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Value Engineering &

Cost Control Management

Mohamed A. Essa, PMP, AVS
“Otaishan Consulting Engineers”
essa2000eg@gmail.com
Introduction
In past 20 years a bigb construction boom
b start in the
h
gulf region, on other hand the world economy financial
crisis create a huge need to start thinking seriously how
we will manage and control these new projects and get
the maximum profit from these investments,
investments we need
more powerful methodologies, tools and technics to
gget the best value of our money. y The main objective
j of
project management is to deliver the project right from
first time on time, with high quality and within budget
to achieve owner satisfaction. Therefore, Value
Engineering Methodology can be utilized as powerful
costt andd quality
lit control
t l tool
t l on construction
t ti projects.
j t
VE Brief History
• Value Engineering Began at General Electrical early
1940’s, in 1947 ‐ Value Analysis started by
Lawrence D. Miles the “Father of VA// VE”
• In 1954 ‐ Value Engineering was used by the U. S.
Navy
• Society of American Value Engineers (SAVE) was
formed in 1959.
1959
• SAVE changed its name in 1996 to SAVE
International® at the Annual Conference since the
VE Approach has been used worldwide.
VE Definition

Value Engineering
g g / Value Analysis
y / Value
Management Are Synonymous Meaning a Creative,
Function‐Oriented
Function Oriented, Systematic Team Approach with
the Objective to Optimize Quality / Performance and
Reduce Total Life Cycle Costs of Projects or Processes.
Processes
Objectives of VE
Value Engineering techniques can be used to achieve a number of
objectives. They can optimize total life cycle cost, reduce time,
improve quality, reliability, maintainability and performance.
Three basic elements provide a measure of value to the user: those
are function, quality, and cost. These elements can be interpreted
by the following relationship:

Value = Function + Quality


Q y
Cost
When to Apply VE on Projects
Value Engineering should be performed in the early design
stages as possible before commitment of funds, final approval
of systems, services, or designs to maximize results. The
potential for savings, is much greater in the early stage of
projects. When VE is applied later, two things increase: the
cost required to implement changes, and resistance to
change.
h
When to Apply VE on Projects
Reasons For Unnecessary Cost

• Lack of information.
• Lack of ideas.
• Temporary circumstances.
• Honest wrong beliefs.
• Habits and attitudes.
Habits and attitudes
• Changes in owner requirements.
• Lack of communication and coordination.
L k f i ti d di ti
VE Methodology
Continuous VE Process during Projects Life Cycle

To Achieve optimum value (quality/price), value


engineering application should be continuous on a
capital project, from conception to conclusion. During
the project, several value engineering activities may
take place in the combination of formal and informal
workshops utilizing multi‐discipline independent team,
integrated team and project personnel; The exact
timing of any value engineering activity is dependent
on project circumstances and should be coordinated
between the value engineering specialist CVS and
project management.
Management Support
Top management support is critical to an effective value
engineering program. Top management is needed to demand
value engineering application, endorse implementation of the
recommendation,, Facilitate the availabilityy of human resources
and financial budget, encourage personnel training, and
develop value engineering culture in the organization. The
success and growth of the value engineering program depends
on belief in the program in various areas such as engineering,
procurement, construction, planning, and estimating.
Conclusions
• VE are effective Methodology as a cost and quality
control tool for different kinds of projects.
• Using the integrated VE approach creates alternatives
that reduce cost of project to meet functions, budget and
satisfy
ti f owner quality
lit requirements.
i t
• Utilizing State‐ of‐ the‐ Art technology in equipment's
and ad anced
advanced engineering systems
s stems to minimize
minimi e
operation and maintenance costs.
• When even one value engineering study is properly
implemented in a timely manner, significant
improvement to project cost and quality can be achieved.
Conclusions

• A much better result can be attained from continuous


p
implementation of value engineering
g g alongg p
project
j
duration.
• Value Engineering is a problem solving technique that can
be useful to project management in making major
decisions.
• In final words, value engineering can and should be active
in project activities, from start to end.
Th k Y
Thank You.