 20% of the respondents strongly agreed on the applicability of value engineering, 48% agreed on the applicability of value engineering, while 32 percent of the participants remained neutral. On the other hand, only 0% of the respondents showed they disagreed on value engineering and its applicability. After the above statistical findings were established, major impediment to the application of value engineering in the southeastern Asian country particularly in Malaysian, were examined. The flowing factors were established as key contributing factors. These included:
- The failure of management and stakeholders to agree on a common understanding of value engineering and methods to implement value engineering in construction projects.
- Conflict of interest had a significant role in contributing to the failure implement value engineering.
- Lack of communication, which was identified as a key component in value engineering was lacking in the construction industry in Malaysia.
- Failure to create sufficient time to implement value engineering in the construction industry.
- Lack of knowledge on value engineering and associated benefits in the construction industry.
- Casual application of the principles of value engineering in construction projects without the need to apply the concept in its detailed nature.
A close examination of the results showed that over 91% of the respondents either did not value the concept of value engineering or have a clear conceptualization of the need for value engineering in the construction industry.
On the other hand, a case study of the successful application of value engineering in the US showed that value engineering as one of the components integrated into the construction industry under the requirements of the federal laws. Thus, the federal laws make value engineering a mandatory requirement. On the other hand, other countries that have registered significant involvement with value engineering include South Africa, Sweden, France, and many other developed nations. It is therefore important to examine the findings on the value engineering expectations in the construction industry. According to Dell’Isola (1982), a number of respondents were interviewed on their perceptions about the value of value engineering in the construction industry to establish the perceptions about the usefulness of the technique. According to the studies, a number of value engineering concepts evaluated led the researcher to establish that 63% of the respondents related value engineering to functionality while 59% perceived value engineering to be a creative technique.
On the other hand, 54% of the respondents argued that value engineering as a technique to implement value in a project while, 52% of the respondents belong to this study group perceived value engineering to be a focus in the job plan in its systematic implementation approach. On the other hand, the effectiveness of value engineering was examined in terms of the perceptions of respondents interviewed in the inquiry. According to Dell’Isola (1982), the respondents seemed to agree that value engineering was a technique to optimize quality, innovation, competitiveness, and improve economic value. In conclusion, it was shown that developed nations had realized the benefits of value engineering and borrowed from other successful cases studies, while the southeastern countries were experiencing impediments towards the implication of value engineering as management techniques for value optimization. However, a closer examination of the perceptions of value engineering in the developing nations of the southeastern Asian region particularly Malaysian showed common understanding and perceptions about value engineering to prevail in both situations (Dell’Isola, 1982).
Conclusion and Recommendations
Several studies have shown that value engineering and value management are two project management techniques used in industry to optimize value at the target cost. Different researchers have coined different definitions of value engineering and value management. On the other hand, different arguments and definitions on value engineering and value management fail to distinguish between value engineering and value management by assuming that both techniques are just another approach of defining value using different terminologies. However, based on the above research, it is clear that a distinct difference between value engineering and value management as project management techniques should prevail. Thus, value engineering is a structured approach to project management in relation to the optimization of value in a project with the goal to reduce project costs in relation to inputs and outputs.
In addition to that, value engineering draws on the hard system-thinking paradigm with attributes that focus on the project plan. Value engineering therefore draws on information availed to the stakeholders, highly speculative, and relies in the evaluation concept. In addition to that, value engineering centers around the project development process and is strongly informed by recommendations of the stakeholders. On the other hand, value management is a project management technique that seeks to establish a common understanding of the problem a given project was designed to solve with special emphasis of a common approach to solving a given problem. In addition to that, value management thrives on communication as the baseline component that enables understanding of the common problem to solve with a given project. Thus, value management tends to focus on project objectives developed by stakeholders and agreed upon by all project participants. Further research has shown that value management techniques draws on the soft system thinking theory. In addition to the findings, different research findings show SMART as one of the value management techniques consistent with implications on project management teams.
Several findings have shown that value management and value engineering techniques have been applied in the USA with resounding success, thus inspiring other countries to systematically adopt the management approach to manage and engineer value in project management. However, it has been established in the study that value management and engineering has failed or not been applied in project management as techniques to manage and engineer value due to a number of reasons. Key reasons, according to the above research that have significantly contributed to the failure to adopt value engineering and management in the southeastern countries include:
- The failure by industry stakeholders to identify and incorporate value management and engineering even by well-qualified and experienced professional into the construction industry.
- Failure to understand the value and effectiveness of value engineering and value management in the construction industry as being critical in optimizing project value.
- Failure to integrate effective communication within the stakeholders and other project stakeholders for a common and shared understanding of project problems.
- Failure of to impact knowledge and lack of information on value management and engineering.
- Lack of knowledge in value management and engineering.
On the other hand, poor comprehension of value engineering and value management in relation to the benefits likely to be realized throughout project lifecycle. On the other hand, the researcher has identified the need to optimize project value by integrating and making value management and value engineering complimentary. Thus, by complimenting and applying these techniques with a balanced approach, project value can be optimized with the target project costs.
However, to successfully implement a construction project by focusing on optimizing project value, it is recommended that further researcher and conclusions informal the inquiry along the line of how developed countries have endeavored to integrate and create value in the construction industry and the approaches that can be borrowed and used as value management and engineering methodologies.
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