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ISSN 1029-0982 Vol. 13 No. 3 / 4, 2007

THE VALUE MANAGERThe official publication of The Hong Kong Institute of Value Management

THE HONG KONG INSTITUTE OF VALUE MANAGEMENT


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The Value Manager ISSN 1029-0982

Vol. 13, No. 3 / 4, 2007 HKIVM Page i

THE VALUE MANAGER

Editor: Jacky K.H. CHUNG BSc. MPhil, Dip BE, CRP, MICRM, MHKIVM

The Hong Kong Institute of Value ManagementP.O. Box No. 1358, G.P.O., Hong Kong.Tel: (852) 2859 2665, Fax: (852) 2559 5337, Email: [email protected]

COUNCIL MEMBERS OFTHE HONG KONG INSTITUTE OF VALUE MANAGEMENT (HKIVM)

PresidentProf. Geoffrey Q.P. Shen, PhDDepartment of Building & Real Estate

The Hong Kong Polytechnic UniversityHung Hom, Kowloon, Hong KongTel: (852) 2766 5817, Fax: (852) 2764 5131Email: [email protected]

Vice-President / Training, Accreditation and

MembershipDr. Mei-yung Leung

Department of Building and ConstructionCity University of Hong KongTat Chee Avenue, Kowloon, Hong KongTel. (852) 2788 7142, Fax (852) 2788 7612Email: [email protected]

TreasurerMs. Shirley C.S. HoAedas Ltd.19/F, 1063 Kings Road,Quarry Bay, Hong KongTel: (852) 2821 6487, Fax: (852) 2529 6419Email: [email protected]

SecretaryDr. Ann T.W. YuDepartment of Building & Real EstateThe Hong Kong Polytechnic UniversityHung Hom, Kowloon, Hong KongTel: (852) 2766 7807, Fax: (852) 2764 5131Email: [email protected]

Technical DirectorMr. Colin JesseEvans & Peck (Hong Kong) Limited14th Fl. Sun House181 Des Voeux Road Central, Hong KongTel. (852) 2722 0986 Fax (852) 2492 2127Email: [email protected]

Technical DirectorMr. Jacky K.H. ChungDepartment of Civil EngineeringThe University of Hong KongPokfulam Road, Hong Kong.Tel: (852) 2859 2665, Fax: (852) 2559 5337Email: [email protected]

Development DirectorTony WuTransport Department25/F, Asia Orient Tower

33 Lockhart RoadWan Chai, Hong KongTel: (852) 2829 5385, Fax: (852) 2845 7489Email: [email protected]

Conference DirectorMr. Paco P.C. TsangJacobs China Ltd.15/F, Cornwall House, Taikoo Place,

979 King's Road, Quarry Bay, Hong Kong, ChinaTel: (852) 2880.9788 Fax: (852) 2565.5561Email: [email protected]

Immediate Past PresidentMr. David Kai Cheung YauHenderson Land Development Co Ltd75/F, Two International Finance Centre8 Finance Street, Central, Hong Kong.Tel: (852) 2908 8865, Fax: (852) 2537 5025Email: [email protected]

Past PresidentMr. Tony WilsonSRA, PMRs Office, Ocean ParkMaunsell AECOM Group8/F, Grand Central Plaza, Tower 2,Shatin, N.T., Hong KongTel: (852) 2605 6262, Fax: (852) 2691 2649Email: [email protected]


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Vol. 13, No. 3 / 4, 2007 HKIVM Page 1

AIMS AND OBJECTIVES OF THE HKIVM

To create an awareness in the community of the benefits to be derived from the application ofValue Management in Hong Kong.

To encourage the use of the Value Management process by sponsors. To establish and maintain standards of Value Management practice in Hong Kong.

To contribute to the dissemination of the knowledge and skills of Value Management.

To establish an identity for the Institute within Hong Kong and overseas.

To encourage research and development of Value Management with particular emphasis ondeveloping new applications of the process.

To encourage and assist in the education of individuals and organisations in ValueManagement.

To establish and maintain a Code of Conduct for Value Management practitioners in Hong

Kong. To attract membership of the Institute to support these objectives.

TABLE OF CONTENTS

Editorial................................................................................................................................................. 1Message from the President .................................................................................................................. 2Value management in the Architectural Services Department in Hong Kong...................................... 3A VM approach to the appointment of consultants and contractors on a value for money basis.......... 8A functional based multi-criteria decision framework for contractor selection.................................. 16HKIVM news and events .................................................................................................................... 25

EDITORIAL

Welcome to the third issue of The Value Manager 2007. Different from the previous issue, the focusof the papers presented this time will be on procurement, an area in construction that there isconsiderable scope for the use of VM. Three outstanding papers, two from Hong Kong and one fromthe UK, are highly recommended to you in the current issue. The first paper Value management inthe Architectural Services Department (ArchSD) in Hong Kong is written by our Past President,Tony Wilson, who is the former Chief Architect of the ArchSD. This paper introduces somesuccessful VM studies in the ArchSD and comes to a conclusion that the application of VM couldresult in greatly improved project outcomes and added value for all those involved for a very small

cost outlay. In the paper titled A VM approach to the appointment of consultants and contractors ona value for money basis, Prof. John Kelly and Kirsty Hunter from the U.K. introduce a value basedmethod capable of description within the tender documents which meets all the requirements ofprobity. A panel of stakeholders will construct the paired comparison and blank scoring matrix atthe time of preparing the brief. Last but not least, A functional based multi-criteria decisionframework for contractor selection written by Jacky et al. describes a functional based multi-criteriadecision framework which demonstrates the principle and technique of applying VM to contractorselection and thus, helps users develop criteria and procedures for their own projects. I hope you willenjoy reading these papers

Jacky ChungEditor, The Value Manager


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MESSAGE FROM THE PRESIDENT

Geoffrey Q.P. ShenPresident of HKIVM

I am very pleased to inform you that built on the success of our previous eight internationalconferences, our 9th International VM Conference Achieving Sustainable Values throughCollaboration will be held in InterContinental Grand Stanford Hotel on 30-31 October 2008. This isan event jointly organized with the Department of Building and Real Estate of the Hong KongPolytechnic University.

Linked to this conference, is an international symposium for speakers and participants from primarilythe Greater China region including Hong Kong, China Mainland, Macau, and Taiwan to exchangeviews and appreciate the practices and advancement in different parts of the region.

The organizing committee of the Conference and Symposium are working very hard in arranging thecall for papers, logistics, sponsorship, and promotion etc.. Please give as much support as youpossibly can to ensure the success of these two very important events organized by the Institute.

Thank you very much for your support!

Best regards,

Geoffrey ShenPresident, HKIVM


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Vol. 13, No. 3 / 4, 2007 HKIVM Page 3

VALUE MANAGEMENT IN THE ARCHITECTURAL

SERVICES DEPARTMENT IN HONG KONG

A.R. Wilson

Former Chief Architect, Architectural Services Department, HKSAR

THE GOVERNMENT OF THE HKSAR

The Government of the HKSAR is headed by aChief Executive who is reported to by aministerial system. Below the ministers arevarious bureaux and departments. Under theEnvironment Transport and Works Bureau are aseries of works departments including CivilEngineering, Drainage, Water Supplies and theArchitectural Services Department (ArchSD).

THE ARCHITECTURAL SERVICESDEPARTMENT (ARCHSD)

The major roles of ArchSD are:-

As the professional advisor to theGovernment for all public buildingsexcept Public Housing.

To manage and monitor the in-house oroutsourced design, and the procurementof new facilities.

To maintain the up keep of governmentfacilities.

In addition, ArchSD seeks value for money,promotes best practice in the ConstructionIndustry and is a leader in sustainable buildingdesign matters. ArchSDs web page ishttp://www.archsd.gov.hk.

In 2005 ArchSD completed 67 projects with atotal value of around $6.4 billion HK dollars.Currently we have 264 capital major projectsand 237 minor projects under planning andconstruction, with a total value of about $76billion HK dollars.

ArchSD has around 1770 staff consisting ofprofessionals, technical officers, administrativeand staff site supervisory staff. Theprofessionals include multi-disciplinary project

managers, architects, landscape architects,engineers, building services engineers andquantity surveyors. Many are individuals withvarious other specialist training, e.g. V.M. LifeCycle Costing etc.

ArchSD serves Government clients and PolicySecretaries. ArchSD has a wide range ofexpertise including assisting clients in Publicand Private Partnership Projects (PPPs). Otherkey areas are tourism enhancement projects,recreation facilities, parks and open spaces,

international exhibitions, education facilities,heritage and conservation projects, etc. Onetypical client example is the Secretary forSecurity who is responsible for prisons, bordercrossings, customs and immigration facilities,the Hong Kong police, fire and ambulanceservices etc. Each of these departments hastheir own groups of users.

Figure 1: The Hong Kong Science Park


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Figure 2: Stanley

Waterfront Improvement

Figure 3: Tsim Sha Tsui

Beautification

Figure 4: Kowloon Park

VALUE MANAGEMENT IN HONG KONG

Although not the first to use Value Management(VM) in Hong Kong, ArchSD was the leader topush VM into Government and the public use ofthe construction industry. Recognizing the

potential of VM, ArchSD Assistant Director Mr.Tony Toy, introduced VM to the heads of allGovernment Departments in 1994. He foundedthe Hong Kong Institute of Value Management(HKIVM) in 1995 and became its first President.He also arranged to have several ArchSD staffproperly trained and qualified in VM torecognize how to achieve better results andobtain better value for money in the future.

Commencing in 1998, ArchSD assisted theEnvironment Transport and Works Bureau

(ETWB), establish the current TechnicalCircular 35/2002 on the use of VM within theWorks Departments. For details please refer toETWB web page http://www.etwb.gov.hk. TheHKIVM monitors and maintains lists ofqualified VM facilitators for the ETWB worksdepartments to use. The HKIVM web page ishttp://www.hkivm.org.

VM is now professionally practised in thepublic and private sectors of the constructionIndustry in Hong Kong.

TIMING OF VM STUDIES

Value can be added throughout the projectprocurement process with a series of VMstudies at the right times. A new VM study isespecially important when there has been amajor change in circumstances or scope. OneVM study at the right time is usually moreproductive than several weeks of meetings andfollow ups. The most appropriate time to hold aVM is at the very beginning when the idea is

first raised because it can ensure that the plancan develop in the right direction, changes areminimal, major risks identified and resourcesare not wasted.

PROJECT CLARIFICATIONAt the start of a project, ArchSD projectmanagers consider the following points: Is thescope clearly defined? Are there questions onthe Client Brief and Schedule ofAccommodation? Does the project have multi-users? Is there enough information and are therisks positioned with enough certainty toprepare a Technical Feasibility Study to seekinitial approval and funding.

CRITICAL SUCCESS FACTORS

There are five critical success factors that mustbe carefully managed:

The Client/owner must give full supportto the study.

The organization of VM process must beunderstood and properly managed withclear objectives set.

A properly qualified VM facilitator mustbe appointed.

The correct key stakeholders must attendand contribute positively.

The five phase VM job plan must befollowed.

There are other lesser factors that can contributeto better success which should be discussedwith the qualified VM facilitator.


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Figure 5: Pennys Bay Fire Station

SYSTEMS THINKING

It is important to recognize that looking forvalue should consider the whole system. In theconstruction industry, a project should beconsidered achieving a wider purpose. Forexample, a new clinic building is part of groupclinics, which contribute to the general healthcare system, therefore this contribution as afunctional asset in the whole system must beunderstood to determine the scope of the clinic.Changes in one part of a system can impact onother parts considerably.

Sometimes the individual parts of the system ifall working to their maximum may not achievethe required objective for the product. Forexample, the target to create maximum safety ina car may result in a heavier vehicle which willprobably require the use of more fuel. Thecompromise or balance to achieve safeness andfuel consumption for the best total end result ismost important. Careful consideration of the

VM objectives and a full understanding of the

required functions are very necessary.

USE AND ESTEEM FUNCTIONS

It is very important to position use functionsagainst any required esteem functions. Usefunctions are normally fairly easily identified.Esteem functions relate to appearance, image,etc. and often are less defined but haveconsiderable cost and other implications. Ifidentified early in the process, esteem functionscan be properly discussed and positioned in the

design.

VM STUDY EXAMPLES

ArchSD has completed 30 major studies, thefirst commencing in 1994. VM facilitators usedhave been from all around the world with veryimpressive results.

Figure 6: The Wetland Park


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Costs have definitely been saved in ArchSDprojects but these are not always easilymeasurable especially in VM studies carried outat project inception. It is preferred toconcentrate on clarifications, adding value,

minimizing risks and resolving problems inearly studies. Later as the design develops, thelarger cost items can be identified and exploredin more detail.

Study 1

Wetland Park, conceptual stage, strategic VM.Project estimate $430 million H.K.

The objective for this workshop was very broad,to agree the project objectives and key

functional requirements.The outcomes were:

Agreement on key issues, quality andneeds for main functional areas.

A plan in how to mitigate impact andmaintain the wetland, the buffer area andthe water treatment.

A plan on how to compliment and expandexisting education on the subject.

The result was :

Smoother implementation of the projectwhich is now completed and has theexhibition under installation for openingnext year.

The strategic study was essential as it hadall the key stakeholders involved to focus

on a common approach from thebeginning.

Study 2

Sheung Shui, Slaughterhouse Scheme designstage, $1208 million H.K.

The objective of this study was:

To rate the design proposal which hadused the design and build contractprocurement method, against the requiredfunctions and propose improvements.

The outcome was:

The design proposals were ratified.

The proposed improvements were:

Reducing area for liarage (animalcollection)

Reducing some internal building heights.

Reducing some under building areas.

Reducing size of water tanks

Consideration of shared facilities

The client user/operator relationship andunderstanding of operations greatlyimproved.

The result was smoother project implementationand equipment co-ordination with savings ofwere over $50 million HK.

Figure 7: Sheung Shui Slaughterhouse


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Study 3

Mongkok Stadium, Rough Cost Indication $250million HK. Feasibility study stage.

One of the best measurable VM examples in

ArchSD was a study on an old existing soccerstadium which the client wished to considerablyupgrade. An outline feasibility report wasprepared based on the given information. Therough cost estimate was $250 million HongKong. ArchSD thought that this was high forthe extra improvements requested.

The objectives of the two day VM studywere:

To ensure the scope of the project wasfully understood and accepted.

To determine if flexibility for futureworks can be built in

To ensure value for money.

The outcomes at the end of the two daystudy were:

an improved schedule of accommodationwith clearer functional requirements.

improvements in site utilization and pitchorientation.

The result the following week however, wasmore surprising. The client stopped the project!The client considered that for the same moneythey could have built a new facility on a bettersite, have more spectator seating and correctsoccer pitch orientation. Why waste funding onsomething that would not meet the objective ofensure value for money? The projectarchitect was upset. The senior managementwere happy because this happened now ratherthan six months later when all the design workand resources would have been wasted. Thestory had a happy ending. One month later, theclient came back with a revised project briefand the project was reactivated. The final costwas just over $50 million HK, improvementswere made in a shorter time, creating almost asmany spectator seats as before but saving theGovernment and taxpayers almost $200 millionHK. This measurable result from the timelyuse of Value Management clearly indicates howsuccessful it can be.

CONCLUSIONS

ArchSD has found most difficulty inimplementing early VM studies as clients oftenuse the excuse, Not ready for it yet. When wehave convinced them to have the study, they

replied afterwards, We wish we had done thatsooner!

VM can improve projects by ensuring: Valuefor money for the whole project, appropriatequality, responsiveness to clients priorities,client involvement and insight in the designprocess and project, improved communicationsand understanding.

ArchSD has used VM especially when there is aneed to improve communications, resolveconflicts, set targets and objectives, establish

priorities, create more options and validatedesign proposals, etc.

In ArchSD VM studies, we have been able toadd value through, cost savings, time savings,options evaluation, expediting decisions,minimizing wastage, forecasting risks,optimizing resources, promoting innovation andbreaking deadlocks.

Common VM solutions concentrate on keyareas to add value, using staged or phaseddevelopment, and seeks areas of shared or multibenefits, e.g. solar panels used integrated asroof covering etc.

ArchSD has found that the professionalapplication of VM at the right time, results ingreatly improved project outcomes and addedvalue for all those involved for a very small costoutlay.


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A VM APPROACH TO THE APPOINTMENT OF

CONSULTANTS AND CONTRACTORS ON A VALUE

FOR MONEY BASIS

John Kelly and Kirsty HunterGlasgow Caledonian University, UK

INTRODUCTION

The research reported in this paper makesreference to the acquisition or procurementregulations of Australia, Hong Kong, UnitedStates, and United Kingdom. Within the pastdecade there has been a move by public sectororganisations towards the procurement of publicworks on a design build basis. The design build

is either procured as a capital purchase or, as apublic-private partnership. In the latter theprivate sector partner tenders a unitary chargeand remains responsible for the building for anumber of years. Additionally, public sectororganisations have, concurrently, increasinglymoved towards best value procurement inwhich the successful tender is judged on anumber of factors in addition to price.

These changes bring new and unique challengesto the probity of public sector procurement. The

first challenge is to define the design buildprocurement process so that judgment can bemade on factors other than price. The secondchallenge is to define the design buildprocurement process such that the methodologyemployed in the selection of the contractor andconsultants is transparent and capable of audit.This paper introduces such a methodologybased upon a value management approach.

BEST VALUE

The following four procurement guidancedocuments have been analysed in this researchand the definition of best value stated:

Australia Commonwealth Procurement

Guidelines (Jan 2005)Value for

money is the core principle underpinningthe Australian government procurement.In a procurement process this principlerequires a comparative analysis of allrelevant costs and benefits of eachproposal throughout a whole procurement

cycle (Whole of Life Costing).

Hong Kong Treasury Branch guide to

public procurementTo achieve the

best value for money, we take intoaccount in our tender evaluation not onlythe competitiveness in price, but alsocompliance with users' requirements,reliability of performance, qualitativesuperiority, whole-life costs and after-sale

support, where applicable. USA - Federal Acquisition Regulation

(FAR Mar 2005)Best value means

the expected outcome of an acquisitionthat in the Government's estimationprovides the greatest overall benefit in

response to the requirements.

UK - The Scottish Procurement

Directorate's Policy ManualThe

prime objective of the Scottish

Executives procurement policy is to

achieve value for money - the optimumcombination of whole life cost andquality to meet the customer's

requirements.

The above guidance documents are consistent inthe definition of best value/value for money andare similar in highlighting those factors to beconsidered in their judgment. These factorsinclude:

Past performance / performance history of

the supplier Special features of the supplier or service

required for effective programmeperformance

Trade-in considerations

Probable life of the items selected ascompared to that of a comparable item

Warranty considerations

Maintenance availability

Environmental and energy efficiencyconsiderations


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Delivery terms

Understanding of scope by supplier

Supply chain management

Performance measurement

Health and safety

Fraud prevention

Understanding of culture

The relative risk of each proposal

Flexibility to adapt and possible changeover the life cycle of the property orservice

Financial considerations includingbenefits and costs over the whole

procurement cycle

Quality of the finished building

Particular ability, skills and strengths.

The Scottish Executive Client pack:construction works procurement guidanceSection 2 - value for money, summarises thefactors to be considered as standard of serviceprovided; including factors such first design,aesthetic, appropriateness, sensitivity tosurroundings, ease of maintenance, adaptation

to future requirements, impact on the widerenvironment.

The research questions which arise from thisbrief summary are as follows:

Are there a discrete number of factorswhich can be identified which can becommonly used in an auditable manner to

judge value for money tenders?

Can a value based method be evolvedwhich is transparent, capable of beingdescribed in the tender documents andused in the judgement of tenders?

Is value management fundamental to themethod?

A METHOD FOR CLASSIFYINGSELECTION CRITERIA

The above factors are cited in variousinternational government publications as thoseon which value for money will be determined.In order to answer the research questions it is

necessary to build a framework or methodologyto manage value for money. A logical approach

to managing value for money is ValueManagement (VM). Clearly the procurementmethod is a valid topic for discussion at aproject briefing value management study andthe criteria for judging a value for money tender

could be determined at that time. However, thequestion is whether there are a discrete numberof factors for judging value for money tenders.

Value is commonly cited as being a relationshipbetween cost and function (OBrien:1976 p16,Crum: 1971 p14, EUR 14394:1993, ICE: 1996p3, Hayden and Parsloe: 1996 p5, RJ Park:1999 p96). Adam (1993 p176) defines value asthe lowest cost to reliably perform a functionwhere the definition of function is that whichthe product process or system delivers to makeit work and sell, the definition of basic function

is the specific reason why the device wasdesigned and made. Norton and McElligott(1995 p13) define value as a relationshipbetween cost, time and function. They state thatin a value management study the objective is toimprove value through the balancing of cost,time and function which can be achieved inthree ways:

to provide for all the required projectfunctions but at a reduced cost

to provide additional desirable projectfunctions without adding to the cost

to provide additional desirable projectfunctions while at same time reducingcosts

Other authors introduce the relationshipbetween value, quality and cost for example,Burt (1975) states that maximum value isobtained from a required level of quality at leastcost, the highest level of quality for a given cost

or from an optimum compromise between thetwo. Best & De Valence (1999 p14) state thatvalue is a relationship between time, cost andquality, and illustrate the time, cost, qualitytriangle, a technique commonly used in projectmanagement and illustrated on numerouscommercial websites. Although accredited toDr Martin Barnes academic debate is thin andcitations are dominated by Atkinson (1999).

The relationship between quality and function isbest illustrated by reference to Juran and Gryna

(1988) who defined quality as the totality offeatures and characteristics (functions) of a


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product or service that bear on its ability tosatisfy stated needs or implied needs. Thedefinition of value as being a relationshipbetween time, cost and quality is helpful in thesearch for characteristic factors of value for

money.Bicheno (2000: p170) describes the Kano modeldeveloped by the Japanese quality guru DrNoriaki Kano who states that maximum qualityis attained when targeted characteristics areachieved and the customer is delighted. Thereare three variables within the model. These arebasic factors, performance factors anddelighters, which have a relationship to thepresence of quality characteristics and customersatisfaction. These variables are included in theKano model, illustrated in figure 1.

In the Kano model a basic characteristic isexpected to be present, the customer will be

dissatisfied if it is absent and only neutral if thecharacteristic is completely fulfilled. Theperformance characteristic relates to theessential function. The customer will be moresatisfied if higher levels of performance are

achieved. The delighter is a performancecharacteristic, not specified by the customer butdesired by the customer once its benefits havebeen revealed. There is however a timedimension to the model such that the threevariables will tend to sink over time, i.e. whatonce delighted is now expected and higherlevels of performance are always sought. Forexample, power steering on small cars as astandard feature once delighted customers butnow power steering is expected as a basiccharacteristic and its absence would lead to

dissatisfaction.

delighter

basic

performance

absent fulfilled

Presence of Characteristics

delight

neutral

dissatisfaction

Degreeof

customersa

tisfaction

Imp

act o

ft i

me

Figure 1 The Kano model (adapted from Bicheno: 2000)

The relationship between time, cost and qualityand definition of quality in terms of basic andperformance criteria is useful in the analysis offactors to be considered in the judgement ofvalue for money tenders.

An analysis of the factors listed above basedupon Kano results in their classification into 4

types:

Basic characteristics. Either the tenderermeets the required level of performanceor not. This applies to such factors ashealth and safety and fraud prevention.Basic factors, which relate to thecompany as opposed to the proposeddesign, should be determined through the

pre-qualification questionnaire such thatthose tendering will all meet the


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requirements. Alternatively, anacceptable level should be specified suchthat a tenderer with an unacceptableperformance will not be considered. Forexample, any company having a company

director with a fraud conviction shouldnot apply.

Measurable performance characteristics.These characteristics are those such asenergy consumption, hard facilitiesmanagement costs, soft facilitiesmanagement costs, capital cost and time.These are valid characteristics of a tenderappraisal process. In a design build lumpsum tender the tenderer should berequired to submit an estimate of all thesecosts to be used in judging the tender

whether or not there is a contractualcompliance requirement i.e. a proving ofenergy and FM costs over say the firstfive years of operation.

Non measurable performance

characteristics. These characteristics arethose such as aesthetics, contribution tocommunity, popularity with stakeholders,etc. These are valid characteristics of atender appraisal process.

Risk. Risk is commonly defined as beinga hazard, the chance of a bad consequenceor loss, or the exposure to miss chance.Risk management maximises thecertainty of the functional value of aproject. Risk is a solution focused factorof value and is a valid criterion whenviewed from the perspective of the client.However, although it could be a discretediscretionary factor in the choice of adesign it is better incorporated into thescoring system as risk is an overlay on

basic and performance characteristics.The client should only consider thoserisks incorporated into the design whichaffect operability; construction risks willbe incorporated into the tender by thetenderer.

The 4 types give a useful classification systemwhen determining those factors for judgingvalue for money tenders.

A METHOD FOR IDENTIFYINGSELECTION CRITERIA

During a value management workshop at theproject briefing stage, at which all clientstakeholders are present, the subject of

procurement should be discussed and a methodof procurement selected. The criteria for

judging best value/value for money tenders willdepend on whether the tender is to be basedupon a full design by the client (or clientsconsultants) or whether the tender will containelements of design by the tenderer. Theprimary difference in the criteria will be therelevant performance characteristics and risk.In the situation where a tender is submittedbased upon the clients design the onlyperformance characteristics relevant are capital

cost and time. The risk to the client should bethe same for each tenderer. The basiccharacteristics should be defined as a prescribedrequirement and the information on this gleanedthrough a pre-qualification questionnaire. Inthis way all tenderers will meet the basic criteria.

For those tenders which contain elements ofdesign by the tenderer a new technique isrequired to elicit the measurable and non-measurable performance variables. Thefollowing technique has been evolved and

tested within two training workshops. It isconsidered that the technique is ready to go live.The stages of the new technique are describedwith reference to a design build project for anew primary school. The method assumes thatthat Value Management briefing workshop isheld with the head and deputy head designatefor the new school together with the localcouncillor and representatives from; the localauthority education department, the localauthority facilities management department andthe local community council.

Stage 1 Brainstorming and classifying

relevant criteria

As a part of the workshop the team shouldbrainstorm those factors considered relevant in

judging tenders. The factors should then becategorised in terms of the 4 types describedabove. An example of the brainstorming andcategorisation exercise is given in figure 2.


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CRITERIA CLASSIFICATION CRITERIA CLASSIFICATION

CAPITAL COST

PAST PERFORMANCEENVIRONMENTALIMPACT (GREEN)COMMUNITY USEFRAUD PREVENTIONFLEXIBILITY(UPGRADEABLE)SOFT FM COSTHARD FM COSTEARNING POTENTIAL(RENTED FACILITIES)

MEAS PERF

BASICMEAS PERF

NON-MEAS PERFBASICNON-MEAS PERF

MEAS PERFMEAS PERFMEAS PERF

HEALTH & SAFETY

TIMEAESTHETICSCULTUREESTEEMCOMFORT (STAFF &PUPILS)LIGHT AND AIRYCOMMERCIALLYSOUNDPAST PERFORMANCESCOPE CREEP/CLAIMSATTITUDE TOPARTNERING

BASIC

MEAS PERFNON-MEAS PERFNON-MEAS PERFNON-MEAS PERFNON-MEAS PERF

NON-MEAS PERFBASICBASICBASICBASIC

Figure 2 Stage 1 brainstorming and classifying relevant criteria

In Figure 2 the basic criteria relates more to thecompany and not to the designed solution.These issues should be discovered as a part ofthe pre-qualification questionnaire and thecompanies selected to tender for the project willtherefore be acceptable on these counts. Themeasurable and non-measurable performancecriteria relate to the building and should be

judged on a weighted scale. The risks

associated with the company should be dealtwith through the basic criteria. Risks associatedwith the design should be assessed as a part ofthe evaluation.

Kelly et al (2004: p212) describe the basiccriteria for a value system as capital cost,

operations cost, time, community,environmental impact, exchange (earningpotential) flexibility, esteem, and comfort.From the above brainstorming session it can beseen that all of the measurable and non-measurable performance criteria fit within thebasic criteria, for example soft and hard FMcosts are operational costs and aesthetics andculture could be considered parts of esteem.

Stage 2 Determining the weights to factors

To determine the weights given to the variousfactors a paired comparison matrix exercise isundertaken. An example for the primary schoolis given in figure 3.

A. Through Life Cost - OPEX

B. Time

C. Esteem / Aesthetic

D. Environment

E. Exchange

H. Comfort

G. Flexibility

A B C D E F G

Total

H

F. Politics / Community

A

A

A

A

A

G

C

D

E

B

G

H

C

C

F

D

F

G

F

G

H

G

H

G

HA H H

6 1 3 2 1 3 6 6


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Figure 3 Paired comparison to obtain factor weights

From the matrix it should be noted that capitalcost is excluded since all other factors will be

judged in the context of capital cost. The

matrix is designed to be included withdescriptive text in the tender documentstogether with a statement of the proportionsused for capital cost and other factors. In thisexample the judgement is made on the basis of70% capital cost and 30% other factors.

Stage 3 Judging the tenders

Once the tenders are received a panel, ideallyincluding representatives from the valuemanagement workshop will convene to judge

the tenders in accordance with the pre-determined weightings. The scoring is on thebasis of multiplying the score against each

factor by its weighting as shown in figure 4.The indicative scoring is inclusive of risktherefore an exciting and innovative design withacceptable risk will score 2. A good solutionwhich is risk free will also score 2. Forexample tenderer A in figure 4 viewed from thecontext of operating cost has an innovativesolution with little risk, however, the team werenot impressed by the aesthetic which theyscored as acceptable.

Throu

ghLife

Cost-O

PEX

TimeEs

teem

/aesthe

tic

Envir

onme

nt

Exch

ange

Politi

cs/com

munit

y

Flexib

ility

Comfort

A B C D E F G H

6 1 3 2 1 3 6 6 Total

Tenderer A

Tenderer B

Tenderer C

Tenderer D

2 1 4 4 3 1 3

5 5 5 4 4 4 5 5

2 1 2 1 1 2 1 3

4 2 2 5 2 3 4 4

24 2 3 8 4 9 6 18

30 5 15 8 4 12 30 30

12 1 6 2 1 6 6 18

24 2 6 10 2 9 24 24

474

134

52

101

5 exciting/innovative / risk free

4 exciting/innovative / little risk

3 excellent design solution / some risk

2 good solution / acceptable risk

1 acceptable / risky

0 unacceptable / high risk

Full score 5 5 5 5 5 5 5 530 5 15 10 5 15 30 30 140

Figure 4 Matrix showing weighting and scoring

The total score for each tenderer is used in anotional discounting exercise described byCIRIA (1998) to determine the best value formoney. The discounting is illustrated asfollows:

The notional discount is calculated by the totalfor each tenderer as a proportion of the full

score (in this case 140) multiplied by thepercentage importance given to other factors (in

this case 30%). The notional discounts aretherefore for each tenderer:

Tenderer A 74 140 x 30% =15.86% notional discount

Tenderer B 134 140 x 30% =28.71% notional discount

Tenderer C 52 140 x 30% = 11.14%notional discount


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Tenderer D 101 140 x 30% =21.64% notional discount

The tenders received are adjusted to takeaccount of the notional discount to give theirrelative position in value for money terms:

Tenderer A 2,130,000 less 15.86%notional discount = 1,792,182

Tenderer B 2,365,000 less 28.71%notional discount = 1,686,009

Tenderer C 1,950,000 less 11.14%notional discount = 1,732,770

Tenderer D 2,225,000 less 21.64%notional discount = 1,743,510

Therefore, based upon the notional tenders,

Tenderer B, the highest tenderer should beawarded the contract as the full solution offeredgives the best value for money as provedthrough the value for money process.

CONCLUSION

The research described set out with threequestions:

Are there a discrete number of factorswhich can be identified which can becommonly used in an auditable manner to

judge value for money tenders?

Can a value based method be evolvedwhich is transparent, capable of beingdescribed in the tender documents andused in the judgement of tenders?

Is value management fundamental to themethod?

The research undertaken has proved that thereare four factors which may be used in the

judgement of value for money tenders fordesign build namely, basic factors, measurableperformance factors, non-measurable

performance factors and risks. The basicfactors are those which relate primarily to thecompany as opposed to the proposed design andshould be determined through the pre-qualification questionnaire such that thosetendering will all meet the requirements. Themeasurable and non-measurable performancefactors will need to be determined for eachtender but are likely to be highly correlated withcapital cost, operations cost, time, community,environmental impact, exchange (earningpotential) flexibility, esteem, and comfort. The

risks involved with the technical solutionoffered by the tenderers are taken into accountin the weighting and scoring matrix exercise asshown in figure 4.

The research demonstrates a value basedmethod capable of description within the tenderdocuments which meets all the requirements ofprobity. A panel of stakeholders will constructthe paired comparison and blank scoring matrixat the time of preparing the brief. A valuemanagement workshop is not fundamental to

the method but preparing the necessary pre-tender documents through a value managementworkshop and using a panel of members fromthe workshop to judge tenders reinforces theprobity and increases the certainty that

judgements are fair. The overriding conclusionis that the process accords with therequirements of the procurement andacquisition regulations reviewed.

REFERENCES

Adam, E 1993, Value management: costreduction strategies for the 1990's,Longman Professional Publishing,Melbourne.

Atkinson, R 1999, Project management: costtime and quality, two best guesses and aphenomenon, it is time to accept othersuccess criteria, International Journal ofProject Management, Vol. 17, no.6, 337 342.

Australian Government, Dept of Finance andAdministration, (2005) Commonwealth

Procurement Guidelines Jan 2005, ISBN 0-9752394-6-5

http://www.finance.gov.au/ctc/commonwealth_procurement_guide.html accessed 11thJuly 2006

Best, R and De Valence, G 1999, Building invalue: pre-design issues, Arnold, Sydney.

Bicheno, J 2002, The Quality 75: towards sixsigma performance in service andmanufacturing Picsie Books

Burt, ME 1975, A survey of quality and valuein building, BRE

CIRIA 1988, Selecting contractors by value

CIRIA.


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Vol. 13, No. 3 / 4, 2007 HKIVM Page 15

Crum, LW 1971, Value engineering: theorganised search for value Longman,London.

European Commission, 1993, Bettermanagement through value analysis

EUR14394 en, European Commission DGXIII, Brussels

Hayden, G W and Parsloe, C J 1996, Valueengineering of buildings services:application guide 15/96, Building ServicesResearch and Information Association,Bracknell, UK

Institution of Civil Engineers Design andPractice Guides, 1996, Creating value inengineering, Thomas Telford Publishing,London.

Juran, JM and Gryna, FM 1988, JuransQuality Control Handbook 4th editionMcGraw-Hill

Kelly, J, Male, S, and Graham, D 2004, Valuemanagement of construction projectsBlackwell.

Norton, B R and McElligott, W C 1995, Valuemanagement in construction: a practicalguide Macmillan, London.

O'Brien, JJ 1976, Value analysis in design andconstruction McGraw Hill.

Park, RJ 1999, Value engineering: a plan forinvention, St Lucie Press, Florida.

The Scottish Executive, 2005, ConstructionWorks Procurement Guidance Section 2

http://www.scotland.gov.uk/Publications/2004/06/19384/37498 accessed 11th July 2006

The Treasury Branch, Financial Services andthe Treasury Bureau, Government of theHong Kong Special Administrative Region,Government Procurement: Guide toProcurement,

http://sc.info.gov.hk/gb/www.fstb.gov.hk/tb/eng/procurement/tender04.html accessed 11thJuly 2006.

USA General Services Administration 2005,Federal Acquisition Regulations March2005 http://www.arnet.gov/far/ accessed11th July 2006-07-11.


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Common practice in Hong Kong

Hong Kongs construction industry is mainlycomprised of a strong private sector clienteles,as well as significant Government departmentsunder the Environment, Transport and Works

Bureau and quasi-Government organisationssuch as Mass Transit Railway Corporation(MTRC) and Hong Kong Housing Authority(HKHA) etc. (Kumaraswamy, 1996). Tomanage contractor selection process, manyexperienced clients have already establishedtheir own systems to examine the qualificationsand performance of contractors. Two typicalexamples are given below:

The Environment, Transport and Works

Bureau maintains lists of approved contractors

which are complied according to their relevantexpertise, financial status, technical andmanagerial capabilities as well as theirperformance of completing past projects(Environment, Transport and Works Bureau,1997)

Hong Kong Housing Authority has

established a comprehensive PerformanceAssessment Scoring System (PASS) to reviewthe registered contractors performance levelsof their contracting works in the ongoing

projects since 1990 (HKHA, 1994).Nevertheless, it is observed that contractorselection processes could be informal andunsystematic in the private sector.Kumaraswamy (1996) explained that privateclients might only draw up a short-list ofprospective tenderers based on their ownexperience because they do not need to conformto rigid rules. Moreover, the data involved inthe selection could be subjective and imprecise(Fong and Choi, 2000).

Problems and limitations of contractorselection

The selection process should identify acontractor to whom the client can confidentlyentrust the responsibility of executing theproject satisfactorily. Unfortunately this is notalways possible because the majority of current

selection methods generally over-emphasiseacceptance of the lowest bid price (Fong andChoi, 2000). As a result, selection of contractorsis generally based on the principle ofacceptance of the lowest bid price (Nguyen,1985; Russell and Skibniewski, 1988;Kumaraswamy, 1996, Fong and Choi, 2000,Topcu, 2004). For example, the public Sectorclients in Hong Kong are most oftenconstrained to select the lowest bidder(Kumaraswamy, 1996). However, the intensityof price competition between contractors has

been blamed for many industry ills(Kumaraswamy et al., 2000) and a significantamount of research has proved that this is oneof the major causes of project delivery problems(Holt et al., 1994; Hatush and Skitmore, 1998;Kumaraswamy, 1996; Fong and Choi, 2000,and Topcu, 2004). Latham (1994)recommended that the selection of contractorsshould be made on a value for money basis,with proper weighting of criteria for skill,experience and previous performance, ratherthan automatically accepting the lowest bid

price in all cases. Fong and Choi (2000) agreedwith this and pointed out that there should be atrade-off between time, cost and quality andnone of them should not be under oroverweighed.

Tools and techniques applied to contractor

selection

Literature review showed that a large number oftools and techniques had been successfullyapplied to contractor selection. A summary of

previous research works in contractor selectionis given in Table 1.


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Table 1: A summary of tools applied to constructor selection

This paper aims to demonstrate the principleand method of introducing Value Management

(VM) to contractor selection which has not beenexplored according to the Table 1 with a viewto improving the process. A value frameworkwhich integrated (i) function analysis of VMmethodology with (ii) Functional PerformanceSpecification (FPS) is recommended, throughwhich the identification, clarification,representation, and assessment of clientrequirements (selection criteria) for contractorselection can be facilitated. Function analysis,which is an essential tool in VM, is based on theintuitive logic of testing function relationshipsand graphically displaying them in a diagramform. It enables functions to be displayed in alogical sequence and their dependency testedrigorously (SAVE, 1998). FPS is an additionaltechnique applied to VM methodology. Itrequires each function to determine all thecriteria by which it will be measured, theexpected level of satisfaction and then, for eachcriteria level, the corresponding flexibilityallowed (EUR 16096 EN, 1995 and Masson,2001).

THE VALUE FRAMEWORK FORCONTRACTOR SELECTION

Introduction to the framework

The proposed value framework introduces a

new contractor selection method that provides amore comprehensive evaluation of acontractors all-round performance. Theframework involves a two-stage selectionprocess and details are summarised in Figure 2.

The first stage, prequalification, aims to identifythose potential contractors who are eligible forfurther consideration so as to minimise theamount of abortive tendering work. Assuggested by Kumaraswamy (2001),prequalification can ensure that the selectedcontractors are sufficiently responsive,responsible and competent to undertake thecontract and deliver optimal results, meetingclient requirements with minimal failures. Thesecond stage, final selection, is undertaken inform of a 1-day VM workshop. It aims toestablish a client value system to capture,organise and present the client requirements(selection criteria) in form of a set of functionalobjectives. Finally, recommendations will besubmitted to tender review committee forconsideration. The committee would clarify the

queries raised by the VM study team and tomake negotiation with the contractors duringtender interview meetings. In addition, there isan option of requesting the contractors tosubmit the revised tenders based on thecomments and suggestions from tenderinterviews before making the final decision.

Tools Introduced by

1 Capability evaluation Rugg., 1993

2 Multi-attribute analysis Holt et al., 19953 PERT approach Hatush and Skitmore, 19974 Needs-based approach Chinyio et al., 19985 Partnering approach Kumaraswamy and Matthews, 20006 Fuzzy neural network approach Lam et al., 20017 Evidential reasoning approach Sonmez et al., 20018 Performance modeling approach Alarcon and Mourgues, 20029 Multi-criteria approach Mahdi et al., 2002

10 Analytic network process approach Cheng and Li, 2004


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Figure 2: 2-stage contractor selection by the value framework

Job plan of the framework

In stage 2, the framework has four phases,namely preparation phase, information phase,analysis phase and evaluation phase. Referring

to Figure 2, the first two tasks are common inVM studies and relatively straightforward. Theremaining two tasks need some furtherexplanation.

Figure 3: Job plan of the value framework


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(1) Preparation phase

The main objective of the preparation phase isto define the scope and objectives of theworkshop. Facilitators assist clients to definethe scope and objectives of the workshop. They

select and invite the key stakeholder to join theworkshop. A typical team should includeproject managers, client representatives,architects, surveyors, engineers and facilitators.Finally, they draw up a list of necessaryinformation and ensure that sufficientinformation is available for the workshop.

(2) Information phase

The main objective of the information phase isto get all members of the team to fully

understand the background, constraints andlimitations of the project. Key tasks include anintroductory presentation given by thefacilitator; a presentation of projectrequirements given by the client representative

and a short discussion of project concerns andconstraints by other stakeholders.

(3) Analysis phase

The main objective of the analysis phase is todevelop the client value system of selectingcontractor and there are four steps in total. Inreference to the commonly selection criteria inHong Kong (Fong and Choi, 2000), an exampleof the functional objective hierarchy ispresented in Figure 4.

Figure 4: An example of the hierarchy of the functional objectives

Step 1: Define and develop functional

objectives

A mission statement which concisely indicatesthe fundamental reasons for a client to hire acontractor is established on the first stage. Torealize the statement, a list of functionalobjectives will be developed and linked together

by using the why-how logic.

Step 2: Assign weighting to functions

Assigning weighting is to determine the relativeimportance among functions. One approach isto distribute 100 points among level-1functions, further spread the points assigned to alevel-1 function among its corresponding level-2 functions, and so on. This allows comparisonof functions at the same level. Showing the

importance of functional objectives not onlyhelps clients to understanding their


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requirements and needs more thoroughly, butalso provides useful information to the designteam members who will participate incontractor selection process. An example of therelative importance of functional objectives is

illustrated in Figure 3.Step 3: Define levels of functional objectives

This is to define the levels of quality to bereached by contractors in order to satisfy theminimum standards of functional objectives.For example, implementing ISO9001: 2000 or

equivalent control system for at least 3 years isconsidered as an acceptable level for thecriterion of having a good quality controlsystem.

Step 4: Assign flexibility to functional

objectives

This is to assign flexibility to each criterion toindicate its negotiability. A four-scaleassessment system (F0 to F3) is adopted andsome examples are demonstrated in Table 2.

Table 2: Specification for the objective of ensure good working performance

(4) Evaluation Phase

The main objective of the evaluation phase is toundertake the assessment of contractorproposals and tenders referring to the clientrequirements identified and discussed in

previous phases. By using the criteria scoringmatrix technique, these requirements can beused as criteria to assess whether the contractorscan meet the client values. An example of theassessment exercise is demonstrated in Table 3.

Functional Objectives Levels Flexibility

Have no failure completionrecord (8)

The contractor should have no failure completionrecord within 10 years (8)

F0

Have no delayed completionrecord (3)

The contractor should have no late completionrecord (more than 3 months) within 2 years (3)

F2

Have no over-budget record (3)The contractor should have no over-budget

record within 3 years (3)F2

The contractor should implement ISO9001:2000or equivalent control system at least 3 years (5)

F1

Ensureworkingperformanc

e

Have a good quality controlsystem (6) The contractor should received quality awards

(1)F3

Note F0 The criterion is an absolute must, not negotiable, all effort must be made to meet this level, whatever thecost

F1 The criterion is a must if at all possible, no discussion unless there is a very good reason

F2 The criterion is negotiable, hope this level is reached, ready to discussF3 The criterion is very flexible, this level is proposed but is open to any suggestion


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minimum cost model and provides a balancedapproach to assess the potential of contractorsall-round performance for contractor evaluation.The framework facilitates clients to evaluatecontractors systematically with respect to their

economic and technological aspects, qualitystandards, past performances and other tangibleand intangible characteristics.

Improve the transparency of selection process

Most public sector and some private sectorclients still find it difficult to accept anythingother than the lowest bid from tenderers(Kumaraswamy, 1996). One of the reasons isthat it is very difficult to justify and explain therationale of the selection for selecting acontractor other than the lowest bidder. As

discussed before, this framework provides aquantitative approach to investigate clientrequirements in contractor selectionsystematically. In addition, the 2-stagecontractor selection by the value frameworkallows independent teams to develop clientvalue system and make recommendationsbefore the tender interview. This objectiveapproach help the public clients to prove to thegeneral public that projects are awarded basedon the best possible combination of a variety ofcriteria and thus to hold a greater accountabilityfor their decisions. Besides, the frameworkadopts teamwork approach to improvecommunication and increase involvementamong clients, designers, surveying andengineering consultancies. This reducespotential conflicts by bringing the expertise ofall major stakeholders into the selectionprocess.

LIMITATIONS OF THE FRAMEWORK

The successful implementation of theframework depends largely on the support fromclients as additional time and resources arerequired. Hence, it is highly recommend that theframework should be applied to large-scaleprojects in order to maximise the benefitsgained. In addition, the composition of study

teams and the skill of facilitators are alsocritical in this process.

CONCLUSIONS

This paper describes a functional based multi-criteria decision framework for constructioncontractor selection in Hong Kong. Theframework demonstrates the principle andtechnique of applying Value Management tocontractor selection and thus, helps usersdevelop criteria and procedures for their ownprojects. It has successfully demonstrated theinnovative use of function analysis and FPS insupporting contractor selection. It also improvesthe understanding of client expectation aboutcontractor performance well as the

comprehensiveness and transparency ofcontractor selection process. The framework hasthe potential to make major improvement in theprocess by employing the selection criteriamore effectively and efficiently in terms ofidentification, clarification and representationof. It also helps reduce and resolve conflictsamong major stakeholders by bringing theminto the process, and by facilitating theassessment of tenders and contractorperformance as well. Whilst there are potentialbenefits in using the proposed framework in the

briefing process, further research work isneeded to verify the benefits of putting thisproposed approach in practice and to makefurther improvements. Encouraged by theenthusiasm of practitioners in the industry, weare planning to implement and further test theproposed framework in a number of real lifeprojects in the near future.

ACKNOWLEDGEMENTS

This paper is developed based on the A

framework for identification and representationof client requirements in the briefing processwhich is a research project funded by TheResearch Grant Council of the Hong Kong SARGovernment. The authors wish to thank Ms.S.Y. Yuen for her assistance in editing thispaper.

REFERENCESAlarcon, L.F. and Mourgues, C.(2002)

Performance Modeling for Contractor

Selection, Journal of Management inEngineering, April, 52-60.

Cheng, E.W.L. and Li, H. (2004) Contractorselection using the analytic network

process, Construction Management andEconomics, 22, 10211032.


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Chinyio, E.A., Olomolaiye, P.O., Koemta, S.T.and Harris, F.C. (1998) A needs-basedmethodology for classifying constructionclients and selecting contractors,Construction Management and Economics,

16,91-98.Environment, Transport and Works Bureau

(1997) Rules for the administration of thelist of approved contractors for PublicWorks. Works Branch, Technical CircularNo. 9/97, Works Bureau, Hong Kong.

European Commission (1995) ValueManagement Handbook, Commission of theEuropean Communities, ReportEUR16096EN.

Fong, S.W.P. and Choi, K.Y.S. (2000) Final

contractor selection using the analyticalhierarchy process, constructionmanagement and economics, 18, 547-557.

Hatush, Z. and Skitmore, M. (1997) Assessmentand evaluation of contractor data againstclient goals using PERT approach,Construction Management and Economics,15, 327-340.

Hatush, Z. and Skitmore, M. (1998) Contractorselection using multicriteria utility theory:an additive model, Building andEnvironment, 33(23), 105115.

HKHA (1994) Performance AssessmentScoring System (PASS), Hong KongHousing Authority (HKHA), Hong Kong.

Holt, G.D., Olomolaiye, P.O. and Harris, F.C.(1994) Factors influencing UK constructionclients choice of contractor, Building andEnvironment, 29(2), 241248.

Holt, G.D., Olomolaiye, P.O. and Harris, F.C.(1995b) Applying multi-attribute analysis tocontractor selection decisions, EuropeanJournal of Purchasing and Supply

Management, 1(3), 13948.

Kumaraswamy, M. (1996) Contractorevaluation and selection: a Hong Kongperspective, Building and Environment,31(3), 27283.

Kumaraswamy, M.M. and Matthews, J.D.(2000) Improved subcontractor selectionemploying partnering principles, Journal ofManagement in Engineering, May/June, 47-57.

Lam, K.C., Hu, T., Ng, S.T., Skitmore, M. and

Cheung, S.O. (2001) A fuzzy neuralnetwork approach for contractor

prequalification, Construction Managementand Economics, 19, 175188.

Latham, M. (1994) Constructing the Team -Joint Review of Procurement andContractual Arrangements in the United

Kingdom Construction Industry, FinalReport, HMSO, London, UK.

Mahdi, I.M., Riley, M.J., Fereig, S.M. andAlex, A.P. (2002) A multi-criteriaapproach to contractor selection,Engineering, Construction andArchitectural Management, 9(1), 29-37.

Masson, J. (2001) The use of FunctionalPerformance Specification (FPS) to defineinformation systems requirements, createRFQ to suppliers and evaluate the

suppliers response, Conference paper ofthe SAVE Annual Congress, May 2001.

Nguyen V.U. (1985) Tender evaluation byfuzzy sets, Journal of ConstructionEngineering and Management, 111(3), 23143.

Palaneeswaran, E and Kumaraswamy, M.(2001) Recent advances and proposedimprovements in contractor prequalificationmethodologies, Building and Environment,36 (1), 73-87.

Rugg, D. (1993) Using a capability evaluationto select a contractor, IEEE Software, July,36-45.

Russell, J.S. and Skibniewski, M.J. (1988)Decision criteria in contractorprequalification, Journal of Management inEngineering, 4(2), 14864.

SAVE International (1998) Function AnalysisSystems Technique The Basics,http://www.value-eng.org/manuals/FAbasics.pdf .

Sonmez, M., Yang, J.B. and Holt, G.D. (2001)Addressing the contractor selection problemusing an evidential reasoning approach,Engineering, Construction andArchitectural Management, 8(3), 198-210.

Topcu, I.Y. (2004) A decision model proposalfor construction contractor selection inTurkey, Building and Environment, 39,469-481.


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HKIVM NEWS AND EVENTS

10 Oct 2007, A public seminar named "Add value to Ocean Park" was held r in conjunction

with the Department of Building and Real Estate in The Hong Kong Polytechnic University.The speaker, Daniel Altier, the General Construction Manager for Dragages (HK) JV,presented the details of this project and talk through how the problems encountered wereovercome. He will explain how Partnering and Value Engineering benefited all partiesinvolved.

2 Oct 2007, A public seminar on "Best Value, Value Management and the SustainabilityAgenda". Professor John R Kelly, who is the Chair of Construction Innovation in the Schoolof the Built and Natural Environment in Glasgow Caledonian University, reported the progressof Best Value within the public sector in the UK, the place of value management and tools andtechniques, including a new approach to whole life costing, designed to meet the sustainabilityagenda in this seminar. The talk was followed by a discussion of the application of valuemanagement methodologies in the context of sustainability in Hong Kong.

16-19 Nov 2007, a series of VM workshops and seminars have been organised in junctionwith the Department of Building and Construction in City University of Hong Kong to bringthe experiences of the VM to local to construction professionals and details are as follows:

Workshop 1 - Key VM phase: Function Analysis, by Dr. Roy BartonWorkshop 2 - Key VM phase: Creativity Analysis, by Ms. Laurie DennisWorkshop 3 - Key VM phase: Evaluation techniques, by Mr. Ken ScottSeminar 1 - Successful VM applications in Australia, by Dr. Roy BartonSeminar 2 - Innovative VM tech. in Complex Projects, by Dr. Steve KirkSeminar 3 - Information analysis for Complex Projects, by Dr. Steve KirkSeminar 4 - VM Trends in the United State, by Ms. Laurie DennisSeminar 5 - Novel VM applications in Europe, by Mr. Ken Scott


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impact matrix

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