Value Engineering What is VALUE Engineering

Value Value Engineering Function Quality Cost Value = F + Q C

Value = Value Engineering Function + Quality Cost = F + Q C Function: The specific work that a product must do. Quality: Customer needs, desires and expectation Degree of excellence, Do it right at the first time Cost: The Life Cycle Cost (LCC) or Total Cost Customer: The person(s) for who the output is created Value: The lowest cost to reliably accomplishes function(s), needs, desires and expectations of the customer

Example : Value Engineering Three types of Air Conditioning systems (A, B and C) F + Q V = C AC System Function Quality Cost Value A 8 5 6 2.16 10 B 7 10 1.7 7 C 9 7 2.29

Value Engineering VE Definition

Value Engineering Value Engineering Improving (upgrading) Value is Customizing Quality and optimizing the life cycle cost (LCC)

Value Engineering Customize Quality Improve Value Optimize Cost Not always Improving Quality Improve Value Optimize Cost Not always Reducing Cost

Value Engineering Is actually coming up with … Useful Ideas

Efficiency vs. Effectiveness Value Engineering Efficiency vs. Effectiveness Efficient Do things right Useful Idea Effective Do the right thing

VE examines Life Cycle Cost LCC

Total Cost = Initial Cost + Follow on cost LCC Life Cycle Costing A technique used during VE approach. If focuses on the total cost Total Cost = Initial Cost + Follow on cost Follow on costs (or Ownership cost) Are all the associated cost of running the facility. It covers energy, maintenance, repair replacement, staffing.. Etc.

Where are the “ Hidden Costs “ ? Life Cycle Costing Where are the “ Hidden Costs “ ? The Client Site Cost Capital cost Fees Furnishing Occupancy Cost Energy Cost Maintenance Cost Operating Cost

Life Cycle Costing Life Cycle Costing For a 160 bed Hospital - Life span is 25 years Case 1 : Initial Cost = SR 124 Millions 17 %

Level of Influence on Cost Life Cycle Costing Level of Influence on Cost

Pareto’s Law 80 % of Total Cost 20% of the items Makes up 100 80 20% of the items Makes up 80% of the cost % of Total Cost 60 40 20 0 20 40 60 80 100 % of Items

Value Engineering Again Why VE

Where senior managers invest their time … Value Engineering Where senior managers invest their time … What they Say ... Actual Common Sense is not always Common Practice

Function Analysis Value Engineering Determine Function Active Verb & Measurable Noun Classify Function Basic, Secondary and Required Secondary Develop FAST Relationship between functions Test Validity of functions Identify Missing functions Comprehend the project

According to a survey (In Saudi Arabia, 1991) Value Engineering According to a survey (In Saudi Arabia, 1991) When asked … after the completion of the facility:- Q. Are you satisfied with what you’ve got ? A.

Value Engineering According to KSU , 1999 When asked … after the completion of the facility:- Q. Are you satisfied with what you’ve got ? A.

Reasons for unnecessary Costs: Value Engineering Reasons for unnecessary Costs: Lack of information lack of Ideas Temporary circumstances Honest wrong beliefs Habits and attitudes Change in the owner requirements Lack of communication coordination Using unsuitable standards & specification Others

Value Engineering VM Stages

1 2 3 The 3Stages of the VM Study Value Management Value Management Pre-Study Coordination Data Preparation Team Selection Modeling VE Workshop 2 Information Function Analysis Idea Generation Evaluation Development Presentation 3 Post-Study VE Study Report Implementation Plan Follow-Up 1 - 3 Days 3 - 5 Days 1 - 4 Weeks

The 7 Phases of The VE Workshop Value Management The 7 Phases of The VE Workshop No Creativity Evaluation Development Value Circle Implementation Follow up Yes Decision Information Function Analysis Presentation VE Job Plan