District Engineer Candidates Course

AND GUIDELINES
by
Engr. Geronimo S. Alonzo
15 July 2019
Outline of Presentation
• History of Value Engineering
• What is Value Engineering?
• Why do Cost Overruns exist in a project?
• Is VE appropriate on the Design Process?
• Common Misconceptions
• Basic Value Engineering is…
• Value Engineering for Engineers
Outline of Presentation
• Owner’s Perspective
• Designer’s Perspective
• The VE Team Plan
• How to Handle Cost
• The VE Team Process
 Information Phase  Analytical Phase
 Functional Phase  Development Phase
 Creative Phase  Implementation Phase
Outline of Presentation
• Value Management Team
• DPWH VE Guidelines
 Samples
What is Value Engineering?
• Value Engineering, or value management, is a
professionally applied, function oriented, creative
and systematic management team approach, used
to analyze and improve value in among others,
Transportation Projects, such as
 highways
 bridges
 other infrastructures
• It is a powerful methodology for:
 solving problems and/or reduce costs
while improving performance.
• VE increases customer satisfaction and
adds worth to investments.
• VE reduces construction costs by preventing
the occurrence of unnecessary items, focusing
on the projects functionality while reducing
total costs, thus improving its Rate of Return.
• final objective is to provide a balance of
quality, performance and functionality,
minimizing construction, operation and
maintenance costs.

Value Engineering has improved the

outcome of a variety of products for
many years…
Why do Cost Overruns exist in a Project?
The perfect project does not exist: the ten best
professional firms, facing the same problem and with the
same parameters will develop ten different projects with
ten different costs.
Projects can be improved because they always carry
unnecessary components.
 Some of the recognizable causes why variations in costs
occur are due to differences in:
• Planning and development criteria and philosophy:
• Amount of time allowed developing the project;
• Organizational capacity, poor in-house coordination;
• Honest misconception, biased thinking;
• Habitual thinking, tendency to use proven designs;
• Assumptions made at various times during the design
process;
 • Creative thoughts affected by lack of
intellectual and/or professional stimulus;
• Difficulty in being scientifically “up to date” ;
• Political circumstances or interventions;
• Project approval by owners, users, banks;
• Professional liabilities, etc.;
All projects are subject to improvement; the
objective of the studies of VE is to improve a project by
reducing or eliminating unnecessary costs.
Is VE Appropriate in the Design Process?

Yes
 applying VE after the design concept will guide
the designer to a cost effective design.

VE is often misunderstood by the construction industry!

Common Misconceptions ….
• VE “Cheapens” Projects
• VE creates adversity
• VE ignores the design
professional’s concept
• VE is a bureaucratic
conspiracy
• VE is a pain in the neck!
Basic Value Engineering Is:
Value Engineering For Engineers
• VE improve your project
• VE can make it better
• VE make it more
affordable
There Are Many Paths
- by which to achieve project goals If
properly applied,
the VE process can and will discover
the best path…..

VE will identify basic functions

and can map better ways to
accomplish the goals of your
project
Simplicity is the Essence of VE

Reduce Complicated Projects

Into Basic Components

Analyze Basic Functions

VE Looks at the Basics

 Identify the Basic Function of Components

and Systems is the Key…

.. to Identify Better Ways to Accomplish Your

Project Goals
By Basics We Mean Basic

• VE will identify the best and highest value of

the basic components and systems required
for your project
The Owner’s Perspective
• The budget is fixed ..
• No change orders !!!
• We need it yesterday..
• Local economy is important ..
• Respect our traditions …
• Meet code requirements …
• NO COMPLICATIONS !!!
The Designer’s Perspective
• Today it is not unusual for projects to exceed
during the design process.

• Engineers are NOT KNOWN

for their Estimating Skills !
The VE Team has a Plan !
The VE team will…
• Keep all eyes on the ball
• Develop winning The
plays
VE team will… C
V
S

• Emphasize team play E

C
M

• Develop a budget strategy A S

It Means Win! Win! for the Designer

How to Handle Cost
The Value Specialist’s Answer
• There is always a better way to do
anything!
• The secret is to understand basic
FUNCTIONS!
• And then determine best VALUE!
The VE Team Process

• Information Phase • Development Phase

• Functional Phase • Presentation Phase
• Creative Phase • Implementation
• Analytical Phase
• Follow Up
Another Key Concept is…
The VE team will introduce
value management to the
project … Valu e Management
VM can and will exceed the
expectation of basic project
goals…
Here is the process…
Information Phase
First the VE Team needs to Know All that can
be known about the Project:
• Objectives of Owner/User
• Criteria, Codes, Mandates
• Project Program
• Project Budget
• Project Schedule
• Estimate of Cost
Functional Phase
• Next the VE team will apply value methodology
in consideration to the project:
1. Identify functions
What does it do?
2. Classify functions
What must it do?
3. Determine worth
What is its value?
Functional Phase
• In our experience we have learned that:

 80% of the opportunity to

improve value and to find cost
savings…
… Occur in 20% of the
components of a project
Multiple Details are Distilled …
• Into an active verb and a
measurable noun

• The process is called

function analysis

• It is a unique contribution
of value engineering
Value and Cost are not the Same !
• A simple match can produce fire

• A box of matches can light 20 fires.

• A box of matches costs three

pesos P3.00
Value and Cost are not the Same !
A cigarette lighter can also
produce fire.
A cigarette lighter can
produce 100 fires.

A lighter costs ten pesos

P10.00
Value and Cost are not the Same !
A light from a match costs P3/20 = P0.15
100 lights cost P15.00
A light from the lighter
costs P10/100 = P0.10
100 lights cost P10.00

Which choice has the greatest worth ???

 It’s as easy as …

Find a single active verb such as ….

Reduce
Then …
Find a measurable noun such as ….

TRADES
The Combination of Verb and Noun …

Reduce
Trades

Is Basic To Value Analysis…

The Logic is Quite Simple !

Reduce
Trades
Saves Cost
Improves VALUE !
Creative Phase
Next the team shifts gears and moves into
“Over-Drive”:

• “Brainstorming”
• There is always a better way!
• Generate many ideas!
• Identify continuing concepts
• Identify contiguous concepts
• Identify opposite concepts
It is not unusual for design concepts to
become “locked-in” early in the process!
• Designers are often
influenced by factors other
than a true value threshold.
• Time is often the governing
factor!
• The perspective is often
limited to first cost
Analytical Phase
• Evaluate by comparison
• Research the facts
• Seek out the best expertise
• Document resources
• Does it make sense?
• What is the up side?
• What is the down side?
Analytical Phase

• The analytical phase

is like “re-keying” the
main lock on the
design process!
 Analytical Phase
• Except that….!
In VE, the inter-disciplined
team all participate in
making the key!
Development Phase
• Prepare sketches

• Refine cost

• Research life cycle costs

Development Phase
• Advantages/Disadvantages
• What is the team’s opinion?
• Does it meet criteria?
Presentation Phase
• Each proposal stands alone
• Savings are cumulative
• Each proposal is orally
presented and debated
• Final written report
Implementation Phase
• Approve acceptable proposals
• Assist the design professional
• Respond to requests for
information (rfi)
• Use partnering to negotiate
change
• Monitor project progress
• Report to owner regularly
• Document cost impact
The Value Management Team (Sample)
Team Leader - CVS

Architect Civil Engineer

Structural Engineer Electrical Engineer

Mechanical Engineer Recorder

The Desired Goal
Cost Effective Design
The Desired Goal
Cost Effective Design
The Desired Goal
Cost Effective Reliable Design
Cost Effective Alternatives
Basic Function = Common Sense
Common Sense = Cost Effectiveness

Cost Effectiveness = Value Management

Everyone Loves a Winner
• Another name for value
engineering is: value
management
Value management means:uccess!.
Success!
• Application of VE/VM for Your
project means:
Win/Win !
IN CLOSING:
VALUE ENGINEERING IS A PRODUCT
OF AN ATTITUDE OF THE MIND, WHICH
SEEKS TO CONTINUALLY IMPROVE
WHAT ALREADY EXISTS.
• IT IS BASED ON THE BELIEF THAT ONE
CAN DO THINGS BETTER TODAY THAN
YESTERDAY AND BETTER TOMORROW
THAN TODAY.
Generic Fast Diagram
Weighing Evaluation
Weighing Evaluation
DETERMINATION OF WEIGHTS

Project Title Project ID

HVAC Small Office Generic

Phase Date
Design Development Phase

Goals, Desired Criteria, Function, Features Raw Score Assigned Weight

A Initial Cost 8 10
B maintenance 5 6
C Energy Usage 6 8
D Aesthetics 1 1

E Reliability/Performance 5 6
F
G
H
Ranking Ideas
Ranking Ideas
Examples of Value Engineering
Examples of Value Engineering
Examples of Value Engineering
Examples of Value Engineering
Examples of Value Engineering
Examples of Value Engineering
Examples of Functions and Modifiers
Examples of Functions and Modifiers
Examples of Functions and Modifiers
Examples of Functions and Modifiers
Examples of Fast Diagrams
Example of Fast Diagram
Functions Analysis Presented in Tabular Form
Functions Analysis Presented in Tabular Form
Functions Analysis Presented in Tabular Form
Functions Analysis Presented in Tabular Form
Functions Analysis Presented in Tabular Form
Functions Analysis Presented in Tabular Form
Functions Analysis Presented in Tabular Form
Thank You
and
God Bless!!!