Project delivery methods and VM
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CHAPTER ONE
INTRODUCTION
Historical Development
History of Project Delivery Systems
The history of project delivery systems dates back in 1795 BC when the code of Hammurabi was established. In 40 BC during Renaissance, the first document of Design and construction was developed. In 1420, Brunelleschi, a design builder emerged. In 1456, Alberti a specialist in building designs communicated design intent through drawings. During the industrial Revolution, there occurred the rise of professional societies in 1850. This was followed by the legal separation created by Miller Act in 1935. As from the 1950s, there have been significant changes and advancement to the delivery systems as this is the era related to the information revolution. The first personal computers developed in the 1950s and the internet in 1969 have played a considerable function in this advancement. In fact in 1993, the DBIA was founded.
The Master Builder was the first project delivery system. The Code of Hammurabi represented the obligation of construction and design to society. The Vitruvius provided documentation of construction and design practices. On the other hand, Brunelleschi of 1377-1446 was a quintessential design builder and innovator. During the rise of professionalism, Alberti introduced the first intentional separation of art from the craft. Additionally, he developed architecture as a profession different from the science of construction and engineering. From the 15th to the 19th Century, architects maintained roles for both construction and design. Industrial Revolution brought a number of impacts in the project delivery field. For instance, there was task specialization, division of labor, entrepreneurship, need for capital, and the ability to communicate design intent. When professional societies emerged, there was much professional specialization, increase in specialized skills and knowledge, and ethical standards of practice. In addition, there was advocacy and promotion of professional markets and interests. As a result, there arose issues of conflict of interest. The Miller Act introduced in 1935 ensured there were public laws of contradicting that mandated separation of design from contractor selection and construction solely on cost. Furthermore, there were professional licensing requirements.
There are four delivery methods with various distinct features and characteristics. The first method is the Design-Bid-Build. This approach has three phases that are linear; design, bid, and build. There are three prime players in this method, the owner, constructor, and the designer. The separate contracts in this approach are the owner to the constructor and the owner to the designer. The responsibilities in this method include program, management, preparation of specs and plans, normal services, and sub construction. Another approach is the Multiple Prime. The three linear phases also apply in this approach. However, there are multiple players; owner, designer, and multiple subs and many contractors. The contracts are owner to the designer and owner to multiple prime specialty contractors. The owner carries own responsibilities related to finance, program, and management. The designer performs all normal services while the prime specialty subs are responsible for providing independent construction services to the owner.
The CM-at-Risk is another method of project delivery. It has the three phases mentioned earlier or may be fast tracked. The main players include the owner, designer, and the CM constructor. The contracts are the owner to the Cm constructor and the owner to the designer. The owner performs program and finance functions while the designer carries out all normal services. On the other hand, the CM constructor is charged with the responsibility of project management and pre-construction services, coordination of designs before construction and is prime with the subcontractors. The other approach is the Design-Build. This involves the integrated process-overlapped construction and design. The approach is frequently fast tracked, and there are two main players involved, the owner and the design-build entity. The entity may take on many forms, and there is only one contract in the approach that is the owner to design-builder. In this method, the owner is responsible for performance requirements, program, and finance services. The designer-builder does design and construction and may also include post construction and programming services in the list of duties. This implies that the design-builder may expand services to include finance and programming (Hall, Giglio, and American Institute of Architects, 2010).
History of Value Management
Value management originated from the United States as a consequence of shortage of shortage of materials and components in the manufacturing sector during the Second World War. The founder of value management, later known as Value Analysis, Mr. Lawrence Miles, of the General Electric Company was highly responsible for the development of the method in 1942. Since then, value management is highly accepted in various industries. Currently, the Government of the United States and many other nations including Japan, Korea, the United Kingdom, Saudi Arabia, Australia, amongst others implement value management method to be used for their capital work projects. Value management was formally introduced in Malaysia in 1986 by Association Professor from Canberra University in Australia known as Professor Roy Barton. This was made possible by the Quantity Surveying Department in the Universiti Teknologi Malaysia (UTM). Additionally, Dr. Mohd Mazlan was honored to be among the participants in the training program of Value Management.
In 1990, Mazlan made a research visit to Australia to take a look into the approach of value management and its process of implementation under the scholarship of the Commonwealth Science Council. In 1999, IKRAM and JKR organized the first National Seminar that was officiated by Tun Daim Zainudin, the Minister for Finance in Malaysia during the time. During his speech, Zainudin strongly urged the industry to take up value management on board because of the benefits associated with the concept. It is essential to note that Mazlan was the only speaker for the seminar that lasted for two days.
The subject of value management was taught at some of the main public universities. For instance, Housing, Building, and Planning, Universiti Sains Malaysia in 1991, Universiti Malaya in 1996, Department of Quantity Surveying, Universiti Teknologi Malaysia in 1993/1994, The Faculty of Architecture, Planning, and Surveying Universiti Teknologi MARA in 1997, Polytechnic in 2003, Universiti Islam Antarabansa in 2000 and others including Private Institutions. Because of the positive response from the manufacturing and construction industries, the Institute of Value Management of Malaysia was registered in May, 2000 and was formalized with twenty founding members. Presently, the membership of the Institute has rised to over 200 members. In March, 8, 2010, Mazlan received an invitation by Economic Planning Unit of the Department of the Prime Minister to present and brief the National Economic Council chaired by the Prime Minister of Malaysia, as well as, other senior ministers on value management application and the benefit associated with it. The Prime Minister declared the VM as among the supporting pillars for the country during the following day.
Various terms such as value control, value engineering, and value analysis are used to describe the principle of value management (VM). VM was developed because of inadequacy of components and materials that faced the manufacturing industry in North America in the Second World War. Value management refers to both processes of solving, as well as, seeking problems. As a system of problem seeking, VM identified problems likely to arise in the future and establish or develop solutions to the problem. Additionally, VM is a proactive management system of solving problems that makes maximum functional value of a project by managing its growth and development from the concept phase to operation phase of a project through multidisciplinary value group or team. Value management makes client value system clear at the conceptual stage of a project. In doing this, it seeks to achieve a functional balance between quality, cost, safety, reliability, and aesthetic. The system could be introduced at any phase in the project’s life cycle, but it is beneficial if introduced right from the project’s pre-construction stage before a commitment of any design is undertaken.
The techniques and tools of value management drive stakeholders to give answers to questions that might not be normally considered if other systems are used. Value management identifies items of costs that are unnecessary in a project and establishes alternative means of achieving similar functions at the lowest cost possible, without negatively influencing the quality, image, functional performance, aesthetic, and safety of the structure while at the same time improving the schedules of the projects. Programs of value management usually take the form of a workshop arrangement where the client, suppliers, contractors, specialists, manufacturers, and other stakeholders engaged participate and give suggestions for discussions and investigations. This makes designers and consultants comprehend what a client will accept as standard or yardstick to measure the result of their investment.
As a result, the client is projects with projects they can operate, occupy, and maintain at their chosen location and time without contradicting the nee3ded quality, aesthetic, function, and images that have accepted comfort. If there is no clarity of the client value system, designers and consultants only focus on requirements not intended by a client. Therefore, chance for maximizing design, concept, maintenance, and construction might not be achievable. However, the value management session or workshop is distinct from the ordinary project meeting as the aims of each are different.
Value management refers to an organized set of processes and procedures, which are introduced to facilitate the function of services, designs, systems, or facilities at the lowest cost of valuable ownership, taken cognizance of the value system of the client for quality, durability, reliability, time, aesthetic, conformance, cost, and time. The methodology and approach is about being innovative, creative, and susceptible to consensus, changes, and facilitating the use of good communication, analytical, resources and togetherness. Value management program is usually carried out in the systematic stages of concept, design, feasibility, design development, construction, operation, and occupancy phases of the projects. The work operations are tactically done in the job plan. This refers to the frame works, which guide the methodical maneuvering of ideas to ensure that options or alternatives are not omitted unnecessarily.
The VM job plan refers to an organized framework that is intended to guide the procedures of analyzing the projects, services, products, or components under investigation to ensure the development of numbers of practical functional and economical alternatives that meet the requirements of clients. The stringent adherence to this framework ensures that there is no omission or over-sighting of steps or phases of project development. The process of value management can be divided into a number of phases. However, the main activities in each phase still holds regardless of the number of processes in each phase. In many cases, the steps are broken down into five main stages (Davies and Davies, 2011).
Thesis Structure
There are existing practical and theoretical studies and research on the value management and project delivery methods especially in the United States of America since the development of value management in the State. However, the number of existing studies in value management and project delivery methods is not as adequate as required. Hence, the main aim of this Master research is to examine and assess the present situation of VA and project delivery methods in construction industries to find out the answers to the research question: What is Control of Delivery Time in the Construction Projects through the Application of Value Added Engineering or Value Management?
CHAPTER TWO
LITERATURE REVIEW
Definitions of project Delivery Methods and Value Management
Project delivery methods refer to system used by an agency for organizing and financing design, constructing, operations, and maintenance services for a facility or structure by getting into legal treaties and agreements with one or more parties or entities. Every person responsible for the adoption of a construction project must make an essential and early decision concerning the approach by which the project will be constructed and designed. This is what is referred to as the project delivery method. In recent years, the decision has become more difficult since alternative delivery approaches have been developed to address potential weaknesses in earlier methods. The design, programming, and design of essential public buildings necessitate the coordinated attempts of a large number of organizations and professionals. Vital to the successful delivery of a complex facility or building project is effectively and efficiently guiding the diverse parties into a responsive and productive force, which represents the interests of institutions, public agencies, and tax payers(Hall, Giglio, and American Institute of Architects, 2010).
On the other hand, Value management refers to an organized set of processes and procedures, which are introduced to facilitate the function of services, designs, systems, or facilities at the lowest cost of valuable ownership, taken cognizance of the value system of the client for quality, durability, reliability, time, aesthetic, conformance, cost, and time. The methodology and approach is about being innovative, creative, and susceptible to consensus, changes, and facilitating the use of good communication, analytical, resources and togetherness. Value management is concerned with improving and maintaining equilibrium between the stakeholders’ needs and wants and the resources required to satisfy the needs. The value judgments of stakeholders differ, and value management reconciles the varying 1priorities in order to deliver the best value for all stakeholders. Value management is based on rules and principles of defining and adding measurable value and focuses on objectives and goals before solutions and is concerned with function to facilitate innovation. Value management distinctly joins within an incorporated framework, which is a value based management style; a positive model to individual and group or team motivation. It also creates an awareness of the organizational environment, as well as, the effective application of proven tools and methods.
Value management can also be defined as the application of techniques of value analysis for improvement of business efficiency and effectiveness. Value management program is usually carried out in the systematic stages of concept, design, feasibility, design development, construction, operation, and occupancy phases of the projects. The work operations are tactically done in the job plan. This refers to the frame works, which guide the methodical maneuvering of ideas to ensure that options or alternatives are not omitted unnecessarily (Davies and Davies, 2011).
Importance of applying Project Delivery Methods
There are a lot of advantages associated with the application of project delivery methods. A construction project entails varied types of group members. General contractors, architects, construction laborers, and the agency involved in overseeing the project have distinct roles to play. Complex construction projects take a great deal of coordination among members participating, and some kinds of project delivery methods are more effective at enhancing communication. One of the vital advantages of applying the delivery methods is that they are bound by laws and; therefore, parties are determined to abide by these laws. Additionally, construction progresses in one area as another section is still being designed as units work together as a team. Additionally, applying these methods ensures that communication is highly enhanced. Applying the methods ensures efficiency and effectiveness in time, cost, and quality. The methods follow standard engineering and architectural practices for labeling and symbols where appropriate. This has significant benefits for all construction agencies and clients. Project delivery methods enhance trust and teamwork among participants (Hall, Giglio, and American Institute of Architects, 2010).
Importance of applying Value Management
Value management is important in construction for a number of reasons. Value management is used throughout. Usually, a project has a series of sessions or workshops incorporated with the project program starting at project description, strategic level, and going to the construction level. In the operations phase, skills and knowledge gained help in improving future projects in addition to the use of, the new facility. Value management is associated with cost cutting and value improvement. This implies that it improves the understanding of requirements of clients, as well as, their business needs. This is essential especially to the current concept of managing value in the construction industry. Poor or lack of clearly stating the client’s instructions results to poor value. All through the lifecycle of the project with wasted resources in time management, production and design time, as well as, the cost of change. Therefore, having clear directions from the client requires skilled facilitation to change any misconceptions that might arise. Having external challenge is essential in gaining improvement in the construction industry. Up to date, all tactical and strategic workshops, external facilitators to the team area involved. This ensures that there is no unwarranted commercial or political pressure to bear on the team involved in the project. In addition, this also ensures that uncertainty areas are established and dealt with as required. Value management provides a structured framework on how the project is to be undertaken. It is, therefore, an essential tool that needs to be applied.
Value management is used to establish the best alternatives of design for various projects. It reduces costs on existing projects. Value management increases reliability, availability, improves quality, and enhances customer satisfaction. VM improves organizational performance, the economy, the environment, and schedule. This is possible through the conventional development practice. Value management reduces risk and is a powerful tool used in the identification of problems and establishes recommended solutions. The requirements of value management are based on realistic measures of effectiveness. Value management ensures that there is acceptance and implementation of ideas and options based on cost reductions. VM considers cost budget increases based on cost reductions of the project’s life cycle (Davies and Davies, 2011).
How to apply Project Delivery Methods
Preliminary Cost Plan: This is known as the project registration stage and entails the wider overview with the initial allocation of cost. Cost monitoring is undertaken at this stage and progressively during the tender, design, and the construction process.
Master planning Stage: This involves the development of a master plan that indicates the functional associations between buildings, access to the site and within the site, staged construction, circulation, and engineering. In this stage, the environmental assessment studies are carried out. Additionally, there is a need for application of IPA and Ministerial Site designation if required.
Schematic Design and Documentation: During this stage, there is monitoring of cost throughout the design to guarantee that the limit of cost is not exceeded.
Tender cost Plan: During this phase, the sum of tender is determined depending on any agreed upon pre-construction variations.
Developed Design and Construction: This is the actual action plan phase (Hall, Giglio, and American Institute of Architects, 2010).
How to apply Value Management
Information phase: The activities in this category are into the scope and logistics. However, there are times when this stage is rushed to complete because value management is frequently seen as a way of resolving arising problems or giving direction. This should be highly restricted as the ultimate success of VM depends on covering the activities of the stage. Activities in the scope category are related to establishing the bounds and focus of the VM. Data gathered in this stage is assessed and consolidated and forms the foundation for all subsequent analysis. The objectives of the VM are outlined, and there is the identification and preparation of background information in the scope category. On logistics, there is the formation of value study group comprising of technical experts. Additionally, there is the formation of study timetable. Identification and gaining of commitment from various stakeholders involved and the nomination, invitation and briefing of participant are undertaken here. The venue is arranged, and the distribution of consolidated background material is done at the logistics category of the information phase. The information stage gives the opportunity to examine the overall project rationale.
Function Analysis Phase: In this stage, roles are identified and evaluated. The tools and techniques established to identify and evaluate functions at this phase include the Function Analysis System Technique and the Functional Hierarchies. The tools start with the general functions before proceeding to the specific functions. Functional evaluation is essential and entails an evaluation of the joining of integrated and interdependent components that form a collective entity and serve common interests.
Options/Ideas Phase: This is the stage where alternatives of ideas and options are presented in order to obtain improvement in value. During this phase, lateral reasoning is encouraged to generate as many ideas as possible even when the ideas may seem illogical. Several ways have been identified to structure the value study to promote the generation of ideas. However, the method depends on the number of individuals involved in the study, as well as, the project’s nature.
Evaluation Phase: each and every option or idea generated in the previous phase needs to be considered by the team as a whole to make decisions on the ones to be analyzed in detail. Options and ideas are analyzed in terms of the benefits and disadvantages they give to the project with regard to value improvement. Tools that might be used in this stage to undertake evaluation may include the Evaluation Matrices.
Action Plan: This phase involves the preparation of the Action Plan. This summarizes the results and gives a framework for substantial tasks on evaluation and decision making. The action plan represents the consensus of options of the value study participants and outlines ideas, which show the highest potential for improvement of value. The main elements included in this phase are a list of all activities to be carried out, identification of individuals responsible for each activity, indication of time and venue for the project.
Analysis and Reporting Phase: This is the last phase in the application of value management. The requirements for value management differ significantly depending on the project phase at which the study is undertaken. This implies that the requirements vary depending on whether the project is at strategic or concept stage (Davies and Davies, 2011).
When Project Delivery Methods should be used in Construction
Various types of project delivery methods are used in construction and have been proven to be successful. Project delivery methods provide a set of construction drawings, as well as, technical specifications, which describe the required functions to be undertaken and materials required in undertaking these roles. Therefore, project delivery methods should be used in construction when these specifications are needed. In addition, the methods follow standard engineering and architectural practices for labeling and symbols where appropriate. This is beneficial for all construction agencies and clients.
Project delivery methods operate under legal circumstances. This, therefore, implies that the models should be applied when there are legal requirements among parties involved in the construction contract. Furthermore, the methods may be used when there is a need for skilled and qualified team, as well as, when a strong relationship between builders, designers, and owners is required. This is because project delivery methods ensure that all these aspects are enhanced during the entire project. Trust and teamwork are more essential than mere pieces of paper. This is the reason why project delivery methods are preferred in construction.
When there is a requirement for cost cutting and time saving in construction, then project delivery methods are used. This is enhanced by selecting the delivery project that can ensure that the project time is not wasted, and that costs of the project are at a minimum. Project delivery methods are used in construction when participants emphasize on collective decision-making. Applying the project delivery methods ensures efficiency and effectiveness in time, cost, and quality. Thus, if all these are desired by parties involved, then there is no hesitation to using the delivery methods to achieve maximum benefits for all parties (Gransberg, Shane, National Research Council (U.S.)., National Cooperative Highway Research Program., American Association of State Highway and Transportation Officials., & United States. (2010).
When Value Management should be used in Construction
Value management is an essential component of the entire process of project delivery. Value management is used when there is a need for scheduled and planned on projects to enhance efficiency and effectiveness in the delivery of services. Value management starts early in the process of design and continues into the construction process. This has positive, maximum impacts on the project schedules. The emphasis of value management is placed on achieving maximum value within the budget. Improved value may be reflected in various ways depending on particular project requirements. This comprises of improved quality, flexibility, function, maintainability, expandability and reduced cost of the entire construction process. If all these are desired, therefore, value management can be used as it produces the best results.
Value management ensures reductions in costs or increases cost savings. This occurs when the required functions and features of a project are delivered at a reduced budget of the project. This is only achieved when value management is used in construction. However, VM must not be used merely as a mechanism of cutting costs at the expense of required features and functions. VM considers cost budget increases based on cost reductions of the project’s life cycle. Value management ensures that there is acceptance and implementation of ideas and options based on cost reductions. Additionally, the requirements of value management are based on realistic measures of effectiveness, as well as, value improvement.
It is essential to note that value management can be used at any phase of the project. The greatest resource savings and benefit are, however, obtained early in the conceptual and development phases. This is the level where the fundamental information of the intended facility or building is developed, but before the development and main design resources are spent. In addition, value management may be applied more than once in the project’s life cycle. Initial application of value management assists in getting the project commenced in the appropriate direction and repeated uses help in refining the direction of the project based on changing or new information. The later that a VM study is carried out, the higher the cost of change will be in implementing the improvements. Value management may be applied in the design planning stage to define the objectives and goals of the project, functions, requirements, criteria of design, and the scope of work. It is used in the design stage to develop detailed VM proposals and options to the project’s design, as well as, to define materials needed and ensure that the proposals are implemented. Value management is used to check the conformance to standards, codes, specifications and to ensure that proposals are implemented appropriately (Dallas, Clackworthy, and Great Britain, 2010).
Procedures for implementing Project Delivery Methods
References
Hall, D. J., Giglio, N. M., & American Institute of Architects. (2010). Architectural graphic standards for residential construction. Hoboken, N.J: Wiley.
Gransberg, D. D., Shane, J. S., National Research Council (U.S.)., National Cooperative Highway Research Program., American Association of State Highway and Transportation Officials., & United States. (2010). Construction manager-at-risk project delivery for highway programs. Washington, D.C: Transportation Research Board.
Davies, R. H., & Davies, A. J. (2011). Value management: Translating aspirations into performance. Farnham, Surrey: Gower.
Dallas, M., Clackworthy, S., & Great Britain. (2010). An executive guide to value management. London: Stationery Office.
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