Successful Value Engineering (VE) studies save project costs that are 10-20 times the cost of the study. For example, the Hampton Roads Sanitation District has found savings average 17 times the cost of the VE studies conducted on the designs of several of its wastewater treatment facilities. So what are the keys to getting these kinds of returns?
Involvement in more than 30 Value Engineering (VE) studies has led to our observations about the keys to a successful VE study. The heart of a VE study is a workshop where a multi-discipline team under the guidance of a Value Engineering Team Coordinator (VETC) analyzes a project for unnecessary costs and/or opportunities to increase value. A typical VE team has 5-7 highly qualified members who bring interdisciplinary skills to the workshop. The workshop uses a structured approach consisting of the steps of reviewing information on the project, brainstorming alternatives, screening the brainstormed alternatives, evaluating the remaining alternatives and finally recommending alternatives for further consideration by the owner and designer. The recommendations include estimated effects on costs and schedule, effects on operation and maintenance, advantages, disadvantages.
1. Select team members who are highly qualified in the disciplines they represent and match the disciplines with the needs of the project. They should not have been involved in the project prior to the workshop and should have no vested interest in the outcome.
2. Select team members from different sources to avoid the workshop degenerating to the design philosophy of Firm A versus the design philosophy of Firm B.
3. Be cautious about including members who work for a direct competitor of the designer. Also be cautious about including members who work for the design firm even if they have not been previously involved in the project. VE team members not related to the design firm typically provide a perspective independent of the design firm’s design philosophies resulting in greater creativity.
4. Participation of an owner’s representative in the workshop is often beneficial. The VE team gains background information and the individual gains a better understanding of design alternatives.
5. The team will be working under the time constraints of a finite workshop schedule (usually five days or less) so it is important that the team members are comfortable developing recommendations without the luxury of studying the issues to death. They need to be individuals who can quickly and competently move through idea analysis to conclusions.
6. Have the right VETC. It is a plus to have a VETC that has VE expertise and experience as well as a basic understanding of the type of project involved in the VE. For example, a VETC who has worked only in the aerospace industry will not be as effective on a VE study of a water treatment project as a VETC who has worked on similar projects.
7. If only one VE workshop is to be done, schedule it at 10-30% design completion. If a second workshop is to be done, schedule it at about 60% design completion.
8. Hold the workshop at a location where the team members are isolated from their day-to-day responsibilities.
9. Each VE recommendation should include only one idea. Recommendations should include sketches and clear, concise, legible computations and notes of all the assumptions.
10. Accurately evaluate life-cycle costs, not just capital costs.
11. The last step of the workshop should be a presentation of the VE recommendations to the owner and designer with enough interaction to be sure that each recommendation is understood.
What have been your experiences with VEs on projects?