Value Management: Maximising Benefits For the Rakyat
In many countries, the application of value management has become integral to the construction industry. In the simplest terms, value management is a process to seek maximum returns on a project from well-managed costs. The returns in this case are not just financial, but also in terms of the function or benefit of the project to the end-users, as well as the quality and sustainability of the project. Value management seeks to find the optimal balance of these factors.
Take for example the construction of paved roads. By applying value management analysis, we can determine that a road in a low-traffic area does not require as much reinforcement as one built in a high-traffic zone. Hence the cost of a kilometre of paved road in the low-traffic area can be reduced. In other words, one size does not fit all. One other area that where this can be applied as soon as possible is in the building of schools.
A 2009 study on the impact of Value Management implementation in Malaysia revealed that construction projects in the country that applied the concept had recorded savings on the initial project cost by between 10% and 30%. However, our industry, including the private sector, has not been as quick to adopt the concept comprehensively and institutionalise it within the system. This must change so that the nation’s physical development is in line with the Government’s transformation plans.
In my recent trip to Turkey, I visited the construction of one of the largest infrastructure development projects in the world – the Marmaray Rail Tube Tunnel and Commuter Rail Mass Transit System. In undertaking this complex project, the value management process has been crucial to ensure every amount of funding produces maximum long-term value for the country and its people. In fact, I hope that our Public Land Transport Commission will study the value management implementation of this project and adopt it for our domestic projects.
In fact, I had already asserted last year that all projects for new public buildings slated under the 10th Malaysia Plan must be preceded by a comprehensive value management exercise. This must be done even before the tender process – specifically as early as the planning stages – so that the Government, together with the private sector, spends prudently and that the project returns the maximum possible value. Soon, the implementation of value management processes for all construction-related projects will be a standard practice in all ministries, thus ensuring that every Ringgit from the Rakyat will be well spent.