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Value improving practices

Background

The development and implementation of major projects makes increasing use of a range of formal review and analytical processes that have been shown to improve the chances of achieving successful outcomes. These are generally referred to as Value Improving Practices or VIPs. They are most effective when implemented during the early stages of a project, usually as part of the Front End Loading (FEL) activity.

Broadleaf offers support for several of the commonly recognised VIPs as well as:

  • Additional processes for review and analysis during project development
  • Concept generation and review prior to the formulation of a business case
  • Overall business investment opportunity management processes.

This note describes the support Broadleaf can offer in these areas and provides an indication of the approach we commonly recommend to implementing VIPs that will enhance business outcomes. In addition to offering proven methods and tools, Broadleaf’s team of senior personnel offer high grade facilitation and process management skills that can be applied to a range of requirements.

Basic principles

While the details vary with the characteristics of particular projects and the nature of the reviews or analysis processes being used, there are some basic principles that underpin the quality and value of VIPs and related exercises. These include the following:

Table 1: Principles

Timing

Undertake value improvement activities at times that balance the availability of relevant information and the need to ensure there is sufficient flexibility and time for the outcomes to be used. The timing may also be driven by the need to succeed at the next project approval stage.

Process

Use a well-prepared and well-structured process, taking account of any relevant standards, to ensure that all facets of the project are covered with a balanced application of effort and time to each one.

Facilitation

Use an independent facilitator to enhance the rigour and integrity of the process. This also allows participants to devote their energy towards the content of the exercise while the process is managed by the facilitator.

Participation

Engage the people required to ensure comprehensive coverage of all relevant areas of the project, from the business vision to engineering, implementation and on into operation, while promoting team integration and providing a viable group for a workshop or other form of interaction.

Recording

Ensure the conduct and outcomes of the process are recorded comprehensively.

Action

Transfer the outcomes effectively into project design and implementation in a formal action plan, with specified task owners and timings.

VIPs for enhancing business outcomes

An overview of the VIPs and other processes for which we offer support is set out in Table 2.

The timing of these exercises can vary. If the optimum point in a project has passed without an appropriate review or analysis being conducted, value may still be gained by tailoring the approach to suit the stage of the project when the opportunity to do the review or analysis does arise. Figure 1 indicates what is likely to be the most appropriate timing for each of the processes outlined here.

Table 2: Value improving processes

Process

Applications and outcomes

Strategic opportunity identification

  • Exploring the issues and the decisions available to the business
  • Building strategic options associated with a market, resource or capability
  • Identifying where analysis can be directed to resolve strategic decisions
  • Overcoming the barriers associated with the scale and complexity of business development

Strategic option modelling

  • Constructing cash flow and other models that balance the detail required for realistic representation against the need for transparency and ready interpretation
  • Examining the uncertainty associated with cash flows, cash flow drivers and timing, and incorporating this uncertainty into a quantitative risk model
  • Using quantitative risk models to inform decision making by assessing the main sources of uncertainty and comparing the forecast financial performance of investment options

Risk assessment

  • Establishing priorities and directing attention towards issues requiring attention in later work by structured identification and analysis of risks
  • Planning risk treatments to ensure that later activities include tasks that will address major risks and opportunities and so enhance the eventual outcome

Quantitative risk modelling

  • Modelling the cost, schedule and cash flow of proposed investments
  • Establishing realistic targets, commitments and contingency requirements
  • Presenting outcomes to support requests for funding and approval to proceed with further work

Technology selection

  • Comparing technology options for system implementation using risk and opportunity review processes
  • Identifying the relative strengths and weaknesses of alternatives to assist in technology option selection

Process simplification

  • Challenging the need for the unit operations, equipment redundancy, flexibility and other ‘nice to haves’ as part of early design review and value management exercises
  • Mapping current processes and procedures, and testing and optimising them, through the use of operational breakdown matrices and Procedural HAZOPs
  • Optimising processes through human error and task analysis
  • Reviewing integrated recycles and examining alternative approaches that will achieve the required outcome more cost-effectively

Waste minimisation

  • Exploring options to eliminate, reduce, reuse or recycle material and energy wastes
  • Identifying the real costs of wastes and justifying expenditure on minimisation options

Constructability review

  • Reviewing construction plans to identify risks to be resolved and opportunities to be exploited
  • Identifying priorities for action to improve plans

Value engineering and value management

  • Reviewing functions to identify options for value improvement
  • Using formal workshop facilitation and processes in compliance with Standards
  • Integrated assessment of options to prepare strategic improvements plans

Figure 1: When to apply each VIP

Stage in project development

Concept: option development

Concept: business case

Prefeasibility: option selection

Feasibility: detailed definition

Opportunity identification

X

Strategic option modelling

X

Risk assessment

X

X

X

Quantitative risk modelling

X

X

X

Technology selection

X

X

Process simplification

X

X

Waste minimisation

X

Constructability review

X

X

Value management

X

X

X

Our strong facilitation skills are widely applicable and from time to time we are called upon to assist in structuring and facilitating a process to meet special requirements. We are always pleased to explore such requirements in addition to those set out here. We have a track record of providing support that delivers sufficient rigour to ensure the integrity of the outcome, capitalising on the experience and creative input of the participants without placing an onerous burden on them.