Total Value Management is a new management approach that uses the techniques of Value Management/Engineering (VM/VE) and integrates it with the concept of Total Quality Management (TQM) to optimize whole life sustainability of infrastructure development from concept to execution to operations management.

1. TOTAL VALUE MANAGEMENT IN A PUBLIC PRIVATE
PARTNERSHIP ENVIRONMENT
Health Capital Investment Branch
By: Silbert Barrett, BAA
Framework for Creating Value Investment through
Integrated Capital Planning
Ministry of Health and Long-Term Care
Presented to:
February 5, 2014

2. Background
Recognizing the growing infrastructure deficit and its implications, the
Ontario Government has taken some important steps in infrastructure
investment:
 Harris government with the introduction the Capital Investment Plan Act
(RSO 1993)
 The Province's Building a Better Tomorrow (July 2004), Policy document
outlined a framework for planning, financing and procurement for Ontario's
public sector.
 This framework applies to infrastructure initiatives undertaken by Ontario
government ministries and agencies.
 Infrastructure Ontario was created under this framework to engage Private-
Public Partnership in Infrastructure financing and development through an
innovative approach called Alternative Financing and Procurement (AFP).
Total Value Management in a Public
Private Partnership Environment 2

3. It establishes clear guidelines to achieve its
objectives based on these Principles:
 Protection of the public interest;
 Value for money;
 Appropriate public control/ownership structure;
 Accountability ; and
 Transparency.
Total Value Management in a Public
Private Partnership Environment 3

4. Business Case for Major Infrastructure Cost
Planning & Management-Life Cycle Cost Analysis
Total Value Management in a Public
Private Partnership Environment
100%
Detail Design Tender
SAVINGS
0%
COST
QUALITY
LEGEND
TOTAL LIFE CYCLE COST MANGEMENT
Opportunity for Cost Savings
TIME
ConstructionConcept
4

5. Optimizing the Cost/Quality Curve
Life-cycle cost analysis (LCCA) is a method for assessing the total cost
of facility ownership.
 It takes into account all costs of acquiring, owning, and disposing of a
building or building system.
 LCCA is especially useful when project alternatives that fulfill the
same performance requirements, but differ with respect to initial
costs and operating costs, have to be compared in order to select the
one that maximizes net savings
Total Value Management in a Public
Private Partnership Environment 5

6. Life-cycle cost analysis
This begins at early stage project planning:
 Development of a Healthcare Planning Charter
 Healthcare Needs Assessment Study
 Developing Programs and Service Plans
 Program and Service Elements should drive Facilities Master Plan
Total Value Management in a Public
Private Partnership Environment 6

7. Optimizing the Cost/Quality Curve
Total Life Cycle Cost Management
Components of Facilities Master Plan:
 Key elements of the program and service plan
 Physical and Cost elements of the project
 Program Budget and Project Cost Limit developed by cost
consultant
 Program and Project Cost Management within define project
parameter established along the cost/quality curve
Total Value Management in a Public
Private Partnership Environment 7

8. Optimizing the Cost/Quality Curve
Total Life Cycle Cost Management
Total Value Management in a Public
Private Partnership Environment
Opportunity For Cost Savings
Detail Design TenderConcept
POST CONSTRUCTION OPERATIONS PLAN
ASSET LIFE
Construction
COST PLANNING & VALUEENGINEERING SCHEDULING AND CONTROLLING-PROJECT COST MONITORING LIFECYCLECOST MANAGEMENT
Time
Effects of Deferred
Maintenance and
Renewal
Planned Renewal
Amortization rate adjustedCONDITION
8

9. THE END
(Questions)
Total Value Management in a Public
Private Partnership Environment 9