Unit (D31VR) Value and Risk Management assignment Project Value and application of Value Management (VM) and Value Engineering (VE)


1.0 Introduction

In the execution of the contemporary projects, organizations are increasingly engaged in value and risk management. According to Hoyt and Liebenberg (2011), value management is a value analysis or engineering techniques for improvement of business effectiveness and efficiency. In other words, it is a process that involves leverage on an innovative approach for obtaining optimum value for every money spent in the construction process. It is in this light that Trivellas et al. (2013) noted that value management involves investigating, analysis, comparison, and selection of distinct options available for producing prerequisite function and meeting or exceeding the expectations of the customers. Similarly, Cardona (2013) defined the risk management as a process involved in identification, analysis, and reporting of uncertainties. This is a principle that broadly adopted in the construction industry and distinct stages in the procurement process. Taking this into account, the value and risk management are critical practices that must be prioritized to guarantee a successful construction process. This report focuses on a value and risk management of a property consortium involved in developing a luxury hotel in the city center on a redeveloped site. Through a focus on this case study, an understanding of project value and application of Value Management (VM) and Value Engineering (VE) would be demonstrated in detail. The relevance of this would be to guarantee the best use of their investment in the project and its timely delivery.

2.0 Part 1: Understanding Project Value and Application of VM and VE

2.1 Value Drivers

2.1.1 Definition of Value Drivers

According to CABE (Rahim et al., 2016), delivery of value implies maximization of the benefits by a project through enhancing satisfaction or exceeding the needs of different stakeholders whilst simultaneously minimizing the use of resources. In this case, the value can be described as a function between the satisfaction of needs (business benefits and requirements) and the resources required for their deliver with the value being equated to benefits and resources.  Taking this into account, one of the instrumental approaches of describing the factors essential for delivering value through the project is through leverage on value drivers. Further, Edvardsson et al. (2011) noted that value drivers are varying from one project to the other and dependent on the benefits targeted to be accrued from a building. In this case, the degree to which the design successfully satisfied each of the value drivers is a measure of the quality of the building design. In this case, the better the quality of a design, the higher the satisfaction of the value drivers. According to CABE (Rahim et al., 2016), the most common value drivers include maximization of business effectiveness, ensuring effective project management and delivery, achieving the required financial performance, impacting positively on the locality, minimizing building operation and maintenance costs and environmental impact and complying with the third party requirements.  In the case study project, the value drivers would be prioritized as including minimizing building operations and maintenance of costs and environment, Maximising Business Effectiveness, ensuring effective project management and delivery and lastly Complying with Third Party Requirements.

2.1.2 Metrics of Value Drivers and Relevant Parties

In the context of the current project, which involve the development of a luxury hotel in the city center on a redeveloped site, the value drivers for this project include the following;

Minimising building operation and maintenance of costs and environmental impact

The current project involves the construction of a hotel and leisure club. In a hotel or a leisure project, effective leverage on the competitive advantage. This means that in an event where the management of a hotel or a leisure club focuses on active maintenance of their operations, it is challenging for the competitors to penetrate hence increasing the overall value of an organization.  The success of this process can include metrics such as a whole-life cost of the construction project which is currently pegged at 30 million pounds and the overall facilities management estimates.  The parties to be involved in this process would include the administration, management of the organization, staff and the clients. As noted by Taylan et al. (2014), the costs and environmental impact evaluation is equally critical as it leads to the minimization of the environment and environmental sustainability. This value driver can be critical in the first stages where the waste-disposal issues increase with the building material being a rough indicator of the environmental impact. To evaluate the success of this value driver, the suitable metrics would include the sustainability index and construction excellence sustainability KPIs. In the UK context ……………………………………………………………………………………………………………………Please click the icon below to receive this assessment in full for only $15