vm guide ®

A Guide to the Value Methodology Body of Knowledge

A production of SAVE International ®
19 Mantua Road, Mount Royal, NJ 08061, USA

VM Guide® Technical Committee:

Ginger Adams, CVS®, FSAVE
Ashley B. Carson, CVS®
Tammy Dow, CVS®
Javier Masini, CVS®
Sebastian Meindl, CVS®
Robert B. Stewart, CVS®, FSAVE
Istvan Tarjani, CVS®
Hisaya Yokota, CVS®, FSAVE

Cover and book design by Jeremy Banka.

This edition copyright © 2020 SAVE International®.

All rights reserved.

Printed in the United States of America.

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VM Guide®

Preface

First shared with the public more than 70 years ago, the Value
Methodology (VM) has been successfully applied, learned,
shared, and improved upon by many professionals and institu-
tions around the globe. Its evolution resulted in it being called
different names and varying in the number of phases followed
in its application. The use of a function logic map with many
variations became standard practice, different certification
levels emerged and changed, and many more interesting things
happened during this function-oriented story that began with a
man named Larry Miles.
Larry Miles invented a breakthrough in problem-solving that
has been tested and validated for decades. Since he planted
the VM seed in 1947, it has grown and branched significantly.
As of today, many authors have written about and around
Miles’ function-based methodology, adding much knowledge
to his original approach while the language around his legacy
evolved to match the need to successfully apply VM to other
applications such as the service industry, organizational devel-
opment, and management procedures.
All these important changes, experiences, and improve-
ments have forged a set of best practices around the Value
Methodology, recorded separately in SAVE International Value
Summit papers or in independently authored books. SAVE
International’s Executive Committee decided to gather, orga-
nize, and document all the most relevant experience and best
practices into a new document, the Value Methodology Guide
(VM Guide®). It represents the core knowledge that individuals
aspiring to achieve certification as a Value Methodology Asso-
ciate (VMA) or Certified Value Specialist® (CVS®) need to know
to qualify. In addition, the VM Guide® is rich with guidance and
examples that will serve as an excellent reference for new prac-
titioners and as a resource for seasoned value practitioners to
refresh their skills and/or maintain their continuing education
requirements to recertify.
The development of the VM Guide® was also inspired by re-
cent changes in the SAVE International® certification process,
the associated development of core competencies required
to become certified by SAVE International®, and the absence
of a single source to which one may refer while preparing for
professional certification. Multiple publications currently ex-
ist, like the Function Analysis Guide (SAVE, 2016) and the Value

ii
Methodology Memory Jogger, Second Edition (GOAL/QPC,
2018). These publications will be revised to align with the VM
Guide® that, going forward, represents the standard terminol-
ogy and practice to be used when teaching and applying VM.
The VM Guide® is a SAVE International® publication, au-
thored by members of SAVE, the Lawrence D. Miles Value Foun-
dation, and related VM organizations representing Canada,
Germany, Hungary, Japan, Mexico, and the United States. The
primary authors are Certified Value Specialists® with decades
of experience applying the Value Methodology to projects,
products, processes, services, and organizations. The content
of the VM Guide® was shared with the membership of SAVE
International for their review and feedback before the publica-
tion was finalized through multiple VM Guide® Chapter Review
Committees. Dozens of VM practitioners and program manag-
ers from around the world contributed to this book.
As previously stated, the VM Guide® is focused on identi-
fying information covering the theory, guidance, process, and
techniques that a SAVE International® Certified Value Special-
ist® (CVS®) should know. It is neither possible nor practical to
attempt to include all the knowledge available around the Val-
ue Methodology. Therefore, the VM Guide® does not include
all VM techniques available: it is important to honor the history
of VM while respecting the need to evolve.
A key task of the VM Guide® development process was to
ensure that the information included represents state-of-the-
art practice and is inclusive of different areas of application.
Techniques that are not covered in the VM Guide® are still
valid; however, the SAVE International® professional certifica-
tion process does not include them. Therefore, the VM Guide®
includes references and links to additional sources for infor-
mation discussed, and readers are encouraged to use outside
sources to further hone their skills in specific areas of interest;
e.g., creativity techniques, evaluation methods, facilitation
skills, etc. Finally, a significant effort was made to present the
information in a generic manner that is not industry-specific,
so it can be easily applied to projects, products, processes,
services, and organizations.

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VM Guide®

Contents

1
Preface............................................................... ii 1Introduction.......................................................1
1.0 Overview and purpose of this Guide.............................1

1.1 Foundational concepts..................................................1

1.1.1 Value...................................................................... 1

1.1.2 Function................................................................ 2

1.1.3 The Value Methodology........................................ 2

1.1.4 Divergent and convergent thinking..................... 2

1.1.5 Teamwork.............................................................. 2

1.1.6 VM facilitator......................................................... 2

1.2 Application areas.......................................................... 2

1.3 History and evolution.................................................... 3

1.4 VM Organizations.......................................................... 3

1.4.1 SAVE International®............................................ 3

1.4.2 Miles Value Foundation........................................ 4

1.4.3 Other Value Methodology organizations............ 4

1.5 References..................................................................... 4

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2
2The Value Concept..............................................5 2.3.2 Users..................................................................... 7

2.0 Introduction.................................................................. 5 2.3.3 Stakeholders........................................................ 7

2.1 Terms and definitions.................................................... 5 2.3.4 Design, project, product, development,

or delivery team........................................................ 7
2.1.1 Cost-benefit analysis (CBA).................................. 5
2.3.5 Decision makers.................................................. 7
2.1.2 Cost, initial............................................................ 5
2.3.6 VM team................................................................ 7
2.1.3 Cost, life-cycle (LCC)............................................ 5
2.4 Reasons for poor value................................................. 8
2.1.4 Customer.............................................................. 5
2.4.1 Lack of information.............................................. 8
2.1.5 Efficiency.............................................................. 5
2.4.2 Fixation with “standard” solutions..................... 8
2.1.6 Expected value..................................................... 5
2.4.3 Poor communication........................................... 9
2.1.7 Performance......................................................... 5
2.4.4 Misconceptions and wrong beliefs.................... 9
2.1.8 Productivity.......................................................... 5
2.4.5 Rigid adherence to standards............................. 9
2.1.9 Quality................................................................... 5
2.4.6 Habits and attitudes.......................................... 10
2.1.10 Resource............................................................. 5
2.4.7 Indecision........................................................... 10
2.1.11 Risk...................................................................... 5
2.4.8 Fear of failure..................................................... 10
2.1.12 Schedule............................................................. 6
2.5 Elements of value.........................................................11
2.1.13 Stakeholder........................................................ 6
2.6 Value measurement.....................................................11
2.1.14 Time..................................................................... 6
2.6.1 Inputs and outputs..............................................11
2.1.15 User..................................................................... 6
2.6.2 Costs and Benefits............................................. 12
2.1.16 Utility .................................................................. 6
2.6.3 Performance and Resources............................. 12
2.1.17 Value ................................................................... 6
2.6.4 Expected value.................................................. 12
2.1.18 Voice of the customer........................................ 6
2.7 References....................................................................13
2.2 Development of the value concept............................. 6

2.3 Who determines value?................................................ 6

2.3.1 Customers ........................................................... 6

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3 4
3Value Methodology Job Plan..............................15 4Preparation Phase............................................23
3.0 Introduction.................................................................15 4.0 Introduction................................................................ 23

3.1 Terms and definitions...................................................15 4.1 Terms and definitions.................................................. 23

3.1.1 VM facilitator....................................................... 15 4.1.1 Constraints......................................................... 23

3.1.2 VM Job Plan......................................................... 15 4.1.2 Subject matter expert (SME)............................. 23

3.1.3 VM proposal........................................................ 15 4.1.3 VM pre-study meeting........................................ 23

3.1.4 VM study............................................................. 15 4.1.4 VM study sponsor.............................................. 23

3.1.5 VM study subject................................................ 15 4.1.5 VM study decision maker................................... 23

3.1.6 VM team.............................................................. 15 4.2 Process........................................................................ 23

3.2 Evolution of the VM Job Plan.......................................16 4.2.1 Identifying VM study goals & objectives........... 23

3.3 The relationship of a VM study 4.2.2 Inputs and outputs............................................ 24

to the VM Job Plan.......................................................... 17
4.2.2.1 Inputs.......................................................... 24
3.4 Communication dynamics
and the VM Job Plan...................................................... 18 4.2.2.2 Outputs....................................................... 24

3.5 Phases of the VM Job Plan.......................................... 18 4.2.2.3 Activities..................................................... 24

3.5.1 Preparation Phase.............................................. 18 4.2.2.4 Process flowchart...................................... 24

3.5.2 Information Phase............................................. 19 4.3 Activities...................................................................... 24

3.5.3 Function Analysis Phase.................................... 19 4.3.1 Conduct VM pre-study meeting......................... 24

3.5.4 Creativity Phase................................................. 19 4.3.1.1 Identify VM study participants................... 25

3.5.5 Evaluation Phase............................................... 19 4.3.1.2 Identify VM study schedule and agenda... 26

3.5.6 Development Phase........................................... 20 4.3.1.3 Identify site visit requirements................. 28

3.5.7 Presentation Phase............................................ 20 4.3.1.4 Identify VM study logistics........................ 29

3.5.8 Implementation Phase...................................... 20 4.3.2 Identify, collect, distribute,

and review information........................................... 30
3.6 References...................................................................21
4.3.2.1 Identification and collection of information.30

4.3.2.2 Distribution of information........................ 31

4.3.2.3 Review of information................................ 31

4.4 References...................................................................31

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5Information Phase............................................33 5.3 Activities...................................................................... 37

5.0 Introduction................................................................ 33 5.3.1 Reviewing and transforming

subject scope information..................................... 38
5.1 Terms and definitions.................................................. 33
5.3.2 Reviewing and transforming subject
5.1.1 Balanced scorecard........................................... 33 performance and quality information.................... 38
5.1.2 Cost model......................................................... 33 5.3.3 Reviewing and transforming
subject time information........................................ 38
5.1.3 Gantt Chart......................................................... 33
5.3.4 Reviewing and transforming
5.1.4 Pareto model...................................................... 33
subject cost information........................................ 39
5.1.5 Process flowchart.............................................. 33
5.3.5 Reviewing and transforming subject risk
5.1.6 Project management plan................................. 34 information..............................................................40

5.1.7 Quality management plan.................................. 34 5.3.6 Conducting a VM study kick-off meeting.......... 41

5.1.8 Quality model..................................................... 34 5.3.7 Conducting a site visit........................................ 41

5.1.9 RACI matrix......................................................... 34 5.4 Basic techniques........................................................ 42

5.1.10 Resource model............................................... 34 5.4.1 Voice of the customer........................................ 42

5.1.11 Risk model......................................................... 34 5.4.2 SWOT analysis.................................................... 43

5.1.12 Risk register...................................................... 34 5.4.3 RACI matrix .......................................................44

5.1.13 Scope................................................................ 34 5.4.4 Process flowcharts............................................44

5.1.14 Specifications................................................... 34 5.4.5 Balanced scorecard.......................................... 46

5.1.15 Work breakdown structure.............................. 34 5.4.6 Gantt chart......................................................... 47

5.2 Process........................................................................ 34 5.4.7 Cost models....................................................... 47

5.2.1 Gathering and Organizing Information............. 34 5.4.8 Risk registers and scoring................................. 48

5.2.2 Reviewing and transforming Information......... 35 5.4.9 Work breakdown structure............................... 49

5.2.3 Orienting participants....................................... 36 5.5 Informative References...............................................51

5.2.4 Inputs and outputs............................................ 36

5.2.4.1 Inputs.......................................................... 36

5.2.4.2 Outputs....................................................... 37

5.2.4.3 Activities..................................................... 37

5.2.5 Process flowchart.............................................. 37

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6
6Function Analysis Phase...................................53 6.2.3.4 Process flowchart...................................... 57

6.0 Introduction................................................................ 53 6.3 Activities...................................................................... 58

6.1 Terms and definitions.................................................. 54 6.3.1 Define functions................................................. 58

6.1.1 Activity................................................................ 54 6.3.1.1 Identify functions ...................................... 59

6.1.2 FAST.................................................................... 54 6.3.1.2 Classify functions ...................................... 60

6.1.3 Function.............................................................. 54 6.3.1.3 Organize functions .................................... 62

6.1.4 Function, all-the-time........................................ 54 6.3.2 Allocate resources ............................................ 63

6.1.5 Function analysis............................................... 54 6.3.3 Prioritize functions............................................ 63

6.1.6 Function, basic................................................... 54 6.4 Basic Techniques........................................................ 63

6.1.7 Function, higher-order....................................... 54 6.4.1 Random function identification......................... 63

6.1.8 Function logic path............................................ 54 6.4.2 FAST Diagrams................................................... 64

6.1.9 Function, lower-order........................................ 54 6.4.2.1 “How” and “Why” logic............................... 65

6.1.10 Function, one-time........................................... 54 6.4.2.2 “When” logic............................................... 66

6.1.11 Function performance specification 6.4.2.3 Structure of the FAST diagram.................. 66

(FPS) matrix............................................................. 54
6.4.2.4 AND/OR logic.............................................. 68
6.1.12 Function resource matrix................................. 54
6.4.2.5 FAST diagrams versus flowcharts............ 68
6.1.13 Function, secondary......................................... 54
6.4.3 Function resource allocation (matrix).............. 69
6.1.14 Function, unwanted.......................................... 54
6.4.4 Function performance specification matrix.....71
6.1.15 Random function identification....................... 54
6.4.5 FAST dimensioning............................................ 72
6.1.16 Subject objectives............................................ 54
6.5 References...................................................................73
6.2 Process and key concepts......................................... 55

6.2.1 The function concept......................................... 55

6.2.2 Why function analysis?...................................... 56

6.2.3 Process inputs and outputs.............................. 57

6.2.3.1 Inputs.......................................................... 57

6.2.3.2 Activities..................................................... 57

6.2.3.3 Outputs....................................................... 57

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7 8
7Creativity Phase...............................................75 8Evaluation Phase..............................................81
7.0 Introduction................................................................ 75 8.0 Introduction.................................................................81

7.1 Terms and definitions.................................................. 75 8.1 Terms and definitions...................................................81

7.1.1 Convergent thinking........................................... 75 8.1.1 Criteria................................................................ 81

8.1.2 Evaluation........................................................... 81
7.1.2 Creativity............................................................. 75
8.1.3 Grading............................................................... 81
7.1.3 Creativity techniques......................................... 75
8.1.4 Ranking............................................................... 81
7.1.4 Divergent thinking.............................................. 75
8.1.5 Weighting............................................................ 81
7.1.5 Freewheeling...................................................... 75
8.2 Process and key concepts......................................... 82
7.1.6 Hitchhiking.......................................................... 75
8.2.1 Process inputs and outputs............................... 82
7.2 Process and key Concepts......................................... 75
8.2.1.1 Inputs.......................................................... 82
7.2.1 The importance of functions in the
8.2.1.2 Activities..................................................... 82
creative process..................................................... 75
8.2.1.3 Outputs....................................................... 83
7.2.1.1 Framing problems using functions............ 76
8.2.1.4 Process flowchart...................................... 83
7.2.1.2 Leveraging the ambiguity of functions...... 76
8.3 Activities...................................................................... 83
7.2.2 Creative process.................................................77
8.3.1 Establish evaluation framework........................ 83
7.2.3 Process inputs and outputs................................77
8.3.2 Establishing evaluation criteria........................84
7.2.3.1 Inputs...........................................................77
8.3.2.1 Understanding the current state...............84
7.2.3.2 Activities......................................................77 8.3.2.2 Guide for establishing evaluation criteria.84
7.2.3.3 Outputs........................................................77 8.3.2.3 Examples of evaluation criteria................. 85

7.2.3.4 Process flowchart...................................... 77 8.3.3 Evaluating ideas................................................. 86

7.3 Activities...................................................................... 78 8.3.3.1 Evaluation in the context of human behavior.86

7.3.1 Generate ideas................................................... 78 8.3.3.2 Establishing the scope of evaluation........ 86

7.3.2 Record ideas....................................................... 78 8.3.4 Selecting ideas.................................................. 87

8.4 Techniques.................................................................. 87
7.4 Creativity techniques.................................................. 78
8.4.1 Coarse filter – simple evaluation techniques... 87
7.4.1 Brainstorming..................................................... 79
8.4.2 Medium filter – intermediate evaluation techniques.88
7.4.2 Brainwriting........................................................ 79
8.4.3 Fine filter – detailed evaluation techniques..... 89
7.5 References................................................................... 80
8.5 References...................................................................91

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9
9Development Phase..........................................93 9.3.2.3 Assess time or schedule impacts............. 97

9.0 Introduction................................................................ 93 9.3.2.4 Assess performance and quality impacts.97

9.1 Terms and definitions.................................................. 93 9.3.2.5 Assess risk.................................................. 98

9.1.1 Annuity................................................................ 93 9.3.2.6 Develop narratives................................... 100

9.1.2 Break-even point................................................ 93 9.3.3 Review and revise VM proposals..................... 100

9.1.3 Escalation........................................................... 93 9.4 Basic techniques.......................................................101

9.1.4 Future value........................................................ 93 9.4.1 VM proposal development forms.....................101

9.1.5 Inflation............................................................... 93 9.4.2 Calculate a return on investment....................101

9.1.6 Interest rate........................................................ 93 9.4.3 Calculate a simple payback............................ 102

9.1.7 Life-cycle cost (LCC) analysis............................ 93 9.4.4 Life-cycle cost analysis................................... 102

9.1.8 Life-cycle period................................................ 94 9.4.4.1 The time value of money.......................... 105

9.1.9 Present value...................................................... 94 9.4.4.2 Inflation and escalation........................... 106

9.1.10 Return on investment (ROI).............................. 94 9.4.4.3 Life-cycle cost methods...........................107

9.1.11 Simple payback................................................ 94 9.5 References................................................................ 109

9.1.12 Time value of money......................................... 94

9.2 Process........................................................................ 94

9.2.1 The development process................................. 94

9.2.2 Inputs and outputs............................................ 95

9.2.2.1 Inputs.......................................................... 95

9.2.2.2 Outputs....................................................... 95

9.2.2.3 Activities..................................................... 95

9.2.2.4 Process flowchart...................................... 96

9.3 Activities...................................................................... 96

9.3.1 Assigning ideas to the VM team......................... 96

9.3.2 Develop VM proposals....................................... 96

9.3.2.1 Ensure technical viability........................... 97

9.3.2.2 Determine costs......................................... 97

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10Presentation Phase........................................111 10.4.8 Overcome visual bias.....................................115

10.0 Introduction............................................................. 111 10.4.9 Be wary of PowerPoint....................................115

10.1 Terms and definitions............................................... 111 10.4.10 Recognize others for their efforts................116

10.1.1 Handout ........................................................... 111 10.4.11 Communicate concisely...............................116

10.1.2 Visual presentation......................................... 111 10.4.12 Effective Q&A.................................................116

10.1.3 VM study report............................................... 111 10.4.13 Use of graphics, sketches, and charts
instead of words....................................................116
10.2 Process.....................................................................112
10.4.14 Have a presentation moderator...................116
10.2.1 Inputs and outputs..........................................112
10.4.15 Remote presentations..................................116
10.2.1.1 Inputs.......................................................112
10.5 References................................................................116
10.2.1.2 Outputs....................................................112

10.2.2 Activities..........................................................112

10.2.3 Process flowchart..........................................112

10.3 Activities...................................................................113

10.3.1 Schedule the VM presentation.......................113

10.3.2 Select the VM proposals to present...............113

10.3.3 Prepare the visual presentation

and handouts.........................................................113

10.3.4 Starting the presentation...............................113

10.3.5 Develop VM study Report...............................114

10.4 Basic techniques......................................................114

10.4.1 Share the credit...............................................114

10.4.2 Find champions of change.............................114

10.4.3 Sell the concept of change early...................115

10.4.4 Use language to communicate ideas

with enthusiasm.....................................................115

10.4.5 Sell value improvement..................................115

10.4.6 Be prepared.....................................................115

10.4.7 Create excitement...........................................115

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11 12
1Implementation Phase....................................117 12VM Facilitation and Team Dynamics.................125
11.0 Introduction.............................................................. 117 12.0 Introduction............................................................ 125

11.1 Terms and definitions............................................... 117 12.1 Terms and definitions.............................................. 125

11.1.1 Change management....................................... 117 12.1.1 Consultant...................................................... 125

11.1.2 Implementation meeting................................. 117 12.1.2 Facilitator........................................................ 125

11.1.3 Implementation plan....................................... 117 12.1.3 Neutral............................................................ 125

11.1.4 Resistance to change...................................... 117 12.2 General facilitation skills........................................ 126

11.1.5 Status reports.................................................. 117 12.2.1 Active listening............................................... 126

11.2 Process......................................................................118 12.2.2 Questioning ................................................... 126

11.2.1 Managing change ............................................118 12.2.3 Using feedback...............................................127

11.2.2 The forces of change.......................................118 12.2.4 Handling conflict.............................................127

11.2.3 Implementing change ....................................119 12.2.5 Consulting or facilitating?..............................127

11.2.4 Inputs and outputs..........................................119 12.3 Group dynamics ..................................................... 128

11.2.4.1 Inputs.......................................................119 12.3.1 Tuckman’s group development model ........ 128

11.2.4.2 Outputs....................................................119 12.3.2 Other group dynamics................................... 129

11.2.4.3 Activities................................................. 120 12.3.2.1 Groupthink.............................................. 129

11.2.4.4 Process flowchart...................................120 12.3.2.2 Small versus large groups...................... 129

11.3 Activities................................................................... 120 12.3.2.3 Social loafing ......................................... 130

11.3.1 Review and assess VM proposals.................. 120 12.3.2.4 The fallacy of silence
meaning concurrence...................................... 130
11.3.2 Resolve VM proposals.................................... 120
12.3.2.5 Heuristics................................................ 130
11.3.3 Develop the implementation plan..................121
12.4 Forming teams ........................................................ 130
11.3.4 Track and audit results....................................121
12.4.1 Team composition approaches .....................131
11.4 Basic techniques......................................................121
12.4.1.1 100% Independent .................................131
11.4.1 Implementation forms....................................121
12.4.1.2 100% Design team and stakeholder ......131
11.4.2 Implementation status reports..................... 122
12.4.1.3 Hybrid – Blend of independent
11.5 References............................................................... 122 and subject team/stakeholder ........................131

12.4.2 Team size ........................................................131

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12.5 Facilitation of Preparation Phase techniques........131 13VM Programs..................................................139
12.6 Facilitation of information phase techniques....... 132 13.0 Introduction............................................................ 139

12.7 Facilitation of Function Analysis Phase 13.1 Terms and definitions.............................................. 139
techniques................................................................... 133
13.1.1 Value engineering change proposal (VECP)... 139
12.7.1 Working with people unfamiliar
with function analysis........................................... 133 13.1.2 VM program .................................................... 139

12.7.2 Facilitating development of a FAST diagram .133 13.1.3 VM program manager..................................... 139

12.8 Facilitation of Creative Phase techniques............ 134 13.2 VM program elements............................................. 139

12.9 Facilitation of Evaluation Phase techniques......... 135 13.2.1 VM program manager..................................... 139

12.10 Facilitation of Development Phase techniques.. 135 13.2.2 Policies, standards, and procedures............ 140

12.11 Facilitation of Presentation Phase techniques... 136 13.2.3 VM program champion................................... 140

12.12 Facilitation of Implementation Phase 13.2.4 VM program information tracking and key
techniques................................................................... 136 performance indicators.........................................141

12.13 References..............................................................137 13.2.5 Qualified VM facilitator and team members. 142

13.3 VM program development...................................... 142

13.3.1 Location within the organization................... 142

13.3.2 Integration with other programs................... 142

13.3.3 Authority and reporting structures............... 142

13.3.4 Organizational awareness and training........ 143

13.4 VM program management...................................... 143

13.4.1 Selecting subjects for VM studies................. 143

13.4.2 Timing of VM studies...................................... 145

13.4.2.1 Planning phase....................................... 146

13.4.2.2 Design phases........................................ 146

13.4.2.3 Acquisition phase....................................147

13.4.2.4 Value engineering incentive clause....... 148

13.4.2.5 VM program requirements clause......... 148

13.4.3 Sustaining a VM program............................... 148

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Appendix A
14Glossary of Terms........................................................................... 149

Appendix B
15Historical and Cultural Perspectives on Value.................................. 155

Appendix C
16VM Standard Reference.................................................................. 161
17

Appendix D
18Index.............................................................................................. 161
19

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xvi
 1. Introduction

1
Introduction

1.0 Overview and purpose of this Guide the function required, as opposed to the specific piece or part
requested. Many of these “substitutes” performed as well as,
The VM Guide® is intended to form a basis for the knowledge
if not better than, the originally requested items and, in some
value practitioners need as they learn the Value Methodology
cases, for less cost. This was the birth of function analysis, as
(VM), prepare for a VM certification exam, and to serve as a min-
we know it today, and remains the single most important dis-
imum level protocol for CVS® practice throughout their career.
tinction of VM.
The Guide has been organized to convey the WHO, WHAT, WHY,
The VM Job Plan is defined in Miles’ Techniques of Value Anal-
and WHEN of VM – and is presented in three major components:
ysis and Engineering, (3rd Edition, 1989), as the “problem-solv-
● Core terms, concepts, processes, and activities of the ing system.” Since the inception of the “value method,” many
methodology. people have written books, taught courses, delivered presen-
tations, and facilitated teams through tens of thousands of
● Applications illustrating how the VM process (known as VM studies and training courses. And through that time, the
the VM Job Plan) and related techniques are executed problem-solving system—the VM Job Plan—remained intact. It
relative to projects, products, processes, services, and is a logical, sequential approach to analyze a subject, whether
organizations (collectively referred to as the “subject” of it be a project, product, process, service or organization.
a VM study).
1.1.1 Value
● Additional resources and templates to provide a basic Since its creation in the late 1940s, the Value Methodology
foundation for applying core techniques in a standardized described in this Guide has received different names, like value
way. Note that these examples and forms are not intended engineering or value analysis. Nevertheless, the word “value”
to be “required” by practitioners in the performance of is always there. To really understand the power of this meth-
actual VM studies. odology, the VM practitioner must grasp the essence of value.
It is not uncommon to find analysts or decision-makers using
It is important for readers to appreciate that VM is a systematic
the word “value” interchangeably with “price” or “cost”; this
process and not a “collection of standalone tools.” Each phase
common misunderstanding may lead to the wrong decision be-
of the VM Job Plan builds on the previous phases. As the VM
ing made, cutting corners, and cheapening the project. This mis-
Guide® presents the overall, decades-proven Value Methodol-
conception has also led many practitioners to refer to any cost
ogy, this concept of “system” is organized in focused chapters
reduction activity as “value engineering,” a very risky mistake.
threaded together to identify coherent professional practice.
When Larry Miles stated his famous axiom “All cost is for
Each chapter includes specific terms and definitions applica-
function,” he was stating that value is first established by the
ble to the chapter content. In addition, a complete Glossary of
user’s (or customer’s) needs and wants. Chapter 2 describes
Terms is included at the end of the VM Guide®.
in detail how the concept of value cares for both the custom-
er's needs and the organization’s interests in better using the
1.1 Foundational concepts available resources to satisfy these needs. Chapter 2 also
The foundational concepts of VM date back to the 1940s, focuses on the idea of a function as the means to describe the
when Lawrence D. Miles, the “Father of Value Analysis” (as he customer’s needs and wants which will be detailed in a manner
originally called it), worked for the General Electric Company to broaden the understanding of the problem or opportunity in
in Schenectady, New York. Tasked with providing increasingly such a way that it drives the generation of creative alternatives.
difficult-to-find materials and parts required for the military
during World War II, Miles began looking for ways to provide

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1.1.2 Function This change in framing problems is essential to changing the

The thorough analysis of expected and achieved functions is way we think about possible solutions. Figure 1.1 describes
the most important element that makes the Value Methodology the difference between traditional problem framing (which is
unique among so many problem-solving methods. “Function” object-oriented), and the Value Methodology problem framing
is the element of value that focuses on achieving the custom- (which is function-oriented). By using generic descriptions of
er’s needs while broadening the mind of the team performing the customer needs, using the function rules described in
the VM study. As explained later in this VM Guide®, VM defines Chapter 6, the team approaches the problem with a very differ-
a “function” as a non-specific abstraction, consisting of an ent and divergent mindset that leads to a more innovative set of
action verb and a measurable noun, that describes what an solutions. Also, Chapter 3 describes how the standard VM Job
element of a project, product, process, service, or organiza- Plan starts with divergent thinking until innovative ideas are
tion does or should do. In other words, VM acknowledges that generated, and later uses convergent thinking in the evaluation
customers never buy things, but the function (or result) they and development of those ideas into implementable proposals.
receive from those things. Chapter 6 describes the process to
perform a complete analysis of functions that will be used to 1.1.5 Teamwork
later generate alternative solutions to the problem that could One of the foundational concepts of the Value Methodology
not easily be found with traditional, “object-oriented” (instead states that a multidisciplinary team is responsible to improve
of function-oriented) approaches. the value of a project, product, process, service, or organiza-
tion through the analysis of functions. Teams assembled for VM
1.1.3 The Value Methodology studies are normally shaped as a task force, which implies the
The Value Methodology (VM) is a systematic process used by formation of a requisite group of subject matter experts who
a multidisciplinary team, led by a qualified VM Facilitator, to bring together a specific set of skills and disciplines to accom-
improve the value of a project, product, process, service, or plish a specific goal. Team members may come from different
organization through the analysis of functions. The formal VM areas within the same organization or outside it, such as clients,
process includes eight distinct phases referred to collectively designers, or any other stakeholders who will bring the required
as the VM Job Plan. Depending who uses this standardized ap- set of knowledge expected to achieve the desired results.
proach, the same methodology has been called other names
such as value engineering, value analysis, and value manage- 1.1.6 VM facilitator
ment, as stated in the SAVE International Value Methodology In every VM study, team members are the experts providing the
(VM) Standard (see Appendix C – VM Standard). All three of right set of skills and knowledge to the goal of the study. Al-
these terms represent the application of the Value Methodol- though it is beneficial if they understand VM, they are not nec-
ogy in either different moments of the life cycle of the subject essarily expected to be knowledgeable about the VM process;
under study or in different application scenarios within an that is the role of the VM facilitator. The VM facilitator is the one
organization. who will guide the work of the group to accomplish its goals.
The facilitator will plan, lead, and facilitate the VM study, and
1.1.4 Divergent and convergent thinking is expected to have the skills and experience described later in
As previously described in 1.1.2, the fact that the team focuses on this guide. Chapter 12 provides the common VM guidelines and
a generic description of what the customer needs (the function) best practices for VM facilitators.
requires the VM team to reframe the subject under study as a
statement of purpose or intent. The Value Methodology improves 1.2 Application areas
the problem framing process, which is the process of describing The Value Methodology may be applied to anything that
and interpreting a problem to arrive at a problem statement. performs a function. Applications encompass construction,
Problem framing is an important step in problem solving, as slight product design and manufacturing, supplies, transportation,
changes in framing a problem may lead to a vastly different prob- health care, government, environmental engineering, business
lem-solving process and the resulting solutions. processes, and service industries. Organizations that use the

Functions

divergent thinking innovative ideas

Object/Problem Solution
traditional approach

Figure 1.1 – How VM uses functions to generate divergent thinking, reframing the problem.

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 1. Introduction

Value Methodology span both private and public sectors and

include federal, state, and municipal agencies.
While the types of information and team structure vary, de-
“ In recognition of his outstanding accomplishment through
the establishment, organization, and development of a
Value Analysis Program, which has resulted in substantial
pending upon the VM study subject, the VM Job Plan is applied cost reductions.”
in the same sequential order in all cases.
VM helps to find solutions for all kinds of challenges. Be- In 1954, the U.S. Navy Bureau of Ships implemented the first
cause VM is, by design, a multidisciplinary, multicriteria meth- federal government VM program with assistance from Miles
od that looks at both value and costs, it can solve problems and and his staff. It was there that the name “value engineering”
produce solutions that can easily be implemented. By looking took hold. Nine years later in 1963, the Department of Defense
for the function, VM takes you away from a monodisciplinary (DoD) established specific requirements for a formal program
approach and opens a fresh perspective on the challenge at within the three military services. This included design and
hand. The language (verb and noun) and the method allow construction activities, as well as suppliers, and mandated
people with totally different backgrounds, disciplines, and incentive-sharing clauses in construction contracts. Contrac-
interests to work together and find common ground and “out tors were permitted to propose value engineering changes
of the box” solutions. (value engineering change proposals or VECP) and share in net
savings. The high level of success achieved by the DoD led to
great expansion over the next 15 years. This included agencies
1.3 History and evolution such as General Services Administration, Environmental Pro-
As previously noted, the Value Methodology was developed tection Agency, U.S. Forest Service, Veterans’ Administration,
during the World War II era, from 1939 to 1945, by Lawrence Federal Highway Administration, and the Department of the
Delos Miles during his employment with General Electric Com- Interior. Today, every federal agency with a significant con-
pany. Miles was repeatedly tasked with securing materials, struction or purchasing program employs VM in some form.
parts, and systems desperately needed for the military, and Most state Departments of Transportation employ VM, as do
consistently succeeded – despite overextended suppliers – in many municipalities throughout the U.S. and Canada.
supplying those needs by analyzing what functions they were Today, the terms “value engineering,” “value analysis,” and
required to perform. “value management” are often used interchangeably. Howev-
In 1944, Miles transferred to Locke Insulator, a subsidiary er, in some environments, they are distinguished differently.
of General Electric, in Baltimore, Maryland. As Manager of For example, the California Department of Transportation has
Purchasing there, he was responsible for delivery and cost of a value analysis program, while the Federal Highway Admin-
millions of dollars’ worth of materials and products per year. He istration has a value engineering program. The City of New
developed patterns of engineering, laboratory, and purchasing York, Office of Management and Budget, having had a highly
teamwork that limited costs and improved products. He learned successful program since 1982, designates value engineering
both the productive and destructive force of human attitudes when the methodology is applied to construction projects, and
and practices, and their effects on appropriate designs and value analysis for application to business process improve-
appropriate costs. His thinking increasingly turned to “What ment studies. In the manufacturing sector, value engineering
function am I buying?” rather than “What material am I buying?” is performed on a project in development, whereas value anal-
In 1947, Miles returned to GE in Schenectady to lead what ysis occurs after the product is designed and produced. When
was named the Purchasing Department Cost Reduction Sec- the General Services Administration started a program in the
tion. He researched and developed workable techniques that 1970s, they called it value management.
would secure more cost-effective achievements by the deci- The term “value methodology” encompasses all these nu-
sion-making employees in a plant or business. The new func- ances as an umbrella term that represents that the true Value
tion-based approach was introduced to GE’s Vice President Methodology –– the Job Plan as we know it –– is employed,
of Engineering who said, “This is the best method I have seen without regard for the setting in which it’s used.
to get competitive costs and retain quality. What are you going
to call it? Proper quality at proper costs equals value. Why not
call it value analysis?” From that point, Miles was tasked with
1.4 VM Organizations
training 1,000 people per year. He used people and products
1.4.1 SAVE International®
from different plants, applied the techniques, and showed
them how they could increase earnings and maintain competi- SAVE International® (SAVE) is the premier, international, pro-
tive positions. Training sometimes exceeded the annual target fessional association devoted to advancing and promoting the
of 1,000 people, and during the four years from 1948 to 1952, Value Methodology. The association provides its members ed-
$10 million in savings were reported. In 1950, GE gave Miles its ucation and training, publications, certification, promotional
highest award, the Coffin Award (named for and given in honor tools, networking, and recognition.
of their first president), with the citation: SAVE operates a certification program which is globally
recognized as the industry standard for competence in the ap-
plication of the Value Methodology. The annual Value Summit

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VM Guide®

is SAVE’s major event and typically attended by delegates from Additional professional organizations with which SAVE often
every continent. collaborates include:
SAVE members are trained and certified in the practice of
the VM in more than 35 countries. Originally founded in 1959 ● Dutch Association of Cost Engineers (DACE), Netherlands
as the Society of American Value Engineers (SAVE), the society (www.dace.nl)
officially changed its name to SAVE International® in 1996.
● Hong Kong Institute of Value Management (HKIVM)
Find more information about SAVE online at www.value-eng.
(hkivm.org)
org. The name “SAVE International” became a registered trade-
mark in 2012. ● Value Analysis Canada (VAC) (www.valueanalysis.ca)

1.4.2 Miles Value Foundation ● Value Engineering Society of China (VESC)

The Lawrence D. Miles Value Foundation (MVF) is a charitable (www.vesc.org.cn)
foundation created, in 1977, to promote and fund the devel-
opment of educational programs, new applications, and a
research library for the study of the Value Methodology. 1.5 References
The MVF accomplishes its mission by: ● Miles, Lawrence D. Recollections, Miles Value Foundation,
1987, https://play.google.com/store/books/details/
1. Promoting public awareness of the Value Methodology Lawrence_D_Miles_Foundation_Lawrence_D_Miles_
through publications, multimedia programs, and technol- Recol?id=djFbDwAAQBAJ
ogy transfer programs
● Miles, Lawrence D. Techniques of Value Analysis and
2. Offering practical and innovative applications of VM in Engineering, 3rd Edition edited by Eleanor Miles Walker,
business and government Executive Director, Lawrence D. Miles Value Foundation,
1987.
3. Developing and teaching courses in the value principles
and methodology at the undergraduate, graduate, and ● Miles Value Foundation. The Value Methodology Memory
postgraduate levels Jogger® 2nd edition, GOAL/QPC, 2018. Print.

4. Encouraging professionals and students to undertake

research and development of value-related applications
and programs through scholarships and grants programs.

Find more information on the MVF online at valuefoundation.org.

1.4.3 Other Value Methodology organizations

With the spread of the Value Methodology came the formation
of VM organizations throughout the world. Several of those
organizations are SAVE International affiliates and operate the
SAVE Certification Program in their countries and in their native
languages. Those include:

● Society of Japanese Value Engineering (SJVE) (www.sjve.org)

● Indian Value Engineering Society (INVEST)

(www.invest-in.org)

● Society of Korean Value Methodology (SKVM)

● Society of Hungarian Value Analysts (SHVA)

(www.shva.hu)

● Value Management Institute of Taiwan (VMIT)

(www.vmit.org)

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 2. The Value Concept

2
The Value Concept

2.0 Introduction 2.1.5 Efficiency

The function of the Value Methodology is to improve value. This The ratio of useful output to total input. Efficiency refers to very
chapter explores the history, theory, elements, and approach- different inputs and outputs, depending on specific fields and
es to measuring value. industries.

2.1.6 Expected value

2.1 Terms and definitions A quantitative measure of value expressed by multiplying an
anticipated outcome by the probability of its occurrence.
2.1.1 Cost-benefit analysis (CBA)
A method used to ascertain the soundness of any investment 2.1.7 Performance
opportunity and provide a basis for making comparisons with The extent to which a project, product, process, service, or
other such proposals. All the positives and negatives of the VM organization achieves its intended function(s). Performance
study subject are first quantified in monetary terms and then can be measured quantitatively or qualitatively, the measure-
adjusted for their time-value to obtain correct estimates for ment of which answers the question of how well the function(s)
conducting a CBA. is(are) being performed.

2.1.2 Cost, initial 2.1.8 Productivity

The expenditure of all the resources needed to design, deliver, The rate of output per unit of input; usually for a production
produce, or establish a project, product, process, service, or process, however it is used also for construction activities.
organization. Cost has different dimensions that can be mea-
sured by factors such as materials, labor, equipment, time, risk, 2.1.9 Quality
etc. and be quantified in currency. Cost should not be confused A subjective term for which each person or sector has its own
with “price,” which is the amount of money exchanged or set definition. In technical usage, quality can have two meanings:
as consideration for the sale of something. Initial cost is also 1) the characteristics of a product or service that bear on its
frequently referred to as “capital cost.” ability to satisfy stated or implied needs; 2) a product or ser-
vice free of deficiencies. According to Joseph Juran, quality
2.1.3 Cost, life-cycle (LCC)
means “fitness for use”; according to Philip Crosby, it means
The sum of all recurring and one-time (non-recurring) costs “conformance to requirements.”
over the full lifespan or a specified period of a project, product,
process, service, or organization. It includes the initial costs, 2.1.10 Resource
operating costs, maintenance and upgrade costs, and remain- All inputs of cost, time, energy, space, materials, labor, etc.
ing (residual or salvage) value at the end of ownership or its required to accomplish a function.
useful life, including salvage or decommissioning costs.
2.1.11 Risk
2.1.4 Customer
An uncertain event that could have an impact on the cost,
A person or an organization that purchases a product or ser- schedule, or performance of a project, product, process,
vice. The customer plays a critical role, if not the most import- service, or organization. Risks can either be positive (oppor-
ant, in determining value. In some cases, the customer may tunities) or negative (threats). The Value Methodology must
also be a user. consider the impact of risks to value.

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2.1.12 Schedule value is established by the user’s—or the customer’s—needs

A procedural plan indicating the time, duration, and sequence of and wants.
activities or operations. Schedule may be considered as an input Miles stated that a product or service is considered to have
(a resource) or an aspect of performance, depending upon the good value only if it has appropriate performance and cost. He
context of the project, product, process, service, or organization. also made the following observations:

2.1.13 Stakeholder ● Value is always increased by decreasing costs (while, of

course, maintaining performance).
An individual, group, or organization who may affect, be affect-
ed by, or perceive itself to be affected by a decision, activity, or ● Value is increased by increasing performance if the custom-
outcome of the project (i.e., VM study). er needs, wants, and is willing to pay for more performance.
2.1.14 Time It follows that there are other ways to improve value. One way
The measured or measurable period during which an action, is to increase performance while increasing costs, such that
process, or condition happens. Time, as an element of value, the improvement in performance is greater than the increase in
may be considered as an input (resources) as well as an out- cost. Another way is to decrease performance while decreas-
put. For example, time may be considered as an input when ing costs, such that the decrease in cost is greater than the
considering the delivery of a project and as an output when decrease in performance while still delivering the functions
experiencing a service such as a massage. and minimal performance needed by the customer.

2.1.15 User
2.3 Who determines value?
A person or entity that utilizes or receives the results of the project,
As described above, value is frequently extrinsic and depends
product, process, or service, or is a member of an organization.
upon the individual’s point of view. Seldom is value singular in
2.1.16 Utility nature and it usually involves many perspectives. To improve
value, it is important to consider who determines value.
An economic concept that is used to quantify the usefulness
of, or level of, satisfaction derived from a thing. Utility is closely 2.3.1 Customers
related to the concepts of performance and quality.
The customer ultimately makes buying decisions and is fre-
2.1.17 Value quently also a user. The concept of customer value is based on
the idea that people make rational buying decisions based upon
An expression of the relationship between the performance of
the relationship between the total cost of ownership and perfor-
functions relative to the resources required to realize them. This
mance. The primary principle in this decision is overall value; or,
can be expressed as Value = (Function Performance)/Resources.
simply said, is the customer getting the most for their money?
2.1.18 Voice of the customer It is important to remember that customers closely relate
value directly to the function or functions that they are trying
A process and/or method of eliciting the preferences and re-
to acquire. Understanding what customers value is important
quirements of customers and users relative to value.
because it can help us better understand how people choose
among competing suppliers of goods and services. This ap-
2.2 Development of the value concept proach, which ties into traditional marketing disciplines, can
The history of the value concept is long. From the dawn of civi- help lead organizations to search for the answers to several
lization, the idea of value has engaged scholars, philosophers, important customer value questions such as:
mathematicians, economists, and psychologists. This section
is intended to provide some historical context to the thinking ● What are the key buying factors that customers value
behind the value concept while illustrating the importance of when they choose between a business and its most
concepts such as utility, cost, performance, time, uncertainty, closely related competitors?
and human perception in considering value. Refer to Appendix
● How do functions support customer “wants and needs”?
B for additional information on the historical and cultural per-
spectives on value. ● How do customers correlate an organization’s performance
In 1947, Lawrence D. Miles established the concept of value compared with its competitors for each key buying factor?
as a technical field of study. In 1961, he published Techniques
of Value Analysis and Engineering, which presented the con- ● What is the relative importance of each of these compo-
cept of function as an integral part of value. nents of customer value?
Miles defined value in terms of the relationship between
Often the view from the marketplace differs from the organi-
function and cost. This was eloquently stated in his axiom, “All
zation’s internally developed perception of customer values.
cost is for function.” Of equal importance, he stressed that
It is important that those seeking to apply VM appreciate the
importance of understanding the wants and needs of its cus-

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 2. The Value Concept

tomers in improving value. Ultimately, the success of an orga- 2.3.3 Stakeholders

nization depends on how well it satisfies the needs and wants Stakeholders represent those who have an interest in the proj-
of its customers. ect, product, process, service, or organization. For example, a
The key criterion in measuring this is value. The Value Meth- salesperson or family member is a stakeholder in a customer
odology, as described in the chapters that follow, will provide buying an automobile. They have an interest in influencing the
the reader with a means of creating and improving value for the buying decision, but do not ultimately make the final decision.
projects, processes, products, services, or facilities an orga- Construction projects often have many stakeholders. For
nization provides. There are numerous techniques that can be example, stakeholders having an interest in a highway project
employed to capture and understand the customer preferences. might include regulatory agencies, community groups, utility
Voice of the customer (VOC) is a process used to capture companies, property owners, and the public, in addition to the
the requirements/feedback from the customer and/or user designers, consultants, contractors, subcontractors, etc.
(internal or external) to provide information regarding the level Manufactured products stakeholders consist of designers,
of performance and quality they desire. These are presented in manufacturing engineers and operators, finance, sales and
Chapter 5, Information Phase. marketing personnel, and service people, etc.
An organization must strive to hear its intended customers It should be noted that stakeholders have three different
or end users if it desires to succeed. Once the organization has views: those who support the activity, those who are neutral,
accomplished this first step, it will be in a better position to: and those who oppose the activity. Failing to identify all the
stakeholders in the beginning can lead to serious implications
● Understand what customers and users value from its proj-
for the project, product, process, service, or organization.
ects, products, processes, services, and organizations.
There are many tools and techniques related to identifying
● Measure value and communicate it to customers and users. and managing stakeholders. VM Facilitators should seek to
identify them and understand their interests, as they can sig-
● Prioritize what a customer wants as value and deliver it. nificantly influence value decisions.
● Retain existing customers (the cost of finding a new one is
2.3.4 Design, project, product, development, or delivery team
typically 5 to 10 times that of serving an existing customer).
Those involved in conceiving, designing, producing, or other-
● Convert unknown customers to known ones. wise delivering a project, product, process, or service have
significant influence on value. This group of people owns the
● Create a competitive advantage through the development
responsibility to interpret the needs of customers, users,
of a customer-focused organization.
stakeholders, and decision makers and transform them into
● Manage changes in customer expectations and optimize something of value that addresses those needs. In order to
processes to keep delivering optimum value. deliver value to customers and users, they must synthesize
these external values with their own perceptions of them. De-
Measuring customer’s value is dynamic throughout a project, sign teams that do not fully hear the voices of customers and
process, product, service, or organization. Periodic reassess- stakeholders will likely fall short of fully delivering value.
ment of value should occur to account for changes over time.
2.3.5 Decision makers
2.3.2 Users Decision makers, as key stakeholders, play an active role
Users may or may not also be customers. For example, some- in determining value and may, or may not, occupy any of the
one who purchases an automobile is a customer and will likely other roles described above. It is important to understand
also be a user. The same person’s family and friends who ride who has decision making authority relative to value judgments.
in the vehicle would be users. A lease company may purchase Customers are natural decision makers when they purchase
the automobile, but the individuals (its customers) that drive it a product or service. CEOs may make decisions about what
are users. to produce or how to price their products. A spouse could
Users must be considered as key stakeholders. Their expe- influence the decision of what clothing is purchased for their
rience with the project, product, process, service, or organiza- partner. Understanding what motivates decision makers is
tion will influence the behavior of future customers and other important in considering value.
users in determining its value. Sometimes, customers do not
adequately consider the preferences and perceptions of us- 2.3.6 VM team
ers. This occurs when the customer is disconnected from the The VM study team should seek to solicit and understand the
user. This disconnection is common for public projects where different value perspectives of the groups identified above,
the user is “the public” and the customer is the agency spon- as each influences its own perception of value. This may be a
soring the project. Organizations should seek to solicit input challenging and time-consuming activity, but it is essential if
from users whenever possible. Users should be considered for the VM study team is to improve value.
inclusion on VM study teams.

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2.4 Reasons for poor value All projects generally begin with several basic assumptions.
Too often as a project progresses, these assumptions become
There are many reasons why optimal value is not always
“criteria” or “requirements” if not challenged and either verified
achieved. The Value Methodology is a proven approach to
or changed. Value studies provide a structured way to question
identify these problems and provide solutions that improve
original assumptions, identify their cost and performance im-
value. While there are countless possibilities, some of the most
pacts, and replace or challenge them with facts. The greatest
common reasons include:
source of incomplete information or ignorance comes from not
● Lack of information fully understanding the customer’s needs.

● Fixation with standard solutions 2.4.2 Fixation with “standard” solutions

● Poor communication Humans have a natural tendency to resist change, especially
in relation to longtime solutions that appear to be working
● Misconceptions and wrong beliefs
just fine. We are all familiar with the mantra, “If it’s not broken,
● Rigid adherence to standards don’t fix it.” While there is an undeniable common sense to this
phrase, “we should not let it dull our creativity, nor our desire
● Habits and attitudes
to find a better solution.”
● Indecision, and Noted American geologist Thomas C. Chamberlin (1843–
1928) addressed this concept as it applies to the application
● Fear of failure
of the scientific method. He observed that a strong tendency
among scientists and researchers, in their desire to reach an
2.4.1 Lack of information interpretation or explanation, that commonly led them to a ten-
A basic lack of information can lead to poor value. People are tative interpretation based on an initial examination of a single
not all-knowing, and seldom is all relevant information available. example or case. He realized that this tentative explanation, as
Also, uncertainty arises from gaps in information. For example, such, did not threaten objectivity; but, if it began to be trusted
a project in the planning phase is likely to hold a high degree without further testing, it could blind us to other possibilities
of uncertainty due to the lack of scope definition and technical that were ignored at first glance. This premature explanation
information available at such an early stage of development. becomes a tentative theory and then a ruling theory, and, sub-
Making value judgments with imperfect information is an ev- sequently, our research becomes focused on proving the ruling
eryday fact of life. Examples where a lack of information could theory. The result is a blindness to evidence that disproves the
negatively impact value include: ruling theory or supports an alternate explanation. Only if the
original, tentative hypothesis was by chance correct does our
● A bridge project has identified specific locations to locate research lead to any meaningful contribution to knowledge.
the foundations; however, no geotechnical information is Through these observations, Chamberlin developed the
obtained characterizing the soils. This lack of subsurface method of multiple working hypotheses, which involves the
information could potentially degrade the project value development, prior to research, of several hypotheses that
if poor soils are discovered during construction, which might explain the phenomenon to be studied. Many of these
increases costs to mitigate and delays the project. This hypotheses will be contradictory, so that some, if not all,
uncertainty; however, is reducible through additional geo- will prove to be false. However, the development of multiple
technical investigations. hypotheses prior to beginning research lets us avoid the trap
● A consumer sees a pair of shoes on sale at a store. The of the ruling hypothesis and makes it more likely that our re-
customer purchases the shoes, ignorant of the fact that search will lead to meaningful results. Through this approach,
the same product is available at the store down the street all possible explanations of the phenomenon to be studied can
at a 20 percent lower price. Had the customer engaged in be considered with open minds, including the possibility that
market research, a better, higher value buying decision none of the explanations or solutions is viable and the possi-
would have been made. bility that a new explanation may emerge. One tool to perform
this analysis is a support/refute matrix.
● A company’s hiring process only searches for candidates As in the case of the first example, “If it’s not broken, don’t fix
in a specific locale. Limiting the geographic range reduces it,” Chamberlin’s observations are quite relevant. Generally, we
the pool of potential candidates by not considering poten- have a fixation with the existing solution or standard way of do-
tial applicants amenable to relocating to the company’s ing things. This can inhibit the potential for value improvement.
location, missing out on highly qualified individuals. The VM process helps to address this issue, as alternatives
Today’s good information often becomes tomorrow’s bad that challenge the status quo are free to be developed. The
information. Conditions can change quickly and without our benefits and risks associated with the change are quantified
knowledge, as was the case in the preceding examples. In this for the decision-makers. Often the risk associated with not
respect, an accurate assessment of value is only as accurate changing becomes the compelling rationale for action.
as the information upon which it is based.

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 2. The Value Concept

2.4.3 Poor communication ogy that has arisen in modern society to which we all tend to
Most projects, especially those dealing with facilities and man- subscribe. In his bestselling book Freakonomics (2005), author
agement processes, involve multiple stakeholders. Nowhere is Steven Levitt identifies many underlying economic principles
this more evident than within public organizations where there which he discusses at length. Two of them support the notion
are typically several regional and local government entities, of honest, wrong beliefs. These are:
regulatory agencies, special interests, and citizen groups in-
● Conventional wisdom is often wrong. It is a commonly
volved in the project development process. These stakehold-
held belief in the United States that money wins elections.
ers often hold radically different views about the importance
One need only look at the 2008 presidential election to
of a project’s objectives. Typically, the dominant stakeholder
confirm this, right? The Obama campaign significantly out-
(usually the project’s “owner”) places their objectives ahead of
spent the McCain campaign, and guess who won? We often
all others, which are often not aligned with the customer’s or
see correlations where we want to see them; however, it
user’s. This bias often leads to the development of a project
doesn’t mean they are correct. Based on an analysis of data
scope that does not optimize value for all stakeholders.
presented in Freakonomics, a winning candidate can cut
Related to this phenomenon is the type of one-way commu-
their spending by 50 percent and lose only 1 percent of the
nication structure still pervasive in most organizations. In a one-
vote, while a losing candidate who doubles their spending
way communication structure, information primarily flows from
can similarly expect to pick up 1 percent more votes.
the top down. This is especially true of most public and many cor-
porate structures that are functional or departmental in nature. ● Experts use their informational advantage to serve their
Under this structure, most communication passes in one di- own agenda. Here, Levitt shows how experts can easily ex-
rection, from the upper echelons of management down through ploit our trust and lead us to believe they are working for us
the established hierarchy. Just like in an army, where the one- rather than themselves. Real estate agents typically work
way communication structure is common, this model makes for a commission of the total sale of a property. It stands
it easier to maintain control over the organization in meeting to reason that their interests are in line with their clients—
objectives, especially in very large organizations. However, the higher an agent can sell a client’s property, the more
there are only limited opportunities for communication back money they will both make. However, as Levitt shows, the
up the chain and, as a result, there is a high probability that the data paints a very different picture. The average realtor
information received by the lower tiers will be misunderstood makes 3 percent more on the sale of their own homes than
or misinterpreted. Further, this model tends to stifle construc- they do for everyone else. That’s $9,000 more on the sale
tive criticism and feedback (i.e., it has a chilling effect), which of a $300,000 house! Why don’t the rest of us get the same
are essential to innovation and improvement. value from their services?
VM utilizes a cross-functional, team-based organizational
structure. One of the primary strengths of this structure is that The application of VM facilitates challenging such beliefs with
it utilizes a completely different communication model, which current facts and helps to dispel honest wrong beliefs by de-
is multidirectional. In a multidirectional communication mod- veloping alternatives that would otherwise be dismissed with-
el, information flows freely among all participants. This is much out analysis and quantification of the benefits in the current
more conducive to innovation and improvement. environment. Through VM’s focus on the user, misconceptions
For this structure to be effective, a skilled, objective VM such as those identified above can be revealed and strategies
facilitator must provide direction and structure while also en- developed to address them.
couraging the free flow of information.
The application of VM within the context of a VM study is an 2.4.5 Rigid adherence to standards
intense, focused effort in which members of the VM study team, In today’s world, technological change is an accepted part of
project team, the project owner, and user representatives come life. Despite this, organizations are still prone to maintaining
together in the same room as a single team possessing a single outdated standards or relying on aging technology. Much
goal: to improve project value. Additionally, the VM techniques of this resistance is rooted in a belief that new technologies
applied at each step of the VM Job Plan gather, organize, and are unproven and inherently flawed. With this line of thinking,
develop information regarding the project; draw meaningful individuals and organizations can quickly fall behind their com-
conclusions from the project information through the appli- petitors. One such example is provided below.
cation of function analysis; and, foster direct communication A VM study was performed on a project by a state depart-
between team members through a consensus-driven approach. ment of transportation. During the Function Analysis Phase,
the function “Improve Sightline” was identified as describing
2.4.4 Misconceptions and wrong beliefs one of the major project elements involved regarding the cur-
Misconceptions and honest, wrong beliefs that result from rent design concept. To achieve this function, the grade of an
mental conditioning as does the ready acceptance of opinion, existing highway was going to be lowered to allow motorists to
rumor, and speculation without justification or verification. see over the crest of a gentle hill. The cost to do this was esti-
They result from the longtime propagation of many of the other mated in the tens of millions of dollars while creating significant
poor reasons for value cited here. There is a certain mythol- disruptions to existing traffic and requiring extended detours.

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VM Guide®

During the Creative Phase of the VM Job Plan, one of the ideas The responses identified above represent obstacles to change
the VM study team developed was to adopt a different design based upon habitual ways of doing things. It is important to
standard. In fact, such a standard had been recently adopted recognize these for what they are and not to let them get in the
by the American Association of State Highway and Transpor- way of innovation. Remember, habits are a necessary part of
tation Officials (AASHTO), which resulted in the elimination of our life; however, their very nature is thoughtless. The best way
this work. The state had not yet adopted this standard but was to overcome habitual thinking is to make people aware of what
in the process of doing so. The change in question was driven they are saying and then get them to think critically about it.
by the manner in which driver sight lines were calculated. Due People are usually not even aware that their habitual respons-
to the higher volumes of SUVs and light trucks taking to the es are rooted so deeply. Once the roots are exposed for what
streets, average driver sat significantly higher above the road- they are, people are more apt to accept changes.
way than their counterparts from previous decades. This lag in
the adoption of new standards nearly cost taxpayers millions 2.4.7 Indecision
of dollars and thousands of hours in traffic delays. Decision making isn’t always easy, especially in the face of mul-
Value studies initiated by an organization are conducted tiple variables and uncertainty. It is human nature to delay chal-
under the premise that innovation is necessary in order to im- lenging decisions for a variety of reasons. These may include:
prove value. Considering this: VM provides an excellent vehicle
for presenting the ideas and technologies of tomorrow, and ● Accountability: Perhaps the decision makers wish to
challenging yesterday’s standards, within an environment that avoid accountability for their decisions. This is a common
is conducive to introspection and thoughtful consideration. phenomenon in politics that allows politicians to avoid
the disfavor of constituents by not choosing a position.
2.4.6 Habits and attitudes
● Insecurity: In some cases, decision makers may be
Individuals develop habits and attitudes over a lifetime. This
unsure of what to do. They delay making decisions in
ingrained form of behavior can lead to an appalling degree of
order to avoid making a poor choice.
ignorance with respect to making decisions that lead to good
value. We all possess many layers of habits and attitudes related ● Perfection: Sometimes people avoid making decisions
to culture, religion, profession, and lifestyle. While many of our because they are seeking the “perfect” solution. The
habits and attitudes are quite positive, they can also create blind reality is that perfection is seldom achievable, and the
spots with respect to our ability to make value decisions in the perfect choice today may be an imperfect one tomorrow.
workplace. Companies often get into trouble when the motivation
for profit, which is ingrained in corporate culture, takes control. ● Guilt: All decisions have consequences, both positive and
Habits and attitudes represent the greatest obstacle to negative. The negative consequences of decisions often
achieving good value. Habitual thinking can be extremely have emotional strings attached to them. One of these
difficult to overcome. If you repeatedly ask somebody, “Why is guilt, which can be a powerful influence in delaying
do you do it that way?” usually by the third time, they will re- decisions that make us feel uncomfortable.
spond, “Because that’s the way I’ve always done it.” This type
of response comes up even sooner if asked in the workplace. 2.4.8 Fear of failure
People perform tasks all the time without really thinking about The fear of failure is a significant factor in diminishing value. Fear
them or knowing why they are doing them. If they stopped to of failure is closely related to fear of embarrassment, which may
ask things like “Why are we filing these reports?” or “Why do be an outcome of failure. It can cause us not to even try something.
accounting and purchasing both need to approve this requisi- Fear of failure is the intense worry that we experience when
tion?” they might find that the answer is “You don’t need to.” we imagine the bad things that might happen if we do not
What follows are all good examples of habits and attitudes succeed. These negative feelings increase the odds of holding
influencing behavior in the workplace: back or giving up.
Fear of failure is what causes people not to try; to push back
● We did it that way on our last job.
on new ideas; and, to stay inside one’s comfort zone. It is a
● It deviates from standard procedures. very primal, and powerful phenomenon that must be managed.
One of the best ways to deal with fear of failure is by providing
● We’ve never done that before.
evidence that an idea or approach can be successful. Fear is
● It will set a precedent.
● It’s too risky.
● Management won’t like it.
● It hasn’t been tested.
● It doesn’t agree with company policy.

● Headquarters will never approve it.

10
 2. The Value Concept

rooted in uncertainty – of not knowing what will happen. Steps ● Cost. Like the previous definition, costs include all the
that can be taken to deal with fear of failure include: resources required to realize the subject. Cost includes
the salaries/wages of the people and equipment that do
● Thoroughly evaluate the advantages and disadvantages. the work, the materials they use, and all the other circum-
stances that require an expenditure of resources. Cost
● Consider the probabilities and impacts of threats.
can consider initial as well as life-cycle costs.
● Identify ways to manage the threats.
● Risk. We can never be certain that things will go exactly ac-
● Focus on good outcomes but do not become attached cording to plan. Therefore, the impact that uncertainty can
to them. have must be considered. Risks may be classified as either
threats (negative risks) or as opportunities (positive risks).
● Stay positive. There can be many risks to a project, both known and
unknown, that can affect one or all of the aforementioned
● Think of opportunities that lie out of the comfort zone. elements. Risk often manifests itself as fear, whether it is
fear of failure, embarrassment, or the unknown.
VM should seek to identify and manage risks. Doing so will help
reduce the chance that fear of failure will erode value.

2.6 Value measurement

2.5 Elements of value There are several different approaches to measuring value.
There are several basic elements that provide a measure of The methods described below are all valid and have their uses.
value to the customer. These elements comprise performance, Some of these, such as Cost Benefit Analysis, are well estab-
quality, perception, time, cost, and risk. They provide the basic lished methods that are widely practiced and understood. It
building blocks from which all value emanates: is not the intent of the VM Guide® to fully detail the nuances
of these methods, but rather to point to them as recognized
● Performance. Performance is defined as the capacity of a
methods to measure value.
project, product, process, service or organization to fulfill
It is important when considering the measurement of value
its functional requirements. For example, a performance
that the focus is on functions; in other words, what is the value
attribute for a sports car might be “speed” measured in
of the desired functions?
kilometers per hour while for a hammer it might be “du-
Measurement makes value even more tangible and transpar-
rability.” Performance can be measured quantitatively or
ent. This can be unwanted in organizations driven by prestige
qualitatively. The level of desired performance should be
or politics. On the other hand, it gives insights to where value
determined by the customer or user.
can be improved.
● Quality. The American Society for Quality (ASQ) defines
2.6.1 Inputs and outputs
quality as “a subjective term for which each person or sec-
tor has its own definition. In technical usage, quality can Several variations are used to measure value relative to the
have two meanings: 1) the characteristics of a product or concept of inputs and outputs. These can be categorized un-
service that bear on its ability to satisfy a predetermined der two basic approaches: efficiency and productivity.
requirement or stated or implied needs; 2) a product or Efficiency, as an expression of value, is one way to consider
service free of deficiencies.”In the first meaning, quality is the relationship between inputs and outputs. For example, an
synonymous with “performance” as described above. In efficiency ratio that considers expenses (E) relative to revenues
the second meaning, quality is more about conformance (R) yields the following relationship:
to standards and/or specifications.
Expenses
● Perception. Our perception of value can significantly Efficiency =
Revenues
influence our reality. Many psychological, cultural, and
behavioral phenomena affect how we interpret value. For For example, if expenses are $2,000 and revenue is $10,000,
example, our perception of clothing fashions may change the efficiency ratio is 0.20 or 20% (20/100)—meaning that
over time, based on cultural norms and the effects of $0.20 is spent for every dollar earned in revenue. It should be
advertising. The discipline of behavioral economics is acknowledged that this method is very cost-centric and may
concerned with identifying, studying, and quantifying the not adequately capture other dimensions of value. However, it
effect of cognitive bias on value judgments. is one possible way to consider value from the standpoint of
efficiency. Caution should be used in applying this perspective,
● Time. The customer requires acceptable delivery, usually as it could lead an organization to efficiently produce products
at a specific place within a given period. The best projects, of poor value or even the wrong product.
products, processes, or services are of no value if they Productivity is another expression of value that considers
cannot be provided to the customer in a timely fashion. inputs and outputs. Labor productivity can be measured as a

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VM Guide®

ratio of the total output (goods or services) in dollars to the Decisions are made through CBA by comparing the net present
number of person-hours to produce the output. Labor produc- value (NPV) of the subject’s costs with the net present value
tivity may also be measured as the ratio of total output to the of its benefits. Decisions are based on whether there is a net
number of workers used to produce the output. benefit or cost to the approach; i.e., total benefits minus total
costs. Costs and benefits that occur in the future may have less
Outputs weight attached to them in a cost-benefit analysis. To account
Productivity = for this, it is necessary to “discount” or reduce the value of
Inputs
future costs or benefits to place them on par with costs and
For example, assume a company generates $80,000 in goods in benefits incurred today. The “discount rate” will vary depend-
1,500 hours. To calculate the labor productivity, 80,000 divid- ing on the sector or industry, but public sector activity gener-
ed by 1,500 = $53 of revenue generated per hour of labor. Using ally uses a discount rate of 5 – 6%. The sum of the discounted
the same example, if the labor was performed by 30 employees, benefits of an option minus the sum of the discounted costs,
then the net productivity per employee would be calculated by all discounted to the same base date, is the “net present value”
dividing 80,000 by 30, yielding a value of $2,666 in revenue per of the option. Many governmental agencies require CBA to be
employee. This method considers outputs (measured in costs) performed to justify the expenditure of taxpayer money on
relative to inputs (measured in terms of labor – either person large public projects.
hours or number of people).
Both methods are simplistic, but useful, in comparing the val- 2.6.3 Performance and Resources
ue of different options from the standpoint of inputs and outputs. Another form of value measurement considers outputs in terms
of a mixture of qualitative and quantitative factors (perfor-
2.6.2 Costs and Benefits mance) relative to all inputs (resources). While like Cost-Ben-
One method of expressing value is to quantify the costs and efit Analysis (CBA), it differs greatly in how it approaches the
benefits of a thing using a monetary unit for both (such as U.S. quantification of these factors. This more nuanced view of
dollars or Japanese yen). This is typically expressed as a ratio. value allows for measurements that are not purely money- or
Using such a method, all the resources required to actualize time-based.
the subject are compared to the benefits it delivers, which are Performance describes the capacity of the subject to pro-
expressed in currency equivalents to enable the calculation vide key customer or user functions. Resources describe the
of the net cost or benefit. This method is popularly known as monetary costs, time required, labor, materials, etc. to pro-
Cost-Benefit Analysis (CBA). duce the desired performance.
As a technique, CBA is used most often at the start of the
development of a project, product, or process when different Performance of Functions
options or courses of action are being appraised and compared Value =
Resources
as options for choosing the best approach. It can also be used,
however, to evaluate the overall impact of a program in quan- Resources are quantitative by nature and can be readily mea-
tifiable and monetized terms. Economists often use CBA to sured in terms of monetary or time-based units. The measure-
consider the value of social programs and major public invest- ment of performance can be more challenging and requires
ments. In these applications, it may be used to quantify value specialized methods, because performance can be expressed
by assigning monetary equivalents to things such as mortality both qualitatively and quantitatively. Such methods, referred
and carbon emissions. It must be acknowledged that while one to collectively as Multi-Criteria Decision Analysis (MCDA) tech-
may indeed assign monetary values to human life and climate niques, include, but are not limited to: The Analytic Hierarchy
change, the validity of such estimates is open to debate. Process (AHP), the Analytic Network Process (ANP), and, the
CBA adds up the total costs of a program or activity and Hierarchical Decision Model (HDM). The application of these
compares it against its total benefits. The technique assumes methods allows for decision makers to assign numeric values
that a monetary value can be placed on all the costs and bene- to performance criteria that reflect their preferences and pri-
fits of the subject, including tangible and intangible returns to orities using mathematical algorithms to express total value.
other people and organizations in addition to those immediate- This approach eliminates the need to assign monetary values
ly impacted. As such, a major advantage of CBA lies in forcing to qualitative criteria as is the case with CBA methods.
people to explicitly and systematically consider the various
factors which should influence strategic choice. 2.6.4 Expected value
Expected value seeks to incorporate the concept of uncertain-
Expected value seeks to incorporate the concept of uncertain-
Benefits of Functions ty and is defined as the predicted value of a variable, calculated
Value = as the sum of all possible values with each multiplied by the
Costs
probability of its occurrence. In the practice of risk analysis,
the expected cost value of a risk is calculated by multiplying
the anticipated value of the outcome (also referred to as an

12
 2. The Value Concept

“impact”), expressed in monetary units, by the likelihood of

occurrence, expressed as a percentage.

Expected Value = Outcome × Probability

For example, if there is a 50 percent chance that a project will

be $2,000 over budget, the expected value of the overage would
be $1,000 = $2,000 x 0.5. It should be noted that the same
formula applies to the expected value of time or schedule risk
where units of time are used instead of money. There are more
sophisticated articulations of expected value that consider
multiple outcomes and include more complicated logic.
Expected value can be combined with some of the previous-
ly described methods for measuring value to consider risk and
uncertainty.

2.7 References
● Miles, Lawrence D. Techniques of Value Analysis, Mc-
Graw-Hill, 1961.

● Fallon, Carlos. Value Analysis,”2nd. edition, Wiley-Inter-

science, 1980.

● Levitt, Steven. Freakanomics, William Morrow, 2005..

● Stewart, Robert. Value Optimization for Project and

Performance Management, John Wiley & Sons, 2010.

● Cretu, Ovidiu; Stewart, Robert; Berends, Terry. Risk

Management for Design & Construction, R.S. Means, 2012

● American Society for Quality, Glossary – Entry: Quality,

retrieved 2019-9-10

● Project Management Institute. A Guide to the Project

Management Body of Knowledge (PMBOK® Guide), 5th
Edition, Project Management Institute, 2013.

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VM Guide®

14
 3. Value Methodology Job Plan

3
Value Methodology Job Plan

3.0 Introduction 3.1 Terms and definitions

The Value Methodology follows a sequence of phases, or steps,
designed to lead a multidisciplinary team through a structured 3.1.1 VM facilitator
way of thinking. This process is referred to as the Value Meth- One who is substantively neutral, has no significant deci-
odology (VM) Job Plan. The VM Job Plan must be followed, from sion-making authority, enables a group to improve how it de-
start to finish, to fully realize the benefits of value improvement. fines and solves problems, and increases a group’s effective-
The VM Job Plan includes the five original steps identified ness. In the context of VM, one who leads the group through
by Larry Miles in the same relative order, although some have the VM Job Plan.
been renamed to add clarity while other phases were added
to expand its scope and enhance its effectiveness. The VM Job 3.1.2 VM Job Plan
Plan now includes the following phases: A sequential approach for applying the Value Methodology,
consisting of the following eight phases: 1) Preparation,
1. Preparation 2) Information, 3) Function Analysis, 4) Creativity, 5) Evaluation,
6) Development, 7) Presentation, 8) Implementation.
2. Information
3.1.3 VM proposal
3. Function Analysis
A developed idea resulting from the application of the Value
4. Creativity Methodology during a VM study to increase the value of a project,
product, process, service, or organization. VM proposals may
5. Evaluation alternately be described as alternatives or recommendations.
6. Development 3.1.4 VM study
7. Presentation A structured effort to improve the value of a project, product,
process, service or organization through the application of
8. Implementation the Value Methodology by a multidisciplinary team facilitated
by one who is competent in VM techniques, ideally a Certified
The VM Guide® dedicates a section to each of the eight phases Value Specialist (CVS®).
of the VM Job Plan, which provides additional information
concerning the processes, activities, and basic techniques for 3.1.5 VM study subject
each phase. A brief introduction to each phase, its primary ob- The subject of the VM study can be anything for which there is
jectives, and relevant considerations is provided in this chapter. a desire to explore opportunities for improvement. The Value
Methodology is commonly applied to define new, or enhance ex-
isting, products, processes, projects, services, or organizations.

3.1.6 VM team
A multi-disciplined group of participants, led by a trained facilita-
tor, that apply the value methodology to the subject of a VM study.

15
VM Guide®

3.2 Evolution of the VM Job Plan The original VM Job Plan, as conceived by Miles, consisted of
the following five steps:
The VM Job Plan has evolved over time. To develop a better
understanding of the VM approach, it is useful to first discuss 1. Information. Develop an understanding of the subject.
the scientific method which is perhaps the most widely under- The key to this step is the process of asking questions of
stood and applied approach to problem solving. The original the customers and stakeholders.
development of the scientific method is largely attributed to
Francis Bacon (1561–1626), a persuasive, seventeenth-centu- 2. Analysis. Develop an understanding of the subject’s func-
ry English statesman and philosopher, who argued that knowl- tions. This step represents the main point of departure of
edge was gained only by gathering empirical data rigorously Value Methodology from other problem-solving approaches,
and logically refined into a single, essential conclusion. The including the scientific methvod. Miles created an entirely
scientific method consists of four distinct steps: different way of thinking about problems and systems based
on what the subject does rather than what it is.
1. Observation. State the problem and research it. Observe
a phenomenon or a group of phenomena and gather data. 3. Creativity. Identify alternative concepts to achieve the sub-
ject functions. Although creativity is a routine component
2. Hypothesis. Formulate a hypothesis (or multiple working of just about every problem-solving method, the creative
hypotheses) to explain the phenomena. In many fields of process in VM focuses on functions rather than the things
study, the hypothesis can often take the form of a causal that perform them. This may at first appear to be a rather
mechanism or a mathematical relation, while in general subtle difference; however, the implications are profound.
problem-solving instances, a potential solution to the prob-
lem or a prediction of the expected outcome, is identified. 4. Judgment. Evaluate the alternative concepts based upon
their merits. Miles regarded this as a rather straightforward
3. Experimentation. Perform experiments to test the pre- step with the assumption that basic common sense would
dictions. In science, the use of numerous, independently be used to select the best ideas for additional development.
reproduced experiments to verify and validate the original
findings is generally required. 5. Development Planning. Develop the alternative concepts
into detailed recommendations. Also originally included
4. Conclusion. Draw conclusions from the experiments. within this step was the implementation of the alternative
Summarize the results of the experiments into meaningful concepts into the project.
conclusions relative to the original hypothesis.

start
Creativity Generate Ideas
Preparation Identify Subject
Identify Goals
Define Value
Evaluation Evaluate Ideas
Organize Effort
Select Ideas

Information Analyze Information Development Transform Ideas

Transform Information Develop Information
Orient Participants

Presentation Present Information

Propose Change
Function Analysis Define Functions
Allocate Resources
Implementation Implement Change
Allocate Performance
Manage Change
Prioritize Functions
Realize Value

end

Figure 3.1 – Phases and functions of the VM Job Plan

16
 3. Value Methodology Job Plan

Value Study

Information

Function Analysis

Creativity
Preparation Implementation

Evaluation

Development

Presentation

Figure 3.2 – Typical configuration where the Preparation

and Implementation Phases occur outside of the Value Study

How does the VM approach to problem solving differ from 3.3 The relationship of a VM study
that of the scientific method? There are several important
differences that merit further discussion. These differences
to the VM Job Plan
are best introduced by two quotes attributed to Albert Einstein It is important to recognize the difference between a VM study
[1879–1955], one of history’s greatest thinkers and scientists. and the VM Job Plan. While it is essential that all phases of the
VM Job Plan be followed to fully actualize value improvement,

“ The significant problems we have cannot be solved at the

same level of thinking with which we created them.”
the VM study (where the full, multidiscipline VM study team
applies VM) is oftentimes a subset of these phases.
Traditionally, a VM study is most often identified as including
The scientific method first states the problem and then gathers the Information, Function Analysis, Creativity, Evaluation, De-
pertinent data. The VM Job Plan states the problem, gathers velopment, and Presentation Phases. This is usually the case
data, and then defines the underlying functions. This is an es- where a third-party VM study team is brought in to perform an
sential difference in understanding the problem. The process objective analysis of a project, product, process, service, or
of breaking problems down into functions broadens the level organization. In this situation, the sponsoring organization
of abstraction involved to understand and to solve the problem would likely handle both the VM study preparation as well as
at the most appropriate level. the ultimate implementation of the VM proposals resulting

“
from the VM study (see Figure 3.2 ).
Imagination is more important than knowledge.”
The sponsoring organization must adhere to the VM Job
The scientific method develops a hypothesis (solution), or in Plan to successfully reap the benefits of the effort. That said,
some cases multiple working hypotheses. The VM Job Plan ded- the VM study could vary somewhat in terms of the participants
icates an entire step to the creation of ideas that will address at certain phases. For example, for some organizations, the VM
the functions. There is a deliberate separation of creativity study team members may be involved in the Preparation and
(imagination) and judgment (knowledge and experience). This Implementation Phases. In other organizations, it is possible
separation is essential if our imagination is to be fully realized that others might be involved in the Development Phase. Re-
and applied to the problem. gardless, all phases must be followed in the proper order.
Although many variations of the VM Job Plan emerged over
the years, all of them included this same fundamental se-
quence of activities and thinking, even though the names of the
phases may have differed or new phases were added.

17
VM Guide®

3.4 Communication dynamics must utilize all their facilitation and leadership skills to optimize
the value of every step of the VM Job Plan. Ultimately, effective
and the VM Job Plan value leadership is directly linked to good communication.
Maintaining good communication is essential to the flow of the
VM Job Plan. Figure 3.3 illustrates a model of group communi-
cation relative to the VM Job Plan. Although this model was origi-
3.5 Phases of the VM Job Plan
nally developed to demonstrate group decision-making, it also
3.5.1 Preparation Phase
applies to the communication dynamics of the VM Job Plan.
It is important to understand how the steps in the VM Job Thorough preparation is critical to the success of any VM
Plan relate to the dynamics of group communication. The study. The first part of this preparation is identifying what is to
participants of a VM study are first introduced to the subject’s be studied (the VM study subject) and when it is to be studied. A
problems, issues, and objectives. The exchange of informa- variety of techniques may be employed to select the best sub-
tion begins and thinking becomes divergent, which results in jects for study and identify the proper timing for the VM study.
divergent communication. The initial presentation of project
information leads to questions, which in turn leads to more Key activities involved in the Preparation Phase include:
questions. Thinking continues to diverge through the process
● Defining and confirming the VM study goals and objectives;
of Function Analysis, which frames problems in the abstract.
This trend increases during the Creativity Phase. At about the ● Identifying the key participants, customers or users,
midway point of the VM process, thinking begins to converge as and stakeholders;
the diverse ideas generated are evaluated critically. This con-
vergence in thinking and communication continues through ● Determining how value is defined;
the development of alternative concepts, is summarized in the
Presentation Phase through reports and presentations and ● Identifying the study duration; and,
culminates in deciding which alternatives to accept or reject.
● Identifying the logistics required to support the
Another way to think about the dynamics at play: the appli-
VM study effort.
cation of VM applies creative dismantling followed by critical
reconstruction to improve project value. The VM facilitator

VM Job Plan
Preparation Information Function Analysis Creativity Evaluation Development Presentation Implementation
co
n
ng

ve
rg
ki
in

e nt
th

th
nt

in
ge

ki
er

ng
v
di

?
Problem Solution
ng
di

ki
v

in
er

th
ge

nt
nt

e
rg
th
in

ve
ki

n
co
ng

Ideas

Figure 3.3 – Dynamics of Group Communication and the VM Job Plan

18
 3. Value Methodology Job Plan

A basic level of understanding is provided by gathering and re- 3.5.3 Function Analysis Phase
viewing the appropriate information before starting a VM study. Function analysis is the heart of the Value Methodology. The
Depending upon the type of VM study, the information required ultimate objective of the Function Analysis Phase is to identify
will vary slightly. However, in all studies, information pertaining functions that do not provide good value and those that are
to the subject scope, performance or quality, time or schedule, altogether unnecessary. There are three steps in the Function
cost, and risk should be identified, gathered, and organized for Analysis Phase:
use in the Information Phase.
A pre-study meeting is usually conducted as a vehicle for 1. Define the subject’s functions. This includes the activi-
planning and organizing a VM study. This meeting typically ties of identifying, classifying, and organizing functions.
includes the value practitioner and key stakeholders and, in
some cases the rest of the VM study team. This meeting helps 2. Allocate resources to functions. Project information
ensure a well-defined VM study by aligning all participants and related to cost, performance, schedule, risk, and other
focusing their effort on value improvement relevant to the VM information (such as size, weight, etc.) is associated with
study sponsor’s goals. specific functions to identify an understanding of these
relationships and enhance the team’s understanding of
3.5.2 Information Phase value improvement opportunities.
The primary objective of the Information Phase is to obtain a
3. Prioritize functions for value improvement. Ultimately,
thorough understanding of the subject under study. The infor-
the objective of function analysis is to prioritize specific
mation gathered prior to and during the VM study is reviewed
functions for value improvement. These will serve as the
and discussed by the team. Typically, the stakeholders respon-
focus for the Creativity Phase and aid the team in thinking
sible for the study subject will present the current state of the
laterally about potential alternative solutions.
things to the VM study team and answer their questions. Key
considerations in this phase include:
3.5.4 Creativity Phase
● Human relations are very important to the success of any
In the Creativity Phase of the VM Job Plan, a creativity session
VM study. “People problems” are oftentimes more difficult
is conducted for each function targeted for improvement
to resolve than technical problems. The effectiveness of
during the Function Analysis Phase. During these creativity
a value practitioner’s efforts depends upon the amount of
sessions, any idea that can be associated with that function
cooperation they can obtain from the various stakeholders
is recorded for later evaluation. Creativity techniques are typ-
involved with, or responsible for, the subject under study.
ically employed to identify numerous ideas on each function
● All pertinent facts concerning the subject must be requiring improvement. Generating a large quantity of ideas is
uncovered and drawn together, including but not limited the goal, rather than the quality of the ideas. A large quantity of
to customers, stakeholders, the sponsor’s objectives, the ideas leads to a greater number of quality ideas. A key element
history of the subject and its development, cost, time and of creativity is to avoid evaluating ideas generated during the
schedule, quality and performance requirements, imple- creative process.
mentation successes and failures, and potential risks. A variety of creative techniques can be employed to stim-
ulate the VM study team’s imagination. Team brainstorming is
● All aspects of the subject should be questioned, ana- typically used to initiate the creative process. All members of
lyzed, and examined. It is often helpful if the subject can the VM study team must be encouraged to participate, because
be observed in actual operation (if applicable). The main a high level of participation motivates and energizes the cre-
considerations are getting all the facts and getting them ative process. The focus should first be on the development of
from the best available sources. ways to perform the function, and secondly on ways to improve
the value of the function.
● The subject information must be thoroughly analyzed and
meaningful conclusions drawn from it. One of the key ac- 3.5.5 Evaluation Phase
tivities of the Information Phase is to transform the “raw” The objective of the Evaluation Phase is to reduce the large
information into a form that the VM study team can use to quantity of ideas generated in the Creativity Phase to the best
focus them on value improvement. This effort ultimately value improving ideas through the evaluation process. The
assists the team in identifying areas of opportunity and VM study team will discuss and evaluate each idea relative to
allocating the most pertinent information to functions in performance, quality, time, cost, and risk. This process iden-
the subsequent phase. tifies the major benefits and challenges of each idea and how
it would impact value. Once this is done, the team agrees on
a rating for the idea. Rating serves as a filter, with the better
or higher rated ideas generally advancing to the next step and
being developed further.

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VM Guide®

Frequently, several ideas or a combination of competing ideas 3.5.6 Development Phase

remain. When this occurs, an evaluation matrix may be used that The objective of the Development Phase is to develop the best
better quantifies the impact of competing ideas to identify which ideas identified during the Evaluation Phase into specific VM
will best meet the VM study Subject’s need, purpose, perfor- proposals, recommendations, or alternatives that have been
mance, and cost objectives. Key considerations include: technically validated. The impact of each VM proposal should
also be quantified as much as possible. Key questions and
● Spending money as you would your own. This is an import-
considerations include:
ant rule when considering the cost of implementing an idea.
● Does the proposal clearly explain the nature and rationale
● Evaluating the ideas relative to performance and quality.
of the proposed change?
● Understanding how the ideas will impact time and risk.
● Does the proposal consider all the impacts to resources
Will the idea take more time than the current approach?
(e.g., initial cost, life-cycle cost, schedule, etc.)?
Will it reduce uncertainty by maximizing opportunities or
minimizing threats? ● Does the proposal consider how the change will be imple-
mented?
● Identifying implementation factors, such as the time
required and resources available to integrate the change. Ensure that each VM proposal has been fully documented and
The challenges related to acceptance of the ideas and is presented in a format that will enable decision makers to
resistance to change should also be considered. clearly understand all relevant information.

● Comparing the benefits and challenges of each idea rela- 3.5.7 Presentation Phase
tive to the current state of the subject.
A final report containing the VM study team’s alternatives and
● Refining ideas that might be otherwise rejected. Often addi- a presentation to the VM study sponsors and/or stakeholders
tional creativity techniques can be used to develop a solution concludes the VM study. The objective is to inform the audience
for a problem that arises during idea evaluation. It is useful to of the VM study team’s findings. This initial presentation should
think of the Creativity and Evaluation Phases as an iteration not be advertised as a decision meeting—the decision-making
process in nature. The surviving ideas are then refined, and process should occur in the final phase; Implementation. The
more cost information is obtained. Detailed estimates are VM study team typically provides the written report after the
prepared only for the more promising alternatives. presentation. Key considerations in presenting results include:

● Selecting ideas for further development. Ideas with the ● The presentation of the VM proposals, both written and
greatest value improvement potential are normally chosen oral, must gain the cooperation of the decision makers
to be developed with further study, testing, refinement, and their advisors. It is therefore important that VM
and information gathering. If there is more than one out- proposals be developed and conveyed in as clear and
standing idea addressing a specific function or the differ- concise a manner as possible. Avoid decision making
ences between two or more ideas are not clear enough meetings at VM study presentations.
to eliminate any of them, then all should be retained and
● The VM study team can elaborate on those points that are
carried over into the next phase.
not clear to the listeners, and questions regarding the VM
● Selecting ideas for further development. Ideas with the proposals can be answered instantly.
greatest value improvement potential are normally chosen
to be developed with further study, testing, refinement, 3.5.8 Implementation Phase
and information gathering. If there is more than one idea
The Implementation Phase is critical to the ultimate success of
addressing a specific function that is outstanding, or
the VM Job Plan. During this phase, the sponsors and/or stake-
the differences between two or more ideas are not clear
holders involved in the decision-making process will review and
enough to eliminate any of them, then all should be re-
assimilate the data given to them in the Presentation Phase. An
tained and carried over into the next phase.
implementation meeting should be conducted once sufficient
time has passed to review the VM study team’s findings. The pur-
pose of this meeting is to decide the acceptability of each VM
proposal. Ideally, the VM study team will be present to provide
clarifications and assistance to the decision makers. Accepted
proposals require the development of an implementation plan
and schedule for integration into the VM Study Subject.
Tracking the implementation of VM proposals and auditing
the results helps to measure the efficacy of the VM effort. The

20
 3. Value Methodology Job Plan

subject should have some kind of mechanism put in place that

will allow the changes to the subject’s scope, performance,
quality, schedule, cost, and risks to be managed.

3.6 References
● Miles, Lawrence D. Techniques of Value Analysis and Engi-
neering, 2nd Edition, McGraw Hill, 1972.

● plato.stanford.edu/entries/scientific-method/

● Kaner, Sam. Facilitator’s Guide to Participatory Deci-

sion-Making (Jossey-bass Business & Management Series),
3rd Edition, Jossey-Bass, 2014. (Note: Figure 3.3 is an adap-
tation of an original diagram found on page pg. 6.)

21
VM Guide®

22
 3. Value Methodology Job Plan

4
Preparation Phase

4.0 Introduction 4.2 Process

The success of a VM study depends upon the quality of infor-
mation used by the team during execution of the study. The 4.2.1 Identifying VM study goals & objectives
organization, planning, and information required for the VM Establishing the goals and objectives of a VM study is critical.
study must be defined and systematically collected in order to The VM study sponsor will no doubt have identified a desired
meet the study’s goals and objectives. goal(s) which is the catalyst for the VM study. Goals broadly
All VM studies are unique. Therefore, the VM facilitator must describe desired outcomes. These can be further articulated
understand the scope as well as the goals and objectives of the as objectives that identify specific results which may be de-
VM study in order to ensure that it is well planned and organized scribed using key performance indicators (KPIs). Sometimes,
to obtain maximum benefit. If the scope, goals, or objectives the VM study sponsor will have identified both goals and objec-
are not clear or agreed upon, the Preparation Phase can be tives, but frequently they have only the goal in mind.
used to reach common ground while facilitating team building. VM studies may have varying objectives, depending on what
is being studied and the needs and wants of the sponsor, cus-
4.1 Terms and definitions tomers, users, and stakeholders. The VM facilitator (as well as
the VM study team) should have a clear understanding of what
4.1.1 Constraints the sponsor’s goals and objectives are prior to commencing the
VM study. The goals could vary dramatically, depending upon the
The state of being checked, restricted, or compelled to avoid or
state of the project and the reasons for performing the VM study.
to perform some action. For most VM studies, there are restric-
tions on some parameters of a solution (e.g., laws, standards,
For example, a VM study’s goals and objectives could be:
market demand, policies, resources, commitments made,
etc.). These restrictions are called constraints and can be real
or perceived. VM may be an effective tool for turning perceived
constraints into opportunities for value improvement. Goal Objective
Identify a means
4.1.2 Subject matter expert (SME) Reduce it by two weeks.
to reduce processing time
A person who is an authority in a particular area, discipline, or topic.
Build consensus among Identify a project scope
4.1.3 VM pre-study meeting stakeholders as to what the that can be delivered
A formal exchange of information that identifies, clarifies, and project scope should be. within the annual budget.
communicates the conditions of a VM study, including its sub- Improve product Improve market share
ject, objectives, participants, schedule, and logistics. market share. by 5 percent
4.1.4 VM study sponsor Get the project
Reduce project costs.
The person or organization responsible for defining the specific back within budget.
objectives of the VM study and the stakeholders’ needs.
Reduce them
Reduce production costs.
4.1.5 VM study decision maker by 10 percent.
A person involved in determining the acceptance or rejection Identify specific methods
of VM proposals. Reduce project risk.
to reduce litigation risks.

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VM Guide®

As these goals and objectives indicate, the Value Method- 4.2.2.3 Activities
ology can be used in a number of different ways, all of which ‒ Conduct VM pre-study meeting
aim at improving value. They should always relate back to the
VM Study Subject’s scope, performance, quality, cost, sched- ‒ Identify VM study participants
ule, and risks and can be general or specific in nature. Having
a clear statement of the VM study’s goals and objectives will ‒ Identify VM study schedule
help the VM study team stay focused and achieve the sponsor’s
expectations for the VM effort.
‒ Identify site visit requirements

4.2.2 Inputs and outputs

‒ Identify VM study logistics

‒ Distribute and review VM study subject information

4.2.2.1 Inputs
‒ VM study Subject
4.2.2.4 Process flowchart Figure 4.1
‒ VM study sponsor goals.
4.3 Activities
4.2.2.2 Outputs
4.3.1 Conduct VM pre-study meeting
‒ VM study objectives
As with all studies, conducting a pre-study meeting(s) is
‒ VM study subject information essential to the planning and organization of the VM study. The
purpose of this meeting is to ensure a well-defined VM study
‒ VM study participant list by aligning all participants and focusing the effort on achieving
the goals and objectives of the study. The pre-study meeting(s)
‒ VM study agenda
should ideally occur a minimum of two weeks in advance of the
‒ VM study site visit requirements VM study to ensure that all required information is compiled
and all required pre-study activities are completed. This also
‒ VM study meeting location allows time for the VM team to review the information and
request additional information prior to the study, as it may be
‒ VM study environment and meals difficult to obtain this information in a timely manner after the
study begins.
‒ VM study information requests.

inputs activities outputs

Conduct VM
VM Study Subject VM Study Objectives
Pre-Study Meeting

VM Study Sponsor Goals VM Study Subject Information

Identify VM Study Participants VM Study Participant List

Identify VM Study Schedule VM Study Agenda

Identify Site Visit Requirements VM Study Site Visit Requirements

Identify VM Study Logistics VM Study Meeting Location

VM Study Environment and Meals

Distribute & Review VM

VM Study Information Requests
Study Subject Information

Figure 4.1 – Preparation Phase Flowchart

24
 3. Value Methodology Job Plan

The participants attending the VM pre-study meeting may VM study teams of five to seven members excel;
vary, depending on the VM study. This meeting typically includes however, there is no limit to the number of team members
the VM facilitator and key stakeholders, and in some cases and it is not uncommon to have larger VM study teams.
the rest of the VM team. The VM facilitator should remember The size of the VM study team should be based on the
that, in some instances, this may be the client’s and/or design disciplines necessary to address the relevant aspects of
team’s first exposure to the Value Methodology. Therefore, the the project and to achieve the VM study objectives. If large
VM facilitator should be prepared to answer their questions VM study teams are to be utilized, consideration should be
and explain the Value Methodology process. During the pre- given to having two or more VM facilitators. This allows for
study meeting, the following should be discussed: flexibility in the design of the VM study, such as breaking
the VM study team into multiple teams. It also allows for the
● An overview of the project, process, service, product, or VM facilitators to consistently discuss how the VM study is
organization that is the focus of the VM study proceeding and make any required adjustments in order to
ensure the VM study goals and objectives are being met.
● Identification and clarification of the VM study goals and
In some scenarios, it can be helpful if a communication
objectives
specialist and/or behavioral specialist works with the VM
● What information is available, in what format, and how it facilitator(s) in larger groups.
will be provided to the VM facilitator Once the required disciplines are established, the
individuals to fill these roles should be discussed. The VM
● Identification of the information needed to support any study team participants may be obtained from several sources:
of the Information Phase techniques likely to be utilized
(e.g., Pareto chart, Gantt chart, etc.) ‒ VM study sponsor’s organization;

● How the project, process, product, service, or organization ‒ Stakeholders;

information is to be distributed to the VM team and by whom
‒ Subject matter experts within the design team
● Whether additional pre-study analysis is required (e.g., organization who are independent from the design team;
research on similar products, highway safety analysis,
market research, etc.) ‒ Members of the design team;

● The scope of work for the VM study (i.e., is the entire ‒ Subject matter experts from an independent
project, product, service, process, or organization the consulting firm with no involvement in the design
subject of the VM study or just a portion?) team organization;

● The schedule and end date for the VM study ‒ Other agencies or organizations; and,

● The disciplines required for the VM study ‒ Customers and/or users.

● VM study logistics (i.e., location, site visit requirements, Regardless of the composition of the VM study team, the
agenda [including timing for the midpoint review and team selected should consist of individuals who are:
results presentation])
‒ Experienced in their field of practice;
● What performance or quality criteria and requirements
are to be considered ‒ Creative, open to new ideas, and able to share their
knowledge and expertise;
● VM study report format and submission dates, as well as
Implementation Phase requirements. ‒ Able to promote the ideas of other VM study team
members;

4.3.1.1 Identify VM study participants ‒ Able to respect the ideas generated by other VM
Once the VM facilitator understands the project, process, study team members;
product, service, or organization, they can begin to discuss
‒ Will fully participate in the VM study process and
the size and disciplines required for the VM study with the
actively provide their knowledge and expertise; and,
VM study sponsor and/or the subject team. The VM team
should be multidisciplinary, should mirror the disciplines ‒ Able to fully commit to the time requirements of the
involved in the original design/development of the study VM study.
subject, and should incorporate the knowledge required
to cover the issues and objectives of the VM study.

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VM Guide®

4.3.1.2 Identify VM study schedule and agenda For a typical 5-day VM study, the baseline includes time
The VM facilitator must discuss and establish the overall VM allotments as shown in Figure 4.2 . The shaded area
study schedule during the pre-study meeting. This includes: represents those phases of the VM Job Plan that occur as a
‒ Study duration and dates; team effort.
Some value practitioners require that a longer period
‒ Meetings that should include study sponsor, designer/ of time be devoted to the VM study. Reasons a study may
developer, and stakeholders (e.g., kickoff meeting on need to be longer include solving problems, creating new
the first day of the study, midpoint review meeting); concepts or designs, planning strategies, or streamlining
processes or procedures. This may vary from six or eight
‒ Presentation of VM study results duration and dates (e.g., days to as long as twelve days or more. Longer studies
on the last day of the VM study, or after the VM study); typically require a split schedule and, depending upon
the study target, may necessitate a variation in the time
‒ Date for submission of the draft VM study report;
allotted to specific VM Job Plan activities.
‒ Date for the implementation meeting; and, In some cases, VM study sponsors may attempt to limit
VM studies to three days or even shorter periods without
‒ Date for submission of the final VM study report. regard for the scope of the VM study subject or the
integrity of the VM Job Plan. Time limitations may result
Determining the appropriate length for the team portion in more enthusiastic participation by the study sponsor’s
of the VM study should be the priority in determining the personnel, because they “lose” less time away from
overall VM study schedule. For many years there was a their normal work effort. At the same time, these time
widely perceived notion that a VM study should be five days constraints require that some portion of the VM Job Plan
long, or 40 hours. In fact, the duration of a VM study should be compromised. The VM Job Plan is often construed
be based on several different factors, which include: to apply only to the formal phases included in the team
study: Information, Function, Creativity, Evaluation,
‒ Size and complexity of the project; Development, and Presentation. The Preparation and
Implementation Phases, while not always considered
‒ VM study goals and objectives;
formal steps of the VM Job Plan, are integral to the success
‒ VM study scope; of any value improvement effort and are addressed as such
in this discussion.
‒ Size and expertise of the VM study team; and, Regardless of the study type, the study subject, or
the length of the VM study, certain pre-study activities
‒ Resources available to conduct the study. must always occur. In addition to project identification,
definition of the VM study schedule, and team selection,

Number of Hours per Study Value Type

VM Job Plan Phase Project Product Process Procedure

Preparation 8–24 8–16 20–30 40–60

Information 4–6 2–6 2–6 2–6

Function Analysis 2–4 6–10 4–8 2–6

Creative 3–6 3–6 3–6 3–6

Evaluation 4–6 2–4 3–6 3–6

Development 16 4–8 12 8

Presentation—Oral 2–4 2–4 2–4 2–4

Presentation—Report 40 8–16 40 40

Implementation Times will vary and depend on VM study sponsor.

Figure 4.2 – Five-Day VM Study Model
(shaded area represents VM Phases that are part of the study)

26
 3. Value Methodology Job Plan

extensive preparation work is required in the form of data is impacted in some way. Of additional consideration, pre-
collection, cost analysis and models, team information study and post-study times must be increased as a result
packages, and logistical arrangements. Once the team of the compressed team study schedule.
study is concluded, additional documentation may be A 3-day VM study may limit results to mere validation
required to complete or further refine the developed VM of a project’s functional concepts rather than lead to
proposals. A complete report is prepared to document significant project improvements. VM proposals developed
the study efforts and its results and to determine what during a shortened study are likely to be more conceptual
implementation actions must occur. and less detailed than those produced in a longer study;
None of the phases and activities associated with the and, as a result, they may prove more difficult to implement.
Value Methodology Job Plan (as described in Chapter 3) Most importantly, the results may not be optimized due to
may be eliminated by reducing the length of a team study: the limited time the VM study team has had to exploit the
all must occur for every VM study, regardless of how long techniques of the Value Methodology and gain the benefits
the team sessions last. of team communication and project understanding those
Using a construction project as an example, assume the techniques offer.
study sponsor has requested a 3-day VM study. The Even when constrained by a 3-day study, it is possible
compressed time is required to maintain the design to have impressive results that dramatically demonstrate
schedule, the budget to conduct the VM study is limited, the power of the VM process. However, this scenario
and the key team members are unable to commit to more represents a double-edged sword, because impressive
than three days away from their regular responsibilities. results only encourage ongoing use of the abbreviated VM
Figure 4.3 shows how the hours per phase would differ study approach. Note that a successful VM study in a 3-day
for a 3-day study compared to the 40-hour model period depends highly upon an experienced VM facilitator
previously illustrated. The shaded area represents those and VM study team.
phases of the VM Job Plan that occur as a team effort. Many reasons exist as to why a VM study might require
There are both advantages and disadvantages more than the typical five days. A high profile, controversial
associated with the 3-day VM study approach. While it project, or multiple funding entities may create specific
reduces the VM study sponsor’s cost for the study, the VM issues that require more attention by the VM study team.
team and VM facilitator are put under tremendous pressure A more involved study may be required if the project is
to accomplish a great deal in a short period of time. In over budget, has problems associated with completion, or
order to maintain the integrity of the VM Job Plan and, at the is very complex, having more elements on which to focus
same time, prevent the activity from being simply a cost and requiring a larger team to perform the study.
reduction exercise, the VM facilitator’s job of keeping the Much can be gained by increasing the time available
VM team focused and on track becomes even more critical for a VM study. First and foremost, the VM study team
than usual. As noted earlier, every phase of the VM Job Plan can be more intimately involved in the pre-study planning

VM Job Plan Phase Number of Hours Effect of Reduced Time

More pre-study time required by the VM Facilitator to prepare for the

Preparation 24-32
abbreviated VM study

Information 4 Site visit eliminated

Less time for team interaction; increased VM Facilitator influence; reduced

Function Analysis 2-3
time for cost/performance/function analysis

Creative 2-3 Fewer ideas generated; potential loss of significant ideas

Evaluation 4 Reduced depth of team discussion and analysis of ideas

Development 8-10 Less detail, potentially less credibility related to VM proposals

Presentation—Oral 2 Fewer VM proposals to present.

Presentation—Report 64 More time required in report writing to complete development of value proposals.

Implementation Times will vary and depend on VM study sponsor.

Figure 4.3 – Three-Day Value Study Model for a Construction Project
(shaded area represents VM Phases that are part of the study)

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VM Guide®

(Preparation Phase), resulting in increased and improved occurs within an organization, etc.). Visiting the site and
information gathering. Of equal importance, the VM discussing what they have seen helps stimulate the VM
study team may meet with project stakeholders and study team’s ideas in the Creativity Phase of the VM study.
decision-makers at the midpoint of the study to validate If a site visit is to occur, the planning and coordination
the direction the team is taking with their VM proposal of the site visit needs to be discussed during the pre-study
development. Additionally, when complex problems are meeting to ensure that the time allotted for the site visit is
considered, more time is available to spend on function used effectively. Following are some of the requirements
analysis to address these problems. for a site visit that should be discussed:
Obviously, a study spanning more than five days
requires a split schedule of some sort. There is a significant ‒ Will the site visit occur during the Preparation Phase
advantage to having a break of several days between team or during the Information Phase of the VM study?
sessions, as it offers the opportunity for team members
to do research and gather additional information needed ‒ Some clients require that the VM study team
for development of VM proposals. Avoid too much time undertake the site visit prior to the study.
between team meetings to reduce the potential for loss of
the VM study team’s momentum.
‒ In a typical 5-day VM study, the site visit occurs
during the Information Phase.
Assuming an 8-day VM study, the breakdown of time
spent on each phase of the VM Job Plan might be as shown ‒ Whether the site visit occurs during the Preparation
in Figure 4.4 . Phase and/or Information Phase, the following
The true issue is not whether a VM study is conducted questions should be discussed:
over three days or three months. The key is maintaining the
integrity of the Value Methodology Job Plan and making the ‒ How long will it take to get to the site, tour the
necessary adjustments in the time allotted for all elements site, and return to the location of the study?
of the process to maximize the results generated. The key
is achieving a “fair return” for something exchanged—in ‒ How is the VM study team to travel to and from
this case, time. the site?

4.3.1.3 Identify site visit requirements ‒ How accessible is the site?

During the pre-study meeting, whether a site visit will be ‒ Does lunch need to be provided (e.g., bag lunch
undertaken must be discussed. A site visit can provide or stop to eat near the site)?
the VM study team with invaluable information on the
existing conditions as well as any project constraints (e.g.,
proximity to another building, right-of-way restrictions,
how a part is manufactured, how a business process

VM Job Plan Phase Number of Hours Effect of Reduced Time

Preparation 32 Includes pre-study meeting

Information 8 Enhanced site visit and discussions with stakeholders.

Increased function analysis possible; multiple FAST diagrams can be con-

Function Analysis 8
structed.

Creative 4-8 Additional time for creativity; different techniques may be employed.

Evaluation 12-16 Increased evaluation time allows more thoughtful consideration of ideas.

Development 24-28 More credible, well-developed VM proposals.

Presentation—Oral 4 Increased number of VM proposals to present.

More time required in report writing due to greater number of value

Presentation—Report 72
proposals developed.

Implementation Times will vary and depend on VM study sponsor.

Figure 4.4 – Eight-Day Value Study Model for a Construction Project

(shaded area represents VM Phases that are part of the study)

28
 3. Value Methodology Job Plan

‒ What safety equipment, if any, is required (e.g., ‒ What security requirements, if any, apply?
hard hats, work boots, safety vests, safety Must VM study team members go through
vehicle (if stopping alongside a highway, an security each day and, if so, do they need
active construction site, a manufacturing to be escorted while in the facility? What
assembly line)? documentation is required for security?

‒ Who will lead the site visit (e.g., client and/or ‒ Power supply availability. All VM study team members
design team)? Remind them to focus on areas are required to bring their laptops. Therefore, it is
of potential risk, challenges, and constraints, essential that enough power supply is available.
as these are areas the VM study team will
review during the study. ‒ Accessibility of the meeting location to the site.
The advantages of having the study near the site
‒ What documents will be required as reference allows the VM study team to undertake a site visit,
during the site visit? potentially access the site later in the study to
assist in the development of an idea, and potentially
A site visit may not be possible due to time limitations of allows them access to maintenance and operation
the VM study and/or the location of the site with respect to personnel.
the meeting location (e.g., the site is in a remote location
or it will take a significant amount of time to travel to and ‒ Meal requirements. The VM facilitator must
from). In this case, the site visit may consist of the VM understand whether the facility has easily accessible
study team reviewing the site via Google Earth, Google locations for lunch, whether catering is required or
Maps, videos, and/or photos. permitted, whether the VM study team must bring
their own lunch, and typical timing requirements
4.3.1.4 Identify VM study logistics with respect to lunch in order for them to develop
The location of the VM study is an essential component the study agenda. For example, if the facility has a
to its success and should be discussed during the pre- cafeteria where the VM study team can go for lunch,
study meeting. Some factors that the VM facilitator should when is the best time for them to break for lunch to
discuss with the client and/or design team with respect to facilitate their timely return to the study?
the study location include:
‒ Internet access. The VM facilitator should confirm
‒ Size of the meeting room to comfortably what type, if any, internet access is available. For
accommodate the VM study team, as well as example, at some government offices, internet
additional participants in the Information Phase and access is available only for government personnel
Presentation Phase. When a lot of people are on the with special card access. If internet is not available,
team, extra meeting or breakout rooms are beneficial. the VM study team should be informed that they
should bring all the materials and documents
‒ Minimizing travel expenses for the VM study team. required to undertake the VM study on their laptop
computers. Alternatively, they could use their cell
‒ Minimizing distractions to the VM study team. For phones as a hotspot.
example, having the study in the office or facility
where the majority of the VM study team works may ‒ Audio/visual. A telephone with teleconference
result in team members being pulled out of the study capabilities should be available in the meeting room
to deal with issues and/or not return in a timely to allow those who are attending the Information
matter from breaks or lunch. Therefore, it may be and Presentation Phases via teleconference/web
beneficial to hold the study close to, but not at, said meeting to participate. This also allows the VM study
facility. team to call the client and/or design team as well as
another subject matter expert during the VM study.
‒ Accessibility of the meeting location for the VM study Other appropriate audiovisual equipment, such as
team. This refers to potential restrictions on the VM multimedia projectors, monitors, whiteboards, and
study team, such as: flip charts should be available as necessary.

‒ What hours is the meeting space accessible? Regardless of where the VM study is to be held, the VM
For example, can the VM study team start at or facilitator will be responsible for minimizing distractions,
before 8:00 a.m. and stay later than 5:00 p.m.? ensuring that the VM study team members have what is
Can the VM study team leave for a few hours required to undertake the study, access to the facility,
and then return later in the evening, if required? making travel arrangements, arranging meals, and
whatever else is required to undertake the VM study.

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VM Guide®

Study meeting room environment shape, and the VM facilitator’s preference. The important
thing to remember is that the projector and/or flip charts
The study environment is also important to the success of
must be visible to all VM study team members and visiting
a VM study. Remember, the VM study team will be working
participants, and that the VM study team members are able
for long hours for up to five consecutive days in the meeting
to face each other. The VM facilitator will be responsible
room. When selecting a meeting room for undertaking the
for setting up the meeting room to accommodate the VM
VM study, the following items should be considered:
study team and visitors.
‒ Availability. The meeting room should be available
on a 24-hour basis for the duration of the study.
This allows for the VM study team to leave their
Meals and breaks
displays on walls, tables, easels, etc. in place. It It is important during the pre-study meeting to discuss
also allows them to leave materials in the room, as meals and breaks during the study, as this may impact the
well as work as long as they wish without having to study agenda. For instance, if meals can be provided (i.e.,
lose momentum due to having to leave the room by a catered), then this allows for the flexibility of a working
specified time. lunch, if needed. For example, providing the VM study team
with lunch allows them more time during the Development
‒ Size. The meeting room(s) must be large enough to Phase to work on their VE proposals. If lunch is to be
accommodate not only the VM study team and all provided, consider dietary restrictions. The VM facilitator
their materials, but also the design team and client should coordinate with the VM study team to address such
as well as anyone else who will be attending the needs. Keep in mind that sharing a meal can also have a
Information Phase and Presentation Phase. For team bonding effect.
the VM study team, the room must accommodate It should also be noted that, due to a study being held at
free movement around the table, being able to a remote project site, the VM study team may be required
put displays on the walls and review them without to bring lunch. This is important for the VM facilitator to
disturbing another team member and provide a clear know, as they will need to relay this to the VM study team.
view for all participants to the projection screen and If lunch is not provided, then an understanding of where
flip charts. It is ideal to have extra space available for the VM study team can go out for lunch and the anticipated
tables for materials and/or products as well as any amount of time needed for them to go out for lunch, eat,
supplies the VM facilitator brings to the study (e.g., and return is required. This amount of time needs to be
printer, scanner, etc.). For very large teams, consider included in the overall study agenda.
one large room and several smaller rooms.
4.3.2 Identify, collect, distribute, and review information
‒ Location. As previously discussed, the location of the
meeting room relative to the site or manufacturing 4.3.2.1 Identification and collection of information
plant should also be considered in terms of allowing
During the pre-study meeting, the project, product,
the VM study team to undertake a site visit, as well as
service, process, or organization as well as the available
revisit the site if required later during the VM study.
information will be discussed. The information provided
‒ Lighting. A room with natural lighting/windows should should identify the purpose and need, deliverables, cost,
be provided. However, care should be taken as to schedule, and details on the “base case” design. The
the amount and size of the windows provided, as this VM facilitator needs to understand the project, service,
could potentially impact the temperature of the room product, process, or organization for which the VM study
as well as the participants’ ability to see the projector is to be undertaken in order to understand what level of
screen and/or computer screen due to the sun. details will be provided in the documentation. Information
Having a meeting room that does not have natural regarding the study subject should cover the basics,
light/windows may have a negative impact on the including:
productivity of the VM study team, which may result
in more breaks being required. ‒ Scope,

‒ Temperature control. The ability to control the ‒ Performance and quality,

temperature of the meeting room will ensure a
‒ Schedule,
comfortable working environment for the VM study team.
‒ Cost, and
It is the responsibility of the VM facilitator to ensure that
the meeting room can accommodate the VM team for the ‒ Risk.
duration of the VM study. There is no standard arrangement
for the set-up of tables in the meeting room. The table setup
depends on the type of study, table shapes and size, room

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 4. Preparation Phase

4.3.2.2 Distribution of information

Once the VM facilitator receives the project, product,
process, service, or organization materials, they distribute
that information to the VM study team. There is no standard
format for providing information to the VM study team.
However, some clients may have special requirements for
the distribution of materials. For example, some clients may
require that the development of a workbook with the relevant
information be provided to the VM study team. Additionally,
some clients require that the materials be provided to the
VM study team prior to the study (e.g., one-week prior).
Therefore, it is essential that the VM facilitator discuss with
the client or owner their requirements for distribution of the
materials as well as timing during the pre-study meeting.
Often, some or all the information is confidential. It might be
necessary to make the team members aware, or even have
them sign a confidentiality agreement.

4.3.2.3 Review of information

All the VM study team members are required to review the
materials provided prior to the VM study. The VM study
team will be asked by the VM facilitator to submit any
requests for additional information. Such requests should
be compiled by the VM facilitator and sent to the VM study
sponsor and/or design team prior to the study. Additional
guidance relative to the review and analysis of VM study
information is covered in Chapter 5, Information Phase.

4.4 References
● Adams, Ginger R. and Hays, Terry R. “The Value of Time,” SAVE
International Conference Proceedings, 1994 The content of
this section is condensed and revised from this reference.

● Resource on team size retrieved from:

knowledge.wharton.upenn.edu/article/is-your-team-
too-big-too-small-whats-the-right-number-2/

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