7   Embedding MoV into an organization

Figure 7.1 Structure of Chapter 7

Many organizations will wish to introduce MoV on a project-by-project basis – either to convince senior management of its effectiveness or because demand may not warrant setting up internal delivery capability. In these cases external resource may be procured on an ‘as-needed’ basis. Should the scale of MoV applications become large and frequent, thus justifying internal delivery capability, organizations should introduce and embed MoV in a manner that is consistent with their other processes so that it becomes a cost-effective part of the way in which they conduct business rather than something procured externally. This chapter describes a process for doing this. The degree to which these processes are implemented should be proportionate to the scale of MoV activities.

If organizations anticipate that their MoV needs will be minimal, they may prefer to adopt a less formal approach to that described below, sufficient for their people to understand the benefits of MoV without committing to building up a full internal delivery capability. When such organizations apply MoV to a programme or project they can procure qualified study leaders from third parties to deliver MoV.

Other organizations may already have people engaged on other work who wish to add MoV to their set of skills. For these, management structures will already be in place, and much of what follows will not be needed.

Regardless of the above, those who wish to become MoV study leaders should possess the level of knowledge contained in this guide and the facilitation skills necessary to deliver MoV effectively.

The processes described below describe a top-down approach to introducing MoV. Commonly, senior management will need to be convinced of the merits of fully embedding MoV before committing to the process. In such cases, demonstrating its effectiveness on a few trial projects is an excellent way to build confidence and tailor the method to suit the specific requirements of the organization.

It should be noted that although embedding MoV in the manner described here will require some investment, there is significant value to be gained form having an effective management structure in place to support competent study leaders. The main benefits include:

  Greater efficiency in the delivery of MoV and the benefits gained therefrom

  Continuous improvement in MoV delivery

  More effective use of internal resources by broadening their capabilities

  More cost-effective delivery than procuring external resource

  Better control over delivery and greater responsiveness

  Developing a value-conscious culture

  Known study leaders and better relationships with users.

For MoV to become fully embedded into an organization, it will need a consistent approach over a period of time as described in earlier chapters. In order to establish this environment, it will be necessary to formally introduce the discipline, including the steps described below (see also Figure 7.2):

  Introducing the MoV policy

  Establishing suitable roles and responsibilities

  Setting up a strategy for implementing the policy

  Introducing training

  Providing guidance on how MoV will be used on projects

  Developing procedures for data capture, feedback

  Monitoring and measuring the benefits achieved

  Overcoming barriers to embedding MoV.

In common with many management activities, an enthusiastic and supportive culture should be encouraged within the organization, starting at the top and continuing through all levels of management and staff. Experience has shown that such support will not develop and cannot be sustained without a planned series of activities to introduce, build upon and maintain the MoV principles described in outline in Chapter 2. This chapter describes how to introduce measures that will lead to the establishment of a sustainable culture along with mechanisms for delivering the benefits of MoV.

It also addresses how to overcome some of the barriers to the adoption of MoV and the consequences of not implementing positive measures for improving value.

Figure 7.2 How to introduce and embed MoV

Sometimes senior management have to be convinced of the need to introduce MoV, in which case it may be appropriate to trial its introduction on a few projects and use the successful outcomes of MoV to support the argument for wider introduction. When adopting this approach it is still necessary to have some visible senior management support and accountability to encourage take-up by managers.

7.1     INTRODUCING AN MOV POLICY

The policy is the first clear statement of support by senior management and, as such, should communicate how MoV will be implemented throughout the organization to help achieve its strategic objectives. The policy will also describe why it is needed and outline what it is.

7.1.1     Composition

The MoV policy will contain:

  Reasons for adopting MoV and how it contributes to corporate objectives

  A high-level outline description of the key MoV processes, why they are used and signposts to other MoV processes

  Statement of who is the explicit policy owner and other key roles and responsibilities

  Responsibilities of all other participants and their expected contributions

  Policy on training

  Clear terminology for describing events and key roles in order to promote a common language

  Guidelines on how to measure the benefits arising from MoV

  Principles of capturing data and learning from experience for continuous improvement

  Statements on how the reward system will respond to positive and negative MoV performance

  Guidelines on setting appropriate targets for improving value

  Guidelines on when and how MoV studies are to be conducted

  Reporting requirements

  Explanation of how MoV relates to other policies in use in the organization

  Sign-off by the board

Taking each of these points in turn:

  Reasons for adopting MoV  No matter how MoV is introduced, it should be aligned with the organization’s overall goals and with other policies and complementary processes in use in the organization. Some existing processes may need adapting to accommodate and encourage the use of MoV. In addition, it should be noted that:

  Goals vary hugely depending on what the organization is set up to do. Most government organizations are set up to implement government policies through the procurement and/or delivery of public services in a manner that provides the greatest benefits to society and efficient use of public funds. Private organizations, on the other hand, are generally set up to generate wealth. In neither sector is success in achieving these goals assured. The use of MoV along with other Best Management Practice guides will improve the chances or make it easier for organizations to achieve success.

  The value profile of a public organization will, for the reasons outlined above, differ significantly from that of the private sector. Other organizations such as charities will also have their distinctive value profiles.

  All organizations are different. When setting up the MoV policy it is therefore essential to establish the rganization’s value profile so that all involved can understand it and contribute to its achievement.

  Description of processes   The policy should set out the core processes to be used in MoV applications in differing circumstances. This will discourage study leaders from taking short cuts and thus undermining the quality of the method. It will also reduce the incidence of a tick-box culture. Undertaking a health check (see Appendix C) from time to time will verify whether MoV is being applied rigorously.

  The MoV policy owner  is likely to be the sponsor who represents MoV on the executive board. The key roles and responsibilities will be those outlined in section 7.2.

  Roles and responsibilities  These are described in section 7.2 and should be set out in the strategy. Senior management must take every opportunity to promote MoV strongly and enthusiastically so that the rest of the organization appreciates its contribution to improving performance.

  Training   A critical decision in developing MoV policy is whether or not to rely on third parties to deliver MoV, in whole or in part, or to train up and develop internal resource. This decision may be influenced by several factors – for example, the size of the organization, the frequency of application of MoV, broader organizational policy to restrict activities to core business, the nature of the projects to which MoV will be applied, and the existing or anticipated skills profile in the organization. Even if it is decided to employ external resource to deliver MoV, it will still be necessary to provide training to employees in order that they can understand, initiate, oversee and contribute to MoV studies.

  Terminology   The policy should use terms that are common throughout the organization and specific to MoV. Please refer to the glossary for suggestions on standard terminology.

  Measuring benefits   MoV will result in both monetary and non-monetary benefits. Whilst monetary benefits are relatively easy to measure objectively, non-monetary benefits might require a more subjective means of assessment. Therefore, the metrics for assessing them must be selected with care, especially as they may be indirect.

  Capturing data and learning from experience   If the organization is to learn from experience and improve MoV performance, it will be necessary to capture, analyse and disseminate outputs from MoV studies. The policy should set out who is responsible for doing this and how the information should be used.

  Reward system   A strong motivator for encouraging employees to support and use MoV is to link success with the reward system. Such links must be carefully thought through to avoid abuse or inadvertently rewarding the wrong behaviours.

  Setting targets  Targets and improvements in value sought by different organizations will vary depending on the organization’s goals. For example, whilst maintaining a healthy financial situation will always be important, an organization in the health sector will place greater emphasis on improving the health of its customers and set targets accordingly. The policy should provide guidance on these priorities.

  When and how to conduct MoV studies   The level of appropriate MoV effort should reflect the size, complexity and importance of the project to which it is applied. Some small projects may not warrant any MoV study. A small project that is repeated many times within a wider programme, however, may warrant a greater degree of effort, since the benefits arising from it will be multiplied many times over the whole programme. Major projects, particularly those contributing to a wider programme, will warrant significant effort. The policy should give guidance on the level of MoV effort to be applied in different circumstances.

  Reporting requirements  In order that the senior MoV practitioner and the SRO may gauge the success of MoV and take appropriate action to maintain and improve it, the policy should set out who should receive reports and the level of detail that these should contain.

  Relationship with other policies  The MoV policy should complement other policies rather than duplicate or conflict with them. This is essential if MoV is to become embedded into the way in which the organization operates.

  Sign-off by the board  The MoV policy will be one of the obligatory documents in the organization and therefore needs to be formally signed off by the board under the same process as applies to other documents of similar status. Periodic updates to the policy should be signed off similarly.

7.1.2     Multiple policies

Sometimes an organization may have several significantly different strands of activity. In such cases, there may need to be variants on the MoV policy in order to reflect these different activities. Where this is the case, it is important that each variant clearly states the reasons for its implementation and to what it applies.

7.2     ROLES AND RESPONSIBILITIES

The implementation of MoV to maximize value for an organization is regarded as good practice and, as such, should not be discretionary once adopted. It is nevertheless vital that clear roles and responsibilities are assigned if it is to be successful.

A suggested management structure is illustrated in Figure 7.3.

Figure 7.3 A suggested MoV management structure

The representative to the executive board should:

  Have a good understanding of (but not necessarily be an expert on) MoV

  Share a good relationship with the board so that issues relating to MoV can be raised as they occur

  Attend board meetings from time to time

  Chair the MoV steering group (or MoV board)

  Be likely to have other responsibilities in the organization in addition to MoV duties

  Encourage the use of MoV and the building of a culture at board level that motivates all involved to seek to maximize value in all their activities, through the use of incentives or otherwise.

The senior MoV practitioner will be actively engaged in all aspects of the MoV programme and must demonstrate leadership and competence in the subject to inspire and motivate all those who are involved. Depending on the volume of MoV activity in the organization, the role may or may not be full time. The senior MoV practitioner should:

  Be experienced in MoV

  Have both the knowledge and skill to apply it

  Report to the steering group (if it exists)

  Be responsible for implementing the MoV policy and contribute to its development and updating from time to time.

Study leaders may be drawn from any part of the organization and will be selected on the grounds of their knowledge and skill in applying MoV processes. In addition to a thorough knowledge of MoV, good study leaders will need all or some of the following skills and characteristics:

  Positive attitude

  Self starter

  Inquisitive nature

  Excellent facilitator and communicator

  Good leader

  Generosity – to give credit to others

  Low sensitivity to criticism

  Confidence in success.

Some of these characteristics may be acquired through training but others will form part of an individual’s character. Study leaders should be selected with these characteristics in mind.

The selection of the appropriate people in the roles of senior MoV practitioner and study leaders will have a positive impact on developing a value-conscious culture.

The key roles referred to above are summarized in Table 7.1.

Depending on the scale of MoV activity, no extra headcount may be required for MoV adoption. Most of the role descriptions here can be provided by refocusing existing roles – MoV should be regarded as a new way of working rather than an additional workload. The titles given are purely for ease of explanation and may be appropriate only in larger organizations.

Table 7.1 Key roles

Level	Activity	Purpose	Done by	Training needs
Organization	Full alignment of MoV activities with organizational objectives	Set the business objectives and ensure MoV is in step.	Executive board This term is used to denote the most senior decision-making body in an organization. It may be one person, or several.	Some awareness training would be helpful to ensure understanding of the MoV sponsor below.
	Promote MoV	Ensure value is the first consideration in all decision-making. Agree relevant feedback mechanisms and ensure adequate resource.	There should be a representative at board level. In smaller organizations, this may be the CEO; in larger ones, another director.	Needs to be convinced of MoV benefits, whether through awareness training or experience.
	Oversee MoV implementation	Ensure full alignment of individual MoV activities with organization objectives.	An MoV board or steering group is helpful where MoV implementation is likely to be large in scale, involving many programmes and projects.	This is an optional role, depending on appropriateness. Awareness training is advisable where taken up.
	Import MoV skills and knowledge	Ensure MoV activities are effective.	The senior MoV practitioner is a role that requires skills and knowledge that are unlikely to already exist in the organization. Where the scale of implementation is small, this could be provided by an external resource or combined with another role of a similar nature.	Full qualification and experience is needed. A full-time, dedicated resource would be needed, at least in the short term, for full implementation in a larger organization.
	Provide data for use in studies and communicate results and learning	Track performance improvements in line with agreed value priorities.	Some organizations have a support office that can support MoV activities either within the organization or during application on programmes or projects.	No MoV training needed, but awareness training may be helpful. This is likely only to be available in larger concerns and is not essential.
Application	Lead MoV studies	Lead and facilitate a suite of studies to achieve a given objective in accordance with the implementation plan.	Study leaders are competent MoV practitioners responsible for all aspects of planning, implementing and reporting on MoV studies.	Full training is necessary for in-house study leaders. External practitioners can be procured if a pilot study is preferred.
	Participate in studies	Contribute to studies and developing proposals, and see these through from executive board presentation to implementation.	Members of the MoV study team should be drawn from all key stakeholder groups involved in advising on and delivering the programme or project, and/or may be affected by its outcome.	Members of the study team may require awareness training.

7.3     SETTING UP A PLAN FOR IMPLEMENTING THE POLICY

The MoV policy implementation strategy will be written by the senior MoV practitioner and signed off by the steering group.

It should set out clearly how the activities required by the policy should be implemented. These will include the following:

  A summary of the requirements of the policy so that all participants in MoV are aware of it

  The level of training and qualifications required, by whom, and where and how these can be acquired

  An outline of the key objectives of MoV in the organization, and guidelines on selecting projects to which MoV will be applied

  A high-level outline of the key MoV processes, why they are used and signposts to more detailed sources of information (including this guide)

  How MoV will be applied to projects (see study leader’s handbook in section 7.5), including scaling the level of effort to suit the size and complexity of the project

  Roles and responsibilities of all participants, including those who will contribute to but not lead MoV studies, and the project support office (if one exists) in providing support generally

  Reporting requirements and how to capture data for analysis and learning lessons.

The plan should be made available to all those who are involved in MoV activities within the organization.

The plan may propose that MoV be introduced on a few projects initially to demonstrate success and facilitate fine-tuning of the study leader’s handbook (see section 7.5).

7.4     INTRODUCING TRAINING

A good understanding of MoV is necessary to instil its principles and embed a systematic approach. Unless firmly embedded, there is a risk that future changes in leadership may undo progress made to date. The cost of training will be more than recouped by the improvements in value resulting from the successful implementation of MoV. Many of these improvements will not be forthcoming without MoV.

It is unnecessary to train everyone to the same level, as they will not all be involved to the same extent.

Training may be applied at four levels:

  Awareness training for individuals who simply need to know what MoV is so that they can interact with their colleagues. This may be aimed at different levels of employee, from senior managers to more junior staff, since each will need a different level of understanding.

  Foundation-level training for those who are likely to participate in MoV activities.

  Practitioner-level training for those who will be actively involved with and contribute to MoV studies. Individuals who wish to lead studies may require additional training in such skills as facilitation.

  Training to advanced study leader level involving skills and knowledge for those who intend to deliver MoV services.

Sometimes, when implementing an MoV study, it is necessary to provide ‘just-in-time’ training to participants to help them contribute fully to the study (see Figure 5.2). This is similar to awareness training (as described in the first point above) and would normally be provided by the study leader.

Training at awareness level may be undertaken by internal staff who have an understanding of the principles and practice of MoV. It could also be provided by e-learning or through involvement in MoV studies on projects.

Mentoring by experienced MoV practitioners is an excellent way for novices to improve their proficiency. The best way to learn and gain experience is, however, by applying MoV to live projects, possibly under the guidance of a mentor initially.

Training at other levels should be delivered by accredited trainers using accredited material. This guide provides the basis of the Best Management Practice MoV qualifications, which are part of the PPM suite of qualifications. Other qualifications are available through professional institutions internationally.¹²

All training should contribute to raising both the organizational and individual levels of maturity on learning generally and MoV in particular. In Appendix D, organizational maturity and individual competency models, consistent with the Portfolio, Programme and Project Management Maturity Model (P3M3), are discussed.

7.5     STUDY LEADER’S HANDBOOK

A key document that the senior MoV practitioner should produce describes how to apply MoV to projects and programmes. This document effectively forms the study leader’s handbook on how to use their accumulated knowledge to develop and implement a project-specific MoV plan. It is the culmination of all the effort set out in the previous four sections of this chapter. It should broadly describe the MoV project plan illustrated in Figure 5.2.

The study leader’s handbook should set out the following:

  Guidance on selecting on which projects to apply MoV and the level of effort to be applied commensurate with their size, complexity and importance.

  How to identify the key stakeholders in the project and define the objectives of the study.

  How to select the required processes and the level of effort needed to achieve the study objectives.

  How to select the study participants and gauge whether or not they need training.

  Where and how to gather information, including what information may be needed.

  How to use the information that has been gathered to provide useful input to the MoV study and share this with the participants.

  How to conduct the study, run workshops, generate value-improving proposals, obtain decisions from the project management teams, agree implementation plans, report the outputs and follow up.

  How to capture data and use it to learn lessons and provide feedback for continuous improvement.

The project plan should spell out the role of project support office in providing technical support as well as capturing and disseminating the records accumulated during the MoV programme. Without access to this information, future projects risk wasting much time and money, so it is essential to consider how individuals can retrieve this data.

7.6     DATA CAPTURE AND FEEDBACK

Data capture is essential to a learning organization and culture. All study output has worth in terms of supporting decisions made and lessons learned from those decisions. Consideration is needed to determine how lessons learned on one project can be transferred to another, whether in the same programme or not.

Similarly, whilst the policy and implementation guide will have been developed with a view to optimizing the application of MoV, feedback from MoV studies will provide valuable information on what worked well in practice and what was less successful. This provides the basis for building on successful processes and improving those which could benefit from some help.

Responsibility for ensuring retained data is captured, analysed and accessible for sharing with others may rest with the senior MoV practitioner or may be undertaken by the project support office, where this exists.

Thought is needed to determine what is to be captured, how long it is to be kept, the media in which it is kept and, above all, the way in which it is to be shared. The structure, location, form and permission levels of these records will determine how they are accessed and by whom. Enabling ready access to those who need it is one of the most difficult aspects of setting up a knowledge database. A framework should be established for storing the data, providing ‘labels’, such as key words, project type and sector, and so on to facilitate search and retrieval. Lessons learned, especially if they are negative, are often lost to future projects and this wastes time and money reinventing the wheel. Capturing, recording and maintaining a good knowledge database requires skill and resource. This role is ideally suited to a good support office, if available.

Contributions to and use of the knowledge database should be mandatory.

The best source of MoV data is the reports that are produced giving the outputs from each study. This reinforces the need for these reports to be comprehensive and accurate.

Typically the following information may be gathered:

  Value-improving proposals (whether implemented or not)

  Classification of the project type, context (e.g. whether part of a programme or not) and objectives

  The agreed study outputs and implementation plan

  The success or otherwise of achieving the expected increases in value.

This information may then be analysed to provide the following easily accessible outputs:

  A record of all studies undertaken, their classification, dates, outputs (initial and final) and feedback

  Information on the most common and effective value-improving measures for different project types

  Performance trends to inform senior management about the effectiveness of MoV

  Case studies or success stories for sharing and/or publication

  Information for future project audits

  What should be done differently next time.

7.6.1     MoV study records

A readily accessible and detailed record of all MoV studies undertaken will save considerable time in reviewing past experience. This information may be used in marketing, learning from others with similar experience and providing precedent for similar projects.

7.6.2     Effective value-improving measures

Information on the most common and effective value-improving measures provides invaluable input for conducting similar studies and a firm foundation for project teams to build on from the outset.

7.6.3     Trends

Senior management and others will want to understand trends in the outcomes of MoV studies and programmes. Performance trends (for example plotting the added value realized by project type over time) will help senior management focus their MoV efforts where they are most effective and avoid wasting resources. Benefits, both monetary and non-monetary, should be recorded centrally to show trends in the effectiveness of the programme and the cost benefit ratio for MoV.

Suitable key performance indicators for MoV fall into two types.

  Embedding measures:

  Proportion of projects or programmes to which MoV is regularly applied

  Numbers of formal studies undertaken

Monitoring such statistics allows the rate of take-up to be measured and future resource requirements, such as training, to be estimated.

  Outcome measures:

  Cost savings compared with total costs of applying MoV

  Types of projects to which MoV is applied and the relative success of such applications.

Trend information will enable the senior MoV practitioner and senior management to identify where MoV is working well, where performance needs to be improved and demonstrate that those projects employing effective MoV deliver added value.

7.6.4     Case studies

Publicizing success stories is the best way to secure senior management commitment and win new followers. By keeping MoV achievements in view as much as possible, corporate memory will be protected from changes in senior management and other project-related resource.

Similarly, there is no better way to demonstrate the effectiveness of MoV and to build a supportive culture throughout an organization than by sharing positive outcomes. Success breeds success and such case studies should form a core part of any training exercise.

Not only does this encourage senior management support, but it instils a sense of pride in those who contributed. This sense of personal ownership of a successful result is a powerful motivator in repeating that performance. In addition, such individuals generally acquire a good deal of kudos, which can improve career opportunities; it is important to consider how to retain these people in the organization.

Over time, it should be possible to build up a significant library of cases. These could be used to enhance the reputation of an organization that can demonstrate a successful track record of maximizing value in all its transactions.

The precise components of a good case study will vary, just as organizations do, but all will have certain features in common:

  An abstract searchable by key words, which makes the case study easier to find

  An indication of the challenges faced, why a change was necessary and what the project was seeking to achieve

  An outline of the methodology of moving from the original state to the new state, to reflect the key challenges and strategies used to overcome them

  A description of specific changes made and how and why they were selected

  A statement of the benefits delivered. Since these will vary over time, they will need to be updated periodically and the period defined. Where impacts are non-monetary, a means by which they can be measured must be described and the results given.

Although there is a lot of information here, case studies should be quite concise, which will encourage people to read them.

7.6.5     Audit trail

Many projects take several years to complete. Throughout that time they are likely to see changes in management personnel as well as the business environment. To provide an understanding of why certain decisions were taken, records should provide a clear explanation of the material on which the study was based and the MoV analysis resulting in the course of action agreed by the team.

7.6.6     Feedback for improving performance

While all MoV procedures should be rigorously applied, organizations should be prepared to adapt and amend them, within the bounds of this guide, to build on those things that work well and change or improve delivery of those that are less successful. The needs of all organizations differ. It is important to adapt procedures to suit the circumstances in which they are used and ways in which the organization operates.

If MoV is taken to heart by the whole organization, then performance will drive motivation up and a virtuous circle will result. Individuals can improve how they do things and share their successes with others; they will understand what the priorities of the organization are because these are described simply and clearly in the MoV plan; they can remedy any gaps in their knowledge or skill sets in relation to these objectives with help from the organization; they will learn from their mistakes and must be allowed to do so; and they will ask questions and need to know this is acceptable. All these things contribute to the culture of a learning organization and a personally rewarding existence that benefits the organization and those whom it serves (see Figure 7.4).

To apply the procedures as if they were set in stone and by rote will have an adverse effect. There is a risk that MoV could become a tick-box procedure – for example, to get approval to fund a project that might not offer any benefit to anyone, or might fall short of its potential to add real value. Such a culture is likely to discourage involvement and improvement in MoV and should be avoided by clearly demonstrating the benefits delivered.

Figure 7.4 Feedback for improving performance

7.7     MONITORING AND MEASURING THE BENEFITS

All projects are planned on the basis of providing benefits to the stakeholders. One of the primary purposes of MoV is to enhance the expected benefits to add more value.

The main outcomes from a successful MoV study or series of studies will include the following benefits:

  Enhanced satisfaction of the needs of the various stakeholders, both monetary and non-monetary

  More effective use of resources including money, time, manpower and materials

  Enhanced relationships between the participants leading to increased performance.

In order that these value enhancements may be realized, it will be necessary to undertake the following activities:

  Record the expected additional benefits (for example, by way of the MoV study report. If a benefits register exists, this may be incorporated in the study report.

  Provide the means to measure both monetary and non-monetary value improvements.

  Monitor the implementation of the value-improving proposals that are included in the agreed implementation plan.

  Take such actions as may be needed to prevent loss of (or further enhance) the expected improvements in value.

  On project completion, record the enhancements actually achieved and compare this with expectations.

  Provide feedback for improving future MoV performance.

In many organizations, these activities will be undertaken by the project teams in their regular project reviews, with or without input from the MoV study leader. They may also be undertaken by the project support office.

Many projects include a benefits realization process. In such cases the enhanced benefits arising from MoV studies may be introduced as a project change and managed as part of that process. If MoV enhancements to benefits are to be managed in this way, the value-improving proposals should include the information required in the benefits profile.

Monitoring the implementation of value-improving proposals at project reviews provides a reliable way to ensure their delivery.

Whatever method is adopted, failure to manage the implementation plan to secure the benefits will result in a reduction or loss of the added value provided by MoV.

7.8     OVERCOMING BARRIERS TO EMBEDDING MOV

This section explores some of the barriers that may be encountered when embedding MoV and suggests ways in which to overcome them. Some of the most common barriers are listed below:

  The belief that there are already processes for maximizing value and that project teams should be using these intuitively throughout the project. ‘We do it anyway.’

  The belief that applying MoV processes rigorously takes up too much time and is a waste of resource, particularly where time is short. ‘It takes too much time.’

  The belief that competitive fee bidding resulting in a tight fixed fee will discourage designers from accepting re-work due to changes, even if these result in enhanced value. ‘We can’t afford to make the changes.’

  A culture that does not encourage maximizing value if it involves additional unrewarded effort: inappropriate incentives and lack of accountability. ‘What’s in it for me?’

  A reluctance to change working practices which are already embedded. ‘Don’t fix it if it ain’t broke.’

  Paying a fixed return on capital investment is unlikely to encourage value for money.

Below are some answers to these objections.

7.8.1     We do it anyway

A common cause for not implementing formal processes to maximize value is a belief that project teams should do this intuitively, or over-confidence that their intuition is right. In an ideal world, maybe this could be the case; however, the real world is becoming more and more competitive. To succeed in winning work, consultants and contractors will price what is requested in the bid documentation and no more. They will not price for expending effort in improving the value of a project unless it is to their advantage. This requires a cultural shift from lowest cost to value for money or affordable cost.

MoV requires resource to implement and that costs money although, as demonstrated by statistics in the USA (see section 1.4.1), the benefits of applying MoV effectively and at the right time far outweigh its cost. Furthermore, embedding MoV in an organization together with some rationalization of processes should enable it not only to be applied without increasing headcount, but applied using existing resources more effectively.

Unless formal MoV is specified in accordance with best management practice (such as is set out in this guide), organizations are unlikely to receive a rigorous service and therefore to reap the full benefits of their investment. To counter this tendency, the requirement to apply MoV should be incorporated in tender documentation together with a requirement to demonstrate experience and provide a commitment to apply it in accordance with the tender requirements.

7.8.2     It takes too much time

In common with any management technique, assigning too little time and/or resource to implementing MoV significantly reduces its benefits. Scaling the level of effort to the size and complexity of a project should not be regarded as a licence to take short cuts.

The consequences of suboptimal or non-existent delivery of MoV include:

  Unnecessary costs generated by projects that do not have a robust business case for their existence

  Increased waste of materials or other scarce resources

  Poor performance of the completed project through a lack of clear understanding of the objectives

  Failure to achieve essential targets in sustainability or other corporate standards.

In short, a failure to provide value for money (as specifically required by UK government guidance, which is mandatory for public sector activities) would result.

Taking short cuts may be avoided by embedding the procedures described earlier in this chapter.

The added value from successful MoV studies generally far outweighs the costs arising from any delay. By careful management, the changes required to realize increased benefits should not cause delay. Indeed, any delay should be offset by reduced re-work from getting it right first time.

MoV activities should be programmed into the project from the outset, and contracts with the project team should include a requirement to participate and contribute to them.

7.8.3     We can’t afford to make changes

Competitive fee bidding should include appropriate allowance for refining designs to optimize value, regardless of whether MoV is applied or not. If MoV is integrated into an organization’s way of working, this should not be an issue: however, it may be undermined by inappropriate procurement practices.

It is good practice, when placing contracts, to build in an appropriate mechanism for incorporating changes arising from MoV studies.

If an MoV study results in outcomes that significantly enhance value, consideration should be given to sharing the rewards arising from making the changes with the project team. Generally, this reward amounts to a small fraction of the additional benefit and represents money well spent. Incentives may take several forms and, ideally, should result in benefits for client and contractors alike.

In the USA it is common practice to introduce value engineering change proposals (VECPs) into contracts. These incentivize contractors to introduce value-improving proposals that benefit all parties.

7.8.4     What’s in it for me?

Incentives need to be set very carefully. There are numerous examples of people taking advantage of incentives that have been poorly thought through or executed with the result that they gain the reward without having delivered the value.

The use of short-term incentives can encourage reckless risk-taking rather than establishing long-term benefit. Such behaviour can result in catastrophic loss of value when favourable conditions cease.

Appointing consultants or contractors on terms that increase their reward for increases in project costs or time is a recipe for inviting cost and time overruns and should be avoided. In such cases there will be huge resistance to implementing MoV.

Similarly, appointments based on lowest cost rather than best value can result in poor performance.

Any incentive payment mechanism must be used to reward ‘good’ behaviour. Pain/gain schemes allow the rewards to the project team to be aligned with the delivery of good value.

Often the culture in a large organization works against individuals making additional effort to improve value. They will receive their salary regardless, provided they work in accordance with their contract.

In such cases, senior management should consider introducing incentives for individuals to actively seek to enhance value and contribute to MoV studies. Such incentives should be designed to encourage long-term value enhancement rather than short-term gain (which might evaporate over the course of a long project).

Setting target incentives does not always result in the desired behaviour; however, changing culture can do so.

If management are not fully accountable for the activities over which they preside, they may not enforce the rigour needed to make MoV effective.

7.8.5     Don’t fix it if it ain’t broke

Many projects and services have been delivered successfully using traditional approaches that have not changed for many years. Unfortunately, in these times of rapid change, such established practices may not maximize value.

For many, there is a natural resistance to embracing changes in working practices when the existing ways of doing things seem to work adequately or if people have had insufficient time to assimilate the new processes.

In such cases it will be necessary to convince existing staff of the potential benefits to them and their organization. This may be achieved through training and the sharing of success stories.

7.8.6     Fixed returns on capital investment

If rewards are simply related to the amount of money spent, there is no incentive to maximize customer satisfaction or value for money. Reward should be based on the benefits delivered to customers.

7.9     AVOIDING FAILURE

In addition to the examples described above, the OGC published a report, agreed with the National Audit Office, entitled The Common Causes of Project Failure. In this, they specified eight common causes. MoV addresses all of these, directly or indirectly, as outlined in Table 7.2.

Table 7.2 Eight common causes of project failure

Cause	MoV response
Lack of clear links between the project and the organization’s key strategic priorities, including agreed measures of success	This is clearly remedied by use of MoV which requires articulation of such links and clear project definition
Lack of clear senior management and ministerial ownership accountability and leadership	MoV itself cannot be implemented without senior management support and leadership. Ministers will tend to support success stories which MoV can provide. While senior management support is essential, MoV actually puts ownership of the improvements in value with the team
Lack of effective engagement with stakeholders	Engagement with stakeholders is a key principle of MoV, so the likelihood of its occurrence is significantly reduced through its use
Lack of skills and proven approach to project management and risk management	MoV training will help in terms of approach to project management, together with M_o_R or similar risk training
Too little attention to breaking development and implementation into manageable steps	MoV explores alternative ways of delivering benefits and can therefore contribute to optimizing the ‘chunking’ of development and implementation
Evaluation of proposals driven by initial price rather than long-term value for money (especially securing delivery of business benefits)	This is the reason why MoV uses whole-life costs as far as possible, as a better reflection of benefits gained. Changes in procurement policies and culture would help to address this cause
Lack of understanding of, and contact with, the supply industry at senior levels in the organization	MoV involves all links in the delivery process, as they are deemed to be stakeholders in their own right
Lack of effective project team integration between clients, the supplier team and the supply chain	MoV involves all links in the delivery process, as they are deemed to be stakeholders in their own right

12  For example: the Institute of Value Management (UK) at www.ivm.org.uk; Society of American Value Engineers, http://value-eng.org; and Institute of Value Management Australia, www.value-management.com.au