VALUE ENGINEERING
By: Engr. NELSON S. TAPSIRUL
BSCE, MBA, MSCM
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OVERVIEW
Value Engineering (VE), also called Value Analysis, is an effort
to remove unnecessary functions to reduce cost. The BOQ, or
the Project, shall undergo VE to be cost-effective.
DPWH, NEDA, other government projects always undergo VE.
The revised IRR of Procurement Act or RA-9184 states:
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OVERVIEW
DPWH VE Manual NEDA VE Manual
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WHAT IS VALUE ENGINEERING?
“…the most effective technique known to improve value
and eliminate unnecessary costs in design, construction,
and maintenance of infrastructure projects without
compromising safety and stability.
ROGELIO L. SINGSON
DPWH Secretary, 2010-2016
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WHAT IS VALUE ENGINEERING?
“…the systematic application of recognized tools and
techniques by a multidisciplinary team to identify and
categorize the functions of a project with the objective to
created, select, and develop alternative approaches that
will deliver cost-effective and performance-enhanced
project functions.”
SAVE International
[Link]
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WHAT IS VALUE ENGINEERING?
The value of a function is defined as the relationship of cost
to performance, as follows:
Performance max
Value max =
Cost min
Cost Performance
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WHAT IS VALUE ENGINEERING?
BEST TIME TO USE VALUE ENGINEERING
Potential Break-Even
Savings Point
COST
Cost to
Change
Design Final Design
Planning Construction
Development Bid Documents
PROJECT LIFE CYCLE
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WHAT IS VALUE ENGINEERING?
Other terms used to describe “Value Engineering”
▪ Value Methodology - This is the official term used by SAVE
International. It describes the overall body of knowledge.
▪ Value Analysis - This was the first term used when the process
was originally developed for manufacturing.
▪ Value Engineering - The term engineering was used to identify
the process as it is applied to design and construction.
▪ Value Management - This less commonly used term refers to its
application to business processes.
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FOUR BASIC STEPS IN VALUE ENGINEERING
1. INFORMATION GATHERING
▪ This asks what the requirements are for the product or
service. Function analysis is done in this initial stage.
▪ It tries to determine what functions or performance
characteristics are important.
FOUR BASIC STEPS IN VALUE ENGINEERING
1. INFORMATION GATHERING Item: Elevator
FUNCTIONS & ORIGINAL ALTERNATIVE REMARK
FEATURES DESIGN DESIGN
Carrying Capacity 12 pax
Speed 250 ft/min
Safety Features Passed
International Std
Cost P4.5M
FOUR BASIC STEPS IN VALUE ENGINEERING
2. ALTERNATIVE GENERATION
In this stage value engineers ask:
▪ What are the various alternative ways of meeting
requirements?
▪ What else will perform the desired function?
FOUR BASIC STEPS IN VALUE ENGINEERING
2. ALTERNATIVE GENERATION Item: Elevator
FUNCTIONS & ORIGINAL ALTERNATIVE REMARK
FEATURES DESIGN DESIGN
Carrying Capacity 12 pax 12 pax
Speed 250 ft/min 200 ft/min
Safety Features Passed Passed
International Std International Std
Cost P4.5M P4.0M
FOUR BASIC STEPS IN VALUE ENGINEERING
3. EVALUATION
In this stage all the alternatives are assessed by
evaluating how well they meet the required functions and
how great will the cost savings be.
FOUR BASIC STEPS IN VALUE ENGINEERING
3. EVALUATION Item: Elevator
FUNCTIONS & ORIGINAL ALTERNATIVE REMARK
FEATURES DESIGN DESIGN
Carrying Capacity 12 pax 12 pax
Speed 250 ft/min 200 ft/min Insignificant for
mid-rise building
Safety Features Passed Passed
International Std International Std
Cost P4.5M P4.0M Significant saving
FOUR BASIC STEPS IN VALUE ENGINEERING
4. PRESENTATION
In the final stage, the best alternative shall be chosen
and presented to the client for final decision and approval.
Sample VE: Cebu Bus Rapid Transport (BRT) Project
SYSTRA Philippines, together with SPACEM Design and Associates,
was involved, from February to June 2014, in the following tasks:
▪ Data and information gathering (site visits, meetings with
stakeholders, review of studies, etc.)
▪ Functional analysis based on objectives and generation of
alternatives through creative brainstorming
▪ Evaluation of objectives against options
▪ Recommending the alternative that best responds to required
functions at the lowest cost
22 November 2017
VALUE ENGINEERING: ACTUAL CASE
FACTS
▪ The proposed project is an
extension of the smaller
maintenance hangar to
accommodate bigger
EXISTING aircraft.
HANGAR
▪ Please see floor plan
PROPOSED EXTENTION
VALUE ENGINEERING: ACTUAL CASE
FACTS
▪ As designed, the plane rolls
on its own wheels into the
hanger.
▪ It requires 24,437 ft2 of
EXISTING
HANGAR
covered area, with a 180 ft
wide hangar door.
▪ Cost as designed:
▪ US$3,900,050. This is the
cost of building an addition
PROPOSED EXTENTION to the exiting hangar of
24,437 ft2 and installing 180
ft door.
VALUE ENGINEERING: ACTUAL CASE
FACTS
▪ Please notice the big
unused space in front of the
plane.
▪ Also notice the wing of the
plane that cannot fit into the
existing hangar.
▪ What should be done to
utilize the space and
possibly reduce the floor
area of the proposed
extension?
VALUE ENGINEERING: ACTUAL CASE
FACTS
▪ VE Alternative, the plane is
introduced to the hangar at
an angle, resting its wheels
on specially designed carts
on rails.
▪ It reduced to 11,842 ft2 of
covered area and 160 ft
wide hangar door.
▪ Cost of Alternative:
▪ US$2,945,417. This is the
cost of building smaller floor
area and installing smaller
hangar door.
VALUE ENGINEERING: ACTUAL CASE
FACTS
▪ Advantage: Savings on
initial investment of
US$954,633
▪ Present value of savings
during life cycle, due to
lower maintenance area,
US$1,367,090
US$ 1,367,090
▪ Saving = --------------------
25 years
▪ Saving = US$ 54,684 / year
VALUE ENGINEERING: ACTUAL CASE
SUMMARY
1. By applying VE, the construction cost is reduced:
▪ Original Design US$ 3,900,050
▪ VE Alternative Design US$ 2,945,417
▪ Cost Saving US$ 954,633 or 24.48%
2. Present value of savings during life cycle, due to lower maintenance
area: US$ 1,367,090 or US$ 54,684 / year
3. By applying VE, the construction and maintenance costs are reduced
but the functionality is not compromised.
FINAL WORDS ABOUT VALUE ENGINEERING
▪ The benefits of Value Engineering are widely known and
have been adopted in countries around the world
through the public and private sectors.
▪ Experience in the United States indicates that a Value
Engineering study can generate recommendations to
eliminate 10% to 30% of the project’s construction costs.
ROGELIO L. SINGSON
DPWH Secretary, 2010-2016
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