In the last note, I said that “our value management approach provides a systematic way of seeking to find the best “value for money” solution.” Our understanding and definitions of “value” and “value for money” are central to this. Here’s a recent example.
I recently ran a Value Management workshop, together with my colleague, Mark Neasbey. It was a really interesting exercise, the purpose of which was to select one option from three potential design options that had been prepared for a regional Civic Centre comprising a new library, museum, council offices and community facilities. It was the third of a series of workshops: the first two had been direction-setting, but this time, a decision was needed – which option will be recommended as the preferred one?
It is here that the separation of “value” from “money” in the pursuit of best “value for money” comes into play. In the first two workshops, the participants had identified and agreed to a “value statement” that succinctly defined the primary purposes of the new Centre, the benefits expected from fulfilling those primary purposes and, a list of important features and characteristics. In workshop 3, we verified that value statement and then set about reviewing the three options against the statement. Note – this is very important – we have not brought “money” into the picture at the moment, other than verifying that all three options were estimated to be within budget.
Our approach was simply to compare all three options (all of which satisfied the fundamental requirements of the brief) against the value statement and to see where the differences were. This exercise quickly revealed that one of the three options was much-less preferred than the other two. When, later in the workshop, we examined the estimated cost of the three options, it turned out that the least-preferred was the most expensive and so that option was eliminated, leaving us with two.
We then had a classic value for money decision to take. Both options would satisfy basic requirements, but one of the options was definitely preferred over the other. But it was more expensive. So here is the value for money question – is the most-preferred option worth the additional expenditure? There is no calculation for this – it is purely a matter of judgement. Our task was to structure the discussion so that the group could see what extra “value” they’d be getting for their “money”. They decided to go for the more expensive options as representing “best value for money” – supported by a justifying statement to explain the decision to others.
The process of separating “value” from “money” helped considerably in arriving at this decision.
There’s something to think about!