Delivering Value Today and Tomorrow

PAPER 4
ACHIEVING HIGH PERFORMANCE PROGRAMS, PROJECTS, PRODUCTS
BY MANAGING THE WHOLE VALUE IMPROVEMENT CYCLE

AND

SERVICES

MARTYN R. PHILLIPS
Abstract
The performance of programs, projects, products and services is inextricably linked with quality,
value, functionality and risk. Most significant value and performance enhancement gains are made
through strategic decisions and in conjunction with stakeholder input. This typically involves the proactive and continuous management of several interfaces and complex relationships. Each of these
aspects involves its own set of considerations.
Due to tight time pressures, the application of some of todays management practices can be
compressed to the point of becoming dangerously ineffective or even misleading. The key to effective
allocation of time and staff resources is to demonstrate that defining and enhancing value is not a
quick fix, but an integral part of the project initiation and continuing development process. After all,
how else can a process that integrates and refines inputs across a variety of interests and
professional disciplines be truly expected to be effective for long lasting agreement and results?
This comprehensive and integrated approach provides an efficient management framework for
strategizing, conceptualizing, developing and executing programs and projects, for continuous
performance/value improvement, and for demonstrating that best value has been derived. Maximum
effectiveness requires completion of the whole value improvement program, rather than the commonly
observed ad hoc interventions. This overcomes the oft observed corporate problem of lack of followthrough (caused typically by lack of continuity and emerging higher priorities of the day).

Author details
Martyn R. Phillips, CVS, CVM, FICE, FCIWEM, P.Eng.
Martyn has been involved in systems planning and development, program implementation,
construction and network operations for various programs, projects and services since starting work in
the field of building and civil engineering in1964. For several years now, he has conducted value and
risk management consulting and training assignments for a wide range of clients and topics
worldwide. His leadership of group problem solving situations has resulted in expediting approvals
and identification of significant opportunities for saving time and cost for a number of high profile
projects and services in both the public and private sectors, in many different countries and diverse
cultures.
Contact details:
Phone:
+1 780 460 1625
Email:
mphillips@teamfocus.org

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Delivering Value Today and Tomorrow

ACHIEVING HIGH PERFORMANCE PROGRAMS, PROJECTS, PRODUCTS

BY MANAGING THE WHOLE VALUE IMPROVEMENT CYCLE

AND

SERVICES

MARTYN R. PHILLIPS
Introduction
Business improvement processes come and go. Their acceptance and effectiveness depend largely
on timing - in terms of recognition of needs, personalities involved, particular circumstances of
application and of course demonstrable success for promoters and project staff. A common factor for
success lies in acknowledgement of team dynamics, language of the customer and links to
corporate leadership. A broader and longer term view of programs and projects is required.
The paper introduces this holistic approach for saving considerable time and cost particularly for
owner organizations and agencies. It builds on the traditional value engineering / value management
methodology and is conducted through a systematic long-term process of analytical and innovative
explorations that culminate in firm, tested proposals for business improvement. The process provides
a comprehensive framework for program planning, solving of complex problems, issues resolution,
concept development, project implementation and follow-through. It guides formulation of strategies
as well as the development, implementation and optimization of a range of various types of projects,
products and services. In doing so, the process maximizes team performance and profitability while
managing risk at the appropriate comfort level for different organizations. For the purpose of this
paper, the term project generally also embraces the terms program, product and service as
appropriate to a particular circumstance.

Background
Management staff are often trapped in a world of tight timelines and high expectations of output. Yet
so often they are judged on how well they manage the grey (i.e. undefined) areas. Staff are
expected to be adept at alternating their focus back and forth from big picture to detailed nuts and
bolts issues, as well as deal well with a range of immediate and longer term priorities. They have to
manage the dilemma of dealing with the conflicting demands of interpreting fuzzy and intangible
direction versus controlling performance tightly and reporting factually. Senior management makes
recommendations for investment decisions only to be surprised many months or perhaps years later
that things did not work out as expected. We have probably all seen and heard of excellent ideas that
have been thwarted by lack of testing, follow through and loss of individual sponsors, champions or
key designated project staff.
Management of interfaces, wider communications and succinct reporting, as well as dealing with
fuzziness and uncertainty of needs and costs are areas of particular concern. The fundamental
issues of project need, scope, exclusions, values, priorities, constraints, organization, roles,
responsibilities and control procedures should be addressed early, with a robust framework put in
place to ensure strategic performance alignment and delivery to plan. Due to tight time pressures, the
application of many of todays management practices can be compressed to the point of becoming
dangerously ineffective and misleading.
Value is supposedly built implicitly into program and project development. The issue here is: using
whose definition of value and to what extent? There is sometimes a reluctance to engage in a formal
process to ensure best value and reduce risk. A variety of excuses is offered, but it is likely fear of
potential embarrassment that is at the root of resistance. After all, from a corporate perspective, what
right do managers / employees have to put their own personal interpretation on instructions and to
obfuscate issues, potentially leading to a reduced corporate gain? Stakeholders need assurance that
all, not just some, interests are being safeguarded.
Many definitions of a value delivery process exist. Progress has been made around the world in
formalizing and defining such processes. However among this large array, there is not universal
agreement on the definitions or practice, other than the earlier the application, the more effective it is.
Some applications are very narrow and restrictive, others are broad and lacking in specifics. Most are
applied as interventions and thus can be viewed as being bureaucratic formalities thrust upon the
project manager and hurdles to be cleared as quickly as possible. Suffice to say some managers
attempt to subvert the formal process or try to defer it until such time that it will be too late to apply.
All this misses the advantages of a longer-term, continuous, integrative process that navigates the

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program and project through the managerial minefield and secures timely approvals, while maximizing
value and performance in the end-product or service.

Context
In todays world of rapid change, faster communications and emerging technologies, there are widely
differing stakeholder needs and expectations for clients and their project managers to reconcile.
Many well-intentioned undertakings have led to costly overruns, disruption in service, over-complexity,
disputes, poor overall value for money and slower than expected pay back. A major challenge,
particularly for large organizations, is in being able to demonstrate to shareholders and other
stakeholders that best overall value is being provided. Managing the process of identifying and
delivering improved value requires a lot of sensitivity towards a variety of issues and people.
So often, project development and / or implementation teams are unaware of the value expected from
their undertakings. For example:
Business people are often absent during project development
Return on investment criteria are not evident and therefore not necessarily attained
Key knowledgeable people are lost to the next critical project
Information may not be passed on and many assumptions may have to be made by the next
wave of project personnel.
Improvement projects are constantly implemented yet the return on investment and expected value is
demonstrably not always accomplished in line with the business case that was used to obtain project
approval. Every allocation of resources or other monetary investment should yield an appropriate
return. If not, then this would represent a lost opportunity elsewhere in the organization. Most
significant value and performance enhancement gains are made through strategic decisions and in
conjunction with stakeholder input. This typically involves the pro-active and continuous management
of several interfaces and complex relationships. Each of these aspects involves its own set of
considerations. Todays competitive environment requires us to embrace approaches that maximize
productivity and performance in the pursuit of achieving best value for shareholders and other
stakeholders. The currently established business as usual mode often exhibits programs and
projects that suffer from implementation delays, stakeholder frustration and requests for additional
(unbudgeted) expenditure. Sound, long-lasting decisions are pre-requisites for business success and
the reputations of all involved. Effort spent in developing unambiguous, acceptable strategic direction
is undeniably a good investment. To guide sustaining decisions, participants should view the whole
picture before focusing on specifics.

Performance and Value

Value is determined not solely by the producer or promoter, but in concert with the customer / user.
Nor is value related solely to money, as value criteria may include, for example, aesthetics,
functionality, ease of operation & maintenance, fastest time to market and sustainability. Clients are
really seeking to buy overall performance improvement, not just a sequence of traditionally practiced,
project development activities. Good project performance includes satisfying a range of stakeholders
who may have differing views, values and thresholds of tolerance for perceived risk. All too often,
capital projects have been planned and implemented with too little consideration for how they would
be operated and maintained efficiently, or interface with other programs. Similarly, operational
improvements may not fit with strategic aims.
Some requirements for the success of projects and value programs are listed below.
Provision of strategic direction
Clear definition of stakeholders expectations and needs
Ensuring key objectives are achieved
Ensuring risks are managed appropriately
Verifying that the organizations resources are used responsibly
Delivery of the promised resultspredicted performance gains achieved on time and within
the forecast return on investment, over the long term.
Programs, products, projects and services not meeting their targeted benefits are all too common.
These undertakings are normally charted on the premise that they are required to meet specific
business needs. It is important that decisions are based on an understanding of the full cost of
ownership of an asset. Due to changing business dynamics, the business need(s) may change
before project completion. Particularly in complex business environments, it is important that
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managers are able to have a reference framework for ensuring confidence in project delivery to suit
projected and changing conditions. Dealing with uncertainty, managing risk and assuring best value
are closely linked. Uncertainty exists typically due to unknowns and sensitivities in information and
conflicts in stakeholders viewpoints or attitudes. The assessment and apportionment of risk in
dealing with that uncertainty is a major factor in determining true value and the appropriate payment
price. For maximum effectiveness, project promoters and implementers must think and act outside
their normal zones of comfort. Thinking outside the comfort zone requires people to be receptive to
new ideas and to those of others. This calls for less defensive and broader thinking, such that the end
result is not just more of the same. Change has the potential for significant disruption by challenging
organizational paradigms and personal comfort zones. There must be ownership of the process to
ensure that the change process delivers the expected results. There is great temptation for project
staff under budgetary and schedule pressures to circumvent divergent thinking by converging too
quickly on a set of solutions that has worked elsewhere.
It is wise to understand senior managements expectations, as follows:
Boardroom Expectations:
Front-end Alignment
Strategic framework to manage change and stakeholder engagement
Clearly defined concepts, understanding of risks, choices and implications,
Performance Enhancement
Value enhancement / cost improvement
Delivery of sustaining results - continuing improvement process and management of
resultant benefits.
In contrast, some common complaints from frustrated middle managers are:
Moving targets
Over aggressive delivery dates
Changing objectives
No follow-through in the value chain
Shareholder delays
Lack of incorporation of lessons learned from
Changing scope
previous work
Re-work
Improvement ideas not implemented
Slow decision-making
Lack of management support.
The trick to accomplishing successful value improvement programs and individual assignments is to:
Understand the true objectives from a higher management perspective
Plan and verify thoroughly, from inception to completion; adhere to a holistic framework
Select the appropriate steering group, core team and support; communicate regularly
Ensure completion of data discovery and related analysis
Regulate the pace of proceedings to suit the situation
Follow through on all output actions and consult stakeholders.
This requires a systems approach to be instituted from the outset and followed through to execution
and follow-up.

Different VM Approaches
There is often confusion over the several, various value terms. To some people, these terms are
synonymous; to others, each term may have a specific interpretation. Within the value family of
terminology, there are the following additional expressions: Value Analysis, Value Assurance, Value
Control , Value Engineering, Value Improvement, and Value Planning.
The following list illustrates an additional range of views on value-related terminology:
Value methodology (VM) American
o Originally value analysis (VA), then value engineering (VE)
Value management (VM) European, Australia
Value improving practices (VIPs) process industry. VE is one of 17 VIPS
A US research focused institute, lists 44 Value management practices.
o Each of these practices must be unique, documented, optional and not part of
everyday management tools).
With such a disparity of interpretations, it should not be a surprise that expectations of value
improvement work, what it can do, what to expect, etc, can differ considerably. A well orchestrated,
formal, value improvement process is extremely powerful, but it needs to be very carefully planned
and controlled for complete success. The established Value Methodology1 and other comparable
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approaches provide excellent means for accomplishing this. Such approaches encompass tools and
techniques to address the interrelated aspects of:
Stakeholder issues & concerns
Operations & maintenance requirements
Stakeholder values
Costs (capital and whole life)
Project functionality
Potential project risks
Implementation schedule
Critical decisions.
Implementation obstacles
Some different approaches to conducting value assignments are as follows.
Workshops of 5 days or more, preceded by preparatory work and followed by closure
activities
Recent trend toward short workshops such as 1-day duration (or less). Sometimes it seems
like workshops are conducted as check in the box activities to demonstrate due process
Combined value and risk management workshops
Longer term, integrated process of risk management and value assurance.
A challenge when using VM in todays over busy society is the differing interpretations of what it
really is and how it is best conducted. Also, its challenging approach when reviewing existing plans
and designs can lead to defensiveness of some participants. The traditional VM process, while
typically very effective, does not always fit comfortably within the mode of operation of 21st century
business activities. It is important to take a big picture look at reasons for undertaking a value study
as well as the expectations of senior management and the broader stakeholder audience.
Today, more than ever, there are many variables and viewpoints voiced in any project, large or small.
Application of the value methodology provides a basic framework and a tool set that addresses issues
of potential misunderstanding and misalignment at the start of a project. In many cases it results in
significant reductions in the whole life costs of the final project. A major challenge, particularly for
large organizations, is in being able to demonstrate to shareholders and other stakeholders that best
overall value is being provided. Managing the process of identifying and delivering improved value
requires a lot of sensitivity towards a variety of issues and people.

Focus
Projects often suffer from the following characteristics:

Despite the availability of an abundance of project management techniques and training,

together with a plethora of professionals in most large organizations, many projects fail to
satisfy all shareholders and users
A missing link between,
(i) the day-to-day administration of projects to satisfy institutionalized procedures, and
(ii) the objective, strategic thinking required to achieve best overall value and stellar
performance for the corporation, stakeholders and external partners.
Missed deadlines, overspent budgets, reduced functionality, commissioning and operational
hiccups, together with shareholder dissatisfaction and other stakeholder concerns are all part
of an unacceptable value gap.

Consider now the following value management needs as to how they might apply to a particular
program / project situation:

Establishing unambiguous strategic direction

Identifying a comparable range of concepts for comparison and selection of the most
appropriate to a given situation
Optimizing functionality of the selected concept
Reducing program / project development time
Balancing capital and whole life costs
Rescuing a stalled program or project
Optimizing an ongoing process
Assurance of best overall value, managed risk and continuing value improvement.

There are several project approval considerations and interrelationships. Quite often a key piece of
the puzzle is missing, but the project proceeds regardless, only to founder seriously at a later stage.
It is clearly inappropriate for management to deny the problem or to shuffle the problem off to the next
phase of the project development and execution. A comprehensive, but easy to interpret, system of
cradle to grave checks and balances is required to maximize corporate performance. Thinking
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outside their comfort zones requires people to be receptive to new ideas and to those of others. This
calls for broader and less defensive thinking, such that the end result is not merely more of the
same. Re-skilling of organizations and individuals may be necessary to produce the dramatic
improvements in value that major corporations are demanding. A thorough understanding of the
value chain (or value stream) and functional requirements is required by key project participants.
A well-communicated framework is necessary for deriving balanced solutions to complex and divisive
issues, taking into account also financial, legal, political, regulatory, schedule, resource and technical
implications. This is accomplished through refocusing business programs and resources - by proper
identification and understanding of the issues, stakeholder values and strategic intent at an early
stage, together with involvement and clear focusing of the appropriate team members at the right
times. Outcomes are based on a common understanding of needs, constraints, key concerns, major
risk areas, life-cycle impacts and shared/negotiated team values.
Good program and project planning starts with clear definition from the outset and a holistic
framework supported by senior management. This involves issues such as commercial strategy,
financing, inter and intra organizational arrangements, emerging technology, contract philosophy,
socio-economics, environment, resourcing, etc. All this can be outside the range of training, expertise
and experience of many project managers. A broader and longer term view of programs and projects
is required. The fundamental issues of project need, scope, exclusions, values, priorities, constraints,
organization, roles, responsibilities and control procedures should be addressed early, with a robust
framework in place to ensure strategic performance alignment and delivery to plan. One persons
view of a successful project can be quite different from that of another. Focus varies with the role of
the particular stakeholder. A project may satisfy criteria for schedule cost and quality parameters, but
still not succeed through loss of political or customer support.
Program/project definition and performance requirements must be developed early and in consultation
with representation of all stakeholders. Project opportunity, risk and best value are critical,
interrelated considerations. Adequate allowance should be made for dealing with areas of uncertainty
(e.g. condition, data, trends and forecasts) and adjustments made as the uncertainty reduces. Risk
and value need to be managed more deliberately and systematically than generally in the past. From
a customer and executive perspective, the real issue is that of performance to expectations and,
often, changing external factors. A common test of project success is whether it still meets the
(sometimes loosely defined) requirements for business success. This requires an understanding of
the sponsors business objectives and operating characteristics along with the key issues and
requirements of other key stakeholders.
Managing project value and risk requires a good understanding of stakeholder expectations (which
may well change during the project development and implementation process). This requires
interaction with and understanding of stakeholders stated and implied needs. Every project is unique
in terms of conditions and constraints, stakeholders and their requirements as well as timing and
budgets. Typically, participants in projects and in related value and risk studies go through their own
individual thoughts and attitude transition process; this and the related impacts on group dynamics
should be recognized. There is a high likelihood that implementation of a revised program of work or
a new project will cause change. Projects which effectively integrate change management as a part
of their business change tend to be more successful and better received by those impacted by the
change. In contrast, process improvement disciplines that are engineering centric and problem
solving in nature tend to ignore change management and thereby experience a higher degree of
employee resistance and difficulties during implementation.

Value Assurance
Value assurance may be viewed as the umbrella term that ensures and demonstrates to higher
management the effectiveness of many other management processes. The value methodology is a
key technique to guiding analysis, formulation, testing and stakeholder consensus building. Value
assurance is a key feature of the Value Search2 approach to provide more predictability and certainty
of success in program/project development and implementation. It has a broad application to
programs and projects, as required to demonstrate to the highest levels of management that the most
appropriate aspects have been addressed adequately and that best value for money is being
provided. Properly applied, value assurance (VA) is a pro-active and holistic approach to preventing
or mitigating such problems, while delivering superior results in a timely manner. Detractors of the
need for a value assurance process might well argue against yet another management process.
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However, if all of the foregoing aspects are required and are indeed provided, then confirming their
existence and adequacy should not be a burden. In practice, such a process ensures that the
expectations / results gap between management levels is closed, and that commitments are followed
through.
This is a high-level, high performance business and technical improvement process approach with a
set of techniques used to guide improved initiation, development and implementation of programs,
projects and services. The VA approach is particularly effective for situations with a complexity of
issues, diversity of stakeholder opinions and disparity of expected outcomes. At its highest level, the
value assurance process supports senior management decision-making to focus on projects that yield
the highest value and to assist in the planning and control of strategically important improvement
initiatives. Focusing only on lower-level, sub optimization projects is unlikely to contribute to overall
performance improvement goals. Value assurance ensures that the appropriate processes are in
place to achieve the business goals, and how well they are being applied, as well as what is
necessary for the processes to remain effective to suit changing conditions.
Value assurance ensures, and demonstrates to senior management / stakeholders, that the most
appropriate aspects have been addressed adequately and that best value for money is obtained
within controlled risk parameters. Activities extend across a broad range of activities and timescales,
from strategic alignment of stakeholder expectations and business plans, through confirming best
overall fit of developing project proposals to optimizing an in-service system or facility. The process
promotes a balanced, bottom-line performance approach through equitable treatment of
considerations of:
Finance
Functionality, effectiveness and quality
Environment
Output performance (budgetary and scheduling)
Social aspects
Stakeholders wishes and needs.
Accordingly, value assurance should involve a wide range of roles drawn from wherever necessary,
over a continuing period of time. Unlike quality assurance, the skills to perform value assurance must
be drawn from the key performance people who are responsible for charting a program or projects
success. The key to proper time allocation is to demonstrate that defining and enhancing value is not
a quick fix, but an integral part of the project initiation and continuing development process.
The VA approach encourages establishment of an holistic framework with specifically identifiable and
verifiable stages / steps such as listed below.
Stage I: Initiation & Analysis
1. Mandate, Scope, Opportunity, Strategic Issues, Boundaries, Team Composition
2. Stakeholder Expectations & Criteria, Needs Assessment, Communications Plan
3. Project Metrics and Base Case Performance Vs Requirements.
Stage II: Exploration & Potential Options
4. Input Summaries, Innovation & Judgement
5. Development & Testing of Proposals
6. Selection, Integration & Planning.
Stage III: Consultation & Approval to Implement
7. Interim Read-out & Feedback
8. Broad Stakeholder Consultation & Fine-tuning of Proposals
9. Recommendations & Approval(s) Package.
Stage IV: Manage the Change
10. Familiarization of Implementers / Training of Users; Handover Package
11. Briefing of other Parties & Confirmation of Buy-in
12. Implementation, Monitoring, Reporting & Adjustment.
These stages and steps apply to both the long-term application (e.g. months / years) and to shortterm applications (i.e. weeks).
The relatively isolated, short, sharp, flash-in-the pan value
workshops that are so common today fit into Stage II, Step 4. Mini-workshops for continuing analysis
and risk management apply to several of the various steps.
In keeping with this approach there are two contrasting yet complimentary applications of value and
risk related work:
a) Concept engineering through early, strategic focusing for formulation potential options and a
clear, unambiguous, path forward. This enables smoother decision-making, approvals, funding and
subsequent orientation of the implementation team
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b) Value improvement and assurance through the Program / Project Evaluation and Enhancement
Review (PEER) process for continuing value /performance enhancement to finesse for optimum
quality, functionality, schedule and cost parameters.
A blend of a various management tools and techniques is utilized as appropriate to the circumstances
and requirements of the particular situation.

Conclusion
The outcomes of programs, projects, products and services vary significantly, both in nature and in
degree of success. Success is a relative term and its measurement varies greatly. Many factors
dictate the likelihood of success, not least of which is the overall management approach and culture of
an organization. Within this approach lie aspects of attitude, training, processes and procedures.
Most value enhancement gains are made through strategic decisions and in conjunction with
stakeholder input. This typically involves the pro-active management of several interfaces and
complex relationships. Effective interfacing and issues management require recognition of these
considerations, together with the need for good communication and consultation with a wide variety of
project stakeholders.
Many program and project delivery interfaces exist. Examples are:
Budget, schedule, quality and functionality
Planning, analysis, design and implementation
Procurement, purpose, scope and resources
Communication, consultation and politics
Best value, optimum performance and balanced risk.
Each of these aspects involves its own set of considerations. Effective interfacing issues
management and requires recognition of these considerations, together with the need for good
communication and consultation with a wide variety of project stakeholders. Stakeholders have
different roles as decision makers, or those whose endorsement is key, or others who can influence
the outcome and the extent to which the project or service will be favourably received. Specifically
targeted messaging to a range of stakeholders is paramount.
A holistic value assurance approach can address the foregoing through a comprehensive, integrated
guiding approach to derive optimal performance. Maximum effectiveness requires completion of the
whole program, rather than the commonly observed ad hoc interventions. This overcomes the often
observed corporate problem of lack of follow-through (caused typically by lack of continuity and
emerging higher priorities of the day). Immediately noticeable benefits include:
Clarity of purpose
Improved teamwork, synergy and morale
Positive impact on product or service performance, quality and/or functionality
Accelerated development periods
Less uncertainty of outturn cost and schedule
Better stakeholder confidence / satisfaction.
However, to attain these benefits, diligent planning, senior managerial support and follow-through are
required. Attention to every one of the twelve steps within the four stages advocated above is
recommended. This comprehensive and integrated approach provides an efficient management
framework for strategizing, conceptualizing, developing and executing programs and projects, for
continuous performance/value improvement, and for demonstrating that best value has been derived.
Appropriate fields of application include infrastructure, systems and service delivery for energy,
healthcare, heavy industry, housing programs and building, learning, major construction,
transportation and utilities. Opportunities for application in product manufacturing are presumed to be
similar.

References
1. SAVE International, 1997 (under revision 2006), Value Methodology Standard, United States
2. Phillips, Martyn R. and Thompson, M. J., 2004, revised 2006; Value Search Aligning the Road to
High Performance Programs, Projects, Products and Services; Part 2, Assuring Best Value and
Managing Uncertainty; Pages 2-13 to 2-22, 2-25 to 2-28 and 2-170 to 2-202; Rosslyn Publishing,
Canada
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