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Standards of Practice Course Value Engineering. AGENDA: 1) Overview 2) Functional Analysis 3) Keys to Success 4) VE Approach 5) VE Procedures 6) Reporting.

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Presentation on theme: "Standards of Practice Course Value Engineering. AGENDA: 1) Overview 2) Functional Analysis 3) Keys to Success 4) VE Approach 5) VE Procedures 6) Reporting."— Presentation transcript:

1 Standards of Practice Course Value Engineering

2 AGENDA: 1) Overview 2) Functional Analysis 3) Keys to Success 4) VE Approach 5) VE Procedures 6) Reporting Procedures © Construction Management Association of America. Do Not Duplicate or Reproduce.

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4 What is Value Engineering? © Construction Management Association of America. Do Not Duplicate or Reproduce. “ … an organized effort directed at analyzing 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 the required performance, reliability, quality, and safety.” Source: Office of Management and Budget “Price is what you pay. Value is what you get.” ~ Warren Buffet

5 History of Value Engineering Evolved during World War II General Electric took lead after WW II Expanded to design & construction in 1960’s Government and private sector by 1970’s Numerous VE programs active today History of Value Engineering © Construction Management Association of America. Do Not Duplicate or Reproduce.

6 Alignment Projects need to start right to finish right Expectations Scope Budget Ongoing Effort

7 © Construction Management Association of America. Do Not Duplicate or Reproduce.

8 Item-Oriented Optimization Item-oriented optimization involves looking at item A and asking: “How can item A be made at a lower cost?” The result is item A 1, a modified version of item A, as shown below: AlAl A

9 © Construction Management Association of America. Do Not Duplicate or Reproduce. Function-Oriented Optimization VE involves looking at item A and asking the questions: “How can the basic functions of item A be provided at a lower cost?” The result is item B, which is sometimes a completely different item, as shown: AB Basic Functions of A

10 © Construction Management Association of America. Do Not Duplicate or Reproduce. Function Analysis

11 © Construction Management Association of America. Do Not Duplicate or Reproduce. Reasons for Unnecessary Costs Lack of time Lack of information Lack of key ideas Lack of budget Temporary circumstances Habits and attitudes Honest wrong beliefs Politics Inadequate definition of value

12 © Construction Management Association of America. Do Not Duplicate or Reproduce. Attitudes Toward VE General negative attitude toward VE Consensus to do VE earlier Conflict over emphasis Diversity of opinion on approach

13 © Construction Management Association of America. Do Not Duplicate or Reproduce. Industry Trends Emphasis on value Timing of studies A / E, owner, and user participation “Zero-based” design

14 © Construction Management Association of America. Do Not Duplicate or Reproduce. Value Improvement To improve value: –Improve benefits, maintain cost –Maintain benefits, reduce cost –Improve benefits, reduce cost –Reduce benefits, reduce cost * –Increase benefits, increase cost * * If benefits remain within needs and cost within limitations. Value= Functional benefits Cost Cost

15 © Construction Management Association of America. Do Not Duplicate or Reproduce. Functional Benefits: How are they measured? Esteem Use Reliability Cost Maintainability Security Expandability Aesthetics Safety Durability Convenience Accessibility Flexibility Perception

16 © Construction Management Association of America. Do Not Duplicate or Reproduce.

17 Key to Value Engineering Success What does “value” means to the owner Understand what is of “value” to the owner Understand how the owner measures “value” Understand how “value” is perceived Define appropriate levels of “value” Be precise in assessing “value”

18 © Construction Management Association of America. Do Not Duplicate or Reproduce. Relationship Between Quality and Cost MAX MIN HIGH COST QUALITY LIMITS LOW MIN MAX HIGH QUALITY INITIAL COSTS FUTURE COSTS TOTAL LIFE CYCLE COST Too Cheap Too Expensive LOWEST LCC

19 © Construction Management Association of America. Do Not Duplicate or Reproduce. Pareto’s Law of Distribution 0 10 20 30 40 50 60 70 80 90 100 020406080100 PERCENTAGE Of TOTAL FACILITY COMPONENTS PERCENTAGE OF COST Best Value Focus

20 © Construction Management Association of America. Do Not Duplicate or Reproduce. Sensible Trade-Offs Facility Value Target 0102030405060708091011 Foundations Substructure Superstructure Exterior Closures Roofing Interior Construction Conveying Mechanical Electrical General Conditions Sitework

21 © Construction Management Association of America. Do Not Duplicate or Reproduce. Relationship of Time and Change Cost of making changes Best Opportunity for Improvement Time High Ability to make changes Degree of Change Low PlanningDesignConstruction

22 © Construction Management Association of America. Do Not Duplicate or Reproduce. Civil & Structural Architectural Mechanical Electrical Focus on Interdisciplinary Areas Owner’s requirements

23 © Construction Management Association of America. Do Not Duplicate or Reproduce. Sensitivity to Life Cycle Impact

24 © Construction Management Association of America. Do Not Duplicate or Reproduce. Care with Major Risks in the Budget “It’s worth a $100,000!” Are they the same? $175,000$25,000 $100,000 $75,000$125,000 “It’s worth a $100,000!”

25 © Construction Management Association of America. Do Not Duplicate or Reproduce. September, 2009 Project-Specific Issues Design approach Technical design Program Flexibility Reliability Constructibility Expandability Energy Maintainability Budget Schedule Procurement approach

26 © Construction Management Association of America. Do Not Duplicate or Reproduce.

27 Value Engineering and Value Analysis Planning & Design Construction Value Engineering Value Analysis

28 © Construction Management Association of America. Do Not Duplicate or Reproduce. Approach to a VE Study 3 Phases of a VE Study: Pre-Workshop: preparation & organization VE Workshop: intensive & focused team during a 3-5 day dedicated effort Post-Workshop: Follow-up, assessment, report, meetings if needed, implementation Pre- Workshop VE Workshop Post- Workshop Value Engineering Study

29 © Construction Management Association of America. Do Not Duplicate or Reproduce. Establishing a VE Team A most critical action! Good experienced team = successful VE Three choices: 1.Select team from people involved in project 2.Select independent team not involved in project 3.Hybrid: i.e. some insiders/some outsiders

30 © Construction Management Association of America. Do Not Duplicate or Reproduce. September, 2009 Advantages/disadvantages of the VE Team Composition A VE specialist facilitates the study using the existing design team, owner personnel, and other owner consultants Traditional outside, independent “cold team” which conducts the study, facilitated by a VE specialist A VE specialist facilitates the study using an independent “cold team” working with the design firm, owner personnel, and other owner consultants

31 © Construction Management Association of America. Do Not Duplicate or Reproduce. VE Work Plan Information Objectives –Key issues & criteria –Function analysis Development –First cost –Life cycle cost –Non-economic objectives Speculation –Open-minded –Creative Report –Considerations –Implementation Evaluation –Performance against criteria –Goals & objectives

32 © Construction Management Association of America. Do Not Duplicate or Reproduce. Defining Value Objectives List Criteria / Objectives First cost O & M cost Energy consumption Space requirements Performance Image (owner’s vision) Flexibility Reliability Expandability Schedule

33 © Construction Management Association of America. Do Not Duplicate or Reproduce. Defining Value Objectives Determine minimum (or maximum) acceptable standards First cost NTE $150/sf O & M cost NTE $8/sf Energy consumption NTE 60,000 Btu/sf/p.a. Space requirements NLT 50,000 sf net program area Performance on scale of 1-10: 7 minimum Image on scale of 1-10: 5 minimum Flexibility 35% of space Reliability minimum toleration: 24 hours Expandability horizontal, one side Schedule September, 2003 ItemAcceptable Standard

34 © Construction Management Association of America. Do Not Duplicate or Reproduce. Defining Scope Program –Functional Space Program –Blocking & Stacking –Public Space –Efficiency Geometric Drivers –Wall Area Ratio –Degree of Articulation Volume Drivers –Clear Ceiling Height –Plenum Height –Interstitial Needs –Atria –Light Shelves

35 © Construction Management Association of America. Do Not Duplicate or Reproduce. Criteria and Standards Building systems standards Energy standards Codes -- local and national Life safety considerations Technical specifications Document standards Procurement standards

36 © Construction Management Association of America. Do Not Duplicate or Reproduce. Functional and Operational Requirements Operating standards Interface / support requirements Redundancy Security Flexibility

37 © Construction Management Association of America. Do Not Duplicate or Reproduce.

38 Overview of VE Procedures Cost models Energy / maintenance models Function analysis Issues analysis Brainstorming and Group Dynamics Economic Analysis/Life cycle costing/Sustainability Examples Value Enhanced Design/Integrated VE Standards

39 © Construction Management Association of America. Do Not Duplicate or Reproduce. Cost Model

40 © Construction Management Association of America. Do Not Duplicate or Reproduce. Function Analysis - Assigning cost to functions ItemFunctionCost Acoustic Tile CeilingRetard Fire$0.85 Hide Structure$0.35 Absorb Sound$0.30 Total$1.50 sf

41 © Construction Management Association of America. Do Not Duplicate or Reproduce. Facility Level Function Analysis 3.0ARCHITECTURAL: Exterior ClosureControlEnvironment P$2,602,348$2,500,0001.04 RoofingControlEnvironment P$548,737$540,0001.02 Interior ConstructionProtectSurface P$4,168,402$4,000,0001.04 SeparateArea Conveying SystemsMoveVertical Loads R/S$40,000

42 © Construction Management Association of America. Do Not Duplicate or Reproduce. FAST - Technical - Example

43 © Construction Management Association of America. Do Not Duplicate or Reproduce. Issues Analysis Define key issues Tie functions to key issues Identify benefits / costs Identify priority Define trade-offs

44 © Construction Management Association of America. Do Not Duplicate or Reproduce. Unlocking Creativity Two Kinds of Thinking Analytical –Logic based –Limited/unique ideas –Convergent thinking –Vertical thinking –Works well inside the envelope Creative –Imagination based –Many & varied ideas –Divergent thinking –Lateral thinking –Tests the edges of the envelope

45 © Construction Management Association of America. Do Not Duplicate or Reproduce. Brainstorming Techniques Defer judgment Focus on the key issues identified Start with most general & work to specific One individual records ideas Maintain one discussion at a time Everyone is equal Keep a good sense of humor

46 © Construction Management Association of America. Do Not Duplicate or Reproduce. Barriers to Creative Thinking Unwillingness/inability to focus on critical issues Conformity Not challenging the obvious Extreme focus on details Evaluating too quickly Fear of looking like a fool Self-imposed barriers

47 © Construction Management Association of America. Do Not Duplicate or Reproduce. Checklist for Generating Ideas Inordinately expensive items Complex & complicated items Construction difficulties High maintenance items Potential operational difficulties Non-standard products Multiple use & repetitive items Critical materials Obsolete materials Restrictive criteria Extreme safety factors Restrictive tolerances Proprietary specifications

48 © Construction Management Association of America. Do Not Duplicate or Reproduce. Group Dynamics & Partnering Recognize the importance of group dynamics Avoid unnecessary conflicts Base VE process on common goals & objectives Address the issues not the individuals Understand that the whole is larger than the sum of the parts Use VE process to develop partner relationships

49 © Construction Management Association of America. Do Not Duplicate or Reproduce. Economic Analysis Techniques Present Value Analysis Annualized Cost Rate of Return Break Even/Payback Period Savings/Investment Ratio

50 © Construction Management Association of America. Do Not Duplicate or Reproduce. 50 LEED® Green Building Rating System™ LEED© Checklist taken from LEED® Green Building Rating System™

51 © Construction Management Association of America. Do Not Duplicate or Reproduce.

52 Value Engineering Reporting Procedures Summary of Results / Implementation matrix Executive summaries Proposals Cost estimates Appendix materials –Cost models –Function analysis –Idea listings –Agenda –Miscellaneous

53 © Construction Management Association of America. Do Not Duplicate or Reproduce. 53 Value Engineering Proposal For U.S. Embassy Project

54 © Construction Management Association of America. Do Not Duplicate or Reproduce. 54 LCC Analysis for VE Proposal For U.S. Embassy Project

55 © Construction Management Association of America. Do Not Duplicate or Reproduce. Sample Implementation Matrix

56 © Construction Management Association of America. Do Not Duplicate or Reproduce. Value Enhanced Design Integration of value management, cost management into design process Utilizes design team of record Emphasizes owner & user participation Must start at outset of project Objective is to assure alignment of scope, expectations & budget

57 © Construction Management Association of America. Do Not Duplicate or Reproduce. Value Enhanced Design Delivery Cost Management Design Value Management Internal workshops to improve value and to enhance constructibility On-going, interactive cost management supplementing milestone estimates $$$

58 © Construction Management Association of America. Do Not Duplicate or Reproduce. Value Enhanced Design Delivery Advantages Improved team communications Better control over cost Improved clarity of value expectations Faster feedback on cost impact of decisions Reduced chances of redesign Improved relationship with owner

59 © Construction Management Association of America. Do Not Duplicate or Reproduce. Standards

60 © Construction Management Association of America. Do Not Duplicate or Reproduce. Questions?


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