Note
28 Feb 2019: Process and Criteria added.
31 Jan 2018: Created.
Different Terms 不同的名稱
- Value analysis 價值分析 - Original name used to refer to the methodology used to analyse the values of the various components of a product.
- Value engineering 價值工程 - A later name used when the methodology has been more well established as a system. It is said to be more focused on the technical aspects of the value study.
- Value management 價值管理 - An even later name used when the methodology has been adopted for services and processes. It is said to be more focused on the strategic or policy aspects of the study.
- Value methodology 價值方法 - A name referring to the methodology used in the value study.
- They should now be regarded as synonymous without being too academic to distinguish between them.
Value 價值
- Standard equation: Value ≈ Functions / Costs.
標準方程式: 價值 ≈ 功能 / 成本。 - Modified equation: Value ≈ Functions / Resources.
修訂方程式: 價值 ≈ 功能 / 資源。 - “Functions” can include prices, benefits, uses, worth, relationship, etc. of ALL parties.
“功能”可包含各方的價格、好處、用處、代替成本、關係、等等。 - "Resources” can include costs, time, labour, materials, plant, effort, waste, etc. of ALL parties.
“資源”可包含各方的成本、時間、人工、材料、機械、努力、損耗、等等。
Worth 代替成本
- "Worth" has a special meaning in VE/VM. It means the cost of achieving the same function using alternative means. If the worth is less than the cost of the present means, the present means has poor value.
英文的"worth"一般亦解作價值或值得否,但在價值工程,它有特別的含意,乃指達到同樣功能的其他辦法的成本。若此"代替成本"比現行方法的成本低,則意味現行方法的價值低。
Value Index 價值指數(性價比)
- Value index = worth / cost of a function = function worth / function cost . If worth < cost, i.e. value index < 1, then the function has poor value.
- Somebody uses value index = cost / worth, then if cost > worth, i.e. value index > worth, then the function has poor value.
- It is suggested to use the former formula, because it is more consistent with the Value ≈ Functions / Resources formula and the intuition that higher value ratio is better.
Purposes of VM 價值管理的目的
- Not necessarily cost reduction.
不一定是減錢。 - “Cost” can be non-financial.
”成本” 可以不是金錢上的。 - Enhancing Value by:
提升價值,可:- Reducing resources;
減低資源; - Keeping resources unchanged;
維持資源不變; - Increasing resources to a lesser extent;
增加資源但幅度較細; - Increasing the extent of existing functions;
增加現有的功能的程度; - Expanding the scope of functions.
擴大功能的範圍。
- Reducing resources;
Value Study 價值研究
- A specific study on a particular product, service, process or entire project using VA / VE / VM to improve value.
- Usually done by conducting a workshop attended by many stakeholders representing different expertise, needs and interests.
- A value study should have the following three-stage process:
- Pre-workshop preparation;
- Value workshop;
- Post-workshop documentation and implementation.
Six-Phase Value Workshop 六階段價值工作坊
- Introduction Phase (preceding the 6 phases)
介紹階段 (六階段前) - Information Phase
資訊明暸階段 - Function Analysis Phase
功能分析階段 - Creative Phase (or Creativity Phase)
方案創造階段 - Evaluation Phase
方案評估階段 - Development Phase
擇優深化階段 - Presentation Phase
總結報告階段
Similarity of the Processes of Various Management Models
- They all call for cyclical and continual review and improvements.
- A VM workshop is only a start at the “plan” stage and that continual review and improvements would be required throughout the course of project delivery.
Integration of Various Management Models
- Integrity management is the backbone throughout, and can be considered as part of the risk management.
- Quality, health and safety should be the basic minima that a project should achieve. They are only a sub-set of all the risks which may be encountered.
- Risk management is about preventing or mitigating risks in order to make a project successful.
- Value management is about adding value to the project on top of mere success.
- Non-contractual partnering helps people work easier and smoothly.
Ground Rules of Workshops
- Equal right and opportunity.
- Mutual trust and respect.
- No pre-judgement.
- Non-adversarial.
- Better value creation.
Persistent Critical Questions
- First ask "Do What" to identify the functions of the particular product, service, process or entire project being studied.
- e.g. [Do A], [Do B], [Do C].
- Phrase "Do What" in the form of a verb followed by a measurable noun to represent a simple and single function.
- The verb is to represent the action achieving the function.
- The measurable noun should represent the object to be acted upon to achieve the function.
- The objects should not use the names of the actual components making up the product, service, process or project so as to free up the choice of the components.
- Then ask "<-- Why" and "How -->" to link up the relationship of the functions.
- Why? [Do A] <-- in order to <-- [Do B] <-- in order to <-- [Do C].
- How? [Do A] -- by --> [Do B] -- by --> [Do C].
- Linked path: [Do A] -- [Do B] -- [Do C].
- Asking ”Why“ can help align objectives and ultimate goals on the far left.
- There can be functions not linked up in the horizontal manner but branched off at the same time, e,g. when [Do B], [Do C] also happens at the same time.
- There can also be parallel paths, or functions which happen at one time or all the time.
- Then ask "Why not" and "What else" to challenge the existing and generate new ideas.
Brainstorming Rules
- State ideas quickly.
- Quantity more important.
- “Free-wheeling” welcome.
- OK to state the obvious, to repeat, to think out of the box.
- OK to add upon, combine, improve on others’.
- OK to twist or turn around others’.
- No explanation required.
- No criticism, doubting, judgement.
Evaluation
Evaluation as a Phase or a Technique
- The Evaluation Phase follows after the Creative Phase where creative ideas are evaluated to judge their values.
- During the Information Phase and Function Analysis Phase, some prioritization, shortlisting and selection may be conducted.
- Each of these actions would involve some kind of evaluation techniques and judgement.
- Therefore, evaluation occurs across the whole process of value study.
Process
(Section added 8 February 2019)
- Why?
- Select the most significant and promising ideas for adoption
- How?
- Consolidate ideas
- Group similar ideas (no screening!)
- Review ideas critically
- Advocate or doubt-cast (but no scoring yet!)
- Adjust and expand ideas
- Determine criteria
- Observe overall objectives
- Observe individual functions
- Suggest criteria (no judging yet!)
- Group similar criteria (no screening yet!)
- Review criteria
- Adjust and expand criteria
- Weigh criteria (5 to 10)
- Score ideas
- Recommend ideas
- Consolidate ideas
Criteria
(Section added 8 February 2019)
- Using a noun, e.g. time, as a criteria is not sufficient. Do you want shorter time (fast project) or longer time (long lasting battery)? A criteria should have some qualitative or quantitative qualifiers.
- Some qualitative qualifiers:
- Lower, higher
- Shorter, faster, longer, just in time
- Excellent, better, just OK
- Easier
- Some quantitative qualifiers preceded by "more than / less than / equal to" and the like:
- Monetary
- Temperature
- Quality grade
- Environmental assessment grade
- Life span
- Aspects to study:
- Quality
- Price
- Life cycle cost
- Time
- Life span
- Maintenance
- Operational use
- Risks
- Safety
- Combine a qualifier and an aspect to form a qualitative criteria, e.g.:
- Shorter time
- Good safety
- Qualitative criteria may be more specific and may become screening criteria, e.g:
- Less than one month
- Zero accident
- Not more than ... accident rate
Units of Measurement
- When all the functions and resources can be converted into monetary units, the evaluation of the values will be much easier.
- However, not all can be converted into monetary units, then some other common units of measurement should be devised, e.g. some scientific units, mass, energy, speed, time.
- Yet, in many cases, there are no suitable monetary units or scientific units, human subjective views are to be adopted.
- When human subjective views are to be adopted as units of measurement, they have to be quantified, even for qualitative views, after thorough discussions.
Voting
- One can make and record one's own choices in whatever manner, but voting is the best way to express collective views in a quantitative manner.
- VM is about collective wisdom and collective decision.
- Dominance by the bosses or vocal people should be avoided.
- During group discussions, vocal people would involuntarily speak more to express their views or influence other people.
- Voting giving better chances for everybody to express free will and choices should be preferred.
- Voting can be by:
- Ballot paper - confidential, but needs time to count.
- Show of hands - quick, but may be dominated by bosses or vocal people.
- Show of figures (0 for no support, 1 for least support, 5 for strongest support) - expressing different degrees of support.
- Marking or sticking voting points on a displayed list of choices - quick and not dominated by others.
- When selecting top few choices out of many choices, give sufficient number of votes to each participant:
- e.g. for 30 participants each suggesting 3 choices, there will be 90 choices.
- When the participants are asked to vote for the top 10 choices, and each participant is allowed 10 votes, then the total number of votes will be 300 votes.
- Which number when divided by 90 choices will mean 5 votes per choice on the average.
- If the participants' choices are very diversified, each of the top 10 choices may only have a small number of choices of 10 to 20.
- Therefore, it would be better to give more than 10 votes to each participant.
- If desired to amplify the preferences between each participant's own choices:
- Request the participant to indicate on each vote a weighting on a scale of 5 or 3.
Tabular Comparison
- Workshop participants may be asked to give scores on a scale of 10 for expectation and achievement to identify the gap between the two.
- An example is as follows:
- The aspects help people focus on the areas for present consideration and further study.
- Each aspect may be guided with evaluation criteria (e.g. on time, within budget, least environmental harm, good health, good quality, good safety, or further breakdown) for scoring.
- The scoring direction must be clarified, e.g. time or cost may be scored as 0 for very poor time or cost control or as least time or cost overrun, of totally reversed meanings.
- In this example, 5 is treated as the passing score for on time and within budget, and 10 as the excellent performance.
- The scoring scale may be a 5-point scale such as:
- 5 for excellent;
- 4 for good;
- 3 for fair;
- 2 for marginal;
- 1 for worth something;
- 0 for not supported.
Column Chart
- The results may be presented as a column chart for visualisation:
Bar Chart
- Or as a bar chart:
Collective Scoring
- It may not be possible to agree the scores between a group of participants quickly without being dominated.
- Voting may need to be conducted.
- Each participant will give his/her score for each Aspect.
- The scores are then totalled and averaged per Aspect as follows:
- A show of figures based on a 5-point score will be quicker than a 10-point score.
Radar Chart
- For an even quicker gathering and presentation of the scores at the workshop, a radar chart would be very useful.
- Here, there are three participants each having been requested to indicate their expectation and achievement scores for each aspect by putting a dot on a 10-point scale axis.
- After that, the approximate centres of gravity of the dots of different aspects are connected together.
- The distance between the two connecting loops will be the gap.
- For a workshop where the number of aspects or criteria to be scored is unknown in advance, a hand drawn circular radar chart with the number of axes flexibly added may be adopted:
Pareto Principle
- Also known as the 80/20 rule, or the law of the vital few.
- Roughly 80% of the effects come from 20% of the causes.
- Applying the principle generally:
- Focus on the significant 20% causes to generate 80% effects.
- When applied to construction costing:
- 20% of the items in the pricing documents represent 80% of the costs.
Most Cost Significant Items
- The most cost significant items should be selected for value study because they have the greatest potential for and impact of cost savings.
- Components listed in the regular cost reports:
- Sorted in the descending order of their costs:
- Visualisation:
Priority Rating of Intangible Items
- For intangible aspects of products, services, processes or projects, they can be rated by a single set or two sets of scores as follows, where the product score = importance score x probability score:
- Similar scoring concept has been used in risk management.
- The same can also be applied to the selection of value options.
- For physical components of products and projects, only one final value option would be chosen for a component.
- However, for intangible aspects of products, services, processes and projects, more than one value option may be adopted for achieving the same objective..
- But, because of limited resources, not all can be adopted.
- The above multiple scoring method may be used to select the top priority value options.
Comparison of Two Options
-
Like school examinations, the simplest way to calculate scores to compare between two options (projects below) would be as follows:
- This is useful when every score counts for precision (passing marks in examination) and the scores at columns B and C can be countable.
- Collective scoring as described above may be conducted when precision is not tha critical.
Multiple Criteria Comparison
-
If the aspects or criteria should not carry equal weight, then weighting of the aspects or criteria would be required:
-
The following shows the results if the same group of participants scored on a 10-point scale at the same time:
-
The following shows the results if the same group of participants scored on a 5-point scale at the same time:
-
The above 3 sets of results show that the absolute degree of accuracies may vary but the relative merits are not affected very much.
Pairwise Comparisons
- A more detailed method to determine the relative ranking of different aspects or criteria is by pairwise comparison.
- A pairwise comparion is done by asking: between the pair of aspects or criteria at the left and at the top, which one is preferred, then write down the preferred one in the intersecting box.
- The total occuurence is then counted and the proportion calculated.
- The following is based on the ranking shown above.
- Note that if the comparison is done independently, the results may be very different because participants may say safety is of paramount importance.
- The above shows that Environment having the lowest ranking will score zero.
- This would not be used when the proportion is used as weightings.
- The following gives at least one vote for one aspect to avoid zero proportion, the ranking remains the same.
- Weighting may be added when doing the pairwise comparion by giving, for example, 3 for strongly preferred, 2 for moderately preferred, 1 for preferred.
- There are many formats and ways of pairwise comparion tables.
Life Cycle Costs
- When comparing different options having different patterns of initial costs and long term running costs, their life cycle costs should be worked out and compared.
- See Life Cycle Costing.
Action Plan of Applying VM on Intangible Aspects