Value Engineering

Value Engineering (VE) is one of the most effective techniques known to identify and eliminate unnecessary costs in projects.  Value is a fair return or the equivalent in goods, services, or money for something in exchange.  Value can be considered by the formula: Value = Function/Resources.  Function is measured by the performance requirements, and resources are measured in the materials, labor, price, time, etc., required to accomplish that function.  Value Methodology (VM) focuses on improving value by identifying the most resource-efficient way to accomplish a function that meets the required performance expectations.

The term VE is used when applying VM to new projects. VE refers to an organized effort to analyze functions of systems, equipment, facilities, services, and supplies for the purpose of achieving essential functions at the lowest life-cycle cost, consistent with required levels of performance, reliability, quality, and safety.

 

Value Methodology (VM)

VM is not cost cutting, quality reduction, or a process that can be applied without top management support and the support of all functional disciplines. VM is however, a process to identify unnecessary cost in a project, and to offer alternatives while assuring quality, reliability, life cycle cost, and other critical factors meet or exceed expectations. A VM workshop consist of gathering the required stakeholders and conducting VE sessions which follow sequential six phases.

Phase     Name

     1.        Information

     2.        Function Analysis

     3.        Creative

     4.        Evaluation

     5.        Development

      6.       Presentation

 

  1. Information Phase
    1. The project overview consisting of the background, purpose, location, budgets, schedule, and the identities of the designers, owners, contractors, and other stakeholders.
    2. Evaluation of the gathered information for the project such as; studies, operations, site issues, material or labor constraints, municipality requirements, front end engineering (FEED), or architectural renderings.

 

  1. Function Analysis Phase
    1. A function describes the purpose or intended use for anything. The purpose of the Function Analysis phase is to identify the greatest opportunities for the improvement of value. Need to ask the questions, what does the function do, and what is the value of the function?
      1. Identify functions
        1. Determine all possible verb-noun combinations that describe the functions of the subject under study (Ex: charge battery, control heat).
      2. Classify functions,
        1. Classify the identified functions into basic and secondary. Basic is the specific purpose, and secondary supports the basic. Battery example – basic = deliver energy, secondary = store energy.
        2. Higher order functions -v- lower order functions
      3. Organize functions
        1. Use function analysis worksheets to correlate various types of information with the functions. Use a Function Analysis System Technique (FAST) which display in logic format deepening the understanding. (see diagrams)
      4. Prioritize functions.
        1. Select the functions that have the greatest opportunity for savings.
  1. Creative Phase
    1. The purpose of the creative phase is to generate a large quantity of ideas or alternates that can perform the basic functions (brainstorm). Withhold judgement for the ideas, and develop as many as possible.
      1. What other solutions will perform the function?
      2. What else will create the required outcome?
      3. Does it need performed at all?
  1. Evaluation Phase
    1. The purpose of the evaluation phase is to evaluate the options produced in the creative phase. Screen the raw ideas to reduce them to a manageable quantity. Answer the questions for the options.
      1. Will the idea achieve the basic function?
      2. Will the idea improve value?
      3. Is it readily available to implement?
  1. Development Phase
    1. The objective of the Development Phase is to collect additional data, to thoroughly analyze those best alternatives selected during the Evaluation Phase, and to prepare cost estimates and initial designs that will ensure acceptability and ultimate project implementation.
      1. Determine sources for additional information. Consult with specialists, suppliers, contractors for additional input and cost information.
      2. Ascertain feasibility of the selected alternatives.

 

  1. Presentation Phase

1. The purpose of the Presentation Phase is to sell your ideas when putting the recommended alternatives before the decision makers. Answer the questions regarding each value alternative.

          1. What are the specific recommended changes?
          2. How do they perform the required functions?
          3. What roadblocks need to be overcome?