Term Paper on Value Management

(First 3 Pages)

Value management is a framework within which methods are brought together to identify better value from projects, products and services. The key disciplines are not new, but it is the way they are integrated and deployed that makes the approach so effective.

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Over the past half a century or so, the UK's major trading partners in the US, Japan and the rest of EU have increasingly adopted Value Management as an approach for securing enhanced performance. Value management is a powerful philosophy and technique which, when applied on a systematic basis, helps users achieve best performance in their class. It has also been adopted by many of the UK's best organisations. The essence of the value management has been that it has been developed based on the concept of value and functional approach. These were pioneered by Lawrence D. Miles in the 1940's who developed the technique of Value Analysis (VA) as a method to improve value in existing products. Initially Value Analysis was used principally to identify and eliminate unnecessary costs. However it is equally effective in increasing performance and addressing resources other than cost. As it evolved the application of VA widened beyond products into services, projects and administrative procedures.

Value Management is quite separate from other management approaches in that it simultaneously includes certain factors which are not normally found together. It brings together a single management system:

Some of the key attributes are:
• emphasis on teamwork and communication,
• an atmosphere that encourages creativity and innovation;
• focus on customer's requirements and
• requirement to evaluate options qualitatively to enable robust comparisons of options
• teamwork ,satisfaction ,communication encouraging change
• External conditions, internal conditions these will govern the limits of potential outcome and should be quantified.

Some of the major advantages of using this brand of management are as follows:
• Value for money
• Enhancement in effectiveness and efficiency of work
• Improved processes, procedures and lead times between projects
• better business decisions by providing decision makers a sounds basis for their choice;
• improved products and services to external customers by clearly understanding, and giving due priority to their real needs;
• enhanced competitiveness by facilitating technical and organizational innovation;
• a common value culture, thus enhancing every member's understanding of the organization's goals;
• improved internal communication and common knowledge of the main success factors for the organization;
• simultaneously enhanced communication and efficiency by developing multidisciplinary and multitask teamwork;
• Decisions which can be supported by the stakeholders.

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The point of argument is that the use of value management requires a concerted effort, which can provide benefits far exceeding the cost. Although it can be performed on a project by project basis, for optimum performance it should be led by a senior manager with an overall strategic view of the business. This helps prioritize projects and focus for maximizing value.

Before discussing in depth the modalities of the value management process and approach with specific reference to construction industry, let us at first look at how the system is initiated and gets going
A strategy is first developed by setting up a management team or steering committee, which is responsible for identifying the projects, products or services to be improved to achieve your goals. This team should be led by a senior manager. This is not a full time but nevertheless it is important that it should be performed well.
At least one person in the team must have a detailed grasp of the Value Management process and experience the approach. This will spread across the steering group. Often an external value management expert as well as key stakeholders within the organization will be involved.

A conventional business might identify a number of different areas where value management can best be utilized. These need to be prioritized and the steering committee must be entrusted with the responsibility. It is often best to start with a relatively small project, but one that is valuable to the business.

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