An Assessment on the Strategies for Effective Value Management Practice in Nigerian Construction Industry
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To increase awareness among industry professionals about the principles and benefits of value management in the Nigerian construction industry.
- To facilitate effective collaboration and communication among stakeholders throughout the project lifecycle.
- To promote the integration of value engineering techniques, such as functional analysis and cost optimization, into project decision-making processes.
REVIEWED OF RELATED LITERATURE
History and Development of Value Management
Value management originated from value analysis, which was developed by Lawrence Miles during the Second World War. Though there is a difference between value management and other terms such as value engineering and value analysis, value management in the construction industry is increasingly seen as the approach to delineate the whole process of improving a project value from concept to operation. As a result, many studies see the terms of value engineering and value analysis as a subset of the generic approach of value management (Al-yami and Price, 2006b)
The origin of value analysis/engineering can be traced back to the days of World War II when there was a material shortage problem in the manufacturing sector due to an increased consumption for war purposes (Cheah and Ting, 2004). Lawrence D. Miles, an electrical engineer who was then assigned to the purchasing department of General Electric Company, started finding ways to alleviate the material shortage problem in the company’s production. To accommodate the constraint, he focused on functions that a product was meant to perform and experimented with alternatives to achieve the same functions without compromising quality. Although the main emphasis was not cost reduction, this came as a by-product. With this in mind, Lawrence Miles designed a structured process necessary to capture the exact function of the component/raw material and then determine using innovative means, the best material/components to perform such a function at a lower cost (SAVE, 2007). This process was called Value Analysis.
As the practice of Value analysis developed, there was a shift from the focus on studying the functions of components/raw materials to improving the conceptual designs of component/materials. This is expressed through the widening scope of value analysis which not only involves the identification and selection of raw materials based on function and price, but also the improvement of the design of products based on the functions it is expected to provide. Furthermore, Engineers were increasingly being employed to carry out the Value Analysis process. This prompted a change in the use of the term Value Analysis to the adoption of the term Value Engineering (SAVE, 2007). The Society of American Value Engineers (S.A.V.E) was established in 1959, and it established the use of Value Engineering as the preferred term for describing the process instead of Value analysis in the United States of America (Kelly et al, 2004).
Construction projects involve several professionals and organizations coming together to produce a construction product based on the objectives and goals of the client. The value engineering process could lead to the achievement of project goals at reduced costs. Concurrent with the wide spread popularity, the process of value engineering has undergone improvements through the integration of several tools and techniques aimed at making the process more effective, efficient, flexible and more attractive to stakeholders internationally in both the private and public sectors (SAVE, 2007).
The use of the term “Value Management” as against “Value Engineering” began in the European manufacturing industries and was adopted in the SPRINT program (Strategic Programme for Innovation and Technology Transfer) (Kelly et al, 2004). It is a term commonly used by professionals globally especially in Europe, Africa and Australia to describe the process of value enhancement in projects (Kelly et al, 2004).
The Concept of Value Management
To understand the concept of value management better, there is the need to first of all understand the concept of value. Value is defined as the quantum of needs achieved at minimum cost. The equation below describes how value is achieved. Therefore the greater the satisfaction of needs and the more minimal the cost, the greater the value achieved (Value Management Practice Guidelines, 2009)
Value = Satisfaction of Needs i.e. / Use of Resources i.e. what is necessary for the everything required to user (Outcomes) satisfy needs (Cost)
Furthermore, the Institute of Value Management (2008) opines that the concept of value relies on the relationship between the satisfaction of many differing needs and the resources used in doing so; the fewer the resources used or the greater the satisfaction of needs, the greater the value. Stakeholders may hold differing views of what represents value and the aim of value management is to reconcile these differences to enable an organization achieve the greatest progress towards its set goals with the use of minimum resources.
Various researchers and scholars have defined value management in different ways. Following are some of the definitions of value management:
Male et al (1998) defined value management as a proactive, creative, problem-solving or problem-seeking service which maximises the functional value of a project by managing its development from concept to use. The process uses structured, team-oriented exercises that make and appraise existing or generated solutions to a problem by reference to the value requirements of the client.
Kelly and Male (2004) and Odeyinka (2006) defined value management as a service that maximise the functional value of a project by managing its development from concept to use through the audit of all decisions against a value system determined by the client.
Office of Government Commerce (2007) defined value management as a well established methodology for defining and maximizing value for money
The Institute of Value management UK (2008) defined value management as a style of management particularly dedicated to motivate people, develop skills and promote synergies and innovation, with the aim of maximizing the overall performance of an organization.
Society of American Value Engineers (SAVE) (2008) defined the concept of value management as a systematic, multi-disciplinary effort directed towards analyzing the functions of projects for the purpose of achieving the best value at the lowest overall life cycle cost.
Oke and Ogunsemi (2011) defined value management as a systematic and multi-disciplinary process directed towards analyzing the functions of projects from its inception to completion and commissioning (through auditing or examination) for the purpose of achieving best value and return on investment at lowest possible overall life cycle cost.
All these definitions point to the fact that value management encourages team work by improving working relationship among the team while at the same time improves service delivery by achieving better value for money for the projects.
This chapter discusses the methodology used in the study. The research population, sample and sampling techniques as well as the instrument of data gathering are all contained in this chapter.
The approach adopted for this research is the quantitative method of research. Wimmer and Dominick (2000) opine that survey research has to do with questioning individuals about their attitudes, emotions, beliefs, intentions and behaviours. Hence the survey method of research was employed to reveal the opinion of practicing quantity surveyors regarding the readiness of the industry to adopt value management.
The population is the entire group whose characteristics are to be estimated (Wimmer et al, 2011). A population can be defined as the universe represented in a group of interest which the researcher wishes to draw information and generalize result of a study. Also, Verma and Beard (1981) describe population as a large group from which a sample is selected for study. For the purpose of this study, a list of registered quantity surveying firms obtained from the Quantity Surveyors’ Registration Board of Nigeria (QSRBN) shows that there are 168 registered consultancy firms across the country.
DATA PRESENTATION, ANALYSIS AND DISCUSSION
The data collected to an assessment on the strategies for effective value management practice in Nigerian construction industry were analysed and presented in this chapter. In view of the objectives of this study, a total of 117 questionnaires semi-structured questionnaires were administered to quantity surveying firms.
The collected questionnaires were carefully coded and the data entered into the statistical package for social science (SPSS V.20). Having done this, seventy (70) questionnaires were retrieved from the total number of 117 questionnaires administered, which presents the study with a sixty percent (60%) return rate.
Based on the assertion of Moser and Kalton (1971), the result of a survey could be considered significant if the response rate is not lower than 30-40%. Based on this, the percentage of the returned questionnaires is adequate for the analysis
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary of findings
Below are the major findings from the study:
- Professionals in the Nigerian construction industry have a good understanding of value management as indicated in table 4.2 and 4.3 with mean values falling within high level.
- The barriers and facilitators for effective stakeholder engagement in value management processes as the result revealed that government support through legislation is the only factor under facilitators with a high level of existence while key barriers existent are lack of value management qualified practitioners, lack of commitment to implement value management, lack of time due to rushed designs and difficulties in the involvement of all key stakeholders in project processes.
The Nigerian construction industry can adopt value management processes with little effort for adjustments based on all the four categories of the requirements for value management with an overall mean of 3.34 which falls within the moderate level of existence
In conclusion, this study has delved into the assessment of strategies for effective value management practices in the Nigerian construction industry. The findings shed light on the current state of value management and its impact on project success, cost control, and stakeholder satisfaction.
Firstly, it was revealed that the Nigerian construction industry faces several challenges when it comes to effective value management implementation. These challenges include a lack of awareness and understanding of value management principles, inadequate training and education on value management, and limited collaboration among project stakeholders.
However, the study also identified various strategies that can be employed to enhance value management practices in the Nigerian construction industry. These strategies include:
- Promoting Awareness and Education: There is a need for industry-wide campaigns and initiatives to increase awareness and educate stakeholders about the benefits of value management. Training programs, workshops, and seminars should be organized to enhance the knowledge and skills of professionals involved in construction projects.
- Stakeholder Collaboration: Effective value management requires collaboration among all project stakeholders, including clients, designers, contractors, and suppliers. Encouraging open communication, cooperation, and teamwork can lead to better decision-making and improved project outcomes.
- Early Involvement: Value management practices should be integrated into the project lifecycle from the early planning stages. By involving key stakeholders at the outset, potential value-enhancing opportunities can be identified and incorporated into the project design and development.
- Continuous Improvement: Value management should not be seen as a one-time exercise but rather as an ongoing process throughout the project lifecycle. Regular reviews and evaluations should be conducted to identify areas for improvement and implement corrective measures.
- Knowledge Sharing and Benchmarking: Establishing platforms for knowledge sharing and benchmarking can facilitate the exchange of best practices, lessons learned, and success stories within the construction industry. This can help in disseminating valuable insights and promoting continuous learning and improvement.
Implementing these strategies requires commitment and support from all industry players, including government agencies, professional bodies, project owners, and practitioners. By embracing effective value management practices, the Nigerian construction industry can achieve enhanced project outcomes, improved cost control, increased client satisfaction, and ultimately contribute to the overall development of the nation’s infrastructure.
It is important to note that this study has its limitations. The findings are based on a specific context and may not be directly applicable to other regions or industries. Further research and case studies are encouraged to validate and expand upon the findings of this study.
In conclusion, the effective implementation of value management strategies holds significant potential for the Nigerian construction industry. By embracing these strategies and overcoming the associated challenges, the industry can achieve improved project outcomes, enhanced value for all stakeholders, and contribute to sustainable development in Nigeria.
Based on the findings and conclusions of this study on the assessment of strategies for effective value management practice in the Nigerian construction industry, the following recommendations are put forth:
- Industry-Wide Training and Education: It is recommended that industry stakeholders, including professional bodies, government agencies, and educational institutions, collaborate to develop comprehensive training programs and educational initiatives focused on value management. These programs should target professionals at all levels and emphasize the principles, methodologies, and benefits of effective value management practices.
- Integration of Value Management into Regulations and Policies: Government agencies and regulatory bodies should incorporate value management principles and requirements into construction regulations and policies. This can ensure that value management practices become an integral part of project planning, execution, and evaluation processes.
- Promote Collaboration and Communication: Project stakeholders should actively promote collaboration and open communication throughout the project lifecycle. This can be achieved through the establishment of project teams, regular project meetings, and the use of collaborative project management tools. Emphasizing the importance of sharing information, ideas, and experiences can enhance value management practices and improve project outcomes.
- Encourage Early Involvement of Value Managers: Value managers should be engaged from the early stages of project planning and design. Their expertise and input can help identify potential value-enhancing opportunities and guide decision-making processes. Involving value managers at the outset can maximize the effectiveness of value management practices and optimize project value.
- Establish Knowledge Sharing Platforms: Industry stakeholders should create platforms for sharing knowledge, best practices, and case studies related to value management. This can be achieved through conferences, seminars, industry forums, and online platforms. Encouraging practitioners to share their experiences and lessons learned will foster a culture of continuous learning and improvement within the industry.
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