presentation to the pcmg (pharmaceutical contract management group) on value management

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Presentation to the PCMG (Pharmaceutical Contract Management Group) on Value Management

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  • 1. Value Management
    A collaborative approach to customer satisfaction

2. 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
Supplier
1
Supplier
2
3. Traditional Approaches
Concept
Traditional behaviour is mostly about supplier margin not a common purpose
Design
Procurement
Often the design is done in complete isolation to theimplementation
Implementation
Risk management is often concerned with responsibility for the additional cost not fixing the root cause
4. 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
5. 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
6. 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
7. 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 notjust the lowest price
What leads to the improvements?
8. Culture of transparency means
Joint leadership andcommitment 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 ImprovementCulture Not Just Process
9. Bridging the Gap
Concept
VM 1
Design
VM 2
Procurement
VM 3
VM 4
VM 5
Implementation
10. Diagnosis of the issues with the client and suppliers
Workshop with the integrated team using VM techniques to generate solutions
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
11. Are You Ready for Value Improvement?
Value Management
Cost Management
Supplieris involved
in the concept / design
Client specifies
design alone

Focusis on the root cause of the risk
Focus is on who pays for the impact of the risk

Payment is based on balanced scorecard
Payment is based on fixed price

Transactional relationshipwith suppliers
Long term partnership with key suppliers

Culture of cross
fertilisation of ideas
Islands of functional
knowledge

12. Parallel Project Training
on-line APM
e-learning
Public & in-house
training
Project Management Training for Clinical Trials

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