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

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