Value Improving Practices (VIPs) for Capital Projects

Steven M. Buck Manager, Capital Projects February 2010

Motivation for Value Improving Practices

Value Improving Practices were introduced in the US in the 1930s as a method to challenge project scopes and aimed at designing and building the bare minimum for the purpose According to US literature the consistent utilization of VIPs can save 5 10% of capital investment cost Value Improving Practices improve alignment between business and engineering stakeholders due to intensified dialogue and detailed clarification of project objectives and priorities

Value Improving Practices provide a systematic approach to creatively challenge and document project decisions to enhance the level of quality, cost effectiveness, and reduce project execution time.
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How does VIP work?

Project Team Challengers Hard working Experienced in technical areas, VIP protocol and projects, not part of project team

VIP Asking questions, creating ideas, creating more ideas, evaluating options, adding value

Project Team Smart working

VIP: A Contribution to Competitive Engineering and Successful Projects

VIPs will provide: A systematic approach to challenge the team Optimization with total cost of ownership Align business goals and project objective/priorities Document success and best practices

Value Improving Practices Impact

VIPs Analysis
Potential to Impact Value Explore

Appraise/ Select

Define

Execute

Operate

Project Phase

BASF VIP Practices

VIP 1. 2. Project Catcher Project & Site Classification Content Workshop for processes from research Fix the project task, characterize the project

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4. 5. 6. 7. 8. 9.

Process Optimization
Energy & Wastes Logistics & Site Reliability, Availability & Maintainability Process Control & Operation Management Function, Cost & Risk Analysis Execution Strategy & Risk Assessment

Identify competitive process variants; improve technical implementation

Reduce manufacturing costs and achieve sustainable conservation of resource Competitive integration of the project into supply chains / the site / Verbund. Investigation in minimal Total Cost of Ownership and maintenance strategy project and plan specific in agreement with the site Optimal economical concept for process and operations management Determine the minimum Total Cost of Ownership for fulfillment of the defined process function Develop best-possible execution/procurement strategy, address and assess relevant risks Optimization plant erection and planning by consideration of SHE, Civil and Construction requirements during Engineering Optimization transfer construction to start-up (after mechanical completion)
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10. Constructability 11. Commissioning & Start-up

Value Improving Practices for Large Capital Projects

Timeline Gates & VIPs

Project & Site Classification

Clarification and alignment of Project Objectives
Determine if project is ready to start basic engineering Decide what Value Improving Practices should be applied Initial discussion of Division of Work and project organization

Process Optimization

Systematic review of the process concept to identify opportunities for optimization

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Energy & Wastes Optimization

Evaluate process concept for energy optimization and waste minimization
Heat integration (Pinch Analysis) are considered for energy optimization Project resultant wastes are traced back to their generation to determine if alternate steps can reduce or eliminate wastes

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Logistics and Site Optimization

Inbound and outbound material flow
Transportation modes Storage requirement

Site congestion issues

Loading and unloading requirements Manufacturing strategy Capacity flexibility Coordination with Site Master Plan
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Reliability, Availability & Maintainability

Review to determine optimum maintenance strategy and project concept to achieve minimum total cost of ownership to meet required plant availability
Define spare parts strategy Standardization of equipment Special predictive and preventive techniques

Identification of special cleaning, start-up and maintainability issues

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Process Control and Operation Management

Review application of advanced process control techniques
Alarm management Governmental reporting requirements

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Function, Cost and Risk Analysis

Evaluation of alternatives to a achieve the functionality of the various project parts
Risk assessment of alternatives

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Execution Strategy & Risk Assessment

Review of Procurement Plan and Execution Strategy Identification and assessment of project risks Development of Risk Management Plan to mitigate risks

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Constructability
A series of reviews to consider construction planning, execution and strategy issues Claim avoidance

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Commissioning and Start-up

Develop overall commissioning and start-up concept for project
Identification of system boundary conditions System sequence and turnover

Commissioning time schedule and resources

Special testing requirements Safety concept related to system turnover

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VIP Example

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VIP Results of How the Tortoise Won !!!

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VIP Example: Buying a Vehicle vs a Project

$9,990

$190,000

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VIP Example: Buying a Vehicle vs a Project

VEHICLE
Objectives/Cost/Timing Truck/SUV/Car/Specifications Diesel/Gasoline/Hybrid/Electric Purchase/Lease Instrumentation/GPS/DVD player Maintenance/Reliability/Cost/Complexity

VIP PRACTICE
Project Classification Function Cost and Risk Analysis Energy and Waste Optimizaiton Execution Strategy and Risk Assessment Process Control & Operation Management Reliability, Availability & Maintainability

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VIP Example: Buying a Vehicle vs a Project

$35,000
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VIP : A Contribution to Competitive Engineering and Successful Projects

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