Comprises three sections

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1.0 Executive Summary

This value engineering (VE) report for new JCEB2 building comprises three sections. The first section serves to highlight the basic principles of value engineering methodology applied to this project and quoted with case studies for easy reference and demonstrate how they could cut down unnecessary costs and add value to the project.

The second section briefly identifies the general functional elements of JCEB1 with approximate cost breakdowns and aims to analyse and review the four primary functional elements selected from existing JCEB1 building for succeeding value engineering processing. These elements selected for analysis including the MVAC system, lift, roof and decorations. The VE analysis to these elements would include defining the function(s) and developing alternatives by using Function Analysis System Technique (FAST) with explanation and justification of criteria. One of the major elements would also be screened out for in-depth analysis by means of "Combinex" system (Fowler, 1990) / Combined Scoring Matrix to produce alternatives with which criteria are justified and explained.

In finalizing the report, the last section would consolidate, explain and justify the findings from section 2 and propose optimized changes with use of value engineering techniques that add value to the new building while retaining essential functionalities from the existing one.

2.0 Section 1 - Basic Principles of Value Engineering

Definition of VE

It is imperative to differentiate the definition of value in terms of cost reduction and value engineering. The former means that value equals to cost, where the value in the latter represents the changes in performance and quality supporting functions (worth) divided by its changes in initial cost and running cost.

In brief, the VE is an organized methodology applied during the design / engineering phase of a project as to identify the key functionalities and remove redundant cost. Concurrently, it maintains these essentials needed by the client and end-users and applies to the completed project for auditing and refining the desirable performances. (Gameson, 2009)

Objectives of Applying VE to JCEB2

In consider the value of functions from a building / product is determined by the user / customer acceptance of each of those functions (McGeorge and Palmer, 1997), a research to the JCEB1 is launched out to pinpoint the fundamental functions as well as the products failed to match the users' needs and wants. From these researches, unnecessary costs and / or functions mismatch are erased and value added to the functionalities of JCEB2. Further, applying VE technique to JCEB2 building serves to attain the benefits of improved definition and expression of value, enhanced value and benefits for end-users, improved affordability / value for money, achieved consensus / integrate a variety of proposals from stakeholders with client's own objectives, reduced wastes and defects, earlier management involvement and benefits realised where previous methods failed. (OGC, 2007)

Historical Development

The Origin of value engineering was firstly introduced by General Electric Company in USA at 1940's for systematic improvement to their business. After evolved in the following four decades, it has developed from a purchasing-based analysis method into a management-based system and, being widely applied by the construction industry. In return, this technique defines and maximizes value for money to the clients and end-users without compromising the essential functions, from which removing unnecessary cost and adds value to the construction projects. (Fowler, 1997)

Considerations to Application of VE

Before the launching out of VE to this project, a series of considerations should be integrated. These include the survival triplet, target cost and profit management (Cooper & Slagmulder, 1997), associated risks (Fewings, 2005), life cycle costing (R.S. Means, 1997), re-engineering and particularly, the application of VE at the planning stage is more important over other stages of projects (McGeorge and Palmer, 1997).

To consider as a whole, survival triplet namely functionality, quality and cost are critical to the VE. The key is to select the proper rating of improvement for each of the three dimensions based upon the users / customers' needs. In applying the theory of risk management to value management, this report has taken into account the associated risks to the proposed alternatives. Again, as risks and value management are interrelated, the project team should repeat in parallel the exercises of associated risks to the preferred options from value engineering until the optimal balance is reached. Life cycle costing (LCC) techniques is, undoubtedly, crucial to VE, when carrying out cost effectiveness studies and benefit-cost analysis, LCC techniques must be included or it may lead to poor decision making. To obtain innovative ideas from VE, re-engineering concept is also one of the important substances as it provides brilliant ideas to the alternatives. Eventually, it is worthy to incorporate target cost issues / profit management techniques to value engineering processes since it is proven that when VE is integrated with a target costing system could helps to increase the functionalities of the project while maintaining the target costs.

Basis of VE System

At around 1970's, the VE begin used in the United States for construction projects. It consists of a 40-hour workshop structured around a job plan for the function analysis and it is carried out at 35% design by an external team. (McGeorge and Palmer, 1997).

The job plan generally starts in various phases from preparation to presentation with use of FAST diagram to analyse the needed and wanted ingredients from client and users. These function analysis are the processes of defining & evaluation of functions, generation of alternatives and it is the basic technique to forms the basis of value engineering.

Case Studies of VE

For the ease of realize VE technique to this project, the case studies of Open University in UK (OGC, 2007) and the five capital arts projects in UK (Short et al, 2007) is hereby quoted for highlighting the benefits and associated alternative changes. With adoption of alternative from traditional procurement route to partnering approach with regular value management reviews, the client's and end-users' expectations met in full and costs reduced by 20% to remain within budget. As revealed from the case studies, the returned saving from the VE exercise also confirmed that it is around 10 times the amount of investment to apply VE methodology.

Digest of VE technique to JCEB2

The trend towards utilizing more VE methodology in the construction industry should not be underestimated as it improves projects' effectiveness. Outlining a model of knowledge flow in VE could cultivate more efficient studies in the industry. Thus, in any VE exercise, the engagement of client and stakeholders along with highly experienced professionals to bring out promising results is necessary. Accordingly such contributions is significant to the efficiency of the study, as these valuable information capable to recall the memory of previous experiences from VE team would in turn put in more bright ideas to this project.

3.0 Section 2 - Value Engineering Analysis of JCEB1 Building

The application of VE to JCEB2 is primarily concentrate on cutting unnecessary costs from mismatched functions (Cooper & Slagmulger, 1997) and will develop in detail in this section. The definition and analysis of functions to various building elements would first be carried out, followed by targeting major components and making decision in establishing possible cost deduction to such components without sacrifice the functionalities.

In general, a job plan comprising several distinct stages shall be organized for the accomplishment of value engineering studies:

Preparation Phase

The value engineering studies of JCEB2 are based on the features of existing JCEB1 and the preparation phase involves selecting members to form the workshop team. The personnel for the workshop team including architect, structural engineer, building services engineer, contractor, quantity surveyor, related specialists, client / stakeholders, facilities manager and value engineer.

Information Phase

The function of JCEB1 elements are defined and grouped into basic and primary functions. On identifying the primary supporting or basic functions and taking into account the measurement of user / customers' acceptance, the acceptances of function definition are summarized for onward FAST processes at analytical phase.

Analytical phase

Generally, there are four levels of function definitions that would influence the potential for improving value. The sequence as ranking from highest to lowest are correspondingly project functions, space functions, element functions and components. The functions of items are mainly clarified by use of active verb and measurable noun approach. Yet, the correct definition of project functions shall be considered as a whole with proper level used when verb-noun definition failed to mirror the real functions (McGeorge and Palmer, 1997). In light of the higher the level of function definition used, the greater the capacity for changing the project, the highest level of function analyses are therefore adopted for JCEB1 in this report.

In short, function analysis is the core of value management and comprises three main ingredients; function definition (through the verb-noun definition), function evaluation (through the evaluation of the lowest cost to achieve function) and the generation of alternatives (created through brainstorming).

Once the functions are defined and analysed, approximate estimate of cost breakdown to the functional elements are prepared and allocated to major components of JCEB1 as shown below (based upon the cost index provided by Hong Kong Census and Statistics Department and prices in Schedule of Rates for Term Contracts for Building Works published by Hong Kong Architectural Services Department):-

Upon allocating and summarizing the estimated cost breakdown, the capital costs are sorted from highest to lowest as fig. 1 and, in comparing the function-costs to function-attitudes, the major components will be selected for onward analyses in order to achieve the maximum beneficial return from value engineering.

As reflected from the chart, the top five components with highest capital cost in logical sequence are MVAC installation, decorations, electrical installation, roof and lift respectively. Considerations are, as a result, given to these components as they would affect most to the overall cost saving by applying value engineering technique.

The method of Functional Analysis System Technique (FAST) involves asking questions like 'how is this to be achieved?' to the selected element by starting with the higher order function. The answers to this question form the next layer of functions and the question 'how' is also asked until the elemental / component function of them is reached. In reverse of this operation, asking 'why' checks that the logic of the diagram is correct and indicating procedures or functions that may replace by better alternatives at later phase.

Stating below are the four elements namely lift, MVAC installation, roof and the decorations selected for use of FAST functional analysis:

Upon the application of FAST to the selected elements, the higher order functions of which are identified. The ultimate goal of MVAC installation is to provide comfort by a series of dependent functions from providing ventilation to chilling airflow and maintain humidity. The main objective of decoration is to allow relaxation to the occupants and users. The lift is to provide transportation along with functions satisfying current enactment and minimizing noise emitted by enclosing the noise generate in machine room and lift shaft and, the construction of roof is to provide weatherproof shelter as well as insulation for reducing heat gain or loss.

In turn, the lowest cost to achieve necessary functions of the elements shall be worked out and, once these functions have been evaluated, the evaluation can be used to generate alternatives by brainstorming "what else will also achieve the same function?"

There are numerous methods for evaluating alternatives but perhaps "combined scoring matrix" is the one most commonly used. An example of which is delineate below:

Creativity phase

At this phase the function analysis will be used as a foundation for generating alternatives that meet the functions as defined in the analytical phase. Brainstorming is also needed to workout problem-solving method to them as well.

Judgement phase

All the potential alternatives that meet the functions are assessed and the feasibility of the ideas or concept is verified (McGeorge & Palmer, 1997). The estimates for economic consequence with regard to establishment cost, lift cycle cost and any possible cost deduction are also carried out in this phase (Cooper & Slagmulger, 1997).

Development phase

Shortly after the judgement phase, the last phase is to make decisions and fill in supporting data of proposed product / process on value analysis proposal form. The ideas that worth considered are selected and scheduled to further develop.

4.0 Section 3 - Value Engineering Proposal of JCEB2 Building

In review of section 2 and to facilitate adding value to JCEB2, recommended changes and justifications to the selected elements are delineated below:

Decoration Proposal

Findings of JCEB1 - The research on the pattern of end-users (mainly part-time students and lecturers) and usages of JCEB1 discovered that the rooms of building were mainly used as classroom and the auditorium at G/F (clouded in Fig. 4.1) is long idling.

Proposed Changes - To delete the auditorium and include the space to adjacent exhibition area; revise the classroom layout and replace the block wall partitions by air-tight (sound-proof) folding partitions. The luxurious finishes are to be downgrade to durable and economic materials.

Justification of Proposal - The hiring rate of auditorium is very low and being vacated for certain period. On contrary, the adjacent exhibition area is always hired out for various purposes. The end-users are not interest to the luxurious finishes as they just care about their study and the size of classrooms are not flexible enough to fully utilize. The higher order function of JCEB1 is not suitable for JCEB2 as it just concentrated on aesthetic appearance where JCEB2 aims to cut down unnecessary cost and maximizing the functionalities such as durability of finishes and flexibility of rooms' layout and usage.

Expenses for Change - Rough estimate (Details to be submitted later) reveals that there is approximately 15% initial and maintenance costs saving for these changes.

Roof Proposal

Findings of JCEB1 - The existing roof comprising insulation board, waterproof membrane and roofing tile on concrete slab. The surface water is directed to vertical grating by natural fall of designed ridges.

Proposed Changes - To convert the roof into green roof (Fig. 4.2) and utilize the automatic rainwater pumping system (Wack, 2009) to irrigate the green roof.

Justification of Proposal - The conversion of traditional roof to green roof serves to enhance the insulation of heat gain from direct sunlight as well as cooling down the room temperature underneath. The rainwater utilization system provides additional natural cooling to the building and intended to maintain vitality of green roof. The combination of these systems not only help to lower the MVAC running cost but, as a bonus, increase the aesthetic appearance of JCEB2 as well as providing a leisure space to the occupants.

Expenses for Change - Rough estimate (details to be submitted later) indicates that there is approximately an extra 25% initial cost for the green roof and a cutback of 16% for MVAC running costs.

Lift Proposal

Findings of JCEB1 - From statistical researches, the average rate of usage of existing lift is as low as 3.2 people per hour and the steel staircase at G/F also rarely used by the occupants (both clouded in fig. 4.3). In addition, the width of passage adjoining the staircase barely satisfied current building regulation.

Proposed Changes - To delete the lift and steel staircase, replace glazed panelled hydraulically driven platform lift (Fig. 4.4) at the position of removed steel staircase.

Justification of Proposal - The alternatives as compared at section 2 combined scoring matrix reveals that the traditional lift is relatively require more time to construct owing to the requirements of lift machine room and, generates more irritating sound to the occupants while operating. Again, the Building (Planning) (Amendment) Regulation 2008 has been gazetted to enhance the design requirements governing the provision of facilities allowing access to and the use of buildings and their facilities by the disabled (HK Government, 2008). The installation of lift is serves solely satisfying the disability discrimination act and the disabled access enactment since JCEB1 is only a two storey high building. In adopting the proposed platform lift, a cutback of machine room construction cost, time required for EMSD inspection could be acquire. Space and area of lift shaft could also be amended to suit nearby layout. The replacement of glazed panelled lift at steel staircase location also present as a visual feature in the hall and, by the way widen the existing passage next to the steel stair given that the platform lift is much slender than the staircase.

Expenses for Change - Rough estimate (details to be submitted later) indicates that the cost for the new platform lift is slightly higher than traditional lift by 5% if no fire rating requirement needed. The confirmation of fire rated requirement will be available from Hong Kong Fire Service Department by 29.05.2009 and the fire compartmentation plan is still under review by the architect. All in all, the probability to apply fire rated glazing is very low.

MVAC System Proposal

Findings of JCEB1 - The MVAC installation at JCEB1 involving 14.5 millions construction cost. The existing MVAC system is using water-cooled chillers, the capacity of which is a little bit over-design for a two storey building.

Proposed Changes - The central MVAC system could be downgrade from water-cooled chillers (Fig.4.5) to air-cooled chillers (Fig. 4.6) and the internal layout of JCEB2 to be revised for suiting the new MVAC trunking routing for cutting costs.

Justification of Proposal - The downgrading of MVAC system serves mainly cutting unnecessary cost and diminishes the size of chillers at roof. By contribution of green roof and rainwater utilization system as well as the revised layout which intended to shorten the airflow travel distances, the require cooling power of MVAC system could be pare down as much as 15% where perfectly matching the capacity of proposed air cooled system.

Expenses for Change - Rough estimate (details to be submitted later) shows that there is approximately a saving of 12.5% initial cost and a reduction of 16% for MVAC running costs due to the downgrading and re-route of air ducts / revised layout.

5.0 References

  • Advantage Engineering Inc. (2009) Industrial Heat Transfer Equipment. [online]. Indiana: Advantage Engineering Inc., [cited 23 February 2009] Available from: .
  • Cooper, R. & Slagmulger, R. (1997) Target Costing and Value Engineering. Montvale NJ: Productivity Press.
  • Fewings, P. & Jones, M. (2005) Construction Project Management: an Integrated Approach. [e-book] London: Tayler & Francis Ltd. [cited 16 February 2009] Available from: Wolverhampton University / e-Resources / EBook Library .
  • Fowler, C. (1990) Value Engineering in Design. New York: Van Nostrand Reinhold.
  • Gameson, R. (2009) Value Management. Wolverhampton: University of Wolverhampton. 44-pages power point format handout, circulated via City University Blackboard on 29 January 2009 for lecture 10 of module CN3035 "Construction Management".
  • Hong Kong Government. (2008) Disabled to get better building access. [online]. Hong Kong: Hong Kong Government [cited 21 April 2009] Available form: .
  • Landmark Lifts Ltd. (2009) Landmark Lifts Platform Lifts. [online]. Northamptonshire: Landmark Lifts Ltd [cited 21 April 2009] Available form: .
  • McGeorge, D. and Palmer, A. (1997) Construction Management, New Directions. London: Blackwell Publishing.
  • The Office of Government Commerce, (2007) Value Management in Construction Case Studies [online]. Norwich: The Office of Government Commerce, [cited 4 April 2009]. Available from: .
  • Point Centre Financial Incorporated. (2008) California: Point Centre Financial Incorporated, [cited 17 April 2009] Available from: .
  • R.S. Means (1997) Value Engineering Practical Applications. Kingston: R.S. Means Company Inc.
  • Short, C.A., Barrett, P., Dye, A. & Sutrisna, M. (2007) Impacts of value engineering on five capital arts projects. Building Research & Information, 35(3), 287-315. [copy on WOLF]
  • Tokarz, E. (2006) CEER Green Roof Project. [online]. Villanova: Villanova University, [cited 23 April 2009] Available from: .
  • Wack, O. (2009) Rainwater utilization in housing [online]. Pörschke: Regenwasseranlagen, [cited 23 February 2009] Available from: .
6.0 Bibliography
  • Architectural Services Department. (2009) Schedule of Rates for Term Contracts for Building Works 2006 Edition [online]. Hong Kong: Architectural Services Department, [cited 17 April 2009] Available from: .
  • Grönqvist, M., Male, S. and Kelly, J. (2008) [homepage] [online]. West Yorkshire: Value Solution Limited, [cited 17 April 2009] Available from: .
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  • Hong Kong Building Department (1993) Code of practice on the Design and Construction of Buildings and Building Works for the Installation and Safe Use of Lift and Escalators. [online]. Hong Kong: Hong Kong Building Department, [cited cited 18 April 2009] Available from: .
  • Hong Kong Census and Statistics Department. (2009) Official statistics on "Land, Building, Construction and Real Estate" [online]. Hong Kong: Hong Kong Census and Statistics Department, [cited 17 April 2009] Available from: .
  • International Development Research Centre (2009) Guidelines for Writing a Project Proposal. [online].Ottawa: IDRC [cited 23 April 2009] Available from: .
  • Landmark Lifts Ltd. (2009) Architecture in Motion. [online]. Northamptonshire: Landmark Lifts Ltd [cited 21 April 2009] Available form: .
  • Mazen A. Al-Juaid (2009) Laptop Selection Using Value Engineering. [online]. Dhahran: King Fahd University of Petroleum and Minerals, [cited 18 April 2009] Available from: .
  • Raftery, J. (1994) Risk Analysis in Project Management. London: E & FN Spon.
  • Wixson. J (no date) Function Analysis and Decomposition using Function Analysis Systems Technique. [online]. Idaho: Lockheed-Martin Idaho Technologies Company, Inc. [cited 20 April 2009] Available from: .

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