Two of the most essential functions of VfM are value management and value engineering. Whilst similar in their aims, there are fundamental differences between them.
Value Management (VM)
VM is a method of highlighting possible opportunities to create value within a project and subsequently managing those solutions to ensure value is continuously delivered.
It encompasses the whole life cycle of a project, from design to completion and beyond. The process is undertaken in collaboration with the project team, understanding and managing the balance between cost, time and performance. Prior to value being clear and understood, it is important for the project team to understand cost, time and the needs and wants of stakeholders (function) as explained below:
- Costs, as in whole life costs, and in particular, sizeable or increased initial costs, can be justified and explained if it reduces future maintenance costs. This is therefore decreasing disruption in the future because of the reduced need for maintenance.
- Time or programme issues can often be a major problem on a scheme. It could cause funding problems and in fact increase overall scheme costs.
- Function (performance) is the wants and needs of stakeholders (all interested parties within a scheme). Some of these needs and wants will be 'must haves' and essential for the scheme to be built, but some will be less important. All options must be considered in an effort to ensure true VfM.
The main benefit of VM is that it gives each and every project a clear path to create value through the understanding of client objectives as well as the needs and wants of the stakeholders. The route to delivery is agreed and developed with the full project team, with the understanding that solutions to achieve the objectives are reliable and cost-effective.
The main benefit of VM is that it gives each and every project a clear path to create value through the understanding of client objectives as well as the needs and wants of the stakeholders.
In addition, VM encourages creativeness within the project team; it nurtures an environment from which innovation can be developed and imaginative solutions can be implemented. The key to this is successful team building, empowering project participants to think differently about creating value. This can be done through a number of workshops which allows the freedom of the project team to give opinion and present new ideas in which the whole scheme benefits.
Value Engineering (VE)
VE is a method used to eliminate any unnecessary costs, in order to achieve value for money on a project. VE methods and techniques can be used throughout the life cycle of a project, from strategic definition (very early design) to handover and close out.
VE is best utilised as a team approach to provide the optimum value on a project. This means that the whole project team should be involved, from the client right through to the supply chain.
An example of this could be when installing an additional CCTV system. Don't just go like-for-like, look at similar models that do the same job, if not better, for a more cost-effective solution. Picture quality could be improved and it could cost less to run (use less electricity).
VE can also be associated with maximising value, not just reducing costs...
VE can also be associated with maximising value, not just reducing costs (cutting upfront project costs is not VE!). VE examines key solutions to extract any unwanted waste, such as water, energy, time, maintenance etc, and reduce life cycle costs whilst providing better function, quality and sustainability.
Although costs are heavily investigated, VE is not just a method to reduce costs, in fact it can bring additional benefits, such as a better understanding of a brief, highlight different design solutions, identify different construction methods to employee empowerment.
The value benefit curve decreases over the duration of a project. The biggest impact therefore can be achieved through VM and VE decisions being made and implemented at the earliest possible stage of a construction project.
The two methods ultimately have the same goal and are usually encompassed under the same umbrella, that is; to ensure that the project is successful, not only by looking at the bigger picture in terms of managing and understanding VM but using the skills of the project team to utilise VE.