achieving high value programs and projects by managing the whole value improvement cycle

Improved Value & Decision Making: CSVA Conference 2006, Toronto, Canada

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CSVA 2006 – Improved Value and Decision Making

ACHIEVING HIGH VALUE

PROGRAMS AND PROJECTS BY

MANAGING THE WHOLE VALUE

IMPROVEMENT CYCLE

Michael Thompson for Martyn Phillips

The TEAM FOCUS Group


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Purpose

To encourage use of Value Management as a systematic long-term process of analytical and innovative explorations that culminate in firm, tested proposals for business improvement.

To describe a VALUE ASSURANCE approach to achieving high performance and value


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Topics of Discussion

Need for Change Background Context Performance and Value Different VM Approaches Value Assurance Conclusion


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Questions

How many value practitioners find themselves being involved in a project from cradle to grave?

How many project teams consider it necessary to involve an external party to assist them with ensuring that high performance is achieved?


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Need for Change

Alternative needed to “Get Fixed Quick”

“Continuum” approach rather than “Intervention”


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Background

Management staff trapped in a world of tight timelines and high expectations

Dealing with fuzziness and uncertainty of needs and costs

Value supposedly built in – no formal processes

No universal agreement on value delivery


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ContextStakeholders

•Widely differing needs and expectations

•Return on investment and expected value not

in line with business case

Project Team•Well intentioned

undertakings often lead to costly overruns,

disruptions to service•Often unaware of

value expected from them


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Context Return on Investment

criteria not evident, and therefore not necessarily attained

Key knowledgeable people are lost to the next critical project

Information may not be passed on and many assumptions may have to be made by the next wave of project personnel (no continuity)

Some examples of where it can go wrong: Business people

often absent during project development


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Performance & Value Value determined not

solely by the producer / promoter, but in concert with the customer / user.

Not solely money

Value includes: Aesthetics Functionality Ease of O&M Fastest time to market Sustainability

Clients seeking to buy overall performance improvement, not just sequence of traditionally practiced project development activities


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Performance & Value

Think outside comfort

zone

Receptive to new ideas

Less defensive, broader thinking

End result not just

more of the same

Ownership to ensure change

process delivers expected results


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Different VM Approaches There is often confusion over the several,

various value terms, e.g.

It is of no surprise that expectations of value improvement and what it can do can differ considerably

The traditional VM process does not always fit comfortably within the mode of operation of 21st century business activities

Value AnalysisValue AssuranceValue Control

Value EngineeringValue ImprovementValue Planning


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Focus Quite often, a key piece is missing but the

project proceeds regardless……..


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Focus

Unambiguous Unambiguous strategic strategic directiondirection

Selecting most Selecting most appropriate appropriate conceptconcept Optimising Optimising

functionalityfunctionality

Reducing Reducing development development timetime

Balancing capital Balancing capital and whole life and whole life costscosts

Rescuing stalled Rescuing stalled project / programproject / program

Optimising Optimising ongoing processongoing process

Assuring best Assuring best value, managed value, managed risk and value risk and value improvementimprovement


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Needs Assessment

Needs Assessment

Value Engineering

StrategicPlanning

Concept/Feasibility

Outline Design

Detailed Design

Construction & Commissioning

Close Out

Operations & Maintenance

Tech

nic

al Le

vels

Man

ag

em

ent

Levels

Concept Engineering

Concept Engineering

Functionality / Fit for Purpose

Functionality / Fit for Purpose

Risk & Value Management

Risk & Value Management

On-Time, On Budget, Delivery

On-Time, On Budget, Delivery

Continuing Improvement

Continuing Improvement

Value Engineering is a very powerful tool –But it floats in space!


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Value Assurance

The umbrella term that ensures and demonstrates the effectiveness of many other management processes

VALUE ASSURANCE PROGRAM

Pro-active and holistic approach

Ensures expectations / results gap closed


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Value AssuranceStage I – Initiation & Analysis

1. Mandate, Scope, Opportunity etc.2. Stakeholder Expectations and

Criteria, Needs Assessment, Communications Plan

3. Project Metrics and Base Case Performance vs. Requirements

Stage II – Exploration & Potential Options

4. Input Summaries, Innovation & Judgement

5. Development & Testing Proposals6. Selection, Integration & Planning

Stage III – Consultation & Approval to Implement

7. Interim Read-out & Feedback8. Broad Stakeholder Consultation &

Fine Tuning of Proposals9. Recommendations & Approvals

Stage IV – Manage the Change10. Familiarization of Implementers /

Training of Users; Handover Package11. Briefing of other Parties and “Buy-

in”.12. Implementation, Monitoring,

Reporting & Adjustment


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Conclusion The outcomes of programs, project,

products and services vary significantly Success is a relative term and its

measurement varies greatly Dictating factors include:

Overall management approach Culture of an organization

Most value enhancement gains are made through strategic decisions, in conjunction with stakeholder input


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Conclusion A holistic Value Assurance approach can

address the various issues through a comprehensive, integrated guiding approach to derive optimal performance

Maximum effectiveness requires completion of the whole program, rather than the commonly observed ad hoc “interventions”

To attain these benefits, diligent planning, senior managerial support and follow-through are required


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Real Life We were recently invited to undertake

a 3-day VE study for a high profile multi-storey building (not in the UK) including all preparation time, workshop time and presentation time

Objectives were to reduce capital costs by 35%

We considered it impractical to address a job of that magnitude adequately in such a short time scale

We declined! We also find there is a high demand

for “tick in the box” exercises which we prefer not to conduct


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What It All MeansGet away from what we have always done in the past

Use a holistic approach throughout the life of a project

Pay diligent attention to the 4 Stages and 12 Themes


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A Final Thought

What if we had a smart system that: Captures key learnings and project problems? Allows corporate feedback to be incorporated

in future planning? Avoids the necessity of every generation to

learn the hard way? Avoids repeated costs for organisations and

for Society?


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We have!

Value Assurance and Continuing Performance

Improvement


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Questions

Feedback

The TEAM FOCUS Groupwww.teamfocus.org

Martyn Phillips46 Pineridge Crescent St AlbertAlberta, T8N 4P4CanadaTel: +1 (780) 460 – 1625Email: [email protected]

Michael Thompson44 Hardy Lane ChorltonManchester, M21 7LAUnited KingdomTel: +44 20 7871 4568Email: [email protected]

achieving high value programs and projects by managing the whole value improvement cycle

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