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The current funding crisis – a result of the global economic downturn – is driving clients to find new and innovative ways to save money and keep projects within budget.
This is especially applicable within the facilities management industry, especially with the introduction of owners associations, who will be seeking to further reduce costs associated with maintaining common areas and facilities.
Businesses wishing to streamline their organisations would be well advised to consider integrating value engineering (VE), which many mistakenly confuse for cost-cutting. In fact, VE means identifying value improvement opportunities before balancing them against a cost benefit ratio.
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For example, when investing in a property, clients often consider preventative maintenance as an unnecessary cost, rather then identifying ways to protect their investment and reduce long-term operating costs.
Let us describe VE as ‘a systematic approach to delivering the required functions, at lowest cost without detriment to quality, performance and reliability’. This enables us to further define the process, and the parameters of our system, in order to produce tangible results.
Sticking with the preventative maintenance example used above, a VE process would analyse the function of the investment building against defined parameters.
These would be the goals, needs and objectives of the client on a short, medium and long term basis. We would then identify value improvement opportunities that would deliver the overall needs of the client.
This approach, which is favoured by Faithful+Gould, is delivered through a detailed consultation process with the client and their relevant stakeholders.
The process often involves an interactive workshop, with a series of structured sessions to ensure the business goals and objectives are being met by the delivery of their project/services.
Asking key questions early on in the project can often save valuable deliverables (time, quality, function, money) at later stages.
VE is best applied earlier rather then later, as the greatest opportunity for applying value improvements is when the cost of implementation is at its lowest.
As the project continues through the varying stages and VE becomes reactive rather then proactive, the costs rise and the level of value improvements reduce, thus the efficiency of the process often reduces.
As value improvement opportunities often emerge at different lifecycle/project stages, businesses that recognise the benefit of undertaking the VE workshop review process at clearly defined stages through the project life-cycle are further increasing the likelihood of their project’s success.
This applies to projects both small and mega - and the greater the belief and support from senior management in the process, the more successful it is likely to be.
As any business matures and evolves, the lessons learnt from a VE process should be fed back into its system. As a result, VE process complements the continuous improvement cycle such as those found in ISO 9000:2005.
Before the economic downturn, many businesses and projects were like buckets filled with holes. There was such a continuous flow of money pouring into them that the holes were never considered a problem.
Nowadays, the flow of money into businesses is slowing, so plugging the holes is regarded as a priority.
Integrating value engineering into a business management system is one important, systematic way of achieving this.
John has over 20 years experience in solutions orientated risk management. He is currently responsible for Faithful+Gould’s risk, business continuity and value management processes at enterprise, programme and project levels within several sectors.
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