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1PLANNING AND DEVELOPMENT
VALUE MANAGEMENT
THE APPLICATION OF VM/VE FOR CAPITALEXPENDITURE PROJECTS FOR MAHB
17 – 18 DECEMBER 2008PUTRA WORLD TRADE CENTRE (PWTC)
KUALA LUMPUR
By : Abdul Nasir Abdul RazakGeneral Manager
Planning & DevelopmentTechnical Services Division
2PLANNING AND DEVELOPMENT
• Introduction
• The Emerging of VM at MAHB
• Flow , Frameworks, CFT involvements
• Workshop
• Challenge & Overcome
• Results
• Sample of case study
• Conclusion – Moving Forward
The Outline Contents
3PLANNING AND DEVELOPMENT
MAHB’s VISION
WORLD CLASS AIRPORT BUSINESS
MAHB’s VISION
WORLD CLASS AIRPORT BUSINESS
VM UNIT’s VISION
MANAGING COST-EFFECTIVE & OPTIMISATION PROJECTS, FACILITIES, SYSTEM, PRODUCTS
AND PROCEDURES
VM UNIT’s VISION
MANAGING COST-EFFECTIVE & OPTIMISATION PROJECTS, FACILITIES, SYSTEM, PRODUCTS
AND PROCEDURES
4PLANNING AND DEVELOPMENT
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.
5PLANNING AND DEVELOPMENT
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
7PLANNING AND DEVELOPMENT
PLANNING & DEVELOPMENT – ORGANISATION CHART
PLANNING & DEVELOPMENT
General Manager
Project ManagementOffice
Technical Excellence
Airport Development & Planning
Design Management
Construction Management
Airport Planning
Value Management
Simulation
Techno Economics
Airport Standard
KnowledgeManagement
ExcellenceCentre
8PLANNING AND DEVELOPMENT
VM UNIT / SECRETARIAT ROLES
** PASP (Procurement Activities and System & Procedures)
MAJOR SCOPE
VM TRAININGContinuous VMImprovement &
Competence
VM STUDIESFormal Application Of VM MethodologyIn PASP Challenge
9PLANNING AND DEVELOPMENT
Members : Training & Workshop Hours Record
Nos Name Unit / Division Hours Status of IVMM’s Membership
1 Zainol bin Mohd Isa Airport Standard 72 Member
2 Ahmad Fadzil bin Arshad Project Management Office 100 Member
3 Norazah binti Attan Value Management 124 Member
4 Syamsul Azuar Arshad Value Management 179 Member
5 Noraziah binti Badaruddin Value Management 171 Member
6 Enati binti Mohd Zahari Procurement & Contract 60 Member
7 Khatijah binti Mat Excellent Centre 48 Member
8 Noor Khasimah Mohd Sidek Excellent Centre 64 Member
9 Nor Azlina binti Mohd Isa Airport Planning 16 Member
10 Zaiton Hayati binti Muda Quality Management 16 Member
11 Md Azmi bin Baba Value Management 132 Member
12 Nabillah Zolifah binti Zolkifli Commercial Services 16 Associate Member
13 Mohd Fauzi bin Abdul Hamid Excellent Centre 24 Associate Member
14 Mohamed Ramlan bin Rafie Procurement & Contract 8 Associate Member
15 Zainuddin bin Ismail Procurement & Contract 64 Associate Member
16 Mohammad Muttagin bin Rapie Simulation 8 Associate Member
17 Mohd Ismail bin Kunjumon Knowledge Management 8 Associate Member
10PLANNING AND DEVELOPMENT
Thought Processes
Analytical Creative
1 - Analyse information 2 - Brainstorm Functions
3 - Organise Functions4 - Generate Ideas for
Alternatives5 - Evaluate Alternatives
6 - Develop Proposals7 - Appraise Options
8 - Recommend Solutions
VM AS A STRUCTURED PROCESS
11PLANNING AND DEVELOPMENT
VM interventions should be undertaken when:
1. Key decisions need to be made
2. Conflicts or problems need to be resolved
3. Consensus needs to be achieved
4. Team building is required
5. Cost or Time overruns need to be addressed
6. Other identified benefits need to be secured
WHEN ?
12PLANNING AND DEVELOPMENT
VALUE MANAGEMENT : HOW?
2007 (1st Year)
2007 (1st Year)
VM Awareness, Seminar &
Familiarization
VM Awareness, Seminar &
Familiarization
Central Region – MATC, KLIA
Central Region – MATC, KLIA
Penang AirportOn Aug 2007
Penang AirportOn Aug 2007
Planning(Zone by Zone)
Planning(Zone by Zone)
North RegionNorth Region
South RegionSouth Region
Central RegionCentral Region
Sabah Sabah
SarawakSarawak
MoU with Pejabat Harta Bina, UTM
MoU with Pejabat Harta Bina, UTM
13PLANNING AND DEVELOPMENT
VALUE MANAGEMENT INITIATIVE
2008 (2nd Year)
2008 (2nd Year)
Cross Functional Team TMO Initiative • Top Management buy the Idea & initiative that theVM as a tools of cost savings& optimization elements• Part of Key PerformanceIndex (KPI)
Cross Functional Team TMO Initiative • Top Management buy the Idea & initiative that theVM as a tools of cost savings& optimization elements• Part of Key PerformanceIndex (KPI)
Objective : To achieve 20%Saving from CAPEX (selected)
i.e Project more RM500K
Objective : To achieve 20%Saving from CAPEX (selected)
i.e Project more RM500K
Multi Discipline - Members
Multi Discipline - Members
VM/VE ManualFor MAHB & Groups
VM/VE ManualFor MAHB & Groups
15PLANNING AND DEVELOPMENT
BACKGROUND OF GLC TRANSFORMATION PROGRAMME
1. GLC Transformation Programme was launched in May 2004
2. The main objective is to transform GLCs into high-performing entities
3. 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.
16PLANNING AND DEVELOPMENT
GLC Transformation Initiatives - (Colour books)
Strategic Initiatives Key Focus Areas
People Development
ROE
• Increase concession income by improving positioning, product mix and space utilisation
• Develop value proposition for all Malaysia Airports and market intensively
• Update and implement airport and land development masterplan
• Optimising capital management practices (addressed after the Financial Restructuring) Purple Book
• Centralise Procurement in line with Red Book
• Enhancing operational improvement (Yellow Book )
• Reviewing and revamping procurement
Red Book
• Manage stakeholders proactively • Improving regulatory environment
• Enhance capabilities and leadership qualities
• Strengthening directors’ capabilities Green Book
• Managing and developing leaders and other human capital Orange Book
• Intensifying performance management practices Blue Book
Service Level
Efficiency
Source: Ethos Analysis
Regional Airports
Profitability
Implementation of 6 Colour Books in the Transformation Programme
•Reengineer processes and review costs to be more efficient
17PLANNING AND DEVELOPMENT
Varies Ideas
Distinct Perspectives
Comprehensive Approach
Shared Vision
Consensus
CROSS DISCIPLINARY TEAM
18PLANNING AND DEVELOPMENT
VALUE MANAGEMENT METHODOLOGY & TECHNIQUES
Budget OwnerRep.
QS/Estimator
Airport Planner
AirportStandard
CommercialServices
FinanceServices
Procurement& Contract
Etc
VM PROCESS
VM JOB PLAN
RECOMMENDATION
IMPLEMENTATION
OUTCOME
19PLANNING AND DEVELOPMENT
PROCESS FLOW OF VM
DivisionalDirective
Preparation BudgetBy Unit / Division
Budget Owner
Capital Expenditure List
Budget Challenge Committee
Approving Budget Authority
Before Issuance of Form A (2)
Award
Tendering & Evaluation& Approval
Sole Proprietor (1)
Not Approved
GM / HEAD
PCD & PMO
VMC
VMAC
BUDGET OWNER
VMC
PCD &BUDGET OWNER
VMC = VM Committee VMAC = VM Approval Committee (1) = VM may be applied during negotiation stage for Sole Proprietor Project(2) = Form A refer to MAHB 3P’s
20PLANNING AND DEVELOPMENT
THE VALUE MANAGEMENT FRAMEWORK
MAHB’s MANAGEMENT BUDGETARYPOLICIES & OBJECTIVES
VM POLICYConsistent with and contributes to
Other Policies
VM PROGRAMMEManaged and Coordinated by
VM Unit
VM TRAININGContinuous VMImprovement &Competence
VM STUDIESFormal applicationOf VM MethodologyIn CAPEX Challenge
VM METHODS AND TOOLSApplication of Appropriate Techniques
VM / VE STUDY RESULTS
VA
LU
E C
UL
TU
RE
To
war
ds
del
iver
ing
bet
ter
Val
ue
of
Pro
ject
s, S
yste
m, P
rod
uct
s &
Pro
ced
ure
s
FE
ED
BA
CK
FO
R C
ON
TIN
UO
US
IMP
RO
VE
ME
NT
To
be
gat
her
ed b
y V
M U
nit
21PLANNING AND DEVELOPMENT
“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
CROSS DISCIPLINARY TEAM
23PLANNING AND DEVELOPMENT
NEXT WEEK
LATER
DESIGNCONTINUES
PROJECTS STARTS
WEEK BEFORESTUDY
CFT/VM Unit inform the Budget Owner the intention to hold VM study at their time appointmentsTo collect all data / info / drawings / etc
CFT/VM Unit prepares detailed reports and sends to budget ownerPhase 6 (Feedback & Action Plan) CFT/VM Unit informed of ideas put into practical
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 continuesTuesday Afternoon - Phase 3 (Evaluation)Wednesday - Phase 4 (Development)
Ideas from Phase 3 developed into feasible costed technical alternativesThursday - Development continuesFriday Morning
Selection of optimum technical alternativesFriday Afternoon - Phase 5 (Presentation)
Above alternatives presented to Client and design team, VM Team disperse
PRE-STUDY
POST-STUDY
VALUE STUDY
24PLANNING AND DEVELOPMENT
CHALLENGES IN IMPLEMENTING VM & TO OVERCOME
OVERCOME• More awareness session
• Knowledge Sharing Session• KPI Setting – Value Added
• Recognition – i.e IVMM’s Membership•Workshop & Brainstorm session at hotel /
resort
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
25PLANNING AND DEVELOPMENT
RESULTS : 2008
MONETARY SAVINGS BY VM INITIATIVES
60.8
45
0
10
20
30
40
50
60
70
1
Actual : Cost Saving of RM 60.8 Million
Target : Cost Saving of RM 45 Million
26PLANNING AND DEVELOPMENT
ProjectRetail 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
VM/VE CASE STUDIES
Saving: RM 8,651,874.00
30PLANNING AND DEVELOPMENT
No Description Savings / Extra
Group 1
1 To Omit Provisional Sum of Board Walk (3,000,000.00)
2 To omit 3 columns of Mezzanine level slab and redesign 1 column per section at central core
3 To change from 2hr fire rated door to 1 hr fire rated door
4 To limit contingency RM 4.0M as provided to 5% project cost (2,000,000.00)
5 To consolidate design, centralized of or utilize FIDS monitor (Prov RM2.0M) -
Group 2
2 To change Imported granite to Alucobond for internal finishes (15,568.00)
3 To change Imported granite tile to local granite for floor (46,080.00)
4 Ditto (62,000.00)
5 To change brickwall (1hour rated) to Lightweight prefabricated concrete panel (1 hour fire rated)
6 To change Luxalon aluminum strip ceiling to Galvanized iron strip ceiling (91,746.00)
Group 3
7 Omission of 10 nos Lifts and relocation of 8 Nos of Lifts (2,020,000.00)
TOTAL SAVINGS (8,651,874.00)
VM/VE CASE STUDIES
31PLANNING AND DEVELOPMENT
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 marketVM studies was commissioned to achieved the following objective:
- To minimize odour inline with cost & hygiene & no ponding water- Enhance the image
VM/VE CASE STUDIES
Saving: RM 1,976,936.80
32PLANNING AND DEVELOPMENT
No Description Savings / Extra
Group 1
1 Repaint ceiling, no skim coat for wall & maintain electrical works (114,000.00)
2Provide auto air freshener, suitable hygieneic bin and introduce curve-railing 2,000.00
Group 2
3 Repaint the ceiling (415,156.80)
4 Install non-slip tiles to cubical area (398,880.00)
Group 3
5 Double counted items in BQ (233,400.00)
6 Demolition works (160,800.00)
7 Install corrian vanity top c/w built in wash basin (102,000.00)
8 Omit the wash basin (58,200.00)
9 To omit urinal c/w glass divider and replace with urinal c/w fin
10 Remove suspended hanging cabinet (408,000.00)
11 Change to advertising panel (60,000.00)
12 Remove graphic embrossed coloured glass (18,000.00)
TOTAL SAVINGS (1,976,936.80)
VM/VE CASE STUDIES
35PLANNING AND DEVELOPMENT
COLLABORATION WITH UTM(UTM HEADED BY TNC DATO’ PROF. IR. DR. ZAINI UJANG & MAHB HEADED BY EN ABDUL NASIR ABDUL RAZAK)
38PLANNING AND DEVELOPMENT
CONCLUSION : MOVING FORWARD
•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