Value Management is one of the vital management aspects that is applied in general focus in management and this pertains to even the advancement of Asset control focus. It can also be defined as a way of management specifically designed to give morale to people, skills enhancement, and encouraging inventions and innovations with the reason of improving the overall performance of an organization.
Since Tech Watt is opening a Head Office, an analysis is a requirement as it will not only aid in realizing and cutting out unnecessary costs but also will act as an effective tool in the performance enhancement. It will also help in resources preparation rather than the cost.
Value analysis does not only dwell in the products and services section but puts focus on projects and administrative purposes. In general terms, it can also be defined as a definite base in the analytical procedure for enhancing innovative, remedies to challenging problems in an organization. It includes representatives of important stakeholders in a given workshop. (Highsmith 2003).
It is the unity of people pulled working towards a common aim with a creative approach to challenges and this actually creates differences between Value Management from other management aspects. The method employs enhanced value-for-money solutions that increase the levels of quality or performance as per the availability of the resources.
Principles of Management Value
The principles entail a continuous knowledge of organizational value, stabilizing the measures of value and putting control on them. The second principle is an insight on the aims and targets before looking for answers. The last principle is an insight on performance, furnishing the key to improve innovative and accountable results. (Schwaber 2004).
Notably, Tech Watt needs Value Performance analysis so that they can establish the relationship between the contentment of various varying needs and resources used in performance. It is worth noting that if fewer or fewer resources are applied, or the greater the contentment of needs, then the greater the value.
From the extract, Techwatt requires the ability to receive visits from its clients. These clients that will be both from inside and outside hold different opinions of the representation of values. Hence this is the reason for value management so that it can create harmony in the opinion differences and also help the organization to attain immense progress towards its defined objectives with the application of the least resources.
Equally, The Company can improve their value by adding the satisfaction of need even if the resources used in performance goes up as long as the satisfaction of need goes up more than the increase in resources applied.
One of the reasons why Value Management distinctively stands out from the other management aspects is because it both includes characteristics that are not generally found together. It fosters together a single management way. This management style takes on the following course.
Attention on teamwork and communication; It’s through teamwork that people in the organization work towards a common objective. This is coupled with communication because without communication, people cannot be unified. Secondly, is an insight on the performance of things than what they comprise of. Another element is a conducive environment that uplifts creativity and innovations and lastly is an insight on customers’ requirements and purpose to evaluate choices qualitatively to enable strong comparison of choices.
Relevant Human dynamics In Value Management
The following are some positive human elements in Value Management.
Team Work: Encouraging people to work in unity towards a common objective. Satisfaction in people thereby, realizing and giving credit where necessary. Communication is a means of bringing people together hence it should be encouraged. Enhancing better understanding and providing better decisions. Change is a vital aspect in Value Management but if not properly relayed it can be met with much resistance. But by challenging the status quo and talking about its relevance can be of much benefit (John 2006).
Consideration should be put on the environment because it exerts pressure both from inside and outside. Externally, current conditions should be put into consideration which the management may not be influential too. Internally, conditions within the organization can prevail which managers may or not be able to control. The degree of freedom is also a force to reckon with because both the internal and external situation will dictate the stretch of potential and should be quantified.
The methodology applied and the tools used should be appropriate to avoid regrets and unnecessary costs.
The end of a Value Management study is authentic to be undertaken on summarizing of the Investment Evaluation. Accordingly, an official Value Management study is required to be undertaken on projects that cost about over $5 million (Moffat 2002).
Advantages Of Value Management
The benefits of using Value Management can be felt by both the organization and consumers. To the organization, it leads to improved business decisions by giving the decision implementors a relevant basis for their options. Better quality products and services to the outside customers are also achieved through prioritizing their urgent needs.
The term Managing for Value is also used to define a new view on Value-Based Management, attaining special importance company culture deviation aspects and looking forward to translating efforts for sustained growth and relevant share price adjustments. Value management brings about a common culture that improves the understanding of organizational goals by every member.
There is the realization of Better internal communication and general knowledge on the major success factors of the organization. By enhancing it, both work performance and communication can be achieved through the development of multidisciplinary and multi-task teamwork.
Decisions can also get full back up by the organization stakeholders. The other benefits of value management can be felt by the consumers and providers in society at large. This includes the industrial sector which entails the manufacturers, construction, and processing. Service sectors including both the private and public and the government which comprises health, education, and other public activities.
Value Management Studies
Value Management studies can be carried out at the end of any period of the capital investment. Recommendable results are likely to be achieved from the studies undertaken at the Major Plan.
The advantages of Value Management have been found to be more fruitful when the person appointed to head it is independent of the contractor team (Down 2001).
The studies also provide a great opportunity to examine the challenging assumptions and also enhance innovative and lateral thinking so that one can come up with better service to the delivery of the requirements.
It’s worth noting that in many occurrences, the results can actually cause a decline in cost without putting the organization needs into consideration, it is preferable to first obtain the reason for which resources are assigned, ensure that facilities are up to date with the present Legislative demands, minimize overhead costs, enhance communication and provide a base for opportunities for innovation.
Over the years, it has been realized that the major variables that have a stake in the control of software improvement projects are four and this includes, functionality, cost, delivery date, and quality.
Once the project rolls out, there are quite a number of changes that take place. The technology could demand a completely different system than the one hoped for. There is also a high probability that the business environment in which the system will be run changes and this consequently affects the customers in that as they examine the system, they also change what they believe will only obtain value to them. One Ralph. S, in his book Management and Organizational Dynamics, says that the higher the uncertainty of the technology and the less the demands are understood, the greater changes will be prevalent.
Quite a big number of organizations completing projects successfully may be directly engaged to prosperity and realizing customer needs or expectations.
Project management is not an easy thing to do and apparently, a good one to be more specific is not easy to achieve hence its implementation should be regarded with determination and dedication it has to be given consideration and much thought just like any other key business operation in organizations. Research by the Center for Business Functions clearly indicated that implementing project management in organizations that are oriented in the Information and Communications Technology led to a great enhancement in operation estimating customers satisfaction and abiding by strategic business objectives.
Those organizations that take the initiative to implement project management actually stand out to be in a better position when it comes to competition as compared to those which do not implement project management. The research also attains value to the considerable profits that an Information Technology firm can greatly achieve through planning and implementing formal project management functions.
From the research, the conclusions drawn affirmed that project management definitely increases the value to organizations in all industries. Measures that should be put into consideration in relation to project management includes; operational estimation, customer satisfaction, focus on strategic business goals, time management, quality improvement, and budget. Unfortunately, many organizations do not sample metrics that realize the value of a project to the organization. Due to this, it should be realized that in the long run without good project management systems put in the right direction the growth and status of projects is not quantified and checked and consequently project fall shocks the organization because it comes in when it is least expected and that is at the time of project completion.
To avoid such surprises, the organization should take into high regard one of the most critical areas of project management procedures which involves the preparation of the reports and project review. Organizations that are reluctant and do take it their prerogative to tell the managers to submit reports clearly indicate that in the long run should the project be in trouble the blame will be definitely be shifted to the project manager. Vice versa strict procedures that are adhered to faithfully when it comes to reporting on the status of projects are clear evidence that the management is concerned about the growth of projects and is ready and willing to offer any kind of assistance if need be.
Value Management has actually distinguished itself in the management aspect not only to be one of the best effective performance measurements but also act as a way of communication when it comes to offering proper feedback when required.
Another important aspect of value management is its comparative ability as it can assist clearly in outlining the goals and aims of a project and also determine where a project is and its direction to where it came from, was actually meant to be the direction it was meant to take.
In the process of project performance, it’s upon the project manager to make a follow up of how much of the planned work has been achieved thereby providing the other aspect of Value Management which is the amount of work that has actually been executed and performed or the finance spent which counts for the total accumulated Cost. (Butzel 2000).
A designed system to managing uncertainties related to threats. This can be done through a trail of human activities which includes its assessment, goals development among others. The goals could be taking the risks in a different direction, running away from it, minimizing the bad side of risk, and lastly coming to terms partially or in full repercussions involved.
In proper risk management, more weight is put on risks with bigger loss and greatest chances of occurrence. These kinds of risks are given priority when it comes to listing while those risks with a minimal chance of occurrence are given less attention put such management practice into the act, can sometimes prove to be difficult and this is due to the fact that it is not easy to strike a balance between the occurrence of the high risk with a minimal loss and high risk with a lower chance of existing can be mishandled.
Apparently, there are some risks that are usually ignored by many organizations and this is due to the fact that they do not have a touch value. However, they have a high probability of occurring way for example, if wrong skills are employed to perform some work and the work backfires then the skill’s risks will be registered.
When an organization makes ineffective mergers that fail then it brings about related risks. If daily operations in an organization are mishandled it creates process engagement risks. All these risks mentioned above minimize skilled production, minimize cost-effectiveness, and renders a production of substandard goods and services. The organization’s reputation is also put at stake and earnings or revenues are reduced. The existence of intangible risks has led to the formation of risk management to form immediate value from the verification and minimization of risks that tampers with productivity.
When managing risks, organization firms are usually faced with the challenges of resource allocation. Resources that are allocated and consumed in risk management could be diverted into a project that can generate more income for the organization hence good risk management should be one that reduces spending while optimizing the minimization of risk negativity.
While managing risks, a number of steps should be put into consideration. These could involve the following steps. First, the risk needs to be identified with regard to the chosen area of interest. The next step should be to put a strategy on the remaining area of the process, this is then followed by mapping out or selecting the on the risk social scope, stakeholder’s identity, and aims. The next step is to determine or decide a framework or methodology for the work and the purpose for identification. An analysis of the risk involved should also be carried out to and lastly alleviate the risk by applying the available organizational, human or technological concept.
In-depth, identification of the risk can begin with the origin of the challenge or with the challenge itself. It is worth noting that identification of risks origin can be categorized as either internal or external to the organization that is the objective of risk management. These could entail stakeholders of a project, company staff, or even climatic conditions.
A thorough problem analysis needs to be carried out because risks are connected to known threats. For instance, accident threats, money loss among others. These threats can be directly connected to a number of people in an organization with most regard to stakeholders, customers, and the government.
When the origin is established, the circumstances that an origin may bring about or the situation that causes trouble can be thoroughly analyzed. In a case where stakeholders are pulling out in the course of a project they may threaten to give financial support to the project; confidential reports may be uplifted by employees regardless of how close a system can be. Only to mention but a few, these are the more reasons as to why proper risk management should be put in place with every organization that is keen to prosper.
While identifying the risk the methodology used may vary depending on culture, industry. Some of the most common ways of identification include checking which entails a system whereby most organizations have lists with recognized risks given to them. Each risk in the recognized list can be verified for use in a given situation. Another system is Charting and here resources are identified and their threats and repercussions are taken into regard (Mark 2000).
A scenario-based system employs a situation whereby scenarios are chosen which can provide a choice to attain a goal or study the relation of forces. Other methods include Taxonomy base where the answers to the questions reveal the risk and lastly there is the Objective base which is used by most organizations because all organizations with aims and goals can be triggered by any situation.
Risk assessment should be conducted after the identification process. Rate of loss occurred, and their possibility of re-emerging. In this process, it is vital to come up with the best knowledge guess in order to establish which risk should be given the first consideration in the plan. Quantifying the impact of the risk is another problem especially for assets not regarded as material. Hence the assessment should equip the management with the knowledge that decisions in risk management may be prioritized.
Butzel, S, 2000, Successful strategies Capstone Corporations, California.
Down, C, 2001, Value Capabilities, Thomas Telford, Boston.
John, C, 2006, Project Management Methods, Ross Publishing, California.
Highsmith, J, 2003, Managing systems, Dorset house, Boston.
Mark, R, 2000, Risk Management, Graw Hill Publishers,Wyoming.
Moffat, H, 2002,Value at Risk, Cambridge University Press, New York.
Schwaber, K, 2004, Development System, Prentice Hall, New York.