Value Engineering (VE) Process and VE Ideas on Highway Projects

Value Engineering (VE) is a systematic method to improve the "value" of goods or products and services by using an examination of function.

VE is primarily about enhancing value and not with cutting cost (although this is often a by product). The philosophy and techniques of VE attempt to provide the required quality at optimum cost during process of developing a project.

The key differences between VE and cost reduction are that the former is:

• Positive, focussed on value rather than cost, seeking to achieve an optimal balance between time, cost and quality;
• Structured, auditable and accountable; and
• Multi-disciplinary, seeking to maximise the creative potential of all departmental and project participants working together.

What is Value?

Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost. It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvements.

Value Engineering in Terms of Function

Value Engineering is a process to generate ideas/options that could:

• Increase function with a lesser degree of cost increase
• Increase function with no change in cost
• Increase function at reduced cost
• No change in function at reduced cost
• Decrease function with a great degree of cost reduction

Setting a Framework

Project sponsor should ensure that a Value Management Plan is dawn up and incorporated into an early draft of the Project Execution Plan. The plan should establish:

• A series of meetings and interviews;
• A series of reviews;
• Who should attend; and
• The purpose and timing of reviews.

Workshops

Most VE practitioners use a workshop approach to the reviews and studies mentioned later. Generally workshops last one/two days, although this can vary depending on the complexity of the project.

*life cycle costing is a vital element of VE.

*the reviews are undertaken at every stage of the project.

Achieving Optimum Value

VE reviews primarily concerned with the most effective means of implementation the project. The emphasis is therefore more on managing the efforts of the project team and thoroughly reviewing all key design decision to ensure that:

• The design is developed in line with the project brief;
• Project needs and objectives are being achieved; and
• All key aspects of the designs are effective and appropriate to achieve best value for money.

Contractors’ Value Engineering Proposals

Contractors’ VA proposals can be submitted and are usually after submitted tenders. They are primarily intended to reduce construction costs or improve buildability and are often linked to an incentive scheme which rewards the contractor for saving achieved.

The Value Manager

Project sponsors must establish a structure for ongoing VM throughout the project and the appointment of an experienced value manager will help get the most from the process.

What is Function?

According to the EN 1325-1 definition, a function is an effect of a product or of one of its constituents.

Resources

Resources comprise everything that is required to satisfy the needs.

Resources will include no just cost but also time, materials and other inputs, whether physical such as materials or abstract such as intellectual property.

The Fast Diagram

FAST (Function Analysis System Technique) was designed by Charles W. Bytheway in 1963.

FAST is defined as a form of function analysis expressed in diagrammatic form to show the relationship between functions and the means of achieving them.

A FAST diagram is limited by two vertical lines that delimit the scope of the problem, and on the left of the left line is to be found the ‘higher level’ function, which is in fact the general need.

On moves the diagram from one function to another:

• From left to right by asking the question: HOW?
• From right to left by asking the question: WHY?

An example is as follows:

Functional Cost Analysis

As the FAST diagram progresses from left to right, it becomes more possible to assign costs to the different means of achieving a given function. This can help determine whether lower cost alternatives can be found. However it is important that all function required are clearly defined if costs of alternative solutions are to be compared in a meaningful way. It must be remembered also that it is very difficult to cost function per se, costs relate more to the technical solution proposed, and may be influenced by attributes of these solutions which are unrelated to the function required.