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Possibleaddedvalue

Pre-project Project Operation

Decidewhat you

want

Designand

construction

Earning

Opportunity

Costof late

change

 

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   V  a   l  u  e  m  a  n  a  g  e  m  e  n   t

   V  a   l  u  e  p   l  a  n  n   i  n  g

   V  a   l  u

  e  e  n  g   i  n  e  e  r   i  n  g

   V  a   l  u  e  r  e  v   i  e  w

   P  r  e  -   i  n  v  e  s   t  m  e

  n   t  p   h  a  s  e

   U  n   b  u   d  g  e   t  e   d

   B  u   d  g  e   t  e   d  p  r  o   j  e  c   t  s

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   O  p  e  r  a   t   i  o  n

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  o   f  a  s  s  e   t  s

   C  o  n  c  e  p   t

   P  r  e  -   f  e  a  s   i   b   i   l   i   t  y

   F  e  a  s   i   b   i   l   i   t  y

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  p  r  a   i  s  a   l

   P  r  o  c  u  r  e  m  e  n   t

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   O  p  e  r  a   t   i  o  n

   D  e  c  o  m  m   i  s  s   i  o  n   i  n  g

   C   l  o  s  e  o  u   t

   D  e   f   i  n  e

  p  r  o   j  e  c   t

   D  e   f   i  n  e  p  r  o   j  e  c   t

  a  p  p  r  o  a  c   h

   D  e  v  e   l  o  p

  a  p  p  r  o  a  c   h   /   d  e  s   i  g  n

   F  e  e   d   b  a  c   k

   D

  e  v  e   l  o  p

   d

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  a  p  p  r  o  a  c   h

   P  r  o  c  u  r  e  m  e  n   t

  a  n   d   t  r  a   i  n   i  n  g

   H  a  n   d  o  v  e  r   /  p  o  s   t  p  r  o   j  e  c   t  e  v  a   l  u  a   t   i  o

  n

   N  e  x   t  p  r  o   j  e  c   t

   S t  r  a t  e  g  y :   C  o  r  p  o  r  a t  e ,   B  u  s i  n  e  s  s   &   P  r  o j  e  c t

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   P   R   O   J   E   C   T   A   P   P   R   A   I   S   A   L

   P   R   O   J   E   C   T   I   M   P   L   E   M   E   N   T   A   T   I   O   N

   O   P   E   R   A

   T   I   O   N

   O   F   T   H   E   A   S   S   E   T

INITIATION

   P   R   O  J   E   C   T   A   C   C   O   U   N   T   B   A  L   A   N   C   E

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   T   I   M   E

   D   E   F   I   N   I   T   I   O   N

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   C   O   N   S   T   R   U   C   T   I   O   N    C

   O   M

Regulatory approval 

Planning 

approval 

Contract award 

–  +

SANCTION

COMPLETION

   C  o  s   t

   C  o  s   t  a  n   d   b  e  n  e   f   i   t

                                  

                

                                       

                 

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   P  o  s  s   i   b   i   l   i

   t   i  e  s  o   f

  r  e   d  u  c   i  n  g

  c  o  s   t

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   I  n  v  e  s   t  m  e  n   t

   d  e  c   i  s   i  o  n

   A  c  c  u  m  u   l  a

   t  e   d  a  m  o  u  n   t

  o   f   i  n  v  e  s   t  m

  e  n   t

   D  e  c   i  s   i  o  n  s   t  e

  p  s

   A   P   P   R   A   I   S   A   L

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  n  o   f  e  q  u   i  p  m  e  n   t

   T   i  m  e

                                  

                

                                                                                                                         

                                                                                                                                                                                        

                                                                                                   

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Maximum A

Most likely B

Minimum C   E  s   t   i  m  a   t  e   d  r  a  n  g  e  o   f  c  o  s   t  s   (   £  m   )

Actualcost

Feasibility studyDesign

TenderConstruction Claims

settlement

A

B

C A

B

C

Feasibilitystudy

Tender SettlementA B C

 

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THE PRESENTSITUATION

THE OBJECTIVE

Estimated cost

Actual cost

Achievable cost

Realistic estimate ofprobable costshowing tolerance

Apparent cost overrun 

Actual cost overrun due to: • Inefficiency • Lack of resources • Inadequate investigation 

• Lack of funds etc. caused by unrealistic estimate 

Lowside tolerance 

Most probable estimate 

Highside tolerance 

 

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8/9/2019