3: Value Management

Question 1

Define ‘value management’.

Answer 1

The management of a process to obtain maximum value on a scale determined by the client.

Question 2

Define ‘value’.

Answer 2

The importance, worth, or usefulness of something.

Question 3

What is the function (formula) of value?

What variables may be used in place of both?

Answer 3

Performance (P) / Resource (R)

Quality (Q) / Cost (C)

Question 4

What are the five ways of improving value by influencing performance and resource variables. (5)

Answer 4

• Better target customer needs/wants +P/=R
• Cost reduction whilst still delivering performance =P/-R
• Further cost reduction by eliminating unimportant requirements -P/–R
• Adding modest cost to achieve larger performance benefit ++P/+R
• Improving performance and reducing cost simultaneously +P/-R

Question 5

How are the ‘weights’ calculated in the matrix?

Answer 5

By multiplying the weights from the branches in the value tree provided.

I.e. overall weight of branch x weight of smallest section.

Question 6

How do you check that the ‘weights’ have been calculated properly?

Answer 6

They should all add up to 1.00.

Question 7

How is the ‘utility’ calculated in the matrix?

Answer 7

Multiply the ‘weight’ by the ‘ranking’ for a particular box.

I.e. if a criteria such as energy efficiency is ranked at 90, and the weight is 0.3, then the utility = 0.3 x 90 =27

Question 8

How is ‘total utility’ calculated?

Answer 8

By summating all the utilities in a particular row

Question 9

What is the ‘value index’ and how is it calculated?

Answer 9

The utility cost per £1000.

Value index = Total utility / Cost (£1000s)

Question 10

What does the total utility represent?

Answer 10

How well the project delivers the clients needs as a %.

I.e. a perfect project would be 100%.

Question 11

What things should be discussed with/asked of the client to assist them with making a decision?

Answer 11

• If the weightings are still appropriate from when they were first set.
• Whether they are attracted to the option with the highest utility even if the cost is not the most appropriate.
• Identify what criteria has the highest weighting and compare the utility for these specific criteria across the design options rather than total utility
• If a specific option can be removed or taken forward for development, potentially for maintaining performance whilst reducing cost

Question 12

What is sensitivity analysis?

Answer 12

Tweaking the weightings to see how sensitive it is to change

Question 13

Describe the positives of VM in civil engineering. (7)

Answer 13

• Drives client to consider what is important.
• Provides vision of options to PM team.
• Improved team to client relationships.
• Improved communications.
• Enhances value culture.
• Identifies weaknesses.
• Better than nothing.

Question 14

Describe the negatives of VM in civil engineering. (2)

Answer 14

• Costs money.
• Numbers are subjective.