Value Engineering

When you are asked what is Value Engineering what do you think of, cutting the cost, making the building smaller, removing scope from the project, rebidding the project to more subcontractors? The correct answer is to add value to the project.

Value analysis was created in the early 1940’s by Lawrence D. Miles while he worked for General Electric, a major defense contractor, during the Second World War. He proposed products are purchased for either function or esthetics and desires. I need a hammer to build my backyard deck this weekend and a new grill to cook dinner. If I buy the grill with the six burners and the Wi-Fi controls in a custom color to match my college football team it is very desirable. I can still cook a great meal without those accessories added to the grill. The hammer performs work, the super grill is very desirable.  A value engineering study would confirm the hammer is what I need to build my deck, and I can cook dinner on the grill without the Wi-Fi and matching school colors. Lawrence Miles asked the question; can a design be improved, or would a different material achieve the same function? He had a change in thinking to move from reviewing the existing parts to improving the conceptual design. A new process was born, think before you build.

In the 1950’s, his process started to be used in other industries and analysists were hired. Those hired were engineers and were called Value Engineers. In 1959 the Society of America Value Engineers was incorporated and in 1996 the name was change to SAVE International. Value Engineering is a process used by a team to improve the value of a project through analysis of its function. Function analysis is the foundation of Value Engineering. Functions are described using two words, measurable noun/active verb. A hammer is used to apply force and a pen is used to write. The Value Engineering team reviews the project’s functions to determine how it can be improved and made more efficient and cost effective. The tool used by value engineers is the Function Analysis System Technique (FAST Diagram).

Why use Value Engineering? There are several reasons, customer satisfaction, productivity improvement, quality improvements, and it is a tested system which has worked for over 50 years. It is result oriented, operations enhanced, lowers life cycle costs, and brings cost savings to the project. Many of the Value Engineering techniques that are used for a formal study are used by estimators all of the time, but in different ways and by different names.

Reasons for poor value that occur on a construction project include lack of time, information, ideas, habits, politics, and a lack of money (or fee).

Lack of Time:

Each member of the design team has a set date to complete their final design/plans. There is only a limited time to achieve the best design for the best value. The statement made on all projects to the design team from the client, generally is, “Get the design done, bid the project, we need the widget store open in ten months.”

Lack of information:

            New materials, technology, and products are constantly entering the market.

            No member of the design team can keep up with these changes and what is

           done in one area of the country is very different in another area.

Lack of ideas:

The design team cannot think of everything. It could be time, money, or materials. The team can’t always second guess. An idea is selected, and the design follows that idea.

Habits:

It was done this way before and it worked, why change? If the new or “better idea” fails, costs the owner additional money or delays the completion of the project, how does the team explain that to the owner? It is easy to cut and paste details from a previous project into the current project.

Politics:

There are many people to please and each know what is best for them. Often the least costly solutions may not be acceptable to the residents in the surrounding area of the project.  

Lack of fee:

Not having the proper fee to design a project can affect the end project.

To stay within the project budget sometime short cuts are taken which can affect the project.

A Value Engineering study can help to address all of the above reasons. Who should be involved at the Value Engineering (VE) study is as important as the study itself. The owner and their end user of the project should be an integral part. If it is a hospital bed tower, the nursing department should be involved in the study. If it is a hotel, housekeeping and the restaurant staff should have representation in the study.

Engineers and architects, who were not on the original design team should be included in the Value Engineering study. A Certified Professional Estimator certified by the American Society of Professional Estimators and a Value Engineer trained by SAVE International round out the Value Engineering study team.

All Value Engineering studies start by using the same four phases: Information Phase, Creative Phase, Judgement Phase, and Recommendation Phase.  

Information phase:

Define the project, discover the background information of how or why the design team got to where the project is (what did they think the owner intended them to design).

Creative phase:                                                                                                                               

Ask questions do not assume, think outside of the box. This is an open discussion with all members of the VE study because no idea is a bad idea. The floor is open to all ideas at this time. All ideas are recorded covering the walls with sticky notes of ideas.

Judgment phase:

Review each idea from the creative phase for advantages and disadvantages. Then rate each of the ideas from one to ten, ten being the most desirable. At this time the team does not know if an idea will work, can be developed or will bring value to the project and save money. Those questions are answered with a cost assigned during recommendation phase.

Recommendation phase:

The recommendations phase brings value engineering ideas into function.

The team prepares the best ideas selected from the creative phase with a cost for each, and life cycle cost if it applies to an idea. The recommendations can challenge the original design. The ideas from the recommendation phase are now presented to the original design team and the owner. The Value Engineering team presents their ideas in the following format: what it is, what it does, what it must do, what else will perform the same function, and what will that cost. The owner and original design team can decide to accept or reject the VE ideas presented. 

Value Engineering cannot be done in a vacuum. It is a not a one estimator solution, because the project is over budget, using the “slash and burn method” to cut cost.

Value Engineering is a team process that works best with a trained team.

In all of the excitement of finding cost saving ideas the question to be asked by the Value Engineering team is how does the change affect the big picture of the project. Remove wall tile in a private restroom and paint the wall, great idea.  What about increasing the floor to ceiling height to add ball rooms to a hotel for additional income? What happens to the column lengths, building weight and foundation size, skin of the building, plumbing risers, HVAC vertical duct runs, electrical conduit runs, metal studs, drywall, and elevator runs, etc.? These are all factors to be considered during a Value Engineering study. Do not wait for the right opportunity to use Value Engineering, do something now on your project, because there is no better time to start.

Robert A. Nidzgorski, CPE Lifetime, VMA, CCHM

Director of Preconstruction 

AUSTIN COMMERCIAL