Intentional Value Management – Prevention Versus Cure

Scot McClintock
Value engineering workshops conducted at the end of a design phase can lead to redesign cost and schedule implications. However, value management can be used early and often within the planning and design process to prevent ever needing a cure.

The vast majority of Faithful+Gould’s value management (VM) services in the Americas encompass value engineering (VE) workshops that are conducted to “cure” a project design of cost overruns, lack of consensus, poor performance, or other issues. The same is true for our competitors in the value field. While we are very successful in these endeavors, VE workshops conducted at the end of a design phase can lead to redesign cost and schedule implications. However, VM can be used early and often within the planning and design process to prevent ever needing a cure.

A “prevention” approach integrates VM in the design process, encouraging and empowering the design team to use the VM process as a tool throughout design. This paradigm shift uses VM up front in the project life cycle to clarify project goals, objectives and functions; define critical success factors and key performance indicators for the project; and get the owner, stakeholders and all design disciplines on the same road to success.

A “prevention” approach integrates VM in the design process, encouraging and empowering the design team to use the VM process as a tool throughout design.

The Faithful+Gould approach to discrete VE interventions helps the owner and design team understand why VE recommendations were made; what their function, cost and overall project implications are; what their advantages and disadvantages are; and finally, how they can be implemented. Even the best VE efforts require changes to the design in order to implement VE recommendations.

Pre-workshop activities and the information phase of the VE workshop help the independent VE team acquire a deep understanding of the project and establish consensus on expectations with the owner and design team. However, the industry standard six-phase VE job plan is so successful at finding better value for the money, including performance improvements and both capital and life cycle cost savings, that design changes are inevitable. If design is 30, 50 or even 90% completed before VE occurs, the “cure” will result in redesign costs and schedule impacts that will reduce cost savings. The earlier changes can be identified, the greater the potential savings and other benefits.

According to the “prevention” model, the project team employs strategic VM or integrated VM throughout the project life cycle, integrating VM in the planning and design process. Integrated value management (IVM) is characterized by a high level, strategic planning (SP) workshop at the beginning of the project life cycle followed by brief value “control” (VC) workshops right up through the completion of the project.

The SP workshop is usually a three-to five-day workshop, although it can include a series of investigations (geotechnical, land use, environmental, etc.) over several months, as required in project planning. In lieu of a traditional kick-off meeting where project numbers and hours are handed out, the purpose of the SP workshop is to:

  • Review the owner’s goals and objectives for the project to understand their starting point and purpose for both the project.
  • Identify the stakeholders, individuals and organizations involved in the project, affected by the project, and/or able to influence the project, and determine how strong their influence is.
  • Identify other interactors such as regulators, constraints, etc.
  • Agree upon a scope statement including the drivers for the SP workshop, the expectations/deliverables, and any constraints on the SP team.

The SP workshop follows the same phases as our VE interventions, although the subject matter of each phase is much broader and some new tools are incorporated. The SP team must discuss and agree on project expectations, needs, objectives, demands, benefits, outcomes, performance, goals and challenges. The information and function analysis phases are often lumped together as a “sense making” phase in which:

  • A stakeholder analysis is performed using information gathered during the pre-workshop, and a list is made of stakeholder’s needs and expectations expressed in a verb-noun format.
  • From a written purpose for the project and the needs and expectations of the stakeholder analysis, the SP team creates a function breakdown structure (FBS). The FBS is used to identify the critical success factors (CSF) and key performance indicators for the project. Those functions or benefits directly related to the CSFs are the targets for creative phase brainstorming.

The remaining phases are the same as standard VE, (i.e. creative, evaluation, development and presentation phases) although when high level decision makers are involved, the presentation phase is called the recommendation, discussion, or even decision phase. In SP, the output of the development phase contains a specific action plan with names and dates specified. A summary report of the results of the SP workshop is prepared to serve as an ongoing guide for project implementation.

The above report serves as a reference point for the periodic VC workshops, held as needed to keep program implementation on target. The focused VC workshops, usually one day each, follow a job plan more similar to a VE workshop, using the tools and techniques required to maintain the right path: solve difficult design issues, mitigate risks or make needed decisions. The VC workshops can be used as needed throughout the project life cycle to keep the project aligned with established goals, objectives and requirements. VM becomes a continuous effort applied throughout the planning and design process by the project team using outside experts as may be required.

While this VM approach is common in Europe, it is quite rare in the Americas.

The IVM process is a method of assuring owners and stakeholders that the planning and design process will result in a functionally effective design solution while recognizing the project’s specific value objectives and expending only the resources required. Integrating VM studies into the planning and design process assists the design team in delivering a design that balances objectives and quality requirements.

While this VM approach is common in Europe, it is quite rare in the Americas. This provides an opportunity for project managers, including those in Faithful+Gould and Atkins, to use this VM approach as a differentiator from our competitors. Faithful+Gould's Value Manager's believe this approach will lead to improved project management success, resulting in return engagements from our clients. To those asking who will pay for VM, the answer is that cost benefit of avoiding these common design pratfalls pays for itself.

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