Value Engineering PDF

ENGINEERING SPECIFICATIONS & COST BUILTUP QSS 512 VALUE ENGINEERING INTRODUCTION INTRO TO VE Intro: It is a management technique/program/concept First started in 1940s Tried and proven for countless owners and manufacturers Savings of 50 dollars for each dollar spent on value...

ENGINEERING SPECIFICATIONS & COST BUILTUP QSS 512 VALUE ENGINEERING INTRODUCTION INTRO TO VE Intro: It is a management technique/program/concept First started in 1940s Tried and proven for countless owners and manufacturers Savings of 50 dollars for each dollar spent on value engineering is common. Audience: Planners, designers, engineers, architects, operators and maintenance personnel, owners, utility companies, developers, investors, contractors and private companies. Advantages: Saving money Building more for less money (better value) (better return on investment) Increasing efficiency Cutting dependency on energy-intensive buildings (high energy cost) Fight inflation FATHE OF VE: Lawrence D. Miles CONSTRUCTION COST INFLATION (Graph) DEFINITION Value engineering is a proven management technique using a systematized approach to seek out the best functional balance between the cost, reliability, and performance of a product or project. The program seeks to improve the management capability of people and to promote progressive change by identifying and removing unnecessary cost. Value engineering has several techniques that serve as the toolkit of the value analyst. TOOLKITS OF VE STUDY / AREA OF STUDIES TO BE ADDRESSED IN VE STUDY Sr. No. Tool / Technique/ Management aspects for VE 1 Function Analysis 2 Creative Thinking 3 VE Job Plan 4 Cost Models 5 Life Cycle Cositng 6 Evaluation Matrix 7 Functional Analysis Systems Techniques 8 Cost and Worth 9 Habits, Roadblocks, and Attitudes 10 Managing the Owner/Designer/Value Consultant Relationship TERMINOLOGIES IN VALUE PROGRAM VALUE ENGINEERING Describes a value study on a project or product that is being developed. It analyses the cost of the project as it is being designed. VALUE ANALYSIS Describes a value study of a project or product that is already built or designed and analyses the product to see if it can be improved. VALUE MANAGEMENT / VE STUDY / VALUE PROGRAM Identifies the methodology and techniques used in value work, but does not distinguish between engineering of a building or facility and the analysis of a product. It is used to describe the entire field of value endeavors. All three terms describe the application of value tolls/techniques JOB PLAN The systematic approach of value engineering is the JOB PLAN. The JOB PLAN is the road map for defining the required task, and determining the most economical combination of functions to achieve the task. The JOB PLAN also helps us to identify high cost areas in the design, i.e., items that are at a higher cost than on other similar facilities. The JOB PLAN also uses the functional approach that makes it necessary for the designer to identify the real requirements of their project. In defining the project, the analyst uses two-word descriptions such as house personnel, transfer oil, convert energy, purify water, etc., JOB PLAN STEPS Information Phase Creative Phase Judgement Phase Development Phase Recommendation Phase INVENTORS VE JOB PLAN DESCRIPTION Inspiration, Data Information Information and background on the subject matter are sought so gathering, Phase that patterns and combinations of ideas can be formulated. The Analysis of required functions of the inventor’s quest are broken down and known facts identified. Experimentation Creative Ideas are formulated to hopefully arrive at the right formula - new Phase combination Analyze and Judgement The inventor needs a place to start, so he begins judging and Judge data Phase evaluating his ideas, trying to arrive at the best combination Develop design Development The inventor’s dream nears the point of success as he begins Phase building. He fails and tries again, each time learning by his mistakes and other people’s suggestions. Sell to Public Recommenda His new invention is complete and ready to go, only to meet with tion the reluctant supervisor, who sets every road block imaginable. He overcomes these road blocks and feels the true meaning of success. What VE is and What not? Sr What VE is? What VE is not? No. 1 System oriented Design Review 2 Multidiscipline Team A Cheapening process approach 3 Life cycle oriented A requirement done on all design 4 Function oriented Quality control 5 A proven Management technique Q to Students? WHAT CAN BE THE REASONS FOR POOR VALUE IN CONSTRUCTION PROJECTS? WHICH PARTY IS RESPOSIBLE FOR POOR VALUE – OWNER/DESINGER/CONTRACOTR? HOW TO MANAGE A PROJECT/ RUN A FIRM WITHOUT THE NEED OF VE? ALL DESIGNS HAVE UNNECESSARY COSTS Studies have shown it Impossible to bring together innumerable details of a construction project with the best functional balance between cost, performance and reliability without a VE review. Design done under the pressure of due date The very nature of construction design demands that countless variables be considered and pulled together by a certain date. Goal of Value consultant is similar to the designer – owner’s requirement fulfilment at the most reasonable life cycle cost. VE consultant uses DEDUCTIVE REASONING (Top-down logic) whereas DESIGNER uses INDUCTIVE REASONING (based on pas experience) (Bottom up logic). VE team sit down with plans and specifications that have been conceptualized to a certain point. REASONS FOR POOR VALUE* Lack of time Lack of information Lack of idea Misconceptions Temporary circumstances that inadvertently become permanent Habits Attitudes Politics Lack of fee * This is not an exhaustive list, there can be other reasons also REASONS FOR POOR VALUE Lack of time Due date to deliver final plans Lack of information Era of technical explosion (civil example) Lack of idea No one can think of everything (non – civil field example) Misconceptions Honest misconception (non-civil field example) Stick to our convictions or be convicted by our stickiness – example BIM Temporary circumstances that inadvertently become permanent Routine occurrences Floor loading rate 100 pounds/ sq. ft. or lighting level 150 foot-candles Habits Attitudes Politics Lack of fee LACK OF INFORMATION SLUMP BLOCK FINISH – concrete blocks ROCK VENEER FINISH – Broken stones LACK OF IDEA Metal strapping VALUE ENGINEERING HISTORY EARLY DEVELOPMENT IN GE COMPANY VE applied in construction industry since late 1960s or early 1970s First evolved in Manufacturing industry, then into government procurement sections, and eventually into the construction industry. Initial development of value engineering concept was a product of the GENERAL ELECTRIC (GE) COMPANY. The man responsible for the development of the value engineering program was Lawrence D. Miles, an electrical engineer with GE. Miles was assigned to the purchasing department under the direction of vice-president, Harry Erlicher. Miles (cost conscious engineer) was assigned to purchase department – who was often dissatisfied with the high cost of many of GE’s projects.  All types of steel, aluminium, copper, bronze, nickel and tin were committed to the war effort (WW II). Shortage of material forced them to look for alternative material and design to meet the same function. The underlying factor was that materials and designs were changed, but the function remained the same. One example: a pump rotor usually made of stainless steel for underwater use. Stainless steel was unavailable. The manufacturers searched for an alternative that would accomplish the same function. Spalding fibre was tried. Instead of costing 15 dollar like the stainless steel, the Spalding fiber pump rotor cost 5 dollar. It was more impervious to corrosive vapors, lasted longer and was one- third the cost of the original stainless steel.  After the war, Erlicher and Miles were in agreement that there must be a mechanism to stimulate these progressive changes. Miles was made a GE purchasing agent in 1944 and applied the functional concept to purchasing. In 1947, Miles was assigned full time the task of reducing costs for General Electric’s products. Efforts at cost reduction using the functional concept were noteworthy.  During 1947-1952, Miles developed the functional concept as it relates to cost. It was recognized that people need to be pushed a bit, to be motivated beyond their normal habit solutions. Also unnecessary cost should be identified and removed to stimulate progressive change even when materials and habit solutions are available. For example, if a design has not changed in 18 years, the product is excellent or management has failed to improve it. As the program developed other subjects were added to broaden the impact of cost reduction and to help stimulate the creatie minds of desingers, purchasing agents and sales engineers. Other subjects were added such as creative thinking, evaluaiotn of the basic function, habits and attitudes, roadblock to change, new materials.  As each session was opened, a presentation was planned that either informed, motivated or reminded participants to think beyond their normal habit solutions. Many of the subjects were intended to perform all 3 of these functions. At first, the functional approach was related to decreasing cost. However, other criteria also needed to be accounted for in the final analysis of the project. Was the product safe? Was it saleable to the public? Was it aesthetically pleasing? Etc. The initial thrust of cost reduction was then expanded to evaluate the overall value of the product. The first value analysis seminars at General Electric were conducted in 1952.  Later it was realized that multidisciplinary team was needed from all parts of the company that were involved in the production and sale of various products. SPREAD OF VALUE ANALYSIS Through technical papers, articles in journals, and word of mouth, GE’s success in value analysis became known. A US Navy Admiral – GE Vice-president GLEN WARREN – Conversation was on high cost of defence systems. Invited for VALUE ANALYSIS WORKSHOP. Navy accepted invitation and inititated a value analysis program in the Navy shipyards. In 1954 the Navy Bureau of Ships, a division of the department of defence, established a VALUE PROGRAM. The Navy did not call its program value analysis as GE’s program had. GE’s program was to take an existing product that was being manufactured and analyse it for unnecessary costs. The Navy felt it would be more prudent for their needs if they analysed the engineering drawings before anything was built. The Navy’s program showed excellent results, following the Navy’s lead, the US Army and Air Force also launched VALUE ENGINEERING PROGRAM. DEVELOPMENT OF INCENTIVE CLAUSES Suppliers and contractors doing work for the government remained untapped area for cost savings. The department of defence, at that time, was under the direction of Robert McNamara. He suggested that the department of defence should concentrate less on the allowable costs and more on the avoidable costs of defence work. This was in relation to the cost of contracting for government services. ….. Under the current contract terms the contract is reduced by 5 million dollar and the suppliers’ profit is reduced proportionately. In 1963, the Armed Services Procurement Regulation (ASPR) committee added article 17, section I which made it mandatory that value engineering incentive provisions be included in all procurement exceeding 1 lakh dollar and value programs be include in certain contracts over 10 lakh dollar. VALUE ENGINEERING SOCIETY FOUND In 1958, the Electronic Industries Association (EIA) formed a committee on value engineering SAVE (SOCIETY OF AMERICAN VALUE ENGINEERS) SJVE (SOCIETY OF JAPANESE VALUE ENGINEERS) INVEST (INDIA VALUE ENGINEERING SOCIETY) INTRODUCTION INTO CONSTRUCTION FIELD Value engineering was introduced into the construction industry between 1963 and 1965 when contractor sharing clauses were added to construction contracts. In 1964, the Army Corps of Engineers included incentive clauses in their contracts. The Bureau of Reclamation, a division of the department of the interior, included contractor sharing clauses in 1966 In 1970, the United States Congress endorsed contractor incentive clauses for the department of Transportation and the General Services Administration (GSA), public building service. In 1973, the General Services Administration (GSA), Public Building Services introduced the first value engineering service clause requiring value engineering studies on their construction projects. (this was done by realizing that major savings of is when applying value engineering during design stage). To ensure that the principles of value engineering were used to their fullest, the GSA asked the SAVE to develop a certification program for value practitioners. The status of certified value specialist (CVS) was established by SAVE as a standard recognizing competence in the field of value engineering. SAVE was interested in establishing a seminar on value engineering for the construction industry. The 40hr. Workshop was sponsored jointly by AMERICAN CONSTULTING ENGINEER’S COUNCIL (ACEC) and the AMERICAN INSTITUTE OF ARCHITECTS (AIA). THANK YOU HABITS, ROADBLOCKS AND ATTITUDES CAN YOU LOOK BACK AT YOURSELF AND IDENTIFY SOME OF YOUR ACTIONS IN YOUR DAY TO DAY LIFE WHICH ARE BECAUSE OF HABIT PATTERNS RATHER THAN APPLYING MIND? CAN YOU LOOK BACK AT YOUR LIFE AND IDENTIFY SOME SITUATIONS WHERE YOU/ANY PERSON DISPLAYS RESISTANCE TO NEW IDEAS/CONCEPTS? WHAT CAN BE REASONS FOR THIS RESISTANCE?  HABITS; Disadvantage: force of habit allows the continued duplication of an old design or the manufacturing process. Advantage: speedier formation of drawings through a quicker conceptualization, easy to achieve due dates, avoid penalties. Problem in changing Habits – ATTITUDE 99 +/- 99 9999 - rearrange to get 100 as the result  A Child is a creature of impulse, and an adult is a creature of habits; the older we get, the more the grip of habit on our conduct – G.B.Cheever Habit works more constantly and with greater force than reason….. – by Locke Knowledge is fluid, always changing, always growing, very often requiring you to let go of a firmly held idea. Habit is just the opposite. Habit is rigid, unbending, unchanging, ungiving, unyielding, and naturally, because knowledge and habit are so diametrically opposed to each other, they often get in each other’s way. Sr. Machine Inventor No. 1 Sewing machine Poet and a cabinet maker 2 Cotton gin Teacher 3 Type setting machine Watchmaker 4 Pneumatic tyre Veterinarian VIDEOS  Is experience always bad? Are habits always bad? No, but not good in all situations Example where habtis are good: typing, reading, army for combat situations, modern assembly systems run on habits, driving a car etc., Example where habits are bad: Design of a project, construction procedure etc., ATTITUDES Attitudes support the continuation of existing habits and are susceptible to roadblocks. Attitude kill good ideas before the ideas have a chance to develop. ROADBLOCKS TO NEW OR DIFFERENT IDEAS IT NEEDS HIGHER APPROVAL HE IS TOO AMBITIOUS FOR US WE DID IT THIS WAY LAST TIME IT TAKES TOO LONG TO LOOK INTO THE DRAFTING ROOM DOESN’T LIKE CHANGES ATTITUDE SCREEN FIDIC Conditions of Contract – Clause 13.2 – VALUE ENGINEERING The Contractor may, at any time, submit to the Engineer a written proposal which (in the Contractor’s opinion) will, if adopted, (i) accelerate completion, (ii) reduce the cost of the Employer of executing, maintaining or operating the Works, (iii) improve the efficiency or value to the Employer of the completed Works, or (iv) otherwise be of benefit to the Employer. FIDIC Conditions of Contract – Clause 13.2 – VALUE ENGINEERING JOB PLAN STEPS Information Phase Creative Phase Judgement Phase Development Phase Recommendation Phase REASONS FOR VE STUDY (JOB PLAN STUDY) Organized It forces a concise description of purpose It zeroes in on high cost areas It forces people to think deeper than their normal habit solutions Objective Universal VERSIONS OF JOB PLAN INFORMATION PHASE Defining the project Background information that leads to the design Information that went into the development of design Rationale used by designer for the development of project Assumptions made in the design criteria, in selecting materials and equipment's Limitations on project Sensitivity to the costs involved in owning and operating a facility areas that have high cost INFORMATION PHASE PROJECT CONSTRAINTS: Not subjected to VE Study Examples in WASTE WATER TREATMENT PLANT Effluent criteria established by the health department Plant design capacity No bypass to the river Provisions to be provided for interim solids handling Architecture to blend in with surroundings. INFORMATION NEEDED FROM DESIGNER AND OWNER At the beginning of VE wksp, Designer asked to give oral presentation on the project design. EXAMPLE FROM A CASE INFORMATION PHASE SITE VISIT A picture is worth a thousand words Get the facts well so that you can do a competent job ANALYZING COST INFORMATION First assignment of Value Engineer’s is to review the cost information and validate it. Accuracy of cost information is mandatory All VE Study are based on Life cycle cost Serves as a basis for comparison of future Value engineering recommendations Second assignment is to construct COST MODEL COST MODEL COST MODEL COST MODEL COST MODEL COST MODEL INFORMATION PHASE FUNCTION ANALYSIS Identify what it is we are trying to do and also to identify the associated cost. Clearly define the work involved and the requirements for the project. Also to separate those nonessential areas of the project that are being provided for support more than to perform the specified requirements. Function analysis forces conciseness by identifying the work or function to be performed. Description on Function analysis worksheet Function classification: BASIC and SECONDARY Identify COST and WORTH related to each Function Calculate COST-TO-WORTH for the overall system VE after the above study, still he is not sure of the process and elements involved in the project, it may be helpful to prepare a FAST (FUNCTIONAL ANALYSIS SYSTMES TECHNIQUE) DIAGRAM. FAST is actually a road map of a function which helps to delineate the steps that are taken in a project in order to achieve its purpose and objective. INFORMATION PHASE INFORMATION PHASE BASIC: The specific work or purpose the product or project must complete SECONDARY: Support function that may be needed but do not perform the actual work FAST TECHNIQUE FAST EXAMPLE – WAREHOUSE FOUNDATION FAST EXAMPLE – IMPROVE PROFITABILITY FAST TECHNIQUE CLASS EXERCISE CREATIVE PHASE Ideas come as a result of work done in the Information Phase and from group and individual creative sessions. Creative techniques are used to foster an open atmosphere of a free flow of information. Creative and judgement phase worksheet used in VE The ideas are immediately recorded before it is forgotten. Judgements are suspended during the development of creative ideas. CREATIVE PHASE CREATIVE PROCESS TOOLKIT Imagination Inspiration Illumination CREATIVE PHASE CREATIVE PROCESS IN VE STUDY The team members must believe that improvements are possible. Be receptive to new ideas Eliminate the word “impossible” from thinking process SUSPEND JUDGEMENT Develop as many ideas as possible Look for association of ideas Don’t be afraid to experiment Encourage all team members to participate Test your own views in the form of questions Help team members work through their ideas Record all ideas. JDUGEMENT PHASE Used to screen the ideas previously listed in the creative phase. Criteria to screen creative ideas; Cost benefits to the recommendation Does the proposal idea meet the required functional requirements? Are the original design requirements excessive? What is the impact on the design and construction schedule of the project? Is there excessive redesign required to implement the idea? Is there improvement over the original design? Has the proposed design been used in the past? Is there a past record of performance on the new design proposal? Does the idea materially affect the aesthetics of the building or project? CREATIVE & JUDGEMENT PHASE CREATIVE PHASE - EXAMPLE JUDGEMENT PHASE DEVELOPMENT PHASE Study takes the ideas remaining after judgement and further develops into workable solutions. Technical expertise of the team members play an important role How do you divide up the ideas for development among the team members. JUDGEMENT PHASE DEVELOPMENT PHASE VE STEPS