Benefits Of Adoption Of Value And Risk Construction Essay

The metropolis governments are be aftering to build a new-build local authorities administrative central office to be located in the metropolis Centre. The thought of new central office proposal is to accomplish the centralization of work force and resources in order to accomplish the effectivity and efficiency in disposal of services. The maps of the proposed central offices are:

Centralization of all public sector sections.

Resettlement of the staff to a individual location.

Increase efficient disposal of authorities services.

Time and cost nest eggs.

The proposed undertaking is still at the early phase of development. It is great to carry on the value and hazard direction surveies since no design or undertaking squad has been identified at the current phase.

2.0 Objective of the Study

The strategic aims of the client for the new undertaking are to accomplish Value for money by rationalizing local authorities service sections in a high specification modern edifice that befits a progressive and airy metropolis. The undertaking has a budget of ?25M and an initial estimation is that around 12,500m2 of adjustment is required. Hence, the aims of this survey are:

Ensure the necessary maps are achieved at the optimal cost and at the needed quality in order to maximize the value.

Eliminate or understate unneeded outgo through designation the possible hazards and develop the hazard appraisal to extenuate the potency of hazards.

Establish the concern demands and stakeholder demands.

3.0 Benefits of Adoption of Value and Risk Study at Project Early Phase

Value and hazard surveies are important for the undertaking at the early phase because it provides client a wide position on the value returned and hazards to be anticipated of the proposed undertaking. Value direction is a systematic and multi-disciplinary attempt, which the maps of the undertaking is straight analysed to accomplish the lowest overall life rhythm cost with best value ( Othman, 2005 ) . The benefits of value and hazard direction are:

Maximise the undertaking value within the restraints of clip, cost and quality.

Enables placing client demands and reacting to the brief development drivers can cut down subsequently alteration orders.

Enables focused believing to bring forth more advanced thoughts.

Enables early designation of possible hazards and mitigates the potency of hazards to cut down loss.

Understate the unneeded costs through cut downing waste.

4.0 Value Management Study

Value direction survey has to be carried out to find the undertaking is deserving making. This survey can be divided into three phases as follow:

Set out the undertaking undertaking.

Specify the undertaking brief.


The occupation program has to be developed and it is a method for the logical, consecutive, analysis of value and is characterised by:

Phase 1 a†’ information.

Phase 2 a†’ creativeness.

Phase 3 a†’ rating.

Phase 4 a†’ development.

Phase 5 a†’ presentation.

Phase 6 a†’ feedback.

4.1 Set out the Undertaking Task

One twenty-four hours pre-workshop meeting will be organised and cardinal stakeholders will be selected to organize the commission members by the value direction facilitator. The formation of the cardinal stakeholders as commission members is to guarantee the concern of the single stakeholder demands could be included and it is required for the development of the value direction survey. The attendants for the value direction pre-workshop meeting and their function and duties are shown in table 1 as follows:



Director / Project Sponsor

Management individual from client administration, who is authorized for determination devising, decide differences, information supplier and overall scheme.

Undertaking Manager

An employee that competent in supplying proficient expertness from undertaking initial phase to completion.

Production Manager

Responsible to supply the adept audience and information required for production issues.

Finance Manager

Responsible to rede on the undertaking budgetary and fiscal position.

Facilities Manager

Responsible the edifice care during the life of the edifice.

Value Management Facilitator

Responsible to construction the survey strategically.

Table 1

The docket for pre-workshop meeting is scheduled as follows:




Gathering of attendants at chief office


Self debut and briefing


Tea interruption


Site visit and proceedingss the attendant ‘s remarks


Lunch interruption


Brainstorming session – to corroborate construct solution


Tea interruption


Development of value system and designation of edifice demand


Value direction and workshop overview


End of pre-workshop meeting

Table 2: Agenda for Pre-Workshop Meeting

After the docket fixed, value direction facilitator will get down the interview with invited stakeholders to garner all necessary information. With one twenty-four hours pre-workshop activity, it will give better apprehension on the proposed development and restraint of the undertaking.

Aim of the Undertaking

Client intends to heighten the quality of the authorities service and to accomplish Value for Money by rationalizing local authorities service sections in a high specification modern edifice.

Needs of the Undertaking

The proposed physique determination has to fulfill client ‘s demands and it is as follows:

Centralization and resettlement of staff to a individual location.

Adoption of advanced engineering to increase the work efficiency.

Improvement of work quality.

Time and cost nest eggs.

Client Value System

Time, cost and quality are important for every proposed undertaking. For this proposed development, cost and quality are the major concern of the client, whereas clip is non specifically mentioned by client as a concern. The sum-up of clip, cost and quality in relation to proposed development is illustrated as follows:

Time: Not specified


Quality: efficient disposal and Cost: Budgeted ?25M

high specification modern edifice

Figure 1: Time, Cost and Quality for Proposed Development

The outlook of client is as follows:

Greater office infinite for future manpower growing.

Comfortable office edifice to better the working environment.

Centralised direction and disposal to increase the production rate.

Constraint of the Undertaking

Higher building cost and assorted cost will be expected due to ideal location, which is at the metropolis Centre.

Undertaking Budgetary

Initial budget of the proposed development is ?25M and initial appraisal is 12500m2 of adjustment is required. This initial budget is likely to be revised because it is estimated without completed design drawings.


Undertaking building period and the beginning day of the month of the undertaking are yet to be confirmed by the client.

After good defined all the issues, value direction facilitator will take the members to test through to guarantee that the build determination can be proceed to fulfill client ‘s concern demands. The value direction workshop will merely be organised after determination to construct is confirmed.

4.2 Define the Project Brief

At the undertaking early phase, the first important point to be prepared is the undertaking brief, which to give a house foundation for the beginning of the proposed undertaking. The undertaking brief consists the lineation and description of the undertaking is trying to accomplish and operational demands of the undertaking. The value direction workshop will be organised and the squad members from the pre-workshop will be attended together with the design squad. During the value direction workshop, the maps of the proposed development will be to the full analysed harmonizing to occupation program, and action program will be produced for the client.

4.2.1 Functional Analysis

The functional theoretical account for the proposed development is presented by the map analysis system technique ( FAST ) . The FAST diagram is produced based on the thoughts raised by single attendants, which is reflected as follows:

Increase work


Centralised direction Time and

and disposal cost nest eggs



New physique


Pleasant working


Modernization Reflect authorities



of engineering

Figure 2: FAST Diagram

4.3 Execution

The concluding study will be produced and presented to the client and all the parties have to be committed for the execution phase. Systematic monitoring system shall be used during the execution to guarantee uninterrupted undertaking betterment. Follow up action should be applied if any menaces have been identified.

5.0 Combined Value and Risk Management Study

The value and hazard direction are interrelated both in their aims and execution of workshop. One twenty-four hours combined value and hazard direction workshop will be organised and the attendants for the combined workshop meeting are the cardinal stakeholders, design squad, building squad and facilitator. The docket for the combined workshop meeting is scheduled as below.




Gathering of attendants at chief office


Introduction and briefing


Review client ‘s value system and place of import issues


Hazard designation – brainstorming hazard and effect


Tea interruption


Hazard analysis – Screening of hazard and filtration and digest


Lunch interruption


Hazard response – direction brainstorming


Tea interruption


Hazard registry


Action program and decision


End of workshop

Table 3: Agenda for the Combined Workshop Meeting

The combined value and hazard direction of the proposed development will be presented in two distinct entitles with separate occupation program of value direction and three-step hazard direction model. The intercession points for hazard direction in relate to the overall model of the value direction for the proposed development is shown in the diagram below.

Value Management Job Plan

Risk Management Intervention Points

Phase 1 – information

Client ‘s edifice demand and place of import issues such as clip, cost, location etc.

Brainstorming of map and hazard from the FAST diagram

Phase 2 – creativeness

Generate FAST diagram

Hazard designation – brainstorming the hazard associated

Phase 3 – rating

Hazard analysis – measure the hazard and take those necessitating consideration

Phase 4 – development

Hazard analysis and response – consider staying hazards, measure them and develop a response

Phase 5 – Presentation

Produce the hazard registry

Table 4: The Combined Value and Risk Management

5.1 Risk Identification

This is the most important phase for the hazard direction survey. Potential of hazard during the undertaking life rhythm is identified in the combined workshop meeting. The sum-up of the hazard identified is shown in table 5 as below.

Hazard / Hazard



Climate status

Site plants ceased.

Delay of undertaking and lead to abandon of undertaking.

Location handiness

Long mobilization clip

Communication web

Late information among the parties

Design mistakes

Inaccurate and deficient analysis of informations for the undertaking

Lead to high fluctuation and more cost incurred to client

Contract continuance / clip

Exceeding inclement conditions and alteration of design

Delay of undertaking, higher rectification cost due to bad craft and more differences during the building works.

Management of supply concatenation

Late bringing and quality of stuff


Poor craft

Table 5: Summary of Identified Risk

5.2 Hazard Analysis and Response

This phase involves appraisal of the identified hazard, which to find the likeliness of the happening and potency of impact and badness. With mention to the hazard analysed, present the hazard response to extenuate the potency of hazard to minimum. The hazard matrix and hazard analysis and response are recorded in tabular arraies 6 and 7 as below.



















Table 6: Hazard Matrix of Likelihood and Impact

Hazard / Hazard



Hazard Ranking

Hazard Response


Climate status





To retain the hazard but seek to understate the effect.

Location handiness





Conduct thorough review and probe to the proposed location and obtain authorization blessing.

Communication web





Develop systematic undertaking program and acceptance of engineering.

Design mistakes





Regular meeting with design and building squads to guarantee design truth.

Contract continuance / clip





Develop monitoring system to track the work advancement.

Management of supply concatenation





Increased natural stuff cost is transferred to contractor by fixed cost catching.






Cost of rectification plants is transferred to contractor by the keeping amount.

Table 7: Hazard Analysis and Response

6.0 Recommendations of the Follow-up Study Report

Follow-up to the value and hazard direction study should be carried out to guarantee the survey can be used efficaciously and improves the overall public presentation of the undertaking in footings of clip, cost and quality. The recommendations of the follow-up survey study are as follows:

The client representative has to see the feasibleness of the survey and maximize the use of survey into the building works.

The engaged building house should run into best value in concurrence with undertaking particulars.

7.0 Decision

Value and hazard direction is of import to be carried out before the build determination is made to guarantee that the undertaking is clearly scoped and all possible hazards are identified at undertaking early phase. Hence, the disagreements and differences are resolved earlier proceed to another phase. In add-on, this value and hazard direction survey is besides guaranting the client aim can be achieved at the needed quality within the budgeted cost and stipulated clip.

Part 2

D31VR – Value and Risk Management

An Evaluation of Current and Potential Future Application of

Value and Risk Management into Construction Project Management Professional Services in the Construction Sector in Singapore

1.0 Introduction

In today ‘s progressively globalised and complex universe, the building industry becomes more competitory and complicated, more challenges and alterations have to be faced by the administrations for the endurance and improvement. Therefore, more advanced techniques and solutions have to be adopted by the administrations for go oning betterment. Client is the one funding the undertaking, and is the nucleus of the building industry and the drive force for the betterment ( Othman, 2005 ) . In today ‘s building industry, one of the most important issues confronting is accomplishing client satisfaction. From the study showed that there is really few building undertakings are finished on clip or at the budgeted cost and the finished merchandises do non run into client ‘s demand and outlook, it happened the same in Singapore. Due to this scenario, the usage of value and hazard direction in building industry is steadily increasing as clients expect better consequences from their investing in the undertaking and besides more administrations realised the job faced during the building phase can be reduced by usage of value and hazard direction in undertaking early phase.

In Singapore, value and hazard direction is non widely used in building industry comparison to other industries such as fabrication industry. Due to higher demand and outlook from the client today, value and hazard direction has been progressively recognised as being appropriate for the building. Value direction is a uninterrupted procedure, which all the constituents involved in building are critically assessed to determine whether better value options are available ( Crown, 2003 ) . The building industry is classified as a bad industry because of its complexness and disconnected nature. Hence, hazard direction is a must to be used in every individual undertaking in Singapore regardless the size of the undertaking. Risk direction is a go oning procedure throughout the undertaking life rhythm. It is progressively popular and besides of import to be adopted because it can supply value for money ( Othman, 2005 ) . Hazard and uncertainness have potential in detrimental effects for the building undertakings, which the public presentation, productiveness, quality and the budgeted cost of the undertaking will be affected. Hazard can non be eliminated but it can be transferred or minimised ( Mills, 2001 ) .

This paper aims to supply the rating of current application of value and hazard direction and the obstructions to value and hazard direction development in the building sector. In add-on, the potency of the future application of the value and hazard direction will besides be discussed.

2.0 Literature Review

2.1 Definition of Value and Risk Management

Value direction is a systematic and multi-disciplinary attempt, which the maps of the undertaking is straight analysed to accomplish the lowest overall life rhythm cost with best value ( Othman, 2005 ) . Harmonizing to Male and Kelly ( 1998 ) , value direction is the squad based “ process-driven ” methodological analysis to present a service or undertaking at optimal public presentation and cost without hurt to quality. By utilizing this squad of experts, it allows value direction procedure to place best solutions for design and building which provide the best value for money with respect to the client demands. The value direction procedure encourages the better apprehension of the aims and positions of assorted stakeholders, and the effectual accomplishment of these aims ( Shen and Yu, 2012 ) . The relationship between value, quality, map and cost can be represented by the equation as follows:

Value = ( Function + Quality ) / Cost

Where Function = the specific worth that a design must execute

Quality = the client ‘s demands and outlooks

Cost = the undertaking life rhythm cost

Value direction purposes to optimize the undertaking life rhythm cost and better the value through placing remotion of unneeded costs while the quality, public presentation and other factors will run into client ‘s outlook. Workshops of value direction to be developed at undertaking early phase, it enables cardinal stakeholders participate in the briefing procedure to clear up their involvements and demands and to make committedness to the solutions ( Shen and Yu, 2012 ) . It will bring forth better apprehension of client demands and concern demands through workshops. Job program based on value direction techniques will be produced and is characterised by the stages as below ( Shen and Liu, 2004 ) .

Phase 1 Phase 2 Phase 3 Phase 4

Preparation Analysis Creativity Implementation

Choice of capable Gather information Alternatives creative activity Approval

VM Team Function analysis Alternatives rating Review

Plan production Function rating Recommendation production Feedback

Figure 1: Outline of the Job Plan

Risk direction is the decision-making procedure affecting detail consideration of hazards which can hold important impact on the concluding result of the undertaking. Risk direction in building includes the development and keeping a articulation hazard registry, and placing and analysing the hazards in footings of earnestness and likeliness of the hazard ( Crown, 2003 ) . Harmonizing to Mills ( 2001 ) , the earnestness of the hazards can be measured as the chance of the activity and its effects or loss:

RI = L x C

Where RI = Risk Impact

L = Likelihood

C = Consequence

Risk direction is a go oning activity throughout the life rhythm of the undertaking and the value of money can be achieved by cut downing hazard in the undertaking ( Othman, 2005 ) . The systematic sequence of the hazard direction is described as below ( Mills, 2001 ) .

Measure 1 a†’ Risk designation

Measure 2 a†’ Hazard analysis

Measure 3 a†’ Risk response

Measure 4 a†’ Feedback

The effects of serious hazards occurred in the undertaking can be really detrimental, it can do the clip and cost of the undertaking overruns and turn the profitable undertaking into a loss-making venture.

3.0 Value and Risk Management in Construction Project Management

3.1 Current Application of Value and Risk Management

In Singapore, the usage of value and hazard direction in edifice undertakings is relatively higher than substructure undertakings due to the complexness of the undertaking. It is utile to utilize value and hazard direction in undertaking early phase, which can hold better apprehension of client demands and better value for money can be achieved. In order to place the possible demands of the undertaking, the value and hazard direction adviser is engaged by the client for appraisal the proposed undertaking. The value and hazard direction adviser identifies the concern needs through workshop and guarantee it achieves the client outlooks ( Othman, 2005 ) . Value and put on the line direction facilitator is appointed and cardinal stakeholders are selected to organize the value and hazard direction squad. The squad members define all the issues and screen through in item to guarantee the build determination can be proceed to run into the client demand. Then after, the value and hazard direction workshops are organised to garner all information and exhaustively studied in order to supply best solutions for the foreseen job. Some common job that happened in the edifice undertaking in Singapore is showed as follows ( Hlaing & A ; Singh & A ; Tiong and Ehrlich, 2012 ) :

Undervaluing measure.

Sharp and sudden addition of stuffs monetary value.

Human factors – one or more people ne’er perform their functions and duties.

Misconstruing and differences between squad members.

Hence, the best alternate solutions such as usage of stuff fluctuation index have to be generated by the squad members to get the better of the common job. The value direction technique that normally used is functional analysis. In functional analysis, the functional demand of the undertaking is generated and reflected by FAST diagram, which are the thoughts raised by the squad members. Beside it, the undertaking budget and contract period besides need to be considered in the workshops.

Risk direction is non one-off activity, it is the uninterrupted procedure throughout the undertaking life rhythm. The application of hazard direction at undertaking early phase clarifies the aims and aids in polishing the undertaking brief ( Mills, 2001 ) . Hazard is anticipated every bit many as possible, so that the unneeded cost can be reduced to minimal, which straight help client to salvage cost. The possible hazards of the undertaking are identified, analysed and responded by squad members. There are few chief possible hazards in edifice undertaking and it was extremely concerned by the governments of Singapore such as Building and Construction Authority ( BCA ) and Ministry of Manpower ( MOM ) . These chief potency hazards are listed as follows:

Hazard Identified

Hazard Analysed

Hazard Control

Falling from tallness

Bad hurts / dead

Provision of house railing.

Use safety hardness.

Falling object


Provide gimmick gauze.

Erect toe board.

Topple of Crane

Bad hurts / dead

Provide stable platform.

Ensure outriggers are decently extended.

Lift within safe working burden.

Table 1: Main Potential Risk in Singapore

Besides that, other hazard factors need to be concerned include velocity of the building, undertaking location, complexness and acquaintance of the work.

3.2 Obstacles to Value and Risk Management Development

Good quality of the merchandise is the of import aim by the Singapore authorities. The authorities is underscoring the bringing of good coatings merchandise and guarantee good quality control on stuffs and building plants. However, overemphasis on quality has created conservative attitude of building professionals against creative activity, alteration and invention ( Shen and Liu, 2004 ) . Any advanced thought on possible impact on quality could be stifled even though it may give some clip shortening or cost nest eggs of the undertaking. Therefore, the effectivity of the value and hazard direction survey will be affected by this conservative attitude. The good proposals generated by value and hazard direction survey are unable to implement efficaciously if the conservative attitude can non be changed.

In Singapore, value and hazard direction is non widely used in building industry. Lack of practical counsel for implementing the value and hazard direction is one of the factors doing low application of value and hazard direction in building industry ( Shen and Liu, 2004 ) . This is because the features of the building industry are non introduced consequently in value and hazard direction books. Practical model has to be established for implementing the value and hazard direction in order to advance the usage of value and hazard direction in the building industry.

4.0 Benefits of Adoption of Value and Risk Management

The usage of value and hazard direction is more applied on larger undertaking graduated table in Singapore. This is due to big graduated table undertaking is more complex and more alternate solutions have to be applied in the building to guarantee the undertaking advancement with minimum job. To accomplish best value of money and client demands, the appointed value and hazard direction squad develops the undertaking undertaking and brief through workshops before kick start of any physical plants. The planned series of workshops of the undertaking incorporates with undertaking programme get downing at project description-strategic degree, and so after go oning to building proficient degree. The lesson learned in the workshops can help in bettering the public presentation of the undertaking.

Risk direction is non a new construct, it is adopted by bulk building houses in Singapore to register, analyze and command the hazards before the beginning of building plants. This is because the constitution of hazard appraisal is required under Singapore jurisprudence. The productiveness and public presentation of the undertaking will be badly affected if the hazard is non being good managed. The benefits of current application of value and hazard direction are as follows ( Othman, 2005 ; Weatherhead & A ; Owen & A ; Hall, 2005 ) :

Better apprehension of client aims and demands to forestall otiose resource in production clip, design clip and the cost of alteration.

Client demands are identified at the undertaking early phase and respond in the brief development to understate subsequently alteration orders.

The positions and demands of the stakeholders are perceived and reflected in the brief development and acquiring stakeholders ‘ committedness to transport out the selected determination through workshops.

To advance the common squad apprehension and near co-ordinated attempt to run into the client aims.

Foreseen job is exhaustively studied and bring forth the advanced options in order to cut down the unneeded cost.

Potential hazards are identified, analysed and responded to cut down the amendss caused to the undertaking.

Accomplishment of best value of money by cut downing hazard and unneeded cost.

Successful value and hazard direction demands committedness from the senior direction, ownership and apprehension of the procedure. The senior direction aware the of import of value and hazard direction in order to obtain the optimal balance of benefit in relation to put on the line and cost.

By seeing the effectual result by usage of value and hazard direction in the edifice undertaking, more and more undertakings such as substructure undertakings are begin following value and hazard direction techniques in order to accomplish the value and outlooks. Due to tight contract period, high client ‘s demand, increasing stuff and labor costs in Singapore, there is the great challenge to equilibrate and accomplish the aims of the undertaking. Therefore, usage of value and hazard direction technique is the best indispensable tools assist to accomplish their coveted aims. In the value and hazard direction survey, the best value is non about cost film editing, but is to better the apprehension of the client demands and concern demands.

5.0 Potential of Future Application of Value and Risk Management

In the developed state like Singapore, the concern environment is more competitory. Due to this more dynamic and competitory concern environment, it fosters the development of value and hazard direction and increase consciousness of the usage of value and hazard direction in building industry ( Shen and Liu, 2004 ) . In progressively globalization of universe ‘s economic system, the client outlooks will increase bit by bit and the complexness and troubles of the undertaking will be increased every bit good. Therefore, the demand for the value and hazard direction is even desired for better return value and quality.

Application of value and hazard direction has possible to advance the sustainable design and development during the building undertaking life span ( Shen and Yu, 2012 ) . The functional value of the undertaking can be maximised by usage of value and hazard direction, which by pull offing the development from construct to utilize. By utilizing the value and hazard direction, the consciousness of the sustainability issues can be raised by the building forces and let the integrating of sustainability into the undertakings. With the systematic occupation program, the participants can be guided efficaciously to see the sustainability issues throughout the undertaking life rhythm.

In comparing to the sustainability issue, value and hazard direction besides contributes towards the green edifice design, but it is limited. Integration of sustainability with value and hazard direction is proposed and practical guidelines to be developed which enable the green edifice issues to be considered and evaluated during the workshops ( Shen and Yu, 2012 ) . The characteristics of value and hazard direction workshops such as cognition airing chance, procedure effectivity, strategic clip and effectual techniques and tools could steer the participants to see sustainability and green edifice issues. The sustainable building minimises the waste generated ; maximises the energy efficiency and usage of recycled stuffs ; minimises and optimises the usage of natural stuffs and natural resources ; minimises hazards of wellness to those who construct the edifice and industry the stuffs and provides the needed quality for the optimal monetary value.

Profound reclamation of the value direction thoughts and patterns could be provided by value direction for green edifice design. The appropriate schemes to be used for better integrating of green constructing design and value direction, which will heighten the possibility of high public presentation edifice with best value of money in future.

6.0 Decision

The usage of value and hazard direction is instead of import to increase the overall public presentation of the undertaking. It helps to supply better apprehension of the client demands and outlooks. Furthermore, the improved and cost-efficient solutions are generated to give better value that meet client demands every bit good as cut downing uncertainnesss through hazard designation, analysis and reacting. Value and hazard direction is progressively recognised as the best indispensable tools to help to accomplish the coveted aims. It is expected that the demand for the usage of value and hazard direction in building industry will be increased and the full potency of value and hazard direction can be to the full developed when the practical usher develops and incorporates with the latest value and hazard direction methodological analysis.

The demand for sustainability in building industry is increasing for the past two decennaries. The thought of sustainability should be considered in undertaking early phase and it should incorporate into activities in undertaking development procedure and turn to the sustainability construct in the pre-workshop stage of a value and hazard direction survey. This is because the potency of value and hazard direction in advancing the sustainable design and development during the building undertaking life span.


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