THE CASE FOR VALUE MANAGEMENT TO BE INCLUDED IN EVERY CONSTRUCTION PROJECT DESIGN PROCESS

THESIS KAKITANGAN THE CASE FOR VALUE MANAGEMENT TO BE INCLUDED IN EVERY CONSTRUCTION PROJECT DESIGN PROCESS By FOTOSTAT TIDAK DIBEMARKAN AINIJAAPAR This dissertation is submitted in partial fulfillment of the requirements for the degree of Masters of Science in Integrated Construction Project Management UNIVERSm TEKNOLOGI MARA 2000

DEDICATIONS COPYRIGHT UiTM

The Case For Value Management To Be Included in Every Construction Project During Design Process DEDICATIONS This Dissertation is dedicated to my late mother, Merah Ahmad and to my father Jaapar Dahalan. To Mohammad Nasir, Harris and Adam - their understanding, love and support are very much appreciated. COPYRIGHT UiTM MSc in Integrated Construction Project Management

ACKNOWLEDGEMENTS COPYRIGHT UiTM

The Case For Value Management To Be Included in Every Construction Project During Design Process ACKNOWLEDGEMENTS First of all, I would like to thank to Allah s.w.t for His blessings and opportunity given to me in completing the dissertation successfully. On this special opportunity given to me, I would like to express my utmost gratitude to my dedicated supervisor, Professor Johan Torrance of the Building Department, for his enthusiastic help, endurance, dedications, valuable time, directions and invaluable guidance that pulled me through in order to complete this dissertation. The writing of this text would not have been possible without his valued comments, criticisms and encouragement. Secondly, I would like to thank all the people who had provided me with significant information, excellent suggestions, advice, valuable time, their enthusiastic helped and support. In particular: Mr Mohd Mazlan Haji Che Mat Managing Director, Professional Centre for Value Management Sdn Bhd Mr Khairazan Haji Mansoor Roosnam-Damha Mr Muhammad Hussien Abd Rahman Mrs Aziah Ibrahim Building Division, Public Work Department, Kuala Lumpur. Associate Professor Ahmad Paris Omar, The Co-ordinator of the MSc. course in Integrated Construction Project Management, FSPU, UiTM. All the lecturers of the MSc. course in Integrated Construction Project Management, FSPU, UiTM. To those who contributed directly and indirectly, who are too numerous to mention by name but without whom this dissertation could not have been written MSc in Integrated Construction COPYRIGHT Project Management UiTM

The Case For Value Management To Be Included in Every Construction Project During Design Process Finally, a very personal word of thanks and special appreciation to my dear husband, children - Harris and Adam, my father, family members and not forgetting my colleagues for their understanding, encouragement, attention, constant support and valuable time. Without them, this dissertation may have not been possible. Thank you. AINIJAAPAR May 2000 COPYRIGHT UiTM MSc in Integrated Construction Project Management iv

COPYRIGHT UiTM CONTENTS

The Case For Value Management To Be Included in Every Construction Project During Design Process CONTENTS Acknowledgements List of Figures List of Appendices Abstract iii viii xi xii Chapter 1 Introduction 1.1.0 Introduction to Subject Matter 1 1.2.0 Observations 4 1.3.0 Problem Statement 6 1.4.0 Objectives of the Dissertation 7 1.5.0 Research Hypothesis 8 1.6.0 Methodology 9 1.7.0 Guide to Dissertation 10 Chapter 2 Literature Review and Development of Value Management 2.1.0 Introductory Note 14 2.1.1 The background 14 2.2.0 A Brief History 15 2.3.0 Key Terms 18 2.3.1 Definitions 20 2.4.0 The Structure of the Value Management Team 22 2.5.0 The Value Management Procedure 24 2.5.1 Pre-study Phase 24 2.5.2 Study of Workshop Phase 26 2.5.3 Post Study Phase 27 2.6.0 Techniques Used in Value Management 29 2.6.1 Information Phase 30 2.6.2 Speculation Phase 32 2.6.3 Evaluation Phase 33 2.6.4 Development Phase 34 2.7.0 When to Apply Value Management 34 MSc in Integrated Construction COPYRIGHT Project Management UiTM

The Case For Value Management To Be Included in Every Construction Project During Design Process 2.8.0 The Formal Approaches to Value Management 36 2.8.1 TTieCharette 38 2.8.2 The 40 hour Value Management Workshop 39 2.8.3 The Value Management Audit 41 2.8.4 The Concurrent Workshop 42 2.8.5 The Package Review 43 2.8.6 The Contractor's Change Proposal/Audit 43 2.9.0 Why Value Management 45 2.10.0 Conclusions 46 Chapter 3 The Developing and Upgrading on the Usage of Value Management 3.1.0 Introduction 49 3.2.0 Practices Leading to Obtaining Maximum Return on The Investment in Value Management 51 3.3.0 The Design Process 53 3.4.0 Value Management and Cost Management 56 3.5.0 The Enhancement of the Project Management Service by Using Value Management 59 3.6.0 Value Management and Constructability 65 3.7.0 How Facilities Management Can Benefit from Value Management 67 3.8.0 Design to Cost / Life Cycle Cost 69 3.9.0 Conclusions 73 Chapter 4 Survey on the Malaysian Architects 1 Exposure to Value Management 4.1.0 Introduction 77 4.2.0 Why the Architects? 77 4.2.1 The Nature of the Design 77 4.2.2 The Brief, Site, Concept and Detailed Design 80 4.2.3 Conclusions 82 4.3.0 The Questionnaire Results 83 4.3.1 Introduction 84 4.3.2 Section A Outline of Respondents' Returns 85 4.3.3 Section B The Value Management Experiences 88 4.3.4 Section C The Exposure to Value Management 90 4.3.5 Section D Replies From Those Not Exposed 101 4.3.6 Conclusions to the Questionnaire 102 4.4.0 Conclusions 104 MSc in Integrated Construction COPYRIGHT Project Management UiTM vi

The Case For Value Management To Be Included in Every Construction Project During Design Process Chapter 5 Case Studies For The Clinic Projects 5.1.0 Introduction 106 5.2.0 Background of the Case Studies 106 5.2.1 The Design Brief for Health Clinic KK Type 3 109 5.3.0 Health Clinic Type 3 - Without VM Study 110 5.3.1 Trie Original Planning Concept 111 5.3.2 Problems Encountered By the Users 111 5.4.0 Value Management Study for Health Clinic KK Type 3 111 5.4.1 The Workshop 113 5.4.2 The Objectives 113 5.4.3 The Value Management Team 114 5.4.4 The Distribution of VM team into Smaller Groups 116 5.4.5 An Analysis of the Importance of Time, Cost and Quality 117 5.4.6 The Agenda of The Value Management Workshop 117 5.4.7 Space Function Analysis 118 5.4.8 The Process Chart For Project Planning 119 5.4.9 The Outcomes of the Sub-groups 121 5.4.10 Action Plan 123 5.4.11 Post Study Stage 124 5.5.0 Conclusions 128 Chapter 6 Conclusions and Recommendations 6.1.0 General Conclusions 134 6.2.0 Achievement of Research Objectives 138 6.3.0 The Findings of the Research 142 6.4.0 Recommendations 142 6.5.0 Limitations to the Research 146 References 149 Bibliography 152 Appendices MSc in Integrated Construction COPYRIGHT Project Management UiTM vii

LIST OF FIGURES COPYRIGHT UiTM

The Case For Value Management To Be Included in Every Construction Project During Design Process LIST OF FIGURES FIGURE DESCRIPTION PAGE Figure 2.1 Definitions of the Terms Used 19 Figure 2.2 Typical Terms for VM Studies and Different Stages 19 Figure 2.3 Different Definitions used for Value Analysis, Value Engineering and Value Management 20 Figure 2.4 The Value Management Job Plan 31 Figure 2.5 Stage of Project and Savings Potential 35 Figure 2.6 The Application of Cost Planning and Value Management 37 Figure 2.7 The 40 Hour Value Management Workshop 40 Figure 3.1 Some Fundamental Requirements of Effective Design 52 Figure 3.2 The Relationships of Traditional Project Management Development 59 MSc in Integrated Construction Project Management COPYRIGHT UiTM vlii

The Case For Value Management To Be Included in Every Construction Project During Design Process Figure 3.3 The Scope of 'Buildability' as Defined by CIRIA 64 Figure 3.4 Life Cycle Cost Element 69 Figure 3.5 Inter-relationship between VM and LCC 72 Figure 4.1 Percentage of Feedback 83 Figure 4.2 Types of Firm 84 Figure 4.3 Respondent's Position 85 Figure 4.4 Size of Respondents' Organisation 85 Figure 4.5 Approximate Turnover Per annum 86 Figure 4.6 Types of Project Undertaken By Respondents 87 Figure 4.7 Respondents' Exposure to VM 88 Figure 4.8 Respondents' Understanding of VM 88 Figure 4.9 The Respondents' Understanding on The Timing 90 Figure 4.10 Respondents' Experiences with VM Study 91 Figure 4.11 The Occurrence of VM Study 92 Figure 4.12 The Respondent's Normal Practice to Achieve Value for Money 93 Figure 4.13 Respondents' Implementation of VM Study 93 MSc in Integrated Construction COPYRIGHT Project Management UiTM ix

The Case For Value Management To Be Included in Every Construction Project During Design Process Figure 5.1 The Agenda of the VM Workshop 117 Figure 5.2 Modified Version of Health Clinic Type 3 (Applicable to for RM 8) 123 Figure 5.3 Immediate Implementation After VM Study 124 MSc in Integrated Construction COPYRIGHT Project Management UiTM

LIST OF APPENDICES COPYRIGHT UiTM

The Case For Value Management To Be Included in Every Construction Project During Design Process LIST OF APPENDICES Appendix 1 Appendix 2 Appendix 3 Postal Questionnaire Results' Analysis of the Questionnaires The Health Clinic Type KK 3 Drawings MSc in Integrated Construction COPYRIGHT Project Management UiTM Xi

COPYRIGHT UiTM ABSTRACT

The Case For Value Management To Be Included in Every Construction Project During Design Process ABSTRACT Value management (VM) in construction is the term to describe the total process of enhancing value for the Client from a project through concept to operation. While lower cost can be achieved through the traditional cost saving exercises, neither quality nor value can be guaranteed. Professionals in the industry are increasingly relying on VM to maintain the quality while keeping total cost down and at the same time attempting to optimise the value and functionality of the construction projects. The major influence in the immediate future will be a drive towards better value for money rather than lowest cost. Thus, the main target in order to ensure the factor can be achieved would be through design. This research is limited to discovering the effectiveness and benefits of value management during the design process and how value management can be best employed to benefit the Client of the construction industry. A postal survey was carried out on the Malaysian architect's exposure to value MSc in Integrated Construction COPYRIGHT Project Management UiTM Vltl

The Case For Value Management To Be Included in Every Construction Project During Design Process management due to the importance of the design stage and its impact on the outcome of the construction projects. Case studies were carried out in order to give a better view on the implementation of value management study and its contribution towards the implementation of the construction project. The research showed that the Malaysian clients are slowly accepting VM as a method of achieving value and to achieve better functionality in their projects. Through the application of VM methodology during the design process stages, it was able to enhance the benefits obtained by the client and derive better value and building functionality, without necessarily increasing cost. Yet, value management still has a long journey to travel in order to be an accepted and recognised process in the Malaysian construction industry. COPYRIGHT UiTM MSc in Integrated Construction Project Management ix

INTRODUCTION COPYRIGHT UiTM

The Case For Value Management To Be Included In Every Construction Project During Design Process CHAPTER 1 INTRODUCTION 1.0.0 INTRODUCTION TO SUBJECT MATTER Intensifying competition caused by the globalisation of markets, burgeoning corporatisation and other factors, together with everaccelerating change has, in recent years, placed a growing importance on improving every facet of an organisation's operation. Market globalisation has, in effect, led to increased competition, not just between companies, but also on a macro level, between individual countries. The need for improvement in organisational activities is thus felt not only in private industry but also increasingly in institutional, governmental sectors and other nonprofit making organisations whose effectiveness efficiency and determine a country's competitive position in the world. No one can deny the need for more cost consciousness in the planning, design, construction, operation and maintenance of MSc. in Integrated Construction COPYRIGHT Project Management UiTM

The Case For Value Management To Be Included In Every Construction Project During Design Process complex building projects. This need has been recognised for many years, but the rapid pace of changing technology, inflation and the new problems of energy conservation and environment protection have focused even more attention on the problem. The resurgent emphasis placed on the cost of a building and its maintenance makes it imperative that something needs to be done, in order to explore all avenues for producing the required facility at the best possible value while maintaining the desired levels of performance and quality. Managers need to, not only control cost, but to reduce initial costs and minimise the future costs of ownership. Yet in the process of doing this, the specified performance, quality, safety, utility and aesthetics must be maintained or improved. This is when the value management (VM) studies should come into the picture. The VM method as applied to a construction project is an objective, systematic means of obtaining optimum value for every construction ringgit spent. VM is a relatively new tool and the Malaysian construction industry cannot afford to be without it. COPYRIGHT UiTM MSc. in Integrated Construction Project Management

The Case For Value Management To Be Included In Every Construction Project During Design Process Years before VM was introduced, there had always been ways of cutting costs, with the reduction of material and labour costs being widely used. This, in fact, often resulted in inferior products where, besides reducing costs, it also tended to reduce the number of satisfied users. It has been observed by Mohd Mazian (1999) that an interest is developing in VM within the Malaysian construction industry even though it is still in its infancy stage. Not only the private funded projects have taken an interest in implementing VM studies in their projects but at the moment of the writing of this dissertation, even a major government body had taken a positive steps towards implementing VM in their department by instilling the awareness in the staff. Still, interest is divided between those who advocate VM as a potentially powerful tool to improve value as opposed to those who believe it is largely ineffective and or is already inherent in existing procedures. Value management in construction is increasingly being seen as the term to describe the total process of enhancing COPYRIGHT UiTM MSc. in Integrated Construction Project Management

The Case For Value Management To Be Included In Every Construction Project During Design Process value for the client for a project through its concept stage to operation. 1.1.0 OBSERVATIONS Major clients in Malaysia currently are increasingly concerned with the achievement of value for money in their construction projects. Thus, a new method of cost management, which at the same time could give the optimum value for money must be brought in. In response to this demand, a growing number of construction companies and consultants are claiming to offer a VM service. However, VM continues to mean different things to different people. There is considerable confusion regarding the distinction between Value Management & Value Engineering. Some commentators have been even questioned the extent to which VM differs from the established procedures of cost management. COPYRIGHT UiTM MSc. in Integrated Construction Project Management