APM Group

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2 How can you manage value if the project is not well run? An outline of delivering successful outcomes Michael Dallas, MA Cantab, MICE, FIVM, MAPM APM Group Director MoP is a Registered Trade Mark of the Cabinet Office in the United Kingdom and other countries MoV is a Registered Trade Mark of the Cabinet Office in the United Kingdom and other countries M_o_R is a Registered Trade Mark of the Cabinet Office in the United Kingdom and other countries MSP is a Registered Trade Mark of the Cabinet Office in the United Kingdom and other countries PRINCE2 is a Registered Trade Mark of the Cabinet Office in the United Kingdom and other countries ITIL is a Registered Trade Mark of the Cabinet Office in the United Kingdom and other countries P3O is a Registered Trade Mark of the Cabinet Office The Swirl logo is a Trade Mark of the Cabinet Office

3 What s the point? Deficiencies in benefits capture bedevils nearly 50% of government projects and 30-40% of systems to support business change deliver no benefits whatsoever. OGC the evidence shows that two thirds of public sector projects are completed late, over budget or do not deliver the outcomes expected and The track record of project delivery in the private sector is equally mixed. National Audit Office, 2011 Most large capital investments come in late and over budget, never living up to expectations. More than 70% of new manufacturing plants in North America, for example, close within their first decade of operation. Approximately three-quarters of mergers and acquisitions never pay-off And efforts to enter new markets fare no better Lovallo & Kahneman The brutal fact is that about 70 per cent of all change initiatives fail. Beer & Nohria Are we wasting our time?

4 Paddington Health Campus Pitfalls to be avoided Quotation from the UK s National Audit Office s report into the Paddington Healthcare Campus Scheme, London, May 2006: The Project Director made a deliberate decision not to embed management processes as the scheme did not have sufficient resources or capacity to do it! Reasons for undertaking the project were unclear Not possible to establish a viable business case Master plans contained over-optimistic expectations of land availability, external stakeholder interests and town planning constraints. There was no clear management structure or strong leadership in place Communication between team members lacked openness. The scheme was unable to demonstrate good value for money Although risks were rigorously analysed they were largely ignored and not managed

5 We need a Plan APM Group

6 What makes a project successful? Why is the project needed- Is the PURPOSE clear? How are RISKs identified and managed? How realistic is the PROGRAMME and how effective are PROJECT CONTROLS? Why is this solution appropriatehas a thorough APPRAISAL been carried out? What are the Targets? How will COSTs and budgets be defined and controlled How is the DESIGN /SUSTAINABILITY described what are expectations? How appropriate is the chosen PROCUREMENT route? How? 8 7 Why? What? What should the project deliver- is the DEFINITION comprehensive? What PRECEDENTs- are there, have exemplar processes and projects been researched and benchmarked? How is the project structured- are appropriate MANAGEMENT arrangements in place? How are good COMMUNICATIONS achieved? How well suited and resourced are the PEOPLE chosen to undertake the project? Are all needs identified

7 We must start by getting out the books and scrutinising every penny spent......attack ingrained waste, stop doing things that do not add value David Cameron 2010

8 Major Projects Authority Strategy Major project leadership academy (MPLA) Government major projects portfolio (GMPP) Operating environment (OE) Achievements and learning Promoting Best Management Practice portfolio

9 What methods to use? Arguably the most internationally popular suite of methodologies is that published by the UK Cabinet Office. PRINCE2, MSP and MoP provide process models, organisational guidance and documentation standards for projects, programmes and portfolios respectively - Praxis, Adrian Dooley, Aug 2012)

10 Cabinet Office Best Management Practice portfolio An integrated set of methods for Programme & Project Managers MoV is integral across the main management methods

11 Outline of Management of Value (MoV ) A descriptive guide A booklet to inspire executives A qualification

12 Realising the benefits Key VM steps Understand and articulate Improve value Learn Lessons Prioritise Improve value Quantify benefits Monitor improvements Plan Diagram from Managing Benefits APMG International Steve Jenner

13 Portfolio, programme and project levels - Need to apply VM consistently throughout and at key decision points

14 At Portfolio level Cambridge University Hospitals - Developing strategy for attaining ten year vision The challenge: Clear vision of where they want to be in ten years time Need to assess whether plans are realistic and viable Need catalyst to kick off realisation of plan The process: Workshop with senior decision makers The outcome: Clarity of definition of programme requirements. Plan to procure energy centre through a third party (ESCo) at no cost to hospital as catalyst Clear plan and basis for business case developed in outline

15 At programme level Selecting projects that add most value The challenge Airline seeking exclusive use of new airport terminal but cost of upgrades twice available funds VM programme Series of studies to justify proposed projects viability or otherwise The outcome Determined which projects were really needed taking account of both monetary and non monetary benefits. Identified projects that could be removed from the scope that were not viable Delivered business need within available funding

16 Project level VE - New chemical manufacturing plant The challenge Need to reduce construction and installation costs to render the project viable Minimum target cost reduction 6% Use of Six Sigma unsuccessful The process Three four day value engineering studies following the traditional eight steps on different parts of the plant Workshops undertaken on site, involving decision makers, designers and plant operatives Follow up undertaken by project team The outcome Cost savings identified, after taking account of rework, of 10%, 25% and 40%

17 VM Case Study Prorail Value Improvement of 350%!

18 Working with APMG-International -improving performance through qualifications We develop guidance and exams for qualifications (over 35No) Official accreditors to the Cabinet Office Best Management Practice portfolio We provide consistency worldwide We assess and accredit training organizations (325 No) trainers and their management systems We provide assurance of quality for candidates We process exams (over 18,000 per month) Language capability (translations into 21 languages) High standards of service - our accreditation standards are the highest in the training industry

19 Summary of learning points Review of current (poor) performance Project success criteria UK Cabinet Office initiatives to improve performance How MoV contributes to delivering expected benefits Examples of use at portfolio, programme, project and operational levels About APMG-International

20 Questions, discussion and thank you Canadian Representative: international.com

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