Strategic value management

Abstract

Today's organizational context is rapidly becoming more complex and turbulent and often unexpectedly so; Value Management (VM) is ideally suited to support the organization's need to become more responsive to both stakeholders’ needs and a continually changing market and competition.

VM was initially developed at General Electric (GE) in the late 40s as value engineering and value analysis, a product improvement methodology known today as “hard” value management. Since then, it has evolved into, first “soft” VM, which focuses on achieving stakeholders’ needs and expectations with the least possible resources and more recently into a strategic methodology to help organizations stay competitive. VM is one of the most effective processes to agree multiple stakeholders’ needs and expectations. It is also an efficient group decision-making and problem-solving methodology that helps clarify a strategy and define the means to achieve it.

For value management to be able to support strategic decisions and help deliver business benefits, it needs to be closely combined with portfolio, program and project management. Many well-known project management books, like the Gower Handbook of Project Management and the Wiley Guide to Project, Program and Portfolio Management recommend value management as one of the methodologies by which projects and programs can deliver benefits to organizations.

This paper draws on the author's experience and expertise in applying value management at the strategic level to better understand strategic decisions and business benefits. It targets all managers who want to deliver business benefits that are in line with the organisation's strategy, while making sure that these strategies are achievable. It is tailored for business, Program Management Office (PMO), portfolio, program or value managers who are interested in helping to deliver business value and want to achieve both significant benefits and outcomes and improved stakeholder relationship management.

Introduction

As early as 1731, Daniel Bernoulli, presenting a paper at the Imperial Academy of Sciences in St. Petersburg, stated that the value of an item must not be based on its price, but rather on the utility which it yields (Bernstein, 1996). This concept of the relationship between value and function is at the heart of all value disciplines. As a formalized methodology, value management is not new; its origin dates from World War II when it was codified as value analysis/engineering. Its success was challenged at times, yet flexibility and continued improvements have enabled value analysis and value engineering to overcome roadblocks with remarkable results.

Value analysis/engineering (VA/VE) was first developed by Lawrence D. Miles, an electrical engineer with GE, now universally known as the “father of value engineering.” When World War II broke out, material shortages began occurring, and electrical components that once were plentiful were committed to the war effort. A product that had been produced easily in the past had to be redeveloped using different materials. The function remained the same, but the method of providing that function had to be changed. Miles, who had often in the past been dissatisfied with the high cost of many of GE's projects, realized that often, when circumstances force people to do things differently—altering a design or using a different material, for example—the result was superior performance combined with reduced cost.

Miles based his concept on three guiding principles:

1. The concept of functions to define a product by its functionality rather than by its technical characteristics
2. The use of a multi-disciplinary team in order to develop well-balanced and comprehensive solutions
3. The application of a structured job plan based on the sequential use of creativity and analysis

At first, the functional approach was related to decreasing cost; subsequently, it was expanded to evaluate the overall value of the product. The program developed by Miles was called value analysis/engineering, and its purpose was to analyse the cost necessary to achieve the required function without jeopardizing the reliability of the product: a performance vs. cost ratio. The first value analysis seminars at GE were conducted in 1952. A multidisciplinary team was organized to involve the key decision makers, and the team concept was an instant success. In the late fifties, Miles structured value engineering through a job plan concept and published Techniques of Value Analysis and Engineering (2^nd Ed. 1972).

In the early sixties, Charles W. Bytheway, an engineer with Sperry Rand's Univac Division, developed the Function Analysis Systems Technique (FAST) (1965). FAST is a diagrammatic structure aimed at organizing functions in a logical and orderly manner; it may have been inspired by the concepts of work breakdown structure (WBS) and critical path method (CPM) that were introduced and very popular in project management at the time.

Although the term value management was first used in the 1970s, it was only in the late 1990s that value management emerged as a discipline distinct from VA/VE, drawing on management techniques and fully integrating it in the project life cycle as a “collaborative group-learning approach” (Barton, 2000). Today, VM is used in a number of new fields, like strategic planning, process reengineering, organizational management, change management, concurrent engineering, and others; it is also integrated with known processes like organizational effectiveness, quality management, design to objectives (DTO), and risk management.

In all those years, VM has grown from “a problem-solving system to deliver products with appropriate performance and cost” (Miles, 1972) to “a style of management […] with the aim of maximizing the overall performance of an organization” (BSI, 2000). In the last 15 years, traditional problem-solving value engineering and value analysis have been labelled “hard” value management because of their focus on product improvement perspective and cost focus. “Soft” value management has evolved in the late nineties and early 21^st century in line with new management thinking, which focuses on achieving stakeholders’ needs and expectations and focuses on doing this with the least possible resources. The European standard (BSI, 2000) defines value as a ratio between the satisfaction of the stakeholders’ needs and the resources used to achieve that satisfaction. More recently some authors (Gillier, Hooge and Piat, 2013) who work in the automotive industry have explored the concept of “expansive” value management, where value management is used to destabilize and provoke ambiguity, therefore triggering creativity and innovation. In all these cases, the value management team is a group of subject matter experts that facilitate a problem-solving or decision-making process.

For the last 10 years, a small group of practitioners around the world have used value management to help formulate strategies and master their execution. As VM is more and more associated with governance and decision management, it is evolving from a finite methodology to an agile process in which both decision makers and those who will execute the decisions actively participate. In this context, the participants in the VM process have authority over the resources required to implement the decision. This paper illustrates the use of VM as a strategy formulation and mastering process in the context of organizational project management (OPM), which is described as:

Strategic Value Management (SVM) in Organisational Project Management (OPM)

Strategy execution is the area with which traditional organisations experience the most difficulty because the final outcome can be unpredictable. The current business environment is characterized by both high uncertainty and high ambiguity, or as Siggelkow and Rivkin (2005) have labelled it: combined turbulence and complexity, where firms must balance speed of decision with search for alternate solutions. In these fast-changing situations, there is a need to adopt new ways to formulate and execute strategies. In traditional OPM, decision-makers often spend time and effort collecting hard, evidence-based data; this is not best practice when turbulence and complexity are high. Adding more information often increases confusion for an already complex issue and, by the time enough data has been gathered to make a decision, it has usually become irrelevant.

Exhibit 1 displays the usual OPM business context and process of making and implementing strategic decisions. In this context, strategic objectives are usually defined on the basis of both a corporate strategy and pressures that regularly affect organizations. These pressures can be internal, like new work practices, union contract negotiations, restructuring of departments, or the hiring of a new CEO; or external, like the introduction of new technologies, opening of new markets, new laws or regulations, or natural disasters. Strategic objectives are typically aligned with corporate strategy at the portfolio level.

The business portfolio usually aims to provide new capabilities to the organization to enable it to compete in its chosen market or in new markets. This is why I have labelled this area the “capability cycle”. Once strategic objectives are agreed, programs and projects will be launched. The initiation of the value cycle consists of formulating the program by agreeing the expected benefits that it will deliver (a sensemaking process) and preparing the program in order to deliver these benefits through projects (an ideation and elaboration process). Projects and other program components are then launched (a decision process) in order to deliver benefits. Typical steps include definition of objectives and parameters (initiation), planning and execution, and delivery of results and outputs (monitoring, control and closure). During the project process, value analysis and value engineering are used to optimize performance. These results and outputs are transitioned into the operational side of the business to generate new capabilities that will add value and, ultimately generate business benefits that support the corporate strategy. Ongoing value appraisal takes place during the whole process and corrective or realignment actions are taken if necessary to achieve the ultimate objectives (mastering).

Exhibit 1: The OPM business context

Whereas, in a stable context, decision-makers have time to analyse the situation and see how to integrate change before making decisions, in complex and turbulent context, they must respond quicker and adapt as they go. This is very similar to situations where agile project management is used. Value engineering and value analysis focus on the performance cycle; Strategic Value Management frames the whole process through strategy development, portfolio, program, project, and operations management, enabling managers to take an agile approach to the management of value.

The European value management standard defines value management as:

The Value Management Process

In complex situations and environments, standard problem-solving or decision making techniques are not applicable. A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) – Fifth Edition states that: “Project Governance—the alignment of the project with stakeholders’ needs or objectives—is critical to the successful management of stakeholder engagement and the achievement of strategic objectives.” (PMI 2013a, p.30). Value management is the method of choice to deal with the ambiguity of stakeholders’ needs and expectations and the complexity of a changing business environment at program level and project initiation. It brings structure and objectivity to what has often been a highly subjective and intuitive process and provides a framework for decision making throughout the delivery process.

In this context, it is not potential value that is the goal, but realised value. Therefore value becomes more than a stakeholder satisfaction vs. resources used ratio; it must include the concepts of offered benefits and available capabilities as shown in Exhibit 2. High value is derived from the balance between the four elements shown in the diagram below: Expected benefits (the satisfaction of the stakeholders’ needs and expectations); required capabilities (the resources that need to be used to achieve that satisfaction); but, more importantly: what capabilities are available (resources, competency, expertise, etc.) and what can be offered in regards to these capabilities. The whole purpose of strategic value management is to strike the best possible balance among these elements to offer the best alignment between expected and offered benefits while considering achievability, not specifically to reduce resources.

Exhibit 2: The strategic value concept

The VM process is iterated regularly during the change process as circumstances and expectations will change as results are delivered and the context changes. The VM process comprises the following phases, which are typically carried out as facilitated workshops or meetings where the key stakeholders and other concerned parties participate actively.

• Sensemaking, which includes function(al) analysis and can use a variety of techniques like scenario planning, soft systems analysis, gap analysis, and others, is used to understand the situation and come to a shared agreement about the critical success factors (qualitative statement of expected benefits) and key performance indicators (quantitative measures).
• Ideation is the creative generation of alternatives that enables the process to be truly innovative.
• Elaboration involves the creation of viable options. Viable options are alternatives that have been combined and/or developed enough to enable a decision based on their contribution to expected benefits and achievability.
• Decision is the action of selecting/prioritizing the best options, in regards to the critical success factors.
• Mastery is a constructive evaluation and control process based on improvement rather than on a baseline.

These five phases are repeated at regular intervals, first to define the strategic objectives, then to clarify the program's purpose and success factors and later to define the projects that will support it. It can also be used to design technical solutions and clarify integration procedures. Mostly it will also be used to make sure any proposed change really delivers value to the business.

As shown in Exhibit 3, Strategic Value Management (SVM) is used mostly at the strategic decision level (high ambiguity and complexity), both in the running of the organisation (low uncertainty and turbulence) and for change (high uncertainty and turbulence). Value Analysis/Engineering, or hard VM, is used when ambiguity is low (Execution), either at project or operational level. Soft VM is typically used to reduce ambiguity in complex situations by going through a sensemaking process and elaborating potential solutions to deliver business benefits. This is the program definition phase (PMI, 2013b); it can then be used to initiate projects and during the planning process (PMI, 2013a). Finally, Expansive VM, although out of the scope of this paper, is typically used to challenge existing practices and define new ways of doing things, leading to a change.

Exhibit 3: Value management in an OPM context

The SVM process requires involvement of many stakeholders at different levels and times, but to be effective, decision makers—with authority over resources—must be involved at all stages of the process. Some tasks can be carried on individually, but research has demonstrated that facilitation is a key aspect of successful group decision processes in general and value management in particular, if only to ensure buy-in and support of the decisions.

I will now describe each of these phases and illustrate these with these two real-life case study examples.

Case 1, Gulf Region: Development of a number of options

Following a few incidents that outlined the need for an integrated and up-to-date document control, a large oil and gas company in the Gulf Region had decided to undertake an organization-wide Enterprise Document Management (EDM) program. The program cost was estimated at $US 80 million over a period of seven years and was led by the Information Management Systems Group. We were hired to support this group in the preparation and delivery of the business case for the program; the mandate included a full value management training program for the program team. We used value management to clarify the program's strategic objectives, developed a number of options and assessed their contribution to the strategic objectives and feasibility.

The sensemaking process helped the team define and agree measurable success factors and clearly link them to the organization's strategic objectives. It also enabled us to develop a set of measurable criteria to evaluate the delivery of benefits to the business. The ideation and elaboration processes enabled the team to identify four potential options and assess each of them in terms of their contribution to the company's performance indicators and their achievability. The value management effort was aligned with the company's portfolio management procedures in order to create a good integration with the business. The recommended option was approved by the Board.

Case 2, Western Europe: Choice between two possible alternatives

A large chemical and pharmaceutical multinational had decided to undertake a major worldwide “e-Workspace” change program to increase the group's performance and agility. Many of the companies that form this multinational already had their own IT systems in place; however, they were not necessarily compatible. The main objective of the program, which was estimated at €50 million over a period of six years, was to unify communication and data management through the choice and implementation of the “right” system; it was headed by the CIO office in Western Europe. In this case, the objective was to look at two alternative solutions in order to choose the one that would best fulfil the organisation's objectives.

We used value management to structure the program team's efforts over a period of six months, going through the formulation and preparation stage of this change program. The sensemaking helped them define the program's strategic objectives and critical success factors which supported the business case. We used ideation and elaboration to clarify the technical requirements. In the process, we examined two main technical options to see how well they fit these requirements. This enabled the decision-makers to make a decision based on a set of financial and non-financial criteria that were directly linked to the company's strategic objectives. The resulting proposal was approved by the Board.

Phase 1: Sensemaking

Value management is a sensemaking method. The first step is to identify the benefits expected by the many stakeholders, and then agree on the benefits that the program and its component projects will deliver (offered vs. expected ratio). The benefits are the functions that the program and/or projects are ultimately expected to deliver at the business level. When there is no program to which a project is associated, the sponsor of the project becomes responsible for identifying and delivering the benefits.

A well-managed sensemaking process enables participants to agree a set of benefits that satisfy the purpose of the program and to organize them into a benefits breakdown structure (BBS) using a How-Why logic that helps define the critical success factors (CSFs), which define the successful achievement of the objectives identified at portfolio level (see Thiry 2010 and 2013, as well as PMI, 2013c, p.73 for details on how to develop the BBS). In strategic value management:

1. The first step of the sensemaking phase is to perform a stakeholder analysis, which encompasses the identification of the stakeholders, their classification, and their ranking.
2. The second step is to carry out a functional (benefits) analysis, which consists of determining stakeholders’ needs and expectations, translating them into expected benefits using a verb-noun semantic, identifying any additional benefits required, and organizing them into a BBS.
3. The next step consists of defining those expected benefits that are critical success factors (CSF) of the program or project and their prioritization, which will support decision making throughout the benefits delivery process.
4. Finally, the CSFs are characterized through their key performance indicators (KPI). The definition of KPIs enables the stakeholders to move from qualitative to quantitative measures of success and to be able to assess benefits on clearly quantifiable terms.

Case Study 1:

In case study 1, a number of consultants had produced a report on the incidents and, in doing so, had defined “objectives” for the solutions that needed to be implemented. When we surveyed the different consultants’ reports, we identified 54 distinct objectives. Some of them were “real” objectives; others were system characteristics or principles, issues, maturity dimensions; and many were low-level requirements. We used the Benefits Breakdown Structure to classify these “objectives” and understand what the real success factors were. We also needed to make sure that all the different stakeholders that had contributed to these reports would find their concerns addressed in our proposal. We created a straw man BBS with all 54 objectives. It was debated and reorganised to end up with seven true critical success factors (CSF) and 16 measurable performance indicators (KPI). The stakeholder analysis enabled us to identify a number of work streams that were affected by the program. They were divided into four main groups: system implementation, organisation, migration and technology. Each of them was addressed.

Case Study 2:

Because the program had a worldwide and pan-organisation impact, we took the time to create a thorough, comprehensive stakeholders map. At the start, although it was clear that the program had a worldwide reach, it was not clear who the stakeholders were and what their mutual interest would be. In particular, this stakeholder analysis helped the team understand who the decision-makers were, who the change recipients would be and who the internal service suppliers were. This enabled us to clarify their concerns and clarify the program's strategic objectives in clear terms. We developed an initial BBS, based on the needs and expectations we had identified for the key stakeholders and other stakeholder groups. The program team then went through a number of iterations over a period of a few weeks, following meetings with different stakeholder groups. We ended up with a BBS agreed by the key stakeholder and identified six CSFs and 19 measurable KPIs that would become the success criteria for the program.

Phase 2: Ideation

Value management practitioners use creativity techniques in a number of VM processes, but if there is one area where creativity becomes essential, it is the generation of alternatives. Although the functional analysis has already generated a number of actions, ideation will broaden the scope of possibilities from which to develop options and therefore increase the quality of those options from which the team will choose solutions. It will also generate a bank of possible solutions that could be exploited and developed further if circumstances or stakeholders’ expectations changed, therefore saving important redevelopment time and resources. Ideation is the traditional creativity phase of VA/VE; it consists of identifying as many alternatives as possible for the fulfilment of one or more benefits. It is an area where lateral thinking cannot be mixed with vertical thinking. The team will start with CSFs, or alternatively, lower-level benefits and creatively identify possible ways of achieving them.

Many creativity techniques can be used to conduct ideation, but two are more practical in an OPM context. The Osborn brainstorming technique, with an experienced facilitator, is an easily applicable and valuable technique for small groups (five to eight). The Stepladder, or Nominal Group Technique, would be the best choice with larger groups or when no experienced facilitator is available. With the latter techniques, participants are asked to write their ideas anonymously, the facilitator then collects the ideas and the group votes on each idea. The top ranked ideas are then sent back to subgroups for further brainstorming. As management in general—and the management of change in particular—evolves towards a wider stakeholder involvement, VM is slowly moving from the traditional brainstorm towards techniques akin to stepladder.

In a project or program context, it is important to keep the team focused during ideation; although creativity requires the group to accept all ideas, it is also easy to lose sight of the initial objective. While the loose-rein approach is valid for purely creative processes, the management of portfolios, programs and projects requires some focus because of the limited resources available. An experienced facilitator should be able to manage the process to allow enough freedom to foster creativity without losing sight of the objectives. It should also be noted that fewer ideas will be generated at higher levels (strategic or tactical) than at lower levels (technical or operational) because they are more abstract and cover more ground.

Case Study 1:

In this case, we used the ideation mostly to identify required functional capabilities and potential technical/operational alternatives for each of the CSFs and many of the KPIs. We also used ideation to define actual measures of success.

Case Study 2:

For this program, we used ideation to clarify the needs that were to be addressed by the new system. The team brainstormed on the technical requirements that the system would need to provide and, following this clarified the capabilities that the new systems would need to provide.

Phase 3: Elaboration

This phase of the VM process combines two traditional VA/VE phases: evaluation and development. It concerns the validation of the alternatives that have been generated in the previous phase and the development of viable and profitable options. It uses vertical thinking concepts like feasibility, cost-benefit analysis, weighted matrices, risk analysis, estimating, and so on.

The first step of the elaboration phase is to eliminate all non-viable alternatives generated during the ideation; the second step is to combine, modify, or develop the viable alternatives further to generate options; the third step is to compare the options between them, based on their relative alignment to the stated benefits (CSFs and KPIs) considering the CSFs specifically identified for the change process or generic benefits such as revenue, client satisfaction, or market share.

Finally the team will look at capability to implement, or achievability. Achievability may consider aspects like available resources, quick wins, ease of implementation, etc. Over years of practice, we have developed an achievability model based on four groups of factors:

• Financial factors: Capital cost, expected return delay, source of funding, etc.
• Parameters and constraints: Resource availability, timeframe, project authority, etc.
• People factors: Competence (skills and expertise), spread of resources, availability, etc.
• Complexity factors: Innovativeness, interdependencies, clarity of objectives/scope, etc.

The achievability score (capability to implement) is then combined to the alignment score (contribution to benefits), and the combined score is used to prioritize resources against the different options. This means that the value manager is not only concerned with balancing resources with satisfaction of needs (benefits) but also with making sure that intent is matched with capability. (See Thiry 2010 and 2013 for a full description of the benefits-alignment/capability-achievability methodology).

Once this is done, options that have been judged viable are offered for final decision and prioritization. To complete the process, each major option will be assessed against the KPIs; risks (threats and opportunities) will be identified and analysed and risk responses will be included in the final option.

Case Study 1:

In order to assess alignment, we used a mix of the KPIs that had been defined by the team as well as the organisation's “value map” which had been developed at the corporate strategy level. We used the company's own portfolio template and restructured it into Financial Factors, Parameters and Constraints, Human Resources and People Factors, and Complexity Factors to assess achievability. The elaboration process enabled us to develop and assess three different options for the implementation of the system. Each option offered a different range of benefits and a different level of achievability. Whereas option 1 was the most achievable, it was also the one that offered the least benefits. Option 3 offered the most benefits, but was more difficult and lengthier to achieve. It was option 2 that offered the best combined score of alignment vs. achievability; it was the one that was recommended and accepted for implementation.

Case Study 2:

This case was very interesting in that the conclusions reached through the elaboration process were not those initially expected. Of the two options offered, one was definitely more aligned with the organisation's strategic intent. It had been designed specifically to suit the requirements and was almost a perfect fit. The second option was less interesting for the key stakeholders because it required the updating of a number of legacy systems and, although it offered an acceptable performance level, it would never achieve the same degree of integration as option 1. It was almost a done deal. When we proceeded to the achievability analysis, the surprise was that option 2 was much more achievable than option 1 and therefore more interesting than option 2 on the combined score. When we drilled down into the achievability factors, we realised that the main culprit was the cost. Armed with this information, the executive team renegotiated the cost with vendor 1, who until now had been unwilling to get its price down and, using the arguments developed through the VM process, managed to renegotiate the price to a level that made this option the most attracting.

Phase 4: Decision

The decision itself is the last step of the decision-making process. Traditionally, in VA/VE this was the recommendation phase and involved only the value team of SME's making a presentation to the decision-makers. In SVM, the value management team includes the sponsors and, therefore make the actual decision, rather than just make a recommendation. This is a major divergence from traditional value methodologies. Until recently, the value practitioner mostly acted as an external consultant that only had recommendation power. Recent developments have seen VM become more of a group decision support process, where decision making has become an integral part of the SVM process.

I pointed out earlier that the business context has become more and more turbulent and complex. A number of studies point out the fact that, in complex situations, decision making is subjective and intuitive rather than objective and rational. These findings outline the importance of aiming for stakeholder engagement in order to foster support and commitment for the implementation of the decision. Studies show that group decision making is influenced by the significance of issues for the group, the shared understanding among group members, and participants’ representation in the process. VM, through its sensemaking, ideation, and elaboration processes, promotes stakeholder engagement. But sometimes, there is no choice but to have a leader decision; if this is the case, the process should be made clear to the whole team as early as possible and, if possible, the team must still be given a fair opportunity to discuss and try and reach consensus before the final decision is made in order to maintain their engagement.

Phase 5: Mastery

If VM is to be considered a “style of management,” governance becomes an essential part of the process to ensure that value is delivered. With the authority to prioritize resources, SVM can help realize value sustainably, which means it should be part of the portfolio management process. Value management can be used to appraise benefits delivery at “gateways,” which correspond to key deliverables’ milestones. As the program or project progresses toward its outcome, expected benefits and context may evolve, therefore, SVM must be an integrated and iterative process that is an integral part of the governance system. Because we work more and more in turbulent and complex environments, the VM process should be iterated regularly to guide decisions during implementation and integrated into the governance process.

Change management is an essential part of the management of value; the VM process of sensemaking, ideation, and elaboration can be applied to change, especially regarding contribution to benefits, achievability, and integration with overall needs and expectations. When SVM is applied to the change control process, it ensures that the “real” issues are addressed and that changes are made in line with the CSFs and other expected benefits.

This leads to the use of SVM for benefits delivery, which is a significant aspect of the management of programs (PMI 2013b). SVM provides a clear link between identified expected benefits (functions) and results at different levels of the organization. As an iterative process, SVM regularly reassesses stakeholders’ needs and expectations and alerts program and project managers early enough to identify the most innovative and resource-effective alternatives and to evaluate them on a rational basis.

There are a few elements that must be put in place to support this iterative process:

• Gateways for approval of deliverables need to be defined (typically part of program management) and a VM process (sensemaking, ideation, and elaboration) should be used to review the deliverables.
• Regular reviews of stakeholders’ needs and expectations should be planned, specifically at project gateways and program appraisals. CSFs and other expected benefits’ priority should be reassessed.
• Value criteria (CSFs and KPIs) are to be the basis for change requests evaluation; again the value management process (sensemaking-ideation-elaboration) should be applied to the management of change.

In order to achieve this, the value team must develop a responsive evaluation approach under which value lies in the capability to respond quickly to a changing environment, rather than evaluation strictly centred on a baseline where only reliability is a measure of success. SVM, applied to portfolio selection, program appraisal, project gateways, and more generally, change management, enables the team to structure these processes around a robust framework of iterated evaluation criteria and priorities, more appropriate to complex situations.

Conclusions

This paper targets all managers who are tasked with implementing strategies and want to deliver business benefits that are both in line with the strategic intent and achievable. It is about how stakeholders’ needs analysis (a cross-functional group process), the concept of functions and creative thinking principles, combined in the right framework, can help deliver business benefits time after time in a continually changing world.

Organizations that apply the above principles often link the SVM team closely with finance or portfolio management and follow programs and projects on an ongoing basis. In these organizations, program definition and project initiation are based on VM principles, and SVM is part of the program and project governance processes; reviews are carried out at gateways by the SVM team in collaboration with the program or project team. Outputs of this process include resource reprioritization, contingencies, and risk response management (reallocation of unused funds or resources to other projects on an ongoing basis), revalidation of CSFs, and other success factors to improve value. Recent development in business analysis could point to a similar role for the business analyst; the main difference is that business analysts rely mostly on hard data to make their analysis and recommendations, whereas value managers rely on a mix of hard and soft data to identify the best options for the business.

The application of VM at organizational level can be a major source of competitive advantage. This paper outlines the evolution of value management from value engineering/analysis into a strategic management approach. It also emphasises its strong stakeholder focus, creative approach and sensible resource management as key elements of success.