Value management

From CEOpedia | Management online

Value Management - is a service in which a person or a sponsor of the project conveys a clues and requirements to the project creators. In other words, this is a service that lets to control the project from conception to realization with simultaneously maximizing a value. The definition of maximize value was defined in 1975. It means retention of the highest level of quality and at the same time reduction of costs, and create a balance of these components[1].

Value management is often comprised with the vision of an audit or control but it has a few differences. There are three basic of them[2]:

  • having a creative team, which by using various tools can create plenty of alternative solutions
  • using advanced systems
  • the relation between a function and value

Largely, value management is based on a design brief which the clients give to project creators. It might to serve in the audit of the realization of assumptions. There are a few examples of them[3]:

  • compatibility with a strategy
  • the range of tasks which are related to project
  • the new patterns and design
  • the methods of productions

The Methodology of Value Management

The process of value management has a wide range of technics a processes which include a few stages. There are four main criteria[4]:

  • The first criterion - is the first stage, which includes the planning of the project. In this phase, we define a strategy and collect documentation, and we choose adequate solutions. Additionally, we choose a job plan.
  • The second criterion - is the second stage, in which we choose a comprehensive team who will work at the same place and at the same time.
  • The third criterion - in this stage, we choose a Value Management Team Coordinator (VMTC), who can help a team in realization tasks
  • The fourth criterion - is the last stage, this is the most crucial criterion in which true value management does not look for destructive modifications and its source are project's required or basic functions.

The Advantages of Value Management

Value management has a lot of advantages like a[5]:

  1. provide to reduce costs
  2. provide to implement various functions to the project without increasing costs
  3. provide to implement various functions to the project and reduce costs

Currently, value management is a crucial element of the system of management. Many companies lead plenty of projects at the same time so thank to the fact of the value of management companies may reduce costs of these projects and save money. Value management leave a lot of opportunities to person or sponsor of the project who set terms of performance and owing to the fact they have a whole control and significant influent. In the nearest future it certain that we know new tools and solutions which will lead to achieving better scores.

Examples of Value management

Value management is a systematic approach to providing the best value for money and using resources effectively. It is used to identify, assess and manage risks, opportunities, costs and benefits associated with a project or business venture. Here are some examples of value management:

  • Optimizing the value of a project by reducing its costs and increasing its benefits. This can be done through cost-benefit analysis, risk assessment and quality control.
  • Analyzing the costs and benefits of different options to identify the most cost-effective solution.
  • Utilizing resources efficiently through careful planning and scheduling.
  • Increasing efficiency by reducing waste and inefficiencies.
  • Maximizing customer satisfaction by identifying customer needs and providing value-added services.
  • Developing cost-efficient procurement strategies to minimize costs.
  • Utilizing value engineering to reduce costs and increase quality.
  • Employing total quality management to ensure quality and reliability.
  • Utilizing alternative sources to reduce costs and improve quality.
  • Utilizing technology to reduce costs and increase efficiency.

Limitations of Value management

Value management is an important tool used to ensure that resources are used in an efficient and cost-effective manner. However, there are a number of limitations associated with this tool which must be understood in order to ensure that it is used effectively. These limitations include:

  • A lack of understanding of the value management process by those involved. Without a thorough understanding of the process, it is difficult to identify areas where value can be improved, and there is a risk that resources are not used in the most effective way.
  • Difficulty in quantifying the value of intangible benefits. Intangible benefits are those which can not be measured in monetary terms, such as increased customer satisfaction or improved morale. As such, it can be difficult to accurately assess the value of these benefits.
  • The potential for bias in the value management process. When assessing value, it is important to remain objective. However, there is a risk that personal preferences or agendas can influence the decision-making process and lead to sub-optimal results.
  • A lack of communication and collaboration between different stakeholders. Value management is a collaborative process and requires close communication between those involved in order to be successful. Without effective communication, it is difficult to ensure that everyone is on the same page and decisions are made for the benefit of the organisation as a whole.

Other approaches related to Value management

Value management is a process of identifying the value of project outputs, reducing non-value-adding activities and achieving the best possible value for money. There are several other approaches related to value management such as:

These approaches to value management focus on identifying customer requirements and eliminating waste in the production process to achieve maximum value for money. They are all complementary, and when used together can provide a powerful tool for achieving success in both project and product development.


Value management — recommended articles
Strategic cost management — House of total quality model — Managerial controlling — Methods in management — Business process reengineering — World class manufacturing — Zero defects — Value stream mapping — Work simplification

References

Footnotes

  1. ↑ Kelly J.(2005), p.2
  2. ↑ Kelly J.(2005), p.2
  3. ↑ Kelly J.(2005), p.2
  4. ↑ Norton B. (1995), p.15
  5. ↑ Norton B. (1995), p.14

Author: Tomasz Kuś

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