Updated: Jul 25, 2019
I am a trained Value Management (VM) practitioner and advocate (www.ivm.org.uk). The Institute of Value Management defines Value and VM as:
The concept of Value is based on the relationship between satisfying needs and expectations and the resources required to achieve them.
Value Management is concerned with improving and sustaining a desirable balance between the wants and needs of stakeholders and the resources needed to satisfy them. Stakeholder value judgements vary, and VM reconciles differing priorities to deliver best value for all stakeholders.
Value Management has much to recommend it and has synergies with the EP perspective; the team and stakeholder focus to breaking down silos being a strong match. Techniques such as Functional Analysis Systems Technique in which projects are evaluated in terms of what they ‘do’ for stakeholders rather than what they ‘are’ I have found to be highly effective. However, I have had concerns about VM - which may relate to the way it is practised rather than intrinsic to the approach – in that VM takes a late and ‘protective’ view of risk and uncertainty.
The Value process for project selection is used to create options, select the most beneficial and then incrementally develop the single preferred option via ‘Value Engineering’. Typically, meaningful consideration of risk and uncertainty begins only when the preferred option has been selected – it is implicitly assumed that the best option can be selected without fully considering uncertainty or that uncertainty is identical for all options. This is an unwise assumption.
VM also adopts the ‘protective role’ view of risk management (as do many individuals and organisations). This involves generating a plan or strategy then using risk management to protect it from external disruption or perturbance. This may be a sound approach in some contexts, in many others it would be better to factor uncertainty into the shaping of strategy and selection of projects – which is what EP advocates.
VM has a similar goal to Opportunity Efficiency (OE) in that is seeking to achieve a balanced optimality; however OE has a much richer treatment of uncertainty as an integral part of that balance. From the overview of OE in the book (page 29) a stakeholder engaged environment an underlying requirement:
Both ‘relevant attributes’ and ‘appropriate trade-offs’ should be judged by all parties with legitimate concerns.
VM tools and techniques performs well in fulfilling this requirement and it is a central part of the ethos. However, VM falls short on the three essential components of OE:
‘Opportunity efficiency’ requires:
- risk efficiency with respect to all relevant attributes,
- plus appropriate trade-offs between risk and reward for each attribute,
- plus appropriate trade-offs between all attributes
The first two are not addressed by a ‘Risk Management as protection’ philosophy. A key objective of VM is to ‘make appropriate trade offs’ by ‘reconciling different priorities to achieve best value’. However, it is not possible to make appropriate trade offs in uncertain contexts when one of the ‘wants and needs’ of any stakeholder is that their risk appetite / tolerance concerns are accomodated. In my view, addressing the limitations of VM identified above through approaches suggested in EP could be very effective and have a transformative effect on the usefulness of VM.