CVE 4070 Construction Engineering Value Engineering Prof. Ralph V. Locurcio, PE

Assignments due…  Change Order Estimate due 11/13/2007  Ethics paper due 11/27/2007  Test #3 – 11/29/07  Notebook turn in – 11/29/07

Ethics Paper due Nov 27  NSPE Rules of Professional Conduct Read all of the rules Summarize each of the obligations in one paragraph  Pick a case study: 1,7,58,58,60 Write a 2-page paper applying the NSPE rules to the situation in the case What errors were made How should the engineer behave in the case

What is VE… really?  VE is a “systematic” analysis of a project design to obtain the most value for every dollar of project cost…  The elimination of any part of the project that adds to cost without adding to functionality…  Not only design & construction, but life cycle costs as well…

A second look at the design…  Major cost items  Materials cost & availability  Construction methods  Shipping costs  Organizing & project admin But…

Most productive in construction…  Advantage of contractor’s expertise in purchasing, construction methods, organizing, techniques and quality control…  Generally requires an incentive clause in the contract…

But there’s are risks…  VE analyst may not fully understand the design basis…  VE generates changes that could delay project completion…  VE may not recognize field conditions that might outweigh cost savings…  VE could result in lower quality components…

Role of the owner’s representative...  Be the advocate for the owner & the project…  Control the risks…  Keep the overall value of the project in perspective…

VE in the design phase…  VE analyst should consider costs related to: Materials Labor Equipment Overhead & supervision

Costs related to materials…  Transportation or shipping  Testing cycles  Complex inspections  Tolerances  Fabrication process

Costs related to labor…  Quality of workmanship needed  Excavation  Forming or finishing  Fitting  Availability of new materials, methods that reduce labor  Construction timing

Costs related to equipment…  Design should not prevent use of high production equipment or construction phasing  Design should reduce need for special equipment like cranes, loaders, etc.  Design should minimize haul distances  Design should not force use of special equipment

Costs related to overhead…  Special security requirements  Limited site access or laydown areas  Complex supervision or inspection

Cost saving design features…  Duplicate members  Use modular components  Simplified structural components  Eliminate special forming or finishing  Siting to reduce excavation  Specify local materials  Use simple, clear or standard specs  Use prebid conferences

VE in construction phase…  Study physical features such as topography, geology, climate…  Construction phasing to minimize use of high cost equipment or labor  Modify construction methods to reduce forming or finishing  Increase use of new or high production equipment  Substitute materials or components that reduce cost

The VE process… 1.Information or study 2.Brainstorming 3.Analysis 4.Development of alternatives 5.Presentation 6.Follow-up

Brainstorming techniques  Set time limits  Record all ideas; quantity vs. quality  Avoid judgment, detail or analysis  Neutral controller  Light free flowing atmosphere  Non-competitive; all contribute  Review and categorize at end

Presentation  Describe the process & alternatives  Pros & cons of alternatives  Compare costs of original & VE  Compare quality & functionality  Present an implementation plan  Show cost savings to owner

Contractor incentives…  Generally 45% of any real savings  Must share with sub-contractors  Important to include in contract  VE suggestions are proprietary

Case Study  A chemical facility was to be redesigned. A key requirement was that the new design should operate at a higher efficiency than the existing facility.  The plant operator had completed conceptual engineering and simulation to finalize the process flow scheme.  There was considerable skepticism that value engineering might improve the design. However, the client was open-minded and the engineering team persuasive and it was agreed that the exercise would proceed.  The value engineering facilitator prepared functional flow diagrams. A representative of the operator and several contractor engineers from different disciplines met for 2 sessions, each of which lasted for 4 hours.  During these well-planned and carefully facilitated sessions, 12 ideas were generated, of which 6 were deemed practical. The most significant idea that emerged from these focused brainstorming sessions was to change a column configuration from parallel to series, thereby saving significant condenser costs and improving the energy efficiency tremendously.  The idea was refined and implemented. Overall, the capital cost saving was about $1 million (5% of total capital), with an operating cost saving of about $4 million/year.

Role of the owner’s rep  Be the advocate for the owner & the project…  Control the risks…  Keep the overall value of the project in perspective…