The development and implementation of projects uses 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. The technique of value management (VM) or value engineering is a key VIP.
Broadleaf uses proven VM processes and tools to improve project outcomes. This includes the coordination of VM with risk management.
The objective of VM is to minimise the capital and operating costs associated with the asset or function delivered by a project, within the required quality, performance and timing, and satisfying safety, environmental and project approval constraints.
The value management job plan
Our general approach to value management is described in the Australian Standard AS 4183 Value management outlined in Figure 1. The process is defined by the value management job plan; at the core of the process is the value management workshop.
The information phase starts before the workshop and includes the logistics and selection of participants and the preparation of required background material. The issues and background material consider the perspectives of all the stakeholders.
The key tasks undertaken in this phase include:
- Clarify the project objectives, explicitly stated and ranked in order of priority
- Clarify the scope including the limits of the study
- Identify the issues of concern and risks, which involves coordination with project risk management
- Define the function and performance requirements
- Summarise the current design, cost data and the project schedule.
A briefing information pack is then prepared for the workshop participants.
The first session of the workshop continues the information phase. This includes brief presentations by key personnel on the project fundamentals and required information. What material and the personnel to present that material need to be determined and the personnel notified and assisted.
Workshop information phase
At the workshop the information phase continues. The project time, cost and performance requirements and any issues of concern and risks are presented to the group and discussed.
The assumptions, givens and constraints upon which the current design is based are listed and challenged. The problem situation is then defined and the study scope and objectives confirmed.
Functional analysis phase
In this phase the required functions and their priority are detailed. The function-based analysis is key to the value management concept. Where appropriate data exists, the costs associated with the functions are added and the most likely opportunities are targeted for closer analysis.
The tasks undertaken in this phase include:
- Identify the required functions
- Represent the functions diagrammatically (using a FAST diagram or similar technique)
- Assess the cost and worth of the functions and where possible, identify target functions on the basis of their benefit-to-cost ratio.
At this point the participants know the real purpose of the project and the functions required to achieve that purpose plus the valid assumptions and constraints. They also know aspects of the design that do not support the required functions and current design assumptions and constraints that are not valid. The poor value functions or areas of mismatch are targeted as opportunities for value improvement.
Creative or ideas and options generation phase
Starting with the targeted functions, the functions are examined using a range of brainstorming and creative thinking techniques. Options for providing the functions at lower cost without compromising the quality, environmental requirements and performance criteria are generated. As is typical in this type of brainstorming the ideas are not judged in this phase.
The study team is divided into groups for most of this phase, with each group concentrating on a different functional area or set of issues. Each group presents its options to the others and further options are sought from the combined audience.
The options generated are collected into a single spreadsheet ready for the next phase.
Evaluation or judgment phase
The complete list of options, which can run to several hundred, is evaluated for cost effectiveness and practicability.
The tasks undertaken in this phase include:
- Clarify and assess the options generated
- Assess the risk associated with each option
- Rank each option and generate a prioritised shortlist of options to progress.
Where attractive options are mutually exclusive, they are compared and the best option is selected. This may require the use of decision analysis techniques. A wide range of techniques can be used to analyse and make decisions, however, generally they follow the same basic Kepner Tregoe (KT) steps. These four basic steps are outlined in Figure 2. The first two steps, Situation Appraisal and Problem Definition, will have been conducted in the first workshop session. If required, tools such as paired comparisons or a weighted criteria decision matrix are used to decide on preferred options.
Workshop development phase
The workshop team is divided into groups, with each group developing several related options that were selected in the evaluation phase. Several related options may combine to form a solution to some aspect of the project. The groups assess the options, and then refine, detail and develop the options as part of their solution. Costs, risks, cost savings and other key benefits are assigned to each developed option.
The groups present the solutions to the other participants and the study team finalises the options. The end result is a list of recommended options with associated costs, risks and benefits and an outline implementation plan. The implementation plan includes the person responsible for the further development of the action plan to incorporate the option into the project.
Where a lack of information prevents full development of an option, the required investigation to address the issue will be defined and recommended as part of the solution.
The development phase continues after the workshop. Selected options identified in the workshop are developed further and action plans are approved and implemented. The tasks undertaken in this phase include:
- Finalise cost and schedule impacts
- Identify and assess the risks (both threats and opportunities)
- List the resources required
- Define accountabilities, measures of success and reporting.
The outcome of this phase results in an agreed plan for the integration and implementation of the selected options into the project management processes. Improved value for money from the project should be the outcome.
Broadleaf has facilitated major value management activities for many organisations and projects.
Paper mill coating line project, Tasmanian mills
Paper mill liquid waste management, Maryvale
Australian Magnesium Corporation
A very large project value management exercise to identify major cost reductions that could save the project
GEMCO: 4.5 MTPA and 5.5MTPA expansion projects
Hot Briquetted Iron (HBI): project value analysis
Illawarra Coal: West Cliff Domain Replacement Project
Illawarra Coal: West Cliff Coal Preparation Plant Project
BHP Billiton Mitsubishi Alliance
Goonyella Complex Expansion Project
Coal Stream Alliance
Jilalan Rail Yard Upgrade project
Eaglefield Expansion Project
Public Transport Corporation, Victoria
Jolimont Rail rationalisation project and coordination with Federation Square
LNG Upstream project
Iron Ore Diesel Supply Infrastructure Project
Roads and Traffic Authority, NSW
Multiple road upgrade projects
Goro Nickel project capital cost review
Water for Bowen project
Western Mining Corporation
New smelter options and analysis