VALUE ENGINEERING
Khaled Osman
Director | Expert in Development and Real Estate markets, wide range of experience in Construction, Engineering & Design | Over 36 Years Managing Large-Scale Projects in Industrial, Residential, and Commercial Sectors"
Project management is often defined as the set of skills required for completing a project with the required quality, on time and at a defined budget. This definition does not fully cover project management comprehensively and does not give the full picture of the role of project management at the present time.
Quality, time and cost are important factors and key performance indexes in project management, but it never stop at the planned limit, there is always a desire to go beyond those limits, finish in sorter time , with better quality and lower cost than budgeted, except that after the planned values for those KPIs, things get more connected and interfaces becomes more critical, enhancement in each of the KPI is required but with a delicate balance with the other two, ?and conditioned that none of the three KPIs fall behind the planned value.
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I will focus on Cost in this article, and specifically on one tool that is used to bring add value to the project budget, but it does add also give better understanding and improve quality, and the time factor remains in balance. Its Value Engineering
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The word Value has different meaning in different civilizations, back in 365 BC , the ancient Greek philosopher and scientist Aristotle used the term Value to measure ?usefulness in his “Theory of Ethics”.
But away from philosophy, philosophers, and the linguistic depth of the term, in today's global economics , VE is mostly connected to economic values. The constituents of economic lays among Benefit, Cost, and Exchange Values.
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Value can be expressed mathematically in terms of (Quality) which represent Performance / Function and (Cost).
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Value = Quality / Cost.
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To increase the value in the equation, Value must be greater than 1, this can happen in the following cases : Quality increases without impact on Cost.
-???????? Quality is constant and Cost decreases.
-???????? Quality increases and Cost is reduced.
-???????? Both increased, but Quality increases at a greater pace than Cost.
-???????? Quality reduces, but Cost go significantly lower.
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This really gives more perspectives beyond the traditional evaluating of a product or a project, add more depth, and open more alternatives that ?helps with overturning economy and market needs.
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?Value engineering can be defined as a set of systematic techniques which are used to evaluate the project execution against the used techniques. Explore multiple alternatives/ technologies, simulate the execution, and evaluate the results.
This technique is utilized to reduce the project execution cost with an eye on the value.
In most of the time, decreasing project time saves cost, so even if not a part of the equation, Time is a main factor in VE.
TECHNICAL DIFENITION
Value Engineering (VE) is a focused team study of functions or systems aimed at achieving the lowest project lifecycle costs while meeting all Client performance requirements for reliability, quality, and safety. VE can be performed at any time during project execution but is often most effective when performed in the FEED or FEL phase of the project. Generally, Value Engineering is only performed on a project when the expected benefits outweigh the time and effort spent.?
FACILITATOR/S
Value Engineering (VE) sessions should be planned and run by a qualified facilitator third party, the prequalification for the facilitator / firm should be submitted for Client review and approval.
Workflow Diagram
Procedures
The key steps in this procedure are recommended include:
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Before beginning the actual VE effort, an orientation exercise with the PMC, Client, designers, and users of the facility will be held to establish and define the scope for the VE study.
The scope will include establishing the level of effort for the study and the qualifications required of the team members. The experience levels of the VE team should be consistent with the complexity of the system and the overall cost. The actual VE workshops can vary from one or two days to several days.
The schedule should consider the availability of the team members, preparation plus organization time, and the extent of evaluation for established design alternatives.
Appropriate VE training should be conducted to ensure that project personnel focus specifically on achieving the KRAs that were identified during the alignment sessions. The VE workshops should be facilitated by an experienced VE specialist, such as a Certified Value Specialist (CVS), using the methodology approved by SAVE International (formerly called the Society of American Value Engineers).
The Value Engineering Facilitator should be detached from the project Engineering to ensure an unbiased posture. The VE team will comprise a mix of on-project Contractor and PMC.
Client personnel, with third party and outside technical specialists invited to participate in the workshops as necessary and agreed. All outside specialists and PMCs will sign Licensor confidentiality agreements if required by the Client.
A project package will be distributed to the Value Engineering team consisting of basic project documentation, such as the design basis, process flow diagrams, plot plan, primary equipment data, and cost estimates. Each team member will review this data to become familiar with the project plan and the existing and proposed parameters that will affect the overall cost and performance.
A brief presentation by the design team will be scheduled to answer questions and provide additional information about the project and its objectives, as well as discuss any unique problems.
The Contractor will prepare a breakdown of project costs by functional component, allowing the team members to identify the major cost areas where they can concentrate their efforts.
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At this session, each functional component will be evaluated for cost versus performance, and alternative designs will be generated by the VE team. The goal is to list as many alternatives as possible without criticizing any of the ideas.
The VE team will meet to rank the alternate designs (for example, on a scale from 1 to 10) both for feasibility of implementation and for cost-saving potential. The ranking criteria should have been agreed to in the preparation phase of the VE exercise.
The team will also consider combining alternate designs to produce better designs. From the ranking exercise, the designs with the greatest potential for viability will be visualized.
Depending on the scope of the VE effort, the team members can proceed with the actual detailed evaluation and development of their respective design alternatives by selecting those with the highest ratings. Another approach is to have the project team or a separate, dedicated group further develop the most interesting design alternatives outside the VE exercise.
Each selected alternative will be developed by completing preliminary designs and calculations with enough detail to cost the components and to show the PMC /Client how the alternate scheme works. Workable alternative designs require both sketch preparation, calculations, quantity take-offs, and cost estimate comparisons to obtain potential savings.
For the alternatives that show a cost savings, additional efforts by the team members will include documenting the advantages, disadvantages, schedule impacts, and re-design impacts, as well as a general discussion to provide implementation details to the PMC/Client. At this phase, pricing of the alternatives must be consistent with project-specific cost estimating procedures.
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The Contractor will organize a formal presentation of the team's findings, based on a written VE report that will be submitted to the PMC /Client.
At the presentation meeting, the VE team will brief the PMC /Client on the highlights of alternative design schemes and the potential overall savings. The meeting encourages discussion among the VE team members and their corresponding discipline design leaders.
The VE report should be a comprehensive record which includes a summary, tabulation of cost models, brainstorming results, alternative designs (with sketches, cost-estimating data,
and written discussions of advantages versus disadvantages, project impacts, and general justifications), and the project data package provided at the beginning of the VE effort.
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Implementation of VE alternatives will result from further evaluation and verification by the design team, as the overall design responsibility remains with them. After review by the design team, recommendations from the project for implementation will be submitted to the PMC /Client for final concurrence.
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