planning and development 0 value management the application of vm/ve for capital expenditure...

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


• 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


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


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.


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


PLANNING & 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


VM UNIT / SECRETARIAT ROLES

** PASP (Procurement Activities and System & Procedures)

MAJOR SCOPE

VM TRAININGContinuous VMImprovement &

Competence

VM STUDIESFormal Application Of VM MethodologyIn PASP Challenge


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


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


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 ?


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


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


MAHB – VALUE MANAGEMENT MANUAL’s COVER


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.


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


Varies Ideas

Distinct Perspectives

Comprehensive Approach

Shared Vision

Consensus

CROSS DISCIPLINARY TEAM


VALUE MANAGEMENT METHODOLOGY & TECHNIQUES

Budget OwnerRep.

QS/Estimator

Airport Planner

AirportStandard

CommercialServices

FinanceServices

Procurement& Contract

Etc

VM PROCESS

VM JOB PLAN

RECOMMENDATION

IMPLEMENTATION

OUTCOME


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


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

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“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


MD’s APPROVAL – VM INITIATIVE


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


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


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


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


ROP AT SATELLITE, KLIA


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


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


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


ENHANCEMENT TOILET AT MTB, KLIA


EXCHANGE EXPERIENCE & KNOWLEDGE WITH UTM


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


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


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


Q & A SESSION

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