Using the Otis Elevator Story
Where we are now
To a large extent, SACON has a captive market for school maintenance. But the cost
imposed by a wide geographic dispersion and non-uniform service has already sparked agitation for change and could result in the loss of this market. Similarly, we have, if not exactly a captive market, at least a strong position in our design and construction work. However, as the total market for new government building work falls off, with funds becoming tighter, the Department is facing ever-greater and keener competition. SACON has an advantage now, but we risk losing it if we make strategic choices that remove or fail to develop our information-based competitive edge.
Information and Value Added
Like Otis, we are well placed to develop information-based value. No other maintenance contractor has access to the maintenance and building information we do. And, for that matter, no other designer or builder. This is a significant advantage.
By capitalising on our information strengths, we can improve our competitive position and make ourselves less vulnerable to institutional changes (such as the transfer of school maintenance funding to the Education Department) and the wider structural changes that may be expected. Government capital funding remains tight, and the Government seeks more value for money.
Improve Our Information Reliability
We can improve the value we add to our information in many ways. For one, we can improve the reliability of our information. At the moment, because we use an ancient Treasury legacy system and are required to pay each time we access it, we tend to wait until we have enough changes to warrant access, so that, while we have up-to-date information in-house, few of our customers can see it. If we automatically linked information from our Asset Information System to the client’s system, we could drastically reduce the update cycle. Most of the database update work would then be done in-house and over the phone, greatly reducing costs. And since this advantage would apply only to those using SACON for alterations, additions, replacements, and maintenance, there would be less inclination for others to arrange their own contractors.
Improve the "Information Value Added" Component of Design Work.
Current moves towards privatisation and commercialisation are fuelled by the belief that private companies are more efficient and cost-effective. This doesn't have to be the case. One major factor working in our favour, as far as design work is concerned, is that, as an organisation, we are involved in all stages of the building process, from the initial feasibility concept through design and construction to the eventual maintenance of the building.
We therefore have the ability to use our wide information base to help us design
more flexible, cost-effective and low-maintenance buildings. No private company can match us on the extent of the information we have to draw upon. But we have to demonstrate that we have the capability and will to use this information.
One way to do this is to adopt Value Management practices. Value Management is a technique widely used by leading companies in the private sector to integrate the company's information with other specialists for critical review and project appraisal. We have the opportunity to draw on a wide range of talents (professional and trade) within our organisation. Routine application of this technique to all large-value projects would not only establish our equality with the better-run private companies, but our stronger information base should enable us to achieve even better results.
Using Value Management techniques, the New South Wales Public Works Department
has secured cost savings of more than 10% on projects submitted to it while, at the same time, redesigning to increase the benefits to the client. In the case of the Long Bay Gaol, the savings were about $3m in a total budget of $17.4m, and in the case of the Swansea Channel Estuarine Investigation Research Program, costs were reduced by more than 50% by eliminating non-viable research options. This has done a lot to increase the credibility of the PWD department in N.S.W.
If we do not move to set up such value-for-money techniques, someone else will - Treasury or the Government Management Board, for example. Both of these bodies
are interested, and Treasury, particularly, is actively extending its sphere of influence in the project appraisal area. Neither have the necessary technical expertise, but using their management skills, they would be able to buy outside expertise - and it may not be us.
This is a second excerpt from ‘The Value of Information to the Future of SACON’, which can be accessed here. It is just three pages.
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