“Value Analysis” and “Value Engineering” were key processes in the ongoing success of General Electric, from their development in the late 1940’s, by encouraging “boundaryless behaviour” of its employees, as described by Jack Walsh, the Chairman and CEO. During the 20 years of his tenure the company’s stock value increased by 4000%.
In Australia we have embraced the various titles assigned to the process under the single name: Value Management. This has been the basis of the approach employed in the Australian Standard on Value management and in the Institute’s efforts in the value-debate and education course criteria.
Effective application of Value Management has delivered benefits in the private and public sectors in over 25 of the world’s major economies. It can be applied either generatively or as a review for new ideas or entities and to the upgrading and improvement of existing entities or situations.
The tools and techniques inherent in Value Management, including the generic Function Analysis approach, means that the Value Management process has a very wide application in delivering value-improved outcomes that achieve the best, balanced use of all resources and targeted value for money.
Key success factors
Key success factors in achieving the most effective application of Value Management, obtaining stakeholder consensus and securing best value for money, include:
- use of a prescribed Work Plan
- an appropriate mix of and commitment by Value Management Study group members, usually stakeholders relevant to the commissioning organisations and the entity under consideration
- effective management of value management studies
- senior management commitment and support in the commissioning organisation
- effective study facilitation by a registered Value Management Study Facilitator
- follow-up by the commissioning organisation of the actions agreed at the conclusion of the Study
Is Value Management applicable to my Industry or problem?
Value Management may be applied to virtually any entity, activity or decision making task.
Value Management has been used in virtually every industry category of private and public sector endeavour, some examples being:
- Communications Services
- Healthcare and Community Services
- Property developments (commercial, residential, retail – new and refurbishment)
- Services infrastructure (electricity, gas, sewage disposal / recycling, water, renewable energy)
- Transport infrastructure (air, ports, rail, road, transport interchanges, control centres)
Within these sectors Value Management is presently used within and across critical and challenging business areas, including:
- Strategic planning
- Management systems (information technology and manual systems)
- Long-term infrastructure and service delivery programs
- Building construction and Industrial projects
- Product development
- Services delivery and process flow projects
- Existing building and industrial plant refurbishment and upgrades
- Integrated programs and projects that address environmental and sustainability issues
When should Value Management be applied?
Value Management is most effective when applied at the earliest point in the decision-making process as it ensures a common understanding of the context, scope and required outcomes by the customers / users and the project team. Thus, Value Management proactively guides the preparations of briefs of action and development of solution options by ensuring that all stakeholders have a common understanding of the core value factors, any issues, givens and assumptions and the required functional outcomes.
The perceived constraints, influencing factors expectations, priorities and assumptions are laid bare through the value management process enabling progress with greater confidence lesser risk.
Structure of the Process
The Value Management process may be carried out as:
- facilitated workshops involving groups of handpicked participants, at discrete points during the formulation or life of an entity or, it may be carried out
- by an individual Value Analyst as an ongoing, day-to-day activity.
In both cases, there is a structured work plan to follow. This work plan is set out in the Australian Standard on Value Management (AS 4183-2007).
A “Work Plan” establishes the template for the conduct of a Value Management process and it is detailed in the Australian Standard 4183:2007 for both a Value Management Study involving a facilitated workshop phase and for the activity of a Value Analyst. Whilst the detailed activities in the Work Plans can be reviewed in the Standard, the primary stages for the Value Management study are:
- Pre-workshop planning, logistics and preparations;
- Workshop eventfacilitation and management;
- Post workshop reporting
- Post Study implementation of action plan, directions and agreements
Value Management workshops are intended to nurture learning and collaboration amongst all participants. Indeed, it is by establishing shared knowledge and understanding of vision, the value factors, current proposals (if any) and context of the entity that groups are enabled to work collaboratively in developing proposals to achieve best value for money.
Value Management facilitators are trained to work with multi-disciplinary groups, taking the groups through the work plan in pursuit of specified objectives. A register of qualified and accredited Value Management facilitators is maintained by the Institute.