Value Engineering
1.14 Value Methodology
1.14.1 Value
Value is difficult to define because it is used in a variety of ways. There are
seven classes of value that are recognized today. These are
1. Economic
2. Moral
3. Aesthetic
4. Social
5. Political
6. Religious
7. Judicial
Of all these classes, only economic value can be measured in terms of
(hopefully) objective monetary units such as dollars, euros, yen, or dinar.
However, economic value is also established through an item’s use value
(facilities that provide a unit of use work or service) and esteem value
(properties that make
something desirable). We can say that use values cause a product to perform,
and esteem values cause it to sell. Use value and esteem value defy precise
quantification in monetary terms, so we often resort to multiattribute
techniques for evaluating the total value of complex designs and complicated
systems or machinery. Accordingly, value can be defined as
It means that, if you can provide better facility to the client with lower price,
the value goes up.
1.14.2 Value Engineering
Value Engineering (VE) is a technique for evaluating the design of a product/
project to assure that essential functions are provided at minimal overall cost to
the manufacturer or client/end user. It is a systematic approach to identifying
the project’s functional objectives with the goal of optimizing design,
construction, and future operations. VE is a creative approach to optimizing
value. The authors of Quality in Constructed Projects by ASCE (p. 239) have
described that In its broadest sense, project value is determined by the
relationship of the worth of the project and its elements to their cost. The
following expression summarizes the relationship
The goal of the VE process is to identify alternatives that maximize this value
relationship. The owner’s requirements are the basis for establishing values for
the items in the numerator. For example, an owner who intends to sell a
facility within five years of its completion may place less value in long-term
maintenance characteristics than an owner who intends to keep a facility for
decades. Owner requirements directly affect the relative value of aesthetics,
reliability, sustainable development, maintainability, operability, construction
duration, and other characteristics. Improving the quality of elements related to
these characteristics usually increase cost. The goal of VE is to achieve a ratio
of quality to cost that is acceptable to and in the best interest of the owner.
1.14.2.1 Objective of Value Engineering
The objective of VE is to provide the required product/project functions at a
minimum cost and to achieve equivalent or better performance while
maintaining all functional requirements defined by the customer/client. VE
necessitates a detailed examination of a product/project function and the cost
of each item in addition to a thorough review of product/project specifications.
It does this by identifying and eliminating unnecessary cost.
1.14.2.2 Value Engineering Team
VE studies are conducted by a multidisciplinary team that focuses on a
clearly defined scope. The VE team consists of specialists from a variety of
disciplines (design, manufacturing, marketing, etc., for product evaluation;
and owner, design professional, contractor, consultant, and construction
management/project management, etc., for construction project) focusing on
determining the most effective way to provide high value at an accepted cost
to the customer/client end user. While each member of the project team is
free to recommend that a VE study be undertaken, it is typically the owner’s
responsibility to authorize and formally initiate the VE effort.
The success of a VE effort is linked to the experience of the team members.
The number and qualifications of VE team members depend on project
objectives and the stage of the project life cycle at which VE studies are
conducted.
VE studies typically involve multiple disciplines. VE team members must
be from diverse disciplines and backgrounds and have a range of expertise
related to the project’s key issues. Each of the team members must have
 Positive attitude and approach
• Technical knowledge related to the product/project
• Higher education
• Professional experience
• Certification from a recognized body as an expert in VE
The VE team is led by a certified value specialist (CVS). SAVE
International (The Value Society) manages certification program for CVS.
1.14.2.3 Approach
The VE approach involves brainstorming such questions as
• Does the item have any design features that are not necessary?
• Can two or more parts be combined together?
• How can we cut down the weight?
• Are these nonstandard parts that can be eliminated?
The key to successful VE is to ask critical questions and seek creative
answers. The following are sample questions that should be included in a
VE study:
• Are all the functions provided required by the customer?
• Can less expensive material be used?
• Can the number of different materials used be reduced?
• Can the design be simplified to reduce the type of items?
• Can a product designed for another project be used?
• Are all surfaces and finishes necessary?
• Would product redesign eliminate a quality problem?
• What is the level of technology required to achieve the owner’s
objectives?
It is important to question everything and not take anything for granted.
Creative solutions can be obtained using classical brainstorming or the
nominal group technique.
1.14.2.3.1 Classical Brainstorming
Classical brainstorming is the most well-known and often-used technique
for idea generation in a short period of time. It is used when creative and
original ideas are desired, and is based on the fundamental principles of
deferment of judgment and that quantity breeds quality. The following are
the rules for successful brainstorming:
1. Criticism is ruled out—no criticism.
2. Freewheeling is welcomed.
3. Quantity is wanted—more ideas is better.
4. Contribution and improvement are sought—participants should speak
whatever ideas pop into their minds.
5. Avoid evaluation—no comments on the idea.
A classical brainstorming session has the following basic steps:
1. Preparation: During this period, the participants are selected and a
preliminary statement of the problem is circulated among them.
2. Brainstorming: A warm-up session with simple unrelated problems is
conducted, the relevant problem and the rules of brainstorming are
presented, and ideas are generated and recorded using agreed-upon
checklists/formats and other techniques if necessary.
3. Evaluation: The ideas are evaluated relative to the problem.
Generally, a brainstorming group consists of four to seven people, although
some suggest a larger group.
1.14.2.3.2 Nominal Group Technique
The Nominal Group Technique (NGT) involves a structural group meeting
designed to incorporate individual ideas and judgments into a group
consensus. By correctly applying the NGT, it is possible for groups of
people (preferably 5 to 10) to generate alternatives or other ideas for
improving the competitiveness of the product/project.
The NGT, when properly applied, draws on the creativity of the individual
participants while reducing undesirable effects of most group meetings such
as
The dominance of one or more participants
The suppression of conflict ideas
The basic format of an NGT session is as follows:
1. Individual silent generation of ideas
2. Individual round-robin feedback and recording the ideas
3. Group’s clarification of each idea
4. Individual voting and ranking to prioritize ideas
5. Discussion of group consensus results
The NGT session begins with an explanation of the procedure and a statement of
questions, preferably written by the facilitator. The group members are then asked to
prepare individual listing of alternatives that they feel are crucial to the survival and
health of the organization.
After this phase has been completed, the facilitator calls on each participant, in roundrobin fashion, to present one idea from his or her list. Each idea (or opportunity) is then
identified in turn and recorded on a flipchart or board by the NGT facilitator, leaving
sufficient time between ideas for comments or classification. This process continues until
all the opportunities have been recorded, clarified, and displayed for all the members to
see. At this point, a voting procedure is used to prioritize the ideas or opportunities.
Finally, voting results lead to the development of group consensus on the topic being
addressed.
1.14.2.4 Timings of Value Engineering
VE studies benefit project quality at most stages of the project phases.
Conducted in the early stages of a project, they tend to provide the greatest
benefit, as there is more potential for cost saving. Figure 1.32 illustrates the
effectiveness of VE. In fact, in recent years, VE has become an aid to
owners in the formulation of goals and objectives before most design work
begins.
VE studies for construction projects are conducted at one or more of the
following project stages:
Conclusion of concept design or facilities planning
30% design completion (preliminary design)
60% design completion
90% or 100% design completion (detail design)
VE enhances project quality at every stage of the project phase. In
construction projects, VE starts during the conceptual phase.
Concept design: VE performed during the conceptual design phase improves
the quality of project design. During this phase, VE involves the
investigation of alternatives, design concepts with the client/end user, design
professional, project or construction manager, and any other project team
member involved in this phase. The project team works to identify the
client/end user’s requirements and to design concepts with the potential to
achieve the owner’s objectives.
Figure 1.32
Effectiveness of Value Engineering. (From American Society of Civil Engineers, Quality in the
Constructed Project, 2000. Reprinted with permission from ASCE.)
Preliminary design: Major changes resulting from VE studies conducted
during this phase can be implemented without significant impacts to the
project schedule or budget. The potential for VE-related cost savings is quite
substantial during this phase. VE studies conducted during this phase
conform to the owner’s/end user’s goals and objectives.
Detailed engineering: VE studies conducted during this phase (60%
completion or more) focus on detail design and construction methods and
the constructability of the project. Table 1.17 illustrates areas of VE study
by design stage.
Construction: VE recommendations made during the construction phase are
called Value Engineering Change Proposals (VECPs). These usually relate
to alternatives/substitutes of material, equipment, and construction methods
normally proposed by the contractor. Savings made due to VE application
during this phase are adjusted per agreed-upon terms of contract.
Figure 1.33 illustrates a schematic for review of a project on target cost
basis. Target cost is the amount the owner would like to spend to build the
facility. In construction projects, the target-based approach can be applied
for the development of the facility from the investment point of view,
having a fixed budget allocation. The design is reviewed keeping in mind
the budget price of the facility to ensure that the facility shall be functionally
qualitative and constructed within the targeted budget. If the total estimated
cost is greater than the target cost, then the design must be fed back into the
VE process.
1.14.2.5 Stages of Value Engineering Study
Figure 1.34 illustrates the VE process summary.
VE studies typically consist of three sequential stages:
1. Preparation
2. Workshop (execution of the VE job plan)
3. Postworkshop
Preparation: This is considered by many to be the most important step of the
VE study. During this phase, the owner’s need is defined, VE team members
are selected, they are informed about the project, and the scope of the study
is established.
Workshop: The VE team convenes a workshop that normally has a sixphase job plan. These are
1. Gathering information
2. Functional analysis
3. Creating alternatives
4. Evaluation
5. Development
6. Presentation
Postworkshop: After the workshop, the VE team prepares a report to
support its findings and the implementation program. Its recommendations
are reviewed by the owner and the design team before implementation.
Figure 1.35 illustrates the activities performed during the VE study process.
1.14.2.6 Function Analysis System Technique (FAST)
FAST is a technique that specifically illustrates the relationship of all
functions within a specific project utilizing a “how–why” logic pattern based
on intuitive logic. It is a helpful diagnostic tool, asking questions that
generate basic information about project functions. The FAST diagram is
especially helpful if the VE team is uncertain of project goals. The following
are types of FAST diagrams: classic, customer/user, technical.
1.14.2.7 The Benefits of Value Engineering
The benefits of VE usually come from improvements in the efficiency of the
project delivery system, refinements to specific features, or the development
of new approaches to achieving the owner’s requirements. The first item
most owners look at when they consider VE is potential cost savings.
However, VE focuses on improving the relationship of function,
performance, and quality to cost—not merely cutting cost.
The benefits of VE in construction are
Reduce project construction cost
• Improve project schedule
• Simplify procedures
• Increase procurement efficiency
• Use resources more effectively
• Decrease operation and maintenance cost