A whole new concept became clear

I was reminded recently about a VM workshop that I conducted a few years ago. The focus of the study was a proposed new bridge and approach roads in the city of Lower Hutt in New Zealand. The study produced a quite remarkable outcome. I vividly recall the closing comments of the chief engineer responsible for the project. He said, “We’ve got nothing out of this study that I expected. I thought we might save a few dollars here or there, or change the sizes of some columns and beams: but Instead of that, we have a whole new concept”.

“A whole new concept!”

That’s true. To the surprise of everyone participating in the workshop, the group had produced a solution to completely abandon the current proposal and, instead, the group proposed a whole new concept – comprising infrastructure and traffic management - saving many millions of dollars and bringing substantial benefits that continue to be realised to this day.

For the purposes of this note, there’s no need for me to go into any detail of the project itself, but I will make a couple of comments about the VM process that we used. This VM workshop proved to be a huge building block in my own learning journey in the practice of Value Management. The key to its success (apart, of course, from following our standard VM work plan) was gathering together a large, multi-perspective group that included:

  • Traffic engineers
  • Bridge design engineers
  • Road design engineers
  • Floodway engineers (from a separate but adjoining project)
  • Two local shop keepers
  • The lord Mayor
  • Project Manager
  • Local Council Officers
  • Other project team members

 

I think the total number of participants was about 20, maybe 25. In those days, this was breaking new ground as to the number of participants in VM workshop which traditionally had been much less than that number.

The breakthrough in changing the design concept was triggered by an engineer working on an adjoining project (who would, in the normal course of project development, have no involvement whatsoever with this project - they are separate entities). He came up with an idea, which he put forward in the prescribed form of a “can we” question. The “Can we” question caused me, as facilitator, to call for “yes if” responses. The “yes if” responses came from the Lord Mayor and the shopkeepers and quickly led to the realisation that a whole new concept was possible. The workshop then went on to produce a workable proposal that eventually became reality.

Now here’s something to think about:

  • IF representatives from the adjoining project had not been there; and,
  • IF the process hadn’t allowed for everyone – even those not involved with the project - to listen, learn and put forward ideas; and,
  • IF I (the facilitator) hadn’t followed up the engineer’s “can we” question with a “yes if” request; and,
  • IF the Lord mayor and shopkeepers had not been there to give “yes if” answers based upon very specific local knowledge; then

 

It is highly unlikely that the group would ever have come up with the proposal that it did. The VM study provided an appropriate environment for all this to happen, but even that VM structure still required these things to produce that result.

There’s something to think about.

Earlier this year, my colleague, Mark Neasbey and I conducted a particularly interesting Value Management study of proposed major new health facilities in Singapore. One thing that made the study so interesting was a proposal to spend several million dollars extra over the project budget to enable significant flexibility and change over the next 20 years or so.

Value Management and, in particular, Value Engineering, is often described as just another form of cost-cutting (which should never be the case, but sadly it sometimes is the case). I've written about this in other places, emphasising the fact that whether we are referring to Value Management or Value Engineering, we must always focus on value (as discussed in the three previous notes). Cost-cutting should be called for what it is - anyone can cut costs - and the world is peppered with the consequences of people cutting costs without considering value. I have seen a quotation that says of someone, "He knows the cost of everything, but the value of nothing".

But in this case in Singapore recently, we surely put to death the argument that VM is always about cost-cutting because the strong recommendation at the end of the workshop was to spend many millions of dollars extra in order to give much better value for money in the long term.

As I reflect upon my own journey in Value Management over the last 25 years or so, I know that, in my early days, I would have considered a recommendation to spend many millions of dollars extra over the budget a complete failure in Value Management terms. My colleague, Ross Prestipino tells the story about a Value Engineering conference that he attended in the USA, where a Value Engineering practitioner told him that amongst her clientele, she would never get another job if she didn't deliver cost savings for her client.

There are times when clients need to make savings and the Value Management process can certainly help them do that but it will do so only in the context of delivering best value for money - not simply reducing cost per se.

The Singapore exercise clearly demonstrated that where there is a mature client who is prepared to consider the long-term and genuinely seek best value for money, the VM process can be of enormous benefit. Bring together all of the key stakeholders into a VM workshop. Clearly define where value lies in the proposed new entity (the value statement). Consider various cost comparisons of ways to deliver that value (as described in my last three articles). Then make informed judgements as to which option will deliver best value for money. The rigour of this process provides enormous confidence in the recommendations.

There's something to think about!

 

 The Language of “Value” (Continued)

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!

Roy Barton

President, IVMA

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NOTE 2

The Language of “Value” (Continued)

We’re talking about the “language of “value” in this current series of notes. I mentioned last time that the language of “value” is really important to us in Value Management: and not only to us, but to anyone who is interested in the topic of “value for money” which is really most people on earth! Philosophers have debated the subject of “value” for centuries and there is still no universal agreement on what “value” actually is from a philosophical perspective.

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NOTE 1

Welcome to this series of short notes. My intention is to offer visitors to this website “something to think about”. The notes will be very informal and “chatty” but always containing a point or principle that I hope you will be able to take away and think about.

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