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Technical SessionInstitutionalize VE in PETRONASSuria Irdayu Ahmad Zaidi, PMPFront End EngineerFront End Engineering, GTS, PD&T

Open

Open

Value Engineering (VE) is a systematic function-oriented approach for optimizing the cost andperformance of a project.

Definition

The purpose of a VE study is to meet BusinessObjective of the process at the lowest cost byelimination non value-adding investment withoutcompromising quality and safety.

Objective

Function Analysis System Technique (F.A.S.T) isused to generate ideas that create additional valueto the project.

Technique

No of creative ideas being generated Cost-Worth Analysis Total potential cost optimization

Evaluation

Open

Value = FunctionalityCostCostAnd/orFunc.

CostAnd/orFunc.

CostAnd

Func.

Or??

Given this definition, which of the cars on the following slide has the highest value?

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WHICH HAS HIGHER VALUE?A B

It depends on the functionality you need, so it is very important to define what that is.

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General Approach

OrientationInformation

FunctionCreativity

EvaluationDevelopment

PresentationImplementation

Pre-Workshop

Post-Workshop

In-workshop

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General ApproachPhase ObjectiveOrientation Gather information to better understand the project to gauge the suitability for VE study.Information Sharing project background to VE team.Function Analyze the project to understand and clarify the required functions. Creativity Generate ideas on all the possible ways to accomplish the required functions. Evaluation Synthesize ideas and concepts and select those that are feasible for development into specific value improvements. Development Select and prepare the ‘best’ alternative(s) for improving value.Presentation Present the value recommendation to the project stakeholders.Implementation Incorporate into scope as appropriate by project team .

Copyright UPEC 2018Open

Mandatory to review suitability of VE for each

project FEL 2

1. GOVERNANCE

Sustainability by trained 20 staffs to be certified

practitioner

2. RESOURCES

Established secretariat for performance monitoring

3. IMPLEMENTATION

Institutionalize is to incorporate into a structured and often highlyformalized system or to place in or commit to the care of a specializedinstitution.

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It is mandatory to assess each project for suitability to conduct VEexercise through pre-engagement with the facilitator. This including thepotential value creation VE session brings to the projects.

PPMS ver 5.0 Mar 2016

UPMS Jan 2018

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To address the inconsistent output of VE by non O&G facilitators,PETRONAS has commenced with certified own CVS and developedbespoke templates

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A generic template to conduct the workshop including FAST diagram hasresult in focusing on generating more value added ideas due to thesimilarity of projects in oil & gas

Copyright UPEC 2018Open

NO OF IDEASGENERATED

611

POTENTIAL OPTIMIZATION

NO OF PROJECTS REQUESTED

18

NO OF WORKSHOPCONDUCTED

12

FROM APRIL 2016 UNTIL OCTOBER 2018

RM393mill

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Project conducted VE in FEL 3 achieved lower % in potential costoptimization compare to project conducted VE in FEL 2.

2%

6%

1%

14%

6%

FEL 3

E F I J K

Value vs Project Definition% o

f cost o

ptimizat

ion

Projects Phase ScopeA FEL 2 New compressorB FEL 2 InfillC FEL 2 Greenfield subseaD FEL 2 Greenfield upstreamE FEL 3 New PipelineF FEL 3 New Licensor unitG FEL 2 Greenfield upstreamH FEL 2 New compressorI FEL 3 Greenfield downstreamJ FEL 3 New compressorK FEL 3 New gas receiving terminalL FEL 2 Greenfield downstream

42%

7%14%

4%7%

16%9%

FEL 2

A B C D G H L

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New greenfield project have more ideas being generated which will havehigher potential in CAPEX optimization

20

40

60

80

100

74

109

7280

5551

Project A Project C Project D Project G Project I Project K

New receiving terminal

Greenfield Downstream

Greenfield subsea

New Compressor

Greenfield Upstream

Greenfield Upstream

Ideas Generated vs Scope

Open

Challenges

Inculcate the basic function in doing projects

FAST diagram

No changes is allowed as it will void the warranty

Licensor Unit

VE as cost reduction tools vs to exercise under-utilized human creative potential

Misconception

Incorporation of VE ideas into projects

Not be able to complete the approach due to short duration

Gathering the subject matter expert as cold eye reviewer into VE team

Implementation

Timing

Team

Any questions?

Open

VE Secretariat team:Sarah Harris, Head Concept Select & Conceptual Engineering, Front End Engineering, GTS, PD&T.sarah_harris@petronas.com.my