value management
TRANSCRIPT
PSZ 19:16 (Pind. 1/97)
Universiti Teknologi Malaysia
BORANG PENGESAHAN STATUS TESIS
JUDUL: VALUE MANAGEMENT IN CONSTRUCTION INDUSTRY
SESI PENGAJIAN: 2005/2006 I
Saya NG KIM LAI
(HURUF BESAR)
mengaku membenarkan tesis (PSM/Sarjana/Doktor Falsafah)* ini disimpan di Perpustakaan Universiti Teknologi Malaysia dengan syarat-syarat kegunaan seperti berikut:
1. Tesis adalah hakmilik Universiti Teknologi Malaysia. 2. Perpustakaan Universiti Teknologi Malaysia dibenarkan membuat salinan untuk tujuan pengajian
sahaja. 3. Perpustakaan dibenarkan membuat salinan tesis ini sebagai bahan pertukaran antara institusi
pengajian tinggi. 4. **Sila tandakan ( )
SULIT
TERHAD
TIDAK TERHAD _________________________________ _________________________________
(TANDATANGAN PENULIS) (TANDATANGAN PENYELIA)
Alamat Tetap:
7, LORONG CANTIK, BATU LANCHANG, MR. BACHAN SINGH I 11600 PULAU PINANG I Nama Penyelia Tarikh: 26APRIL 2006 I Tarikh: 26 APRIL 2006 I
(Mengandungi maklumat yang berdarjah keselamatan atau kepentingan Malaysia seperti yang termaktub di dalam AKTA RAHSIA RASMI 1972)
(Mengandungi maklumat TERHAD yang telah ditentukan oleh organisasi/badan di mana penyelidikan dijalankan)
Disahkan oleh
♦
CATATAN: * Potong yang tidak berkenaan. ** Jika tesis ini SULIT atau TERHAD, sila lampirkan surat daripada pihak
berkuasa/organisasi berkenaan dengan menyatakan sekali sebab dan tempoh tesis ini perlu dikelaskan sebagai SULIT atau TERHAD.
♦ Tesis dimaksudkan sebagai tesis bagi Ijazah Doktor Falsafah dan Sarjana secara penyelidikan, atau disertasi bagi pengajian secara kerja kursus dan penyelidikan, atau Laporan Projek Sarjana Muda (PSM).
“I hereby declare that I have read this thesis and in my opinion this report is
sufficient in terms of scope and quality for the award of the degree of Bachelor of
Civil Engineering (Civil - Construction Management)”.
Signature : ....................................................
Name of Supervisor : .................................................... MR. BACHAN SINGH
Date : .................................................... 26 APRIL 2006
VALUE MANAGEMENT IN CONSTRUCTION INDUSTRY
NG KIM LAI
A project report submitted in partial fulfillment of the
requirements for the award of the degree of
Bachelor of Civil Engineering
(Construction Management)
Faculty of Civil Engineering
Universiti Teknologi Malaysia
April 2006
ii
I declare that this thesis entitled “Value Management in Construction Industry”
is the result of my own research except as cited in the references. The report has
not been accepted for any degree and is not concurrently submitted in
candidature of any other degree.
Signature: ……………….
Name: Ng Kim Lai
Date: 26 April 2006
iii
To my beloved parents and all my family members especially my grandmother
who just passed away…
iv
ACKNOWLEDGEMENT
My thanks are due to many people who have been helping me in the course of
my preparation of this research. A few people had contributed and helped me by
giving me valuable advice and information in order for me to complete this
assignment.
First of all, I would like to thank my supervisor, Mr. Bachan Singh for his
valuable guidance, advises and his valuable time. With his valuable guidance, I was
able to understand more in-depth about this report, where to collect the information
that is needed and how to maximize the usage of the information collected. And
therefore I was being able to complete my research on time.
I would also like to take this opportunity to express my appreciation to my
friends for their valuable advice and opinion. Unfortunately, it is not possible to list
all of them in this limited space. I am grateful to all my family members. I am also
indebted to Universiti Teknologi Malaysia (UTM) for providing adequate facilities in
supporting relevant literatures.
v
ABSTRACT
Malaysian government has realized that it is necessary to modernize the
construction industry to keep in line with international practice and long term healthy
growth. As a result, the used of Value Management as an advanced management
technologies and skills was highlighted. From the previous study and interviews
carried out, it was found that the participants in the construction industry lack
awareness in Value Management. Therefore a study was carried out to study the
typical Value Management job plan methodology, the degree of understanding of
Value Management in construction industry, the factors that hinder the application of
Value Management in construction industry, and the main factors that encourage the
implementation of Value Management. The study was conducted in Kuala Lumpur,
Johor Bahru and Penang. And the study was carried out through interviews and
questionnaires. Then the data analysis was carried out by using average index
method. From the study, the respondent’s degree of understanding of Value
Management was average. The main factors that hinder the application of Value
Management are lack of knowledge about Value Management and lack of support
from parties with authority such as government and project owners. While the
factors that encourage the implementation of Value Management are to eliminate the
unnecessary costs and achieve optimum value for money in satisfying the client's
needs.
vi
ABSTRAK
Kerajaan Malaysia menyedari bahawa adalah perlu untuk memodenkan
industri pembinaan supaya mampu bersaing dan dapat bertumbuh secara mendadak
sepanjang masa. Jadi, satu teknologi pengurusan yang maju iaitu pengurusan nilai
telah diperkenalakan. Berdasarkan hasil kajian lalu dan temu ramah, didapati pihak
yang terlibat dalam industri pembinaan kurang menyedari terhadap kewujudan dan
kepentingan pengurusan nilai. Oleh yang demikian, Satu kajian telah dilakukan
untuk megenalpasti tahap pemahaman terhadap pengurusan nilai oleh pihak yang
terlibat dalam industri pembinaan, faktor yang menyebabkan kurangnya penerimaan
pengurusan nilai dalam industri pembinaan dan juga faktor yang akan mengalakkan
penggunaan pengurusan nilai dalam industri pembinaan. Kajian telah dilakukan di
Kuala Lumpur, Johor Bahru and Pulau Pinang dan data dikumpul melalui temu
ramah dan menggunakan borang soal selidik. Analisis data dilakukan dengan
menggunakan purata indeks. Daripada kajian yang dijalankan, didapati tahap
pemahaman terhadap pengurusan nilai oleh pihak yang terlibat dalam industri
pembinaan adalah sederhana. Manakala faktor yang menyebabkan kurangnya
penerimaan pengurusan nilai dalam industri pembinaan ialah kurangnya pengetahuan
mengenai pengurusan nilai dan kurangnya sokongan dari pihak berkuasa, iaitu
kerajaan dan pemilik projek. Di samping itu, faktor yang akan mengalakkan
penggunaan pengurusan nilai dalam industri pembinaan ialah untuk memansuhkan
kos yang tidak diperlukan dan juga mencapai nilai wang yang optima bagi memenuhi
kehendak klien.
vii
TABLE OF CONTENTS
CHAPTER SUBJECT PAGE
TITLE PAGE i
DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENT iv
ABSTRACT v
ABSTRAK vi
TABLE OF CONTENTS vii
LIST OF TABLES xii
LIST OF FIGURES xiii
LIST OF SYMBOLS xv
LIST OF APPENDICES xvi
1 INTRODUCTION 1
1.1 Introduction 1
1.2 Statement of Problems 3
1.3 Research Objectives 5
1.4 Research Scope 5
1.5 Research Methodology 6
viii
2 LITERATURE REVIEW 8
2.1 Introduction 8
2.2 Background of Value Management 9
2.2.1 Value Management in Construction Industry 10
2.3 Traditional Cost Control Method 10
2.4 Value Management 11
2.4.1 Comparison between Value Management and
Value Engineering 14
2.4.2 Misconception about Value Management 15
2.4.3 Unnecessary Cost 15
2.4.4 Cost of Value Management 16
2.5 Factors that encourages the application of
Value Management in construction industry 17
2.6 Timing of Application 20
2.7 Composition of the Value Management Team 22
2.8 Implementation of Value Management Practice 24
2.8.1 Project Selection Technique 25
2.8.1.1 Analysis of Previous Study Areas 25
2.8.1.2 Life Cycle Cost Impact 25
2.8.1.3 Breakdown Analysis 27
2.9 Value Management Methodology 27
2.9.1 The Value Management Audit 28
2.9.2 The Contractor’s Change Proposal 28
2.9.3 Japanese 3 hours Compact Value Engineering
Program 29
2.10 Value Management Job Plan Methodology 29
2.10.1 Pre-Study 30
2.10.1.1 Identify Client’s Needs 30
2.10.1.2 Gather and Complete Data File 31
2.10.1.3 Determine Evaluation Factors 31
2.10.1.4 Scope of Study 31
2.10.1.5 Build Model 32
2.10.1.6 Determine Team Composition 32
ix
2.10.2 Value Management Study 32
2.10.2.1 Information Stage 33
2.10.2.2 Functional Analysis Stage 33
2.10.2.3 Creativity / Speculation Stage 36
2.10.2.4 Evaluation / Judgement Stage 36
2.10.2.5 Development Stage 40
2.10.2.6 Recommendation Stage 41
2.10.3 Post - Study 42
2.11 Factors that hinders the application of Value
Management in construction industry 45
3 RESEARCH METHODOLOGY 49
3.1 Introduction 49
3.2 Methodology 50
3.2.1 Problem Statement & Research Objectives 50
3.2.2 Literature Review 50
3.2.3 Collecting Primary and Secondary Data 51
3.2.3.1 Follow Up Interview 51
3.2.3.2 Questionnaires 52
3.2.4 Data Analysis 53
3.2.5 Conclusion and summary 55
3.2.6 Feedback 56
4 ANALYSIS AND RESULT 57
4.1 Introduction 57
4.2 Questionnaires Collected 58
x
4.3 Background of Respondents 59
4.4 Discussion of Results 61
4.4.1 Degree of understanding about Value
Management 61
4.4.2 Sources to Obtained Knowledge about Value
Management 63
4.4.3 Perception of Value Management 64
4.4.4 Frequency of applying Value Management at
different stages in construction process 65
4.4.5 Respondent experience in Value Management
Session 66
4.4.6 Involvement in Value Management Session 67
4.4.7 Application of Value Management in
construction industry 69
4.4.8 Types of Project Involved in Value
Management Session 70
4.4.9 The Outcome of The Value Management
Session 72
4.4.10 Factors that hinders the implementation
of Value Management in construction industry 75
4.4.11 Factors that encourages the application
of Value Management in construction industry 77
5 CONCLUSION AND RECOMMENDATION 79
5.1 Introduction 79
5.2 Conclusion 79
5.2.1 The typical Value Management job plan
methodology for construction industry 80
5.2.2 The degree of understanding of Value
Management in construction industry 81
xi
5.2.3 The main factors that hinders the application
of value management in construction industry 82
5.2.4 The main factors that encourages the
implementation of value management in
construction industry 82
5.3 Recommendation 83
5.4 Suggestion for further study 84
REFERENCES 85-87
APPENDIXES 88-93
Survey Questionnaire 88
xii
LIST OF TABLES
TABLE TITLE PAGE
NO
2.1 Comparison between Value Management and Value
Engineering 14
2.2 Comparison of Value Management Approach 43
4.1 The distribution of questionnaires 60
4.2 Average Index of respondent understanding about Value
Management and Value Engineering 61
4.3 Frequency of respondents understand about Value
Management 62
4.4 Frequency of respondents understand about Value
Engineering 62
4.5 Perception of Value Management 64
4.6 Frequency of applying Value Management at different stages 66
4.7 Average index regarding the respondent’s satisfaction
with overall outcome of Value Management session 74
4.8 Distribution of frequency of about respondent’s
satisfaction with overall outcome of Value Management 74
4.9 Factors that hinders the implementation of Value
Management 76
4.10 Factors that encourages the application of Value
Management 77
xiii
LIST OF FIGURES
FIGURE TITLE PAGE
1.1 Research Methodology Flow Chart 7
2.1 Potential Saving To Cost of Change 21
2.2 Constructive Overlap 22
2.3 Life Cycle Cost In Construction 26
2.4 The basic FAST diagram 35
2.5 Prioritizing Matrix 38
2.6 Evaluation Matrix 39
2.7 The Timing of Application of Different Value Management
Methodology 44
3.1 Data stored in the SPSS Data Editor 53
3.2 The output of the analysis by using SPSS 54
4.1 Return rate of the questionnaires from the respondents 58
4.2 The amount of questionnaires received from different
construction firm 59
4.3 Designation of the respondents 60
4.4 Sources to obtained knowledge about Value Management 63
4.5 Respondent’s experience in Value Management Sessions 67
4.6 Total years involved in Value Management sessions 68
4.7 The frequency of involvement in Value Management session 69
4.8 Construction disciplines that leading / carry out the Value
Management Sessions 70
4.9 Comparison between government project and private
sector project that involved in Value Management session 71
xiv
4.10 Types of project involved in Value Management session 72
4.11 The saving produce by Value Management for construction
project 73
xv
LIST OF SYMBOLS
∑ - Sum
nx - Variable expressing the frequency of response for I = 1,2,3,4,5
% - Percentage
xvi
LIST OF APPENDIXES
APPENDIX TITLE PAGE
A Survey Questionnaire 88
CHAPTER 1
INTRODUCTION
1.1 Introduction
Since the independence of Malaysia in the year 1957, Malaysia’s economic
development growth rate has accelerated. Economic activity is always accompanied
by construction industry. In order with the expanding national economy, the
construction industry has grown at a two digit annual growth in 1997. Therefore, the
demand for buildings, bridges, highways, airports and other infrastructure in
Malaysia’s economic expansion has grown and develop extraordinary over the past
few decades.
However, everything suddenly changed since August 1997. Soon after that,
there are many construction project been on hold or abandoned due to economic
depression. (Economic Planning Unit, 2001) Others problems following by the
economic depression are the contractors and consultancy firms did not have ability to
reduce the project cost, enhance project functions, and shorten the completion time.
Combined with the lack of effective management skill and low education levels of
employees, it resulted in cost overruns, low quality of work and the delay in
completion time for many construction projects.
2
Therefore, Malaysian government has realized that it is necessary to
modernize the construction industry to keep in line with international practice and
long term healthy growth. As a result, the used of advanced management
technologies and skills was highlighted. Value management was highlighted with
the establishment of Institute of Value Management Malaysia (IVMM) on 9 October
2001 (The Star, 10 Oct 2001). Value management is at the initial stage has high
potential to developed, according to Tuan Haji Mohd Mazlan Bin Che Mat as a
chairman of the Institute of Value Management.
In the field of value management, many people may come across terms such
as value engineering and value analysis and it could be said that the tactical results
are achieved by the application of value engineering in the design and development
of a project or value analysis when seeking improvements to an existing product or
activity. However it is not important which term is used but what is important is
creating the opportunity to improve value.
Value Management can be said as a proactive, creative problem-solving tool
which is a strategic approach to achieving maximum value in a project consistent
with the organization’s broad business goals. It is a structured team approach to
problem solving and reducing costs that can be applied during the objective setting,
concept, design and construction stages and the on-going management of buildings.
(SAVE, 2006) A value management exercise aims to achieve optimum value by
providing the necessary functions at the least cost without affect to specified quality
and performance.
The benefits of applying value management are achieving better value for
money in satisfying the customer’s need, savings in project costs by elimination of
unnecessary cost, better understanding of the project’s objectives, enhance the
function of the project, improved team-working among the construction professional,
3
and enhanced creativity through interaction of different professionals and external
experts in construction field.
1.2 Statement of Problems
The Malaysian Construction Industry contributed about 3.2 percent of its
GDP totaling RM209.27 Billion (Economic Planning Unit, 2001). The possible
impact of Value Management implementation in the construction industry can be
significant as a ten percent potential savings in the industry could generate an
estimated total financial savings up to RM670 Million by using an estimated
investment of RM22 Million, where assuming a return on investment of 30:1. (Ong,
2003)
However, at the same time as Value Management has been widely practiced
in countries like the USA, United Kingdom, Australia and Hong Kong. Even there is
some evidence of Value Management applications in the Malaysian construction
industry; it is still not so popular in Malaysia due to the lack of knowledge and
awareness of its existence and applications. Value Management can be considered
still at its infant stage in Malaysia as only a small amount of construction projects
have been known to apply Value Management so far (Ong, 2003).
Traditionally, construction projects in Malaysia have been developed by
generating a program of needs, or hiring consultants to develop necessary design and
drawings, and then commencement of construction projects by the contractor.
However, there is no program to implement any kind of value assurance program in
much of the process in construction project. For public and private construction
firms in Malaysia, very few similar formal programs have been implemented
4
Besides, from the previous research by Mohd Zainuddin (2000), just only
less than 10% of construction firm had practice value management to reduce cost due
to lack of knowledge. And the quantity surveyor firm that had been involved is only
less than 15 %. Most of the local developers and government are fresh to its concept.
This is because they are not clear with the definition and the application of the Value
Management.
Besides that, Choo (1998) mentioned that majority of contractors in Malaysia
are not in favour of Value Management. They prefer to cut cost without considering
the quality, functionality and safety of the structure that has been build.
Furthermore, unnecessary costs will exist in both private and public
construction firms due to so many factors such as lack of information, lack of ideas,
honest but wrong beliefs, habits and attitudes, lack of communication and
coordination, and out dated or unsuitable standards, codes and specifications.
Without the implementation of Value Management studies, the unnecessary costs
may not be identified and removed. Consequently, the cost of a construction project
will be high.
This means that from the previous research, we knowing that the awareness
of value management among construction industry disciplines is quite low. These
factors act as roadblocks to getting good value of money. The best way to overcome
these roadblocks is by using the Value Management team approach. An individual
effort in decision making can be costly and inefficient, but it proved that by involving
more professionals and specialist in the decision making process, significant
improvements can be realized.
Therefore, it is necessary to investigate the degree of awareness and usage of
value management to enhance value and save cost in construction industry. Why this
5
approach is rarely applied in Malaysian construction industry and what are the
factors that may encourage its implementation?
1.3 Research Objectives
The objectives of the study are:
1) To study the typical Value Management job plan methodology for
construction industry
2) To identify the degree of understanding of Value Management in the
construction industry.
3) To identify the main factors that hinders the application of value
management in construction industry.
4) To identify the main factors that encourages the implementation of value
management in construction industry.
1.4 Research Scope
- The study will focus on the literature review (for 1st objective) and data
collected from questionnaires distributed (for 2nd, 3rd and 4th objectives).
- Questionaires of this research will post to construction firms in Penang, Kuala
Lumpur and Johor.
6
- Targeted respondents of the survey questionnaires including the developer,
project manager, civil and structural engineers, quantity surveyors, contractor,
Value Management Consultant, JKR etc who is related to the construction
industry.
1.5 Research Methodology
This research will be carried on through 6 stages including problems
statement and research objectives, literature review, collecting data, follows-up
interview, analysis and discussion, conclusion, summary and presentation and the
final stage is getting feedback from supervisor and panels to ensure the objectives of
research will fulfill:
7
Collecting Data
Primary Data: Designing Questionnaire
Follow-Up Interviews
Conclusion and Recommendation
Presentation and Feedback from Supervisor and panels
Literature Review
Problem Statement & Research Objectives
Secondary Data: Literature Research
Analysis of Data and Discussion of the Result
Figure 1.1: Research Methodology Flow Chart
CHAPTER 2
LITERATURE REVIEW
2.1 Introduction
This literature review will be divided into a few sections. The first section
will be deal with the background and development of the Value Management in
construction industry. The second section will defined the term of Value
Management and unnecessary cost. Then, it follows up by the factors that encourage
the implementation of Value Management, timing of application, composition of the
Value Management team. After that, it will cover the topic of Value Management
methodologies such as the job plan methodology. And the final part will cover the
factors that hinder the application of Value Management practice in construction
industry.
9
2.2 Background of Value Management
Value Management was used for the first time in 1940s by Dr. Lawrence D.
Miles to describe a technique that was developed at the General Electric Company
(GEC) to search for the alternatives to fulfill the demand when World War II had
developed the shortage of component and material. Because of the war, the
alternatives was often couldn’t meet the demand by the public. Therefore, this led to
the search not for new alternative but to look for a means that can fulfill the function
of the component by an alternative method.
Soon after that time, they discovered that this process of function analysis
produced cheaper overall products without reducing the quality of the product.
When the war is over, the system was maintained in an effort to reduce all the
unnecessary costs from budgets.
Since the significant effect on cost reduction and also improvement in the
products performance in GEC, The Navy Bureau of Ships begun to apply this
technique in 1954. At the same time, the term “Value Engineering” was used to
indicate the engineering emphasis of the Bureau of Ship.
In 1956, with the assistance of GEC personnel, The Army Ordnance Corps
had started to use the Value Management program. After 10 years of use, the total
saving amount is estimated about $200 million dollar. Then in the year 1962,
Secretary of Defense US apply this technique in his Department of Defense to reduce
the defense costs. (James J. O’Brien, 1976)
10
2.2.1 Value Management In Construction Industry
Value Management has been used in the construction industry up to about
1970s. To introduce the use of Value Management more widely, especially in
construction industry, the Bureau of Reclamation provided training course to its
engineers in 1965. Soon after that year, the stated the Value Management clause in
construction contract in 1966. Then in 1969, US Public Service of The General
Services Administration started to set up Value Management Program.
In the twelfth annual conference of Society of American Value Engineers
(SAVE) in 1972, SAVE is emphasized the use of value management in construction
industry. (James J. O’Brien, 1976) Value Management is now a growing
management tool in the construction industry as well and many construction clients
and firms have adopted the Value Management approach to improve teamwork and
maximize value-for-money.
2.3 Traditional Cost Control Method
Basically, the traditional cost control method is defined as control of the cost
of the project which including the collection, measurement of the project cost and
reporting the weekly progress. The main objectives of this method are as follows:
i. To achieve the optimum profit by finished the project within time and at the
same time without affect the required quality.
ii. To obtain a report on every stage of the construction progress to compare
with the target profit or to identify the risk of loss
11
Although the approach seems can work fairly satisfactory, but much
improvement still can be made. There are some of the disadvantages of the cost
control method like:
Nobody in the design process has the authority to comment on the efficiency
of the design or even to make suggestions on design improvements;
Not functions oriented.
Do not employed group of participants with the opportunity to contribute.
Seldom include the client
Seldom include the external group of professional to evaluate.
Seldom consider the life cycle cost implications of design decision.
Do not have decision making tools and techniques as Value Management use
the job plan methodology.
2.4 Value Management
Before defining the meaning of Value Management, what is mean by the
value? Actually value is defined by Dell ‘Isola, 1988 as a cost effective way to
reliably perform a function that will meet the client’s needs, wishes and expectations.
Value = (Function + Quality) / Cost
The function is specific work that a design / item must perform. Quality is the
client’s needs wishes and expectations. While the cost is represent the life cycle cost
of any component/ item in a construction project.
Based on the above equation, value can be theoretically increased while
maintaining the quality either by:
12
i. Increasing the function with the same cost;
ii. Increasing the function with reduction of cost;
iii. Deceasing the cost with the same function;
iv. Increasing the function significantly with the slight addition of cost.
In the construction industry, Value Management and Value Engineering are
the terms that used synonymously to describe a systematic process to identify the
function of a building or facility to ensure that it can be constructed and delivered in
the most cost effective way, (Ong, 2003). Mudge (1971) suggested that, the
definition for value management which is defined by the Society of American Value
Engineers (SAVE) is the most accurate definition:-
Value Management can be said as a proactive, creative problem-solving tool
which is a strategic approach to achieving maximum value in a project consistent
with the organization’s broad business goals. It is a structured team approach to
problem solving and reducing costs that can be applied during the objective setting,
concept, design and construction stages and the on-going management of buildings.
(SAVE, 2006) A value management exercise aims to achieve optimum value by
providing the necessary functions at the least cost without affect to specified quality
and performance.
There are many different ways people define the term Value Management, such as:
Mazlan, (1995) said that the Value Management is an approach defining what
‘value’ means to a client within a particular context by bringing the project
stakeholders together and producing a clear statement of the project objectives.
Charles & Seng, (2004) linked Value Management to a concept known as
‘‘target costing’’, which they defined as ‘‘a structured approach to determine the life-
cycle cost at which a proposed project with specified functionality and quality must
13
be produced to generate the desired level of profitability over its life cycle when sold
at its anticipated selling price’’.
“Value management is a set of techniques concerned with providing a
product, system or service for a customer at the required quality and at the optimum
cost” (Kelly and Male, 1991)
In other words, Value Management can be defined as a structured team
oriented approach to problem solving that can be applied to the concept, design,
construction and management of a project. The primary reason for any client
implement a Value Management study is to achieve value improvement and financial
savings while maintaining the required levels of quality and performance.
Refer to the stated definition; the Value Management encompasses the
following characteristics (Kelly and Male, 1991):
1) It uses a functional oriented that relates function required to the value
received.
2) It is a multi disciplinary team approach.
3) It is life cycle oriented which examines the total cost of owning and
operating a facility.
4) It follows the systematic and organized job plan and eliminates the
unnecessary costs in a project.
5) It directs efforts towards maximum possible alternatives through
creativity techniques.
6) It uses teamwork to merging different experiences and skills.
14
2.4.1 Comparison between Value Management and Value Engineering
Table 2.1: Comparison between Value Management and Value Engineering
(Liu, 2003)
Value Management Value Engineering
Definition
Value Management is a
systematic effort to improve the
value and optimize the cost of
project without sacrificing the
needed performance levels. It is
a creative way of working
together to achieve clients and
stake holder’s needs. (Mazlan,
1999)
Value Engineering is a
management technique using a
systematic approach to achieve
the functional balance between
cost, and performance of a
product (Dell ‘Isolla, 1988)
Objective To optimize the value of a whole
project
To achieve the needed function
for minimum cost of project
Subjects
for
discussion
Project proposal, existing design Existing design
Timing of
application
From the concept to occupancy
of the project
During design and construction
stage
Practicing
Levels
All level Components and element
Value
improving
approach
Value improved by integrating
client’s objectives value criteria
Value improved by alternative
design
Outputs of
the study
Project objectives, specification,
alternative solution based on
client’s needs
Remedial proposal, alternative
design solution
15
2.4.2 Misconception about the Value Management
Dell’ Isolla (1975) mentioned that the misconception about the Value
Management is a major problem of implementing Value Management practice.
Hence, he stated some of the misconception like follows:
1) Value Management only a cost cutting tool and does not consider the quality.
2) Value Management is an unprofessional effort, and it tends to cast doubt on
the integrity and capability of original designer.
3) Value Management is what the quantity surveyor does instinctively.
2.4.3 Unnecessary Cost
Before we go into the term Value Management, we need to understand the
term ‘unnecessary cost’ to achieve the optimum cost for a system, component and
service.
Mudge (1971) suggests that an unnecessary cost is the costs, which do not
meaningfully, contributed to the product to which they build up. But Crum (1971)
defined unnecessary cost is the cost that adds nothing to the value of a product, or are
not essential to achieve the specified functions.
Among all the definitions, a conclusion can be making that the unnecessary
cost which is useless in any given design and it is just simply an additional cost for
that design compared to a more economical design which provides the same function.
16
2.4.4 Cost of Value Management
The implementation cost of value management can be an expensive exercise
as it is a team-oriented approach. Hasnan (1994) mentioned that the fee for standard
workshop in North America is in the range between US$20,000 - $40,000. In
addition to the issue of money, the main negative comments include:
Time consuming exercise which interrupts the flow of the design
team;
Prolongs the design period as the design team has to review Value
Management proposals;
Changes recommended may be unnecessary.
Although the application of value management in a project requires extra cost
and expenses for employing the value specialist and Value Management team
members, but when it comes to the comparison with the overall savings, its
implementation is saying worthwhile.
Generally the cost of Value Management in a project costs less than 1% of
the total construction project cost. But if a well-organized Value Management
approaches could save up to 5-10% of the total construction project cost. (Macedo,
1978)
17
2.5 Factors that encourages the application of Value Management in
construction industry
i. To achieve optimum value of money in satisfying the customer’s
needs
The decision to build, refurbish or extend premises or facilities involve a huge
investment of time, effort and money. So that it need to using Value Management to
achieve the construction customer's needs and reach the optimum value for money
and provides a first step in understanding Value Management for the construction
customer, their consultants and contractors.
ii. Elimination of unnecessary cost
The traditional cost planning approach has its defects and every design
contains certain amount of unnecessary cost which does not contribute to function in
the proposed project. In order to minimize all the unnecessary cost, value
management should be applied.
iii. Enhance the function of a project
Value management has the general aim of giving the client value for money.
But it focuses upon function and searches for alternative ways in which these
functions can be performed. It will question that part of the cost which does not
contribute to function, for example the unnecessary cost.
iv. Reduce the cost of a project without adversely affecting the
quality or performance of the project
18
Value Management is an effective process which has led to millions of
dollars in project cost savings by selecting the right decision to perform while
maintain or improves the quality and responsiveness to the client’s priorities.
v. Improved team-working
Another major consideration is that value management is a team-oriented
approach which ensures effective pooling of expertise. Besides improving the design
efficiency, all professional can contribute to generate the ideas for the solution of the
problems.
vi. Encourages creative thinking
It is strongly believe that the concept of Value Management as a tool for
encourage the creative thinking since one of the stages of Value Management job
plan is the speculation or creative stage to develop a large amount of ideas for
performing the function selected for study.
vii. Better understanding of the project’s objectives
For a construction project, it is necessary to identify and understand what the
priorities of the project’s objectives are. Either to reduce the project cost, finish the
project within the contract period or maintain or enhance the quality or performance
of the premises or structure. This will achieve when exist of an opportunity for the
client to formally participate in key design and planning decisions during Value
Management session.
viii. Identifies the project constraints or problems
19
Besides, a further benefit is that when implementing a Value Management
study, it is possible to identify project constraints or problems and to develop
strategies to manage those problems that happen at any stages in the construction
process whether from feasibility stage or construction stage.
ix. To arrive a more effective design
One of the objectives of implementing Value Management is better
understanding of the customer's specific needs, in simple, clear terms. So the Value
management team will considers all the options, alternatives and innovative ideas to
produce a more effective design to achieve the optimum value for money in
satisfying the customer's requirements. In addition all professionals are allowed to
make suggestion to create solutions for the more effective design.
x. Existing of Value Management Manual
Since 1947, the application of Value Management has greatly increased
around the world and it still continuous to expand. A Value Management manual or
standard had introduced by SAVE International Professional Certification Board to
defines the commons terminology, it also including the standardized job plan
methodology, typical profiles of the Value Manager, Value specialist, duties of a
Value Management team, glossary etc. This manual can be used by the Value
Management team to perform a Value Management study for any construction
projects. (John W. Bryant, 1998)
20
2.6 Timing of Application
For civil engineering works such as buildings, highways, factory
construction, and water or sewage treatment plants, it tends to be one time
applications. Since these are one-time capital projects, Value Management must be
applied as early in the design cycle to achieve maximum benefits. Changes of design
can be accomplished without extensive redesign, large implementation cost, and
schedule impacts. Usually for large construction projects, specific value studies are
conducted during the schematic stage and then again at the design development (up
to 45%) stage. Additional value studies may be conducted during the construction or
build phase. (John W. Bryant, 1998)
Value Management can be implement in any stage in the development of a
project, there is no rules about the Value Management study duration. The 40 hour
job plan methodology is one of the well established duration. Adequate justification
for use the time and resources on Value Management activities need to be considered
when a Value Management study is initiated. There are several key indicators which
may be used by managers to provide the necessary justification:
Potential for saving.
Complex, high cost or innovative projects.
Project acceleration.
Most people in the industry would prefer to implement Value Management at
the early stage of a project’s life. This is because the earlier in the design process
that the study is undertaken, the higher the cost reduction potential and the lower the
unnecessary design costs. Therefore, delay of the application of value management
study until the construction phase would be limits its potential of cost reduction.
(Please refer figure 2.1)
21
Concept Design Use Stage of Project
Construction
Cost
Potential Saving
Cost of Change
Figure 2.1: Potential Saving To Cost of Change (Source: Mazlan, 1998)
Hasnan (1994) also believe that the maximum cost reduction potential occurs
early in the briefing or design process.
In the traditional design process, the preliminary estimates and financial
analysis taken almost 20 times to achieve a satisfy situation. This is due to so many
respective consultant and they provide different ideas and assumption base on their
own area of expertise.
But while implement the Value Management study, the Value Management
workshop process will explore the overlapping area of knowledge and experience
between various disciplines and expertise (Please refer to figure 2.2). So the time
taken to prepare the design plan is much reduced.
22
Mechanical
Civil/ Architectural/ Structural/
Process
Owner Requiremen
Civil/ Architectural/ Structural/
Electrical & Instrumentation
Figure 2.2: Constructive Overlap (Source: Mazlan, 1998)
2.7 Composition of the Value Management Team
Basically, a Value Management team includes a trained and experienced,
independent Value Management facilitator from within or outside of the
organisation; the client; the project team and any other stakeholders including end-
users. The main way in which Value Management is implemented is through
structured workshops led by value manager. The qualities that a good facilitator will
require include:
1) Authoritative leadership
2) Analysis of complex problems
3) Managing a team as a facilitator
4) Understanding of project's relationship to the customer's organisational and
strategic policy
23
5) Sensitivity to influence of organisational politics and hidden agendas
6) Securing the confidence of workshop participants and senior managers
7) Ability to encourage search for innovative solutions
8) An understanding of construction projects
As Kelly and Brown (1990) suggested, the Value Management team should
include normally six to eight professionals, who may or may not have previous Value
Management experience. But if is for heavy engineering projects, the professionals
with engineering backgrounds should be included.
Indirectly, this means that the Value Management team members may have
varying expertise, background and experience. He or she may be a civil engineer,
structural engineer, quantity surveyor, architecture and have expertise outside the
construction field. However, it doesn’t really matter who is involved in the Value
Management Team. But it is important that the team is multidisciplinary and
contains a wide range of expertise. In addition, the team composition should also
reflect equal organisational status.
Besides that, an appropriate Value Management study participant should have
the characteristics of:
Superior mastery of the individual’s area of technical expertise;
Above average creative abilities and skills;
Have desire to improve the project;
Above average communication skills; and
Ability to get along with people.
After the characteristic of the team members has been identified, there are
generally three ways to assemble the Value Management team:
24
Use the present professional team
An outside professional team of architects, engineers and quantity
surveyor are gathered together to look at the scheme once again
Integrate the existing professionals with client’s representatives
Although these three ways of assembling the Value Management are
different, each way has its own advantages. The existing team is familiar with the
details of the project, as a result it can reducing the time required for briefing and
transfer of information.
2.8 Implementation of Value Management Practice
For small or occasional construction customers implementing and
maintaining a Value Management approach might include:
1) Attending Value Management awareness seminars
2) Training an in-house value manager/facilitator
3) Trying a Value Management exercise
4) Collecting and maintaining an information database
5) Feedback from post project review to demonstrate level of Value
Management success achieved.
25
2.8.1 Project Selection Techniques
In the construction industry, there are thousand of items involved in this field.
Every item of potentially low value and high cost must be identified before the Value
Management approach can be applied. It is not an easy task to find out items or areas
that represent the unnecessary costs.
However, there are some techniques can be use to find out items or areas that
are potentially low value and high cost such as analysis of previous study areas, study
of life-cycle cost impact and breakdown analysis.
2.8.1.1 Analysis of Previous Study Areas
During the operation of the Value Management program, source of
information and areas previously studied can be use for selecting projects, Dell’
Isola. (1988) mentioned that the experience of the application of Value Management
and analysis of data from organizations with Value Management program can
develop approximately 30% of savings.
2.8.1.2 Life Cycle Cost Impact
Life cycle cost for an item defined as overall cost exists in the item life
time (Rosnah, 2005). Life cycle cost in construction process including preliminary
design cost, detail design cost, construction cost, testing cost, operation and
26
maintenance cost, and finally is demolish cost. Refer to figure 2.3, life cycle cost
started from the concept phase which is to identify the customer needs and end by
demolish activity.
100
75
Concept Phase
Percentage of Cost
Time & Activities
Design Phase
Construction Phase
Operation & Maintenance Phase
Demolish Phase
Figure 2.3: Life Cycle Cost in Construction
(Source: Rosnah, 2005)
Commonly the life cycle cost for an item can be divided into collective phase
and operation and maintenance phase. Collective phase started with the activity to
identify the customer’s needs to achieve requirement function in the project. It is in
the initial stage in the construction process which including concept phase and
preliminary stage of design. While the operation phase is included the construction
stage, operation, maintenance and last with demolition.
Refer to figure 3, it prove that 75 percent of the life cycle cost come from the
collective phase which is includes the concept phase and preliminary stage of design.
27
Therefore it is a critical phase to find out items or areas that are potentially low value
and high cost and it can be eliminated.
2.8.1.3 Breakdown Analysis
In breakdown analysis, the systems, subsystems, and special equipment
are ranked from highest to lowest in terms of total cost per unit to describe the
distribution of expenditures. The analysis is further refined by breaking down unit
costs into functional areas such as electrical, mechanical, and structural. This
analysis is base on the principles expressed by Pareto's law.
Pareto's law meaning that 20 percent of the system elements contain the
greater percent (80%) of the overall cost (Dell’Isola, 1988). Therefore a small
number of elements will contain the greater percentage of unnecessary costs. During
the Value Management study, all these elements will be analyzed to identify the
greater amount of unnecessary cost.
2.9 Value Management Methodology
There are several approaches or methodology can be selected to implement
the value management in the construction industry which includes the, 40-hour job
plan methodology, The Value Management Audit, The Contractor’s Change
Proposal, and Japanese 3 hours Compact Value Engineering Program.
28
2.9.1 The Value Management Audit
The value management audit is a service offered to value managers by large
corporation companies or government departments to review expenditure proposals
put forward by subsidiary companies or regional authorities. (Hasnan, 1994).
In this approach, the value manager will visit the subsidiary companies or the
regional authorities and undertake a study of the proposal from the perspective of
providing basic functions which normally last for one to two days following the
procedures of the job plan. After the study, the value manager will submit a report
regarding the most cost-effective approach to provide the basic functions.
2.9.2 The Contractor’s Change Proposal
This is a post tender change approach made by the contractor. In this
approach, the client may include a clause in the conditions of contract which states
that the contractor will receive a certain percentage of the cost saved if the change
submitted is accepted by the design team. This is to encourage the contractor to
recommend the effective solutions to the project.
This is considered to be a low cost approach because it uses the creative
talents of contractors and the expertise of the contractors, especially on the technical
aspects of the projects. But it may also delay the progress as the design team has to
evaluate the changes proposed by the contractors.
29
2.9.3 Japanese 3 hours Compact Value Engineering Program
The Society of Japanese Value Engineering has developed a compact “3-hour
Value Engineering program” for the use on construction site to improve construction
methods and allocation of resources. In this approach, it focuses on the potential
parts for improvement. But unlike the formal 40-hour workshop, this approach only
lasts for 3 hours. A compact studies will be carried out frequently on construction
sites. (Brandon, 2000)
2.10 Value Management job plan methodology
This 40-hour workshop is the most often adopted approach in value
management. As defined by Hasnan (1994), it involves the review of sketch design
of a project by a second design team within a working week under the chairmanship
of a value manager.
The procedures of the workshop are briefly outlined as follows:
(a) The client informs the design team of the intention of implementing a
value management exercise,
(b) The client appoints the Value Management Team Coordinator
(VMTC or the value manager)
(c) The VMTC appoints a value management team,
(d) The workshop is held either in a hotel or in the client’s office,
(e) The workshop commences and the team follows the methodology of
job plan.
30
Based on the Value Management standard introduced by SAVE, the Value
Management job plan will covers 3 major period of activities which including Pre-
Study, Value Management Study and the Post-Study. (John W. Bryant, 1998)
2.10.1 Pre-Study
In this stage, it will include the preparation tasks which involve six areas
such as identify client’s needs, gathering a complete data file of the project,
determining evaluation factors, scoping the specific study, building appropriate
models and determining the team composition.
2.10.1.1 Identify client’s needs
The objectives to identify the client’s needs are:
Identify the importance of characteristics of the product or project
Determine the degree the seriousness of client’s complaints of the
product or project
When the project is just started like a new construction project, the analysis
may be tied to project goals and objectives. The results of this task will used in the
Information Phase.
31
2.10.1.2 Gather and Complete Data File
Sources of information can be divided into Primary and Secondary. People
and documentation are the primary sources. People sources include clients, original
designer, architect, quantity surveyor, the builders (manufacturing, constructors, or
systems designers), and consultants. While the drawings, project specifications, bid
documents and project plans are part of the documentation sources.
Literature such as engineering and design standards, regulations, test results,
failure reports, and journals articles are the secondary sources. Another major source
for secondary source is through site visitation by the Value Management team.
2.10.1.3 Determine Evaluation Factors
The Value Management team will determines and discusses with clients
what will be the criteria for evaluation of ideas and the relative importance of each
criterion to final recommendations and decisions for change.
2.10.1.4 Scope of the study
The scope statement for the specific study will be developed. This
statement defines the limits of the study based on the data-gathering tasks. The limits
are the starting point and the completion point of the study. The scope statement also
defines what is not included in the study.
32
2.10.1.5 Build Models
Based on the scope statement, the team may compile models for further
understanding of the study. These include models such as cost, time, flow charts,
and distribution for each study.
2.10.1.6 Determine Team Composition
The study team composition is reviewed to assure all necessary customers,
technical, and management areas are represented. Value Manager will confirm the
actual study schedule, location and need for any support personnel.
2.10.2 Value Management Study
The study or session usually follows an organized and systematic job plan,
which is strongly stress by Value Management methodology. It should compromise
of the following common stages:
1) Information stage
2) Functional Analysis stage
3) Creativity stage
4) Evaluation / judgement stage
5) Development stage
6) Recommendation stage
33
2.10.2.1 Information stage
This phase of the workshop is purposed to obtaining and understanding of
the system, operation or item to sharing and dissemination of information relating to
the project includes identifying the problem situation like high cost areas and
identifying the project functions at the high cost areas. The more chance to reduce
the project’s cost where there is a problem in a particular areas or elements.
(Goldhaber, 1977)
The project clients and/or designer brief the Value Management team to
provide an opportunity for them to ask questions based on their data research. If a
site visitation was not done during Pre-Study, it should be completed during this
phase. Finally, the scope statement is reviewed for any adjustments due to additional
information gathered during the Information Phase.
2.10.2.2 Functional Analysis stage
In this phase, the function of the project is identify and analyzed (Goldhaber,
1977). It may be represented in a hierarchical format and displayed on a function
diagram. Function Analysis is basically a disciplined approach to meet the needs and
required functions.
Function Analysis System Technique (FAST) diagram was used to illustrate
how depending functions are graphically arranged to allow for “how” and “why”
questions to be addressed logically. The technique assisted in the analysis of each
function to eliminate unnecessary processes and provides a framework to seek better
ideas or options. It is a useful technique to determine the function interrelation in
34
analyzing a whole system or a major portion of a system and gives a better
understanding of the interaction of function and cost. (Miles, 1989)
It is proved that by using the FAST diagram, it can concentrate the mind of
the value management team to a concept to identify the functional requirement. They
also can identify the item of the project which requires higher cost but functional
approach is relatively low. (Hasnan, 1994)
The FAST diagram has developed to suit various situations over the years. In
the functional analysis stage, the team will perform the following steps (John W.
Bryant, 1998):
i. Recognize functions of the product, project, or process. This is often
referred to as Random Function Definition.
ii. Categorize the functions as basic or secondary
iii. Make a function Model - Function Analysis System Technique
(FAST) diagram.
iv. Assign cost or other measurement criteria to that functions
v. Establish worth of functions by assigning the previously established
client’s needs to the functions
vi. Compare cost to worth of functions to establish the best opportunities
for improvement
vii. Choose functions for continued analysis
viii. Refine study scope
35
Independent Function
Supporting
Dependent Function
Supporting
Minor Logic Path
Objectives or Specification
How Why
Highest Order
Function (Output)
Basic Function
Dependant Function
Lowest Order Function
Activity
Independent Function
When
Scope of the Problem under Study
Highest Order Function
Lowest Order
Function (Input)
Minor Logic Path
Figure 2.4: The basic FAST diagram (Source: http://www.va1ue-eng.org/)
36
2.10.2.3 Creativity / Speculation stage
In the creativity phase, the Value Management team will explores the
alternatives approaches for achievement of functions, and generates alternatives by
creativity simulating techniques, such as brainstorming. During this phase, the
question will be asked is “what else will perform the required function?” More
outstanding of solution will be develop when there is a greater amount of alternatives
generated. (Goldhaber, 1977) And the ideas generated were focused on the basic
functions established at the earlier stage. Then all ideas will be evaluated and
developed in the next stage. Creativity is a mental process in which past experience
is a combined and recombined to form new combination. The purpose is to create
new combinations which will perform the desired function at less total cost and
improved its performance.
Brainstorming
Azlan (2005) mentioned that brainstorming is a lateral thinking process which
can help to break out of thinking pattern into a new ways of looking things. It is also
a tremendous way of establish positive thinking and develop creative ideas and
solution to a specific problem. The ideas should be develop as fast as possible and
create as broad as possible during the brainstorming session. No criticism of ideas
during brainstorming session because the judgment and analysis at this stage will
stunt idea generation.
2.10.2.4 Evaluation / Judgement stage
Evaluation phase uses the list of ideas produced in the creativity phase to
search for and come up with one or two approach that will meet the needs of the
37
client and project. The ideas selected for evaluation should be determined on the
basis of:
1) Probability of significant savings
2) Available of time and resources
3) Probability of implementation
4) Probability of developing alternates of lower life cycle costs
Jamal (1997) mentioned that the evaluation phase was carried out in two
stages. In the first stage, all suggestion was studied and those that could not be
adopted because of the quality and reliability reasons were eliminated. In this stage,
Value Management team member will evaluate both advantages and disadvantages of
the ideas selected. After that, short listed ideas were critically studied with respect to
feasibility, practically of production and other factors. Those ideas that have
potential for cost savings or improvement to the project are then developed further.
If none of the ideas meet the criteria, the Value Management team will returns to the
creativity stage. (John W. Bryant, 1998)
Evaluation Matrices
The prioritizing matrix in Figure 2.5 and the weighted evaluation matrix in
Figure 2.6 are usually adopted by some practitioners during this evaluation stage.
The prioritizing matrix is adopted to determine the team perception of the importance
of various factors relating to a single item, products or system. The weight
evaluation is used to assist in the evaluation of range or options available relating to a
particular problem.
38
Figure 2.5: Prioritizing matrix (Mazlan, 1999)
39
E = Excellent VG = Very Good G = Good F = Fair P = Poor
Figure 2.6: Evaluation matrix (Mazlan, 1999)
40
2.10.2..5 Development stage
The objective of the Development Phase is to select and prepare the “best”
alternative(s) for improving value. And also develop final written recommendations
for the surviving alternative. This process will involves detail technical, economic
evaluation and also consider of the probability of successful implementation.
(Macedo, 1978)
This stage consists of a critical and detailed analysis of the ideas selected for
further studied. So that the process should be done in this phase must be including:
1) Start with the highest ranked alternatives, develop a benefit analysis and
implementation requirements, including estimated initial costs, life cycle
costs, and implementation costs.
2) Carry out performance benefit analysis.
3) Gather technical data package for each proposed alternative:
a) Written descriptions and sketch of original design and proposed
alternatives
b) Clearly showing the differences of cost and performance data between
the original design and proposed alternatives
c) Technical back-up data such as information sources, calculations, and
literature.
d) Analysis of the overall impact of the change.
4) Implementation plan established which including proposed schedule of all
implementation activities, team assignments and management requirements.
41
2.10.2.6 Recommendation stage
This stage comprises two phases, first is visual presentation followed by a
written report submission to the clients. The presentation encompassed the various
stage outcomes and the final recommendations put forward to the clients for their
consideration and approval to implement the recommended alternatives. The
presentation may be in oral or written form.
It is up to the value manager to determine the real reasons. The job of the
value manager is to identify the problem, make a diplomatic approach, and logical
reasoning, thus reducing the probability of failure. If the proposal depends upon a
generalized statement, the validity of the entire study may be doubted.
This phase of the Value Management job plan includes the following steps
(Goldhaber, 1977):
1) Written report showing consideration and calculation involved for every
alternatives.
2) Preparing and presenting the Value Management proposals
3) Presenting a plan of action to show areas of increased value to ensure
implementation of the selected alternatives
4) Obtaining a decision of positive approval
5) Written final report and confirms the implementation plan accepted by
clients.
42
2.10.3 Post-Study
After the Value Management proposals has approved, it must be
implemented as soon as possible. The recommendations must be converted into
actions. The Value Management team should be required to prepare first drafts of
handbooks, specifications, change orders, drawings, and contract requirements. Such
drafts help to ensure proper transformation of the idea into action to monitor progress
of final implementation. Value Management team should responsibility to
implement the Value Management change. Progress should be reviewed periodically
to make sure that the roadblocks which arise can be overcome.(Goldhaber, 1977) In
post-study, the team will perform following steps:
1) Provide assistance, clear up misconceptions, and resolve problems that may
develop in the implementation process.
2) Minimize delays encountered by the proposal in the implementation process
3) Audit actual results for comparison with what originally had been expected
4) Submit to clients a report on the cost savings.
5) Submit to clients a report on any technical innovations so that they can be
considered for other projects.
6) Identify any problems and recommend corrective action for the next project.
7) Obtain copies of all completed implementation actions as information for
future projects and Value Management studies.
43
In short, the established of Value Management’s methodology has proved that
it can be eliminate the unnecessary cost. This systematic process helps the design
team to improve the understanding client’s requirements. Besides, it also offers
optimum value for money. Table 2.2 shows the comparison of Value Management
approach. While Figure 2.7 shows the timing of application of for different Value
Management Methodology.
Table 2.2: Comparison of Value Management Approach (Source: Fong, 1998)
VM approach Duration of study Time of study
Value Management Job Plan -
40 hour workshop
5 days, 40 hours After sketch design
The Value Management Audit 1-2 days Briefing stage
Contractor’s Change Proposal Not regular Site operation
The Japanese Compact Study 3 hours Site operation
44
Inception
Feasibility
Outline Proposal
Detail Design
Bills of Quantities
Tender Action
Project Planning
Site Operation
Completion
Scheme Design
Feedback
Sketch Plan
Working Drawing
Site Operation
Briefing
Value Management Audit
40 Hours Value Management Workshop
Contractor Value Management Change Proposal
Figure 2.7: The timing of application for different Value Management
Methodology (Source: Kelly & Male, 1991)
45
2.11 Factors that hinders the application of Value Management in
construction industry.
Despite a positive belief in Value Management prospects, it is also important
to identify the major problems that might hinder the successful of Value
Management application in construction industry.
i. Lack of time to implement
The 40 hour job plan is consider as a standard approach for application of
Value Management session and is recommended by many professional. However,
the main problem for implementing this approach is time. It is so difficult to invite
the key project professional such as the architect, engineer, and project manager etc
to attend the study for so long period of time. Many professional in the construction
industry claims that it may need a lot of time to implement the Value Management
practice and they are also lacks of time to involve.
ii. Difficulty of conducting evaluation and analysis
Value Management team members sometimes fails to collect sufficient
project information such as cost data and site information to produce a data file in
Pre-Study stage of Value Management studies. Many clients have shortened the
duration of Value Management studies from 5 days to 1 or 2 days due to lack of
information. Therefore, this evaluation and analysis process cannot be conducted
properly without providing adequate project information during the preliminary
phase.
As a result, the Value Management team has to make all of the necessary
assumptions in meetings. This may increases the uncertainty of the outputs from
Value Management studies. Further consultations and investigations, such as backup
46
calculations and cost analyses require after the ideas produced in the creative phase,
to determine its practicability and potential benefits during the evaluation phase.
These tasks needed a lot of time, possibly taking over half of the time in a meeting.
As a result, members cannot complete all the necessary analysis and provide
responses to questions in meetings.
iii. Lack of support from project owner
Although the Value Management can promotes innovation and provides a lot
of benefits. However, it is not an easy task to change habits and present working
culture in any organization. In addition, there is no policies carry out by the
government to promotes and encourage the Value Management implementation in
construction industry. Due to the government did not take the first step, the private
sector also lack supporting this method. (Mazlan, 1998)
iv. Interruption to normal work schedule
Interruption to normal work schedule is the most common critiques on Value
Management in construction industry. It is difficult to retain the professional group’s
undivided attention from other things throughout this period of 5 days workshop.
During the Value Management workshop, the design or construction progress has to
be delayed due to they have to find out the certain function of project for
improvement.
v. Defensive attitude of the original design team
The Value Management process is need to involving a multi-disciplinary
representative group of people working together. Therefore, the contributions and
the involvement of design team are important for the success of Value Management
studies.
47
The Value Management normally carried out at 35 % of design progress
(Palmer, 1996). The defensive attitude of the design team is not easily to be
eliminated. Mazlan (1998) mentioned that the designer is quite reluctant to involved
and doubtful about the benefit of applying Value Management and thought that this
was only another cost cutting methodology and simply finding faults to their designs.
Many designers argued that in a few days time the Value Management team could
not be hoped to fully understand the project like the existing design team.
vi. Lack of confident to apply it
Why the construction professional especially the design team lack of
confident to involve in Value Management? As we know that the design liability of
Value Management proposal is one of the thorny issues in Value Management
applications, this result in controversial exist whether the Value Management team or
the existing design team will take the design liability for any recommendation
implemented. (Kelly and Males, 1991)
vii. Lack of knowledge about Value Management
Many construction professional do not understand what is about Value
Management and its benefits of applying. Mohd Zainuddin (2000) mentioned that
only less than 10 % of the construction firms had practice the Value Management
study. Furthermore, the degree of understanding about the Value Management by
the professional group will directly affected the level of acceptance or usage of Value
Management in construction industry.
viii. Too expensive to carry out Value Management
The implementation cost of value management can be an expensive exercise
as it is a team-oriented approach. Just like mentioned earlier, the fee for standard
workshop in North America is in the range between US$20,000 - $40,000. (Hasnan,
48
1994) Basically, clients do not want to pay an extra fee for the Value Management
services.
ix. Lack of local Value Management guideline
As we know, the Value Management is rarely applied in Malaysia’s
construction industry. And currently, according to Mazlan, the Value Management
facilitators in Malaysia are still using the American standard such as Value
Management Job Plan Methodology that introduced by SAVE to perform a Value
Management study. There is still no Malaysian guideline for implementation of this
approach. As a result, it cause the construction professional bare in mind that the
Value Management is only applicable in others counties but not in Malaysia.
CHAPTER 3
RESEARCH METHODOLOGY
3.1 Introduction
The finding of the literature review in the previous chapter only provides an
overview of Value Management in construction industry. A through literature
review is not much information on the application of Value Management in the
Malaysian construction industry. So, the best way to obtain information about the
current degree of understanding and usage of Value Management and also factors
that hinders and encourages the application of Value Management in construction
industry are by conduct a questionnaire survey and follow up interview. These kinds
of information are categorized as Primary Data.
However, the literature review can gather the information about the Value
Management job plan methodology. Information gather from this way is known as
Secondary Information. This information can be obtained from article, journals,
reference books, conference papers, internet web site and other published research
papers. From the literature review, a clearer framework of this research was
established.
50
3.2 Methodology
This research was conducted in 6 stages which are identify the problem,
literature review, collecting both primary and secondary data, evaluation and analysis
of data, conclusion and recommendation of the research, and last with the feedback
from supervisor and panels. Methodology of this research is described as follow:
3.2.1 Problem Statement & Research Objectives
A statement of problem must be identifying to justify a reason to start doing a
research. After the problems has been identify, several research objectives are to be
set and the scopes of study are specify to conducting the research.
3.2.2 Literature Review
All information regarding Value Management in the construction industry is
gathered through a literature review. This is considered as a very crucial stage
because at this stage, all the relevant information that is needed to build more in
depth knowledge about the topic is chosen for this research project.
51
3.2.3 Collecting Primary and Secondary Data
The data of this research will collect through conducting an interviews,
literature review and survey questionnaires. A questionnaire need to design and
mainly focuses on the general perceptions, knowledge, understanding and
experiences in the application of value management. The survey widely obtain the
views of construction professionals {including consultants, contractors and
developers) about factors that hinders and encourages the implementation of Value
Management in the construction industry.
At this stage, more practical information is obtained from the answer from the
questionnaire and some can be from interview with the relevant individual. But
before designing the questionnaire, a very important point need to be considered,
which are the questions have to be short and simple without touching any sensitive or
confidential issues as reject may be offended.
3.2.3.1 Follow- up interview
Follow- up interview is said to be the most difficult part for the whole
research as not everyone who is willing to answer the questionnaire wants to be
interviewed. The main purpose to have the interview is to get a more detail
understanding and knowledge about Value Management. Besides that, the answers
from the interviewees are more practical than the theories obtained from texts of
journals. This means that the information collected is more relevant to real life local
construction industry.
52
Follow-up interview will undertake with two experts in Value Management
including the president of the Institute of Value Management Malaysia Tuan Haji
Mohd Mazlan Che Mat and assistant director of JKR Kuala Lumpur Headquarter Mr
Zulkarnain. With the help of local Value Management experts, the author can gather
further comments and explanations of the survey results. The survey results and
relevant discussion may draw an overall picture of Value Management applications
in Malaysia’s construction industry.
3.2.3.2 Questionnaire
In the questionnaire, there were three categories of questions. One was
already posed with the possible answers, and respondents are required to mark the
most appropriate answer with a tick. If any answers were left out, there was blank
space provided for respondents to express alternative information.
In the other category of question, respondents presented with a list of
statements related to Value Management application and the factors that hinder and
encourages the application. Respondents are requested to indicate on a scale from 1
to 5 whether they agreed with each of the statements by using Likert Scale. Each
scale from point 1 to 5 represents the following rating:
Ordinal Scale Level of Agreement / critical
1 Strongly disagree / least critical
2 Disagree / slightly critical
3 Neutral / average
4 Agree / critical
5 Strongly agree / very critical
53
In last category, respondents will be asking to suggest and draw down any
recommendation for increasing the awareness to implement the Value Management
in construction industry.
3.2.4 Data Analysis
All the collected data will be store and analyze by using SPSS (Statistical
Package for Social Science) as shown in Figure 3.1 and 3.2:
Figure 3.1: All data from the questionnaires are stored in the SPSS Data Editor
54
Figure 3.2: The output of the analysis by using SPSS
Average Index (AI)
The data that obtain from the questionnaires are analyse using Average Index
(AI). Al-Hammad and Sadi Assaf (1996) stated that the formula for Average Index is
as follows:
Average Index (AI) = ∑ αi xi
∑ xi
Where:
αi = constraint describing the weight given to
55
xi = constraint describing the frequency of the response for i = 1,2,3,4,5 and
illustrated as follows:
x1 = Frequency of the ‘strongly disagree’ response and corresponding to: a1 = 1
x2 = Frequency of the ‘disagree’ response and corresponding to: a2 = 2
x3 = Frequency of the ‘neutral’ response and corresponding to: a3 = 3
x4 = Frequency of the ‘agree’ response and corresponding to: a4 = 4
x5 = Frequency of the ‘strongly agree’ response and corresponding to: a5 = 5
Mc Caffer and Zaimi Majid (1977) stated that the classification of the rating
scale is like following:
a) Strongly disagree : 1.0 ≤ Average Index < 1.5
b) Disagree : 1.5 ≤ Average Index < 2.5
c) Neutral : 2.5 ≤ Average Index < 3.5
d) Agree : 3.5 ≤ Average Index < 4.5
e) Strongly agree : 4.5 ≤ Average Index ≤ 5.0
3.2.5 Conclusion and Summary
After all the stages are done, a conclusion and summary of findings from the
research are presented. This is where all the information collected are reviewed and
analysed. Then it is reproduce in own words to be presented to the relevant
individual.
56
3.2.6 Feedback
After the presentation, feedback from the appropriate lecturer, supervisor and
panels are much appreciated. This is an important part as this will contribute to a
better research project.
CHAPTER 4
ANALYSIS AND RESULT
4.1 Introduction
The data for this research were collected through questionnaires and by
follow up interview with some of the respondents. The questionnaire is focused on
the respondent’s knowledge, understanding and experiences in the application of
Value Management in construction industry. All this data will be stored and
analyzed by using SPSS (Statistic Package for Social Science). And the result of the
analysis will be presented by using pie chart, bar chart or descriptive statistic like
average index. The main purpose of using SPSS to analyze the data is to create a
result so that can achieve the objectives of the research such as:
1) To identify the degree of understanding of Value Management in the
construction industry.
2) To identify the main factors that hinders the application of value
management in construction industry.
3) To identify the main factors that encourages the implementation of value
management in construction industry.
58
4.2 Questionnaires collected
To achieve the objectives of the research, there were 135 set of questionnaires
posted to the different respondents with different background in construction industry.
However, only 31 respondents made response. Therefore only got 31 set of
questionnaires were collected. Which mean that the questionnaires collected were
only constitute about 22.96 % of the total amount of questionnaires posted (Please
refer Figure 4.1). Although it was below my expectation, but a general picture of the
present status of Value Management in construction industry can still be formed.
Return Rate of The Questionnaires From Respondents
Not Returned77.04%
Successfully Returned22.96%
Successfully Returned Not Returned
Figure 4.1: Return rate of the questionnaires from the respondents
59
4.3 Background of respondents
Table 4.1 and Figure 4.2 are showing the distribution of the questionnaires
that were sent and received from different construction firms. In order to gather
information about awareness of Value Management in different construction
disciplines. The main target respondents should be the clients such as the developer
and government then follows by consultants and contractor. So, the comparison of
the result between different construction disciplines can be made. But unfortunately,
only 24 % and 15.56 % of questionnaires were received from government sector and
developer respectively. While the highest number of questionnaires received is from
contractor which is 10 sets.
67
5
10
21
0
1
2
3
4
5
6
7
8
9
10
Am
ount
of R
espo
nden
ts
GovernmentSector
Developer Structural /Civil
EngineeringConsultancy
Contractor ValueManagementConsultancy
QuantitySurveying
Consultancy
The Amount of Questionaires Received From Different Construction Firm
Figure 4.2: The amount of questionnaires received from different construction firm
60
Table 4.1: The distribution of questionnaires
Target Respondents Amount
sent Amount Received
Percentage Received
(%) Government Sector 25 6 24.00 Developer 45 7 15.56 Structural / Civil Engineering Consultancy 30 5 16.67 Contractor 25 10 40.00 Value Management Consultancy 5 2 40.00 Quantity Surveying Consultancy 5 1 20.00 Total 135 31 22.96
Designation of The Respondents
3
9
6
3
6
2
1
1
0 1 2 3 4 5 6 7 8 9 10
Owner / Investor
Project Manager
Structural / Civil Engineer
Site Supervisor
Quantity Surveyor
Value Management Consultant
Director of Asset
Senior Assistant Director
Amount of Questionnaires
Figure 4.3: Designation of the respondents
Base on the questionnaires received, there are about 80 percent of the
respondents were from top management of the company. The positions held are
managing director, senior assistant director, Value Manager, project manager,
61
engineers and quantity surveyor. (Please refer to Figure 4.3). They could be having
certain level of professional knowledge, ability and maturity to give opinion in the
questionnaires.
4.4 Discussion of Result
4.4.1 Degree of understanding about Value Management
A question about the degree of understanding about Value Management and
Value Engineering were asked, and the result is shown in table 4.2, 4.3 and 4.4. The
average index of degree of understanding about Value Management and Value
Engineering are 3.35 and 3.45 respectively. These mean that the respondent’s degree
of understanding about Value Management and Value Engineering were average.
This represents a fairly high degree of knowledge that was expected, but it should be
pointed out that the result might be a little higher than the actual figure, since most
targeted respondents who never heard of these terms might not returned they
questionnaires.
Table 4.2: Average Index of respondent understanding about Value
Management and Value Engineering
N Minimum
Score Maximum
Score Average
Index Result Value Management 31 1 5 3.35 Average Value Engineering 31 1 5 3.42 Average
62
Table 4.3: Frequency of respondents understand about Value Management
Tot
ally
do
not
unde
rsta
nd
Do
not
unde
rsta
nd
Ave
rage
Und
erst
and
Tot
ally
un
ders
tand
Total
Owner / Investor 0 2 1 0 0 3 Project Manager 0 1 4 3 1 9 Structural / Civil Engineer 0 2 3 1 0 6
Site Supervisor 1 0 2 0 0 3 Quantity Surveyor 1 0 0 1 4 6 Value Management Consultant 0 0 0 0 2 2
Director of Asset 0 0 1 0 0 1 Senior Assistant Director 0 0 0 1 0 1
Total 2 5 11 6 7 31
Table 4.4: Frequency of respondents understand about Value Engineering
Tot
ally
do
not
unde
rsta
nd
Do
not
unde
rsta
nd
Ave
rage
Und
erst
and
Tot
ally
un
ders
tand
Total Owner / Investor 0 1 1 1 0 3 Project Manager 0 1 4 3 1 9 Structural / Civil Engineer 0 2 3 1 0 6 Site Supervisor 1 0 2 0 0 3 Quantity Surveyor 1 0 0 1 4 6 Value Management Consultant 0 0 0 0 2 2 Director of Asset 0 0 1 0 0 1 Senior Assistant Director 0 0 0 1 0 1 Total 2 4 11 7 7 31
63
4.4.2 Sources to obtained knowledge about Value Management
From Figure 4.4, the respondents had heard or learned about the terms of
Value Management from different way. Most of them learned it when they were
studied in college or university, which have of 12 respondents or about 39 % of the
total respondents. However, the respondents who never learned about Value
Management only got 6.5 % or 2 persons.
12
6 65
2
0
2
4
6
8
10
12
Am
ount
of R
espo
nden
ts
College orUniversity
ProfessionalSeminars
Professionalpublication,
journals, art icles
Colleagues orfriends
Never learn
Sources of Knowledge about Value Management Obtained by The Respondents
Figure 4.4: Sources to obtained knowledge about Value Management
64
4.4.3 Perception of Value Management
Table 4.5: Perception of Value Management
N
Stro
ngly
Dis
agre
e
Dis
agre
e
Neu
tral
Agr
ee
Stro
ngly
Agr
ee
Ave
rage
Inde
x
Res
ult
VM is same as traditional cost control 31 6 11 7 6 1 2.52 Average
VM is an method for cost saving 31 1 2 8 17 3 3.61 Agree
VM is can reduce unnecessary project cost efficiently
31 0 0 4 20 7 4.10 Agree
VM is a value enhancing tool rather than just a method of cost reduction
31 1 0 8 11 11 4.00 Agree
VM is easy to apply and the result of cost saving is significant
31 0 4 17 8 2 3.26 Average
VM is has its potential to growth in Malaysia’s construction industry
31 1 1 9 16 4 3.68 Agree
To identify the respondent’s actual perception of Value Management, the
questions in the table 4.5 had been created for respondents to answer whether they
agree with the statement provided. From the result, basically most of them had some
general understanding of Value Management. However, there are a few respondents
already misunderstanding of Value Management. From the first statement, there are
7 respondents agree that the Value Management is same as traditional cost control
method. But in actual, cost control method only aims to cut cost and to balance the
elemental costs, in addition its process is reactive and on-going which can be done by
one man.
65
Then for the second and the third statement, majority of the respondents are
agreed that the Value Management is a method for cost saving and also can remove
the unnecessary cost of construction project. While for the fourth statement, only 1
respondent strongly disagree that the Value Management is a value enhancing tool
rather than just a method of cost reduction. This respondent might misunderstanding
that the Value Management only a method of cost saving rather than value
enhancement. However, the average index is 4.00 where majority of the respondents
are agree with the statement.
Finally, for the last statement where Value Management is easy to apply and
the result of cost saving is significant, the average index are only 3.26. Four of the
respondents commented that the Value Management is difficult to applied although
the result of cost saving is significant. In order to overcome such misconception and
to increase the degree of knowledge among construction professional, it is necessary
to disseminate and promote the Value Management in our country.
In order to ensure the quality of the survey outcomes, 7 respondents (Please
refer table 4.3) who had no or little knowledge or significant misunderstood Value
Management were filtered out from the sample in following analysis which requires
the respondents having basic understanding of Value Management.
4.4.4 Frequency of applying Value Management at different stages in
construction process
Base on theory, Value Management session can be conducted at any stage in
construction process. Nevertheless, to achieve optimum cost saving and at the same
time can enhance the function of the project elements, Value Management should be
conducted as soon as possible.
66
Table 4.6: Frequency of applying Value Management at different stages
N
Lea
st F
requ
ent
Les
s Fre
quen
t
Ave
rage
Freq
uent
Mos
t Fre
quen
t
Ave
rage
Inde
x
Res
ult (
Ran
k)
Concept / feasibility Stage 24 0 2 6 11 5 3.79 Frequent
(1) Preliminary
Drawing 24 0 2 7 10 5 3.75 Frequent (2)
Detail Drawing 24 0 1 12 7 4 3.58 Frequent
(3) Procurement
24 1 3 11 8 1 3.21 Average (4)
Construction Stage 24 4 7 3 7 3 2.92 Average
(5)
The result listed in Table 4.6 show that the frequency of applying Value
Management at different stages. Comment from 24 valid respondents who had above
average or wider knowledge about Value Management being use for the analysis.
From the result, the highest average index is 3.79 mean that majority of the
respondents comment that the Value Management session should be conducted at
concept or feasibility stage. While the construction stage had lowest average index
(2.92) where it is least frequent to apply Value Management compare to other stages.
4.4.5 Respondent’s experience in Value Management Sessions
There are only 11 respondents or 35.48 % of overall sample collected had
experienced in Value Management sessions. On the other hand, about 64.52 % or 20
respondents never involved in the sessions and some of them might also do not
understand how the situation when handling Value Management session is. (Please
67
refer to Figure 4.5). This might represent the actual situation of application of Value
Management in the construction industry.
Respondent's Experience In Value Management Session
Yes35.48%
No64.52%
Figure 4.5: Respondent’s experience in Value Management Sessions
4.4.6 Involvement in Value Management sessions
From Figure 4.6, we can know that the amount of respondents who really
involved in Value Management session is far lower than the amount of respondents
who had never involved at all. Seven of them had experience in handling or involved
in Value Management session more than 5 years, which consist of 2 value managers,
1 project manager, 1 senior assistant director, 2 senior quantity surveyors and 1
engineer.
68
Never Involved< 1 year
1 - 3 years4 - 5 years
> 5 years
20
1 21
7
0
2
4
6
8
10
12
14
16
18
20
Figure 4.6: Total years involved in Value Management sessions
Then, among eleven respondents who had experienced in Value Management
session. Only 4 of them had involved or handling Value Management session which
more than 10 times. These consist of a value manager, senior quantity surveyor,
engineer and a project manager, please refer to Figure 4.7. However, 5 of them lack
of experience in Value Management session because they only involved less than 5
times in the session.
69
20
5
2
4
0 5 10 15 20
Never Involved
1 - 5 times
6 - 10 times
> 10 times
Figure 4.7: The frequency of involvement in Value Management sessions
4.4.7 Application of Value Management in construction industry
For the result in Figure 4.8, a question had been asked to the respondents is
“When applying Value Management session, who normally arrange and lead the
Value Management session?” So the result must be based on the respondents who
had experienced in Value Management session. For this case, only 11 valid data had
obtained while the data from the 20 other respondents who never involved in Value
Management will not be consider in the analysis. From the chart, the construction
disciplines that mostly arranged or lead the Value Management session is developer
or clients, which about 36.4% of the sample. This result is acceptable because clients
or developer must play an important role in Value Management session to verify
what the objectives of construction project are, so that the Value Management can be
carried on.
70
4
1
3
0
3
0
1
2
3
4
Developer /Clients
Structural /Civil
Engineers
QuantitySurveyor
Contractor ValueManagementConsultant
Figure 4.8: Construction disciplines that leading / carry out the Value
Management sessions
4.4.8 Types of project involved in Value Management session
From the data obtained from the 11 respondents who had experienced in
Value Management, the construction projects in Malaysia that will involve and
discussed in Value Management session can be divided into government’s projects
and private sector’s project. Refer to Figure 4.9, there are seven respondents (63.6%)
agree that the construction project which mostly involve in Value Management
session is private sector’s project, and this is higher than the government project
(36.4%).
71
4
7
0
1
2
3
4
5
6
7N
o of
Res
pond
ent
Government Project Private Sector's Project
Figure 4.9: Comparison between government project and private sector’s
project that involved in Value Management session
There are several types of construction project involved in Value
Management session. (Please refer Figure 4.10). The highest involvement in Value
Management session is high rise building project, which is about 45.5% from the
sample. Then follows by the civil works and residential houses or shops (18.18%
correspondingly). And the lowest involvements are construction of university and
major upgrading of existing structure (9.09%).
72
2
5
2
1 1
0
1
2
3
4
5
6
Civil Works High RiseBuilding
ResidentialHouses / Shop
University MajorUpgrading /
Renovation ofExistingStructure
No
of R
espo
nden
ts
Figure 4.10: Types of project involved in Value Management session
4.4.9 The outcome of Value Management Session
Only 11 sets of data are valid to use for the analysis, therefore it is quite
difficult to measure the actual value of savings by percentage over the initial project
cost. The respondents were asked to give the percentage of cost saving over the
initial project cost. The distribution of the value of cost saving’s percentage is shown
as Figure 4.11. Among the 11 valid replied from respondents, the value of cost
saving’s percentage is range from 0.01 % to 50%. Most of them agree that the cost
saving is in the range of 10 to 19.99 % (45.45% of the valid respondents). While
none of them stated that value management couldn’t provide any cost saving.
73
0
2
6
0
3
00
1
2
3
4
5
6
No
of V
alid
Res
pond
ents
No Saving 0 %
0.01 - 9.99%
10 - 19.99%
20 - 29.99%
30 - 50 % > 50 %
Figure 4.11: The saving produce by Value Management for construction project
There are 100% of the respondents are above the average or satisfaction level
with the overall outcome of the Value Management session. None of them
commented that the outcome of the Value Management is ‘bad’ or ‘poor’. The
average index calculated is 3.91 which mean that the outcome of the Value
Management session is good and the respondents are satisfied the result obtained
from Value Management. The average index and the distribution of the result are
shown as in table 4.7 and table 4.8.
From the questionnaires, the respondents need to state the reason for why
they choose that level of satisfaction. This qualitative data is also collected through
interviews with some of the respondents, and the results are summarized as follows:
Value Management can help a lot in understanding and integration of all
parties involved, the final solution is more practical and understood by a lot more
people and supported by those who involved. So that it can develop a good effective
74
team spirit. In addition, Value Management also can help to save in not only in cost
of project, but also save in human and time consumption. Therefore the construction
project can be implemented in more effectively.
Table 4.7: Average index regarding the respondent’s satisfaction with overall
outcome of Value Management session
N
Minimum
Score
Maximum
Score
Average
Index Result
Satisfaction about overall outcome of Value
Management Session 11 3 5 3.91 Good
Table 4.8: Distribution of frequency about respondent’s satisfaction with overall
outcome of Value Management session
Bad Poor Average Good Excellent Total
Project Manager 0 0 1 2 0 3 Structural / Civil Engineer 0 0 1 0 0 1 Quantity Surveyor 0 0 0 2 0 2 Value Management Consultant 0 0 0 2 1 3 Director of Asset
0 0 0 1 0 1 Senior Assistant Director 0 0 0 1 0 1 Total 0 0 2 8 1 11
75
4.4.10 Factors that hinders the implementation of Value Management in
construction industry
Table 4.9 shows the respondent’s comment about the factors that hinders the
implementation of Value Management in construction industry. 12 factors were
identified and among these factors, the major factor which had the highest value of
average index (4.08) is lack of knowledge about Value Management lack of support
from project owners.
In fact, ‘lack of knowledge about Value Management’ is the expected answer
from the respondents who never carries out any Value Management studies in their
organization. In addition, those who had experience in Value Management session
also gave their ‘agree’ or ‘strongly agree’ vote to comment why Value Management
is rarely take on in construction industry. Training courses and the references books
only focus on Value Management theories while provide little information on how to
implement it.
While when lack of support from project owners to promote or undertaken
the Value Management in construction industry is also another major factor that
hinders its implementation. The government still did not play an important role to
perform and promote this new method, while the project owner also lack of interest
in carry out Value Management for their project.
Then, the third critical factors are ‘interruption to normal work schedule’ and
‘lack of local Value Management implementation guideline’, both average index are
3.58. Then follow up by lack of time to implement etc. Except for ‘too expensive to
carry out the Value Management’, the average index is only 3.00 which is the lowest
value compare to other factors. So this suggests that the money if not the factor that
hinders the implementation of Value Management since the result of cost saving of
Value Management Session is so significant.
76
Table 4.9: Factors that hinders the implementation of Value Management
Factors that hinders the implementation of
Value Management
N
Lea
st C
ritic
al
Slig
htly
Cri
tical
Ave
rage
Cri
tical
Ver
y C
ritic
al
Ave
rage
Inde
x
Res
ult (
Ran
k)
a Lack of time to implement 24 1 4 5 9 5 3.54 Critical
(5)
b Lack of knowledge about Value Management
24 0 0 5 12 7 *4.08 *Critical (1)
c Lack confident to apply it 24 0 0 15 8 1 3.42 Average
(8)
d
Lack of support from parties with authority such as government and project owners.
24 1 1 1 13 8 *4.08 *Critical (1)
e Defensive attitude of the original design team 24 1 1 11 10 1 3.38 Average
(9)
f Interruption to normal work schedule 24 1 2 7 10 4 3.58 Critical
(3)
g Difficulty of conducting evaluation and analysis 24 1 2 7 13 1 3.46 Average
(7)
h Too expensive to carry out Value Management
24 0 6 12 6 0 3.00 Average (10)
i Lack of local VM implementation guideline
24 0 3 7 11 3 3.58 Critical (3)
j Inapplicability of VM principles in Malaysia’s construction industry
24 2 2 4 14 2 3.50 Critical (6)
77
4.4.11 Factors that encourages the application of Value Management in
construction industry
Table 4.10: Factors that encourages the application of Value Management
Factors that encourage the application of Value
Management
N
Lea
st C
ritic
al
Slig
htly
Cri
tical
Ave
rage
Cri
tical
Ver
y C
ritic
al
Ave
rage
Inde
x
Res
ult (
Ran
k)
a
To cut project cost without adversely affecting the quality and performance or the project
24 0 1 8 8 7 3.88 Critical (4)
b Better understanding of the project’s objective
24 0 1 7 8 8 3.96 Critical (3)
c To encourage creative thinking
24 0 2 10 9 3 3.54 Critical (9)
d To achieve optimum value for money in satisfying the customer's needs
24 0 2 1 15 6 4.04 Critical (2)
e Elimination of unnecessary costs
24 0 0 6 10 8 4.08 Critical (1)
f To enhance function of a project
24 0 0 8 11 5 3.88 Critical (4)
g To arrive at a more effective design
24 0 0 7 13 4 3.87 Critical (6)
h Identifies project constraints or problems
24 0 0 7 15 2 3.79 Critical (7)
i Improved team-working
24 1 1 7 13 2 3.58 Critical (8)
j Existing of Value Management manual
24 0 3 12 8 1 3.29 Average(10)
78
The factors that encourage the implementation of Value Management in
construction industry are shown as table 4.10. Base on the comment from 24
respondents who had above average understanding of Value Management. The
average indexes of all factors are over neutral value 3. From the result, the major or
critical factor that encourages the implementation of Value Management is to
eliminate the unnecessary cost. The average index is 4.08, which is the highest value
among the other factors. This indicates that the most important motivation to apply
Value Management in Malaysia’s construction industry is cost reduction.
Then follow up by the factor of achieve optimum value for money in
satisfying the customer's needs (4.04), better understanding of the project’s
objectives (3.96), enhance function of the project and to cut project cost without
adversely affecting the quality and performance or the project (both are 3.88) etc.
On the other hand, the lowest value of the average index for this case is 3.29;
represent the existing of Value Management manual. This might be due to the
procedures and application of Value Management in Malaysia is still follows other
country’s manual, and there is no Malaysia’s Value Management standard created so
far until now.
CHAPTER 5
CONCLUSION
5.1 Introduction
In this final chapter, conclusion of all objectives of the research which listed
earlier in chapter 1 will be briefly discussed. Though the analysis and observation of
the result in chapter 4, all the objectives are meet its requirement. Besides, some
recommendations were listed to improve the awareness and acceptance of Value
Management in construction industry. And the final part of this chapter would be the
suggestion for further study.
5.2 Conclusion
Generally, the first objective was achieved through the literature review in the
chapter 2. Then for the second, third and the final objectives, these objectives were
acquired data from the survey questionnaires that filled by the respondents from
80
construction disciplines. The conclusions of all objectives were summarized as
follows:
5.2.1 The typical Value Management job plan methodology for construction
industry
The Value Management session used a typical Value Management job plan
methodology, comprising of the following 6 common stages introduced by Pro-Value
Management Malaysia:
1. Information
The aim of this stage of Value Management is to provide the information to
establish the areas for Value Management study. Its provide opportunity for the
participants to understand the issues and constraints, as well as to exchange relevant
information among themselves.
2. Analysis
Function Analysis is basically an approach to meet the needs and required
functions. Function Analysis System Technique (FAST) diagram was used for
analysis of each function to eliminate unnecessary processes and provides a
framework to seek better ideas or options.
3. Creativity / Speculation
This stage involved the generation of ideas in a free and creative way through
brainstorming without any criticism. Such technique forces the ideas generation
where focused on the basic functions established under the earlier stage.
4. Judgement
The Judgement or Judicial Analysis stage involved the use of logical thinking
to screening and ranking of ideas generated during the Creative / Speculative stage to
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give the most value improvement potential. The ideas are evaluated by listing the
advantages and disadvantages of each idea.
5. Development
This stage is usually involves the checking and verification of practicability,
fit for purpose, benefits, depending on the selected ideas or alternatives. Then these
ideas are expanded into workable solution.
6. Recommendation
This stage comprises two phases, first is presentation followed by a written
report submission to the top management of the organization for review and reflects
upon the Value Management recommendations.
5.2.2 The degree of understanding of Value Management in construction
industry.
The respondent’s degree of understanding about Value Management was
average. This represents a fairly high degree of knowledge that was expected, but it
should be pointed out that the result might be a little higher than the actual figure,
because there are many targeted respondents who never heard of these terms might
not returned their questionnaires. Although respondent’s degree of understanding
about Value Management is average, the misunderstanding and false perceptions of
Value Management still persist in the mind of the respondents. Therefore a few of
them were eliminated from the certain part of analysis in chapter 4.
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5.2.3 The main factors that hinder the application of value management in
construction industry
Although from the theory and concept, the benefits generate through the
Value Management are significant, why construction industry in Malaysia still lack
behind to implement it? To achieve this objective, the factors required were obtained
from the literature review and through the discussion with supervisor. The major
factors that hinder the application of Value Management in construction industry
base on the respondent’s priority are listed as follows:
i. Lack of knowledge about Value Management
ii. Lack of support from parties with authority such as government and project
owners
iii. Interruption to normal work schedule
iv. Lack of local VM implementation guideline
v. Lack of time to implement
vi. Inapplicability of VM principles in Malaysia’s construction industry
vii. Difficulty of conducting evaluation and analysis
viii. Lack confident to apply it
ix. Defensive attitude of the original design team
x. Too expensive to carry out Value Management
5.2.4 The main factors that encourage the implementation of value
management in construction industry.
Besides identify the factors that hinder the application of value management
in construction industry. It is necessary to identify the main factors that encourage
the implementation of value management in construction industry. And the
information for this objective was also getting from the literature review and
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discussion with the supervisor. For this objective, ten factors are generated and the
main factors that will encourage the implementation of Value Management in
construction industry base on the respondent’s priority are listed as follows:
i. Elimination of unnecessary costs
ii. To achieve optimum value for money in satisfying the customer's needs
iii. Better understanding of the project’s objective
iv. To cut project cost without adversely affecting the quality and performance or
the project
v. To enhance function of a project
vi. To arrive at a more effective design
vii. Identifies project constraints or problems
viii. Improved team-working
ix. To encourage creative thinking
x. Existing of Value Management manual
5.3 Recommendation
Since the degree of acceptance of Value Management in construction industry
is still very low. Below are some recommendation to improve the awareness and
usage of Value Management in construction industry:
Related organization such as IEM and CIDB can establish more seminars or
training program to introduce what is about Value Management and its
application in construction industry.
The government needs to encourage and promotion the use of Value
Management in construction industry, since the majority of the private sector
may not be willing to take the first step to implement it.
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Top management of any organization need to exposed, support and apply it in
their organization to promote the method to their employees and their
partnership organization.
Institute of Value Management Malaysia (IVMM) should play an important
role to use any marketing strategies to promote Value Management in the
industry.
Construction professional should try to acquire new knowledge as a whole
and must reduce fragmentation in professional studies.
Establish a local Value Management implementation guideline, since we are
following the American standard for so many years. Furthermore, it may not
suitable to the construction industry in our country.
5.4 Suggestion for further study
There are some suggestions for the further study in Value Management such
as to identify the future expectations for Value Management in Malaysia’s
construction industry. Then to develop a strategy plan that can help clients for future
improvement when implementing Value Management in their organization. And the
last suggestion is to develop a local Value Management guideline for the facilitators
to carry out the Value Management session.
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REFERENCES
Azlan Abdul Rahman (2005). “Civil Engineering Systems and Problem Solving”.
FKA, UTM. Page 10.
Barton, R.T. (1991). “Value Management: A Vehicle for Innovation in Building
Design and Construction, Innovation and Economics in Building Conference”.
Preprints of papers, Institute of Engineers. Page 138-143.
Brandon Phuah. (2000). “Value Management” Deakin University, Geelong
Waterfont Campus. Page 18.
Charles Y.J. Cheah & Seng Kiong Ting, (2004). “Appraisal of Value Engineering in
Construction in Southeast Asia”. Nanyang Technological University. Page 157.
Choo Kok Beng. (1998). “The Challenge of Value Engineering In The Construction
Industry”. Civil Engineering Society (PEKA), Faculty of Civil Engineering,
UTM. Page 2.
Crum, L.W. (1971). “Value Engineering: The Organized Search for Value.”
Longman, London.
Dell’Isola, A. J. (1988). “Value Engineering in the Construction Industry”. Smith
Hinchman & Grylls, Washington DC. Page 8, 52-68, 71.
Fong, P. S., Shen, G. Q., Chiu, E. W. and Ho, C. M. (1998). “ Applications of Value
Management in the Construction Industry in Hong Kong.” Department of
Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong.
86
Goldhaber, Chandra K. Jha, Macedo, M. C. (1977). “Construction Management,
Principles And Practices”. John Wiley & Sons, New York. Page 139, 161-166.
Hasnan Abdullah. (1994). “Pengurusan Penilaian Dan Praktis Ukur Bahan”. Unit
Penerbitan Akademik, UTM, Skudai. Page 4, 19.
Jamal A Al-Duaij, Khalid Eel-Laithy, Reena James Payappilly, (1997). “ A Value
Engineering Approach to Determine Qulity Lightweight Concrete Aggregates”.
ABI/ Inform Global. Pages 25.
James J. O’Brien. (1976). “Value Analysis In design And Construction”. McGraw-
Hill Book Company. Page 1-5.
John W. Bryant (1998). “Value Mythology Standard” Society of American Value
Engineers. Page 1- 8.
Kelly, J. and Poynter-Brown, A. (1990). “Value Management in Quantity Surveying
Techniques.” New Directions, BSP Professional Books, London.
Kelly JR & Male SP. (1991). “The Practice of Value Management: Enhancing Value
or Cutting Cost”. The Royal Institution of Chartered Surveyor, United Kingdom.
Liu Gui Wen, (2003). “A Frame for Implementing the Value Management in China’s
Construction Industry” The Hong Kong Polytechnic University. Page 30.
Mc Caffer and Zaimi Majid (1977). “Assessment of Work Performance of
Maintenance Contractors In Saudi Arabia”. Journal of Management In
Engineering. Page 1.
Macedo, M. C., Dobrow, P. V. and O’Rourke, J. J. (1978). “Value Management for
Construction”. John Wiley & Sons, New York. Page 25, 247.
Mazlan Che Mat, (1995). “Value Management: An Effective Cost Optimisation
Technique”. Faculty of Build Environment, UTM. Page 1.
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Mazlan Che Mat, (1998). “The Challenges and Potential of Value Management In
Local Construction”. Faculty of Build Environment, UTM. Page 6, 10-11.
Mazlan Che Mat, (1999). “ Value Management-Principal and Application”.
Professional Center of Value Management. Pages 38-39.
Miles L.D. (1989). “Techniques of Value Analysis and Engineering”. Lawrence D.
Miles Value Foundation. Page 300, 321-324.
Miles L.D. (1972). “Techniques of Value Analysis and Engineering, 2ND Editon” .Mc
Graw-Hill, New York.
Mohd Zainuddin (2000). “Keberkesanan dan Penerimaan Pengurusan Nilai Di Dalam
Industri Binaan Malaysia.” Tesis Ijasah Sarjana Muda Ukur Bahan.
Mudge A.E. (1971). “Value Engineering, A Systematic Approach”. McGraw- Hill
Book Company, New York. Page 5, 7.
Ong Hock Teck (2003). “Quality and Value Management In Construction Industry.”
Pro-Value Management Malaysia.
Rosnah Mohamad Sirin. (2005). “Teori asas ekonomi Kejuruteraan”. Fakulti
Pengurusan Teknologi, Kolej Universiti Tun Hussien Onn. Page 3-8, 3-9.
SAVE. (2006). “www.value-eng.org”.
William D. Falcon. (1977). “Value Analysis Value Engineering, The Implication For
Managers”. American Management Association, Inc. Page 10.
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APPENDIXES A
Skudai, Johor
Universiti Teknologi Malaysia
Faculty of Civil Engineering
_
Dear_______________________:
I’m student from the Faculty of Civil Engineering in UTM reaching out for
your help and cooperation to share your knowledge and experiences with me who
still trying to learn. I intend to prepare a questionnaire to mail to a select group of
experts who have used and applied the techniques that I’m including in my study.
This questionnaire will be processed in the strictest confidence and for
academic purposes only. Your co-operation in completing this questionnaire
accurately will be greatly appreciated.
Ng Kim Lai 42, Jalan Pulai 78, Taman Pulai Utama, 81300, Skudai, Johor. Contact No: 012-5618612
Supervisor: Mr Bachan Singh (Construction Management) Research Title: Value Management in Construction Industry
I thank you for your valuable time, help and cooperation and sincerely
appreciate your support in this project.
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Questionnaire
Respondent Profile:
Name: _______________________________________________ Organization _______________________________________________ Address: _______________________________________________
_______________________________________________ Contact No: _______________________________________________ Company Stamp:
Part A: Please choose one of the answers:
1. Please state the type of firm involved: [ ] Government Sector [ ] Developer [ ] Architect Consultant [ ] Structural / Civil Engineering Consultant [ ] Contractor [ ] Other, please state ___________________________________
2. Please state your designation: [ ] Owner / Investor [ ] Project Manager [ ] Structural / Civil Engineer [ ] Architect [ ] Site Supervisor [ ] Quantity Surveyor [ ] Other, please state ___________________________________
3. Do you understand the meaning of the ‘Value Management or Value
Engineering’? Please rate the answer according to your understanding. 1-Totally do not understand 2-Do not understand 3-Average 4-Understand 5-Totally understand
1 2 3 4 5
a. Value Management [ ] [ ] [ ] [ ] [ ] b. Value Engineering [ ] [ ] [ ] [ ] [ ]
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4. Where do you learn and understand the terms ‘Value Management or Value Engineering’?
[ ] College or university [ ] Professional seminars [ ] Professional publications, journals, articles [ ] Colleagues and Friends [ ] The technique was already using in my organization
5. Have you previously involve in Value Management sessions?
[ ] Yes [ ] No (Go to Part B if your answer is ‘No’) 6. How many years have you been involved in Value Management sessions?
[ ] < 1 years [ ] 1 – 3 years [ ] 4 – 5 years [ ] >5 years, please state __________
7. How many times have you been involved in Value Management sessions?
[ ] 1 – 5 [ ] 5 – 10 [ ] >10, please state __________
8. When applying Value Management studies, who normally arrange and lead the
Value Management sessions?
a. Developer / Clients [ ] b. Architect [ ] c. Structural / Civil Engineer [ ] d. Quantity Surveyor [ ] e. Contractor [ ] f. Other, please state _______________________ [ ]
9. Construction project that often involve Value Management sessions:
a. Government Project [ ] b. Project for Private Sector [ ]
10. Project mostly involve in Value Management sessions: a. Civil Works [ ] b. High Rise Building [ ] c. Residential Houses / Shop [ ] d. Factory / Plant [ ] e. Other, please state _____________________ [ ]
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11. In your opinion and experiences, please state the percentage of cost savings of the project after applying Value Management.
[ ] No saving 0% [ ] 0-4.99% [ ] 5-9.99% [ ] 10-14.99% [ ] 15-19.99% [ ] 20-29.99% [ ] 30-50% [ ] > 50% 12. What is your level of satisfaction with the overall outcome of the Value
Management sessions in terms of its applicability in construction industry? Please state your reason.
Excellent Good Average Poor Bad [ ] [ ] [ ] [ ] [ ]
13. Please share your experiences regarding the difficulties when implement Value
Management.
Part B: 14. For this question, you are requested to choose either one from 1 to 5 whether you
agree with each of the statements regarding Value Management (VM). Where: 1-Strongly disagree, 2-Disagree, 3-Neutral, 4-Agree, 5-Strongly Agree
1 2 3 4 5
a. VM is same as traditional cost control [ ] [ ] [ ] [ ] [ ] b. VM is an method for cost saving [ ] [ ] [ ] [ ] [ ] c. VM is can reduce unnecessary project cost
efficiently [ ] [ ] [ ] [ ] [ ] d. VM is a value enhancing tool rather than just a
method of cost reduction [ ] [ ] [ ] [ ] [ ] e. VM is easy to apply and the result of cost saving is
significant [ ] [ ] [ ] [ ] [ ] f. VM is has its potential to growth in Malaysia’s
construction industry [ ] [ ] [ ] [ ] [ ]
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15. In your opinion, which stage of the construction project is most frequent in
applying Value Management? 1-Least frequent, 2-Less frequent, 3-Average, 4- Frequent, 5-Most frequent
1 2 3 4 5
a. Concept / Feasibility Stage [ ] [ ] [ ] [ ] [ ] b. Preliminary Drawing [ ] [ ] [ ] [ ] [ ] c. Detail Drawing [ ] [ ] [ ] [ ] [ ] d. Procurement [ ] [ ] [ ] [ ] [ ] e. Construction Stage [ ] [ ] [ ] [ ] [ ]
For Question 16– 18, based on the likert scale shown, rate the following factor according to the weightage of influences. Where:
1-Not critical, 2-Slightly critical, 3-Average, 4- Critical, 5-Very Critical 16. In your opinion, what is the most priority of the project objectives?
1 2 3 4 5 a. Least cost [ ] [ ] [ ] [ ] [ ] b. Project completed within contract time [ ] [ ] [ ] [ ] [ ] c. Quality of works [ ] [ ] [ ] [ ] [ ]
17. What are the critical reasons to carry out Value Management sessions?
1 2 3 4 5 a. To cut project cost without adversely
affecting the quality and performance or the project [ ] [ ] [ ] [ ] [ ]
b. Better understanding of the project’s objective [ ] [ ] [ ] [ ] [ ]
c. To encourage creative thinking [ ] [ ] [ ] [ ] [ ] d. To achieve optimum value for money in
satisfying the customer's needs [ ] [ ] [ ] [ ] [ ] e. Elimination of unnecessary costs [ ] [ ] [ ] [ ] [ ] f. To enhance function of a project [ ] [ ] [ ] [ ] [ ] g. To arrive at a more effective design [ ] [ ] [ ] [ ] [ ] h. Identifies project constraints or problems [ ] [ ] [ ] [ ] [ ] i. Improved team-working [ ] [ ] [ ] [ ] [ ] j. Existing of Value Management manual [ ] [ ] [ ] [ ] [ ] k. Other, please state___________________ [ ] [ ] [ ] [ ] [ ]
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18. In your opinion, why Value Management is rarely applied in construction industry?
1 2 3 4 5 a. Lack of time to implement [ ] [ ] [ ] [ ] [ ] b. Lack of knowledge about Value Management [ ] [ ] [ ] [ ] [ ] c. Lack confident to apply it [ ] [ ] [ ] [ ] [ ] d. Lack of support from project owners. [ ] [ ] [ ] [ ] [ ] e. Defensive attitude of the original design team [ ] [ ] [ ] [ ] [ ] f. Interruption to normal work schedule [ ] [ ] [ ] [ ] [ ] g. Difficulty of conducting evaluation and analysis [ ] [ ] [ ] [ ] [ ] h. Too expensive to carry out Value Management [ ] [ ] [ ] [ ] [ ] i. Lack of local VM implementation guideline [ ] [ ] [ ] [ ] [ ] j. Inapplicability of VM principles in Malaysia’s
construction industry [ ] [ ] [ ] [ ] [ ] k. Other, please state___________________ [ ] [ ] [ ] [ ] [ ]
19. Please write down any suggestion or recommendation for increasing the
awareness and acceptance of Value Management sessions in construction industry.
20. Other comments:
Thank You
I realize that you are extremely busy and therefore I want to thank you for
your willingness to complete and return this questionnaire. However, I will
understand if you skip those that you are uncomfortable with.