Value management : improving capabilities

167 Pages·2001·0.844 MB·English

by  Downs, Clive G., Woodhead, Roy M

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Achieving results
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This book is dedicated to Sheila Woodhead,
who spent her life helping people to achieve their potential.
From education springs progress and
an escape from the limiting prison of ignorance.
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Achieving results
How to create value
By Roy Woodhead and James McCuish
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Published by Thomas Telford Publishing,
Thomas Telford Ltd,
1 Heron Quay,
London E14 4JD.
www.thomastelford.com
Distributors for Thomas Telford books are
USA: ASCE Press, 1801 Alexander Bell Drive, Reston, VA 20191-4400, USA
Japan: Maruzen Co. Ltd, Book Department, 3–10 Nihonbashi 2-chome, Chuo-ku, Tokyo 103
Australia: DA Books and Journals, 648 Whitehorse Road, Mitcham 3132, Victoria
First published 2002
Also available from Thomas Telford Books
Value management: improving capabilities, R. Woodhead and C. Downs, 2001, ISBN 0 7277 2989 6.
Value management incentive programme, N. Standing, 2001, ISBN 0 7277 3030 4.
Managing projects for success, A. Hamilton, 2001, ISBN 0 7277 2941 1.
The value management benchmark, S. Male and J. Kelly et al., 1998, ISBN 0 7277 2794 X.
A catalogue record for this book is available from the British Library
ISBN: 0 7277 3184 X
© Thomas Telford Limited 2002
All rights, including translation, reserved. Except as permitted by the Copyright, Designs and
Patents Act 1988, no part of this publication may be reproduced, stored in a retrieval system
or transmitted in any form or by any means, electronic, mechanical, photocopying or other-
wise, without the prior written permission of the Publishing Director, Thomas Telford
Publishing, Thomas Telford Ltd, 1 Heron Quay, London E14 4JD.
This book is published on the understanding that the authors are solely responsible for the
statements made and opinions expressed in it and that its publication does not necessarily
imply that such statements and/or opinions are or reflect the views or opinions of the
publishers. While every effort has been made to ensure that the statements made and the
opinions expressed in this publication provide a safe and accurate guide, no liability or
responsibility can be accepted in this respect by the authors or publishers.
Typeset by Gray Publishing, Tunbridge Wells, Kent
Printed and bound in Great Britain by MPG Books, Bodmin, Cornwall
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Contents
Preface ix
Acknowledgements xi
Chapter 1 Towards value leadership 1
Introduction 1
About clear thinking 3
Going back to the start 7
Intuitive thinking versus rational thinking 10
Understanding a decision 12
Value and values 12
Value of knowledge 14
Choices, responsibility and context 17
Power and preferences 18
The macro-economic context 19
And customers expected more! 21
Summary 23
Conclusion 24
Chapter 2 The context for value leadership 25
Introduction 25
The industrial age 26
The post-industrial age 26
Knowledge management 28
Value creation 29
The valued functions of an organization 29
The influence of capital to stimulate progress 32
Investment risk and reward 33
From idea to asset 34
The search for results 35
Strategic formulation 35
The outline business case 36
The full business case 40
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Contents
Towards clear objectives 41
Value improving interventions 43
Overview of interventions in a value
creation programme 43
The roles of senior and middle management 45
Structuring the value creation programme 47
Where shall we go? 47
Where else could we go? 48
Is the destination really worth it? 49
How are we going to get there? 50
Let’s do it! 51
Decision-making roles 52
One man’s task is another’s project 53
Capital investment and capital expenditure
projects 54
Conclusion 55
Chapter 3 Towards objective value in organizational
decision-making 57
Introduction 57
Political theories of value and decision-making 60
Organizational theories of value and
decision-making 62
There is more to innovation than being creative 64
Large unstructured stakeholder groups –
listening to customers 65
The role of the project manager as negotiator 66
Time to deal with multiple views of value 67
Bounding the role of stakeholders in a
VE thinking process 68
The role of general facilitation 69
Understanding groups 70
How facilitators can make groups more effective 71
A closer look at facilitation 72
Acknowledging the difference between
‘intervention’ and ‘development’ 74
Facilitating ‘process’ not ‘content’ 75
Deciding who decides and who informs 76
Conclusion 77
Chapter 4 Structuring a value creation programme in
an organization 79
Introduction 79
The search for new ways of thinking 79
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Contents
The search for functions that are valuable 80
The need for big ideas 80
The spin-off value 81
Designing a value creation system: a thinking process 82
A closer look at a value creation template 82
Establishing value-improving practices 87
Sequencing value-improving practices 90
Developing in-house skills and competencies 91
Starting to look at VE in more detail 92
The short study 92
Conclusion 95
Chapter 5 Towards technological advantage with
value engineering 97
Introduction 97
Technological value 100
Understanding the purpose of projects
and ‘studies’ 101
Overview of attributes of value 104
Linking attributes and problem/opportunity
statements 108
Summary of value attributes 110
A more detailed explanation of how we
weight attributes 110
Developing a normalized value metric 112
The base case in a VE workshop 115
Towards functional explanations of the past 117
Functions 118
A more detailed look at functions in VE practice 121
A more detailed explanation of naming functions 123
Explaining FAST diagrams 124
Understanding how to read a Classic FAST
diagram 126
Thinking about how to start at a generic level 128
Function and abstraction 130
Choosing functions to innovate 132
Getting the team on the same page 134
Developing practical ideas 134
Now it’s time for ideas 135
Enabling improved design 137
Crafting ideas 139
Increasing idea understanding and confidence 141
Crafting scenarios 143
Developing decision confidence 143
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Contents
Offering choices to senior management 144
Redrafting the base case 145
Identifying progress after VE is finished 146
What next? 146
Concluding remarks 147
References 149
Index 155
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Preface
The chains of habit are too weak to be felt until they are too strong to be broken.
(SAMUEL JOHNSON, 1709–1784)
When we decided to write this book we made a firm decision to avoid
writing yet another recipe book of tools and techniques for value engin-
eering (VE). There are many such books and most achieve their training
goals well. However, few actually explain the underlying theories of the
practice they preach. As such the reader is often expected to enter a kind
of blind faith that accepts the ‘magic’ of VE without organizational context,
question or even evidence. We want to avoid that by focusing more on the
underlying theories that link leadership, VE and technology management,
which binds both projects and organizations. The practice of VE has
hardly moved forward in the last 30 years. We argue that this is because
the underlying theories upon which practice is based have rarely been crit-
ically examined or explained and that the subjective models upon which
practice is based have been promoted at the expense of objective models.
We want to set the scene with this book to bring science back into VE and
move it from a low-tech craft towards a hi-tech science capable of being
used in projects like the Genome, Mars mission and charity work.
We want this book to provide a new foundation for VE and help its
many advocates to see it as a method that enables the improvement of
artificial things from artefacts to organizations in the widest sense of tech-
nology. We hope that after reading this book we empower you to think in
terms of results and that you will design your approach to their achieve-
ment in a rational way. That is, we hope that this book will help you, the
reader, to become a leader and a value technologist that thinks not just of
product or project value but what such improvement brings for customers
and shareholders.
Roy Woodhead and James McCuish
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