Transcription: Gordon Culp: So what is Value Engineering? That’s what I’d like to spend the next few minutes talking about.
VE is basically a review of a project carried out by a multi-discipline team working together in a multi-day workshop to look for ways to increase the value of a project. And what does increasing value look like? It is creating a way to get all essential functions accomplished at minimum cost.
One of the characteristics of the VE process is the team that is brought together to do the review has had no prior involvement in the project. So the team brings a totally fresh perspective.
VE started to evolve in World War II when, out of necessity, we had to look for ways to accomplish the essential functions of various commodities that were no longer available. For example, we lost our access to rubber plantations in Southeast Asia. So we had to find other materials that would perform the same functions. The VE process started to be applied in a serious way in the wastewater treatment field in the 1970s when the U.S. Environmental Protection Agency started requiring that VE be done on all wastewater projects that had Federal grant money involved and that had a cost of over $10 million.
I was retained by EPA in the 1970s to write the original workbook on how to do VE on wastewater projects. They then hired my firm to evaluate 93 projects that were value-engineered to see what worked and what didn’t work. And I’ve been doing Value Engineering myself for the last 40 years.
I have some tips to offer based on this experience. The first thing that’s absolutely essential is that you have the right team. Usually there are four to seven team members, depending on the size and complexity of the project. They need to be a team that has all of the needed technical disciplines and relevant expertise that’s required for the project. They also need to be individuals who are creative and who can quickly evaluate a range of of ideas to decide which ideas are worth pursuing further.
It’s best not to have direct competitors of the designer on the VE team. Put yourself in the designer’s shoes. If you look across the table and see your competitor analyzing your project in front of your client, it might put you on the defensive. That’s best to avoid.
It’s also best to avoid having all the VE team members come from one firm. Even though that firm may not be a competitor of the designer, you could end up with a VE result of the design philosophy of firm A versus the design philosophy of firm B. This is not a good situation either.
Timing wise, when you do Value Engineering on a design project? Based on our evaluation of 93 VE studies, we found that the best returns were obtained when VE was done at 10% to 30% completion of the design. That’s been my experience on VE studies I have done as well. The second best point is about 60% of design completion. On many complex projects, VE is done at both points – 10%-30% and 60% of design completion.
The VE workshop is the real heart of the process. The workshop is based on a very structured process. For most projects, the workshop is five days in duration, starting on Monday morning and ending Friday afternoon. For smaller projects, the workshop may be shorter in duration, but a 40-hour workshop carried out over five days is typical. The workshop structure is based on a five-phased process.
The first phase, the information phase, starts somewhat before the workshop. Information on the project is gathered, summarized and distributed to the team members so that they arrive at the first day of the workshop with some understanding of the project. And they probably can’t help themselves from starting to generate some ideas prior to the workshop.
The workshop typically opens with a presentation by the designer and the owner. This provides a chance for interaction between the VE team and both of those parties. The presentation provides background on the project. Any constraints on the project, things that the VE team simply must stay within the lines on are also presented. For example, maybe there is no space available for expanding the project site. If there are such constraints, those are laid out so the team doesn’t waste their time looking at ideas that would be dead on arrival.
The next phase is a brainstorming period where ideas are generated. As the name implies, brainstorming is designed to generate creative ideas on what might be done to increase project value. There are no dumb ideas at this point. What looks like a really crazy idea may stimulate a very good idea by another team member. When the brainstorming is complete, the team goes back through every idea on the brainstorming list to evaluate if the idea is worth considering any further. This phase of the workshop process is the evaluation phase.
That shortlist that survives that the evaluation phase then moves forward to the investigation phase. Each of the remaining ideas is investigated in detail and the team then decides which of those ideas to recommend to the owner and the designer for further consideration. A VE report is prepared. There’s usually a debrief by the VE team on a Friday afternoon consisting of an informal presentation to the owner and designer to tell them what’s going to be in the report. The purpose of the debrief is to address any questions that the owner and designer may have about the VE ideas so that they have an understanding of each idea. The ideas aren’t debated at that point, the goal is to explain the ideas. The VE report is then submitted.
Then the owner and designer evaluate the VE report and decide, “Which of these ideas am I going to accept? Which of these ideas am I going to reject? Which of these ideas am I going to run with but will modify them from what the VE team had suggested?”
In every case I’ve been involved in, the project savings from VE have exceeded the cost of the VE study. One of the best wastewater treatment VE data bases I know of has been compiled by the Hampton Roads Sanitation District. This is a large regional wastewater agency in Virginia. It has many large treatment plants. They’ve compiled statistics on the VEs which they do on all their major designs. They often do workshops at two points during the design of each of their major plants. They have found that for every dollar they spend on VE, they recoup $17 in project savings.
I’d be happy to talk with you about the specifics of your project and if VE may be applicable. I look forward to hearing from you.