8447779800, Low rate Call girls in Saket Delhi NCR
An overview of value management, John Heathcote
1. An Overview of the salient features of
‘Value Management’ v01 June‘13
The APM’s VM SIG (Value
Management specific interest group)
Author: John Heathcote MBA MAPM
2. Slide contents list
Slide
3. What is Value Management?
4. Value Engineering at GE
5. What is Value?
6. APM BoK 6th Ed
7. The 3 processes in PM that are most likely to influence Value in the project.
8. Problem definition (the Brief)
9. Contemporary flaws with Problem Definition (Brief)
10. Solution generation/selection (Definition)
11. Contemporary flaws with Solution generation/selection (Definition)
12. Business/Investment Case
13. Contemporary flaws with Business/Investment Case
14. The [facilitated] Team
15. The [facilitated] Team: The Job Plan
16. When VM/VE is flawed?
17. Concluding short guidance.
18. The Limitations with this Presentation version.
19. Natural Links between Value Management & Other APM SiGs
20. Web sourced methods: Client focussed VM
21. Web sourced Images of VM approaches
22. Value Engineering (Wikipedia source)
23. GE’s ‘Job Plan’ approach 1 of 2
24. GE’s ‘Job Plan’ approach 2 of 2
2
3. What is Value Management (VM)?
VM might be described as: “as a process or methodology
which has been developed and adapted for the better
selection and design of better value outcomes for
projects.” source: Author
“It might have particular high value to Project management in
general if it becomes a way of thinking about projects, a
‘value’ perspective rather than a ‘transactional’ perspective
of projects” source: Author
Originally (Like many PM techniques, aimed at
manufacturing .. It has latterly been applied, (by ICE,
who provided a structured guidance about how it
might be applied to projects) to projects. ....
3
4. Value Engineering’s roots at General Electric
Value engineering began at General Electric Co. during World
War II.
Because of the war, there were shortages of skilled labour, raw
materials, and component parts. Lawrence Miles, Jerry
Leftow, and Harry Erlicher at G.E. looked for acceptable
substitutes.
They noticed that these substitutions often reduced costs,
improved product, or both. What started out as an accident of
necessity was turned into a systematic process.
They called their technique "value analysis".
Source: http://en.wikipedia.org/wiki/Value_engineering
4
5. What is Value?
So if this is a process about arriving at more/optimum ‘value’, first we
should decide what value is.....
The APM VM SiG summarises this debate by reducing ‘value’ to:
V = Benefits/Cost
Previous APM BoKs have described value as.....
V = Stakeholder satisfaction/cost of resources
and
Value = Benefits &Key Stakeholder requirements/ resources used
We have a preference for the V = Benefits/£ as later we will describe
how stakeholder interests, whilst important can represent a
distraction, in some instances, from a value focus.
5
6. APM BoK 6th Ed
In this 2012 BoK edition, value management is seen as a sub-
set of ‘requirements planning’.
This is because the notion of value is sometimes related to the
idea of accurately specifying the functional requirements of
a project.
And greater functionality / cost is increased value.
So this is a similar viewpoint... And ..
A critical difference that the VM SiG would like to point out, is
this keeps projects within a “transactional” perspective,
and the SiG believe project management might be better
serves by moving to a “value” perspective.
6
7. So VM tends to concern itself with the PM processes
that are the most likely to have a significant influence
on the project’s delivery of value..
They are:
Problem definition (Brief)
Solution generation/selection (Definition)
Business/investment case
A VM-type process has the potential to make a
disproportional positive influence on the project’s value
proposition, is because it will likely influence these three
aspects of the project positively.
7
8. Problem definition/Brief
Several writers on managing projects,
mention the idea that a project should solve a problem. (Kerzner; OU; Gardiner; Noguiera
2010)
Nogueira (2010) placed great emphasis on this aspect of the project. Projects should
be about solving problems*, and those problems should be clearly and carefully
defined... Before the solution is arrived at.
This idea of projects as solving carefully defined problems currently (2013) remains a
generally overlooked aspect.
It is critical to the VM process, & to projects in general that the ‘problem’ is defined.
This defining of the problem, might result in:
the project being abandoned, because, on analysis, there’s not really an issue to be
addressed;
or that the the original proposal for the project is radically re-defined.
Certainly ‘problem definition’ should lead to deeper understanding of the
issue/problem that is being addressed.
This single aspect of project management is the one which, being at is it, at the start
of the project, has most potential impact on value..
Root cause analysis is an important feature of problem definition and one of the
techniques used to assist in defining the problem, as is the Ishikawa or fishbone
diagram.
* An opportunity is defined by Nogueira as also being a problem. 8
9. Contemporary flaws with
Problem definition/Brief 2
This problem part of the VM process works, because tragically so few projects
proceed without a clear problem start, beginning instead with an assumed
solution, or a preferred solution, coming out of a strategic planning
process, or based on too many assumptions. Or, commonly, simply
because a budget exists and something ought to be done.
Of course contractors simply carry out the specifications in the contract,
assuming the client knows what they want, although research at Leeds
Metropolitan University (Bleier & Heathcote 2009) demonstrates
contractors believe this is a significant problem that prevents them
assisting their clients in delivering more value.
Some project areas, (such as public health in the UK) have highly defined ‘problems’,
they are able to predict where general health problems are and so develop
responses to prevent issues developing, such as smoking cessation.
Modern policing is similar, ‘intelligent policing’ for instance allows the UK police force
to also target known problems and so use their resources more effectively.
Both areas have brought about rapid improvements in recent times (Ref)
9
10. Solution generation/selection (Definition)
Once the problem has been defined an ‘optimal’ solution can be sought.
VM facilitators will deliberately separate the problem definition work in a
team VM workshop process to prevent the most common logic error (the
availability error), this might be best illustrated by explaining the VM SiG’s
‘first good idea error’.
The first good idea error, is made when the project team goes with the first
reasonable idea they come up with, rather than spending any time or any
deliberate process to seek a more optimum solution.
Edward DeBono (1971) highlighted this problem in organisational decision
making and coined the term ‘lateral thinking’ seeking to better equip
people to be more creative in their decision making by seeking other,
better alternatives, by:
- Creating more options, to choose from;
- Thinking beyond ‘tried & tested’ solutions or the typical solution (he called
this pattern breaking),
- Or, critically for project management scenarios, the solution that came
with the project brief!
10
11. Contemporary flaws with
Solution generation/selection (Definition) 2
This problem part of the VM process works, because tragically so few projects proceed
without any thought been given to what a better solution might be.
Several factors conspire to prevent even a scant search for another alternative:
- Suspending judgement is difficult in non-facilitated meetings, options are too readily
evaluated thereby curtailing the search for other solutions.
- A ‘good’ solution might seem obvious. So going with that is socially easy on the team
process. (And objecting is likely to be seen as too challenging in to the group’s
coherence).
- The project brief, once allocated to the PM is likely to be described by the anticipated
solution, i.e. “The Millenium Dome” ..that describes the project as a solution, but
determining the solution it is addressing is much harder. Reviewing and changing the
project as it is handed to the PM might be seen as a challenge to management decision
making. And so difficult to do in some organisational cultures.
- A tired & tested technical solution might be ‘known’ by the technical ‘experts’ in the
team, for instance Civil Engineers tend to think of Civil Engineering solutions, & IT
Engineers, IT ones, often to the same problems. Moving away from a known solution
presented by the technical expert is likely to be perceived as risky!
- Examining this further IT programmers frequently report the client fails to understand the problem
well enough to allow the solution to be designed, though all proceed from the assumption IT will be
the answer, usually an IT solution also requires a business process redesign too.
11
12. Business/investment case
To properly develop the carefully selected solution, it should be p[resented in
terms of ‘objective criteria’ Ury & Fisher (1999) suggested problems &
solutions should be presented using ‘objective criteria’, that’s to say
measurable criteria that allow the Business case to be measured,
monitored and evaluated later on, (See link with Benefits Realisation)
For instance measurable criteria might include:
– Anticipated increase in sales;
– New revenue;
– Increased performance;
– Reduced operational costs;
– Improved market share;
– Greater no.s treated, compared to pre-project.
What is should NOT be, are un-measurable claims, such as:
– To improve the reputation of the company/org;
– Because a stakeholder/manager will be ‘pleased’ with it;
– It meets a policy directive, (It might do, but demonstrate a measurable value
too!)
12
13. Contemporary flaws with
Business/Investment Case 2
Benefits & their costs have RISKS...
– Each business case should reveal the risk s associated with
the promised benefits, for instance:
• Each benefit should have a minimum & maximum expectation;
• Each cost associated with each benefit should also show how
reliable that estimate is.
Project business cases in recent times (Grey report;
Flyvberg) have demonstrated a remarkable capacity to
exaggerate their benefits, while underestimating risk.
A ‘Conspiracy of Optimism’ (ref)
13
14. The [facilitated] Team
Much of the VM process outlined in this shortened presentation
identifies critical parts of the early project lifecycle to illustrate the
thinking required to make VM be a positive influence on projects.
It is largely presented as better decision making, deciding on the
problem first before looking at solutions, thinking about other
alternative solutions and using objective measurable criteria to
present the ‘value case’.
To support that better decision making VM-type processes advise
using a team approach (so more information is available), a
workshop, and a facilitator who facilitates the rational decision
making process (and doesn’t get involved in the detail).
So VM-type processes tend to be focussed around team working,
workshops, lasting 1 or 2 days typically. (Often perceived as
expensive, but these are minimal costs compared to most VM
outcomes.)
14
15. The [facilitated] Team: The ‘Job Plan’
Here’s a simple outline of a team workshop
process:
1. Present the Information we have. (Info Phase);
2. Define the problem;
3. Generate options for solution;
4. Evaluate the options (using risk and objective criteria for
defining benefits);
5. Make a recommendation...Supported by a business case
15
16. When VM/VE is flawed?
In the VM SiG’s road show tours to APM UK branches repeating
themes reoccur from APM members:
As a process many people who have a good faciLove it or Hate it...
litated workshop experience become converts! However the
processes are (abused?) in some instances to simply reduce project
costs to fit within an assigned budget perhaps, in such cases value is
stripped out of the project faster than cost and leaves a sour taste
in the APM member.
A good deal of criticism is aimed at the cost cutting use of VE. While
reducing cost can add value, functionality or benefit should be
protected and the chief concern of the team.
Mentioned earlier where:
- Exaggerated business case benefits; Risk should accompany
estimates to demonstrate to decision makers the reality of the
situation.
- Benefits realisation processes will help with this, to ensure there’s
audit of the business case promises.
16
17. Concluding short guidance to PMs
If you only remember 3 things, about VM remember:
1. If there’s no (defined) problem there’s no project!
2. Don’t succumb to the 1st good idea error; have a
longer think, consult..
3. Make sure your business case has measurable
objective criteria, so you don’t fool yourself and
others!
17
18. Limitations of this presentation version
It’s Just an outline,
Tries to demonstrate the ‘thinking’ principles behind Value
Management.
To do so it leaves out (for later),
Much about the myriad of methodologies that might be utilised: VM, Value
Engineering; Value Analysis; Lean; Six Sigma; Waste Stream Mapping; etc.
& it leaves out:
details about the important ‘facilitator’ role;
How the VM process might be used apart from just at the start of
projects;
How VM ought to be thought of as an iterative process;
Methodologies to support better problem definition;
Methodologies associated with option generation, lateral thinking
& innovation.
18
19. Natural Links between Value Management & Other
APM SiGs
Benefits (Benefits Management is critical to the VM concept... V = Benefits/£)
Governance (A Governance process that has gated decision points and
informed oversight at the points of ‘problem definition’ & ‘investment case’,
plus has a change process to handle changes when the project moves from
the original forecasts in the ‘investment case’ will be a powerful support to
any Value Management intention ..PRiNCE2 does some of this.)
ProGramme Management (Critical to the ideas mentioned so far is
Benefits Management, & Realisation.)
People (VM as a process recommends facilitated workshops, and utilising
the potential power of the team to innovate in problem definition &
beyond 1st good idea error.)
Risk (It is difficult to consider proposing an ‘investment case’ without
considering the risks to it. A Risk Management process should be utilised
alongside the Value Mgt process to: test assumptions; evaluate options;
&to qualify decisions/proposals.)
19
21. Client focussed VM methodology:
http://www.facilities.ac.uk/j/cpd/61-project-management/106-value-management-and-engineering
21
22. Images for VM processes:
https://www.google.co.uk/search?q=value+management+process&rlz=1C1OPRB_enGB509GB522&tbm=isch&tbo=u&source=univ
&sa=X&ei=teWxUevyEunV0QWSqoGIBA&ved=0CDcQsAQ&biw=1280&bih=632
22
23. Value Engineering
Value Engineering is seen as:
From Wikipedia: http://en.wikipedia.org/wiki/Glossary_of_project_management#V
Value engineering (VE) is a systematic method to improve
the "value" of goods and services by using an
examination of function. Value, as defined, is the ratio of
function to cost. Value can therefore be increased by
either improving the function or reducing thecost. It is a
primary tenet of value engineering that basic functions
be preserved and not be reduced as a consequence of
pursuing value improvements. [13]
23
24. GE’s original ‘Job Plan’ approach, 1 of 2
Value engineering is often done by systematically following a multi-stage job plan. Larry Miles' original system was a six-
step procedure which he called the "value analysis job plan." Others have varied the job plan to fit their
constraints. Depending on the application, there may be four, five, six, or more stages. One modern version has
the following eight steps:
1. Preparation
2. Information
3. Analysis
4. Creation
5. Evaluation
6. Development
7. Presentation
8. Follow-up
Four basic steps in the job plan are:
1. Information gathering - This asks what the requirements are for the object. Function analysis, an
important technique in value engineering, is usually done in this initial stage. It tries to determine
what functions or performance characteristics are important. It asks questions like; What does the
object do? What must it do? What should it do? What could it do? What must it not do?
2. Alternative generation (creation) - In this stage value engineers ask; What are the various alternative
ways of meeting requirements? What else will perform the desired function?
3. Evaluation - In this stage all the alternatives are assessed by evaluating how well they meet the
required functions and how great will the cost savings be.
4. Presentation - In the final stage, the best alternative will be chosen and presented to the client for
final decision.
Source: http://en.wikipedia.org/wiki/Value_engineering
24
25. GE’s original ‘Job Plan’ approach, 2 of 2
How it works:
VE follows a structured thought process to evaluate options as follows.
Gather information
1.What is being done now?
Who is doing it?What could it do?What must it not do?Measure
2.How will the alternatives be measured?
What are the alternate ways of meeting requirements?What else can perform the desired
function?Analyze
3.What must be done?
What does it cost?Generate
4.What else will do the job?
Evaluate
5.Which Ideas are the best?
6. Develop and expand ideas
What are the impacts?What is the cost?
What is the performance?
7.Present ideas
Sell alternatives
Source: http://en.wikipedia.org/wiki/Value_engineering
25