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What is Value management

20th November, 2019

What is this Value Management in the construction industry? Most of the people are misunderstood that value management is the method to reduce cost of construction. As per the correct definition, value management is the systematical method used to develop a project to achieve its utmost benefits for the users and owners. In order to do it developer or building team should optimized below mentioned key elements of the project.

Working Procedure

Mostly the process is starting in the design stage of the project. And the design team has to take the lead of the process. The contractor also can participate in the process. There are many techniques to do value management, but these all techniques can be divided into three main categories.

1. Value planning

In the initial stage of a project, the stakeholders are deciding the purposes, main risks, quality etc. In this stage, the building team can identify cost-effective ways to execute the project. Value planning should be done for complete life cycle of the project. They can decide building cost, running cost etc. As an example a client is building a residential apartment building. This contains 20 numbers of apartments in the building. Complete cost is estimated as $1,000,000 for building. So he should sale each apartment at least ($1,000,000/20) = $50,000 (+ profit). If the market value of a normal apartment is around $35000 the client may lead in to trouble. In this market condition it will be difficult to sell these apartments.

2. Value engineering

In this phase, the value engineering team is identifying the critical elements of the project. And systematically developing and design them to reduce the building cost, maintenance cost or running cost. There might be few or more designs can be identified for each critical element at this stage. The value management team will identify and select the best design options from the above-developed options. Example- Same above client wishes to add solar panel power source in to building which can be fulfilled 25% of the energy requirement of the building. This will add additional value to the building and client can market the apartment highlighting that this apartments electricity fee is 25% lesser than the other apartments in market.

3. Value analysis

In this stage, the value management team can identify the operation costs and the initial cost of any kind of work. Also, the value management team will develop the selected alternative design options in order to optimize the costs between building and maintaining of particular work.

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