Part III

Whole-Life Business Value

Part 2 describes the value study method with sufficient detail in terms of methodology,
tools and techniques and indicative agendas to enable a full understanding of the
process of undertaking a value study of a single project. Part 3 reflects the extended role
of the VSL, as experienced by the authors in research and practice deep within the client
organisation, requiring an understanding of the corporate approach of the client to asset
management, Portfolios and Programmes of projects. The value studies undertaken at
high level within the client organisation require both an understanding of value
management and an appreciation of the task being addressed by the client to promote
change which is usually mission-critical and potentially of high risk. It is the melding of
the value study approach together with the understanding of what the client is trying to
achieve that resulted in successful studies being undertaken in this area.
Chapter 8 addresses the relationship between asset management and value management. A description of asset management and the processes and procedures involved in
managing a portfolio of assets is followed by three case studies. Two studies focus on the
moving of two client organisations from an operational view of asset management to a
more strategic orientation for managing physical assets. The third study describes the
rationalisation of a physical asset portfolio involving a small value team of senior
managers. The chapter completes the analysis of the important role of value management within the discipline of asset management by concluding that the disciplines are
complimentary and self-reinforcing. Further that the value management approach is
conducive with careful design to the solution of an asset management problem involving
value, value for money and whole-life thinking. The final conclusion is that understanding the place of asset management in the corporate value system of the client is a
helpful prerequisite for any strategic value management study.
Chapter 9 argues that value management has to go beyond being seen in construction
as a single project intervention to one that can be applied within the multiproject
environments of a client organisation. The chapter provides an outline of strategic
management and organisational strategy set in the context of a review of Portfolios,
Value Management of Construction Projects, Second Edition. John Kelly, Steven Male
and Drummond Graham.
2015 John Wiley & Sons, Ltd. Published 2015 by John Wiley & Sons, Ltd.
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Programmes and projects which are seen as vehicles for delivering investments that will
decide the shape of an organisations vision of the future. The chapter describes the
concept of the organisational value chain and the organisational project value chain in
the context of value structuring for a value management study within a multiproject
environment. The chapter concludes with the proposition for value management
operating in the business case realm within the line-of-sight between the policy
and strategy domain of the client organisation and the benefits it seeks to provide
through Portfolios, Programmes and projects.
Chapter 10 relies heavily on the advice given in HM Treasury Green Book (updated
2011) for option appraisal and business case preparation as a foundation for the
discussion of the place of value management in complex, mission-critical and high
risk projects and Programes. In addition to the comprehensive analysis of option
appraisal the chapter outlines a methodology for use within a value study framework
of whole-life costing and risk management. The chapter contributes to the debate on the
extent to which risk management can be integrated with value management and also in
the context of risk management there is a brief discussion on the benefits and
disadvantages of optimism bias. Following the case study description of a value
management study of the strategic development of a complex public sector project
involving extensive option appraisal is a conclusion which includes, inter alia, the
benefits brought to the study by a client able to recognise a value methodology which
was thorough, rigorous and appropriate.
The chapters in Part 3 describe the application of value management to developmental
projects deep within the client organisation. The characteristic of this type of value study
is the extensive work required at the orientation and diagnostics stage to appreciate fully
the problem to be addressed, the team to be engaged and the design of the appropriate
workshop or series of workshops. Whilst studies of this nature rely heavily on the
fundamental principles of value management, notably the analysis of organisational
values and function, workshop design requires more than the typical agendas illustrated
in Part 2. Indeed, as demonstrated in the case studies it is likely that a programme of
workshops is required. Part 4 takes the theory and practice of value management forward
through an analysis of the value concept to a proposition for the development of a
whole-life value factor for use in option appraisal and benefits realisation. Part 4 also
contains the conclusion to this book.