Presentation to the PCMG (Pharmaceutical Contract Management Group) on Value Management

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Presentation to the PCMG (Pharmaceutical Contract Management Group) on Value Management

Presentation to the PCMG (Pharmaceutical Contract Management Group) on Value Management

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  • 1. Value Management
    A collaborative approach to customer satisfaction
  • 2. Collaborative approach to
    Define and meet the business needs
    Focus on value rather than cost
    Consider options using a structured approach
    Prevent unnecessary expenditure and waste
    Aims of Value Management
    Client
    Supplier
    1
    Supplier
    2
  • 3. Traditional Approaches
    Concept
    “Traditional behaviour is mostly about supplier margin not a common purpose”
    Design
    Procurement
    “Often the design is done in complete isolation to the implementation”
    Implementation
    “Risk management is often concerned with responsibility for the additional cost not fixing the root cause”
  • 4. A traditional procurement approach significantly exceeded budget of £20m
    Value management workshops “brought the team together”
    They agreed clear mission and values
    The result was an improved understanding of client requirements
    A truly integrated team was built
    And the final cost was £19.5m
    Case Study OneWithington Community Hospital
    Source: OCG Value Management in Construction
  • 5. Aim to improve capital productivity
    19,500 sites worldwide
    Spend $400m – $700m per annum
    Resulted in cost saving of 40%
    Two weeks saving in implementation time
    Long term partnership started in 1996
    Case Study TwoGlobal Alliance BP / Lend Lease
  • 6. Establish Integrated teams to focus on value not cost by:
    Understanding the challenge and the focus areas
    Identifing alternative courses of action
    Analysis and evaluation of proposals against defined criteria
    Value ImprovementPractical Steps
  • 7. Standardisation through modular design, common practices and processes
    Transparency though IT real time access to information about status
    Strategic procurement by using global buying power
    Online bidding for suppliers, but with focus on overall cost saving not just the lowest price
    What leads to the improvements?
  • 8. Culture of transparency means
    Joint leadership and commitment from the top
    Rewards for organisations and individuals against balanced scorecard, not just cost
    An integrated knowledge management database
    A flexible work force with strong team working (secondments etc)
    Multi disciplinary team working
    Open book finance
    Value Improvement Culture Not Just Process
  • 9. Bridging the Gap
    Concept
    VM 1
    Design
    VM 2
    Procurement
    VM 3
    VM 4
    VM 5
    Implementation
  • 10. Diagnosis of the issues with the client and suppliers
    Workshop with the integrated team using VM techniques to generate solutions
    Follow up to ensure agreement of actions
    VM 1: stakeholder needs, objectives and priorities
    VM2: project definitions and options
    VM3: value engineering to reduce cost
    VM4: handover review
    VM5: lessons learned
    Workshop Format
    Different workshops at different stages
    Value Improvement Process Workshops
  • 11. Are You Ready for Value Improvement?
    Value Management
    Cost Management
    Supplier is involved
    in the concept / design
    Client specifies
    design alone
        
    Focus is on the root cause of the risk
    Focus is on who pays for the impact of the risk
        
    Payment is based on balanced scorecard
    Payment is based on fixed price
        
    Transactional relationship with suppliers
    Long term partnership with key suppliers
        
    Culture of cross
    fertilisation of ideas
    Islands of functional
    knowledge
        
  • 12. Parallel Project Training
    on-line APM
    e-learning
    Public & in-house
    training
    Project Management Training for Clinical Trials