CEL 766 SYSTEMS DESIGN & VALUE

ENGINEERING

Value Engineering : Merely, a

Methodology or a Philosophy -
Valuation through Some Case Studies

Presented By;
Amrita Mitra 2010CEC3863
Vikalp Awasthi 2010CEC3853
Arneet Singh Sarna 2010CEC3837
Overview

 What is Value Engineering?

 How Do we Apply VE?
 When is it used?
 Value Engineering Six Steps Plan?
 VE Case Studies
What is VALUE???

•Use Value

Hummer.. $50,000+ •Cost Value

•Exchange Value

•Esteem Value

$50000 + •Goodwill
Tata Nano $2000
•“Feel good” Value

Both Nano and Jaguar are owned by TATA

What is Creativity???

“Every man with new ideas is a crank until those

ideas actually work” - Mark Twain

Creativity is the art of

 bringing something new into existence.

 It has the art of making, inventing, or producing

something new and different.

VE combines concepts of VALUE with CREATIVITY

VALUE ENGINEERING - A FORGOTTEN
TECHNIQUE??

Originally called Value Analysis by its inventor, Larry

Miles, an engineer in GE's purchasing operation in 1947,
VA/VE uses a value equation that says value is equal to
function divided by cost. If, for example, the buyer wants
to get more item value, he/she needs to either increase the
item's functionality at the same time he/she is containing
cost; or he/she needs to reduce cost while holding or
improving its functionality. Either way, the result is more
value for the customer.
 WHAT IS VALUE ENGINEERING???

Value Engineering (VE) is an intensive,

Interdisciplinary problem solving activity that focuses on
improving the value of the functions that are required to
accomplish the goal, or objective of any product, process,
service, or organization.

VALUE METHODOLOGY
“The systematic application of recognized techniques which
identify the functions of the product or service, establish the
worth of those functions, and provide the necessary
functions to meet the required performance at the lowest
overall cost.”
 Concept of Value

FUNCTION
VALUE =
COST

V.E. Objective is to make F/C~ =1.00

Best Value is not about cost cutting, it is about

improving the understanding of the business/project
needs and improving utility value for the end user.
 WHEN VALUE ENGINEERING IS USED??

•Value Engineering is used to determine the best design

alternatives for Projects.
•Value Engineering is used to reduce cost on existing Projects.
•Value Engineering is used to improve quality, increase
reliability and availability, and customer satisfaction.
•Value Engineering is also used to improve organizational
performance.
•Value Engineering is used to improve schedule
•Value Engineering is used to reduce risk
•Value Engineering is a powerful tool used to identify
problems and develop recommended solutions.
9
Potential Saving from VE

Re-Test Feasibility
Drawings Released Design Changes

Cost Net Savings from VE

Total Cost of VE Implementation

VE Implementation
beyond this point
results in a net loss.

Construction
Concept Design Dwgs Release Construction

TIME 10
How do we Improve Value of a
function?
Function performance Cost of function?
Needed performance
Resulting Value
Enhanced Value

Enhanced Value

Enhanced Value

Ideal-
Enhanced Value
at Reduced Cost
 HOW IS VALUE ENGINEERING
APPLIED???

Value Engineering uses a combination of creative and

analytical techniques to identify alternative ways to
achieve objectives.
The use of Function Analysis differentiates Value
Engineering from other problem solving approaches.

Function Analysis Systems Technique

FA ST
Value Study Diagram
SIX STEPS VE PLAN
Information Phase: Fact Finding

•What do you need to know about the problem

that you don’t know now?

•What facts are known?

•What are the requirements of the system?
•Are these facts, opinions, assumptions, or
prejudices?

•Where or how can information be obtained?

 FUNCTIONAL PHASE
Functions - Describe what something does
Functions - Use active verb and measurable
noun
FAST (Function Analysis System
Technique) - A logic diagram to describe
how a system works.
Examples :

Secondary Functions
1 Plan Finishing Material
2 Magnify Living Room Area
3 Reduce Wall Thickness
4 Design Exposure Key Function :
5 Minimize Defect Satisfy Tenant
6 Design Finishing
Creative Phase
The Creative Workshop
•Record creative ideas on a flip chart
•Begin with high cost functions
•Structured & facilitated brainstorming
•Number ideas for cross-referencing
•List every idea no matter how
unconventional
•No ridicule or judgment
•Enjoy!!

Functions →Ideas
Mind is like a parachute:
It works best when open!
 Evaluation Phase
• Developing & ranking ideas against
performance criteria
•Pass / fail test
• Eliminating ideas that don’t have champions
•Feasible / realistic / lack of champions
• Voting on ideas through ‘Gut Feel Criteria’

GFI (Gut Feel Index)

-Discuss pro/con and vote. GFI is team average.
-Combine ideas; add new ideas.
-Record all assumptions when voting.
 WASTE
• Make it tangible
• Make it VISIBLE
• Seek / Identify opportunities to eliminate/modify
Small / large ideas, build on others ideas..

Unnecessary & secondary

functions are like waste
that may be eliminated by
creativity
Development Phase
Objectives:
• Review Customer’s values and objectives
• Expand Ideas
• Develop the chosen ideas into written
recommendations that include:
Sketches
Calculations
Cost Analysis
Advantages and Disadvantages
Risks (cost and time) if possible
 ACTION PLAN

• “What needs to be done?”

• Plan ahead for anticipated Road Blocks.
• “Who should be assigned the action?” Assign
a Team Member
• Assign a completion date for the action.
• “When should the task be completed?” Plan
regular team status meetings.
• Anticipate 4-6 weeks to complete the actions.
Reporting/Presentation Phase

• Give oral presentation.

• Support it with written executive brief.
• Be clear, concise, and positive.
• Anticipate roadblocks.
• Use good human relations.
• Inspire Confidence.
Follow –up Activity

• Recognize the participants.

• Publicize the results.
• Audit the performance of the
implemented actions.
• Close out the project.
 Critical Success Factors for VE
METHODOLOGY
VE job plan must be followed systematically
Attitude of Participants
Right attitude, appropriate stakeholders, awareness of process
Executive support
VE workshops, sponsorship, implementation of results
Management of Process
Clear objectives, timelines, follow-up actions, review and
feedback
Professional Workshop Facilitation

Probing with right questions, using appropriate tools, managing

the process, maintaining momentum of team, etc. etc.
 Case Studies

In order to present our views further and to bring

out the importance of a VALUE ENGINEERING
exercise in construction projects, we have taken
up a case study. The following case study was
published by OGC (Office of Government
Commerce), Ministry of Commerce, U.K along
with a series of other value engineering case
studies in order to promote it’s use all across the
United Kingdom for Construction Projects.
Case Studies by OGC
 Case Study No.2

Among all the projects that were subjected to VM by OGC

the second project namely, THE OPEN UNIVERSITY
PROJECT was the one where maximum transformation was
observed. Hence, we shall discuss the same during the
course of our presentation.
 The OPEN UNIVERSITY Project

•Project Objective of the VM team:

Getting more for less and Increasing User
Satisfaction
The End Result:
•VM supported team learning at the OPEN
UNIVESITY LIBRARY PROJECT resulted in benefit
to cost ratio of more than 10:1.
•Cost savings of £1.3m were achieved at a
VM study cost of £120,000 – a benefit-to-cost
ratio of more than 10:1.
The OPEN UNIVERSITY Project
The Open University’s objectives were:
A new library building which:
 did not exceed the capped capital budget
 would be ready for occupation by the stated moving-in date
 met user requirements.
The total and focused involvement of the wider client body, in
particular users of the building and those responsible for its
upkeep.
A project team that would:
 identify and enhance value
 develop a common understanding of user needs
 define common objectives.
 Major issues

 The proposed library site was constrained by

existing buildings, car parking and natural
features- including a large tree and a pond that
was home to a colony of great crested newts.
 The failure to gain approval for previous proposals
had engendered doubts that a properly-
functioning building could be delivered within
budget, on time and also satisfy the aspirations of
user groups, such as the management, library
staff, library users and researchers.
Successful Initiatives: CORE
GROUP
A core group was established which:
 comprised a representative from each partnering organisation
 met monthly to maintain an overview of the process and to
support decision-making
 who would be the arbitrator in the event of a major issue
 worked together in a structured programme of VM workshops and
other full-team workshops
 aimed to add value by increasing client and user satisfaction
 aimed to reduce costs, waste and time spent on re-working and
resolving confusions.
 The team also focused on achieving satisfaction, enjoyment and
pride in an exemplary building, adding value for all.
Successful Initiatives: Trust

 The increase in positive experiences, created by the

successful series of VM workshops, significantly
raised the level of trust within the team.
 When team morale weakened it was apparent in the
team satisfaction KPIs. Consequently, the June
workshop was limited to the morning, followed by a
Thames cruise in the afternoon. In the context of a
£17m project, this cost was minimal but it turned the
morale and team-working around, as evidenced by
the KPIs ( Key Performance Indicators)
Successful Initiatives:
KNOWLEDGE SHARING
 One of the principles of VM is that added
value is driven by the sharing of explicit and
tacit knowledge throughout the project.
 During review workshops, all team members
benefited from communicating their views on
project and team successes and
opportunities.
Successful Initiatives:
MITIGATING RISK
 The University had previously endeavoured to
procure the new library by traditional means.
 This did not yield proposals that could be
delivered within time and budget constraints
and to the satisfaction of the end-users.
 The VM programme was implemented to
help reduce uncertainties.
Successful Initiatives:
REDUCING BUDGET UNCERTAINITY
 As the project developed, it became clear that
there was a potential mismatch between
resources and expectations.
 Workshops, during the design, development
and procurement stages, provided more
opportunities for both costs savings and
enhancements to meet user needs.
 The outcome of the workshops was a reduction
in construction costs of 20% whilst retaining
essential client and end-user functionality.
Successful Initiatives: Cost-
effectiveness of VM process
 The overall cost of conducting the VM
programme, including the salaries of those
who attended and the professional
facilitation fees, was about £120,000. The
realised cost savings were £1.3m,
representing a payback of over 10:1.
Successful Initiatives: Early
involvement of all parties
 Bringing the full team together early on
enabled the client to take advantage of the
knowledge of all professionals, including key
specialist contractors.
 Each workshop featured a team exercise to
reinforce a learning point or introduce a
process. These 15- minute activities also
helped to breakdown barriers.
Successful Initiatives:
Continuous Improvement
 The information and knowledge generated from
the workshops has been used to improve
subsequent schemes for the Open University.
 All the data leading up to the team’s decisions
was listed in detail within the workshop reports.
 This formed an audit trail of objective decision-
making and also provided an information base to
guide users, specifiers, designers and
constructors involved in future Open University
projects.
Lessons learned

 The success of the VM workshop programme

has led the client to adopt the same approach
on subsequent projects.
 The process allowed the client to feel part of
the project and also involved the end-users,
enabling both client and user needs to be met
in a resourceful and value-adding manner.
Lessons learned

 The workshops helped the team to push

the boundaries of cost, time and quality.
Normally, one would expect a gain in one of
these criteria at the expense of the other
two, but in this project the team achieved
better than-expected performance in all
three criteria.
SUMMARY OF CHANGES

 Before:
The procurement route was traditional.
 After:
The revised procurement route involved
partnering with regular VM reviews.

As observed, just bringing about one small

change can do wonders for a Construction
Project.
Achievements and Benefits

Involvement of department heads and end-

users.
 Benefit: Library usage is double the pre-
project estimate.

Excellent value for money.

 Benefit: Savings of £1.3m were achieved
for a cost of £120,000 (the VM studies) – a
payback of over £1.1m.
Achievements and Benefits

Users’ needs were identified before value

adding proposals were generated.
 Benefit: The team evaluated the potential for
value enhancement before spending time on
the detailed development of proposals, which
might have resulted in little improvement.
Achievements and Benefits

All members were encouraged to attend

meetings regardless of their position within
the team.
 Benefit: Fuller briefings with input from end-
users.

Good team spirit.

 Benefit: Team members could raise
controversial topics without fear.
Achievements and Benefits

Joint solutions to problems encouraged.

 Benefit: Reduced delays and costs associated
with time consuming referrals to senior
management.

Development of trust within the team.

 Benefit: Reduced correspondence.
BENEFITS OF VM EXERCISE:

 increasing collaboration as the project

progressed
 clients’ and end users’ expectations met in
full
 costs reduced by 20% to remain within
capped budget
 effective VM reduced uncertainty of
unproven procurement route to acceptable
levels.
Typical Case Study (The
Technical Aspect):
 A typical scenario for the suitability of
crushed aggregate in construction has been
selected as our case study.
 Crushed fine aggregates have been regularly
used to make quality concrete for decades in
India and abroad.
 Demand for crushed fine aggregates for
making concrete is increasing because natural
sand cannot meet the rising demand of
construction sector.
Advantages of Crushed
Aggregate over Natural Sand:
 Because of its limited supply the cost of
natural sand has sky rocketed and its
consistent supply cannot be guaranteed.
 Natural sand in many parts of the country is
not graded properly and has excessive silt on
other hand crushed sand does not contain
silt/ organic impurities and can be produced
to meet desired gradation and fineness as per
requirement.
Comparison with Natural Sand:
Property Natural Sand Crushed fine
Aggregate

Shape Spherical Particles Cubical

Gradation Cannot be controlled Can be controlled
Particles passing 75 Presence of Silt Presence of Dust
micron Should be Less than 3% Less than 15%

Specific Gravity 2.6 to 2.8 2.7 to 2.9

Water Absorption 2 to 3 % 3 to 4%
Ability to hold Up to 7% Up to 10%
surface moisture
Comparison in concrete when
compared with well graded silt
free natural sand:
 Crushed sand gives comparable /better
strength when compared with natural sand
 It gives lower workability
 It gives lower workability retention
 It gives lower cohesion

However, commonly available natural sand is

rarely well graded and silt free.
Long Term Effects (Durability)
Durability depends on permeability of concrete & long term stability
of cement matrix from alkali aggregate reaction, chlorides present in
cement, aggregates and admixture. There is no evidence that
concrete made from crushed fine aggregates is less durable than that
with natural fine aggregates.
Thus Crushed Fine aggregate can be used for all types of concrete
including:
 High Performance concrete
 Self Compacting Concrete
 Pumpable Concrete
 Roller Compacted Concrete
 Precast concrete products
 Brick Work and plaster Mortars
 Flooring
 Water proofing
 Trouble Shooting practical
problems encountered while
using crushed fine aggregate:
Problems Reason Remedy
Concrete does The particle shape is not spherical Controlling shape and gradation
not give but cuboidal or flaky
adequate
workability Usually has higher % of fines Use of plasticizers
Use of flyash

Concrete Higher water absorption removes Wetting of fine aggregates in case

tends to set free water it is bone dry
quickly
Lower particle size results in Use of retarding plasticizers
faster absorption
Greater surface area results in Use of flyash
faster evaporation
Protecting the green concrete
from drying
Problems Reason Remedy
Concrete Flaky shape Controlling the shape and
tends to gradation of particles
segregate
Lack of adequate fines Preventing segregation during
transportation by spraying water

Segregation of Particles while Use of Flyash

transportation and Unloading
Inadequate mixing Blending with natural sand
Use of fibres to increase cohesion
Using better mixers
Concrete Flaky particles or higher fines Controlling the quality of
gives lower increase water demand incoming material by visual
strength inspection and regular sieve
analysis

Higher water demand translates in Controlling the water cement

to higher water cement ratio ratio by using plasticizers
Segregation of concrete results in Take steps to control segregation
non - uniform distribution of
cement paste
Problems Reason Remedy
Concrete has Lower workability and lower slump Use of plasticizers, retarders and
Honeycombs retention flyash
Inadequate vibration Complete compaction and finishing
as early as possible
Segregation of particles during Use well graded crushed sand with
transportation and unloading adequate fines
Lack of fines Ensure cohesion of concrete
Segregation of concrete
Concrete Concrete with excessive fines and Ensure crushed sand is well graded
surface shows flaky particles is prone to bleeding and particle shape is not flaky
irregular
shaped voids Bleeding is phenomena when water Ensure that it is not stone dust
comes to vertical faces and top
surface through capillaries

Bleeding water gets trapped Non absorbent form surfaces like

between concrete and form work to Plastic coated ply are more prone
form water pockets for trapping water pockets

This water evaporates and shows Regular tamping of concrete

irregular shaped pockets on surface member with mallets will bring
bleed water to the top surface
Economics of Crushed fine
aggregates
 Natural Sand –
2000 to 2500 Rs per 100 cft
Rs. 0.4/- to 0.6/- per Kg

 Crushed Sand –
1500 to 2000 Rs per 100 cft
Rs. 0.3/- to 0.5/- per Kg

 Net difference: Rs. 0.1/- per Kg

 Economics in concrete:
 1 m3 of M20 concrete requires approximately
800 to 1000 Kg of fine aggregates
 Cost difference of using crushed fine
aggregates: Rs. 80/- to 100/- per m3
Incremental cost of using admixture: Rs. 50/-
to Rs 100/- per m3
Economics in Mortars:
100 kg of 1:5 mortar requires:
i. 17 Kg of cement
 Cost: Rs. 50/- (@Rs. 3/- per Kg)
ii. 84 Kg of Natural Sand
Cost: Rs 42/- (@Rs. 0.5/- per Kg)
Total Cost: Rs. 92/-
 Replace natural sand by crushed sand @Rs.
0.4/- per Kg
 Saving per 100 kg of Mortar: Rs 8.5/-
 Additional cost of admixture: Rs. 4/-
(Dosage 0.5% by weight of cement @ Rs. 40/- per
Kg)
 Additional cost of fibres: Rs. 5/- to Rs. 10/-
(125 gm per 50Kg @ Rs. 20/- to Rs. 40/- per pouch)
 Saving by flyash replacement (@Rs1.5 per kg:
• 25% replacement - Rs. 5/-
• 50% replacement - Rs. 10/-
 Net cost saving per 100Kg of mortar
 • Crushed sand (saving) - Rs. 8.5/-
 • Admixture (additional) - Rs. 4/-
 • Fibres (additional) - Rs. 5/-
 • Flyash 50% (saving ) - Rs. 10/-
 Net saving: Rs. 10/- per 100cft
 Economics in Overall Building
• Building requires 100 to 150 Kg of fine
aggregate per sq. feet
• Building requires 75 to 100 Kg of mortar
 Net saving: Rs. 6/- to Rs. 8/- per sq. feet

(Note: Above calculations are based on price

levels in Pune Region)
Precautions to be taken:
 Ensure that well graded and well shaped
crushed sand is obtained at site
 Ensure that a mixture of stone dust and grit
at the cost of crushed sand is not being
procured at site
 Ensure that crushed sand is received in wet
condition and does not segregate while
unloading
Conclusions to the case
study:
 Natural sources of fine aggregates cannot
meet the demand of the industry
 Natural sources of fine aggregate cannot
meet the quality requirements of the industry
 Crushed fine aggregate can be used for all
applications in construction
 Crushed fine aggregate can deliver a good
product and will save costs
References
 Value Engineering Methodology In Construction by Fadi Elayache,
Dubai 2010
 Value of Project Management – a Case Study PASI OJALA.
 Value management in Construction (Case Studies) Published by
OGC, Sep 2007.
 Crushed sand, a reality for construction Industry, HCC value engg
division, Published Dec,2009
 The Synergy between Value Engineering and Sustainable
Construction Abdulaziz S. Al-Yousefi, CVS-Life, FSAVE
 VE Research Group of SANNO Management Institute (1999) New
Essentials of VE (in Japanese). Publication Department of SANNO
Management Institute, Tokyo.
Thank You