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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. The Outline Contents. Introduction

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VALUE MANAGEMENT

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  1. 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

  2. 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

  3. MAHB’s VISION WORLD CLASS AIRPORT BUSINESS VM UNIT’s VISION MANAGING COST-EFFECTIVE & OPTIMISATION PROJECTS, FACILITIES, SYSTEM, PRODUCTS AND PROCEDURES

  4. 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.

  5. 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

  6. PLANNING & DEVELOPMENT

  7. 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

  8. 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

  9. Members : Training & Workshop Hours Record

  10. 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

  11. 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

  12. 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

  13. 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

  14. MAHB – VALUE MANAGEMENT MANUAL’s COVER

  15. 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.

  16. 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

  17. CROSS DISCIPLINARY TEAM • Varies Ideas • Distinct Perspectives • Comprehensive Approach • Shared Vision • Consensus

  18. 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

  19. 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

  20. 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

  21. 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

  22. MD’s APPROVAL – VM INITIATIVE

  23. 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

  24. 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

  25. MONETARY SAVINGS BY VM INITIATIVES RESULTS : 2008 Actual : Cost Saving of RM 60.8 Million Target : Cost Saving of RM 45 Million

  26. 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

  27. ROP AT SATELLITE, KLIA

  28. VM/VE CASE STUDIES

  29. 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

  30. VM/VE CASE STUDIES

  31. ENHANCEMENT TOILET AT MTB, KLIA

  32. EXCHANGE EXPERIENCE & KNOWLEDGE WITH UTM

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

  34. VM AWARNESS & WORKSHOP AT MATC, KLIA ON 18-21ST MARCH 2008

  35. 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

  36. Q & A • SESSION

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