Crossing Borders

AAs published in View on Value (Volume 4, Edition 9, Autumn 2020)

Value Management and Value Engineering is being applied worldwide. What is happening in other countries and what can we learn from them? We asked some leading Value Engineers in the world to give their opinion.

What is the status of Value Management (VM) in your country? In what industries is it used and to what extend?

• Keith (UK): “VM is used across numerous industries, in both the Private and Public Sectors, including Aviation, Construction, Education, Health, Infrastructure, Leisure, Manufacturing, Ports, Power, Oil & Gas, Pharmaceuticals, Transportation and Utilities. These industries include organizations which have VM Policies, Principles and Procedures across their whole business plan through to those that hold one-off VM workshops.”

• Mei-yung (Hong Kong): “The Hong Kong Institute of Value Management was established in 1995. Since 1997, Architectural Services Department of Hong Kong government has encouraged to conduct VE studies on projects with a total contract sum higher than HK$100M (~€11 mln). After reviewing the impact of VM in 2002 this was extended for all public construction projects with a total contract sum exceeding HK$200M (~€22 mln).

• Marc & Daniela (Germany): “In 1967 Value Analysis/Value Engineering (“VA/VE”) came to Germany. Since then, its home is the Association of German Engineers (VDI) with its Society “Product and Process Design”. Its technical division VM/VA has around 3.500 members. More than 50 years of history – this is more than a lot of other methodologies can claim. But times are changing. And so does this methodology. A further development from VA/VE towards VM took place. In Germany, the focus is clearly on industrial applications. Be it consumer goods, food, appliances, machines, or even entire industrial plants – there are many examples of successful developments and optimizations from all areas. And it is pretty well known in these product-oriented areas.”

• Renee (USA): “The value methodology is embraced strongly and is mandated in the Federal government with all of the various organizations that support engineering, construction and the manufacturing of military equipment and technology. In turn, the Federal government provides funding for State and Local governments that then require the adoption of the same mandate and the value methodology is applied. This legislated requirement has provided an opportunity for many to learn about the true nature of value and to experience it firsthand during training and workshops. Additionally, we are seeing other organizations that are not required by the federal mandate, begin or continue their value journey by embracing the value methodology as an opportunity to improve performance as well as a tool to aid them in decision-making during alternatives analysis.”

• Istvan (Hungary): “The Value Analysis methodology in Hungary has a long history since 1967. The VM approach is known but not necessarily well-known. There are not governmental programs supporting the Value Methodology in Hungary. The Society of Hungarian Value Analysts (SHVA) sustains the presence of the VM in the country promoting both EU and US models. In the last few years there are traces of VM in the private sector. There are Automotive, food-industrial, metal-industrial players using the Value Methodology, because of the obvious advantages behind it. It is still true that the biggest perspective is on the field of the big infrastructure projects.”

• Felipe (Colombia): “To the best of my knowledge, VM is rarely used in Colombia. This may be due to little demand from procuring authorities and little promotion and dissemination from communities of practice and academia. I am only aware about two infrastructure projects where VE studies were carried out during feasibility stages with the aim to optimize the expected costs for implementation. These were two rail projects, which is a sector that has received insufficient funding from the government for decades and only now is it attracting some attention again.”

• Anita (India): “VM is adopted in many different industries in India. Indian Value Engineering Society (INVEST) was formed in 1977 and is affiliated to SAVE International. In India, predominantly the automotive manufacturing industry uses Value Engineering for their resource optimization. VE is also deployed by organizations in the fields of manufacturing, Engineering services and Technical consulting. The demand for VE in construction projects is gradually increasing.”

Where do you think that VM will be in about 10 years?

• Keith (UK): “I believe Value Management will be integrated with Benefits Management and through the determination and drive of the Value Management community will be as equally important as Risk Management, Portfolio, Program and Project Management, Quality Management, Environmental Management and Sustainability. We need to build the demand and grow the supply of VM qualified professionals from a grass roots level to meet that demand.”

• Mei-yung (Hong Kong): “It depends on the facilitators’ VM knowledge. Do they have sufficient logical mindset helping the VM team to solve the problems systematically?  If they do it properly, VM will be promoted widely. Perhaps, cross-regional VM institutes and VM experts need to be lined up for promoting VM over the world in the next 10 years.”

• Marc & Daniela (Germany): “We hope that VM/VA/VE will make its way also to the construction, service and public sector in Germany. During the past years we have seen a few projects and publications in these areas, but these have only been single cases. We think that it will become more and more widespread in process optimization as well. There is so much more potential and value to increase. And this is what we are working on.”

• Istvan (Hungary): “Virtual technics, the resource-saving methods, the fast solutions, the human-oriented learning materials, and social-media platforms are on top of my mind when I try to the predict something for middle and long term. And for the short term I would mention the analogy between the actual and war situations. Both have raw material shortages, supply chain deficiencies, limited resources. Wait a minute! When we teach the circumstances in which Value Analysis was created during the second World War, we need to notice the similarity. Larry Miles would notice it, surely.”

• Felipe (Colombia): “Unfortunately, without a more active support from consolidated VM communities of practice around the world, I don’t foresee significant progress on the adoption of VM in Colombia. Multilateral development banks and international cooperation initiatives could help to change this fate.”

• Anita (India): “I would like to present two scenarios. First, if the VM fraternity is focusing on developing their skill in function analysis, VM can become the leading methodology since it analyses the core concepts of the system under study. Different methods advocating resource optimization, find ways to do the project right (efficiency is increased). VM, on the other hand, ensures that the right project is addressed (effectiveness of the project under study is increased). Second, if we fail to focus on function analysis, we will see different methodologies suggesting the use of verbs and identifying and defining the problem or system at hand. Thus, the method of function analysis will be embraced by many, if not as VM, then as different methodologies and tools.”

What are the biggest challenges and opportunities of VM according to you?

• Keith (UK): “Getting a consensus on what Value Management is across the World. Perhaps then it will allow the global Value Management/Value Methodology/Value Analysis/Value Engineering/Benefits Management/Lean etc., communities to collaborate more effectively to enable a common meaning of VM and value and to raise awareness through having an ISO Standard on Value Management that sits alongside Quality Management, Environmental Management, Social Responsibility, Risk Management, etc. This then, would hopefully send the “message” to the Private and Public Sectors especially Governments that Value Management e.g., ISOXX000 Series is equally important to ISO9000, ISO14000, ISO26000 and ISO31000, and make ISOXX000 a mandatory requirement for organizations to comply with and implement. Additionally, Corporate Governance and Assurance will require organizations to demonstrate value and not just risk i.e., Risk & Value Committees and Audit Committees with Terms of Reference covering both. Hopefully, supporting the above, is the requirement, owing to Covid-19, for individuals, groups, and organizations to focus on identifying and delivering their real “needs” i.e., “must haves” to stimulate the economic recovery globally. Value Management has a key role to play in this going forwards.”

• Mei-yung (Hong Kong): “Challenges are that (1) construction professionals generally have a lack of VM knowledge in the industry, (2) construction professionals normally consider VM as cost cutting tool, which is part of the job duty of quantity surveyors in HK, (3) facilitators may not have sufficient experience and instant logic to help teams analysing the problems and creating new ideas, and (4) the clients (government and developer) would not trust VM in the real world. Opportunities would be to (1) form VM education, (2) to ensure that VM facilitators apply VM with systematic logical process, (3) to establish VM qualification to ensure the standard in the industry and (4) to promote VM in developing countries.

• Marc & Daniela (Germany): “Nowadays there is a VUCA world out there – volatile, uncertain, complex and ambiguous. There is digitalization. There is climate change. There is a new understanding of work. And of mobility. To survive under these circumstances, organizations need individual and situation-specific solutions, which are often of short duration. Finding them needs creativity and interdisciplinary teamwork. VM delivers the optimal concepts and tools to deal with these challenges and help finding solutions.“

• Renee (USA): “I won’t lie to you; we still struggle to get individuals and organizations to understand the true definition of value. It is not about cutting costs. Our true focus is on adding value, and organizations must help us define what is of value to them. Let us consider this as it relates to long term operation and maintenance costs. As the owners of facilities, you must operate and maintain these facilities for the rest of their life. We must always consider this fact, as the true cost of a facility is capital plus long-term life cycle costs. Even this can sometimes be a struggle here in the U.S., but, as practitioners and instructors of the value methodology we help to bring this fact to light and ensure we discuss it in every workshop.”

• Istvan (Hungary): “Maintaining renewal of certification is an ongoing challenge. The opportunity is the infiltration into the leadership thinking of an organization of any structure.”

• Felipe (Colombia): “The main challenge is to gain recognition. Few people in the sector know the methodology, its benefits and limitations and therefore demand for the methodology is very limited. If professionals, the academia, and the public sector do not know the methodology, there will be no demand for its use, let alone local case studies to demonstrate its benefits and enlarge the communities of practice. The main opportunities lie on the methodology’s focus on value and how that can help developing countries like Colombia reduce their infrastructure gap while considering their limited resources. In this post conflict era, the government of Colombia must generate economic development in regions that used to be isolated by the conflict and this creates additional pressure to public finances. Therefore, investment decisions, especially long-term investments like infrastructure, should be assessed more thoroughly and VM can contribute towards this.”

• Anita (India): “The biggest challenge is the propagation of VM by the people who do not know the methodology. Those who say that they are doing Value Engineering and fail to define functions of the project under study are detrimental to the methodology. While understanding the project in the information phase, they will be thinking about the new ideas. The biggest opportunity is to develop the skill of using the function for creativity. Defining the function as verb and noun is a skill that can be developed with some focus. But using it for creativity while designing and developing the system and moreover for strategizing, warrants a more persistence and commitment. This is a challenge and opportunity of VM. This is the call to action for the Value practitioners. While it may be a challenge, the opportunities that arise from it are worth the effort.”

Reflective thoughts by Timme Hendriksen

• “I am aware that these are just a few perspectives from around the globe. Though I know from my personal experience that the opinions of the VE experts above are a good representation of what is happening on VE/VM around the globe. Worldwide there are big differences in VM maturity and fields of application. Governments could give a big push to the VM application, as a mandatory approach enables training and experience in VE/VM. My personal experience is that most people start to appreciate VE/VM once they experienced it. On the other hand, would not it be great if VE/VM sold itself. I agree on some of the responses that we seem to lack (a joint) promotion activity. I remember a call for action a couple of years ago on a SAVE summit, where they compared this challenge to the approach that Hawaii took to attract more tourists. Instead of competing each other to death, they decided to join forces to first get the tourists to Hawaii: make Hawaii the destination first, then compete. This campaign led to a growth in tourism, enough for everybody. I still think that is a good approach: Join forces and make VM the destination first! That will imply that we need to align our definitions of VM and value globally, as Keith pointed out, to position and integrate it with other embedded approaches. It also means that we have to be true to the methodology, as Anita and Mei-Yung point out, otherwise we will lose credibility.”