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Value Management - concept and application
PRINCIPLE
Value Management is the overall name given to a collection of specific principles, techniques and practices which have been proven effective in maximising value to those concerned. Value Management (VM) is applied across a wide range of industries and organisations in a variety of countries, where it may also be known as Value Analysis, Value Engineering etc. It is the structured analysis of function which sets Value Management apart from other approaches to problem solving and improving value.
Value Management is a structured, analytical process which seeks to satisfy "customer" needs by ensuring that all necessary functions are provided at the lowest total cost, while maintaining the required levels of quality and performance - in other words, to maximise value.
At the core of the Value Management process are the two concepts of function (including its analysis) and value for money.
FUNCTION - AND ANALYSIS OF
FUNCTION
Analysis of function involves clearly identifying what things actually do or what they must do to achieve the clarified needs of the "customers".
Through the analysis of function, it is possible to identify genuine need, wastage, duplication etc., thus providing scope for value to be improved.
The analysis of function is generally not undertaken on specific items or issues taken in isolation, but rather in the context of the whole scheme or system. This approach ensures that sub-elements are not optimised at the expense of the overall system.
The functional analysis perspective not only allows Value Management to explore specific issues but to test the assumptions and perceived needs of the stakeholders.
The way Value Management is generally practiced in Australia (using a structured intensive facilitated workshop of representative stakeholders) has placed many Australian VM professionals at the cutting edge of the world's best VM methodology, as has already been embodied in the Australian and New Zealand Standard for VM: AS/NZS 4183:1994, which is soon to be reviewed and updated.
The types of function considered can range from those that are purely utilitarian to those that may be termed aesthetic or which relate to esteem, prestige etc - and even personal "values" - so there are no known criteria that cannot be expressed and considered as one or more functions.
THE CONCEPT OF VALUE
In Value Management the concept of value is a basic tenet.
Best value is possible only when the required functions are achieved at the lowest cost.
Value in the context of Value Management is the relationship between the satisfaction of needs and the resources required to achieve those needs.
APPLICATION OF VALUE
MANAGEMENT
World-wide trends toward open markets and competition are increasingly demonstrating the relevance of Value Management's focus on function, performance and associated costs in order to improve value.
Value Management has application in a wide range of disciplines and circumstances. The following examples help to illustrate this enormous diversity: the enhancement of organisational performance, analysis of managerial effectiveness, organisational structure and development, validation of project concept, project development, community development, asset planning, operating procedures, product development and procurement.
The process is one of the most powerful management tools available. It has particular application where improvement of productivity, service or quality performance is vital and when time or resources are limited. Its focus on "required function" enables decision makers to channel their efforts on the issues and factors that have the most direct impact on outcomes.
Function analysis in Value Management effectively allows consideration of complex interrelationships. Consequently, Value Management has a broad range of application.
SECTORS THAT ARE GAINING
BENEFITS
Value Management has achieved substantial demonstrable benefits for diverse industry sectors, such as manufacturing, design, construction and the delivery of public services at federal, state and local levels; including health, education, justice, utilities and resolution of community conflicts and opportunities.
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