Standards of Practice Course on Value Engineering
This course provides an overview of Value Engineering and its importance in construction management. The course covers functional analysis, keys to success, VE approach, procedures, and reporting procedures. Value Engineering is a
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About Standards of Practice Course on Value Engineering
PowerPoint presentation about 'Standards of Practice Course on Value Engineering'. This presentation describes the topic on This course provides an overview of Value Engineering and its importance in construction management. The course covers functional analysis, keys to success, VE approach, procedures, and reporting procedures. Value Engineering is a. The key topics included in this slideshow are . Download this presentation absolutely free.
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Slide1Standards of Practice Course Standards of Practice Course Value Engineering
Slide2AGENDA: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.
Slide3© construction management association of america. Do Not Duplicate or Reproduce.
Slide4What is Value Engineering? 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
Slide5History of Value Engineering 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.
Slide6© construction management association of america. Do Not Duplicate or Reproduce.Alignment Projects need to start right to finish right Expectations Scope Budget Ongoing Effort
Slide7© construction management association of america. Do Not Duplicate or Reproduce.
Slide8© construction management association of america. Do Not Duplicate or Reproduce.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: A l A
Slide9© 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: A B Basic Functions of A
Slide10© construction management association of america. Do Not Duplicate or Reproduce.Function Analysis
Slide11© 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
Slide12© 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
Slide13© 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
Slide14© 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 Value = Functional benefits Cost Cost
Slide15© 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
Slide16© construction management association of america. Do Not Duplicate or Reproduce.
Slide17© construction management association of america. Do Not Duplicate or Reproduce.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”
Slide18© construction management association of america. Do Not Duplicate or Reproduce.Relationship Between Quality and Cost MAX MIN HIGH COST QUALITY LIMITS LOW LOW MIN MAX HIGH QUALITY INITIAL COSTS FUTURE COSTS TOTAL LIFE CYCLE COST Too Cheap Too Expensive LOWEST LCC
Slide19© 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 0 20 40 60 80 100 PERCENTAGE Of TOTAL FACILITY COMPONENTS PERCENTAGE OF COST Best Value Focus
Slide20© construction management association of america. Do Not Duplicate or Reproduce.Sensible Trade-Offs Facility Value Target 01 02 03 04 05 06 07 08 09 10 11 Foundations Substructure Superstructure Exterior Closures Roofing Interior Construction Conveying Mechanical Electrical General Conditions Sitework
Slide21© 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 Planning Design Construction
Slide22© construction management association of america. Do Not Duplicate or Reproduce.Civil & Structural Architectural Mechanical Electrical Focus on Interdisciplinary Areas Owner’s requirements Owner’s requirements
Slide23© construction management association of america. Do Not Duplicate or Reproduce.Sensitivity to Life Cycle Impact
Slide24© 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!”
Slide25© 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
Slide26© construction management association of america. Do Not Duplicate or Reproduce.
Slide27© construction management association of america. Do Not Duplicate or Reproduce.Value Engineering and Value Analysis Planning & Design Construction Value Engineering Value Analysis
Slide28© 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
Slide29© 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
Slide30© 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
Slide31© 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
Slide32© 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
Slide33© 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 Item Acceptable Standard
Slide34© 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
Slide35© 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
Slide36© construction management association of america. Do Not Duplicate or Reproduce.Functional and Operational Requirements • Operating standards • Interface / support requirements • Redundancy • Security • Flexibility
Slide37© construction management association of america. Do Not Duplicate or Reproduce.
Slide38© construction management association of america. Do Not Duplicate or Reproduce.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
Slide39© construction management association of america. Do Not Duplicate or Reproduce.Cost Model
Slide40© construction management association of america. Do Not Duplicate or Reproduce.Function Analysis - Assigning cost to functions Item Function Cost Acoustic Tile Ceiling Retard Fire $0.85 Hide Structure $0.35 Absorb Sound $0.30 Total $1.50 sf
Slide41© construction management association of america. Do Not Duplicate or Reproduce.Facility Level Function Analysis 3.0 ARCHITECTURAL: Exterior Closure Control Environment P $2,602,348 $2,500,000 1.04 Roofing Control Environment P $548,737 $540,000 1.02 Interior Construction Protect Surface P $4,168,402 $4,000,000 1.04 Separate Area Conveying Systems Move Vertical Loads R/S $40,000 $40,000
Slide42© construction management association of america. Do Not Duplicate or Reproduce.FAST - Technical - Example
Slide43© 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
Slide44© 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
Slide45© 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
Slide46© 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
Slide47© 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
Slide48© 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
Slide49© 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
Slide50© 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™
Slide51© construction management association of america. Do Not Duplicate or Reproduce.
Slide52© construction management association of america. Do Not Duplicate or Reproduce.Value Engineering Reporting Procedures • Summary of Results / Implementation matrix • Executive summaries • Proposals • Cost estimates • Appendix materials – Cost models – Function analysis – Idea listings – Agenda – Miscellaneous
Slide53© construction management association of america. Do Not Duplicate or Reproduce.53 Value Engineering Proposal For U.S. Embassy Project
Slide54© construction management association of america. Do Not Duplicate or Reproduce.54 LCC Analysis for VE Proposal For U.S. Embassy Project
Slide55© construction management association of america. Do Not Duplicate or Reproduce.Sample Implementation Matrix
Slide56© 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
Slide57© 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 $ $ $
Slide58© 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
Slide59© construction management association of america. Do Not Duplicate or Reproduce.Standards
Slide60© construction management association of america. Do Not Duplicate or Reproduce.Questions?