ASSESSMENT OF VALUE MANAGEMENT PRACTICES AND ITS IMPACT ON CONSTRUCTION PROJECT DELIVERY

ASSESSMENT OF VALUE MANAGEMENT PRACTICES AND ITS IMPACT ON CONSTRUCTION PROJECT DELIVERY

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CHAPTER ONE

INTRODUCTION

1.1  Background to the Study

Value management (VM) originated as value analysis, a concept developed by Lawrence Miles during the Second World War (Shen and Liu, 2004) and was popular in the US manufacturing industry during the 1940s. According to Perera, Hayles, and Kerlin (2011), Miles’s work based its philosophy on providing the necessary functions at the lowest cost. The original methodology analysed the various components of a product in terms of its function, considers ways of providing the functions at a lower cost; and confirms the economic and technical viability before changing production procedures (Male, Kelly, Fernie, Gronqvist & Bowles, 1998).  The practice of VM is still date widespread but its application has been widened and the methodology adapted and translated to meet the needs of different sectors of industry. Value management is a structured and analytical process that seeks to achieve value and optimize the life cycle cost of a facility through identifying opportunities to do away with all unnecessary costs; while at the same time making sure that quality, reliability, performance and other critical factors are not compromised (Dell’Isola, 1997).

The application of VM in the construction sector has been widely applauded by various stakeholders. The practices have witnessed increased adoption in the areas of functional improvement, cost reduction, communication enhancement and promotion of creative minds. Based on the successes, VM is therefore used to provide clients or end users with the best possible product (building project), (Perera, Hayes and Kerlin, 2011). This ensures that these functions and needs can be met at the most reasonable cost, hence providing optimal value for money expended. The application of VM has been linked with the need to foster innovation and excellence in the construction industry (Latham, 1994; and Egan, 1998). However, it is noted that the practice of VM tends to vary across different parts of the world and not very popular in other places including Nigeria (Adu & Umoren, 2009; Oke, Aghimien and Olantunji, 2015).

Oke, Aghimien and Olatunji (2015) observed that Nigerian construction clients are not achieving best value in their projects in terms of budget, time, the required quality, functions, aesthetic, image, safety and fitness for purpose. This is even more worrisome in the south-south geopolitical zone of Nigeria which has witnessed massive construction activities partly due to robust oil revenue base and also a necessity to address infrastructure deficit gap. Ikediashi (2004) observed that sketchy research exist which seeks to maximise the potentials of VM. A study by Adu & Umoren (2009) concluded that there is VM knowledge dearth in Akwa Ibom State. To maximise the benefits of VM in project delivery in Nigeria, more studies are necessary to close the knowledge gap. It is in the light of this that, this study explores the practice of VM within the zone with a view to provide insights into the current state of the methodology in the area.     

1.2  Statement of the Research Problem

Depending on what can be described as the client’s characteristics, the criteria for assessing the client’s value system (CVS) can be identified, measured and achieved (Duncan, 2006). VM ensures that such identification of CVS facilitates the consideration of alternatives that meets the client’s objectives in a project, and that what is measured within the value system is established and agreed upon by stakeholders especially the client. This is the attractiveness of VM.

There is knowledge dearth about value management practices in Nigeria (Adu & Umoren, 2009). This development give rise to clients not receiving best value in their projects in terms of budget, time, the required quality, functions, aesthetic, image, safety and fitness for purpose (Oke, Aghimien and Olatunji, 2015). A study by (Olarewaju and Khairuddin, 2007), similarly observed that value management concept is not widely adopted implemented in project delivery to achieve best value. Sabiu and Agarwal (2016) observed that the problem of lack of non-adoption of VM has been consistently drawn aback by apparent lack of deep insight into the key drivers and inhibitors affecting the concept in Nigeria. Regrettably, this has generated unpleasant consequence on the Nigerian client. According to Oke and Ogunsami (2011), more than 70% of construction projects executed in Nigeria suffers from cost and time overruns irrespective of whether the client is private or public and regardless of the project size. This has ultimately induced low satisfaction rates among clients and concerned stakeholders. Nigeria’s south-south geo-political zone comprises six states and is the main stay of the Nigerian economy accounting for 50% of Nigeria’s GDP, 95% of her foreign exchange earnings, and 80% of all budgetary revenues that amount to #60 billion annually (Ikediashi, 2014). However, in spite of increased construction activities bolstered by the oil wealth, the concept of VM has not been fully explored in the area. This study therefore seeks to explore the VM practices application in construction project delivery in selected states in South-South, Nigeria.

1.3       Aim and Objectives of the Study

The aim of the study is to assess the use of VM concept as a project management technique by construction stakeholders in south-south Nigeria with a view to ensuring a sustainable and vibrant VM process in the construction industry.

The specific objectives are to:

(i)     Assess the level of awareness of value management concepts for construction projects delivery;

(ii)  Examine the level of implementation of value management practices by stakeholders in the construction industry; 

(iii)                         Evaluate key drivers influencing the practice of value management practices in the construction industry; and

(iv)  Assess factors inhibiting the smooth implementation of VM practices for construction projects in the study area;

1.3             Research Questions

In view of the statement of research problem above, the following research questions would be addressed by the study;

1.    What is the level of awareness and use of value management concepts for construction projects?

2.    What is the level of implementation of value management practices by stakeholders in the construction sector?

3.    What are the key drivers that influence the practice and implementation of value management concept in the execution of construction projects?

4.    What are the inhibiting factors hindering the implementation of value management concept in the study area?

1.5 Hypotheses

The following hypotheses are postulated to guide the study:

Ho1: There is no significant difference in the level of awareness of value management practices by construction stakeholders in the industry.

Ho2:  The factors affecting the implementation of value management in the study area is not significant

1.6       Significance of the Study

This study is significant in several ways. First, the awareness to be created by this study would bolster confidence among project stakeholders on the benefits of VM. Moreover, it will enlighten clients and professionals in the construction industry on the rate at which value management concept is being practised in the quest for value for money, its benefit to all stakeholders, professionals and its focus on achieving sustainable built environment.  The study will also examine and show the level of effective application of value management practices among construction participants and the different intervention points in project planning and execution at each phase.

 By implementing this study, barriers affecting adoption of value management practices on construction projects will assist the users within the built environment in attaining the construction project objectives in terms of cost, quality, time and environment and provide far reaching recommendations on how best to implement this at all stages of construction activities within the study area as well as serving as reference for future research. 

1.7       Scope of the Study

This study will be limited to appraisal of value management practices for construction projects in Imo state, South-East, region of Nigeria. The study therefore covers mainly stakeholders in consultants and contracting firms and the different professionals in the built environment operating within Imo State. By assessing the views, experience, knowledge and perspective of various stakeholders with regard to value management in the context of construction project within the region, the study contextualised mainly VM implementation is dragging despite the enormous benefits it offers. The value management practices covered include pre-study stage, information stage, creativity, evaluation stage, development stage, recommendation stage, and post-study process.


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