Value Engineering emerged into prominence after World War II. Basic ideas related to it were developed by Lowrence D.Miles in 1947. The industrial situation during that period was so, that there was overall recession. Material was in short supply. Trained and skill manpower was insufficient. Therefore, manufacturing technologies were looking for alternative material, improved processing requirements, better designs, low cost operation, and efficient system. Foundation of value engineering got its root during this period to achieve some of these objectives. The major focus, however, was to cut down cost while retaining the desired function of the product.
Introduction
UAE enjoyed perhaps the greatest land-and-building rush of all time. The developers bolted to get glassy skyscrapers built, leased or sold. The money was flowing into the construction industry to make it boom during 2004-2008. There was enough money. It was flowing like water. Many were not aware of Value Engineering or abhorred as they thought it will consume time and the optimistic fast-track projects.
Time always changes. All at a sudden, the global economy sank in the last quarter of 2008, and the credit spigot was cut off. Oil, nearing US $150 a barrel in 2008, sank to nearly $30 a barrel in early 2009. This affected almost all the countries in the world.
The current funding crisis as a result of the global economic downturn has affected the Construction Industry very badly, thus driving clients to find new and innovative ways to save money and keep projects within budget. In the United Arab Emirates, Construction is major industry for million expatriates. In 2008 it achieved a highest boom ever in the history of construction industry. Due to the economic recession, many capital projects were put on hold due to the Clients reluctance to invest huge money. Value Engineering is a method of reducing cost, increasing performance and increasing quality of a project. This will help the Client to revise the tightened budget of the project and giving them a chance to implement the project.
The changing Dubai economy has generated a "perfect storm" of demand for Value Engineering. There is an armada of projects underway or on the boards, yet there is time to calmly consider quality and efficiency. The marketplace now dictates that the fittest, not just the fastest, will survive.
What are the possible applications of the results of similar work?
Internationally, Value Engineering has been recognised as an emerging paradigm that focuses on continuously increasing the value provided to the client and is widely accepted as an important tool in recent management of construction projects (Ellis, Wood et al.2005). Value engineering benefits includes decreasing cost, increasing profits, improving performance and improving quality (Save International). Many clients are not aware of this methodologies so
What are the benefits of such implementations?
Dubai is exemplified by massive glass-walled towers that reach for the sky, yet those awesome glass walls also admit large amounts of light and heat, which result in world-class cooling loads, enormous energy consumption, outsized mechanical rooms (reducing leasable space) and a challenge to the ideals of sustainable design.
Value Engineering can be applied to the Projects which are on hold by many Clients in the country which will benefit the Client with lower building capital budgets and operating expenses and jobs to many during this difficult economic downturn.
Of course, in a broader sense, value engineering should always be embraced, even in boom times. It is always a good practice to build efficiently, with results that make best use of energy or water. Whether feast or famine, bringing value engineers into the process early results in better, more valuable buildings.
Many developers now speak of never rushing again, and always turning to value engineers to help visions become realities. Building smart always brings both quantitative and qualitative rewards, and more-sustainable buildings.
Further, it may be helpful
to the reader to understand the background of the writer and how the report evolved.
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http://www.authorstream.com/Presentation/michael_visaya-165344-value-engineering-pup-mscm-education-ppt-powerpoint/
Body of the Paper
So what is Value Engineering?
In the construction industry, value engineering, value analysis and value management are all titles used to describe a structured process of examination of the function of a building to ensure that it is delivered in the most cost-effective way. There are a number of definitions that are suggested:
"A…technique for improving value for money…involves subjecting the design proposals to systematic review at each stage of the design process (the concept stage, scheme design, and detailed design) to ensure that the final design meets user requirements, without over-specification, at the lowest possible cost." The Management of Building Projects at Higher Education Institutions(NAO)
"Value analysis is continuous, not static. It involves questioning the status quo, removing the redundant and encouraging creative thinking." Better Value for Money from Purchasing(DTI)
"…an organised team study of functions to creatively generate alternatives which will satisfy the user's needs at the lowest life cycle cost." (Anon)
"Value Management is a proactive, creative problem-solving process which can be understood by all." Value from Construction: Getting Started in Value Management (BRE)
"A structured approach to the identification and evaluation of project objectives and of the means by which these may be achieved in order to obtain value for money, using a specialist facilitator and workshop techniques." Procurement Guidelines for Higher Education: Building and Engineering Projects(CVCP now UUK)
There are as many different definitions as there are publications on the topic. The fundamental aspects are that:
it is based around the required function/purpose of the building
it is multidisciplinary
it follows a specific methodology.
"Synonymous with the terms value management and value analysis, value engineering is a professionally applied, function-oriented, systematic team approach used to analyze and improve value in a product, facility design, system or service-a powerful methodology for solving problems and/or reducing costs while improving performance/quality requirements. By enhancing value characteristics, Value Engineering increases customer satisfaction and adds value to your investment. Value Engineering can be applied to any business or economic sector, including industry, government, construction and service. Using Value Engineering is a very successful long-term business strategy."
(Credit: The Web Site of SAVE International)
In this region more often the term Value Engineering is used, the terms are not considered in this technical paper.
Value engineering is an organized creative technique directed at analyzing the functions of a product, service or a system with the purpose of achieving the required functions at the lowest overall cost consistent with all the requirements, which comprise its value, such as performance, reliability, maintainability, appearance, etc.
Objective of Value Engineering
Value Engineering emerged into prominence after World War II. Basic ideas related to it were developed by Lowrence D.Miles in 1947. The industrial situation during that period was so, that there was overall recession. Material was in short supply. Trained and skill manpower was insufficient. Therefore, manufacturing technologies were looking for alternative material, improved processing requirements, better designs, low cost operation, and efficient system. Foundation of value engineering got its root during this period to achieve some of these objectives. The major focus, however, was to cut down cost while retaining the desired function of the product.
Concept of Value Engineering
The value engineering approach of the most recent of these programs, which have been applied now in many of the country, technologically advanced and are now applied in the GCC for over twenty years. Known as value engineering as "a collective effort for the systematic analysis of the functions of the project and their conformity with the objectives and requirements of the owner and beneficiary, and then devise alternatives to perform those functions and achieve objectives at lowest possible cost without compromising quality and basic functions." It is modern technology and science has proved its systematic unknown because it helps to reduce cost and improve quality at the same time.
VE studies are mandatory in the following countries:
All US federal projects > $ 2 M
All Japan projects > $ 2 M
All Saudi Government Project > $ 5 M
All RC of J&Y Projects > $ 5 M
All Saudi Aramco Projects > $ 10
Steps in Value Engineering
We use the Value Engineering Job Plan, a systematic approach in five phases that analyzes a project in terms of its functions. The five phases are:
Information Phase in which we study documents, learn background, identify functions, and identify cost/worth of functions
Speculation Phase in which we identify what else can do what must be done. Free use of imagination with no judgment is essential
Analysis Phase where we rank alternative solutions in terms of quality with realistic judgment
Development Phase where we develop the details of best alternatives into written proposals
Implementation Phase where we try to sell proposals to the client and include accepted proposals in the project.
Vcale Engineering Phases as per AACEI, (the VE Job Plan is as follows)
Information Phase
Complete data package
Modify scope
Function Analysis Phase
Identify functions
Classify functions
Develop function models
Establish function worth
Cost functions
Establish vale index
Select function for study
Creative Phase
Create quantity of ideas by function
Evaluation Phase
Rank and rate alternative ideas
Select ideas for development
Development Phase
Conduct benefit analysis
Complete technical data package
Create implementation plan
Prepare final proposals
Presentation phase
Present Oral Report
Prepare Written Report
Obtain Communication for Implementaion
Methods of Value Engineering
Value engineering or value management is a systematic approach effectively solve the problems (Problem Solving Methodology) proven in most countries of the developed world, where they focus first on effectiveness (Effectiveness) by analyzing the function (Function) or functions to be achieved and identify the goals and needs, requirements and desires (Goals, Objectives, Needs, Requirements and Desires) and then looking at the efficiency (Efficiency) by setting quality standards (Quality) that make a product more acceptable, and finally seek the most economical possible cost. and the costs are dealt with by the total costs ( Life Cycle Cost, LCC), and not only the initial costs.
Advantage of Value Engineering
Improve your project performance.
Come up with many practical solution in short time.
Improve your project design
Customize your project Quality and scope
Save Money, time and effort (5-10%)
Avoid unnecessary cost during O&M
Minimize risk
Simplify complicated ad open ended issues
Contractual Aspects of VE
As per FIDIC 1999, Clause 13.2 "The Contractor may, at any time, submit to the Engineer a written proposal which (in the Contractor's opinion) will, if adopted, (i) accelerate completion, (ii) reduce the cost to the Employer of executing, maintaining or operating the Works, (iii) improve the efficiency or value to the Employer of the completed Works, or (iv) otherwise be of benefit to the Employer"
The savings between the Employer and the Contractor as per FIDIC standard conditions is shared 50:50. But many owners in this part of World, they are requesting 75:25 share which in turn give the contractor a reluctance to go ahead with any VE practice.
Who is responsible for VE!
Illustrations (Tables and Graphs)
Conclusions
I believe the value engineering concept and awareness should not only be strengthen in Dubai but ‎across GCC in this economic downturn, when the funding for the project is tight. ‎ Man has made great structures under considerable limitation. I would go a hand further and suggest ‎that Dubai should lead the market by implementing VE in parallel to LEED legislation making at least ‎must have session of it during the initial stages of the project.‎ VE must be made mandatory to all projects of more than a defined budget price.
