Executive Summary
Value management is a process that is used to discover the different functions of the project. This includes coming up with techniques and tools which can be useful in meeting the required objectives. Value management will be used to successfully manage the construction of TechWatt Corporation’s new building. This will be beneficial, as it will ensure that the project flows smoothly from the inception to completion.
In addition, value management will assist in cutting costs while improving performance. This report will include the benefits of value management to TechWatt Corporation, the agenda for the study, techniques that would be useful if applied in the study. In addition, the issues that should be analyzed during the value management study will be dealt with. The participants of the program and the role they will play will be discussed.
Introduction
Value management has been widely accepted as a means of enhancing the value of a project from it inception to its operation. The process ensures that quality, performance, reliability are upheld while minimising the life cycle costs (Shen & Liu 2004).
Value management is useful in dealing with challenges like constraints in the budget and complexity of a project. Value management can assist in reducing costs while sustaining or improving the performance of a construction project.
TechWatt Corporation will benefit in many ways by using value management during the projects initial stages. It will be able to add value to the building project that thus improving its position in the market. The main benefit of value management is attaining the maximum the maximum value from the entire project.
This is what sets value management apart from other methods of improving value for projects or systems. TechWatt Corporation will be able to find the best ways to optimize design and establish the project objectives by analyzing the project briefs.
Information required before the workshop
Financial information is very important for decision making during the deliberations in the workshop. This includes the costs of the project, the expected benefits. The venture can create value if the benefits are more than the costs or if there is value for the money invested. Financial data is useful in his stage because sound decisions can be made based on this information. (Shen & Liu 2004)
Information about risks that TechWatt Corporation would face should be made available to the participants of the workshop. Considering risk is necessary in value management. Important data includes the kind of risks in the market and ways to manage these risks. In addition, the cost of dealing with risks should be highlighted. (Shen & Liu 2004)
People involved
Value management is a team activity which involves the interaction and cooperation of many people. The team TechWatt Corporation may include in value management study may include the project manager, constructor, company managers, the project finance team, design team, project cost manager.
A value manager must be part of the value management team. This individual is charged with the responsibility of understanding the value problems, coordinating value systems and implementing improvements to the company. (Woodhead & Downs 2001)
The finance team has to ensure that the project being embarked on by TechWatt Corporation has a sound capital investment plan. The team should also perform a detailed analysis of the project in order to find useful information that will be used during deliberations and decision-making. The finance team should ensure that the project follows the company’s financial policies.
The accounting and financial reporting standards should also be followed. The managers responsibility is to ensure that there is proper planning. This includes asset disposal planning, asset maintenance, planning and capital investments planning. The basis of these plans should be the company’s policies. (Woodhead & Downs 2001)
Areas for improving value
Constructing the new building to house the headquarters of TechWatt Corporation should create value for the organization. This may be in terms of increased profitability, a better working environment or improving the experience of the firm’s clients.
Value management will assist the organization in creating a means of balancing costs of a project and the benefits received. Value for money is a key feature in value management and it focuses on creating value for investment (Dell’Isola, A.1982).
Tools and Techniques
The value indicator technique is appropriate for this construction project. The focus of the technique is to ensure that the cost of a project matches the value that is realized from it. The relationship between cost and function of the structure to be built by TechWatt Corporation are critical in the value study. The value index is computed by dividing the dividing the function index by the cost index.
The function index is a number between zero and one which shows the degree of importance of the benefits expected. It can be determined by the value study team using mathematical methods such as the force decision method. The cost index is the calculated by dividing the cost of a component of the project divided by the cost of the whole project (Shen & Liu 2004).
Benefits of Value management for TechWatt Corporation
Employing value management during the initial stages of the building project will provide the advantage of acquiring greater insight about what the project is all about. The purpose and means of achieving the same will be known to various stakeholders. Often middle managers are not knowledgeable of all the aspects of a project and this will be a good opportunity to gain this insight (Woodhead & Downs 2001).
Value management will be useful for establishing project objectives, preparing the project brief and the consideration of concept and design alternatives. TechWatt Corporation will benefit from value management in many ways. It will be possible to simplify and ease processes in the project. There will be a lot of time, money is necessary to carry out the project successfully.
With proper planning and execution, efficiency will be enhanced hence time and money will be saved. Obsolete and redundant items and procedures can be known and discarded. For instance old technologies with are no longer efficient can be done away with (Dell’Isola, A.1982).
What the Value Management Study will entail
Value management will that TechWatt Corporation will be involved in will begin with the testing and validation of planning assumptions. The values, objectives and wants of the various stakeholders have to be informed about the planned changes and there approval sought.
What is important to stakeholders is what the managers need to embark on. After the decisions of the stakeholders are known and analyzed, the information received will assist in creating a lasting common vision and direction for the entire group. (Graham, Kelly & Male 2001)
It is imperative that the value management team examine the results of the study to company procurement and policies. In addition, they should ensure that there is no discrepancy with the law or company this is very important because it will ensure that there are no loopholes which can lead to lawsuits and exploitation by others.
Thereafter, the value manager needs to develop some master principles and goals which are the goals for the entire organization concerning a project. The challenges and opportunities that may be expected once the project work begins will be known to the important stakeholders (Dell’Isola, A.1982).
It is important to carry out a function analysis during the value management study so as to find out the things that need to be done so as to meet the projects objectives. The management of TechWatt Corporation should carry out this procedure so as to find areas of wastage, over expenditure and duplication.
This will provide an opportunity for value to be improved in the building project. The functional analysis will also enable the participants of the value management process to test the assumptions and requirements that are in the brief (Graham, Kelly & Male 2001).
TechWatt Corporation should be focusing on getting value for money therefore, the value management study will involve an analysis of the cost of the project verses the worth.
Each group of specialists e.g. the finance team, will have to examine, review and update the requirements of its own field. This will enhance the performance of the whole group as each individual contributes knowledge to his or her field of expertise. (Graham, Kelly & Male 2001).
During the value management study, it is necessary that the clients characteristics. This will ensure that the process takes into consideration the requirements of the clients that TechWatt Corporation serves.
The information that is necessary includes demographic data, experience, financial capabilities etc. this will enable the firm to use appropriate means of attracting and retaining customers. Value will be added to the process if customer service is carried out in light of the requirements of the customer. (Woodhead & Downs 2001)
The agenda for TechWatt Corporation’s value management study is to enhance its effective operations, customer service and business expansion. In addition, it is important that the process clearly show how the organization will get value for the money they invest in the project.
The individuals in the value management team will come up with measures to improve the business while meeting the customers’ needs. The new project should to add value to the core business of the organization. (Woodhead & Downs 2001)
Reference List
Dell’Isola, A.1982, Value Engineering in the Construction Industry, Van Nostrand Reinhold: New York.
Fong, P., 1999. Organizational knowledge and responses of public sector clients towards value management. ‘The International Journal of Public Sector Management.’ Vol. 12, no. 5, pp. 445-454.
Graham, D., Kelly J., & Male, S., 2001. Value management of construction projects Wiley-Blackwell: Oxford.
Woodhead, M., & Downs C., 2001. Value management: improving capabilities. Thomas Telford: London.
Lin G., & Shen Q., 2007. Measuring the Performance of Value Management Studies in Construction: Critical Review. Journal or management in Engineering, vol. 23, no. pp. 2-9.