Value Engineering Management Executive Summery Construction Essay

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Value Management is structured and systematic process of team based decision making and professional team may involve to the workshop by decision making as per the current situation, condition or issue.

VE is a speculated cost control techniques performed by an independent group of experienced professionals. The technique involves an intensive, systematic and creative study to reduce cost while enhancing reliability and performance.

Most of investors enthusiastic to have best value for their investment by implementing Value management/ engineering process, through life cycle of the projects.

As a result of unstable world economy and political conditions, Al Maya Resident Complex project (Including with 25 no stories and car park in three story basement) client was unable to find necessary funds required for the project. Therefore the cost of construction should reduce as much as possible.

Hence it is necessary to carry out a value engineering workshop to find out possible ways to reduce the cost of construction by maintaining the required level of quality, performance and functional requirement.

ACKNOWLEDGMENT

INTRODUCTION

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Value Management is well established methodology which can use for maximizing the value for money. Value management strategies can apply at any stage of the life cycle (project from inception to the demolition) of a project. By applying value management strategies since the conception stage of a project, the client will be able to achieve a better value for his investment (money) by providing required level of quality, performance and all necessary functions. The client can carry out Value management / engineering work shops while construction is ongoing also by considering market conditions, economy conditions, political conditions, environmental conditions etc to seek better value for money by finding alternative methods, do changes as necessary etc.

MAIN BODY DISCUSSION

What Is the Value Engineering/ Value Management?

Concept of Value Engineering

When study about concept of VE, Lawrence Miles who is the founder of VE in 1940's a purchase engineer with the General Electric Company (G. E. C). Miles observed that many of the alternates were providing equal or better performance at a lower cost and from this changed the first definition of value engineering, as per the article of'' WBDG National Institute of Building Sciences'' by Scott Cullen (12-15-2010).

Value Management Process

Value Management is structured and systematic process of team based decision making and professional team may involve to the workshop by decision making as per the current situation, condition or issue.

There are few stages in decision making such as;

Information phase.

Objective phase.

Functional analysis phase.

Creativity phase.

Evaluation phase.

Development phase.

Reporting and recommendation phase.

What Is the different of VE and VM?

VE Consider from a tactical point of view, VM consider from the strategic point of view. In simple terms VM address WHY? And VE address HOW?

What Is the Value Engineering?

The ''Value Engineering for Wastewater Treatment Works'' of USA- EPA, noted in it, VE is a speculated cost control techniques performed by an independent group of experienced professionals. The technique involves an intensive, systematic and creative study to reduce cost while enhancing reliability and performance.

Why Is it used?

To establish the best design alternatives for Projects.

To reduce unnecessary cost on the Projects.

To improve quality, increase reliability and availability, and customer satisfaction.

To improve schedule.

To reduce risk.

To identify problems and develop recommended solutions.

Generally value engineering process can be apply at any point/ phase in a project,

However, usually if use in early stage of the project life cycle, will have sufficient benefits on investment.

There are three main stages of VE's application, those are describing as below.

Planning Phase

Planning stage is pre-study preparation phase of VE; there are additional benefits to be resulted from a Value Engineering Workshop. Therefore independent team can be:

Review the program.

Perform a functional analysis of the facility.

Obtain the owner/users definition of value.

Define the key criteria and objectives for the project.

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Verify/validate the proposed program.

Review master plan utility options, Offer alternative solutions.

Verify if the budget is adequate.

Graph showing the potential savings from VE applications

Graph 1.1 VE application

This graph shows very clear VE benefits of VE application furthermore. (Extracted from 'Value Engineering for Wastewater Treatment Works' of USA- EPA)

VE Workshop Phase

This is the most important phase of the VE process, generally address as VE workshop, required at least one workshop, typically 40- hour workshop session. As well as, client and designer whom they are decide the location as convenient of them.

The first step is prepare of agenda including;

Introduction,

Briefing of value engineering,

Presentation of Project design by project designer,

Outline of the project Constrains,

Question by VE team members for the designer,

Methodology and Approach

There are particular identify five-step during the actual Workshop of job plan of the VE study, as prescribed by article of 'Value Engineering; by Scott Cullen in WDBG program.

Information Phase

The Value management facilitator gives brief explanation to all participants about the value management process, project and study objectives; roles and rules of the exercise. Information about the project objectives, critical issues and constraints identified at the Strategic Diagnosis meeting, etc.

Speculation (Creative) Phase

Collecting of creativity ideas from each team member and analyze them to identify which idea is worthy, which one should improve to use, which one not worthy or additional study required to evaluate, etc.

Judgment (Evaluation) Phase

By evaluating all creativity ideas with cost benefits etc the decision making team will take the final decision about each idea / proposal to incorporate to the final report.

Development Phase (Value Management Proposals)

In this phase VE team prepare alternative designs with capital and life cycle cost comparison of original design and proposed alternative. And all recommendation supplements with written descriptions, sketches, basic technical information and cost summaries.

Presentation Phase (Report/Oral Presentation)

In this phase VE team present the summery of it s finding to the owner and designers, explaining the basic ideas of alternatives.

Post Work shop phase

The Value management Facilitator prepares and presents a report for key stake holders of the project which includes Summary of each phase, decisions made and actions to be taken, alternative methods and materials etc. which provide a complete audit trail. Then client and designers will consider the VE recommendations.

Value Engineering Workshop Report of Al Maya Residential Complex Project

Introduction

This Dubai base multi story residential Complex project; Client is a one of the reputed experienced person in the Construction industry. According to the requirement of the client, he anticipate to reduce the unnecessary cost in the project if available, without touching or disturbing to the original quality, value of the project that planned at the began.

This workshop was held in client office and all expenditure bared by client as own budget. Hence Value management and value engineering workshops are conducted according to the following principles:

The workshop is held to reduce the cost of the project.

All participants are stakeholder of the project.

All participants take part and are able to put forward ideas and suggestions.

The study was facilitated by Mr. Susan Ali and Mr. Smith De Silva of Sullivan of PMP Pty Ltd in accordance with the requirements of AS/NZS 4183:1994 (Value Management).

Project details

Type of the project

Al Maya Resident Complex including with 25 no stories and car park in three story basement.

Participants

Client - Mr./Ms Al Suwahdi Mohomad

Civil Engineer (Contractor) - ASCON Construction LLC

Project Manager- ALEC Project Management LLC

Architect- Design Group LLC

MEP Designer- ASCON Construction LLC

Quantity Surveyor- TEAMS Consultant LLC

Safety Manger- ASCON Construction LLC

Value Engineer Team- PMP Value Management LLC

Location of the Project

Zone 452/5, Block No.115, Emirate garden, Al Kahweenj, Dubai

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Duration of Construction

24 Months (18 Months remaining for Construction)

Agreed Cost of the Contract

AED 30.5 million agreed sum

Current Issue

Reduction of Unnecessary construction cost of the Proposed Resident Complex project through without touching or disturbing the required level of quality, functions and value due to lack of allocated finance.

Agenda of Value Engineering Workshop

Project: Al Maya Resident Complex including with 25 nos stories and car park in three story basement.

Subject: Reduction of Unnecessary construction cost of the Project due to lack of allocated finance.

Location: On 12th Nov. 2012 at the Park Building, Dubai. One day basis

No.

Events

Person

From

To

1.

Introduction

Client's representative

9.00 am

9.15am

2.

Briefing of VE

VE Team leader

9.15 am

9.45am

3.

Presentation of the Project details

Designers

9.45am

10.15am

4.

Tea Break

10.15am

10.30am

5.

Outline the Project constrain

Project Manager

10.30am

11.00am

6.

Questions by Value Manger

VE member

11.00am

12.00pm

7.

Lunch

12.00pm

12.30pm

8.

Information Phase

VE member

12.30pm

1.30pm

9.

Speculation Phase

VE member

1.30pm

2.00pm

10.

Judgment Phase

All Individual members (VE members)

2.00pm

3.00pm

11.

Development Phase

VE member

3.00pm

3.30pm

12.

Tea Time

3.30pm

3.45pm

13.

Presentation Phase

3.45pm

4.30pm

The VE workshop

This Value Engineering Workshop occurred according to the five-stage of job plan that recommended by New Zealand standard (AS/NZS 4183: 1994). The aim of this value Engineering workshop consist of identifying unnecessary cost, developing alternatives, enabling decisions to be made without touching or disturbing the required level of quality, functions and value.

Information phase

Particularly in this phase of the workshop, client shared relevant information with workshop members, mainly objective of the workshop to ready all participant for ask questions, begin to develop ideas and suggestions and challenge ideas already on the table. The ideas are being to promote innovative alternatives and ideas that may lead to better value outcomes for the project.

All participant were presented they ideas asking question at this stage therefore this very important stage of the VE workshop for clearly make understand of the objective further.

Client Agent

He explained the project background and objectives for all participants clearly, and his expectation getting of workshop finally as unnecessary cost reduction of the project without touching or disturbing the project original scope.

Civil Engineer

He explained the existing situation of construction and agreed with some proposals given by VE team. Such as local made sanitary fittings and accessories, wall & floor tiles, etc. due all make under UK standards

Project Manager

He explained possibility of mange for all ideas

Architect

He very much concerned about change of tile and local made sanitary items, eventually, he satisfy and explain those are under similar quality of original design.

MEP Designer

He explained the possibility of change of lighting system inside the all room without harm to the original quality and value.

Quantity Surveyor

He explained cost effective for all participant ideas,

Safety Manger

He explained concerning the safety side for all new ideas, potential incident in future as well as some changes by recommended.

Value Engineer Team

They explained the their proposals

Speculative phase

This step of the VE workshop concerned developing creative ideas, the VE team trace all possible methods of providing the required functions within the project at a lower cost to the owner, many of the ideas were generated during the function analysis by detraining the worth of Collecting of creativity ideas from each team member and analyze them to identify which idea is worthy, which one should improve to use, which one not worthy or additional study required to evaluate, etc.

Hence, all ideas given by the Value engineering team are as follows, and also the Quantity Surveyor provided possible cost saving by each idea.

N

Specified work items in Contract

Proposed Ideas

Comments

Original

Cost

Proposed Cost

Potential

Savings

1.

Important sanitary fittings and bath room accessories UK made as specified.

locally made Similar quality instead of import from UK

Cost saving, not effect to the quality.

AED 4.2 million

AED 3.1 million

AED 0.9 million

2.

9'' cement blocks for internal walls.

4'' cement block for internal walls.

Cost saving and not change the quality.

AED 8.5 million

AED 6.1 million

AED 1.5 million

3.

100 Lux Normal Incandescent Lights bulbs for all rooms and out sides

100 Lux energizer bulbs instead of specified Incandescent Lights bulbs.

Cost saving but the change will effect to the appearance

AED 11.0

million

AED 8.0

million

AED 1.0

million

4.

Cast in-suit concrete floor and guard wall of Car park.

Precast concrete for car park floor slab and guard walls.

Cost saving & Possible time.

AED 5.5 million

AED 5.5 million

5.

Electrical panel boards and accessories units import from UK.

Electrical panel boards and accessory units should import from china instead of UK made.

Cost saving and might not high standard with compare of UK made.

AED 10.0 million

AED 10.0 million

6.

9 inch thick internal block wall as specified.

For all 9 inch brick internal wall should be changed to 4 inch block walls.

Cost saving,

AED15.0 million

AED15 million

All participants were noted down the ideas but not judge them at this stage. Later in the workshop all participants would be given the opportunity to judge all proposals for worth and assess whether can be implemented to archive the aim of the VE workshop, hence at the Judgment Phase each of the ideas was evaluated for worth.

JUDGEMENT PHASE

In this phase the whole group judged the speculative ideas for merit; the purpose being to identify ideas that are likely to reduce cost of the project.

Evaluation

The following table lists the ideas submitted by participants and they were evaluated in accordance with the following rating system:

Each Idea has rated by each participant as how it is effecting to the time, cost and quality of the project. Then it is possible to put rates at the opportunity column according to the given points by professionals. Then the Value Engineering Coordinator can select which proposal should develop, which proposal should reject and also which proposal can directly push for the action, etc.

Company: PMP Value Management LLC.

Project: Al Maya Residential Complex Project,( 25 storey and Car park in basement)

Held on : 05-10-2012 Table of Impact of VE workshop Summary

No

Description

Impact

Opp.

Action

Remarks

T

C

Q

1.

Locally made Similar quality instead of import from France made sanitary fittings & accessories.

5

5

4

5

A

Cost saving

2.

4'' cement block for internal walls.

5

4

5

5

A

Cost saving

3.

100 Lux energizer bulbs instead of specified Incandescent Lights bulbs.

5

3

3

4

R

Effect to Appearance

4.

Precast concrete for car park floor slab and guard walls.

5

5

5

5

D

To be identify possible areas

5.

Electrical panel boards and accessory units should import from china instead of UK made.

3

5

4

4

A

Cost saving but should order again

6.

For all 9 inch brick internal wall should be changed to 4 inch block walls.

3

5

5

5

A

Cost saving but design to be done back

Code of Rating

Opp = Opportunity,

Impact= T - Time, C - Cost, Q - Quality

Rating of Impact = 1 - Possible/Low, 5-Very Possible/High

Action=A - (Accept), D - (Develop), R - (Reject)

This identified ideas with the potential of cost saving or improvements to the project shall be identified for further development under development phase.

DEVELOPMENT PHASE

In this phase participants have the opportunity to make specific recommendations and proposals based on outcomes of the earlier phases. Workshop outcomes and a specific action plan are also produced pending the post workshop report.

EVALUATION OF THE PROPOSAL

The proposal was supported by participants because it: Support to local traders, Improves efficiency of lighting system, Provides safety of workmanship during the construction, Provides an alternative energy savings, and environmental safe.

Issues that detract from the proposal

It requires more evaluation for life cycle cost of maintain period and functioning, as well as it does not include infrastructures work review.

CONCLUSION/ RECOMMENDATION

Value Management strategies can apply for any stage of any project. It is very much use full to apply Value Engineering/ Management strategies since the connectional stage of a project. Also these strategies can be applying to any project till the demolition phase it's, thus for the life cycle of the project. Any client can have a great value for his investments by applying Value management/ engineering strategies for his/ her investment. It is highly recommended to carry out the proposals which proposed by the vale management team and also it is highly recommended to carry out further value management workshops to find out further more possible ways to reduction the construction cost.