1. Value management development
The formal concept of value management (VM) was developed when the need to use scarce resources wisely was critical. The post war development, refinement and adoption of VM techniques have been steadily growing.
VM is a systematic process used to evaluate the essential functions or performance of a capital project in order to achieve the best value for money.
The VM study raises questions such as:
- What must the facility do?
- How else can it be done?
- What will it cost?
Most people practice a basic approach to VM every time they think about buying a product or service. The VM process is distinguished from this everyday practice by deliberately setting out to define and consider the necessary functions accommodated within a new facility and analysing how they can be delivered for the best value (which is usually the lowest cost).
VM takes an overall view of the function of the facility, capital and recurrent cost.
The technique is a tool that allows decision makers to make distinctions between essential and peripheral elements.
- Combines the expertise and experience of program, region, health service and agency personnel and consultant team.
- Identification and protection of essential functions and requirements.
- Elimination of unnecessary functions and features and incorrect assumptions regarding others requirements.
- Improved definition and understanding of project objectives.
- Overcoming of the problem of specialisation of disciplines.
- Better overall understanding of the project by participants and of each others requirements.
- Improved team spirit.
- Management of the inevitable compromises, which must be made between competing requirements and constraints of funding, cost, time and standards.
The NSW government value management manual claims that savings of approximately 15% have been achieved by using VM techniques on capital projects. Another measure of the value of these studies is a probable return on investment of 10 times the cost of the study.
Conduct of study
For major projects where a detailed analysis of a number of prioritised building options is required, the study may be completed at the stage of master planning or the feasibility study.
Value management studies are to be conducted in accordance with AS/NZ 4183:1994 for all projects with a total end cost of more than $5 million. For projects with a total end cost of over $10 million further VM studies may be conducted at other stages, e.g. schematic design and design / documentation.