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Achieving Value for Money (VFM) in Construction Projects

Samuel Olusola, Olatunji (Mr.) 1 Timothy Oluwatosin, Olawumi (Mr.) 2
Oluwaseyi Alabi, Awodele (Dr.) 3
1.Lecturer, Department of Quantity Surveying, Federal University of Technology, Akure, Nigeria, P.M.B 704,
Akure, Nigeria
2.Research Assistant, Department of Quantity Surveying, Federal University of Technology, Akure, Nigeria
P.M.B 704, Akure, Nigeria
3.Senior Lecturer, Department of Quantity Surveying, Federal University of Technology, Akure, Nigeria, P.M.B
704, Akure, Nigeria

Abstract
Value for Money is the clients assessment of the project delivered and/or services rendered by the various
project stakeholders as it met the pre-determined objectives. The study focused on ways by which the required
value for money can be achieved in a project, these includes detailed risk analysis and appropriate risk allocation,
drive for faster project completion, curtailment in project cost escalation, encouragement of innovation in project
development, preparation of a detailed specification etc. Highlighted among management tools that can aid the
achievement of the desired VFM includes Life Cycle Cost analysis, Value Management, Building Information
Modelling, and Lean Construction methods. The study argued for the ex-ante VFM assessment to be carried out
at the design stage of a project; the importance of an ex-post VFM assessment after project completion was
stressed, this is due to the fact that it helps to determine whether or not value for money has actually been
delivered. Meanwhile, the barriers to achieving value for money on investment for the client were discussed with
recommendations for improving VFM practices. The findings of this research provide necessary information and
instruments to assist the various project stakeholders to make informed and supportable decisions.
Keywords: Value for Money (VFM), VFM techniques, barriers, construction projects

1.0 INTRODUCTION
Demystifying issues regarding the concept of achieving or assessing how to, when to, and/or where to achieve
the value for money on investment for clients requires firstly, clarification of the term Value for Money (VFM)
and then identifying ways or stages by which it can be achieved in construction projects. Value for Money can
be defined as the clients assessment of the project delivered (or services rendered) by the various project
stakeholders as it met the pre-determined objectives. A client can attest to value for money when they feel that
they have received a service that was worth the price that they paid for it. Value for money assesses the cost of a
product or service against the quality of provision. It should be noted that value for money is linked to efficiency.
The European Investment Bank describes it as a measure of the economic efficiency of a project (Thomson &
Goodwin, 2005); but this definition according to Antoine (2012) can be more detailed since economic
efficiency can be vague and lead to misinterpretation. VFM according to HM Treasury (2006) is defined as the
optimum combination of whole-of-life costs and quality (or fitness for purpose) of the good or service to meet
the users requirement. The whole-of-life costs could include: the initial purchase price of the goods and services;
maintenance costs; transition out costs; licensing costs (when applicable); the cost of additional features
procured after the initial procurement; consumable costs; and disposal costs. Meanwhile, the University of
Cambridge (2010) and Erlendsson (2002), described 'Value for money' (VFM) as a term used to assess whether
or not an organisation has obtained the maximum benefit from the goods and services it both acquires and
provides, within the resources available to it. The value achieved through the project is measured by the ratio of
benefits delivered (from the owners perspective) to the resources used for the whole project (Dallas, 2006). It
gives:
Value = Benefits Delivered / Resources Used
The term Resources Used can always be converted into money, whether it deals with raw material resources,
technical resources or human resources; therefore, this value ratio is often named as Value for Money (Antoine,
2012). He argued further that the term Benefits Delivered can be easily assessed since it consists of both
objective and subjective components. The objective value according to Antoine (2012), Erlendsson (2002) and
Kelly, Male, and Graham (2004) refers to all economic aspects and it is possible to quantify it accurately in
theory by knowing the price and costs of every step feasibility studies, procurement, construction phase,
operational phase; while the subjective value refers to social benefits and satisfaction and this subjective
value is difficult to define because it depends on individual perceptions so it seems even more difficult to
measure and quantify. Harvey and Green (1993), and Campbell and Rozsnyai, (2002) defined value for money in
terms of quality that quality as value for money sees quality in terms of return on investment and that if the
same outcome can be achieved at a lower cost, or a better outcome can be achieved at the same cost, then the
customer has a quality product or service.

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2.0 VFM- AN OVERVIEW

Baker, Dross, Shah, and Polastro (2013) noted that Value for Money (VFM) is a concept that has been widely
used for some time within the commercial and industrial sectors which collaborated the views of Bidne et al.
(2012) who acknowledged that VFM had been embraced internationally as an essential tool for assessing the
relative costs and benefits of alternative options available for selection for the provision of a potential public
project, though an often misunderstood phrase (Barr & Christie, 2014); Baker et al. (2013) further argued that
there is no universal definition for the term VFM and the most cited definition states that VFM is the optimal
use of resources to achieve the intended outcomes. The 3Es definition of Value for Money is now in common
currency, providing a framework for analysis shaped by Economy, Efficiency and Effectiveness. More recently a
fourth E has been added to the VFM mix in the shape of equity, conveying the message that development is
only of value if it is also fair (Baker et al., 2013; Barr & Christie, 2014; Burger & Hawkesworth, 2011; DFID,
2011; Jackson, 2011).
TTF (1998) stressed that in consideration and assessment of VFM, that VFM should never be
automatically equated with the lowest cost. This collaborated HM Treasury (2006) and DFID (2011) who noted
in their report that VFM is not the choice of goods and services based on the lowest cost bid but to have a better
understanding of the cost implications. It was further stressed that in assessing and delivering VFM, it is
important to note that VFM is a relative concept which requires comparison of the potential or actual outcomes
of alternative procurement options, while Decorla-souza (2015) stressed that VFM analyses should be conducted
once it is decided to undertake a project and wish to assess the project delivery options. However, the
achievement of VFM should be assessed in conjunction with other project aspects such as service quality, risk
transfer, and wider policy objectives (Akintoye, Hardcastle, Beck, Chinyio, & Asenova, 2003). They further
asserted that the overall project success is to a very large extent determined by the ability of the client to adopt
and sustain the VFM regime throughout the project life.
Best value for money can be defined as the most advantageous combination of cost, quality, and
sustainability to meet customer requirements. In this context, cost means consideration of the whole life cost;
quality means meeting a specification which is fit for purpose and sufficient to meet the customers requirements;
sustainability means economic, social and environmental benefits. Best value (BV) is a relative notion that can
be interchanged with VFM, which refers to the optimum outcome of a business process. It is applicable to all
industries, sectors, geographic locations, and cultures. BV is expected to help organizations improve their
performance (Akintoye et al., 2003). HA (2006) provided a better definition of best value, as the delivery of
business objectives at the lowest affordable cost while achieving continuous improvement with the four key
components of best value being effectiveness, efficiency and economy underpinned by the demonstration of
continual improvement. In a research survey carried out by Ansell, Holmes, Evans, Pasquire, and Price (2009),
the respondents of their research survey rank the requirements for delivering best value to the clients as- free
from defects on completion; delivered on time; delivered within budget; fit for purpose; low construction costs;
pleasing to look at; short construction period; supported by worthwhile guarantees; satisfactory life of repair; low
maintenance cost; minimal disruption to the public; and safety.
It is worthy of note that securing value for money is not limited to a some project delivery variants such
as the traditional/conventional method of project delivery or to just design and build but to also variants such as
public-private partnerships, relational contracting. Burger and Hawkesworth (2011) noted that as a matter of
principle, the choice between using a PPP or traditional procurement should be simple; however, governments
should prefer the method that creates the most value for money. They further argued that in practice the choice is
not always as simple as it seems and that the value-for-money objective is very often blurred, and the choice
between using a PPP and traditional infrastructure procurement may be skewed by factors other than value for
money. Akintoye et al. (2003) attested to the fact that it is a fundamental requirement in public finance initiative
(PFI) procurement for value for money to be achieved, and for it to be secured appropriate risks should be
transferred to the private sector; this corresponds to the assertion of Antoine (2012) that value for money is a
critical issue in PPP projects.
PFI is a type of publicprivate partnership (PPP) where project financing rests mainly with the private
sector while the rationale of PPP is to combine the resources of the public and private sectors, in the quest for
more efficient service provision (Akintoye et al., 2003). Grimsey (2006) meanwhile suggested four methods for
determining VFM in project procurement- a full cost-benefit analysis of the most likely public and private sector
alternatives; a detailed modelling of risk-weighted and life cycle costed models of traditional state procurement
(the PSC) and a shadow bid for a PPP before bids are invited; a VFM comparison of the PSC and the contractor
proposals received following the tender process; reliance on a competitive bidding process. Decorla-souza (2015)
revealed that only financial impacts are addressed in most VFM Analysis and that non-financial impacts (e.g.,
user benefits) are not usually addressed. Nonetheless, value for money enables the government to configure and
measure procurement alternatives and identify optimal procurement solutions (Regan, 2014).
The Institute of Value Management (2002) stressed that the concept of value relies on the relationship

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between the satisfaction of many differing needs and the resources used in doing so. The differing needs are
likely to include aspects such as high quality, good indoor environment, durability, cheaper to maintain, user-
friendly etc. Meanwhile, Cox and Townsend (1998) claimed that value for money, productivity, and overall
clients satisfactions are fairly low in the construction industry as compared to other industrial sectors and that no
simple factor is responsible. Key generic factors that for drive value for money include the optimum allocation
of risks between the various parties, focusing on the whole life costs, integrated planning and design of the
facilities-related services, the use of an outputs specification approach, a rigorously executed transfer of risks,
sufficient flexibility, ensuring sufficient incentives within the procurement, the term of the contract, sufficient
skills and expertise, and proper management of the scale and complexity of the procurement (HM Treasury,
2006). In general, there are six determinants of VFM (Morallos, 2008): risk transfer, long-term nature of
contracts, competition, performance measurement and the use of an output specification, performance
measurement, and incentives, private partys management skills.
This paper begins by presenting the underlying concept of Value for Money (VFM). The various ways
by which project stakeholders help in achieving VFM was also expatiated on; and the potential of some
construction management tools such as Life Cycle Costing (LCC), Value Management (VM), and Building
Information Modelling (BIM) etc. to increase the capability of the stakeholders to achieving a good return on
investment (ROI) for the clients was highlighted with supportive arguments from the literature that highlights the
importance of these tools. Meanwhile, the problem or barriers to achieving value for money on investment for
the client was discussed with recommendations for improving VFM. An extensive review of the relevant
literature provided a good background for the discussion of the various sections and this current research aims to
build on existing knowledge in the various field of knowledge highlighted in this work.

3.0 WAYS BY WHICH PROJECT STAKEHOLDERS CAN ACHIEVE VFM

This section draws attention to ways by which the various stakeholders of a project can integrate their activities
so as to achieve value for money invested in such project. Baker et al. (2013) argued that to measure value for
money for any given project or programme, accountability measures, and beneficiary perceptions need to be
considered, since this is the final value for money stamp; they further stressed that beneficiaries feel that their
needs have been catered for and that the organisation has achieved or exceeded expected results, taking into
account available means (time, money, human resources) in the most efficient, effective, economical and
equitable way. Furthermore, a forecast assessment of the attainable value for money need to be carried to ensure
the success of a project, Burger and Hawkesworth (2011) and Regan (2014) maintained that the ex-ante
assessment of value for money is not sufficient to ensure that a project will deliver value for money and that a
further requirement, which is the conducting of ex-post value-for-money assessments that will determine
whether or not value for money has actually been delivered.

3.1 Detailed risk analysis and appropriate risk allocation

The risk in construction projects is of varying degree of impact and occurrence/likelihood. Risks involved in
construction projects can be categorised into procedural risks (consent and licensing risk), design risks,
construction risks (time and cost overrun; defective construction, financing risks (changing economic condition),
maintenance risks operating risks (ineffective operation of an asset), revenue risks (disappointing performance of
the asset) among others. Risk is central to delivering a successful project and it is measured by assessing the
probability and cost of an outcome at variance with expectation (Regan, 2014); therefore, an effective and
detailed analysis of these risks together with an efficient plan to allocate the risk to the various project
stakeholders will facilitate the pursuit of securing and improving the worth of such project hence increasing its
value. HM Treasury (2006) claimed that risks are allocated to the party, or parties, which are best placed to
manage and minimise these risks over the relevant period. The final equation for quantifying risk is as follows
(Partnerships Victoria, 2003)
Value of risk = (consequence * probability of occurrence) + contingency factor.

3.2 Drive for faster project completion

A purposeful collaboration among project stakeholders in conjunction with the efficient utilization of some
project management tools can serve in the good stead of reducing the overall project duration. The knowledge of
several project delivery methods such as design-build, a public-private partnership, single source system etc. and
the correct understanding of which of them would be most suitable to fast-track the project would help to reduce
the cost associated with the elongated project schedule, hence provide value for money invested by the client.
Also the use of project planning tools such as Gantt chart, Network Diagram, and Team Planner etc. will also be
of help in the bid to plan and monitor the progress of work on the site.

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3.3 Curtailment in project cost escalation

A failure of the final project cost to be within the limit of initial target cost/project budget that has a significant
effect on the value derivable from such project. Take, for instance, an event hall project in which the cost
overrun after the project completion amounts to about 15% of the initial target cost, coupled with interest paid on
borrowed capital could ultimately reduce the initial inflow and profitability for the client/owner thereby
presenting a project with below par value for money invested. Hence, the identification of likely factors or
activities in a project that could result in overall cost escalation and the diligence in reducing the impact (or
avoiding them) could help to ensure the final project cost doesnt offshoot the pre-determined project budget.

3.4 Encouragement of innovation in project development

The introduction of innovating strategies and concept to the process of procuring a service and/or constructing a
project can increase its value to the clients and end-users hence securing a greater measure of value and/or return
on investment. Innovative strategies could come in the form of the introduction of better and more efficient
plants and equipment, development of a innovative solution, better motivation strategies for workers, improved
framework for communication and decision making, improved supply chain management, the introduction of hi-
tech facilities, development of cost database, efficiency in tracking supplies among others. Meanwhile, DFID
(2011) advocated for a more innovative way in assessing the value of projects.

3.5 Maintenance cost being adequately accounted for

The application of VFM tools such as value management and life cycle cost analysis will ensure the use of
durable and maintainable building element and designs that will reduce the cost required to maintain such project
in the long run. Accounting for the maintenance cost should be considered at the design stage (outline design) of
a project, by identifying key components of the projects, objectively decide on alternative design items or
components, estimate likely maintenance cost of each alternative design components, then finally choose the
most cost effective design component based on the lowest cost, provided it gives the required function and
conforms to the required quality standard.

3.6 Accurate assessment of the cost of the project

The quantity surveyor/cost engineer on the project should endeavour to carry out an accurate assessment of the
cost of the project, ensuring that the unit rate assigned to each item of the bill of quantities (BOQ) takes into its
calculation, the various activities, materials, labour, plants and other variable costs that are needed to carry out
the task. Also, the quantity surveyor should ensure that no item of work is erroneously excluded from the BOQ,
as such error of omission though may win the contract can constitute claims and subsequent disputes if not well
managed could affect the cost of the project and could in adverse situations lead to project abandonment hence
loss of return on investment to the clients. Goldbach and Claire (2012) noted that when calculating the costs and
risks to the government and private sector it is imperative that all costs and risks included are comprehensive and
realistic; failure to do so will result in biased estimates that may lead to a less-than-optimal procurement choice
and subsequent loss in value. Bidne et al. (2012) affirmed that establishing baseline cost estimates is critical in
all VFM projects.

3.7 Detailed specifications

The importance and relevance of workable specification to any project cannot be overemphasised. More so, if
such specification is well detailed, that is taking into consideration all the design components, materials, the
standard of workmanships, day work schedules, rates etc. The more detailed a specification is, the greater the
ease by which the quantity surveyor or estimators carries out the assessment of the cost of the project, hence the
more accurate his cost estimate, and as before discussed the greater the client derives a value for his investment.
An undetailed specification can give rise to dispute between the various consultants, most notably between the
architect, engineer and the quantity surveyor; and if by chance the quantity surveyor does not notice that some
specification of a design component are missing or he just utilize his previous experience to estimate for the
project, it can result to claim by the contractor, and the contractor is successfully in filing the claim, it will result
in cost overrun and subsequent reduction in value derivable by the client from the project.

4.0 METHODS OF ACHIEVING VALUE FOR MONEY IN CONSTRUCTION PROJECTS

This section discusses the various methods or techniques available to project stakeholders which when
efficiently and effectively utilized or applied to the project can bring about the desired value and return on
investment. These VFM techniques include life cycle cost analysis, value management, building information
modelling, and lean construction methods.

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4.1 Life Cycle Cost (LCC) Analysis

One of the methods of determining whether a project can achieve a reasonable value for money invested by the
client/sponsors is the life cycle cost analysis; this management tool is usually utilized at the design stage of
construction projects, this statement supports the argument by Bidne et al. (2012) that performing the LCC
calculations must occur before the project is implemented. The life cycle cost (LCC) analysis is a management
tool that is used to analyse the cost of constructed facilities in terms of cost of acquiring the facility and as well
as maintaining and operating the facility (Olanrewaju, 2013). However, he further attests that life cycle of the
project alone is not sufficient as a source of creating value to the clients and end users. Extant literature (Arditi &
Messiha, 1996; Morton & Jaggar, 1995; Olanrewaju, 2013) opined that the purpose of life cycle costing is to
maximize the total cost of ownership of the projects over the projects lifespan. Bennett (2003) defined it as the
total cash flow of the project from the conceptual stage to the disposal stage. One of the features of a formal
measurement of VFM is the forecasting of operating costs over the life of the project (Regan, 2014).
Life Cycle Costing (LCC) is a technique to establish the total cost of ownership. LCC is the present
value of the total cost of the building/asset over its entire operating life and includes the initial capital and
construction costs, operating and maintenance costs and the cost or the benefit of eventual disposal of the asset.
LCC also takes into account the capital costs of the project as well as costs of operation and maintenance; and
while information on the exact time, on the origin of LCC and the time it was first applied to the construction
projects, is not available, but it can be safely concluded that it preceded the VM techniques. Life cycle costing is
also being referred to as whole life cost or cost-in-use (Olanrewaju, 2013); and include capital expenditures
incurred rehabilitating and improving assets, all maintenance, and operating expenses, and is a major risk factor
for infrastructure services procured over terms of 20 or more years (Regan, 2014). The fundamental issue in the
LCC is the determination of the operation and maintenance costs of all possible alternatives which are then
discounted to present worth of money (Pasquire & Swaffield, 2006) for analysis purposes. In other words, LCC
is a technique that is used to relate the initial cost with future based costs like running, operation, maintenance,
replacement, alteration costs (Ahuja & Walsh, 1983; Bennett, 2003; Kiyoyuki, Sugisaki, & Kobayashi, 2005;
Morton & Jaggar, 1995). Elsewhere, it is defined as the total cost of project measured over a period of financial
interest of the clients (Flanagan & Jewell, 2005). Life cycle costing goes hand on hand with a VM study and it is
important to look at what it is and how it is incorporated into VM (Coetzee, 2010). A well-planned and
structured approach to LCC analysis helps to secure value for money invested by the client while also presenting
a good future profitability assessment of such project. For instance, when the LCC of incorporating various
building components and/or elements is evaluated, it will provide a good information on the project overall cost
beyond just the initial project commission and this will be of great help to key project decision makers.
The LCC must also consider the costs associated with the transition of the project from the private sector to the
public sector at its conclusion (Bidne et al., 2012). This calculation generally takes on the following formula:
Life-Cycle Cost = First Cost + Maintenance & Repair + Energy + Water + Replacement + Salvage Value.

4.2 Value Management

Another technique for achieving value for money invested is the value management (VM) methodology,
however as noted by Olanrewaju (2013), there are misconceptions and misunderstandings as to which of the two
techniques (LCC & VM) is more involving, proactive and can ultimately create and sustain best value for
construction projects. Various terms such as value engineering, value control, value analysis and value
engineering have been used to describe the principle of value engineering. VM was developed due to a shortage
of materials and components that faced the manufacturing industry in the North America during the World War
II. VM is both problem solving and problem seeking processes. As a problem seeking system, it identified
problems that might arise in future and develop or identified a solution to the problem (Olanrewaju, 2013;
Woodhead & Downs, 2001). Value management as explained by Kelly and Male (2001) is a proactive and
problems solving management system that maximizes the functional value of a project by managing its
development from concept stage to operation stage of projects through multidisciplinary value team.
The Institute of Value Management (2002) described value management (VM) as a technique used to
reconcile the different value judgements made by various stakeholders and enable an organization to achieve the
greatest progress toward its stated goals with the use of minimum resources, in order to achieve value.Value
management was also defined by Olanrewaju and Khairuddin (2007) as an organized set of procedures and
processes that are introduced, purposely to enhance the function of a designs, services, facilities or systems at the
lowest possible total cost of effective ownership, taken cognizance of the clients value system for quality,
reliability, durability, conformance, durability, aesthetic, time, and cost. Meanwhile, the Construction Industry
Board (1997) defined it as a structured approach to establishing what value means to a client in meeting a
perceived need by clearly defining and agreeing on the project objectives and establishing how they can best be
achieved. Value management involves the identification of the required functions and the selection of alternative
that maximize the achievement of the functions and performance at the lowest possible total cost (Best & De-

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Valennce, 2002). It makes client value system explicitly clear at the projects conceptual stage and seeks to
obtain the best functional balance between cost, quality, reliability, safety and aesthetic (Olanrewaju, 2013). VM
considers various issues before proposing the best solution to clients (Abidin & Pasquire, 2005)
The value management approach reduces the risk of project failure, lower cost, shorter projects
schedules, improve quality, functions, performance and ensure high reliability and safety (Olanrewaju, 2013)
hence, secures the requisite value for money for clients. While, life cycle costing is useful when a project has
been selected or defined, value management is introduced much earlier. Value management is introduced when
a decision has not been made yet either to build or not; at this stage, the project is still soft; the clients solution
to the clients problem might not even be constructed facilities. According to Kelly and Male (2001), value
management is introduced to determine the kind of project that will provide to the client the expected return on
investment. The approach could be introduced at any stage of the projects life cycle, but it is more beneficial if
it is introduced from the pre-construction phase of the projects; before any design is committed (Ahuja & Walsh,
1983).
A vital usefulness of this VM technique is that it incorporates the idea of sustainability in its process of
analysis the value of an element of a building and/or project. Other ways by which VM helps to achieve value
for money include- minimising environmental and social damage, through recommending suitable site location,
selecting sustainable materials, determining elements or theme of design and choice of construction; and this
corresponds with the assertions of Barton, Jones, and Gilbert (2000) that VM is economically viable and
Connaughton and Green (1996) that VM reduces cost (see figure 1). Coetzee (2010) maintained that the main
function of VM is not to reduce costs but to improve value and that value is made up by balancing cost, time and
function/quality of the product/project. He also identified benefits of utilizing the VM techniques- it helps to
identify and removes unnecessary costs associated with the project; seeks to obtain maximum efficiency ratios; it
can identify possible problems early on in the project; creates a clearer focus on the project objectives etc.

Figure 1- Opportunities and potential savings through VM (source: Ellis et al., 2004)

4.3 Building Information Modelling (BIM)

Building Information Modelling (BIM) can be defined as a process of generating and managing information of a
building or infrastructure during its life cycle (Kuiper & Holzer, 2013); also, Eastman et al. (2011) defined it a
modelling technology and associated set of processes to produce, communicate, and analyse building models;
they further defined BIM tools as task-specific applications that produces a specific outcome, such as tools for
model generation, drawing production, specification writing, cost estimation, clash and error detection, energy
analysis, rendering, scheduling, and visualization; while the National BIM Standard (NBIMS) describes it as a
digital representation of physical and functional characteristics of a facility (National Institute of Building
Sciences, 2007, p. 21)
Building Information Modelling (BIM) represents the process of development and use of a computer
generated model to simulate the planning, design, construction and operation of a building facility (Abubakar et
al., 2014; Azhar, Brown, & Farooqui, 2009; Buswell et al., 2007). BIM when effectively and rigorously applied
to a construction process facilitate the ease of dissemination of information, tracking of supplies, ease of
estimating and building up cost rate, concept visualization among other. This, when put together, secures the
needed value for money and return on investment for the client.

4.4 Lean Construction

Lean construction is a technique whereby efficiency in the construction process is achieved by means of
minimising the waste of materials; time and effort in order generate the maximum possible amount of value. As
with VM, the lean construction practice aims to reduce the unnecessary costs from the construction projects and

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this is done within the context of LCC as earlier discussed.

Lean principles as described by Womack et al. (1990) cited in Limon (2015) should be applied by
firstly, defining the customers requirements and expectations as the way they interpret the value. Secondly
identifying the value-stream and eliminating the activity that does not add value to the process. Another basic
principle is to adapt the production operations to the rate demand of the customer switching from push to pull
approach (Limon, 2015). Gabriel (1997) noted that the lean approach to project management has found great
usefulness in potentially difficult and complex areas which could increase the level of commitment and
motivation from the project stakeholders. He further listed some its advantages as a reduction of risk to the client,
with the right balance of quality, performance and value for money.
When the principles of lean construction are applied to construction projects, it helps to ensure adequate
effectiveness in the utilisation of project resources such as plants and manpower, efficiency in the use of time,
ensures compliance to standard and quality of workmanship, raw materials, working within budget and schedule
among others (figure 2). The above benefits when aggregated, secures value for money invested by the client and
increases the value of such project while reducing its cost.

Figure 2- Lean construction. Adapted from Ashworth (2006); as cited in Coetzee (2010)

5.0 BARRIERS IN ACHIEVING VALUE FOR MONEY

Value for money assessment provides important information to assist government decision-making in matters
such as the identification, measurement and allocation of risk, life cycle costing of the service options, and
develops in-house expertise in matters such as specification of service requirements, business case analysis, risk-
weighted financial forecasting, project appraisal, multi-stage bidding processes and bid evaluation (Regan, 2014).
However, some problems had been documented and assessed as barriers to the achievement of the requisite
value for money; these barriers are discussed in this section.

5.1 Technicalities of the VFM management tools

Abidin and Pasquire (2005) identified the absence of formal guidelines for the effective use of some of these
tools as a barrier. This implied that some organisation or stakeholders have their own internal guide for the
utilization of some of these VFM tools which they termed confidential and thereby does not allow for a cross-
collaborative framework that could have improved the effective and efficient use of some of these management
tools.

5.2 Lack of Awareness of some of the VFM tools

These involved barriers such as the lack of cognizance of some of these tools and/or passive and negative
perceptions about their application. The lack of knowledge and awareness of these tools are often related to the
discussion on the barriers to VFM. This might probably be due to the fact that some of these stakeholders arent
aware that these tools (though have been in the application in the industry for over decades now) are relevant to
the concept of achieving value for money for clients. It is reasonable to assert that some clients who may not

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adequate knowledge of the VFM tool may not be able to demand their utilization for their projects. However,
informed stakeholder such as architects, engineers, and/or quantity surveyors should take this knowledge to them.
If the informed stakeholders remain passive, the absorption and utilisation of this technique for VFM may
remain passive.

5.3 Unclear client priorities and objectives

The value-for-money assessment is best carried out at the scheme design stage, however, in a situation whereby
the employer/client is still unsure of the type of project, location of such project or the use to which the project
will be put to after completion, can affect the correct ex-ante VFM assessment of such project. For instance, an
indecision by the client on whether to let out the building after completion as either block of offices or mini-halls
(for meetings and workshops), may lead to inaccurate VFM assessment; this is due to the fact that VFM
assessment considers the optimum balance between the whole life cycle cost and the quality delivered.
Cox and Townsend (1998) revealed that the main problems and barriers to achieving 'value for money'
include- low and discontinuous demand, frequent changes in specification, inappropriate (contractor and
consultant) selection criteria, inappropriate allocation of risk, poor quality, inefficient methods of construction,
poor management, inadequate investment, an adversarial culture and a fragmented industry structure.
Other barriers to achieving value for money in construction projects include:
i. Provision of incomprehensive up-front project information by clients, leading to unnecessary delays and
mistakes;
ii. Demands of clients being wish lists, instead of sensible;
iii. Slow negotiations
iv. Less open communication with the client, especially on the pricing of specific risks;
v. Inconsistent risk assessment and management across different organizations of a consortium
vi. High bidding costs mainly attributed to the cost of consultancy services, of which the legal services are
usually the most expensive.
vii. No standard for VFM evaluation and/or assessment procedures

6.0 CONCLUSION
Identifying value for money is sometimes a complex task, as the benefits, costs and risks need to be considered
at the planning stage. Once risks, costs, and benefits have been identified, it is necessary to assess the equivalent
money value where this is practicable, by making an informed and supportable decision about these benefits,
costs, and risks; it is more likely that value for money can be achieved.
The study advocated that value-for-money assessment for a project should be carried out before a
project is undertaken and after the project is completed to determine whether or not value for money has actually
been delivered. This research also sets out ways by which VFM can be attained on a project site, these includes-
detailed risk analysis and appropriate risk allocation, drive for faster project completion, curtailment in project
cost escalation, encouragement of innovation in project development, maintenance cost being adequately
accounted for, accurate assessment of the cost of the project, and preparation of a detailed specification.
Based on the theoretical concept and potential of VFM practices and its tools in achieve sustainable
return on investment for clients; the effective introduction of VFM practices is hereby encouraged because it is
realistic and practicable. However, there still exist gaps in practice and barriers to its practices, indicating room
for improvement. It is proposed to introduce a way to alleviate the barriers to its practices in order to reduce the
gaps and promote better efficacy and effectiveness of future VFM practices and tools. Improvement can be
pursued from many angles. Among these are:
i. Improving clients expertise and knowledge on VFM practices.
ii. Further standardization of project risks assessment and management.
iii. Provision of standard and procedure for VFM evaluation and assessment.
iv. Seek ways to incorporate VFM practices effectively.
v. Assess current performance to identify areas of weaknesses.
vi. Introduce a guide for VFM practices and the utilisation of its tools.
vii. Promote clients interest on VFM practices and its tools.
viii. Prove VFM tools capability as a mechanism to deliver better sustainable value; and.
ix. Formulate strategies for effective inclusion of VFM as prequalification criteria in selecting project team
members such as contractors and consultants to the project.
The findings of this research provide necessary information and instruments to assist procurement decision-
makers in making informed and supportable decisions about value for money when planning procurement of
projects, goods, and services.

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