Managing Value, Requirements and Risk in the Appraisal Stage of UK Construction Projects

300 Pages·2012·4.9 MB·English

by  Ehab Mlybari

Managing Value, Requirements and Risk in the
Appraisal Stage of UK Construction Projects

Ehab Abduraheem A Mlybari

Submitted in accordance with the requirements
for the degree of Doctor of Philosophy

The University of Leeds
School of Civil Engineering

October 2011
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Declaration
The candidate confirms that the work submitted is his own and that appropriate credit has been
given where reference has been made to the work of others.

This copy has been supplied on the understanding that it is copyright material and that no quotation
from the thesis may be published without proper acknowledgement.

© <2011> The University of Leeds <Ehab Abduraheem A Mlybari>
iiiiii
Acknowledgements:
Firstly, many thanks are due to God for his bounties and blessings. Secondly, my thanks and
appreciation extend to Professor Steven Male for his inspiration, guidance, support, encouragement,
and constructive criticism throughout this PhD and during the writing of this thesis leading to its
successful completion. Thirdly, I wish to express my gratitude to my second supervisor, Professor
Denise Bower, for undertaking the supervision responsibility after the Professor Male’s leave. In
addition, thanks and appreciations are due to my sponsor {Umm Al-Qura University} for giving me
the chance to undertake my postgraduate studies and for their unlimited support and
encouragement. Thanks are also due to all research participants who took part in the interviews and
provided case study materials. Fourthly, I would like to extend my deepest gratitude and dedicate
this work to my parents for their love and prayers; to my brothers and my sister for their
encouragement; my wife and my children for their efforts in preparing an appropriate study
environment for me during my study period here in the United Kingdom. Finally, I would like to
thank all of my relatives and friends who supported me in my studies, without whom I could not
have reached this point.

Ehab Mlybari
October 2011
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Abstract:
The construction industry in the United Kingdom has grown significantly and its ability to produce
construction projects successfully has a significant impact on the whole economy’s performance.
This industry needs better performance and value for money improvement because of ineffective
decision-making associated with the management of risks, uncertainties, and changes which are
inherent in these projects, particularly at the early {appraisal} stage and its investment decisions.
Positioning this research within a wider body of international literature, including standards on
managing projects, has made clear: the lack of VM, ReqM and RM approaches that address these
methodologies comprehensively at different organisational levels; and the lack of a clear and proper
linkage between these organisational levels.
This research clarifies the relationships between policy, strategy, portfolio, programme and project
levels and their contribution within the appraisal stage of projects. It investigates the applications of
value, requirements and risk management at different levels of an organisation; and subsequently
develops an integration approach. This approach applies these methodologies together within
investment decisions under uncertainty to appraise projects top-down and manage the
organisational value chain through these organisational levels to successfully provide the right
projects that align with corporate strategy, leading to improve performance and value for
organisations in the construction industry.
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Table of Contents:
ACKNOWLEDGEMENTS: ......................................................................................................................... III 
ABSTRACT: ................................................................................................................................................... IV 
TABLE OF CONTENTS: ............................................................................................................................... V 
LIST OF FIGURES: ........................................................................................................................................ X 
LIST OF TABLES: ....................................................................................................................................... XII 
ABBREVIATIONS: .................................................................................................................................... XIII 
1  CHAPTER ONE: INTRODUCTION: ................................................................................................... 1 
1.1  INTRODUCTION: ..................................................................................................................................... 1 
1.2  RESEARCH CONTEXT, PROBLEM AND NEED: ......................................................................................... 1 
1.3  THE RESEARCH’S AIM AND OBJECTIVES: .............................................................................................. 3 
1.4  SCOPE OF THIS RESEARCH: ............................................................................................................... 4 
1.5  ORIGINAL CONTRIBUTIONS OF THIS RESEARCH: .................................................................................... 4 
1.6  OUTLINE OF RESEARCH METHODOLOGY THAT IS USED IN THIS RESEARCH: .......................................... 4 
1.7  CHAPTER BREAKDOWN AND STRUCTURE OF THIS THESIS: .................................................................... 6 
2  CHAPTER TWO: PROJECTS AND THEIR MANAGEMENT: ...................................................... 9 
2.1  INTRODUCTION: ..................................................................................................................................... 9 
2.2  STRATEGY AND ITS MANAGEMENT: .................................................................................................... 10 
2.2.1  Strategy: .................................................................................................................................... 10 
2.2.2  Strategic Management Definition and Process: ........................................................................ 10 
2.2.3  Strategic Management Hierarchy: ............................................................................................ 11 
2.2.4  Strategic Management Team {the Board}: ................................................................................ 13 
2.3  PROJECT AND ITS MANAGEMENT: ........................................................................................................ 14 
2.3.1  Project Definitions and Features: ............................................................................................. 14 
2.3.2  Examples and Types of Projects: .............................................................................................. 15 
2.3.3  Project Objectives: .................................................................................................................... 16 
2.3.4  Project Life Cycle {PLC}: ......................................................................................................... 17 
2.3.5  Project Management Definitions and Features: ....................................................................... 20 
2.3.6  Project Management Activities: ................................................................................................ 21 
2.3.7  Project Management Advantages: ............................................................................................ 22 
2.3.8  People in Projects: .................................................................................................................... 23 
2.4  MULTI-PROJECTS AND ITS MANAGEMENT: .......................................................................................... 26 
2.5  PROGRAMME AND PORTFOLIO MANAGEMENT: ................................................................................... 28 
2.5.1  Project vs. Programme vs. Portfolio: ........................................................................................ 28 
2.5.2  Programmes and their Management: ........................................................................................ 29 
2.5.3  Portfolio and its Management: .................................................................................................. 34 
2.6  PROJECT VALUE CHAIN {PVC}: ......................................................................................................... 37 
2.7  CHAPTER SUMMARY: .......................................................................................................................... 39 
3  CHAPTER THREE: VALUE MANAGEMENT: .............................................................................. 41
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3.1  INTRODUCTION: ................................................................................................................................... 41 
3.2  VALUE PHILOSOPHY: ........................................................................................................................... 41 
3.3  VALUE MANAGEMENT BACKGROUND: ................................................................................................ 42 
3.4  VALUE MANAGEMENT TERMINOLOGY: ............................................................................................... 43 
3.5  VALUE MANAGEMENT DEFINITIONS AND FEATURES: ......................................................................... 44 
3.6  PROJECTS THAT NEED VALUE MANAGEMENT STUDIES: ...................................................................... 45 
3.7  ADVANTAGES OF VALUE MANAGEMENT: ........................................................................................... 46 
3.8  DISADVANTAGES OF VALUE MANAGEMENT: ...................................................................................... 47 
3.9  VALUE MANAGEMENT TEAM: ............................................................................................................. 47 
3.9.1  Internal or External Team: ........................................................................................................ 48 
3.9.2  Facilitation: ............................................................................................................................... 48 
3.10  VALUE MANAGEMENT INPUTS: ...................................................................................................... 49 
3.11  VALUE MANAGEMENT TIMING: ...................................................................................................... 50 
3.12  VALUE MANAGEMENT PROCESS {JOB PLAN}: ................................................................................ 53 
3.13  VALUE MANAGEMENT STUDY STAGES: .......................................................................................... 56 
3.13.1  The Pre-workshop /Orientation and Diagnostic Stage {O&D}: .......................................... 56 
3.13.2  The Workshop Stage: ............................................................................................................ 57 
3.13.3  The Post- workshop/Implementation Stage: ......................................................................... 60 
3.14  VALUE MANAGEMENT OUTPUTS: ................................................................................................... 60 
3.15  VALUE MANAGEMENT IMPROVEMENT AND FUTURE: ..................................................................... 60 
3.16  CHAPTER SUMMARY: ...................................................................................................................... 61 
4  CHAPTER FOUR: REQUIREMENTS MANAGEMENT: .............................................................. 64 
4.1  INTRODUCTION: ................................................................................................................................... 64 
4.2  REQUIREMENTS DEFINITION AND TERMINOLOGIES: ............................................................................ 64 
4.3  REQUIREMENTS MANAGEMENT DEFINITION AND FEATURES: ............................................................. 65 
4.4  NEED FOR REQUIREMENTS MANAGEMENT: ......................................................................................... 65 
4.5  REQUIREMENTS MANAGEMENT TIMING: ............................................................................................. 66 
4.6  BUSINESS ANALYSTS {REQUIREMENT MANAGER} AND OTHER REQM PARTICIPANTS: ...................... 67 
4.7  REQUIREMENT MANAGEMENT PROCEDURES: ...................................................................................... 67 
4.7.1  Requirements Elicitation, Gathering and Capturing: ............................................................... 68 
4.7.2  Requirements Analysis: ............................................................................................................. 68 
4.7.3  Requirements Organising, Categorising and Prioritising: ....................................................... 69 
4.7.4  Formatting and Documenting Requirements: ........................................................................... 69 
4.7.5  Requirements Validation and Verification: ............................................................................... 69 
4.7.6  Tracking and Managing Requirements Changes: ..................................................................... 70 
4.8  REQUIREMENTS MANAGEMENT TOOLS AND SOFTWARE: .................................................................... 70 
4.9  REQUIREMENTS MANAGEMENT IMPROVEMENT AND FUTURE: ............................................................ 71 
4.10  REQUIREMENTS MANAGEMENT IN CONSTRUCTION INDUSTRY: ...................................................... 71 
4.11  CHAPTER SUMMARY: ...................................................................................................................... 72
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5  CHAPTER FIVE: RISK MANAGEMENT: ....................................................................................... 74 
5.1  INTRODUCTION: ................................................................................................................................... 74 
5.2  RISK MANAGEMENT BACKGROUND: ................................................................................................... 74 
5.3  RISK: ................................................................................................................................................... 75 
5.3.1  Risk Definition: ......................................................................................................................... 75 
5.3.2  Risk Terminologies: ................................................................................................................... 76 
5.3.3  Risk and Project Objectives: ..................................................................................................... 78 
5.4  RISK MANAGEMENT: ........................................................................................................................... 79 
5.4.1  Risk Management Definition and Features: .............................................................................. 79 
5.4.2  Projects that Need Risk Management: ...................................................................................... 80 
5.4.3  Advantages of Risk Management: ............................................................................................. 80 
5.4.4  Disadvantages of Risk Management: ........................................................................................ 81 
5.4.5  Risk Management Team: ........................................................................................................... 82 
5.4.6  Risk Management Inputs: .......................................................................................................... 82 
5.4.7  Risk Management Approaches: ................................................................................................. 83 
5.4.8  Risk Management Timing: ......................................................................................................... 90 
5.4.9  Risk Management Outputs: ....................................................................................................... 93 
5.4.10  Reasons for not Performing Risk Management: ................................................................... 94 
5.4.11  Risk Management Improvement and Future: ....................................................................... 95 
5.5  CHAPTER SUMMARY: .......................................................................................................................... 95 
6  CHAPTER SIX: SYNTHESIS AND APPROACH CONCEPTUALISATION: ............................. 97 
6.1  INTRODUCTION: ................................................................................................................................... 97 
6.2  STRUCTURE OF ORGANISATIONAL LEVELS, INVESTMENT DECISIONS AND VALUE CONTEXT: ............ 97 
6.2.1  Organisational Levels and their Relationships: ........................................................................ 97 
6.2.2  The Value Chain through Organisational Levels: ..................................................................... 99 
6.2.3  Roles to Manage Organisation Levels: ..................................................................................... 99 
6.3  REQM, VM AND RM INTEGRATION ARGUMENT AND ITS POSSIBILITIES: .......................................... 102 
6.3.1  Overview about ReqM, VM and RM and their General Relations: ......................................... 102 
6.3.2  Theoretical Integration Argument through ReqM, VM and RM: ............................................ 102 
6.3.3  Processes Integration Argument through ReqM, VM and RM: ............................................... 105 
6.3.4  Tools and Techniques {T&T} Integration Argument through ReqM, VM and RM: ................ 108 
6.3.5  Intervention Points Integration Argument through ReqM, VM and RM: ................................ 109 
6.4  CONCEPTUAL INTEGRATED STUDIES SERIES WITHIN THE ORGANISATIONAL LEVELS: ...................... 111 
6.4.1  The Integrated Studies {S1, S2, S3 and S4} and their Features: ............................................. 113 
6.5  CONCEPTUAL PROCESS DIAGRAM OF THE INTEGRATED STUDIES THROUGHOUT ORGANISATIONAL
LEVELS: ...................................................................................................................................................... 116 
6.6  THE CONCEPTUAL GENERAL INTEGRATED STUDY APPROACH: ......................................................... 119 
6.6.1  The Approaches for the Integration: ....................................................................................... 119 
6.6.2  The Conceptual VM Extended Process: .................................................................................. 120
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6.7  CHAPTER SUMMARY: ........................................................................................................................ 125 
7  CHAPTER SEVEN: RESEARCH METHODOLOGY: .................................................................. 127 
7.1  INTRODUCTION: ................................................................................................................................. 127 
7.2  PART ONE: OVERVIEW OF RESEARCH METHODOLOGIES AND THEIR THEORIES: ............................... 127 
7.2.1  Research Design: .................................................................................................................... 127 
7.2.2  Types and Approaches of Research: ....................................................................................... 130 
7.2.3  Strategies {styles} for Research: ............................................................................................. 132 
7.2.4  Triangulation: ......................................................................................................................... 138 
7.2.5  Research Sampling: ................................................................................................................. 138 
7.2.6  Data Collection Methods of Research: ................................................................................... 139 
7.2.7  Data Analysis Processes: ........................................................................................................ 141 
7.2.8  Research Validity: ................................................................................................................... 143 
7.3  PART TWO: THE ADOPTED METHODOLOGIES FOR THIS RESEARCH: .................................................. 144 
7.3.1  The Adopted Approach for this Research: .............................................................................. 144 
7.3.2  The Adopted Strategy for this Research: ................................................................................. 144 
7.3.3  The Adopted Preliminary Information Gathering for this Research: ...................................... 145 
7.3.4  The Adopted Data Collection Methods for this Research: ...................................................... 146 
7.3.5  The Sample of this Research: .................................................................................................. 150 
7.3.6  The Adopted Data Analysis Process for this Research: .......................................................... 152 
7.3.7  The Validity of this Research: ................................................................................................. 154 
7.4  CHAPTER SUMMARY: ........................................................................................................................ 156 
8  CHAPTER EIGHT: FINDINGS: ....................................................................................................... 159 
8.1  INTRODUCTION: ................................................................................................................................. 159 
8.2  PART ONE: THE THREE SAMPLE GROUPS: .......................................................................................... 159 
8.2.1  Client Organisations as Case Studies: .................................................................................... 159 
8.2.2  The Consultant Interviewees: .................................................................................................. 160 
8.2.3  The IVM Seminar: ................................................................................................................... 160 
8.3  PART TWO: THE FINDINGS: ................................................................................................................ 162 
8.3.1  Public, Regulated Private and Non-regulated Private Sectors: .............................................. 162 
8.3.2  Organisation Levels and the Investment Processes: ............................................................... 162 
8.3.3  Applications of ReqM, VM and RM: ....................................................................................... 170 
8.3.4  ReqM, VM and RM Study Managers and Participants: .......................................................... 174 
8.3.5  ReqM, VM and RM Integration: .............................................................................................. 175 
8.3.6  Early Value Management Process: ......................................................................................... 178 
8.3.7  The Interviewees’ Views on Integrated Studies Series and how they can be implemented in
Regulated Private Organisations: ......................................................................................................... 181 
8.4  CHAPTER SUMMARY: ........................................................................................................................ 181 
9  CHAPTER NINE: DISCUSSION AND APPROACH DEVELOPMENT: .................................... 183 
9.1  INTRODUCTION: ................................................................................................................................. 183
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9.2  THE KEY ASSUMPTIONS INVESTIGATION: .......................................................................................... 183 
9.3  THE ORGANISATION STRUCTURE AND THE STUDIES TIMING: ............................................................ 185 
9.3.1  The Targeted Sector for the Research Approach: ................................................................... 185 
9.3.2  Investment Process and the Organisation Levels Relationship: ............................................. 185 
9.3.3  Top-down or Bottom-up Investments: ..................................................................................... 189 
9.3.4  The Disconnection {gap} between Organisation Strategy and Project Levels: ...................... 189 
9.3.5  Key Roles and their Skills Profile within Organisation Levels: .............................................. 190 
9.3.6  Consequential Changes for the Conceptual Organisation Structure and its Studies Timing: 191 
9.4  THE INTEGRATED STUDIES SERIES WITHIN THE ORGANISATION LEVELS: ......................................... 195 
9.5  THE PROCESS DIAGRAM OF THE INTEGRATED STUDIES THROUGHOUT ORGANISATION LEVELS: ...... 201 
9.6  THE GENERAL INTEGRATED STUDY APPROACH: ............................................................................... 203 
9.6.1  The Need for ReqM, VM and RM Integration: ........................................................................ 203 
9.6.2  Levels of Integration and their Approaches: ........................................................................... 203 
9.6.3  The VM Extended Process: ..................................................................................................... 205 
9.6.4  Study Leader Features and Skills: ........................................................................................... 210 
9.7  CHAPTER SUMMARY: ........................................................................................................................ 210 
10  CHAPTER TEN: CONCLUSIONS AND RECOMMENDATIONS: ............................................. 212 
10.1  INTRODUCTION: ............................................................................................................................ 212 
10.2  THE OBJECTIVES: .......................................................................................................................... 212 
10.3  CONTRIBUTION TO THE KNOWLEDGE: .......................................................................................... 217 
10.4  LIMITATIONS OF THE RESEARCH: .................................................................................................. 218 
10.5  AREAS FOR FUTURE RESEARCH: ................................................................................................... 219 
LIST OF REFERENCES: ............................................................................................................................ 220 
11  APPENDIXES: .................................................................................................................................... 240 
APPENDIX A: FOR CHAPTER 2: ............................................................................................................. 241 
APPENDIX B: FOR CHAPTER 3: ............................................................................................................. 245 
APPENDIX C: FOR CHAPTER 6: ............................................................................................................. 253 
APPENDIX D: FOR CHAPTER 7: ............................................................................................................. 259 
APPENDIX E: FOR CHAPTER 8: ............................................................................................................. 279 
APPENDIX F: ETHICAL CONSIDERATIONS: PHD CANDIDATES: ................................................ 283
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List of Figures:
FIGURE 1.1: THE RESEARCH PROCESS {SOURCE: (MAMIA, 2006 P15)} ..................................................................................... 5 
FIGURE 1.2: RESEARCH METHODOLOGY OUTLINE {SOURCE: THE AUTHOR} ............................................................................. 5 
FIGURE 1.3: THESIS STRUCTURE {SOURCE: THE AUTHOR} ....................................................................................................... 8 
FIGURE 2.1: THE STRATEGIC MANAGEMENT PROCESS, PROGRAMMES AND PROJECTS {SOURCE: (MALE, 2008 P41)} .................. 9 
FIGURE 2.2: THE ORGANISATIONAL CONTEXT OF PORTFOLIO AND PROGRAMME MANAGEMENT {SOURCE: (MALE, 2008 P12)} 10 
FIGURE 2.3: STRATEGIC MANAGEMENT PROCESS {SOURCE: (DAFT, 2008 P246)} ................................................................... 11 
FIGURE 2.4: CORPORATE GOVERNANCE AND INTERNAL CONTROL {SOURCE: (OGC, 2007X P4)} ........................................... 14 
FIGURE 2.5: THE PROCESS PROTOCOL ELEMENTS {SOURCE: (AOUAD ET AL., 1999 P5)} .......................................................... 18 
FIGURE 2.6: IMPORTANCE OF PROJECT DEFINITION DURING THE EARLY PHASES OF A PROJECT {SOURCE: (OBERLENDER, 2000
P39)} ......................................................................................................................................................................... 19 
FIGURE 2.7: PORTFOLIO, PROGRAMME, AND PROJECT INTERACTIONS {SOURCE: (PMI, 2008 P8)} ........................................... 29 
FIGURE 2.8: PROGRAMME MANAGEMENT RELATIONSHIPS {SOURCE: (LYCETT ET AL., 2004 P296)} ........................................ 32 
FIGURE 2.9: PROGRAMME MANAGEMENT LIFE CYCLE {SOURCE: (HAUGHEY, 2001 P11)} ....................................................... 33 
FIGURE 2.10: PORTFOLIO MANAGEMENT PROCESS {SOURCES: (OGC, 2004B P4)} .................................................................. 35 
FIGURE 2.11: PORTFOLIO MANAGEMENT PHASES {SOURCE: (OGC, 2004B P6)} ...................................................................... 36 
FIGURE 2.12: PROGRAMME LEVEL VALUE AND THE PVC {SOURCE: STANDING (1999 P161)} ................................................. 38 
FIGURE 3.1: THE EVOLUTION OF VM {SOURCE: (DALLAS, 2006 P13)} ................................................................................... 43 
FIGURE 3.2: VM AND VE RELATIONSHIP {SOURCE: (CONNAUGHTON AND GREEN, 1996 P7; HAYDEN AND PARSLOE, 1996 P6)}
.................................................................................................................................................................................. 44 
FIGURE 3.3: OPPORTUNITIES & POTENTIAL SAVINGS VIA VM {SOURCE: (BRE: BUILDING RESEARCH ESTABLISHMENT, 2000
P8)} ........................................................................................................................................................................... 52 
FIGURE 3.4: VALUE OPPORTUNITIES ON A MODIFIED RIBA PLAN OF WORK {ADAPTED FROM (MALE ET AL., 1998A P16)} ...... 52 
FIGURE 3.5: THE LEVER OF VALUE {SOURCE: (KELLY ET AL., 2004 P173)} ............................................................................ 53 
FIGURE 3.6: AN ENHANCED VALUE MANAGEMENT PROCESS {SOURCE: (MALE ET AL., 2005 P12)} .......................................... 55 
FIGURE 3.7: THE MAJOR WORKSHOP ELEMENTS {SOURCE: (KELLY ET AL., 2004 P126)} ......................................................... 57 
FIGURE 5.1: PROJECT RISK MANAGEMENT OVERVIEW {SOURCE: (PMI, 2008 P274)} .............................................................. 85 
FIGURE 5.2: DOUBLE PROBABILITY-IMPACT MATRIX {SOURCE: (HILLSON, 2002 P238)} ......................................................... 87 
FIGURE 5.3: RM FOR ALL ORGANISATION LEVELS {SOURCE: (MERNA, 2003 P116)} ............................................................... 92 
FIGURE 6.1: CONTEXT OF ORGANISATIONAL LEVELS {ADAPTED FROM OGC (2006D P5)} ...................................................... 98 
FIGURE 6.2: THE OVC {ADAPTED FROM STANDING (1999 P161)} ....................................................................................... 100 
FIGURE 6.3: THE CONCEPTUAL ORGANISATION STRUCTURE FOR THE RESEARCH {SOURCE: THE AUTHOR ADAPTED FROM OGC
(2006D P5) AND STANDING (1999 P161)} ................................................................................................................. 101