Gongbo Lin & Qiping Shen Journal of Management in Engineering Measuring the Performance of Value Management Studies in Construction: Critical Review Gongbo Lin & Qiping Shen Journal of Management in Engineering January 2007

Contents Introduction Research Objectives Research Methodology Measuring Organizational Performance Measuring Project Performance Performance Measurement in VM studies Possibility of Adopting Existing Measurement Frameworks Desired Features of new system 10:10 AM

Introduction Value Management (VM) Very useful method to use when dealing with issues such as budget and schedule constraints arising in the construction industry Very little research to evaluate the performance of VM studies Causes apprehension 10:10 AM

Research Objectives To provide a summary of previous studies on performance measurement To give an insight on how to develop a frame-work to meet measurement requirements in VM studies 10:10 AM

Definitions Performance Measurements The process of determining how successful organizations or individuals have been in attaining their objectives (Bititci et al. 1997) 10:10 AM

Research Methodology 7 Major Journals Based on a study by Chau (1997) Construction Management & Economics (CME) Journal of Construction Engineering and Management (CEM) Engineering Construction and Architectural Management Journal of Management in Engineering International Journal of Project Management Automation in Construction Building Research and Information (BRI) 10:10 AM

Search Words Performance Measure (measurement, measuring) Evaluate (evaluation, evaluating) Asses (assessment, assessing) Critical Success Factors (CSFs) Key Performance Indicators (KPIs) 10:10 AM

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Number of Papers Classified by Different Levels of Measurements No. % Organizational 42 27 Project 105 68 Both 8 5 Total 155 100 10:10 AM

Organizational Performance 1990’s Increased competition, Higher standards for competitive success Scarce resources Various studies stressed the need for performance measurement 10:10 AM

Organizational Performance KPI frame work developed in late 1990’s KPI Working Group Tool to benchmark activities at strategic and operational level Time, quality, cost etc. Construction Industry Institute (CII) introduced CII Benchmarking and Metrics Companies with statistical measurements to improve the effectiveness of capital projects Helps to identify the companies position among peer organizations 10:10 AM

Organizational Performance Kagioglou et al. 2001 Performance measurement framework on the basis of Balance Score Card (BSC), adding ‘project’ and ‘customer’ perspectives Beatham et al. 2002 & Bassioni et al. 2004 Integrated business improvement system that used the European Foundation for Quality Management Approach 10:10 AM

Project Performance Traditional approach relied on 3 indicators Cost, Time and Quality Kumaraswamy and Thrope, 1996 Client satisfaction, Project team satisfaction, Technology, Environment friendliness, Health & safety KPI working group in 2000 Time, Cost, Quality, Client Satisfaction, Change Orders, Business Performance, Health & Safety 10:10 AM

Performance in VM Studies Previous Measurements Focus on reducing the cost and enhancing the function Mostly talks about money Highway & Transportation Department: ROI of $121 for every $ spent on VM programs Identifying CSFs of VM studies is critical 10:10 AM

Performance in VM Studies Cont.. Shen & Liu (2003) highlighted 15 CSF’s in 4 clusters VM team requirements Clients influence Facilitator Competence Relevant Departments impact Did not identify KPIs to link these CSFs to an operational level 10:10 AM

Performance in VM Studies Cont.. Benchmarking Male et al. (1998) Client satisfaction good indication of the performance of VM process Data on the project after the application of the VM studies overall indication of the performance of VM studies No indication on how the performance was achieved and how to improve the performance 10:10 AM

Considerations Each VM study is unique Calls for flexible measurements Prompt and cost efficient because of the time and resource limitation of the VM programs No such method which incorporates the 3 requirements without reducing the accuracy 10:10 AM

Possibilities BSC Not comprehensive 4 perspectives are insufficient for VM programs BSC focuses on strategic perspectives, not sufficient for VM studies that last only a few days BSC is developed at strategic, rather than operational level, different for different organizations 10:10 AM

Possibilities European Foundation for Quality Management (EFQM) Model Provides perspective to Integrate result areas and organization areas in one model But fixed criteria 10:10 AM

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KPI FrameWork 10:10 AM

Possibilities KPI Framework Lacks holistic viewpoint on the relationship between the various indicators No measurement of suppliers Doesn’t address the innovation and learning perspective 10:10 AM

Desired Features System that measures not only the financial outcomes, but also the VM process Data collection and processing methods should be prompt and easy to provide timely feedback for corrective measures Indicators like client satisfaction, improved communication between stakeholders etc should be included in the framework 10:10 AM