A Note on VIPs
Typically, Value Improving Practices (VIPs) are applied within an organization's formal, gated project management process. There can be some overlapping of individually applied VIPs. VIPs are not “business-as-usual”; by definition, VIPs must not be routine. Typically, VIPs are out-of-the ordinary practices used to improve cost, schedule, and / or reliability of large capital construction projects. VIPs are applied early in the project, at the definition or Front End Loading (FEL) stage. Only practices with a demonstrated, statistically reliable correlation between use and better outcomes are deemed VIPs.”
The number and definition of VIPs can vary between organizations.
Example application areas are: oil and gas, petrochemicals, manufacturing and pharmaceuticals.
It will be seen that there are many related applications and there can be some overlapping of individually applied VIPs. Other VIPs, such as constructability and value engineering are applied more than once, as needs dictate. In practice, the traditional value methodology is an analytical and creative consensus building process that guides the application and achieves many of the stated objectives of the other VIPs.
Some large industrial projects are recognizing and enforcing the application of a sequence of stage gates and their own list of preferred VIPs. A VIP must provide an improved project outcome. Further, a VIP must not improve one outcome at the expense of another. Newcomers to project management may well be confused by the vast array of terminology and apparently similar techniques. It is not surprising, therefore, that many people prefer to remain with a minimal number of familiar techniques and resist taking on any new ones. Caution must be exercised to not use the VIP process as a check box system in order to just give the impression that best value is being attained.
List of VIPs
Several of the intended VIPs’ objectives can be achieved quickly and effectively through an integrated and selective application of the value methodology.
The following text outlines several VIPs. The list is neither exhaustive nor universally agreed. Many of the VIP descriptions indicate outcomes, rather than processes. These outcomes are natural products of a comprehensive value enhancement process. It could be argued that some are just special practices unique to a particular circumstance.
A. Class of Facility Quality
Definition of the best value facility classifications to meet the Business Plan requirements in terms of specific aspects.
B. Technology Selection
Identification and evaluation of the technology most appropriate to meet the defined business need.
C. Process Simplification
Reduction of unnecessary investment and operating processing costs.
D. Design to Capacity
Avoidance of over-sizing components and systems to meet the defined business need.
E. Waste Minimization
Reduction of waste at source and re-use of waste for cost-effectiveness.
F. Customized Standards / Specifications / Practices
Customizing of standards, specifications and practices that are appropriate to the application and not excessive to the defined needs of the specific facility.
G. Energy Optimization
Maximization of total return on investment by judicious selection and use of plant utilities and equipment.
H. Facility Optimization
Reduction in overall return in investment and operating costs by combining or making unnecessary one or more chemical or physical processing steps.
Analysis of a design by experienced construction personnel to reduce costs and save time during construction.
J. Value Engineering
Identification of alternatives for meeting functionality and quality requirements at the least life cycle cost.
K. Predictive Maintenance
An approach to maintaining a facility whereby equipment is monitored and repairs are made before failure, thus increasing uptime, product quality and yield, as well as stretching effectiveness of capital investment.
L. Life Cycle Impact Assessment
In conjunction with external stakeholders, a triple bottom line (social, environmental and financial) approach to determining most appropriate solution for the total life cycle.
M. Systems Optimization
Efficiency reviews to optimize an in-service process or facility.
N. Reliability Improvement
Provides an effective way to cost justify maintenance activities, decrease equipment downtime and identify solutions with a high return.
O. Risk Assessment and Management
Risk-based decision making and management of risks.
P. Supply Chain Optimization
Integration of the entire supply chain (e.g. suppliers and installers) for full potential in terms of optimizing cost, schedule and quality.
Trust based process that focuses owner and service provider(s) on creative cooperation and avoidance of confrontation for mutual financial benefit.
R. Performance Criteria & Measures
Project Performance Criteria and Measures are used to provide stakeholders with an opportunity to explicitly model project performance, especially in terms of scope, functionality, schedule and budget.
S. Design to Cost
Controls cost throughout the design process by defining not-to-exceed cost targets for each system and subsystem of the project or product.
Application of VIPs
With such an array of individual VIPs to choose from, a project specific VIPs scoping review should be undertaken and a VIP plan defined.
This should include which VIPs will be used, timing of application, key team members and the required outcomes. It is better in practice if there is consistency of VIP team, value methodology and risk management core team members. VIPs and their objectives are generally best accomplished not by addressing each one separately, but by judicious selection, combination and timing of application.
Value engineering is an effective process for achieving the defined deliverables of the other Value Improvement Practices. Most VIPs are, in practice, the objectives or focus of the application of the value methodology. A typical Value Study will encompass the objectives of several VIPs.
Incorporating Lessons Learned
Lessons learned are incorporated, as appropriate, from other projects. Capturing of lessons learned can follow the process steps of: Identify lesson/practice; Document; Validate; Communicate; Extract; Transfer; Apply.
This should be done on a progressive basis rather than waiting for the final close-out and the close-out report.
Each VIP Champion should be made responsible for the lessons learned process in his/her area.