Lesson Summary

James McCuish and Charles Jennings share insights from their extensive experience with Value Management (VM) in major projects, noting the complexities versus classical Value Engineering (VE) studies:

• Major project VM involves managing 4-5 teams generating 400-500 ideas, with 300 entering detailed development.
• These large projects often exceed $300 million, demanding capital expenditure reductions of 10-15%, while improving net present value (NPV) and internal rate of return (IRR).
• Management expects early-stage detailed process flow diagrams and cost estimates (5,000-7,000 line Excel sheets) for decision-making gates in a front-end loading (FEL) phased investment approach.
• VM encompasses multiple workshops focusing on mobilization, commissioning, constructability, and technology selection alongside VE.
• VE integrates with other value-improving practices including design for capacity, waste minimization, and process simplification, all targeting function-focused creativity.

Key preparatory steps and study management techniques:

• An intention model scale is used early to clarify resource commitment and expected VM study results, ranging from a minimal “check the box” to a full-scale commitment.
• Planning includes custom Gantt charts and terms of reference detailing objectives, scope, roles, schedules, and documentation needs.
• The STICK (Scope, Team, Information, Constraints) model visualizes project components and stakeholder relations to align study participants on a common mental model.
• Kick-off meetings with senior management are crucial to confirm economic goals, team alignment, and resource commitment; sometimes supplemented by training videos for value teams.
• Setting business priorities involves ranking multiple value attributes (e.g., cost, schedule, capacity, emissions) to define trade-offs and focus for VE results, using methods like paired comparison and analytic hierarchy processes.

Tools and approach for idea management:

• Four primary Excel workbooks are used for the VM study:
  • Ideation Capture Workbook – catalogs all ideas and initial evaluations.
  • Idea Development and Assignment Generator – assigns ideas to team members for detailed assessment.
  • Idea Write-Up Worksheet – individual structured templates for analysis of each idea’s capital, operational, revenue impacts, and calculation of lifecycle cost and incremental NPV.
  • Idea Aggregator Workbook – consolidates all analyses into a master list with scenario building, economic evaluations, and decision support.
• Use of Excel VBA macros allows fast data updates and dynamic document generation for workshop participants.
• Early filtration of ideas ensures focus on the most promising, balancing thoroughness with workload management.

Concluding recommendations for successful VM in major projects:

• Early testing and agreement on resource commitment and engagement level are essential.
• Clearly define study scope, stakeholders, and desired prioritized value measures.
• Maintain appropriate abstraction level for cost and function to enable creative options.
• Be prepared for multiple teams working asynchronously on detailed components.
• Recognize full-cycle return on investment including qualitative and quantitative improvements, not just cost-cutting.
• Equip teams with sophisticated analysis tools to handle hundreds of ideas efficiently.

Overall, major project value management demands rigor, teamwork, detailed planning, continuous communication, and a suite of tailored tools to improve project returns and meet investment thresholds.