management and value engineering update hart...
TRANSCRIPT
Risk Management and Value Engineering Update to HART Board
October 19, 2017 1
Risk Management Process
Step 1: Cost Risk Assessment
Step 2: Risk Response
Step 3: Monitor and Control
Base cost review, ID cost and schedule risks
Development of risk response strategies
Continuous risk tracking, monitoring and reporting
Financial Planning
Risk/Contingency Allocation
Evidence Based Decision Making
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Project Cost Life Cycle
ActualCost
Project Life Cycle
Planning Stages Design Stages Construction Stage
Project Completion
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Traditional Vs. Risk-Based Estimating
EnvironmentalRisks
Project Base Cost
X %
StakeholderRisks
ConstructionRisks
DesignRisks
Project Base Cost
UtilityRisks
ROWRisks
FundingRisks
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Process
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Step 1: Workshops
Review base cost and schedule.
Identify and quantify potential risks.
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Step 2: Risk Response Strategy
Probability of Occurrence
Impa
ct
Cos
t or S
ched
ule
INITIAL RISK
MANAGED RISK
ThreatsRisk Factors that Increase Cost or
Schedule
OpportunitiesRisk Factors that Reduce Cost or
ScheduleAvoid Exploit
Transfer Share
Mitigate Enhance
Accept
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Identification and Quantification
Response Strategies
Monitor and Control
Risk Management System
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HART Risk Refresh, September 2017
Risk Refresh Workshop Dates: ROW – 30AUG2017, and 25SEP2017 City Center Guideway & Station Group, Schedule Option 4 – 20SEP &
26SEP2017 Utilities – 20SEP2017 Core System Contract – 21SEP2017 Airport Guideway & Station Group – 26SEP2017 West Oahu/Farrington Highway, and Kamehameha Guideway – 27SEP2017 West Oahu, Farrington, and Kamehameha Station Groups – 28SEP2017 Elevators/Escalators; Pearl Highlands Garage – 09OCT2017
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Risk Management ActivitiesMonthly Risk Management Updates to Project Director, CEO, PMOC Top Risk for Program Top Risks for West Projects Top Risks for East Projects Major Changes in Cost and Schedule Risks Month to Month Roll‐up of Total Project Cost with Allocated and Unallocated Contingency
Totals, and Base Costs through Coordination with Project Controls Lead Cost Reduction/Cost Containment Initiatives; Development of Ideas Monthly Meetings with Risk Management Committee
Quarterly Overall Risk Refresh for All Major Contracts
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HART VE & Cost Containment/Cost Reduction WorkshopVE Brainstorming Workshop held 21SEP2017 with HART Team: Brainstorming Generated 80 Ideas
High Level Analysis of Brainstormed Ideas Will it work? Will it save money? Is it conditionally acceptable? Other Criteria: Safety, Purpose and Need, Schedule, 3rd Party Agreements,
Technical Feasibility, Future Expansion, Constructability, Endorsement
Development Phase to Follow Proposal Development Assignments
Presentation Phase and Dispositions Review & Approval or Rejection to Follow 13
A systematic problem‐solving method
Multidisciplinary VE team Structured process: Typically a 5‐day
(40‐hour) study; sometimes shorter duration
Conducted on capital improvement projects to save money without compromising function
To enhance function within the Owner’s budget
What VE Is
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True Value Engineering is not: An un‐structured process where
the loudest voice in the room wins A rudimentary cost‐cutting exercise A single‐person exercise An exercise impacting project
functionality Development of proposals that a
qualified VE team member would not implement on his or her own design
What VE Is Not
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The Value Equation
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• There is always an optimal way to do something.
• The secret is to understand functions…
• And then determine the Best Value!
How VE Handles Cost
Best Value should not mean “cost cutting.”17
Opportunities for Savings
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• Concept-Level of Design: To select a preferred design approach if several alternatives are envisioned to meet the project requirements, and confirm estimate vs. budget comparison
• Early to Mid-Design Phase: To evaluate major systems, with high opportunity for cost savings or functional enhancement
• Final Design Phase: Right time for a Constructability Review. (May be too late to incorporate radical VE ideas at the final design phase)
• Construction Phase: Through Contractor’s Value Engineering Change Proposals (VECP’s) but opportunity generally not as great
When to Use VE
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Multi-disciplinary Team
+VE Job Plan
+Functional Analysis
+Documentation
+Facilitation
What Makes VE Unique? The VE Methodology
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HART VE & Cost Containment/Cost Reduction Workshop - Continued
Results of High Level Analysis, 80 Ideas Brainstormed: 9 Ideas “Passed” with High Savings Potential (P1), for further development (cost savings
greater than $10M for each idea) 7 Ideas “Passed” with Moderate Savings Potential (P2), for further development (cost
savings from $1M to $10 M for each idea) 4 Ideas “Passed” with Low Savings Potential (P3), for further development (cost savings
less than $1M for each idea) 1 Idea “Passed” with Cost Increase (P4), for further development (cost increase for
each idea, but proposed for functional reason) 38 Ideas to be Observations for Cost Avoidance, or for Functional Considerations in the
Design 8 Ideas Already Being Done by HART 13 Ideas Rejected due to Evident Disadvantages 21
HART VE & Cost Containment/Cost Reduction Workshop – Next Steps
1. Meets Purpose and Need of Project, and FTA and EIS Commitments
2. Meets Safety Requirements3. Respects Project Delivery Schedule4. Respects Third‐Party Agreements5. Idea is Technically Feasible6. Idea Supports Future Expansion Potential7. Idea is Constructible
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8. Perception of HART Design Oversight Team9. Perception of Mayor and City10. Perception of Legislature11. Perception of FTA and PMOC12. Reduces Initial Cost or Remains Nearly
Equal13. Reduces Future Operations and
Maintenance Cost
Team Assignments for Proposal Development (October 2017) High Level Criteria Evaluation (October 2017)
Proposal Development by Teams (October, November 2017) Adjudication Meeting for Proposal Dispositions: Accept or Reject (December 2017) Recommendations to CEO for Implementation (December 2017) Implementation of Accepted Proposals into City Center or other Contracts (2018)
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