CONTRIBUTION OF VALUE MANAGEMENT TO THE MALAYSIAN CONSTRUCTION INDUSTRY: A NEW INSIGHT Aini Jaapar and Prof. Dr Johan Victor Torrance Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA 40450 Shah Alam, Selangor Darul Ehsan, Malaysia. ainijaapar@yahoo.com , ABSTRACT: Value management is still in the process of early development in Malaysia. This paper intends to draw a holistic picture of the current VM practices existed in the Malaysian construction industry leading to the formulation of Prototype VM Guidelines. Key words: Value Management, Current practices, Prototype VM Guidelines 1. INTRODUCTION Internationally, value management (VM) is an emerging paradigm that focuses on continuously increasing the value provided to the client, widely developed (Fong 2004) and accepted as an important tool in recent management of construction projects (Ellis, Wood et al. 2005). The construction industry is an important field for VM at the international level (Kelly, Male et al. 2004) as it is considered critical to the success of projects due to its ability to provided a basis for improving value for money in construction (Ashworth and Hogg 2000). It focuses on value rather than cost and seeks to achieved an optimal balance between time, cost and quality (Kelly, Male et al. 2004) as it provides a method of integration in the building process that no other management structure in construction can provide (Kelly and Male 1991). It also explores the functional requirements and seeks overall optimisation accordingly (Shen 1995). VM should precede Cost Management effort (Norton and McElligott 1995) as it has proven to provide significant benefits to clients if it is used correctly (Liu 2003). VM was first introduced in Malaysia in 1986 (Jaapar and Torrance 2005). Unfortunately, VM has not yet become widely practiced in Malaysia (Jaapar and Torrance 2005). It was observed that due to some successful applications of VM in the Malaysian construction industry, further actions should now be taken to exert its full potential to improve value for money for the clients of the industry. Since there is no sound academic base and lack of understanding by the general public, the construction clients and the professional consultants, the overall research reflected in this paper is to draw a holistic picture of the current VM practices existing in the Malaysian construction industry leading to the formulation of Prototype VM Guidelines. By having these VM Guidelines, it is hoped the continuous support from government agencies can be sought to promote its application (Shen 2004) as, internationally, it has proved to benefit many construction industries. It is hoped that the VM Guidelines will be a driving force in the further stage of VM development in Malaysia and later it would be able to set up a better future direction for VM implementation to achieve better value in the Malaysian construction industry. The main objective of this research was to contribute to the existing body of knowledge in the VM of the Malaysian construction industry by understanding the process and system practiced so that it could be developed further and formally adapted to the construction industry context. 2. CURRENT DEVELOPMENT OF VM IN MALAYSIA The value methodology evolved from VA in the 1940s to VE in the 1960s and later to VM in the 1980s (Jaapar and Torrance 2005). The philosophy and techniques of VM are founded on a technique and process which provides a structured approach to the examination and development of a project that will increase the likelihood of achieving the predetermined requirements at optimum value for money. In the context of the construction industry, it is used to describe a structured and systematic process for the identification of functions of a building or facility to ensure that it can be constructed and delivered in the most cost effective manner. It focuses on improving value rather than cost reduction as its basic philosophy is to achieve good value and to remove unnecessary cost. A construction project is an one-off activity, with one chance to achieve a satisfactory outcome. This necessitates establishing unambiguous objectives as well as it requires a serious commitment of time and resources but can provide benefits far exceeding the cost. By having the concept of VM installed, it can identify the option which gives the best value for money in accordance with set criteria. It has been recognised that VM is a factor that is critical to the success of projects, by providing the basis of improving value for money in construction. This is a strong statement, which if it is well researched, will be able to help the Malaysian construction industry to be more competitive, to provide greater client satisfaction and be able to cushion the impact of globalisation in the near future. -1-