Introduction To Value Engineering Theory Construction Essay

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According to the Office of Management and Budget of the United States of America, Value Engineering and/or Value management (hereafter known as "VE") "….. is an organized effort directed at analysing the functions of systems, equipment, facilities, services, and supplies for the purpose of achieving the essential functions at the lowest life-cycle cost consistent with required performance, reliability, quality, and safety. These organized efforts can be performed by both in-house agency personnel and by contractor personnel". In terms of a construction project, it should be acknowledged that VE attempts to add value to a project and this may not ordinarily result in an immediate cost saving. VE involves an objective appraisal of a project in terms of functionality, components, products, maintenance and services and is performed to eliminate any unnecessary cost without compromising the objectives of the Client in terms of quality, scope and time.

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This report will attempt to explain the term VE and the systematic and structured manner in which the VE study is undertaken. In addition to this, this report will provide a working example of a work shop and the workshop report.

Introduction to Value Engineering Theory

In the context of this report, Value Management and Value Engineering shall be read and construed to have the same meaning, albeit the writer acknowledges that they may have a different meaning to different professionals.

The Value Management Research Group at the University of Reading (UK) have developed the following definition for both Value Engineering "Value engineering is concerned with achieving a given function at minimum cost. It is based on the assumption that function is an objective characteristic which is waiting to be identified. Furthermore, it is assumed that all feasible design alternatives provide the same level of functional performance and can therefore be assessed on the basis of cost alone. Within this frame of reference, an increase in value can be directly related to a reduction in cost."

Alternatively, SAVE International (2007) has described VE as "…… a systematic and structured approach, improves projects, products, and processes. VE is used to analyze manufacturing products and processes, design and construction projects, and business and administrative processes. VE helps achieve balance between required functions, performance, quality, safety, and scope with the cost and other resources necessary to accomplish those requirements. The proper balance results in the maximum value for the project

As stated previously, In terms of a construction project, it should be acknowledged that VE attempts to add value to a project and this may not ordinarily result in an immediate cost saving. VE involves an objective appraisal of a project in terms of functionality, components, products and services and is performed to eliminate any unnecessary cost without compromising the objectives of the Client in terms of functionality, operationally, quality, scope and time.

To achieve the best results, it is generally recommended to undertake VE as early as possible in the design phase of a project. This will enable the Client to fully benefit (maximise the return on value) from this organised approach to the elimination of unnecessary cost. In some instances Contractors are encouraged to undertake VE after they are award a project, and where any proposals made by the Contractor are accepted and implement by the Client, they are generally awarded a share of the saving. VE can be done with your existing design and/or independent team of construction professionals.

The most recognised tool of VE are the "Functional Analysis " and "Fast diagrams" and these will be discussed in more detail in Section 2 of this report.

In addition to the above, a case study for VE and a practical application of VE is contained in Section 3 of this report.

There are a number of reasons why VE studies are undertaken, and these include inter alia:-

Escalation of the Client budget

Loss of confidence in the design team

Tenders received exceed the Clients budget

The Client may wish to instigate alternative solution to fulfilling their objectives.

The client may wish for an independent audit of the project before it proceeds.

Section 2 - The Value Engineering Process / Techniques

Value Engineering Process / Techniques

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In the context of a project, VE is an organised and structured study of the function of all and/or specific components that make up a project. The objective of this study is to establish what does the component do? Then in the context of VE, the next question is what alternatives can be used to perform the same function more efficiently and/or cheaper, without compromising on the objective of the Client in respect of functionality, operational, maintenance and quality? It should be noted that VE is not a cost cutting exercise, the objective of VE is to identify the lowest life cycle cost for a function and/or component of a project whilst maintaining and/or improving the quality of that function and/or component.

According to Save International (2007), the VE study and methodology is structured into three specific stages:-

Pre Study Preparation (Stage 1 of VE Study) - According to the Institute for Defence Analyses (2006), this phase lays the grounds for an effective and productive VE study by identifying the problem, refining the problem, and collecting as much information as possible for problem solving as well as organizing for the study that follows. Project data that is received from the Client is distributed between the VE team prior to the formal workshop in order to develop relevant questions.

The Project Study Workshop (Stage 2 of VE Study) -In the initial stages of the workshop, the facilitator for the meeting will make the necessary introductions; brief everybody regarding the purpose of the VE study and the current design proposals. Outline any constraints that are relevant to the VE study. In addition to this, the VE team will have the opportunity to question the designer. After a short site visit, the VE team will then proceed with the workshop stage in detail.

These workshops are attended by a multidiscipline team of construction professionals that are not necessarily involved in the project. There are a number of different approaches to these VE studies and these include amongst others-

The Charrette: A workshop devoted to solve a problem

40 Hour Value Management Workshop - As the name suggest, this workshop study is conducted over a 40 hour period. The sketch designs are reviewed by an independent team of professionals to review and analysis for any cost that can be either reduced and/or eliminated without compromising the objectives of the Client

One to Two Day Workshops & Two to Three Day Works shops :- The objectives of these works shops remains the same, but the study is done over a more intensive and shorter durations.

The Concurrent Study - Under the supervisor of a facilitator, the design team meet on a regular basis during the design phase to brainstorm ideas and think of innovative ideas to reduce the life cycle cost of the project, albeit maintaining quality and functionality.

No matter what method of study is chosen, each of the studies will be conducted in a structured and systematic manner using a framework for VE Study i.e. the "Job Plan". During the various stages of VE, and in the quest to reduce cost albeit maintaining the objective of the Employer, tools such as fast diagrams, functional analysis, brainstorming, creative thinking, weighting scoring that will help identify and eliminate unnecessary project costs. In the context of this report and VE, cost is defined as the total life cycle cost.

According to Save International (2007), The Job Plan is structured in to 6 phases and these are briefly described and explained below:-

Phase 1 - The information Phase: At this stage, the VE team familiarise themselves with the project. The team also reviews the design and then set out the objective of the study. They identify areas of high cost that have little or no value and/or worth to the project. They also identify the true objectives of the project.

Phase 2 - Functional Analysis - The VE team defines the projects functions. The VE team then analyse this function to establish whether any improvement can be made and/or whether any unnecessary cost can be eliminated and/or reduced.

Phase 3 - Creative Phase - The VE team generate a large number of ideas through one of the techniques noted previously i.e. brainstorming, fast diagrams, discussion, creativity in order to identity other ways of fulfilling the objectives of the Client.

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Phase 4 - Evaluation Phase - In this phase, each of the ideas generated in the creative phase will be evaluated and the team will select the best ideas that offer the potential for value improvement whilst maintaining the objectives of the Client.

Phase 5 - Development Phase - The VE team will then develop the preferred ideas into concept designs and/or sketches. The life cycle cost of the alternative ideas will be determined and then compared to the corresponding cost of the original design to establish whether from a cost perspective, this option is viable. If the alternative is consider viable, the VE team will then prepare a detailed report for the benefit of the Client.

Phase 6 - Presentation Phase - In this phase, the VE team will present a brief oral summary of their findings to the Client for review and consideration

Stage 3 - The Post Workshop Phase (Stage 3 of VE Study)

The VE team will then prepare a detailed recommendation report for the benefit of the Client and designer. The Client and designer then have to jointly decide which options to adopt and incorporate into their design.

Section 3 - The Value Engineering Application (Working Example)

Bidbid to Sur Dual Carriage Road Project VE Study Report

20 October, 2012

TABLE OF CONTENTS

TITLE PAGE

1.0 EXECUTIVE SUMMARY 14

1.1 Findings & Recommendations 14

1.2 Value Engineering Team 14

PROJECT DESCRIPTION & BACKGROUND 15

VALUE ENGINEERING OBJECTIVES 15

VALUE ENGINEERING PROCESS 15

CONCLUSION 16

APPENDICES

1. Workshop Agenda 17

2. Costing 18

3. Concept Drawings / Power Point Slides 19

1.0 EXECUTIVE SUMMARY

1.1 FINDING & RECOMMENDATIONS

This report, inclusive of its Appendices, provides details on what the objectives were for the workshop and the findings and recommendations developed for consideration of the Client.

The key recommendations from this VE Workshop include the following

To achieve the prime objective of the Client i.e. eliminate the long term safety liability and maintenance issues inherent of deep excavation cuts, and to reduce the environmental and social impact of dumping 19 million cum meter of surplus excavation in ravens and valleys of the mountainous area. The main recommendation from this VE workshop is to amend the vertical and horizontal alignment of the road, incorporate tunnels where required, thus eliminating the deep excavation cuts and concrete segmental high bridges in at five locations.

1.2 VALUE ENGINEERING TEAM

The value engineering team was assembled by the Client. The VE workshop was led by David Rowe (Cost Consultant), serving both as the facilitator and an active participant. The other members of the VE Team were:

Carl Goulding - Bridge Engineer

Paul Smith - Road Engineer

Simon Shilton - Geologist

2.0 PROJECT DESCRIPTION

The works involve the dualization of the existing Road 23 from Bidbid, a town inland to the west of Muscat, at the intersection with the Muscat to Nizwa Road 15, Chainage 0+000 upto CH 40+800. The project also comprises the construction of 6 high bridges using the precast concrete segmental technology for high bridges, as well as 3 interchanges.

3.0 VALUE ENGINEERING OBJECTIVES

The principal objective of value engineering is the effective and efficient identification of alternative solutions for the dual carriage in the mountainous areas to eliminate the current deep excavation cuts (upto 128m deep). This objective will help eliminate the long term safety risks associated with deep cuts in fractured and/or fragmented rock and its inherent long term maintenance liability. In addition to this, the Client wants to eliminate the environmental impact of the surplus excavation that emanates from the deep cut and is currently intended to be dumped in the ravens and valleys of the mountainous area. Furthermore, the client asked for a brief critical analysis to be prepared for the preferred VE solution (See Appendix 3).

4.0 VALUE ENGINEERING PROCESS

4.1 Pre workshop Phase: In advance of the Workshop, the Client handed the VE team a full set of drawing inclusive of the plan and profile of the site and corresponding existing ground levels. In addition to the above, the Client noted that one of the main constraints for the project and in particular the mountainous areas, is the gradient of the road should not exceed 6%, and no existing wadi (water course) should be adversely affected.

4.2 Workshop Phase: With reference to Appendix 1, the VE team followed the a structured agenda on the day of the workshop

Phase 1 - In the information phase of the VE workshop, the VE team reacquainted their knowledge of the project and in particular the problem at hand.

Phase 2 - The VE team under took a Functional Analysis to establish whether any improvement can be made and/or whether any unnecessary cost could be eliminated and/or reduced.

Phase 3 - In the Creative Phase of the VE workshop - The VE team identified a number of potential solutions for achieving the objectives of the Client and these included:

change the alignment of the road to avoid the mountains

change the vertical and horizontal alignment of the road together with the introduction of tunnels

Incorporate tunnels into the existing alignment and amend the vertical alignment accordingly

Phase 4 - In the Evaluation Phase, the VE team determined that both a change in vertical and horizontal alignment was the most cost effective means of overcoming the problem as well as the incorporation of two new tunnels

Phase 5 - In the Development Phase - The VE team then develop concept designs and/or sketches. The life cycle cost of this alternative was determined and then compared to the corresponding cost of the original design. together with the corresponding life cycle cost for this option (See Appendix 2 & 3).

Phase 6 - In the Presentation Phase - The VE team gave the Client a brief oral summary of their findings.

4.3 Post Workshop Phase

As requested by the Client, the VE team have made further studies of the tunnelling option and the result of which are contained in Appendix 2 & 3

5.0 CONCLUSION

With reference to appendix 2 & 3, the VE study confirmed that by changing the vertical and horizontal alignments as well as incorporating two new tunnels into the project scope of works, a huge saving could be achieved should this option be implemented by the Clients

Appendix 1

Meeting Agenda - Value Engineering Workshop

Project Details - The works involve the dualization of the existing Road 23 from Bidbid, a town inland to the west of Muscat, at the intersection with the Muscat to Nizwa Road 15, Chainage 0+000 upto CH 40+800. The project also comprises the construction of 6 high bridges using the precast concrete segmental technology for high bridges, as well as 3 interchanges.

Value Engineering Title - Eliminating the inherent long term maintenance and safety liability of deep cut formed in fractured and/or fragmented rock

Value Engineering Workshop Date - 20 October 2012

09:00 - 09:15 - Introduction of Problem by the Client

09:15 - 09:30 - Brief on Value Engineering by the facilitator

09:30 - 10:00 - Introduction to Current Design Brief by the Designer (Bridge / Road Engineer)

10:00 - 10:15 - Break

10:15 - 10:30 - Outline Project Constraints / Client Concerns

10:30 - 10:45 - Question by VE team to Road / Bridge Engineer

10:45 - 11:15 - Information Stage - VE to familiarise themselves with the Project

11:15 - 12:00 - Functional Analysis

12:00 - 12:30 - Lunch

12:00 - 13:00 - Creative Phase

13:00 - 14:00 - Evaluation Phase

14:00 - 14:15 - Break

14:15 - 16:00 - Development Phase

16:00 - 17:00 - Presentation

Attendance: -

Appendix 2

Life Cycle Cost Comparison

Appendix 3 - Concept Drawings and Power Point Slide

Section 4 - Overall Conclusion

Conclusion

Value Engineering when conducted in a systematic way, following the framework provided, can help Client optimise their designs and yield cost savings that ultimately provides them value for money without jeopardising quality.