VALUE MANAGEMENTA collaborative approach to customer satisfaction

Collaborative approach to Define and meet the

business needs Focus on value rather

than cost Consider options using a

structured approach Prevent unnecessary

expenditure and waste

Aims of Value Management

Client

Supplier1

Supplier2

Traditional Approaches

Concept

Design

Procurement

Implementation

“Traditional behaviour is mostly about supplier margin not a common purpose”

“Often the design is done in complete isolation to the implementation”

“Risk management is often concerned with responsibility for the additional cost not fixing the root cause”

A traditional procurement approach significantly exceeded budget of £20m

Value management workshops “brought the team together”

They agreed clear mission and values The result was an improved

understanding of client requirements A truly integrated team was built And the final cost was £19.5m

Case Study OneWithington Community Hospital

Source: OCG Value Management in Construction

Aim to improve capital productivity

19,500 sites worldwide Spend $400m – $700m per

annum Resulted in cost saving of

40% Two weeks saving in

implementation time Long term partnership

started in 1996

Case Study TwoGlobal Alliance BP / Lend Lease

Establish Integrated teams to focus on value not cost by: Understanding the challenge

and the focus areas Identifing alternative courses of

action Analysis and evaluation of

proposals against defined criteria

Value ImprovementPractical Steps

Standardisation through modular design, common practices and processes

Transparency though IT real time access to information about status

Strategic procurement by using global buying power

Online bidding for suppliers, but with focus on overall cost saving not just the lowest price

What leads to the improvements?

Culture of transparency means Joint leadership and

commitment from the top Rewards for organisations and

individuals against balanced scorecard, not just cost

An integrated knowledge management database

A flexible work force with strong team working (secondments etc)

Multi disciplinary team working Open book finance

Value Improvement Culture Not Just Process

Bridging the Gap

Concept

Design

Procurement

VM 1

VM 2

VM 3

Implementation

VM 4

VM 5

1. Diagnosis of the issues with the client and suppliers

2. Workshop with the integrated team using VM techniques to generate solutions

3. Follow up to ensure agreement of actions

VM 1: stakeholder needs, objectives and priorities

VM2: project definitions and options

VM3: value engineering to reduce cost

VM4: handover review VM5: lessons learned

Workshop Format Different workshops at different stages

Value Improvement Process Workshops

Are You Ready for Value Improvement?

Supplier is involved in the concept / design

Focus is on the root cause of the risk

Long term partnership with key suppliers

Payment is based on balanced scorecard

Culture of cross fertilisation of ideas

Value ManagementClient specifies

design alone

Focus is on who pays for the impact of the risk

Transactional relationship with

suppliers

Payment is based on fixed price

Islands of functional knowledge

Cost Management

Parallel Project Training

on-line APM e-learning

Public & in-housetraining

Project Management Training for Clinical Trials