VALUE MANAGEMENT IN CONSTRUCTION: The Process and Benefits

 

application of value management in construction

Built-Environment-Sri Lanka -Vol. 04, Issue APPLICATION OF VALUE MANAGEMENT IN CONSTRUCTION Srinath Perera, Gayani Karunasena, Kaushalya Selvadurai. Application of Value Engineering in Construction Projects for the implementation and application of value engineering process in a construction project located in a special region (in terms of. Value Management in Construction: A Client’s Guide, CIRIA Special Publication Construction Industry Research and Information Association. This guide provides a framework for the systematic application of value management for different clients and types of construction project. It outlines how to.


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Conference Paper Decision MakingLeadership The objective of this article is to present and discuss the main aspects of the use of Earned Value Analysis - EVA - in the cost management of civil construction projects.

These aspects are related to advantages and disadvantages, difficulties and benefits, problems and solutions, criteria and results, based on the experience of a real case study in Brazil. The park has 30 attractions, The case is documented with reports, graphs, analyses and comments.

It is shown that EVA had a relevant role in the integrated management of scope, time, progress, cost, application of value management in construction, risks and procurement of the main supplies and services of the project. The results are analysed and the article recommends 10 steps for further implementation of EVA. This paper discuss how to assign earned value to the project stakeholders, related to the theme of this congress.

EVA is a powerful tool to control simultaneously physical and cost performance. EVA provides an integrated schedule timeprogress, and cost management, related to scope and procurement, application of value management in construction, quality, and risks.

Harold Kerzner considers EVA a relevant maturity differential in project management. This is a powerful tool in the decision making process. The cost management in Construction Projects needs the planning of budgeted costs and their control. This is related to all the knowledge areas in the project.

The actual costs are related with the work performed, but the work performed is not often exactly equal to the work scheduled. The solution is the control, measurement and determination of the budgeted cost of the work performed and compare it to the actual costs.

One difficulty is the determination of the proper accounting system and deal with scope changes. The solution requires distinguishing the financial control and cost control. The structure for such application of value management in construction must be in accordance with accepted rules of accounting and serve whatever requirements may relate to contract payment provisions, taxation, regulation, or project capitalization. Financial accounting will also reflect the pricing of a contract which may differ significantly from its costing because of unbalancing and the tracking of indirect accounts such as profits and undistributables.

Field construction managers are concerned with costs — what specific operation should cost and what they do cost. Cost control should be approached as an application of Pareto's law which essentially states that 80 percent of the outcome of a project is determined by 20 percent of the included elements.

The objective of this article is to present and discuss the main aspects about the use of Earned Value Analysis - EVA - in the cost management of civil construction projects.

This paper shows a documented use of EVA in Brazil, by means of empirical approach of a real study case: the Monica Park project, as follows:. Section 4 — Critical analysis of the use of EVA in Monica Park Project, with comparative analysis of vantages and disadvantages, problems and benefits, difficulties and solutions and the 10 steps recommended to implement EVA in further construction projects. Study cases can be exploratory, explanatory or descriptive.

The research methodology, in this case, comprises a simple descriptive real case study, provided by the authors. The reports from Monica Park were used to get data for the paper. Some tables are reproduced in the paper. They are also useful to elaborate theories where little data is available Yin, Yin's approach for case studies was used in this paper through application of value management in construction validation of the content, application of value management in construction, since the comments and concerns of the participants of the Monica Park project have application of value management in construction considered.

As a simple descriptive study case, the replication logic was used verifying the possibility to application of value management in construction the EVA process in other construction projects and 10 steps used in the Monica Park are modelled and provided for future use.

The confirmability is assured by the observation, by the results and reports provided Yin, application of value management in construction, and analysed by the authors: the first one has intensely participated of the Monica Park Project in the database and in the planning and control services.

All the data, reports, databases, perceptions, and concerns were obtained with the other participants of the Project, which were the primary source of information in this study case, as well as the reports.

These data are partially reproduced in this paper. According to Morra and Friedlanderdescriptive cases describe what occurred, why and how, application of value management in construction, so we can get a clear picture of the actual status, application of value management in construction. In addition to the methodology action research was applied also by the authors. Action research is a method which deals with research as well as action Dick, : action to generate change in an organization or in a community, in order to enhance the understanding by the researcher.

In this method, according to Checkland and Holwellthe researcher should participate of the action team involved with the proposed change, such as occurred in this study case. In this method, accuracy and relevance are searched. The EVA method is already considered relevant by the community of project managers and cost engineers. So, the theoretical referential related to EVA was researched in order to application of value management in construction with practical results and guarantee value to this real case study conclusions by comparison of the action research with the actual theory.

So, the simple descriptive case was complemented with action research, as far as the first author participated actively of the team responsible by the transformation in analysis. One limitation of this methodology is that only one case was studied. Nevertheless, the empirical approach was rich enough to allow the critical analysis provided in section 4 and validate the conclusions in section 5, since the author participated in the study case.

Humphreys These criteria are very important. They shall be read, studied and applied as key procedures to get success in EVA application. The park has 30 attractions, with an instantaneous capacity for 1. The park has an area of The construction of the park is the object of this study case. The construction works took 10 months, started in January and finished in October Thematization of the complex services related to provide application of value management in construction park with thematic elements related to the theme of the park: Monica Park.

For operation of the park some companies have been contracted, such as: fast food operators, thematic shop operators, cleaning services, safety services, attraction operations and maintenance. The success of EVA requires clear responsibilities in each work package. The main objective application of value management in construction with EVA in the Monica Park project is that the project finished on time and on budget, education of the project team in the EVA criteria and procedures, as well as training the team in EVA related software.

The main problems of EVA are the cultural change needed in the first implementation, the negative resistance of some people in the project due to the effort to implement, without see clearly the benefits. EVA demanded great effort in Monica Park project in order to:. The main benefits of EVA, identified in the Monica Park Case are: integrated cost, progress and time management, better vision of the project in terms of scope and procurement, early alert to problems, vision of trend for some deviations, reduced time to perception and understanding of problems and solutions, application of value management in construction, support for negotiations and decision making process, motivation of people to the project control process.

The main conclusion is that EVA provides a relevant contribution to the cost management in construction projects, namely in the case Monica Park Project, which was finished on time and on budget, as shown in section 3 and analysed in section 4. EVA contributed application of value management in construction cost management in Monica Park Project and the use of EVA in Monica Park Project contributed also to the application of EVA in construction projects, in general, and in the future, through the data, perceptions and concerns developed in this paper.

Some considerations were added to the ones found in the main EVA book references. EVA is very sensitive for scope changes. One perception that reduced difficulties was that the reports allow easy and fast debugging of mistakes. Not only mistakes on digitizing numbers, but mistakes in the assumptions related to the measuring criteria.

The database and reporting system provide easy consistency analysis of data. Wrong data was easily detected and corrected.

Error detection allowed improved practices and provided support for the decision making process, as well a, negotiations with suppliers and 3rd parties. The SPI index deals with variables planned values PV and earned values EV expressed in costs, in the vertical axis, but the time is the horizontal axis.

The managers can measure delays in horizontal axis. We suggest changing the name from Schedule Performance index to Progress Performance index.

It is related to progress, not time. It is very important to define the suitable structure for control and accounting. The work packages must have clear responsibilities and criteria for measurements. Is important to balance greater or smaller packages in order to get better results in the process.

Greater or smaller packages do not directly mean better or worse results, regarding precision and effectiveness. Good judgement is necessary to define the level of control and the amount of results to deal with. The main contribution of EVA process was the motivation of the manager and his staff concerning the cost management and the goal to finish the project on budget.

The EVA process provided more perception about the costs and its related elements of scope, contracts, performance, suppliers, risks, procurement, communications, application of value management in construction, quality, people and negotiations.

EVA process provided more clear concerns about scope issues, because the scope was better modelled through the WBS and appropriate account packages. More than the curves, EVA inspires the participants to pay more attention to costs and progresses, motivates the participants to discuss the cost elements with more intensity and application of value management in construction the costs, resulting in a project finished on time and on budget, as in the case of Monica Park project.

The process to determine the indexes allow perceptions and supported the decision making process. The proper application of the 35 criteria shown in section 2 were considered more important than the graphs itself. The graph of indexes are not the result of the EVA process.

The result of the EVA process is the project finished on time, on budget and on happiness. Dick, R. Retrieved in November 15 th Einsenhardt, K.

Flemming, Q. Earned Value Project Management 2 nd. England: Probus Publishing Company, Humphreys, K. Kerzner, H.

Morra, L. Yin, R. Young D. Article Decision MakingLeadership 1 November By Fewell, Jesse Learn to let go of the decisions you think you can make faster. Facilitating the right people to take ownership of the right issues is not only better for the project.

 

Earned Value Analysis in the Cost Management of Construction

 

application of value management in construction

 

This paper analyzes the current situation of construction project management and problems based on an overview of relevant theory of value engineering and construction project management. It Points out the importance of value engineering. Finally analyzes the application of value engineering to construction projects in various stages of the. Our Application Value Management (AVM) services help address the challenging dual mandate of improving efficiencies and delivering outcomes. To improve efficiencies, we enable industrialization through a service catalog, hardwiring Continual Service Improvement (CSI) and transformation. To . Value Management in Construction: A Client’s Guide, CIRIA Special Publication Construction Industry Research and Information Association. This guide provides a framework for the systematic application of value management for different clients and types of construction project. It outlines how to.