What is Value?
Value is a measure of how well an organization, project, product, or service, satisfies stakeholders’ objectives in relation to the resources consumed. (EN – 1325-1)
The concept of Value is based on the relationship between satisfying needs and expectations and the resources required to achieve them which may change both with context and time. Interpretation of value will therefore tend to vary from person to person and will be influenced by the situation and may change over time.
What is Value Management ?
VM is a style of management, particularly dedicated to motivating people, developing skills and promoting synergies and innovation, with the aim of maximising the overall performance of an organisation. It is a structured, team based, analytical and creative process for developing innovative solutions to complex problems. It seeks to realize sustainable, value for money solutions that reflect the needs of the organisation and its key stakeholders.
VM is based on principles of defining and adding measurable value, focusing on objectives before solutions, and concentrating on function to enhance innovation. It uniquely combines within an integrated framework a value focused management style; a positive approach to individual and team motivation; an awareness of the organisational environment; and the effective use of proven methods and tools.
The European Standard
The Standard EN 12973 represents a consensus of views and provides a benchmark of good practice. It is designed to provide flexibility and can be applied in a very wide range of circumstances. It captures the essence of Value Management and provides a framework for its application. It describes a range of useful tools and encourages the selection of the most appropriate methods to achieve the desired outcome.
The Standard primarily addresses the needs of three groups:
- Senior Managers seeking to enhance value within their organisations and for their customers.
- People involved in its application.
- Those involved in training and development.
The document progresses from an introduction outlining the benefits for management, through the underlying concepts to their application. It ends with a discussion of some of the techniques which may be useful.
Requirements and guidance on functional expression of the need and functional performance specification are set out in EN 16271.
The Standard EN 16271 states the conditions for successful implementation of Functional Need Analysis, Functional Need Expression and Functional Performance Specification. It extends the generic standard on Value Management, EN 12973.
What are the benefits?
VM can be applied both to the design and development of new products, facilities and processes and the review of existing products, facilities and processes. It can be applied incrementally, delivering high returns on investment and significant soft benefits with low risk. Benefits widely reported include:
- Value improvements in excess of 20%; including savings between 10 – 25%
- Tangible returns on investment between 20 and 40 times the resource commitment are not untypical and exceptionally may be as high as 150 to 1.
- Improved performance of products and services that better reflect stakeholder needs
- Enhanced competitiveness by facilitating and realising latent creativity
- Significant benefits in terms of improved working relationships and organisational learning. Specifically
- Recognisably better decisions based on relevant and balanced information
- Increased efficiency through team based activity with a common focus
- A common value culture, with shared understanding of the organisations goals and associated success factors
- Organisational learning, and improved capability to embed change.