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Value Management Masterclass  Agenda –9.30 Welcome –9.35 Value, risk & benefits. Peter Langley –10.00 The Value Management Process – An interactive example.

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Presentation on theme: "Value Management Masterclass  Agenda –9.30 Welcome –9.35 Value, risk & benefits. Peter Langley –10.00 The Value Management Process – An interactive example."— Presentation transcript:

1 Value Management Masterclass  Agenda –9.30 Welcome –9.35 Value, risk & benefits. Peter Langley –10.00 The Value Management Process – An interactive example. Peter Langley & John Heathcote –11.00 Coffee –12.15 Lunch –13.00 Try it yourself - A Value Management Exercise –15.00 Compare notes –15.30 Barriers to carrying out Value Management –16.00 Close

2 Value, Risks & Benefits Peter Langley Value Management SIG

3 What are Benefits?  APM Definition –The quantifiable and measurable improvement resulting from completion of the project deliverables that is perceived as positive by the stakeholder.

4 Project & Product Life Cycles Concept Definition Implementation Handover & Closeout Operation Termination Business Case (Benefits) PMP (Success Criteria) Product Final reports PPR Success Criteria End of product life Benefits

5 What is Value?  Dictionary definitions –The regard that something is held to deserve –Importance, worth, usefulness, esteem –The material or monetary worth –Reasonable price, Adequate return –Price equal to the worth of the thing bought

6 Measures of Value  How do you define and measure the value of a project? –To the business (Board, owners, shareholders) –To the users & customers –To the project team –To all the stakeholders

7 Value = Satisfaction of Needs Use of Resources Money Business Case (Benefits – sponsor) Stakeholders Requirements (cost, time, quality, functionality) Time BS EN 12973:2000

8 What is Value Management?(1)  Value Management is concerned with improving and sustaining a desirable balance between the wants and needs of stakeholders and the resources needed to satisfy them. Stakeholder value judgments vary, and VM reconciles differing priorities to deliver best value for all stakeholders. Institute of Value Management (www.ivm.org.uk)

9 What is Value Management?(2)  A structured and systematic approach to improving value in a project by establishing clear views and consensus: –About the nature of the problem or opportunity –That the proposed solution is the best –That the scope is only that necessary Value Solutions (www.value-solutions.co.uk)

10 What does VM do for projects?  Promotes a greater understanding of the total project (what, why, when, who, how)  Focuses on required functions/ purpose/ what do we want to achieve  Develops realistic scope, removing unnecessary scope and associated costs  Improves designs  Improves outputs and reduces cost

11 Problem Definition RISKS VALUE Solution Generation Solution Choice IS IT FEASIBLE? IS IT VIABLE? Stakeholder, Business, Technical Presented in the Business case. The VM Process

12 Company strategy Portfolio Programmes & Projects Business Risk Environment Investment risks Value Cost & Resources Benefits Project risks

13 Conclusions  Value is related to Risks and Benefits but they are not the same thing.  Companies do projects to gain value, not just benefits.  Value Management is a problem solving process that can be used for improving the clarity of project & programme needs, the efficiency of solutions, and can assist portfolio management & governance

14 Value Management in the project lifecycle Concept Definition Implementation Handover & Closeout VM1 – defining the problem VM2 – agreeing the solution VE – fine tuning the design Lessons learned

15 The Value Management Process (Job Plan)

16 The VM Process  Information phase  Functional Analysis phase  Creativity phase  Evaluation phase  Development phase  Reporting / presentation phase

17 Information phase – everyone up to speed  Project background –History –Options & costs to date –Expectations  Business case & purpose  Issues analysis

18 Charity Event  You are asked to carry out an event to raise money for a particular charity. There are no boundaries on how you can go about this except to raise as much as possible.

19 Output of Information phase  All to be fully aware of the problem  Definition of the function in a simple understandable sentence  Making overt the client & stakeholder’s value system

20 Information Gathering Methods  Interviews prior to workshop  Checklist  Issues listing –Prioritising & critical issues  Steven’s presentation method

21 Time Cost Quality review  Draw a time, cost, quality triangle and ask each member to put a dot within to show the relative importance. Discuss the result.

22 Functional Analysis Phase  Ask “What does it do” rather than “What is it”?  How & Why diagram  Keep asking the question “how” to work out what to do and “why” to find the reason for doing it  Describe with active verb and noun

23 Value, Option Generation, Creativity John Heathcote Value Management SIG

24 Creative phase Open up options  Define the problem  Gather information  Speculate solutions

25  Honey example  Problems with Humans, tendency to rapid evaluation & snap judgements (Sutherland 1992)  Trick is the AVOID evaluation, –Use a facilitator –“Solution candidates” (Warhurst 2010)

26 Don’t evaluate!  No Evaluation  Availability error / first good idea error

27 Ideas in a Box.  ‘Our’ ideas primarily come from the box we are in....  Civil Engineering, IT,...they but that’s not how we do it.... ...if we always did this, we’d still be building buildings like we built the pyramids...

28 Have a lot of ideas!

29 So word association  (DeBono 1971)

30 MSc Strategic Project Management Research  Tried & tested ideas, favoured. –Risk, which is subjective &.. –Subject to the over/under estimate tendency (Nothing is as good or as bad..)  E&M Engineers, unimaginative (& unhappy about it) except.. –When things were impossible !... (& so risk free)

31 To be better...

32 Guidelines for creative phase  Dare to be illogical / unconventional  Overcome inertia to change  Remove mental blocks and inhibitions  Let the imagination flow and grow  Encourage crazy / off the wall ideas  Look for associations / builds  Don’t evaluate ideas

33 Creative techniques  Brainstorming  Lateral thinking (Edward de Bono) –Random Word –Provocation / movement –Six thinking hats

34 Random Word  Select subject where you want a new idea  Obtain random word (noun)  Define characteristics of random word  Apply these characteristics to subject to give new ideas

35 Provocation  List what you take for granted  Set up provocation (removal / reversal / wishful thinking)  Choose a bold provocation  Generate new ideas

36 Six Thinking Hats  White – facts & figures  Red – emotions & feelings  Black – cautious & careful  Yellow – speculate & positive  Green – creative thinking  Blue – control of thinking

37 Evaluation phase Sorting out the ideas  Initial sorting –Who backs it – silence means no –Voting (public or private) –Scoring  Final sorting –Technical & economical viability –Acceptable to client and function –Criteria weighting & decision matrix –Benefits & concerns / critical concerns

38 Development phase Working up the best option(s)  Consider risks  Develop whole life cost models  Check feasibility  Agree way forward & action points

39 Reporting phase Present preferred option  Key decisions of team  Options rejected & why  Way forward Complete written report


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