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VALUE MANAGEMENT. THE APPLICATION OF VM/VE FOR CAPITAL EXPENDITURE PROJECTS FOR MAHB 17 – 18 DECEMBER 2008 PUTRA WORLD TRADE CENTRE (PWTC) KUALA LUMPUR By : Abdul Nasir Abdul Razak General Manager Planning & Development Technical Services Division. The Outline Contents. Introduction

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value management
VALUE MANAGEMENT
  • THE APPLICATION OF VM/VE FOR CAPITAL
  • EXPENDITURE PROJECTS FOR MAHB
  • 17 – 18 DECEMBER 2008
  • PUTRA WORLD TRADE CENTRE (PWTC)
  • KUALA LUMPUR
  • By : Abdul Nasir Abdul Razak
  • General Manager
  • Planning & Development
  • Technical Services Division
slide2

The Outline Contents

  • Introduction
  • The Emerging of VM at MAHB
  • Flow , Frameworks, CFT involvements
  • Workshop
  • Challenge & Overcome
  • Results
  • Sample of case study
  • Conclusion – Moving Forward
slide3

MAHB’s VISION

WORLD CLASS AIRPORT BUSINESS

VM UNIT’s VISION

MANAGING COST-EFFECTIVE & OPTIMISATION

PROJECTS, FACILITIES, SYSTEM, PRODUCTS

AND PROCEDURES

our view what is a value management
Our View : What is a Value Management?
  • Value Management is a rigorous, systematic effort to improve the value
  • and optimize the cost Projects, Facilities, Systems, Products and
  • Procedures.
  • Value Management generates these cost improvements without
  • sacrificing the needed performance levels.
  • Value Management can also make contributions to improve human factors,
  • Such as attitudes, creativity and teamwork.
why we need the vm
WHY WE NEED THE VM?
  • Increase in Cost vs. Ability to Spend
    • Operating and Capital Expenditure
      • 2005 –Budget RM 324 mil >> Ability to spend RM 148 mil
      • 2006 – Budget RM 483 mil >> Ability to spend RM 175 mil
      • 2007 – Budget RM 486 mil >> Ability to spend RM 245 mil
      • 2008 – Budget RM 448 mil >> Ability to spend ????
          • Target 20% savings through Value Management Initiative

VM to formulate a method of budgeting based on the ability

to spend

>> proper financial planning and efficient resource allocation

slide6

PLANNING &

DEVELOPMENT

planning development organisation chart
PLANNING & DEVELOPMENT – ORGANISATION CHART

PLANNING &

DEVELOPMENT

General

Manager

Project Management

Office

Technical

Excellence

Airport Development

& Planning

Airport Planning

Airport Standard

Design Management

Value Management

Knowledge

Management

Construction Management

Simulation

Excellence

Centre

Techno Economics

vm unit secretariat roles
VM UNIT / SECRETARIAT ROLES
  • ** PASP (Procurement Activities and System & Procedures)

MAJOR SCOPE

VM TRAINING

Continuous VM

Improvement &

Competence

VM STUDIES

Formal Application

Of VM Methodology

In PASP Challenge

slide10

VM AS A STRUCTURED PROCESS

  • Thought Processes

Creative

Analytical

1 - Analyse information

2 - Brainstorm Functions

3 - Organise Functions

4 - Generate Ideas for Alternatives

5 - Evaluate Alternatives

6 - Develop Proposals

7 - Appraise Options

8 - Recommend Solutions

slide11

WHEN ?

  • VM interventions should be undertaken when:
    • Key decisions need to be made
    • Conflicts or problems need to be resolved
    • Consensus needs to be achieved
    • Team building is required
    • Cost or Time overruns need to be addressed
    • Other identified benefits need to be secured
value management how
VALUE MANAGEMENT : HOW?

Central Region –

MATC, KLIA

VM Awareness,

Seminar &

Familiarization

Penang Airport

On Aug 2007

North Region

2007

(1st Year)

Planning

(Zone by Zone)

South Region

Central Region

MoU with Pejabat

Harta Bina, UTM

Sabah

Sarawak

value management initiative
VALUE MANAGEMENT INITIATIVE
  • Cross Functional Team
  • TMO Initiative
  • Top Management buy the
  • Idea & initiative that the
  • VM as a tools of cost savings
  • & optimization elements
  • Part of Key Performance
  • Index (KPI)

Objective : To achieve 20%

Saving from CAPEX (selected)

i.e Project more RM500K

2008

(2nd Year)

Multi Discipline

- Members

VM/VE Manual

For MAHB & Groups

background of glc transformation programme
BACKGROUND OF GLC TRANSFORMATION PROGRAMME
  • GLC Transformation Programme was launched in May 2004
  • The main objective is to transform GLCs into high-performing entities
  • Three key principles govern the GLC Transformation Programme :
  • * Programme is part of the larger national development strategies
  • * Programme is focused on enhancing performance at the GLC’s
  • * Programme takes full cognizance of matters relating to governance, shareholder value and stakeholder management.
slide16

Implementation of 6 Colour Books in the Transformation Programme

GLC Transformation Initiatives - (Colour books)

Key Focus Areas

Strategic Initiatives

Profitability

ROE

  • Reengineer processes and
  • review costs to be more efficient

Regional

Airports

Efficiency

Service Level

People Development

Source: Ethos Analysis

slide17

CROSS DISCIPLINARY TEAM

  • Varies Ideas
  • Distinct Perspectives
  • Comprehensive Approach
  • Shared Vision
  • Consensus
value management methodology techniques
VALUE MANAGEMENT METHODOLOGY & TECHNIQUES

Budget Owner

Rep.

VM JOB PLAN

QS/Estimator

OUTCOME

Airport

Planner

RECOMMENDATION

VM PROCESS

Airport

Standard

Commercial

Services

Finance

Services

IMPLEMENTATION

Procurement

& Contract

Etc

process flow of vm
PROCESS FLOW OF VM

Preparation Budget

By Unit / Division

Divisional

Directive

GM / HEAD

Budget Owner

Not Approved

Budget Challenge Committee

VMC

Approving Budget Authority

VMAC

Capital Expenditure List

BUDGET OWNER

Before Issuance of Form A (2)

VMC

Tendering & Evaluation

& Approval

Sole Proprietor (1)

PCD &

BUDGET OWNER

Award

PCD & PMO

  • VMC = VM Committee VMAC = VM Approval Committee
  • = VM may be applied during negotiation stage for Sole Proprietor Project
  • = Form A refer to MAHB 3P’s
the value management framework
THE VALUE MANAGEMENT FRAMEWORK

MAHB’s MANAGEMENT BUDGETARY

POLICIES & OBJECTIVES

VM POLICY

Consistent with and contributes to

Other Policies

VM PROGRAMME

Managed and Coordinated by

VM Unit

FEEDBACK FOR CONTINUOUS IMPROVEMENT

To be gathered by VM Unit

VALUE CULTURE

Towards delivering better

Value of Projects, System, Products & Procedures

VM STUDIES

Formal application

Of VM Methodology

In CAPEX Challenge

VM TRAINING

Continuous VM

Improvement &

Competence

VM METHODS AND TOOLS

Application of Appropriate Techniques

VM / VE STUDY RESULTS

slide21

CROSS DISCIPLINARY TEAM

  • “Participants selection & stakeholder involvement is the key to SUCCESS”
  • Cross Functional Team:
    • Airport Planner
    • Airport Operation
    • Quantity Surveyor
    • Risk Management
    • Procurement and Contract
    • Airport Engineering i.e BHS, PLB, Infra
    • Finance Management
    • Human Resources
    • Outside Consultants
    • Project Management
    • Other stakeholders i.e receptionist
slide23

PRE-STUDY

PROJECTS STARTS

  • CFT/VM Unit inform the Budget Owner the intention to hold VM study at their time appointments
  • To collect all data / info / drawings / etc

WEEK BEFORE

STUDY

VALUE STUDY

  • Monday Morning - Phase 1 (Information)

Client and design team presents the scope of works to VM Team

  • Monday Afternoon - Phase 2 (Creativity)

Brainstorming session to search for alternatives

  • Tuesday Morning - Creativity continues
  • Tuesday Afternoon - Phase 3 (Evaluation)
  • Wednesday - Phase 4 (Development)

Ideas from Phase 3 developed into feasible costed technical alternatives

  • Thursday - Development continues
  • Friday Morning

Selection of optimum technical alternatives

  • Friday Afternoon - Phase 5 (Presentation)

Above alternatives presented to Client and design team, VM Team disperse

WORKSHOP

POST-STUDY

  • CFT/VM Unit prepares detailed reports and sends to budget owner
  • Phase 6 (Feedback & Action Plan) CFT/VM Unit informed of ideas put into practical

NEXT WEEK

LATER

DESIGN

CONTINUES

challenges in implementing vm to overcome
CHALLENGES IN IMPLEMENTING VM & TO OVERCOME
  • ROADBLOCKS
  • The “I have no time “ Syndrome
  • Change of Working Culture
  • New barrier on their work
  • “ Cut Cost “ perception
  • There are not ready for implement the new tasks
  • CFT tied with their core job responsibilities
  • In initial stage, it is hard to get management involvement
  • in the workshop
  • OVERCOME
  • More awareness session
  • Knowledge Sharing Session
  • KPI Setting – Value Added
  • Recognition – i.e IVMM’s Membership
  • Workshop & Brainstorm session at hotel /
  • resort
results 2008
MONETARY SAVINGS BY VM INITIATIVESRESULTS : 2008

Actual : Cost Saving of RM 60.8 Million

Target : Cost Saving of RM 45 Million

slide26

VM/VE CASE STUDIES

  • Project
  • Retail Optimization at KLIA = Project Brief
  • Increase of Commercial Revenue from 30% - 50%
  • To increase amount of spending per passenger
  • Limit the credit risk borne by the management of KLIA
  • Maximize the retail space
  • Improve retail placement to maximize customer penetration rate
  • Improve product placement to maximize sales
  • Improve retail management
  • VM studies was commission to achieved the following objective:
  • To optimization of space inline with cost

Saving: RM 8,651,874.00

slide31

VM/VE CASE STUDIES

  • Project
  • Upgrading and Enhancement of Washrooms / Toilets at MTB, KLIA
  • PROJECT BRIEF
  • To upgrade the existing Washrooms / Toilets to enhance the aestatic & image in line with market
  • VM studies was commissioned to achieved the following objective:
  • - To minimize odour inline with cost & hygiene & no ponding water
  • Enhance the image

Saving: RM 1,976,936.80

slide35

COLLABORATION WITH UTM(UTM HEADED BY TNC DATO’ PROF. IR. DR. ZAINI UJANG & MAHB HEADED BY EN ABDUL NASIR ABDUL RAZAK)

slide38

Conditions of Contract – VMCP

  • Life Cycle Costing to all our Airports
  • Manual of Value Management
  • Passionate – staff is encourages to further study (Msc & PHD)
  • Strategic Partner with other company in varies industries (i.e Other GLCs)
  • Leader in Industry (VM)
  • Business Venture – Oversea
  • Prime Consultant
  • CONCLUSION : MOVING FORWARD
slide39
Q & A
  • SESSION