The United Arab Emirates antecedently known as the Trucial Oman has the universes sixth largest oil modesty. These are estimated at 98.2 million barrels which is 9.5 of the planetary sum. Her primary export is rough oil which accounts for 81 % of the export capacity. The UAE had a sum of 6,511kilometers of grapevines as per the twelvemonth 2006. This entire includes grapevines selected for a scope of merchandises such as: condensate,520 kilometres ; gas, 2,580 kilometres ; liquid crude oil gas, 300 kilometres ; oil, 2950kilometers ; oil/gas/water, 5 kilometres ; and refined merchandises, 156 kilometres. ( UAE July2007 )

The belowground building of grapevines, oil rigs and oil Wellss pose hazards to all the parties involved in the building, those who are non straight involved in the building undertaking such as the general populace every bit good as environmental hazards.

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Value and hazard direction are of import elements in the building sector. Hazard is inevitable in any building undertaking while value is the grade of importance and the prospective demand that is expected from a given undertaking. Therefore value and hazard direction are important facets for the success of building undertaking ( Alfaro 2011 ) .

Hazard can be defined as the exposure to the likely fiscal loss the physical harm of belongings as a consequence of the probationary association that consequences from the prosecuting a peculiar scheme. The major project of hazard direction attack can be done by methodically sub spliting it into three phases which include: hazard designation, hazard analysis and eventually the hazard responses. Value is the degree of importance or magnitude that is placed upon a peculiar map, point or solution ( Alfaro 2011 ) .

The value direction procedure has three cardinal degrees. This include the finding of the functional demands of the undertaking or any of its constituent parts ; the designation of the possible options and the scrutiny of the cost and value of each option so as to enable the optimum value choice.

In the United Arab Emirates, value direction ( VM ) is normally used to exemplify the overall structured, team-based attitude to any building undertaking. It looks at the value procedure from the low-level formatting of the undertaking construct, appellation, execution every bit good as the operation stages of a undertaking. It involves set of systematic and rational processs, methodological analysis and techniques to increase the undertaking value throughout the being of the installation. ( Potts, 2008 )

On the other manus, hazard direction ( RM ) involves digest of several factors such as: the sensing of preventive steps to cut down the opportunities of happening of a hazard ; better information airing to diminish uncertainness ; considering on hazard transportation through insurance ; puting down processs for pull offing hazard stipends in cost estimations ; set uping unanticipated events programs to counter the hazards when they occur.

The chief techniques and methodological analysiss for value and hazard direction ( RM ) are pertinent for building undertakings and acknowledge that so factual benefits can happen with their usage. However a charming part does non be for the moneymaking direction of hazard. Therefore a hazard should be analyzed constructively, comprehensively and creatively. Therefore rigorous application of a aggregation technique, method or process is non supported ( Potts, 2008 ) .

The major classs of hazard that are most likely to be faced by the client may originate from the capital undertaking. These are potentially much more extended than any extra building costs. This could include the undertaking hazard which is largely concerned with clip and cost: the consequential hazard which are the unplanned effects of undertaking underperformance on the client ‘s undertaking ; benefits hazard are the effects of the undertaking conveying approximately more than the expected benefits ; eventually the consequence on portion monetary value which is related to the public perceptual experience of the undertaking. ( Rawlinson, 1999 )

The value direction facet is relevant to the building sector as it reduces the precise causes of evitable costs. These excess costs can ensue from unneeded facets which provide no utile function ; those that arise from unneeded specification due to unreasonably expensive supplies/components ) ; and cost of hapless build ability ( failure to see building reverberation during the design stage of the undertaking. other costs may originate from evitable life-cycle cost which respect to the failure to set into consideration the future operational costs ; otiose chance cost which is the cost of losing prospective gross. ( Arafa, 2010 )

Value direction techniques can be used in the building industry in order to present the clients undertaking demands. The usage of invention can hold a considerable consequence on the overall result of the undertaking. Advanced solutions need to be adopted at the earliest possible stage of a undertaking. This is because for the chances to add value you must utilize of maker ‘s standard workings instead than modified merchandises.

In the application of value direction in timing is of the cardinal. The commissioning of any building undertaking should follow a cautious analysis of the undertaking ‘s demands. Failure to execute this analysis will take to jobs at subsequent design and building stages. Numerous undertakings undergo hapless definition due to the deficiency of clip and consideration at the initial commencing phases. This is expected to ensue in cost and clip overproductions, the user dissatisfaction and claims or indefensible operating costs.

Value Management can ease in turning away these jobs and fumble the originating chances every bit good as to convey other value betterment proposals and techniques for the undertaking. Cost planning and direction ( CPM ) is an of import component in building undertakings. It operates under three chief maps this includes: supplying a channel through which the existent budget and the timely mode in which the undertakings operations are carried out. This assists in indicating out any divergences from the existent undertaking budget ; it helps in developing a database of end product versus the cost-performance facts for usage in estimate of the costs of consecutive undertakings ; eventually it helps in bring forthing figures for valuing any approaching fluctuations and changes to the contract and possible claims for any extra payments ( Ahmed, 1995 ) .

The incorporation of CPM in the undertaking helps to show that the cost nest eggs and existent benefits can be made well-founded by using the value direction attack. These benefits include constructing an apprehension and consensus among the assorted stakeholders of the undertaking. It besides identifies the linkages of the client ‘s value system as a starting point for authenticating a conceptual theoretical account ( Gary, 2009 ) .

Some of features that are taken into history for an effectual cost planning and direction system include: a budget for the undertaking laid down with a eventuality informations to be allocated on the determination of the senior responsible proprietor ; forecasted costs that permit deliberation of all possible classs of action ; the operation of the cost record maintaining system should be cost-efficient ; costs against the forecasted costs to guarantee conformance with the budget giving room for disciplinary action if demand be and if executable ; the existent costs should be contested to variance analysis in order to find the grounds for any divergence from the existent budget ; the cost proposition of clip and the quality should be integrated and put under consideration in the decision-making procedure.

Measure surveying is an inevitable facet of any building undertaking. The measure surveyor ( QS ) is a important participant in any building undertaking. He is involved in the building of the undertaking from the early phases of origin to its completion. In some instances he may be involved in destruction in order to do critical alterations. However, his chief function is to guarantee that the resources allocated to the building of the undertaking are used to the paramount advantage from the start to the completion of the undertaking. This includes the ability to inter-relate engineering and economic sciences in order to add value to the fiscal and procurement direction for the building undertaking. In add-on he is relied upon to measure any complex jobs that may originate and invent new proposals in the class of building.

The undertaking cost-control systems are applied in cost-value rapprochement used by constructing contractors and measure surveyors in cost planning and direction ( Gary, 2009 ) . His chief function is to do external and rating accommodations to the proposed undertaking meet the undermentioned aims ; place the significance of pull offing the that are hazards coupled with advanced design ; supply the appropriate preparation, advice and recommendations for the senior determination shapers ; application of value technology to study the range so as to run into the demand at the lower cost operable ; keep a clear differentiation between initial prognosiss made at the clip of the preliminary determination doing phase to set about the undertaking, and subsequent prognosiss integrating agring alterations in costs ; ship on a reappraisal of the edifice ‘s use.

Hazard and Value Management policy Guidance and Practice has several counsel that are used in the procurement phases of building. Most of these ushers came up following the recommendations from Latham study. The ushers were issued to help in building undertakings.

The hazard direction survey has an of import function in the building industry in the United Arab Emirates. It is applicable to all the phases of building from the origin of the undertaking to its completion. It has to turn to four key countries which include the constitution of a hazard policy hazard credence standards, the constitution of a hazard registries, the constitution of a hazard registries and hazard appraisal.

Constitution of a hazard policy will help in indicating ; the direction scheme, range and the hazard aims involved in the undertaking. Risk credence standard is established with the assistance of common sense at cut downing hazards one time identified, by guaranting that the hazard is below a certain value.

Constitution of a hazard registries will concentrate on indicating out the possible the jeopardies to the edifice activities which are expected to be involved in the undertaking. It should besides take into history all the hazards identified in the edifice hazard policy ( Segal 2011 ) .

Risk appraisal will take into history ; hazard designation, categorization of the hazards identified, ways of extenuating hazards and inside informations of the hazards involved in the hazard registry. For hazards which bear peculiar involvements, a comprehensive hazard analysis should be carried out comprising of the followers ; causes of the hazards, an event tree scrutiny of the impacts and full quantification of the hazards involved ( Segal 2011 ) . This helps in rating of the cost benefit-ratio, in the enforcements of hazard extenuation processs.

Essential demands for building procurance, usher lineations, the function of the determination shaper involved in investing, the function of the proprietor of the undertaking and the undertaking patron, including their duties and preparation needed. The value for money in procurement sets out the model the undertakings for value for money, hazards involved and the value direction systems.

Appointment of advisers and contractors guide governs the functions and duties of consultancy method including inside informations of assignments. Team working partnering and inducement ensures team work among all the participants. The procurance schemes outlines assorted procurement schemes such as public-private partnerships, design and constructing and model understandings. The fiscal facets of the undertaking takes into consideration ; the undertaking budget and hazard allowance. The whole life cost provides counsel on relevant information ; that will enable the person concerned with determination doing on issues associating to procurement paths, make better determinations.

Professional Bodies Concerned with Value and Risk Management

The professional organic structures which are related to value and hazard direction in the building of oil related undertakings include ; the Gulf Cooperation Council ( GCC ) . The UAE ‘s closest dealingss within the GCC are with its major trading spouse, Oman. The GCC was created chiefly in reaction to regional stableness and security concerns, it besides provides the economic and pecuniary policies of its members.

The UAE is a member of the Organization of Arab Petroleum Exporting Countries.

Abu Dhabi, the capital metropolis of UAE joined the Organization of the Petroleum Exporting Countries. Under the UAE ‘s fundamental law, each emirate has power over its ain production and resource development. However Abu Dhabi became a member of the Organization of the Petroleum Exporting states ( OPEC ) in 1967, but Dubai ( UAE ) does non see itself constituent of OPEC or bound by its quotas.