ivmm value management seminar 26 02 11 [compatibility mode]

8/7/2019 IVMM Value Management Seminar 26 02 11 [Compatibility Mode]

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Value ManagementValue Management&&

Value EngineeringValue Engineering

Future DirectionsFuture Directions

Professor Steven MaleProfessor Steven MaleProfessor of Property & Infrastructure Asset ManagementProfessor of Property & Infrastructure Asset Management

Institute for Resilient InfrastructureInstitute for Resilient Infrastructure

School of Civil EngineeringSchool of Civil EngineeringUniversity of LeedsUniversity of Leeds

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PresentationPresentation My BackgroundMy Background

Part 1: VM PrinciplesPart 1: VM Principles BackgroundBackground to VM / VEto VM / VE

Introduce VM & VE ideas and conceptsIntroduce VM & VE ideas and concepts

Link VM / VE to programme and projectLink VM / VE to programme and projectmanagement deliverymanagement delivery

Process of VM / VE: different study stylesProcess of VM / VE: different study styles Project levelProject level Generic study stylesGeneric study styles

Part 2: Case studiesPart 2: Case studies -- decision time Yes / No!decision time Yes / No! Typical VM/VETypical VM/VE

ProjectProject rescuerescue

Complex projectsComplex projects

Collaborative project structures: partneringCollaborative project structures: partnering

Infrastructure Asset ManagementInfrastructure Asset Management

Use of VM in organisationalUse of VM in organisational changechange

ConclusionsConclusions22
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ApproachApproach To Value & ProjectsTo Value & ProjectsApproachApproach To Value & ProjectsTo Value & Projects

Programme;Project Strategy& Management

Business Strategy,Process I mprovementAnd Re-engineering

OrganisationalChange

Using VM and VEas a change process

Insights fromInsights fromManufacturingManufacturingand Servicesand Services

ConstructionConstruction

Deve lop , Review or Aud i t L inkages Betw eenBusiness St r a tegy ; Asset Managem ent ; an d / o r ,P rog ramm e & Pro jec t St r a tegy in Cons t ru c t i on

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VM/VEVM/VE has been around for 60has been around for 60++ years,years, the firstthe firstfour decades were dominated by North Americanfour decades were dominated by North Americandevelopmentsdevelopments

PastPast 1010 -- 1515 years seen a spread of developmentsyears seen a spread of developmentsinto Europe,into Europe, AustralasiaAustralasia,, Asia, including China &Asia, including China &

HK in particularHK in particular VM emerged strongly into constructionVM emerged strongly into construction

internationally in the 1980sinternationally in the 1980s

Divergent thoughts haveDivergent thoughts have now emergednow emerged aboutaboutVM/VE practice, processVM/VE practice, process and its implementationand its implementation

Been contextualised and localised, with a range ofBeen contextualised and localised, with a range ofdifferent standards also emerging internationallydifferent standards also emerging internationally

Background To TheBackground To ThePresentationPresentation

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Background To The PresentationBackground To The Presentation

Presentation is a reflection on:Presentation is a reflection on: Concept of Value, Project Delivery & VM/VEConcept of Value, Project Delivery & VM/VE

since the mid 1980s when we first went to Northsince the mid 1980s when we first went to NorthAmerica, initially to Montreal in particular, thenAmerica, initially to Montreal in particular, thento the USA to learn about VEto the USA to learn about VE

Close to two decadesClose to two decades of practice in theof practice in the UKUK

150+ VM, RM, Project Audit / Rescue Studies150+ VM, RM, Project Audit / Rescue Studies

Present a number of case studies and drawPresent a number of case studies and drawout some conclusions and observationsout some conclusions and observations

aroundaround VM practiceVM practice Present a possible new emerging model forPresent a possible new emerging model for

VMVM

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PART 1PART 1

VALUE MANAGEMENTVALUE MANAGEMENT

WHATWHAT IT ISIT IS&&

WHATWHAT IS IT NOTIS IT NOT

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VALUE?

Subjective Component

Soft Evidence

Teams and IndividualsMaking decisions and choices

about cost and price

Impacted byPerceptions, Attitudes

Culture, Hierarchy

Objective Component HardEvidence

Objective measures:Cost resources usedMarket based exchanges

Impacted byIndustrial, EconomicSocial and Political

Frameworks Operating

Customer EndUser focused

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Key IngredientsKey Ingredientsof VMof VM

Stakeholder & Team orientatedStakeholder & Team orientated

Makes explicit the clients valueMakes explicit the clients valuesystemsystem

Uses all information to realiseUses all information to realisefunctionfunction

Auditable, Effective & EfficientAuditable, Effective & Efficient

ChallengingChallenging

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A DEFINITION OF VALUE MANAGEMENT

Value Management is concerned withmaking explicit the whole life packagewhole life packageofbenefits a client requires from an investment /business project at an appropriate cost

HOW Introducing Innovationand Improvements to theproject

Using the rightteam

At the right

time

Through co-operative working,joint problem solving and seeking ouopportunities

Whole life view

WHY INVESTIN THE FIRSTPLACE?

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A DEFINITION OF VALUE ENGINEERING

Value Engineering is concerned withmaking explicit the whole life packageof

benefits a client requires from the appropriatetechnical project at an appropriate cost

HOW Introducing Innovationand Improvements to theproject

Using the rightteam

At the righttime

Through co-operative working,oint problem solving and seeking outopportunities

Whole life view, especiallyduring design and construction

AM I INVESTINGIN THE RIGHTTECHNICALSOLUTION?

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Risk, Value andRisk, Value and

OpportunityOpportunity

Risk Opportunity

Value

1111

Risk?

Cost?

Quality ?Time ?

Functionality

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SUCCESSFUL

VM

MANAGEMENT STYLEApplying the Concept of Value

Applying the Concept of FunctionCreativity and Innovation

Customer Focus

Qualitative. Quantitative Evaluation

METHODS AND TOOLSUsing the VM study Plan

Using the techniques withina V M study.

ENVIRONMENTUnderstanding the

Internal

OrganisationalEnvironment

Understanding theExternal

Environment

Designing the right

VM approach

HUMAN DYNAMICS

Team Work, Communication and Satisfaction

Encouraging Change

Ownership of Outcomes

Fundamentals of VM Based on BSI

VALUE&

StrategicFit

CORPORATE STRATEGICDIRECTION

ASSET

MANAGEMENT

LAND

AND PROPERTY

NEW FACILITIES

OR

REFURBISHMENT

MANAGING

PROJECT VALUE

STRATEGICPROGRAMME /

PROJECT

MANAGEMENT

PROCUREMENT ANDCONTRACT STRATEGY

TECHNOLOGICAL

MANAGEMENT OF CHANGE

ORGANISATIONAL

VALUE BASED THINKINGVALUE BASED THINKING& PROJECT STRATEGY AND DELIVERY& PROJECT STRATEGY AND DELIVERY

VALUE BASED THINKINGVALUE BASED THINKING& PROJECT STRATEGY AND DELIVERY& PROJECT STRATEGY AND DELIVERY

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VM/VEVM/VE STUDY PROCESSSTUDY PROCESS

PREPARATION

ORIENTATIONAND DIAGNOSIS

PHASE

WORKSHOP

PHASE

IMPLEMENTATION

PHASE

Plan for Implementation & Change

Documentation review

Interviews

Test

Explore

Introducechange

Develop overt/covert agenda

Identify problem contenders

Review workshop tools/techniquesto address problems

Introduce learning

Change attitudes, perceptions

Introduce improvements & innovationthrough process, tools & techniquesand team dynamics

Team refines ideas &improvements

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INFORMATION

ISSUES

ANALYSIS

FUNCTION

ANALYSIS

Other Tools&

Techniques

BACK-TO BASICSIDENTIDY VALUE

MISMATCHES

INFORMATION SHARINGAND PRIORITISING

IDEAS

IDEASAND

OPTIONDEVELOPMENT

ACTION

PLAN

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National & InternationalNational & InternationalStandards & InstitutionsStandards & Institutions

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VM InstitutionsVM Institutions Institute of Value Management (IVM)Institute of Value Management (IVM) UKUK

SAVE InternationalSAVE International USAUSA

Mod 1 & Mod 2 trainingMod 1 & Mod 2 training

Practice; lead approximately 13 studiesPractice; lead approximately 13 studies

Approx 25Approx 25 worldwide in total.worldwide in total.

14 in Europe.14 in Europe. France, particularly focus on functionFrance, particularly focus on function

analysisanalysis

Japan, SAVE franchiseJapan, SAVE franchise

Canada, SAVE focus but also CanadianCanada, SAVE focus but also Canadianperspectiveperspective

Key issue: franchise versus contextualisationKey issue: franchise versus contextualisationlocallylocally

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VM Standards & GuidanceVM Standards & GuidanceDocumentationDocumentation

Government standards.Government standards.

UK: BSI BS EN 12973: 2000 ValueUK: BSI BS EN 12973: 2000 ValueManagement.Management.

Europe:Europe: European StandardEuropean Standard -- ValueValueManagementManagement..

USA: SAVEUSA: SAVE Value MethodologyValue Methodology

StandardStandard.. AS/NZS:AS/NZS: Australian/New ZealandAustralian/New Zealand

StandardStandard -- Value ManagementValue Management..

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UK VMUK VM Standards & GuidanceStandards & GuidanceDocumentationDocumentation

Guidance notes.Guidance notes.

BREBRE Value from ConstructionValue from Construction -- GettingGettingStarted in Value Management.Started in Value Management.

ICEICE Creating Value in Engineering.Creating Value in Engineering. CIRIACIRIA A Client Guide to Value ManagementA Client Guide to Value Management

in Construction.in Construction.

CUPCUP No 54 Value Management.No 54 Value Management.

BSRIABSRIA Value Engineering of BuildingValue Engineering of BuildingServices.Services.

CIBCIB Fact sheet onFact sheet on --Value ManagementValue Management..

etcetc2222


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EuropeanEuropean

Certification ProcessCertification Process

Knowledge

Continuous Professional DevelopmentContinuous Professional DevelopmentExp

erience

PracticalExperience

ApprovedAdvanced 1

Course

CVAU-K

ApprovedAdvanced 2

CoursePVM

Europe

CVMU-K

Professional Modules &Strategic Applications

TVMEuropeTrain the

Trainer

ApprovedFoundationCourse

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Cost Reduction Cheapest solutionregardless of clientfunctional requirements

ProjectConceptIntact

ProjectConceptIntact

ValueManagement

StrategicImprovement

Identifying the rightproject

ProjectConceptmay be radicallyaltered

TechnicalImprovement

Design and Construction

Structured and systematic processthat keeps client functional requirements

to the fore

Reduce, redistribute oradd in cost based onfunctional analysis

ValueEngineering

Value strategy

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EXAMINE THE ROLE OF VMEXAMINE THE ROLE OF VM

IN THEIN THEPROJECT VALUE CHAINPROJECT VALUE CHAIN

AND PROJECT DELIVERY PROCESS?AND PROJECT DELIVERY PROCESS?

USING BENCHMARKING OF VM;THROUGH LIVE CASE STUDIES;

AND

DEVELOPMENT OF VM STUDY STYLES

MULTI AND SINGLE PROJECT FOCUSED

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Value Based Thinking:Reverse Engineering Client Assets and Projects?

CapitalOperation

andMaintenance

Business / Social value

and benefit

Ratio: 1 to 10 to 100

Source: Adapted from Professor Ken Treadaway (BRE)

Traditional Approach to Investing in Assets & Projects?

VM Approach to Investing in Assets & Projects? Why is it needed in the first place,

why should I invest, for what purpose and

what benefits will be derived from that investment?

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VMVM CascadeCascade

SS

PP PP

ProjectProject ProjectProject

ProjectProject ProjectProject ProjectProject ProjectProject

ProjectProject

VMVM

Strategic studies atStrategic studies atBoard levelBoard level

ProgrammeProgrammestudiesstudies

ProjectProjectstudiesstudies

ValueValuesystemsystem

Individual Project Value Chain

Corporate

Value

Business

Value

Feasibility

Value

Design

Value

Construction

Value

Commission

Value

Operational

Value

Project Programme Value

Corporate

Value

Business

Value

Project Value:

The Individual Project Value Chain

Strategic /Tacticaldelineation

The decisionto construct

The Project Value Chain

Customer is purchasing BENEFITSat each stage of the process

Each stage and processshould be adding value maintaining the value

thread

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WHEREWE ARENOW

CurrentBusiness

WHEREWE

WANTTO BE

TheBlueprintfor the

Business

ISLANDOFSTABILITY

ISLANDOFSTABILITY

ISLANDOFSTABILITY

BUSINESS STRATEGY ANDSUPPORTING STRATEGIES INCLUDING IS STRATEGY

OTHER INITIATIVES

BUSINESS OPERATIONSSUPPORT SERVICES

PROJECTS PROJECTS

Business Strategy, Programmes & Projects (Source; CCTA 1994)

SUCCESSFUL

VM

MANAGEMENT STYLEApplying the Concept of Value

Applying the Concept of FunctionCreativity and Innovation

Customer Focus

Qualitative. Quantitative Evaluation

METHODS AND TOOLSUsing the VM study Plan

Using the techniques withina V M study.

ENVIRONMENTUnderstanding the

InternalOrganisationalEnvironment

Understanding theExternal

Environment

Designing the right

VM approach

HUMAN DYNAMICS

Team Work, Communication and Satisfaction

Encouraging Change

Ownership of Outcomes

Fundamentals of VM

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QUESTIONSQUESTIONS

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Part 2Part 2

CASECASESTUDIESSTUDIES

VMVM Study StylesStudy Styles

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Study 2: project audit on whole design andStudy 2: project audit on whole design andtender processtender process classic US styleclassic US style

VM teamVM team Two VM consultants; shadow design team plusTwo VM consultants; shadow design team plus

contractorcontractor Client/end users representativesClient/end users representatives

Took whole team through VM & VE process toTook whole team through VM & VE process toanalyse project, designs and costanalyse project, designs and cost

ConclusionsConclusions Brief had difficulties embedded in it, difficultiesBrief had difficulties embedded in it, difficulties

with end user control also in briefing processwith end user control also in briefing process Design problematic in certain areasDesign problematic in certain areas Claims likely with out turn costs likely as 21m+Claims likely with out turn costs likely as 21m+ ? Right site? Right site Project cancelled by clientProject cancelled by client

Library ProjectLibrary Project

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Study 3: Briefing studyStudy 3: Briefing study VM team comprised:VM team comprised:

Two VM consultants, same shadow designTwo VM consultants, same shadow designteam plus contractorteam plus contractor

Client/end users representativesClient/end users representatives

Took whole team through VM process toTook whole team through VM process to

develop brief and budgetdevelop brief and budget Used Strategic analysis to identify correct siteUsed Strategic analysis to identify correct site

Used Element analysis to identify appropriateUsed Element analysis to identify appropriatetechnical solutions to meet functions, and,technical solutions to meet functions, and,develop detailed budget for control purposesdevelop detailed budget for control purposes

Detailed investigation of procurement optionsDetailed investigation of procurement options

Library ProjectLibrary Project

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COMPLEXCOMPLEXPROJECTSPROJECTS

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VM Approaches: Study StylesVM Approaches: Study Styles 22ClassicClassic UK VM/VEUK VM/VE

VM Approaches: Study StylesVM Approaches: Study Styles 22ClassicClassic UK VM/VEUK VM/VE

Rail project (Thames Link 2000), projectRail project (Thames Link 2000), projectprogramme level:programme level: Investment programme, 9 projectsInvestment programme, 9 projects Agreed project missionAgreed project mission Project priorities, TWA programme, budgetsProject priorities, TWA programme, budgets

Reviewed each project for alignment with overallReviewed each project for alignment with overallproject missionproject mission Implementation workshop: full review of all projectImplementation workshop: full review of all project

studiesstudies 9 studies, 10 weeks, 2 VM consultant teams9 studies, 10 weeks, 2 VM consultant teams

working in parallelworking in parallel

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Airport Investment programme (SS2)Airport Investment programme (SS2)

400 projects; prioritised by airport using400 projects; prioritised by airport usingweighting and scoringweighting and scoring

VM approachVM approach

Identified function / purpose of eachIdentified function / purpose of eachprojectproject

Value MatrixValue Matrix

Identified projects as developing capabilitiesIdentified projects as developing capabilitiesor maintaining capabilitiesor maintaining capabilities

Clustered around strategic objectivesClustered around strategic objectives

Identified capabilitiesIdentified capabilities --5, current, +55, current, +5yearsyears

Case StudiesCase StudiesCase StudiesCase Studies

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OutcomesOutcomes

Indentified investment gaps againstIndentified investment gaps againststrategic objectivesstrategic objectives

Identified over investment againstIdentified over investment against

certain strategic objectivescertain strategic objectives Challenged individual projects withinChallenged individual projects within

investment programmeinvestment programme

Challenged whether projects wereChallenged whether projects weredevelopment or maintaining capabilitiesdevelopment or maintaining capabilities

Challenged whether projects wereChallenged whether projects werebuilding current and future capabilitiesbuilding current and future capabilities

Case StudiesCase StudiesCase StudiesCase Studies

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ISSUESISSUES

SimultaneousSimultaneous development of:development of:

Partnering agreements, modus operandiPartnering agreements, modus operandiand building team / supply chainand building team / supply chaincommitment,commitment, incentivisationincentivisation structures (astructures (adifficult area)difficult area)

VE existing design, investigatingVE existing design, investigatingconstructability issues; constructionconstructability issues; constructionmethods,methods, analysinganalysing and managing risksand managing risks

Taking the team throughTaking the team through the realitythe reality of whatof whatpartnering means and may mean on thepartnering means and may mean on theprojectproject

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Asset Management PlanningAsset Management PlanningUsing VMUsing VM

Hybrid Study: Combined useHybrid Study: Combined useof VM Styles 1 to 4of VM Styles 1 to 4

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An Asset Strategy enables anorganisation to establish the asset itwants to create, maintain, upgrade,dispose of to meet its service deliveryrequirements.

This perspective drives an organisationto consider why it wants to invest incertain physical assets or divest itself ofothers.

Having established an asset strategyand the associated scope of the assetportfolio, this then needs to bemanaged through time using an AssetManagement Planning process

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Value Challenges SurroundingValue Challenges SurroundingAsset Management in the Case OrganisationAsset Management in the Case Organisation

An Asset Rich OrganisationAn Asset Rich Organisation -- it has approximately 23bn ofit has approximately 23bn ofreplacement value assetsreplacement value assets

Relies on but does not have direct control over 3Relies on but does not have direct control over 3rdrd partypartyassets which effect it doing businessassets which effect it doing business

It spends approx 350m /It spends approx 350m / annann on CAPEX and OPEXon CAPEX and OPEXmaintenance expenditure, or, 1.75bn over a five yearmaintenance expenditure, or, 1.75bn over a five yearperiodperiod

The asset base is made up of over 80 000 individual assetsThe asset base is made up of over 80 000 individual assetsof various types and plus over 24 000km of linear assetsof various types and plus over 24 000km of linear assets

Asset base comprises components and assets in systemsAsset base comprises components and assets in systems

The complexity of theThe complexity of the organisationssorganisationss asset base residesasset base residesalongside other major asset rich organisations but it is has aalongside other major asset rich organisations but it is has aunique set of driversunique set of drivers

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Value Management Critical Success Factors definedValue Management Critical Success Factors definedas structuring the valueas structuring the value study processstudy process as a change as a changemethodologymethodology

Orientation & Diagnostic Phase; WorkshopOrientation & Diagnostic Phase; WorkshopPhase; Implementation PhasePhase; Implementation Phase

Deciding on the approach and teamDeciding on the approach and team

Identifying value challenges/problems; structuringIdentifying value challenges/problems; structuringand restructuring information, the skill of the valueand restructuring information, the skill of the valuemanager as facilitator during the workshop processmanager as facilitator during the workshop process

Team structure, skills & working relationshipsTeam structure, skills & working relationships

Attitude of the stakeholders to the project, serviceAttitude of the stakeholders to the project, serviceand/or the value processand/or the value process

Value Based ApproachesValue Based ApproachesValue Based ApproachesValue Based Approaches

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EMERGING MODEL FOR VMEMERGING MODEL FOR VM

A clear need to move away from theA clear need to move away from thedangers of tick box & just facilitatingdangers of tick box & just facilitatinga workshop into:a workshop into:High value adding problemHigh value adding problem

structuring & solvingstructuring & solving processprocessSupported by clear implementationSupported by clear implementationstrategy & working alongside clientsstrategy & working alongside clients

Clients need to allocate theClients need to allocate theappropriate time for studiesappropriate time for studies

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Value SystemAlignment

Information

Structuring and

Problem Solving

IndependentValue

Manager (s)

Study Style 1

where a value manager

works with an existingteam to assist them to

understand valueproblems, structure

thinking and develop a

way forward.

Study Style 2

where a value

manager works withan existing team

and the objective is

to challenge and

introduce change.

Value SystemReconfiguration

Information Structuring,Problem Solving, Value

System Challenge,

Alignment and Realignment

IndependentValue

Manager (s)

Independent ValueManagement Team

of Specialists

Study Style 4

where a value

manager bringstogether a tailoredindependent value

team of specialist fora value audit and

reconfiguration.

Value System Auditand Reconfiguration

Information Structuring, Problem

Solving, Value System

Challenge, Alignment,

Realignment, Evolution orRevolution

Value SystemAudit

Information Structuring,

Problem Solving, and

Value System Challenge

Study Style 3

where a value

manager bringstogether an

independent tailored

team of specialistsfor an audit study

Independent ValueManagement Team

of Specialists

Increasing Levels of Professional Judgement Required

Increasing Levels of Value System Intervention Required

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VM AS A CHANGE PROCESSVM AS A CHANGE PROCESS

PREPARATION

ORIENTATIONAND DIAGNOSIS

PHASE

WORKSHOP

PHASE

IMPLEMENTATION

PHASE

Plan for Implementation & Change

Start Unfreezing

Unfreezeand Move tonew Level

? WorkshopDuration

Re freezing tonew Level

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ivmm value management seminar 26 02 11 [compatibility mode]

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