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VALUE MANAGEMENTUEB 4543

LECTURE 1

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Lecture Overview

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What is VALUE? What does VALUE

mean to you?

What is VM?

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CLOCK

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The VM History

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The VM History

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Key Terms

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Definitions of VM

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Definitions of VM

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Principles of VM

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VM as a Structured Process

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VM as a Structured ProcessThought Processes

Analytical Creative

1 - Analyse information2 - Brainstorm Functions

3 - Organise Functions 4 - Generate Ideas forAlternatives

5 - Evaluate Alternatives

6 - Develop Proposals7 - Appraise Options

8 - Recommend Solutions

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Cross Disciplinary Team

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Cross Disciplinary Team

Distinct Perspectives

Comprehensive ApproachShared Vision

Consensus

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Cross Disciplinary Team

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What Does the Facilitator Do?

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Function Based/Analysis theFunction

Normal Cost Reduction Process1. What is it?

.

Value Management

3. What does it do? Or What is the function

that it seeks to achieve?

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Function Based

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Function Based

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MOUSETRAP

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What is a Function?

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Elements of Value

Cost Time

Function/Quality

Value

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What is Value?

When we say the estimated value of aproject is RM100 Million is it the same ascost?

When we say the project value rose fromRM40 Million to RM50 Million, does itmean cost?

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Cost is not the same as value

Values are perceived differently dependingon the user, for instance, a landlord maylook at the value differently from a tenant

What is Value?

There are hard and soft values Hard values involve something at best and

lowest cost

Soft values includes attractiveness tocustomers, etc.

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Relationship between Value,Function and Cost

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Categories of Value

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Categories of Value

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Another relationship by Dell Isola

CostCostCostCost

QualityQualityQualityQualityFunctionFunctionFunctionFunction +=Value

Function = The specific work that a design/itemmust perform

Quality = The owners or users needs, desiresand expectations

Cost = The life cycle cost of the product

Value = The most cost effective way to reliablyaccomplish a function that will meet the usersneeds, desires and expectations

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To Increase Value

Value = Function (F) + Quality (Q)Cost (C)

(F) + (Q) (F) + (Q)

(F) + (Q)

(C)

(F) + (Q)

(C)MAINTAIN REDUCE INCREASE

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Value

Common sense says that value relates what youget to what you pay

In VM common sense applies and so value

Expectation : What must the service do to meetuser/stakeholder expectation?

Performance : How well are those needs met?

Resource : What must be committed to secure theservice

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How to Improve Value?

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COST is . . .

How do we define COST?

the sum of all expenditures necessaryto acquire, produce or utilize aproduct, service, process or facility.

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Habits & AttitudesHonest Wrong Beliefs

What are some causes ofUNNECESSARY COSTS?

Shortage of TimePoor Communication Lack of Ideas

Reluctance to Seek AdviceFear of Trying Something New

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Life Cycle Cost (LCC)

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LCC

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In a nutshell

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VM

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The 3 stages in VM Study

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The VM Job Plan

The Value Methodology Job Plan

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INFORMATIONPHASE FUNCTION

ANALYSIS PHASECREATIVEPHASE

EVALUATION

PHASE Complete datapackage

Modify scope Identify functions

Classify functions

Develop functionmodels

Cost functions Establish valueindex

Select functions forstudy

Create quantity ofideas by function

DEVELOPMENTPHASE

PRESENTATIONPHASE

How must each ideawork?

What is thefeasibility of

- Conduct benefit

analysis Complete technicaldata

Createimplementation Plan

Prepare finalproposals

Present oral report

Prepare writtenreport

gy

- What is the

problem oropportunity?

Why do youconsider it a problemor opportunity?

Why is a solutionnecessary?

What is the cost? What is the task

What else canperform thefunction?

Where else canthe function beperformed?

How else can thefunction be

Rank and ratealternative ideas

Select ideas for

development

Who should besold?

implementation?

What will be the

cost?

When will webreakeven?

What is the bestoverall alternative?

- Complete/implementchanges

- Monitorstatus

- Collect user/ customer attitudes

Complete data files

Determine evaluation factors

Scope the study

Build data models

Determine team composition

PRE-STUDYPOST-STUDY

Property of OSC VE Office

What is to be included in the study?

Who is best able to study the problem?

What are the current and futurerequirements of the subject under study?

What type of impediments will the team

come against?

Develop a plan togather project data

Investigate theproject

Verify data

function?

What are the basicfunctions?

What are thesupporting functions?

performed?

How candisadvantages beovercome?

Why is the new waybetter?

Will it meet all therequirements withoutcompromise of form,fit, or function?

What are the annual

savings?

ideas be presented?

What was theproblem?

What is the newway, savings, andbenefits?

How will it satisfyour customers?

What is needed toimplement theproposals?

Who isresponsible forimplementing thechange?

Did the new way work?

How much did itcost/save?

Did the change meet

customers expectations?

Verifyaccomplishments

Present results

Advertise outcomes