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A Structured Approach to Innovation

Calgary, AlbertaOct 24-25, 2012

Steve Holmes, CVS

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Value Analysis enables an agency to maximize the use of resources.

Value is subjective. It is this subjectivity that makes it essential to manage value deliberately to achieve the optimum balance between key stakeholder needs so that the use of resources is maximized.

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Hwy 417 Twining, Arnprior

Project Description

Highway 17/417 Twinning from Lanark Road 29 to Division St, including New Interchanges and Service Roads

VE Objectives

Construction staging, constructability, value (cost)

VE Results Service Road relocated to reflect local values - improve security for Boeing and enable expansion of major employer, generate surplus land for sale, achieve same service road functions, $330,000 savings on Service Road, (2.4 M savings/cost avoidance for total study)

Airport

Boeing

VE Service VE Service RoadRoad

Proposed Proposed Service Service RoadRoad

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Value Analysis builds a common understanding of key needs

Value Analysis can help bring your team to a common understanding of key needs and acceptance of the necessary changes.

Geographic Information SystemsMapping Service Needs

Project Description 

To identify business needs of next generation web mapping solution.

VE Objectives To clearly define the functions, features, and goals of the application solution while gaining consensus among many stakeholders and establish priority features.

VE Results Determined the functions, features and priorities for the application. Achieved a common understanding amongst many stakeholders of a reasonable value solution. 

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Value Analysis is a simple process that fosters innovation.

Value Analysis is a structured approach to innovation and innovation is key to delivering public services in a fiscally constrained environment.

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CVIF Building

Project Description 

Develop design concept and standards for a new style of commercial vehicle inspection facilities. 

VE Objectives

Optimize the building design & security features. Design to be multi‐functional for other enforcement agencies.

VE Results Fast process, strong buy‐in to building concept, very few changes in design and construction.

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Topic Overview

MotivationMarket GrowthThe Pinnacle

A Few Good Years

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Motivation to use VM

Evidence of SuccessConfidence in the processCompetence in achieving useful Outcomes

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Evidence of Success

Fiscal Year Study Finalized2009-10 2010-11 2011-12 Grand Total

Service Provider Fees –Capital Projects

$958,320 $769,413 $1,155,246 $2,882,980

Cost Savings/Avoidance $39,248,769 $35,226,000 $120,699,695 $195,174,464Number of Finalized Studies of Capital Projects

9 9 9 27

Return on Investment 41 46 104 68

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Study Effectiveness

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Annual Reports provide Evidence

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Detroit-Windsor Truck Ferry Project

Project Description

Improvements to the Detroit-Windsor Truck Ferry Access Road, Ferry Dock and parking

VE Objectives

Validate conceptual design and target cost, Identify Key Risks / Mitigation Ideas; with stakeholders

VE Results VE Study resulted in significant change to the to the marine elements of the project including the ferry terminal dock and ramp structural design and alignment. Key Project Risks were identified and used by Project Team to assess competing alternative/scenarios

Marketing

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Confidence in VM

>120 Studies on Projects> 20 Studies on business processes, services and procedures including:– Problem Identification in business processes.– Characterization of Business Needs.– Using Value Analysis for acquisition of software

solutions.– Use of elements of the VA process in day to day

decision making.– ….

Mandatory Implementation Meeting

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Competency

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MinistryofTransportationOntario

National Value Engineering Honorable Mention

Most Value Added

Proposal

In Improved Process

Ontario Ministry of Transportation with NCE Limited

Rock Claims Initiative Value Engineering StudyFor Demonstrating Outstanding Value Engineering Achievements in Teamwork, Cost Savings, Streamlined Construction Sequencing or a Reduction of Schedule That Resulted in an Overall Improved Project

Presented by the AASHTO Value Engineering Technical CommitteeJuly 20, 2005

National Value Engineering Award

Improved Performance

Most Value Added

Proposal

Presented by the AASHTO Value Engineering Technical Committee

Ontario Ministry of Transportation, Red Rock Indian Band with MMM Group

Balancing Transportation and First Nation ValuesHighway 11/17 Junction, Nipigon

For Demonstrating Outstanding Value Engineering Achievements

in Enhanced Performance that Resulted in an Overall Improved Project

Market Growth

Resources Decision Making

Projects Service Providers

Staff

Training

yPersonnel

y

Culture

StaffCapital Operating

LCC

Stakeholder Management

InnovationCost

Avoidance

Evidence

Knowledgeable Owner

Climate for Change

Business NeedsEfficiency

Effectiveness

Senior Management

Risk Analysis

Reliability

y

Confidence

Change Management

Internal Processes

I.T. Solutions

Competence

Other Processes

Services

Time

Divisions/Offices

Right Concept Right

Project

Problem Definition

Highway Safety

Culture

Culture that Welcomes IdeasBuilds Confidence in VMSupport CSVA and send staff to conferencesDevelop Expertise and Experience in VE/VA/VM

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Growth in Projects

Experience developed on capital projectsExpanded to projects for other divisions (truck inspection facilities etc)Delivered solutions on technical and stakeholder areas – ie. Sharing Ideas with First Nation

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Business Needs

Meet Business Needs through VATypically use a Functional Performance Specification to:– Define Problem– Characterize Business Needs– Understand Process– Facilitate concerns of different offices

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Problem StatementNeeded to procure two enterprise-wide software solutions that support a broad spectrum of users.– Different business histories and challenges

What requirements should be included in a RFP?What evaluation criteria will we use?What weighting should be used in the evaluation?– What is mandatory versus rated?

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The Approach

Facilitated development of a Functional Performance Specification (FPS)

Facilitated requirements gathering– Bring selected group together from broad spectrum of users– Focus input to “What is needed?” AND “Why is it needed?”

NOT focused on what is wrong nowNOT focused on end solution

– Discuss performance criteria and level – How do you know when the need is meet?

– Discuss the flexibility in meeting the need – How important is the need?

– Facilitate discussion

Formal documentation as FPS

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FPS: Functional Tree

Identify FunctionsClarified missionOrganized functions in a tree

Provide GIS/mapping services to access various

spatially referenced information

supplied by MTO business units and

partners, in a visual, current, reliable, secure

and user-friendly format, to support

ministry’s core business

7Manage system

5Ensure service

1Manage base spatial data

3Display

information on tables or maps

2Access geo-referenced

business data

6Be user friendly

4Translate location

reference

-1Comply with standards

LEGEND

How ?Why ?

When ?

AND

OR

1Manage

base spatial data

1.1+1Input data

1.1Acquire

spatial data

1.1.1Access data

sources outside MTO

1.1.1-1Use Land

Information Ontario

1.1.2Keep ortho

photos

1.2Update

spatial data

1.2.1Publish

spatial data

1.2-1Document changes

1.3Retain

historical data

1.3.1+1Time stamp

data

1.3.1Archive base spatial data

1.3.1-1Track

archived data

1.4Ensure

quality of spatial data

1.4.1Establish

standards, guidelines,

policies

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FPS: Characterization of FunctionsCriteria and Performance level of function

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FPS: Characterization of FunctionsFlexibilityF0: Must have no matter the cost …. F3: Nice to Have

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Relationship of FPS to RFP

Identify FunctionsClarified MissionOrganized functions in a treeCriteria and Performance LevelFlexibility

Functional NeedsRFP scopeFunctional needs and justificationEvaluation Criteria

Evaluation Weighting

FPS RFP

Decision Making

Decision making is complicated. There may not be “a right answer”.Value is subjective. VM helps access value.VM provides a structured approach to developing and evaluating alternative solutions.Participation in VM exchanges knowledge

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Project Description

EA for extending Hwy 401 from Hwy 3 to new Plaza along selected corridor.

VE Objectives

Ensure that all reasonable freeway alternatives are being considered in the Environmental Assessment.

VE Results Identified 50 design refinements to 5 proposed alternatives, validated decision not to pursue bored tunnel option.

Hwy 401 Extension to new Windsor – Detroit Border Crossing

Integration with Other Processes

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Values Values

Think differentlyThink differently

--Generate Generate alternative alternative solutionssolutions

--TeamworkTeamwork

--ChampionsChampions

--Multidisciplinary Multidisciplinary teamteam

VA / VE VA / VE ProcessProcess

Performance MeasurementPerformance Measurement

LEEDsLEEDs©©

Results Based Results Based PlanningPlanning

Highway Highway SafetySafety

SustainabilitySustainability

Target CostingTarget CostingBalance ScorecardsBalance Scorecards

Risk AnalysisRisk Analysis

Functional Functional Performance Performance SpecificationSpecification

Highway 7 New Alignment –Kitchener to Guelph

Project Description

Highway 7 new alignment from Kitchener to Guelph including directional interchange at the highway 7 and KWE and six other interchanges, 3 major water crossings including Grand River.

VE/ Risk Objectives

Validate/ Improve Design, Improve Constructability, Improve Safety, Risk Analysis & Risk Based estimate

VE Results VE Study resulted in $22 M in initial cost savings/avoidance identified, including relocation of ramps to eliminate skew angles, reduced structure lengths, removal of some access ramps to improve mainline operations, aesthetic improvements to the Grand River Structure. A risk based estimate and detailed risk register were also developed.

Maximize Resources

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When resources are in short supply – how do you allocate your existing resources against your priorities?

– Do you know how your resources are currently allocated and what your priorities really are?

The Pinnacle of use of VM at MTO has been a VM study of the Engineering Division: Our Objective

Develop the ability to strategically deploy available resources to be consistent with the priorities of the division now and in into the future.

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Approach

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Function Diagram

Function PerformanceSpecifications

Function Resource Table

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What is our business?

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Several 2 day workshops to develop a functional tree

plan, build and maintain a provincial transportation network in Ontario in order to allow the population and goods to travel for economic and personal reasons, in a safe, efficient and sustainable manner

optimize the transportation networks

develop strategic investment plan

deliver strategic investment plan

maintain & operate network

apply standards, policies and guidelines

manage division

support corporate initiatives

support government initiatives and interest

prepare emergency plan

participate on committees

manage issues

MISSION STRATEGY

What is the size of our business?

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Separate 2- day workshops with 17 functional groups within the division to develop the Functional Performance Specification DEFINE THE NEEDS

Team Criteria Level Flex Comments

Function: Manage Issues

BRC FOI requests 5 per year F0 Varies each year

BRC Investigating/ responding to Ministers Letters

2 per month F0 Tracked thru CTIS

Function: Inspect Assets

BRC Number of safety Inspections

200 – 300 per year

F0 Additional inspections required every 6 years, more detailed than standard inspection

BRC Number of Bridges Inspected

1,400 per year

F0 Routine inspections every 2 years

How are the Division’s Resources Used?

Teams assigned level of resources to each function they characterized.Important that they did this work as a team.

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Position/Job Family Manager/Head Senior Engineer

Region C W E NE NW HO C W E NE NW HO

# of Positions 1 1 1 1 1 1 10 4 2 5 3 10

ID Function / Cumulative Total .06 .04 .04 .08 .08 .24 1.68 1.1 0.8 0.5 0.3 0.58

0-2.1 Manage Issues .02 .01 .01 .01 .01 .2 .78 0 0 0 0 .08

1.1.1.1.1 Inspect Assets .02 .03 .03 .07 .07 .04 .8 1.1 .8 .5 .3 .4

1.1.1.1.2 Predict Deterioration .02 0 0 0 0 0 .1 0 0 0 0 .1

Benefits and Observations

The VA technique allowed senior executives to develop a functional model that when reviewed by the management teams remained relatively unchanged.

FPS describes the needs of the organization in terms of a function without reference to the how it is done – removing biases of workshop attendees

An efficient approach to documenting the functions being delivered and the level of effort to deliver them

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Summary – Structured Approach to Innovation

Achieved Innovation through Value MethodologiesDeveloped ability to apply VM in many areas through:– Confidence– Competence

MTO now uses VM in all aspects of the business.– Steve Holmes, Contract Innovations Engineer– steve.holmes@ontario.ca

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