1. 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

2. 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
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3. 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
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4. 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
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5. Definitions Performance Measurements
The process of determining how successful organizations or individuals have been in attaining their objectives (Bititci et al. 1997)
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6. 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)
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7. Search Words Performance Measure (measurement, measuring)
Evaluate (evaluation, evaluating)
Asses (assessment, assessing)
Critical Success Factors (CSFs)
Key Performance Indicators (KPIs)
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9. Number of Papers Classified by Different Levels of Measurements
No. %
Organizational 42 27
Project
105 68
Both 8 5
Total
155
100
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10. Organizational Performance
1990’s
Increased competition,
Higher standards for competitive success
Scarce resources
Various studies stressed the need for performance measurement
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11. 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
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12. 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 & Bassioni et al. 2004
Integrated business improvement system that used the European Foundation for Quality Management Approach
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13. 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
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14. 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
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15. 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
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16. 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
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17. 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
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18. 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
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19. Possibilities European Foundation for Quality Management (EFQM) Model
Provides perspective to Integrate result areas and organization areas in one model
But fixed criteria
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21. KPI FrameWork
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22. 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
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23. 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
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