Value and Risk Management: A Guide to Best Practice

Table of Contents:
Foreword xi Preface xiii About the Author xvii Acknowledgements xviii 1 Key features and benefits 1 1.1 Why successful projects need value and risk management 1 1.2 Delivering success 1 1.3 Summary 7 2 Principles of value management 9 2.1 Essential attributes 10 2.2 A brief history 11 2.3 Language 13 2.4 Concepts 13 2.5 The family 15 2.6 Value management through the project cycle 17 2.7 The generic process 19 2.8 Value or cost – balancing benefits and investment 22 2.9 The value of time 25 2.10 Quality 26 2.11 Measuring value 29 3 Principles of risk management 33 3.1 Essential attributes 34 3.2 Evolution 35 3.3 Language 37 3.4 Concepts 37 3.5 The family 40 3.6 Risk management cycle 41 3.7 A generic risk management process 41 3.8 Risk to quality 43 3.9 Measuring risk 44 3.10 Contingency management 49 3.11 Time risk 49 4 An integrated approach to value and risk management 52 4.1 Why integrate? 53 4.2 The integrated process 57 4.3 Timing 58 4.4 Project stages and study types 61 4.5 Understanding the client’s business 66 4.6 Programmes of projects 69 4.7 Project launch studies 70 4.8 Summary of value and risk study types 72 4.9 Critical success factors 76 4.10 A framework for introducing value and risk management into an organisation 77 4.11 Embedding value and risk management in an organisation 81 4.12 Drawing on experience 83 4.13 Selecting the appropriate level of activity 86 5 People 88 5.1 The people and their roles 89 5.2 Collaboration versus confrontation 89 5.3 Stakeholder analysis and management 91 5.4 Team building 92 5.5 Partnering 92 5.6 Communications 95 5.7 The supply chain 97 5.8 Selecting the study team 100 5.9 The study leader 103 5.10 Styles of leadership 105 5.11 A study structure based on logic 105 5.12 Overcoming difficulties 107 5.13 Using conflict to advantage 110 5.14 Gaining consensus 111 5.15 Developing value and risk culture 112 5.16 Language 114 6 Concepts, standards and qualifications 117 6.1 Understanding value and risk 118 6.2 Understanding value 119 6.3 Understanding risk 140 6.4 Training and certification systems 150 7 Learning from others 154 7.1 Practice in other sectors 154 7.2 A value and risk approach to project development 155 7.3 Soft value management 161 7.4 Value management in manufacturing 164 7.5 Value management for public services 168 7.6 Risk and enterprise 174 7.7 The impact of partnering on value and risk 183 7.8 Just how mature are your organisation’s processes? 188 8 Study types 193 8.1 Types of study 194 8.2 Value management studies 194 8.3 Risk management studies 218 8.4 Combining value and risk reviews 226 8.5 Project reviews 227 8.6 European practice 230 8.7 The project cycle 230 8.8 Building on experience 231 9 Techniques for value and risk 234 9.1 The need for techniques 235 9.2 Preparation before a study 235 9.3 Invitation to participate 244 9.4 The workshop 245 9.5 Recording 250 9.6 The wrap-up meeting 250 9.7 Reporting 251 9.8 Reviewing progress 252 9.9 Whole-life costing 254 9.10 Stakeholder analysis 259 9.11 Partnering 263 9.12 Mind mapping 269 9.13 The Delphi technique 269 10 Value management techniques 271 10.1 Value management techniques 271 10.2 Function analysis 272 10.3 Function analysis system technique 274 10.4 Cost/worth 282 10.5 Multifunctionality 284 10.6 SMART methodology 285 10.7 Value drivers 287 10.8 Value profiling (or value benchmarking) 291 10.9 Option selection 292 10.10 Weighting techniques 293 10.11 Generating ideas for adding value (creative techniques) 295 10.12 Selecting the best ideas (evaluation) 300 10.13 Developing implementation proposals 305 10.14 Scenarios 306 10.15 Target costing 307 10.16 Function performance specification 308 11 Risk management techniques 311 11.1 Risk management techniques 311 11.2 Risk analysis and management 311 11.3 Identifying risks 314 11.4 Assessing risk 319 11.5 Managing risk 326 11.6 Optimism bias 335 11.7 Construction, design and management regulations 338 11.8 Risk breakdown structures 338 11.9 Failure modes and effects analysis 340 11.10 Hazard and operational studies (HAZOP) 341 12 Toolbox – checklists, forms and tables 343 12.1 Toolbox – summary 343 12.2 Briefing checklist 343 12.3 Information checklist 344 12.4 Study toolkit 345 12.5 Workshop invitation 346 12.6 Recording information generated during the workshop 346 12.7 Reports 348 12.8 Value management categories/prompt list 349 12.9 Risk identification prompt list 351 12.10 Value profiling proforma 354 12.11 Option evaluation matrix 355 12.12 Weighting tool 355 12.13 Paired comparison proforma 355 12.14 Proforma for whole-life cost estimating 356 12.15 Scenario building form 357 12.16 Whole-life cost checklist 357 12.17 HAZOP analysis sheet 357 12.18 Room layouts 358 Appendix A: Bibliography 362 Appendix B: Glossary 365 Index 376

About the Author :
Michael Dallas, MA, MICE, FIVM is an engineer with Davis Langdon, London.

Review :
* 'essential reading for all those who want to add value and reduce uncertainty in their development and construction projects' - Peter Rogers, Chairman, Strategic Forum for Construction 'I feel that this book is so important .it is very well written in a clear and concise prose. Even battle-hardened risk and value managers like myself will benefit from revisiting best practice, refreshing our tools and techniques and gaining new insights to stretch ourselves.' QS News 'Countless practical examples and anecdotes, some of these pertaining to international projects. Their high number and frequent usage reflect the author's wealth of experience while substantiating the practicality of concepts....The book is an excellent resource and I recommend it.' CME Jan 2007