Fundamentals of value engineering

Fundamentals of
Value Engineering
By Eng Karim Ragab
Planning and Project Controls Engineer
E-mail: Karimrgb@hotmail.com
Mob.:0100 83 83 103

Brief
• A lot of talk recently occurred about value engineering, its applications, and the success of
the global and local levels that applied in.
• Value engineering is not specialized engineered - as is the case in science Computer
Engineering or Electrical Engineering or Civil, but is a method and a structured
methodology to solve problems, whether administrative or engineering, or
manufacturing.
• The approach value engineering of the most
important and most programs that have been
implemented.
• Now in much of the country technologically
advanced method has value engineering is a
scientific method thoughtful became with
effectively by a lot of companies and institutions
global engineering and local communities.
Fundamentals of Value Engineering By Eng Karim Ragab

Brief
• And their success is due to it easier for product decision-making and help them to get the
greatest return material at the same time achieving the goals and tasks required, taking
into account access to jobs desired by the product, such as Beauty and the environment,
safety and flexibility and other important factors that meet or exceed the expectations of
the product and the customer.
• Where this method in the development of performance and productivity on the idea of
combining to achieve targeted production, whether through the construction of projects
or the provision of goods and services, and achieve cost savings without compromising
quality and basic functionality expected by customers and producers.

Contents
• Introduction
• What is Value Engineering?
• Why & When to Apply Value Engineering ?
• Six Steps VE Plan
• Case Study : Using Concrete Bored Piles instead of Middle Barrettes in
Construction of General cargo Berth Project at Port.
• References.

Value Engineering
Introduction

Introduction
• Value Management concentrates on the actual needs of the user to focus its resources. It
is different to cost-cutting exercises, which achieve economies by using less or cheaper
materials.
• The Value Management approach
involves the use of creative
techniques, combined with the
latest technical information on
materials and construction
methods.

Introduction
• Value, in its broadest sense, is the benefit to the client offered by a project. Value means
ensuring that the right choices are made about obtaining maximum benefit for the client
within time, cost and quality constraints.
• Value Management is a process that gives all stakeholders in a proposed development the
opportunity to be involved in the decision-making process. It constitutes an examination of
all relevant options for the design and construction of the project, leading to a refinement of
the design brief and identification of any budget constraints.
• Value Management is a structured, systematic and analytical methodology that seeks to
achieve the essential functions of a project at the lowest total cost, consistent with required
levels of performance and quality.
• The underlying assumption to Value Management is that there are always many ways to
achieve any function, and that an examination of alternatives may produce a better-value
solution.

Value Engineering
What is
Value Engineering?

What is Value Engineering?
• Value Management originated in the United States emerging resulted from components and
materials shortage in the manufacturing sector during World War Two. Mr. Lawrence Miles
(The Founder of Value Management, then known as Value Analysis) of The General Electric
Company was greatly responsible for the establishment of the technique in 1942 and since
then the technique is very much accepted in various industries.
• Presently United States Government and many other nations such as United Kingdom,
Japan, Korea, Australia, Saudi Arabia amongst others adopt Value Management technique to
be applied for their Capital work projects.
• If, for example, the buyer wants to get more item value, he/she needs to either increase the
item's functionality at the same time he/she is containing cost; or he/she needs to reduce
cost while holding or improving its functionality. Either way, the result is more value for the
customer .

• Value Engineering (VE)
Is an intensive, interdisciplinary problem solving activity that focuses on improving the value of
the functions that are required to accomplish the goal, or objective of any product, process,
service, or organization.
• VALUE METHODOLOGY
“The systematic application of recognized techniques which identify the functions of the
product or service, establish the worth of those functions, and provide the necessary functions
to meet the required performance at the lowest overall cost.”
FUNCTION + Quality
VALUE = ‫ـــــــــــــــــــ‬
Cost

Bone and Law (2000) identified ten mandatory characteristics of Value Management
practice:
1. It is visibly supported by senior management.
2. It generates a clear program of work.
3. It involves structured team-based workshops.
4. It employs a range of analytical tools.
5. It involves creative brainstorming.
6. It is led by a qualified value practitioner.
7. It follows a structured ‘Job Plan’.
8. It involves customers.
9. It involves suppliers.
10. It causes study terms to achieve sustained improvements.

According to Dell I’sola, the relationship between Value, Function (Worth), Quality and
Cost can be symbolized as follows:-
FUNCTION + Quality
VALUE = ‫ـــــــــــــــــــ‬
Cost
Where:
• Function = The specific worth that a design/item must perform
• Quality = The owner’s or user’s needs, desires, and expectations
• Cost = The life cycle cost of the product/project.
• Value = The most cost effective way to reliably accomplish a function that will meet the
user needs, desires and expectations.

Value Engineering
Why & When to
Apply Value Engineering ?

Why & When to Apply Value Engineering ?
o Value Engineering is used to determine the best design alternatives for Projects.
o Value Engineering is used to reduce cost on existing Projects.
o Value Engineering is used to improve quality, increase reliability and availability, and
customer satisfaction.
o Value Engineering is also used to improve organizational performance.
o Value Engineering is used to improve schedule
o Value Engineering is used to reduce risk
o Value Engineering is a powerful tool used to identify problems and develop recommended
solutions.

• Value Management studies can take place at any stage in the development of a project.
However it is acknowledged that there is the potential for greater return on investment if it
is used at the very clear stages illustrated in figure 3 and 4 below.
• As such Value Management should be performed as early as possible even before the
commitment of funds, approval of systems or design as to maximize results.
Why & When to Apply Value Engineering ?

When to Apply Value Engineering ?
o The cost of making changes and remedial works will be greatly increased later in the
development stage.

Value Engineering
Six Steps VE Plan

Six Steps VE Plan
• Clearly identify the problem(s) to be solved,
and gather information on the background,
functions and requirements of the project.
1- Information
Phase
• What must the project do?
• What are the functions ?
• and how are they related?
2- Functional
Analysis
• Brainstorm ideas on how to improve the
high cost, broken, or inadequately
performed key functions.
3- Creativity
Phase

Six Steps VE Plan
• Screen ideas for acceptance, score
remaining ideas on a scale and group ideas
into categories. Develop design scenarios,
and selection criteria. Rate and rank ideas.
4-Evaluation
Phase
• Plan how to sell ideas to management,
identify key recommendations, plan
management presentation.
5-Development
Phase
• Give oral presentation to management, or
develop written report.
6-Reporting
Phase

Six Steps VE Plan
1. Information Phase
 What do you need to know about the problem that you don’t know now?
o What facts are known?
o What are the requirements of the system?
o Are these facts, opinions, assumptions, or
prejudices?
 Where or how can information be obtained?

Six Steps VE Plan
2. Functional Phase
 Functions -Describe what something does.
 Functions -Use active verb and measurable noun.
 FAST (Function Analysis System Technique) -A logic diagram to describe how a system
works.
o Examples:
Verb Noun
1) Plan Finishing Material
2) Magnify Living Room Area
3) Reduce Wall Thickness
4) Design Exposure
5) Minimize Defect
6) Design Finishing
Key Function :
Satisfy Tenant
SecondaryFunctions

1) Design Unit Plan
2) Put Cavity Wall
3) Control Temperature
4) Minimize Exterior Surface
5) Execute Natural Ventilation
6) Maintain Cleanliness
7) Supply Air Conditioner
8) Keep View
9) Install Insulation
10) Control Humidity
Six Steps VE Plan
2. Functional Phase
Key Function :
Maintain Facility
SecondaryFunctions

Six Steps VE Plan
2. Functional Phase
Verb Noun
1) Supply Pipeline Space
2) Design Ventilation Space
3) Provide Elec. Pipe Space
4) Add Sewage Space
Key Function :
Install equipment
SecondaryFunctions
Verb Noun
1) Arrange Wall
2) Collect Opinion
3) Install Art
Key Function :
Design Interior
SecondaryFunctions

Six Steps VE Plan
3. Creativity Phase
 Creativity is the art of bringing something new into existence.
 It has the art of making, inventing, or producing something new and different.
“ You must blast before you can create. Blow apart the misconceptions, skeptics, and
naysayers. Blow-up the preconceived ideas and common theories of how things
should be done. Rather, focus on possibilities.”
J. R. Wixson -2004
“ Imagination is more important than knowledge, for
knowledge is limited, while imagination embraces the
entire world.”
Albert Einstein

Six Steps VE Plan
3. Creativity Phase
“ When you always do what you have always done -you always get what you have
always gotten.”
Socrates

Six Steps VE Plan
3. Creativity Phase
 IDEAS Vs. Solutions
o A solution requires justification & validation, and idea needs no justification.
o A solution is an end point, an idea is just the beginning.
o A solution is solid and self supporting, an idea is tender and must be built upon.
DON’T KILL IDEAS WITH ROADBLOCKS !!

Six Steps VE Plan
3. Creativity Phase
 Information for Skeptics
"... after a few more flashes in the pan, we shall hear very little more of Edison or his
electric lamp. Every claim he makes has been tested and proved impracticable.“
[New York Times, January 16, 1880]
"Heavier-than-air flying machines are impossible.“
[Lord Kelvin, president, Royal Society, 1895]
"Airplanes are interesting toys but of no military value.“
[Marechal Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre]

Six Steps VE Plan
3. Creativity Phase
 Information for Skeptics
"I think there is a world market for maybe five computers.“
[Thomas Watson, chairman IBM, 1943]
"There is no reason anyone would want a computer in their home."
[Ken Olson, Chairman and founder Digital Equipment Corp., 1977]
"640K ought to be enough for anybody."
[Bill Gates, 1981]

Six Steps VE Plan
3. Creativity Phase
 Counter Skepticism for Skeptics
“ Tilt-up Construction is an
innovative construction method
that will replace traditional
construction of low and mid rise
buildings in the Middle East
within few years.”
Fadi Elayache 2010

Six Steps VE Plan
3. Creativity Phase
 Rules of Brainstorming
 Generate a large number of ideas -quantity, not quality.
 Free-wheeling is encouraged -Listen and improve on the ideas of others.
 Don’t criticize -No evaluation of ideas.
 Encourage everyone to participate.
 Record all ideas presented.
 Time to let ideas “incubate” should be allowed.
 Select an appropriate meeting place.

Six Steps VE Plan
4. Evaluating Ideas
 GO -NO GO
 Scratch ideas that hold no interest.
 CHAMPION
 Who will speak for the ideas and support them?
 GFI (Gut Feel Index)
 Discuss pro/con and vote. GFI is team average.
 Combine ideas; add new ideas.
 Record all assumptions

Six Steps VE Plan
4. Evaluating Ideas
1 = Acceptable
2 = Good
3 = Excellent
A- Performance Comparison

Six Steps VE Plan
4. Evaluating Ideas
B- Cost Comparison Cost Saving of 4 million AED

Six Steps VE Plan
5. Development Phase
o What is recommended?
o Who has to approve it?
o What is the implementation plan?
o Are mockups or prototypes required to verify final decisions?
o What are the cost, schedule, and deliverables?
o What needs to be done?
o Who should be assigned the action?
o Assign a team member.
o Assign a completion date for the action.
o When should the task be completed ?
o Plan regular team status meetings.

Six Steps VE Plan
6. Reporting Phase
 Give oral presentation.
 Support it with written executive brief.
 Be clear, concise, and positive.
 Anticipate roadblocks
 Use good human relations.
Follow –up Activity
 Recognize the participants.
 Publicize the results.
 Audit the performance of the implemented actions.
 Close out the project.

Value Engineering
Case Study
Using Concrete Bored Piles instead of Middle Barrettes
in Construction of General cargo Berth Project at Port.

Six Steps VE Plan
1. Information Phase
Project Overview
o Construction of General Cargo Berth (Quay Wall Construction), at Damietta Port .The
Main elements are:
o Construction of the main quay wall (diaphragm wall panels and Middle Barrette).
o Construction of the connection between main new quay wall and existing quays.
o Dredging in front of the quay wall, the dredging to be carried out in accordance with
profiles, levels slopes, tolerances shown in the drawings and specifications.
o Apron pavements.
o Supply and construction of the electrical room.
o Electrical Works: M Cables and Feeders, Distribution Boards, Lighting circuits outlets,
Lighting fixtures, Earthing System ...etc.
o Fire Fighting Works: Construct and supply valves box overall dimensions 800 x 2400mm
and accessories.

Six Steps VE Plan
2. Functional Phase
Functions of the required structural element are to:
o be formed to depths of 30 m approx., through virtually different soil types and
through rock, and with great control over geometry and continuity.
o facilitate excavations below groundwater while eliminating dewatering.
o provide structural stiffness which reduces ground movements and adjacent
settlements during excavation.
o be load bearing transferring loads to the underlying layer be reinforced to allow
o incorporation of many structural configurations, accommodate connections to
structures.
o be easily adapted to both anchors and internal structural bracing systems.
Bear (Verb) Loads (Noun)

Six Steps VE Plan
3. Creativity Phase
 Use Middle Barrette. or
 Use Concrete Bored Piles.

Six Steps VE Plan
4. Evaluating Ideas
Criteria Barrette Piles
Formation through virtually different soil
types with control over geometry and
continuity.
3 3
Structural stiffness. 3 3
Load bearing : transferring loads to the
underlying layer
3 3
Incorporation of many structural
configurations, accommodate connections to
structures.
3 3
Adapted to anchors. 3 3
Total 15 15
1 = Acceptable
2 = Good
3 = Excellent
A- Performance Comparison

Six Steps VE Plan
4. Evaluating Ideas
Differences between Barrette & Piles in this project
 Barrette needed for this Project 88 VS 131 Piles.
 Machine used for Barrette construction is Cutter PC 40
 Machine used for Piles construction is Drilling rig BG 30
 Barrette construction production rate is 1.5 Panel / Day (24 hr.)
 Piles construction production rate is 6 Pile / Day (24 hr.)
 Total working days needed for Barrette = 88 / 1.5 = 59 day
 Total working days needed for Piles = 131 / 6 = 22 day

Six Steps VE Plan
4. Evaluating Ideas
Differences between Barrette & Piles in this project
 Barrette dimensions 1 x 1.5 x 30.40 m
 Piles dimensions 1 x 34.5 m
 Bentonite slurry used in both Barrette & Piles.
 RFT rebar & concrete used in construction of both Barrette & Piles.
 Guide walls are needed in construction Barrette only.
 The construction Company (In this project) need a subcontractor for construction
of the Barrette but could construct the Piles by itself.

Six Steps VE Plan
4. Evaluating Ideas
Criteria Barrette Piles
Bentonite slurry 3,617,280 550,000
RFT rebar 2,298,450 3,317,280
Concrete (QB=3830.75 m3 , QP= 3705.98 m3) 1,500,000 2,223,588
Guide walls 1,180,000 0
Manpower rates (DB=59 Day, DP= 22 Day) 1,180,225 440,000
Subcontractors 0 0
Pile Dynamic Load Test 343,377 97,000
X-logging Test 334 Ea. 3,617,280 0
Total 10,684,332 6,627,868
B- Cost Comparison
Cost Saving of 4 million EGP

Six Steps VE Plan
5. Development Phase
o It is recommended to replace the middle Barrette with concrete bored piles.
o Project, Technical, Financial ,project control managers need to approve this
alternative and submit the proposal to the owner and his consultant get their
approval .
o The schedule will reduce from 10,684,332 EGP to 6,627,868 EGP with reduction value
4,056,464 EGP with reduction percent 38 %
o The schedule will reduce from 59 day to 22 day with reduction percent 62.7 %
o Will need redesign of the Barrette to convert it to piles.
o Redesign phase should finish within 3 months.

Six Steps VE Plan
6. Reporting Phase
 A meeting will hold after Redesign phase finish and its agenda will include :
1) Oral presentation.
2) Written executive brief.
Follow –up Activity
 Recognize the participants.
 Publicize the results.
 Audit the performance of the implemented actions.
 Close out the project.

References
• VALUE MANAGEMENT GUIDELINES, August 2005 (Department of Housing and Works
-Government of Western Australia)
• VALUE MANAGEMENT – THE WAY FORWARD Sr. Dr. Mohd Mazlan Che Mat, Institute
of Value Management Malaysia (IVMM)
• VALUE ANALYSIS, VALUE ENGINEERING, by Nick Rich, BSc MBA Matthias Holweg,
Dipl.- Wirtschaftsing.(FH) MSc Lean Enterprise Research Centre
Cardi f , U n i ted Kingdom
• Value Base Planning Using Value Engineering / Value Analysis / Value Management
By: Fred McAuley, Jr.
• VALUE ENGINEERING by Roger Knowles And Nigel Barr

References
http://www.value-engineering.com/consulting.htm
http://www.wordiq.com/definition/Value_engineering
http://en.wikipedia.org/wiki/Value_engineering
http://www.nab.usace.army.mil/whatwedo/ValueEngineering.htm
http://www.lza.com/lza/vs/value_engineering1.html
http://www.vetoday.com/value-engineering.php
http://www.vecp.com/
http://www.whitehouse.gov/omb/circulars/a131/a131.html

Fundamentals of value engineering

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