VALUE MANAGEMENT

THE APPLICATION OF VM/VE FOR CAPITAL

EXPENDITURE PROJECTS FOR MAHB
17 18 DECEMBER 2008
PUTRA WORLD TRADE CENTRE (PWTC)
KUALA LUMPUR

By : Abdul Nasir Abdul Razak

General Manager
Planning & Development
Technical Services Division

PLANNING AND DEVELOPMENT

The Outline Contents

Introduction
The Emerging of VM at MAHB
Flow , Frameworks, CFT involvements
Workshop
Challenge & Overcome
Results
Sample of case study
Conclusion Moving Forward

PLANNING AND DEVELOPMENT

MAHBs
MAHBsVISION
VISION
WORLD CLASS AIRPORT BUSINESS
WORLD CLASS AIRPORT BUSINESS

VM
VMUNITs
UNITsVISION
VISION
MANAGING COST-EFFECTIVE & OPTIMISATION
MANAGING COST-EFFECTIVE & OPTIMISATION
PROJECTS, FACILITIES, SYSTEM, PRODUCTS
PROJECTS, FACILITIES, SYSTEM, PRODUCTS
AND PROCEDURES
AND PROCEDURES

PLANNING AND DEVELOPMENT

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.

PLANNING AND DEVELOPMENT

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 AND DEVELOPMENT

PLANNING &
DEVELOPMENT

PLANNING AND DEVELOPMENT

PLANNING & DEVELOPMENT ORGANISATION CHART

PLANNING &
DEVELOPMENT
General
Manager
Project Management
Office

Design Management

Airport Development
& Planning

Technical
Excellence

Airport Planning

Airport Standard

Value Management
Construction Management

Simulation

Knowledge
Management
Excellence
Centre

Techno Economics

PLANNING AND DEVELOPMENT

VM UNIT / SECRETARIAT ROLES

MAJOR SCOPE

VM TRAINING
Continuous VM
Improvement &
Competence

VM STUDIES
Formal Application
Of VM Methodology
In PASP Challenge

** PASP (Procurement Activities and System & Procedures)

PLANNING AND DEVELOPMENT

Members : Training & Workshop Hours Record

Nos

Name

Unit / Division

Hours

Status of IVMMs
Membership

Airport Standard

72

Member

Project Management Office

100

Member

Zainol bin Mohd Isa

Ahmad Fadzil bin Arshad

Norazah binti Attan

Value Management

124

Member

Syamsul Azuar Arshad

Value Management

179

Member

Noraziah binti Badaruddin

Value Management

171

Member

Enati binti Mohd Zahari

Procurement & Contract

60

Member

Khatijah binti Mat

Excellent Centre

48

Member

Noor Khasimah Mohd Sidek

Excellent Centre

64

Member

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

Associate Member

15

Zainuddin bin Ismail

Procurement & Contract

64

Associate Member

16

Mohammad Muttagin bin Rapie

Simulation

Associate Member

17

Mohd Ismail bin Kunjumon

Knowledge Management

Associate Member

PLANNING AND DEVELOPMENT

VM AS A STRUCTURED PROCESS

Thought Processes
Analytical
1 - Analyse information
3 - Organise Functions
5 - Evaluate Alternatives
7 - Appraise Options

Creative
2 - Brainstorm Functions
4 - Generate Ideas for
Alternatives
6 - Develop Proposals

8 - Recommend Solutions

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WHEN ?

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

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VALUE MANAGEMENT : HOW?

VM Awareness,
VM Awareness,
Seminar &
Seminar &
Familiarization
Familiarization

2007
2007
(1ststYear)
(1 Year)

Planning
Planning
(Zone by Zone)
(Zone by Zone)

Central Region
Central Region
MATC, KLIA
MATC, KLIA
Penang Airport
Penang Airport
On Aug 2007
On Aug 2007
North Region
North Region
South Region
South Region
Central Region
Central Region

MoU with Pejabat

MoU with Pejabat
Harta Bina, UTM
Harta Bina, UTM

Sabah
Sabah
Sarawak
Sarawak

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VALUE MANAGEMENT INITIATIVE

2008
2008
(2 Year)
(2 Year)
nd
nd

Cross Functional Team

Cross Functional Team
TMO Initiative
TMO Initiative
Top Management buy the
Top Management buy the
Idea & initiative that the
Idea & initiative that the
VM as a tools of cost savings
VM as a tools of cost savings
& optimization elements
& optimization elements
Part of Key Performance
Part of Key Performance
Index (KPI)
Index (KPI)

Objective : To achieve 20%

Saving from CAPEX (selected)
i.e Project more RM500K

Multi Discipline
- Members
VM/VE Manual
VM/VE Manual
For MAHB & Groups
For MAHB & Groups

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MAHB VALUE MANAGEMENT MANUALs COVER

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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 GLCs
* Programme takes full cognizance of matters relating to
governance, shareholder value and stakeholder management.

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Implementation of 6 Colour Books in the Transformation

Programme
Key Focus Areas

Strategic Initiatives

Profitability

Increase concession income by improving

ROE

Develop value proposition for all Malaysia

positioning, product mix and space

utilisation

GLC Transformation
Initiatives - (Colour books)
Optimising capital management

practices (addressed after the

Financial Restructuring) Purple Book

Airports and market intensively

Update and implement airport and land

Regional
Airports

development masterplan

Reengineer processes and

Centralise Procurement in line with Red

review
Book costs to be more efficient

Efficiency

Service Level

(Yellow Book )

Reviewing and revamping

procurement
Red Book

Manage stakeholders proactively

Improving regulatory environment

Enhance capabilities and leadership

Strengthening directors capabilities

qualities

People
Development
Source: Ethos
Analysis
PLANNING

Enhancing operational improvement

AND DEVELOPMENT

Green Book

Managing and developing leaders

and other human capital Orange

Book
Intensifying performance
management practices Blue Book
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CROSS DISCIPLINARY TEAM

Varies Ideas
Distinct Perspectives
Comprehensive Approach
Shared Vision
Consensus

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VALUE MANAGEMENT METHODOLOGY & TECHNIQUES

Budget Owner
Rep.

VM JOB PLAN

QS/Estimator
OUTCOME
Airport
Planner
Airport
Standard

VM PROCESS

RECOMMENDATION

Commercial
Services
Finance
Services
Procurement
& Contract

IMPLEMENTATION

Etc
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PROCESS FLOW OF VM
Divisional
Directive

Preparation Budget
By Unit / Division
Budget Owner

GM / HEAD

Not Approved

Budget Challenge Committee

VMC

Approving Budget Authority

VMAC

Capital Expenditure List

Before Issuance of Form A (2)
Sole Proprietor (1)

Tendering & Evaluation

& Approval
Award

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 3Ps
PLANNING AND DEVELOPMENT

BUDGET OWNER
VMC
PCD &
BUDGET OWNER
PCD & PMO

19

MAHBs MANAGEMENT BUDGETARY

POLICIES & OBJECTIVES
VM POLICY
Consistent with and contributes to
Other Policies
VM PROGRAMME
Managed and Coordinated by
VM Unit
VM TRAINING
Continuous VM
Improvement &
Competence

PLANNING AND DEVELOPMENT

VM STUDIES
Formal application
Of VM Methodology
In CAPEX Challenge

VM METHODS AND TOOLS

Application of Appropriate Techniques

FEEDBACK FOR CONTINUOUS IMPROVEMENT

To be gathered by VM Unit

VALUE CULTURE
Towards delivering better
Value of Projects, System, Products & Procedures

THE VALUE MANAGEMENT FRAMEWORK

VM / VE STUDY RESULTS
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CROSS DISCIPLINARY TEAM

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

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MDs APPROVAL VM INITIATIVE

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PRE-STUDY
PROJECTS STARTS
WEEK BEFORE
STUDY

CFT/VM Unit inform the Budget Owner the intention to hold VM study at their time appointments
To collect all data / info / drawings / etc

VALUE STUDY
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 continues

Tuesday Afternoon - Phase 3 (Evaluation)
Wednesday - Phase 4 (Development)

Ideas from Phase 3 developed into feasible costed technical alternatives

Thursday - Development continues

Friday Morning
Selection of optimum technical alternatives

Friday Afternoon - Phase 5 (Presentation)

Above alternatives presented to Client and design team, VM Team disperse

POST-STUDY
NEXT WEEK
LATER

CFT/VM Unit prepares detailed reports and sends to budget owner

Phase 6 (Feedback & Action Plan) CFT/VM Unit informed of ideas put into practical

DESIGN
CONTINUES

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CHALLENGES IN IMPLEMENTING VM & TO OVERCOME

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

OVERCOME
More awareness session
Knowledge Sharing Session
KPI Setting Value Added
Recognition i.e IVMMs Membership
Workshop & Brainstorm session at hotel /
resort
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RESULTS : 2008

MONETARY SAVINGS BY VM INITIATIVES

Actual : Cost Saving of RM 60.8 Million

Target : Cost Saving of RM 45 Million
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VM/VE CASE STUDIES

Project
Retail 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

Saving: RM 8,651,874.00

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ROP AT SATELLITE, KLIA

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VM/VE CASE STUDIES

No

Description

Savings / Extra

Group 1
1

To Omit Provisional Sum of Board Walk

To omit 3 columns of Mezzanine level slab and redesign 1 column per

section at central core

To change from 2hr fire rated door to 1 hr fire rated door

To limit contingency RM 4.0M as provided to 5% project cost

To consolidate design, centralized of or utilize FIDS monitor (Prov

RM2.0M)

(3,000,000.00)

(2,000,000.00)
-

Group 2
2

To change Imported granite to Alucobond for internal finishes

(15,568.00)

To change Imported granite tile to local granite for floor

(46,080.00)

Ditto

(62,000.00)

To change brickwall (1hour rated) to Lightweight prefabricated

concrete panel (1 hour fire rated)

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

TOTAL SAVINGS

PLANNING AND DEVELOPMENT

(2,020,000.00)
(8,651,874.00)
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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 market

VM studies was commissioned to achieved the following

objective:

- To minimize odour inline with cost & hygiene & no ponding water
Enhance the image

Saving: RM 1,976,936.80

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VM/VE CASE STUDIES

No

Description

Savings / Extra

Group 1
1

Repaint ceiling, no skim coat for wall & maintain electrical works

Provide auto air freshener, suitable hygieneic bin and introduce curverailing

(114,000.00)
2,000.00

Group 2
3

Repaint the ceiling

(415,156.80)

Install non-slip tiles to cubical area

(398,880.00)

Group 3
5

Double counted items in BQ

(233,400.00)

Demolition works

(160,800.00)

Install corrian vanity top c/w built in wash basin

(102,000.00)

Omit the wash basin

To omit urinal c/w glass divider and replace with urinal c/w fin

(58,200.00)

10

Remove suspended hanging cabinet

11

Change to advertising panel

(60,000.00)

12

Remove graphic embrossed coloured glass

(18,000.00)

TOTAL SAVINGS

PLANNING AND DEVELOPMENT

(408,000.00)

(1,976,936.80)

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ENHANCEMENT TOILET AT MTB, KLIA

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EXCHANGE EXPERIENCE & KNOWLEDGE WITH UTM

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COLLABORATION WITH UTM

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

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VM AWARNESS & WORKSHOP AT

MATC, KLIA ON 18-21ST MARCH 2008

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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

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Q&A
SESSION

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