PMPD Presentation on

Value Engineering

E&PM
April 26, 2022
1
 Let’s Get Started!

OK – right out of the gate:

We are behind schedule and over budget!

Sound familiar?

This is not where Value Engineering should begin! Take the time
early in the project to understand the goals/expectations and the
budget. Was this a placeholder budget and schedule that needs
to be updated? From the time of the feasibility study, were the
costs escalated to the projected construction mid-point?

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 Value Engineering Definitions:

 Value Engineering as a function-oriented, systematic, team approach to provide

value in a product, system, or service. (The Society of American Value Engineers
International)
 Value Engineering is a conscious and explicit set of disciplined procedures
designed to seek out optimum value for both initial and long-term investment.
(National Institute for Building Sciences)
 Value Engineering can be defined as an organized effort directed at analyzing
designed building features, systems, equipment, and material selections for the
purpose of achieving essential functions at the lowest life cycle cost consistent with
required performance, quality, reliability, and safety. (U.S. General Services
Administration)
 Value Engineering can have a positive outcome for all stakeholders (architects,
designers, building-product manufacturers) when everyone embraces and actively
participates in the value analysis. Creativity can be used in many ways to meet the
overall goal. This process is used to solve problems, identify, and eliminate
unwanted costs and improve function and quality. The set of disciplined steps in the
value engineering process is meant to optimize initial and long-term investment,
seeking the best possible value for the lowest cost.
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 Beginning of Value Engineering - History
Created in a Crises:
• World War II: Lawrence Miles with GE was responsible for purchasing
raw materials and experienced extreme material shortages. He searched
for suitable alternatives that functioned similarly. Found some
substitutions that were more cost-effective AND performed better. This
new technique called “value analysis” is more commonly known today as
value engineering.

PMs Typically Uses VE in a “Crises” – Project Budget Crises:

• Structured VE process often conducted when a project estimate or bid
is significantly over (no additional funds available)
• Similar principals are applied during the study & design of any project.
• GSA and other entities conduct VE processes as a matter of course.

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 FCS Stewardship Responsibility
Part of Our PM Role:
• Facilitate a project to meet goals / expectations - while being mindful of
the overall budget, longevity, sustainability, maintainability, etc.

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 Design versus Value Engineering
We are Making “Value Engineering Like” Decisions All the Time:
• Feasibility or Space Study - explores multiple strategies , pros/cons,
associated costs. Ultimately a preferred direction is stood up as the
project. Team evaluates effective solutions for the budget.
• Pre-Schematic Design or Concept Phase – looks at multiple solutions
(Often 3) to determine best path forward. (Meeting criteria, life-cycle-
cost, budget, sustainability, working with constraints, etc.)
• Design Process – the Design and Stakeholder Team + subject matter
expert’s review options during mtgs & Design Milestones. What is the
appropriate roof or mechanical system, lab casework, or floor finish for
the project? Not done in a vacuum without understanding life cycle cost,
energy performance, durability, and program/performance, etc.
• Checking Scope back to key project goals/requirements and what is
necessary versus nice to have. What moves forward in design, as an add
alternate, or parked until we have a better handle on budget. 6
 Value Engineering – When to Conduct
Best Times to conduct VE study:
1. Completion of Concept Design (Pre-Schematic, Feasibility Study)
2. Completion of Design Development
VE Study to identify and evaluate changes (Or options) that could result in
increased functional value (including stakeholder satisfaction) in the
completed facility while reducing construction or operation and
maintenance costs. This effort should be scaled to the project size,
complexity, and status.

Worst Times:
3. Conclusion of Construction Documents
4. During or after Bidding, requiring bid-addendum, etc.

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 Value Engineering – Why Earlier is Better
Concentrating value engineering efforts in the early stages of project design
affords greater savings and allows a change of direction, if appropriate,
without affecting project schedule. (Emphasis on max. life cycle value)

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Value Engineering – Early (Group Collaborating)

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Value Engineering – Late (N0 – Still Need Collaboration)

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 What Value Engineering is Not
• Not compromised safety, building code, health and well-being of people
• Not a knee-jerk reaction to avoid going over budget. Maximize function
at the lowest possible cost.
• Not reducing quality and increasing operational costs. (Not over-paying
for quality when an equally effective, less expensive option exists)

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 Methodology:
 
Step 1: Information Gathering Phase
• Collect data and get a clear understanding of the project. (Milestone
when owner requirements, drawings, specifications, cost estimate, etc.
are available to fully understand project)
 
Step 2: Function Analysis Phase
• Analyze the functions of the elements identified in the previous step and
evaluate their necessity to the goals of the project.
• Primary Functions – vital to the existence of the final product/project
• Secondary Functions – notable but not critical to the core of the project

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  Methodology:
 
Step 3: Creative (Speculation) Phase
• Develop alternative solutions for delivering necessary building functions.
The value engineering team brainstorms to generate potential design
solutions to reach the project functions.
• Focus on the big-ticket items that have the most opportunity to deliver
value.
• All viable options are outlined at this step.
• Next, designers and their team will eliminate the “weak plays” to
present only the strongest options in Step 4.

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  Methodology:
 
Step 4: Evaluation Phase
• Assess the alternative solutions. Subject matter experts evaluate and
question the available options and weigh them against each other.
• How well can each alternative perform the function of the original
solution?
• Owner expectations also matter and must be discussed.
• Holistic evaluation of each choice since a change in one area of a facility
can affect any or all other areas of a facility.
 
Step 5: Cost Analysis
• Allocate costs to the alternative solutions (First cost and over facility’s
life cycle)

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  Methodology:
 
Step 6: Development Phase
• Team assembles all recommendations, their advantages, disadvantages
and implements plans to present to the project stakeholders.
• Decisions are made on which VE options to incorporate into the
documents.

• Deciders typically involve core project team and SME’s based on VE

scope.
• Some ideas may allow them to be incorporated as a bid alternate.
(Either an alternative product or distinct scope that could be added or
removed depending on bid results or if alternative funding becoming
available, etc.).
• Post-bid addendum can also be used when bids come in high, but less
effective and delays project award.
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Spreadsheet:
• Primary Function: vital to the
existence of final project.
• Secondary Function: notable
but not critical to the core of
the project.
• Long VE lists – group around Uniformat II
.
• VE Examples
PMPD Presentation on
Value Engineering

Questions?
E&PM
April 26, 2022
20