The largely untapped resource of Value Management can deliver surprising “value for money” and added value. By Peter Yeomans
Value: easy to say, difficult to define, often poorly delivered. The apparent lack of a mechanism to create value is one of the justifications put forward for poor-value-for-money outcomes.
But help is at hand. Although developed nearly sixty years ago, “Value Management” (VM) remains a largely untapped practical methodology for ensuring the maximisation of value in any given context.
VM began during World War II in the United States and has evolved from a value-analysis application in the manufacturing sector (i.e. subjecting an existing product to the rigors of the five-stage process to improve value), to a broader suite of applications. It is used in manufacturing, the project environment (building, engineering, construction and the resource sector) and in organisational applications.
The Australian/New Zealand Standard 4183:1994 defines VM as “a structured, systematic and analytical process which seeks to achieve value for money by providing all the necessary functions at the lowest total cost consistent with required levels of quality and performance”.
VM is not simply about cost reduction. The “lowest cost” referred to in the definition is the one that delivers required or enhanced performance expectations, not the cheap and chatty.
“Function” is a key word in the definition. It is the concept of function and its analysis that sets VM apart from the many other recognised group problem-solving processes. Function analysis lays bare the primary raison d’etre of something, be it a paper clip, a nuclear power plant or an organisation. It challenges the stagnating attitude of “we’ve always done it that way”. It is ends and not means orientated. A customer need can thereby be reinterpreted so that it is finally understood that it is not a six-millimetre drill bit that the customer wants but rather six-millimetre holes.
The elements of the process
Three key drivers make the VM process work. First, it needs convergent analysis to ensure that the right “problem” is being solved, a period of divergent creative thinking to generate alternatives, and a close-out implementing qualitative and quantitative tools so that the best solution is selected and developed into the value outcome.
Second, the participant mix of the VM team is critical. Numbers can vary considerably. But, a more important issue is participant suitability. To overlook an end-user or customer could be a folly similar to excluding executive authority from the proceedings.
The third ingredient is management of the process. The VM facilitator (preferably external) is faced with large groups of participants, each of whom is carrying different baggage and is being required to think in unfamiliar ways. Add to this increasingly compressed workshop timeframes of three, two and even one day, and it is clear that the VM facilitator requires high-level group-dynamic skills and a thorough knowledge of the VM process.
So, what results can be expected?
- Capital cost savings in excess of 10%.
- Operational and maintenance cost savings.
- Enhanced quality and performance at the same or less cost.
- Significant reduction in production time-lines.
- The unleashing of synergistic potential and a sense of ownership.
Millions of dollars can be saved on large projects with attendant “go to whoa” timeframes slashed by months. In this context, the time and costs of a VM workshop are negligible.
VM consistently delivers if the right players are involved and the facilitator is on the ball. Significant “whole of life” cost savings are there for the taking. Time and risk factors are substantially reduced. Innovative solutions are generated to complex problems. Performance and quality expectations can be enhanced, even using existing products or processes. It improves communication, understanding and ownership.
In a climate demanding increasingly more from increasingly less, VM gives the value tiger teeth. It is robust. It is simple. It is gaining momentum. It works. It is good value.
How not to
How not to exhibit communication skills
Newspaper headlines that show the knowledge economy is alive and well:
Dead pilot flew without licence.
High-school dropouts cut in half.
Miners refuse to work after death.
Survivor of Siamese twins joins parents.
Prostitutes appeal to Pope.
Ban on soliciting dead in Trotwood.
Children make tasty snacks.
Stolen painting found by tree.
Drunk gets nine months in violin case.
Juvenile court to try shooting defendant.
Soviet ships collide: one dies.
Panda mating fails: vet takes over.
Never withhold herpes infection from loved one.
Red tape holds up new bridge.
Eisenhower flies back to front.
Iraqi head seeks arms.
How not to ask an exam question
The following question appeared on a physics exam at the University of Copenhagen:
“Describe how to determine the height of a skyscraper with a barometer.”
One student replied: “You tie a long piece of string to the neck of the barometer, then lower the barometer from the roof of the skyscraper to the ground. The length of the string plus the length of the barometer will equal the height of the building.”
The student was failed. He appealed on the grounds that his answer was indisputably correct. The university appointed an independent arbiter to decide the case.
The student was called in and allowed six minutes in which to provide a verbal answer which showed at least a minimal familiarity with the basic principles of physics. For five minutes the student sat in silence, forehead creased in thought. The arbiter reminded him that time was running out, to which the student replied that he had several extremely relevant answers, but could not decide which to use.
Finally, he replied as follows:
“Firstly, you could take the barometer up to the roof of the skyscraper, drop it over the edge, and measure the time it takes to reach the ground. The height of the building can then be worked out from the formula H = 0.5g x t2. But bad luck on the barometer.
“Or, if the sun is shining, you could measure the height of the barometer, then set it on end and measure the length of its shadow. Then you measure the length of the skyscraper’s shadow, and thereafter it is a simple matter of proportional arithmetic to work out the height of the skyscraper.
“But if you wanted to be highly scientific about it, you could tie a short piece of string to the barometer and swing it like a pendulum, first at ground level and then on the roof of the skyscraper. The height is worked out by the difference in the gravitational restoring force H = 2(l/g).
“If you merely wanted to be boring and orthodox about it, of course, you could use the barometer to measure the air pressure on the roof of the skyscraper and on the ground, and convert the difference in millibars into feet to give the height of the building.
“But, since we are constantly being exhorted to exercise independence of mind and apply scientific methods, undoubtedly the best way would be to knock on the janitor’s door and say to him: If you would like a nice new barometer, I will give you this one if you tell me the height of this skyscraper.”
The student was Niels Bohr, the only Dane to win the Nobel Prize for physics.
The Slithershanks File
Slithershanks was encouraged to read in New Rules for the New Economy by Kevin Kelly:
“The surest way to smartness is through massive dumbness. How do you build a better bridge? Let the parts talk to each other. How do you improve lettuce farming? Let the soil speak to the farmer’s tractor.”
Slithershanks felt that this was surely possible, provided he was drunk enough.