What is Value engineering? And how we can conduct it in building design and construction? in Detail Please.

Value engineering is based on a methodology developed by Lawrence Miles, who worked for the General Electric Company in the USA during the Second World War. Because of the war, there were shortages of materials and certain finished products. However, manufacturing industry was running at maximum capacity, and ideas where needed to further expand production. Miles was responsible for purchasing raw materials for the General Electric Company. He came up with the idea that if he was unable to obtain one particular material, then it was necessary to obtain a replacement material which performed the same function.

This ‘value engineering’ began with a creative, team-based approach which allowed the generation of many alternatives to the existing solution. Because the General Electric Company were manufacturers, the term ‘engineering’ was seen as being more appropriate at that time, than ‘management’.

Later in the 20th century, value engineering started to spread cross the world. But because of the differences between the mentality and the behaviour of American companies compared to European companies, value engineering, as developed in the USA had to undergo some modification.

Consequently, the European Community's SPRINT programme (Strategic Programme for Innovation and Technology) adopted the term ‘value management’ as the official term. It described the same philosophical concept but in terms that were more in keeping with European management styles. The term 'value management' was also applied as a broad, high-order description which encompassed all value techniques, whether applied at a strategic or tactical level.

Commonly used value techniques are now be defined as:

• Value Management (VM). The full range of value techniques available. It is a higher order title and is not linked to a particular project stage at which value techniques may be applied.
• Value Planning (VP). Value techniques applied during the planning phases of a project.
• Value Engineering (VE). Value techniques applied during the design or ‘engineering’ phases of a project.
• Value Analysis (VA). Value techniques applied retrospectively to completed projects to analyse or audit the project’s performance.

Value engineering is used to solve problems, identify and eliminate unwanted costs, while improving function and quality. The aim is to increase the value of products, satisfying the product’s performance requirements at the lowest possible cost. In construction this involves considering the availability of materials, construction methods, transportation issues, site limitations or restrictions, planning and organisation, costs, profits and so on. Benefits that can be delivered include a reduction in life cycle costs, improvement in quality, reduction of environmental impacts,and so on.

Value engineering should start at project inception where the benefits can be greatest, however the contractor may also have a significant contribution to make as long as the changes required to the contract do not affect the timescales, completion dates or incur additional costs that outweigh the savings on offer.

Value engineering involves:

• Identifying the main elements of a product, service or project.
• Analysing the functions of those elements.
• Developing alternative solutions for delivering those functions.
• Assessing the alternative solutions.
• Allocating costs to the alternative solutions.
• Developing in more detail the alternatives with the highest likelihood of success.

Value engineering is an exercise that involves most of the project team as the project develops, by selecting the most cost-effective solution. However it is about taking a wider view and looking at the selection of materials, plant, equipment and processes to see if a more cost-effective solution exists that will achieve the same project objectives.

The “results accelerators” originally proposed by Miles still act a useful guides to value engineering. Key to this is remembering the relationship between cost and value – value is function divided by cost. Concentration on the function of the project or product will avoid mere cost cutting.

Result accelerators:

• Avoid generalities.
• Get all available costs.
• Use information from the best source.
• Blast, create and refine.
• Be creative.
• Identify and overcome road blocks.
• Use industry experts.
• Price key tolerances.
• Use standard products.
• Use (and pay for) expert advice.
• Use specialists processes.

The project manager must take a pro-active role in both giving direction and leadership in the value engineering process, but must also ensure that time and effort is not wasted and does not have a detrimental effect on the progress of the project.

The text in this article is adapted from Manuals 1, 4 and 7 of “Common Learning Outcomes for European Managers in Construction” developed within the scope of the LdV program, project number: 2009-1-PL1-LEO05-05016 published in 2008. It is reproduced here in a modified form with the kind permission of the Chartered Institute of Building.

Value Engineering is concerned with maximising value, not just reducing costs, it seeks optimum solutions to remove unnecessary waste and reduce life cycle costs whilst improving function, quality and sustainability.

Unnecessary waste might include; unnecessary cost, materials, resources, energy, water, time, plant, lead-in times, transportation, maintenance, replacement and disposal activity.

Although widely used in construction as a purchasing approach to reduce costs, it is now regaining its status as a key modern project management technique:

• Project planning and the development of design proposals, project execution, quality and environmental management plans.
• Project sustainability, addressing for example material sustainability impact, (eg. life cycle, carbon, health and biophilic impacts) circular economy approaches, (eg, design for de-construction and de-assembly) low carbon solutions (eg off site assembly and production) social impact (eg, safety, wellness, local, skills, transport, community impact).
• Combined with supplier engagement through last planner or briefing sessions it can be a powerful tool for exploring integrated and shared economy approaches (eg shared resources, labour, suppliers, deliveries).
• Linked to building information model (BIM) development to ensure optimum solutions within the BIM model.

Value Engineering (value chain mapping or value analysis) isa process where a firm identifies its primary and support activities that add value to its final product and then analyze these activities to reduce costs or increase differentiation in the market.

 The firms Primary activities are: (1) Incoming logistics, (2) Operations (3) Outgoing logistics, (4) Marketing, Branding and Sales (5) After sales service; and   

Support activities are: (1) Firm’s infrastructure to support manufacturing/ Operation, (2) Human Resources Management (3) Procurement (4) Pervasive use of IT/MIS in the whole process. 

The ultimate of goal of Value Engineering to reduce cost, increase the brand image and thereby increase its profit margin than the competitor. 

Few Examples:

Construct is highly appropriate place where someone can apply value engineering to a great extent.

1.     Use a creative and innovative design concept that is appreciated by all – more ventilation, use of top floor for gardening or with a small place for get together with simple acrylic roof/shed. This will help in marketing and brand image

2.     Use of non-conventional plastic material is bath room door or kitchen door. 

3.     Storage of incoming material and using it quickly thereby reducing in cycle time, which will reduce the investment in working capital.

Agree with experts

Thank you

Value engineering is used to solve problems, identify and eliminate unwanted costs, while improving function and quality. The aim is to increase the value of products, satisfying the product’s performance requirements at the lowest possible cost. In construction this involves considering the availability of materials, construction methods, transportation issues, site limitations or restrictions, planning and organisation, costs, profits and so on. Benefits that can be delivered include a reduction in life cycle costs, improvement in quality, reduction of environmental impacts,and so on.

Value engineering should start at project inception where the benefits can be greatest, however the contractor may also have a significant contribution to make as long as the changes required to the contract do not affect the timescales, completion dates or incur additional costs that outweigh the savings on offer.

Value engineering involves:

• Identifying the main elements of a product, service or project.
• Analysing the functions of those elements.
• Developing alternative solutions for delivering those functions.
• Assessing the alternative solutions.
• Allocating costs to the alternative solutions.
• Developing in more detail the alternatives with the highest likelihood of success.

Value engineering is an exercise that involves most of the project team as the project develops, by selecting the most cost-effective solution. However it is about taking a wider view and looking at the selection of materials, plant, equipment and processes to see if a more cost-effective solution exists that will achieve the same project objectives.

The “results accelerators” originally proposed by Miles still act a useful guides to value engineering. Key to this is remembering the relationship between cost and value – value is function divided by cost. Concentration on the function of the project or product will avoid mere cost cutting.

Result accelerators:

• Avoid generalities.
• Get all available costs.
• Use information from the best source.
• Blast, create and refine.
• Be creative.
• Identify and overcome road blocks.
• Use industry experts.
• Price key tolerances.
• Use standard products.
• Use (and pay for) expert advice.
• Use specialists processes.

The project manager must take a pro-active role in both giving direction and leadership in the value engineering process, but must also ensure that time and effort is not wasted and does not have a detrimental effect on the progress of the project.

I apologize this is out of my specialist ..