v a l u e

lilJl c o n t e n t s

T h e Future of Value World

(Ed i tor ia l ) Michaels Adams, \i \. rr. CVS (Life)

Volume 26 Number 1 Spring 2003

»

How C h o o s i n g by A d v a n t a g e s E n h a n c e s Value Analys is

Jim Sidir. Rich Harris, John Steward,

and Richard liok

How Much Value Is There In K n o w l e d g e C r e a t i o n

Gary R. Mvers, PE. CVS

i lJIJ3JJJ •ZJ

•in

I m p r o v e d Road Safety Is No A c c i d e n t

David C. Wilson, PEng., CVS

14

Value M a n a g e m e n t : T h e Ob jec t ive Forens ic Ana lys is Tool 17

Ronald J. Tanenbaum,

PhD, PE, GE, CVS

The Future of Value World EDITORIAL

Michael S. Adams, AIA, PP, CVS (Life)

One issue of Value World (VW) currently costs SAVE International at least $4,200 (based on figures from November 2001 to the present). And, this is a net figure after advertising revenues have been recognized. However, the Fall 2002 issue carried no advertising and, at this writing, it appears that the Spring 2003 issue wil l carry one advertisement. Therefore, it is probably safe. to estimate that, on average, Value World costs the members of SAVE International at least $8,400 annually. Last year, it ran more like $12,000 annually.

We could reduce costs by cheapening the quality of the product and by attempting to get more advertising. Considering the circulation of the journal, it is not likely that advertising revenues wil l be easily increased. What do we do? One school of thought would suggest that we should be prepared to operate at a loss in the case of VW because of the inherent value of the articles; value to both the authors and member of SAVE International. Practitioners have a way to share information on their value analysis work, and first time authors find a friendly venue for breaking into print.

It is difficult to impossible to track copies mailed to non-U.S. addresses, and foreign members often complain that they do not receive their copy. And, getting articles sufficient to justify more than a twice yearly publication is virtually impossible. In addition, the national and international perception of Value World is that it is not sufficiently prestigious to attract research contributions from the academic community. This is a serious problem.

I would like to propose some ideas for dealing with this situation and, I believe, making substantive improvements as well. And, I would like to receive the broadest possible input from the membership. The short description of my suggested plan of action is as follows.

1. Cease publication of Value World.

2. Take articles that would normally go to VW and publish them instead in Interactions. These articles wil l

now be on-line, because Interactions is on-line. Make the merged publication partially accessible only to SAVE members (the articles and other substantive content). Advertising and table of contents, and perhaps a specimen issue, would be open to the public. The merged publication would continue to receive oversight from an editorial group. The name of the merged publication could be the subject of a member competition with an appropriate prize.

3. Create a separate new on-line journal - properly registered and with a first class editorial board, referees, double blind review processes and the lot - in order that this new journal can qualify as a fully legitimate academic journal reserved for the very best in research in the field. Call the journal the International Journal of Value Management (IJVM) or perhaps simply the International Journal of Value (UV) - though this might confuse us with the financial types - or perhaps the International Journal of Value Innovation (IJVI). The IJVM wil l also have a publicly accessible aspect for the general public (TOC, article summaries, advertising, specimen issue, etc.) and a controlled access aspect (the articles themselves) open only to SAVE members and other IJVM subscribers that may not wish to be members of SAVE. Give an annual prize for Best Paper. It will probably take a year to launch the IJVM effort.

4. Annually, SAVE might consider selling an archival CD of one year's worth of content of both Interactions and IJVM. Pricing to members and nonmembers would require some thought.

With further more detailed analysis, I believe it can be shown that costs overall can be reduced. More importantly, I think the value of the two publications proposed will be greater than VWand Interactions today.

Please let me hear your thoughts on this proposal. Address comments and suggestions to me through the business office at info@value-eng.org.

S A V E International is the only professional society in the United States totally devoted to advancing and promoting

the value methodology, a powerful problem-solving tool that uses a professionally applied, function oriented,

systematic team approach to analyze and improve value in a product, facility design, system, or service.

W O R L D Volume 26, Number 1, Spring 2003

How Choosing By Advantages Enhances Value Analysis

Jim Suhr, Rich Harris, John Steward, and Richard Turk

Introduction Choosing B y Advantages is a decisionmaking system. I t is for everyone who makes decisions—including individuals, families,

groups, and organizations—and i t is for nearly a l l types o f decisions. One o f its many applications is i n Value Analysis. The National

Park Service and some regions o f the Forest Service are using C B A i n their V A programs. I n this article, J im Suhr, Rich Harris, John

Steward, and Richard Turk answer the fo l lowing questions:

• What is CBA?

• Where has C B A been used?

• What is the relationship between V A and CBA?

• Where has CBA been used in the V A process?

What is CBA? B y J i m Suhr

As said i n the introduction, C B A provides nearly a l l the

methods that are needed for the many different types o f decisions

people face. Because there are many types o f decisions, the art o f

decisionmaking is a broad f ie ld o f study. C B A simplifies the art o f

decisionmaking by organizing i t into three overlapping areas:

sound, congruent, and effective decisionmaking. This article

pertains to the sound-decisionmaking area.

Each area is, i n itself, a broad f i e ld o f study. C B A simplifies

each area by dividing i t into small sets o f definitions, principles,

models, and methods. However, all the methods i n the entire C B A

system share the same definitions, principles, and models. The

principles are central. The definitions and models help explain the

principles, and the methods apply the principles.

Most people don't need to learn the entire C B A system. They

need to learn only the parts that they need to use. The C B A training

process is designed so that they are able to learn and begin using

just one set o f concepts and methods at a time. A n d to make their

learning process as simple as possible, each set builds on those

they learned before.

The C B A vocabulary is a vital part o f the C B A system. It

helps people to understand one another during the decisionmaking

process. As part o f the training process, we emphasize the need

for decisionmakers to use the C B A vocabulary wi th care and

precision. The C B A defini t ions are based on the applicable

dictionary defini t ions. We of ten use the choice between two

canoes—Canoe C and Canoe K — t o illustrate the CBA definitions

o f several words that are essential in the sound-decisionmaking

process. Following, for example, are the CBA definitions o f the

words attribute and advantage:

Attribute. I n dictionaries, an attribute is defined as a characteristic

or quality o f a person or thing. In CBA, it is a characteristic, quality,

or consequence o f a person, thing, or plan. Specifically, i n C B A , it

is a characteristic, quality, or consequence o f just one alternative.

Here are two o f the attributes i n the canoe decision:

Canoe C weighs 65 pounds.

Canoe K weighs 75 pounds.

In common usage, attributes are often called pros and cons.

But this can be misleading. Why? Because any attribute can be

viewed as a pro or a con, depending on what i t is being compared

wi th . I n a canoe decision, for example, 70 pounds is a reason-pro,

compared wi th 75 pounds. A t the same time, i t is a reason-con,

compared wi th 65 pounds. Likewise, 65 pounds and 75 pounds

can each be viewed as a pro or a con. Calling an attribute a reason-

pro creates a bias i n one direction. Call ing i t a reason-con creates

a bias in the other direction. I n C B A , therefore, when someone

asks us to list the pros and cons o f each alternative, we list the

attributes; and, we label them as attributes. We do not label them

as pros and cons.

Advantage. I n dictionaries and in C B A , an advantage is defined

as a benef i t , or a gain. Synonyms include betterment and

improvement.

The keywords that highl ight the difference between an

attribute and an advantage are one and two. As shown above, an

attribute is a characteristic o f just one alternative. I n contrast, an

advantage is a difference between the attributes o f two alternatives.

In the training process, to show that nearly everyone is already

using the C B A def in i t ion o f the w o r d advantage, we ask the

fo l lowing questions:

Q: Which canoe has the advantage i n weight: Canoe C or

Canoe K?

A: Nearly everyone gives the same answer: Canoe C .

Q: H o w large is the advantage o f C, compared wi th K?

A: Again, nearly everyone gives the same answer: 10 pounds.

Here is something that might seem strange, at f i r s t : I n C B A ,

an advantage is the same thing as a disadvantage. I t is exactly the

2 Volume 26, Number 1, Spring 2003 H t l l l M W O R L D

same difference between two alternatives. To show that most people

are already using the C B A defini t ion o f the word disadvantage,

we ask the fo l l owing questions:

Q. Which canoe has the disadvantage in weight: Canoe C or

Canoe K?

A . Nearly everyone gives the same answer: Canoe K .

Q. How large is the disadvantage o f K , compared wi th C?

A . Again, nearly everyone gives the same answer: 10 pounds

Q. What are the differences between an advantage and a

disadvantage?

A . There are no actual differences. A disadvantage o f one

alternative is an advantage o f another alternative. A n d , there

are no exceptions. As fol lows, there are differences only in

the ways we view them and name them.

Here is the one view: Canoe C is 10 pounds lighter than

Canoe K .

Under this view, the 10-pound difference is called an advantage.

Here is the other view: Canoe K is 10 pounds heavier than

Canoe C.

Under this view, the 10-pound difference is called a disadvantage.

The Fundamental Rule of Sound Decisionmaking

This takes us to one o f the key principles that C B A is based

on. I t was taught more than three centuries ago, in France, in the

early days o f c i v i l engineering. Since then, its expression and its

explanation have both been improved, step by step. I t is now called

the fundamenta l rule o f sound decis ionmaking. Here is the

fundamental rule , as stated by Grant and Ireson in 1970, in

Principles of Engineering Economy:

I t is only prospective differences among alternatives that are

relevant in their comparison (227).

The w o r d only is very significant. I t rules out al l decision

methods that do not base decisions on differences. For example, i t

rules out al l methods that assign numerical weights, ratings, or

scores to factors, goals, roles, categories, objectives, criteria,

money-costs, attributes ("pros and cons"), and so for th. M y first

book, The Choosing By Advantages Decisionmaking System

(1999) explains, i n detail, w h y those who wish to make sound

decisions must base their decisions on differences.

As you saw above, any difference between two alternatives

can be viewed as positive or negative—as an advantage o f one

alternative or as a disadvantage o f another alternative. Therefore,

to prevent a variety o f mistakes, such as omissions, distortions,

and doub le -coun t ing—and to s i m p l i f y the dec is ionmaking

process—I revised the rule in 1981, as fo l lows:

Decisions must be based on the importance of advantages.

The way the fundamental rule is stated today is the same as

the way i t was stated i n 1981. W i l l i t ever be revised in the future?

Time w i l l t e l l . I n addition to the methods that Grant and Ireson

ruled out, i t rules out all methods that base decisions on advantages

and disadvantages. Some o f the methods that base decisions on

advantages and disadvantages just encourage people to make

critical mistakes. Others require them to make critical mistakes.

Sound methods do not encourage or require mistakes.

The fundamental rule applies to al l types o f decisions—from

the simplest to the most complex. Therefore, we encourage

decisionmakers to memorize it. A n d , we encourage them to learn

how to apply i t fo r al l their decisions.

How to Simplify Sound Decisionmaking

C B A simplifies complex decisions by taking small steps. For

example, i t divides the process f o r complex decisions into five

major phases. A n d each phase is further divided into small steps.

For a very complex decision, i t can take several months, or even

several years, to complete the entire C B A process. Here are the

five phases:

Phase I : The Stage-Setting Phase

Phase I I : The Innovation Phase

Phase I I I : The Decisionmaking Phase

Phase TV: The Reconsideration Phase

Phase V: The Implementation Phase

C B A simplifies simpler decisions by taking fewer steps. For

very simple decisions, the entire C B A process can usually be

completed in only a few seconds, in just one step. A n d in many

situations, i t can and must be completed in a fraction o f a second.

Since 1981, C B A methods have been developed fo r very

simple decisions, simple decisions, complex decisions, and very

complex decisions. Surprisingly, the methods for very simple

decisions require the highest level o f sk i l l . Why? Because the

decisions that call for very simple methods usually happen very

rapidly, one after another.

For decisions ranging f r o m very simple to very complex, C B A

methods have been developed for the fo l lowing and other types o f

decisions:

Responding to one-option situations.

Choosing from only two alternatives.

Choosing from several alternatives.

Choosing from a large number o f alternatives.

Choosing from an infini te number o f possibilities.

This has been a small sample o f what decisionmakers learn in

the C B A training process. As you can see from this sample, learning

and using C B A is a journey, not just an event. I hope you w i l l

decide to take this journey. A n d , I hope you w i l l enjoy i t .

Where Has CBA Been Used? B y R i c h Harr i s

Twenty-some years ago when I was first introduced to C B A ,

i t was a new system o f decisionmaking and few were even aware

o f i t , let alone using i t . C B A methods are now producing a wide

variety o f effective decisions, ranging from very simple decisions

in families to very complex decisions in government agencies.

Fol lowing are a few o f the many applications where C B A has been

successfully used:

V a L J H W O R L D Volume 26, Number 1, Spring 2003 3

• limiH|iiiu lii>i) with ihc WSDA Forest Service and the Federal

Highway Administration, (he States o f Idaho and Montana

.in- usmn ( MA in setting priorit ies among their Forest

Highway projects.

• ('MA is used at the local, regional, and national levels o f the

lores! Service for many types o f decisions. For example, the

Wasatch-Cache National Forest used C B A for choosing the

location o f a Forest Service Public Lands Information Center

as well as for setting annual budget priorities. A t the National

level, the Forest Service has used C B A to set priorities among

proposals for both cleaning up hazardous materials sites and

for some o f the San Dimas Technology & Development

('enter's programs.

• For the 2002 Winter Olympics, C B A was used to select a

new highway location for access to the downhil l venue at

Snowbasin, and then for selecting a contractor to construct

the highway. Later, C B A was used to choose a contractor to

construct the Forest Service's Discovery Center located in

Snowbasin's new day lodge.

• . The engineering f i r m o f Michael-Baker Jr., Inc. used C B A to

select the preferred alternative during the environmental

analysis for reconstruction o f Salt Lake City's Redwood Road

f rom Bangerter Highway to 104 t h South Street.

• The City o f North Ogden, Utah, used C B A to select a new

city manager. I n this choice, there were 47 highly qualified

applicants for the position. The City also used C B A to select

a new secretary f r o m a pool o f nearly 250 applicants.

• The National Park Service has used C B A for a wide variety

o f decisions. For example, the Park Service has used C B A to

choose General Management Plans fo r Nat ional Parks,

National Monuments, and other areas. A t the national level,

the Park Service has used C B A to set priorities i n its line

item construction program.

Following is a statement f r o m "Publications" i n the Forest

Harvesting Bul l e t in , a bu l le t in o f the Food and Agr icu l tu re

()rganization (FAO) o f the United Nations (Vol. 10, M a y 2000):

hHp://www.fao.org/docrep/X7152e/x7152e.htm#P137_15851.

ncccsscd November 2002.

"Most decisionmaking methods i n use today are f lawed and

result in less than optimal results. Choosing B y Advantages

(CMA) is a tested and effective system for determining the

best decision by looking at the advantages o f each option. I t

is an easy to use process that w i l l be valuable to businesses,

government agencies and individuals. C B A is surprisingly

simple to fol low and w i l l improve one's ability to create the

best possible results in any given situation."

What is the Relationship Between VA and CBA? B y John Steward

There is a two-way relationship between VA and CBA. VA is

used i n the CBA process, where applicable—especially i n the

reconsideration phase. CBA is used in the VA process, whenever

there is a choice to be made.

Our first use o f CBA in a V A study in the USD A Forest Service

was for the Missoula A i r Tanker Base upgrade design in Missoula,

Montana. The VA team leader instructed the study team that: a)

the study recommendations were considered preliminary, b) we

would fo l low the VA study process to identify and evaluate

areas for improvement and cost savings and providecomparative

information on the alternatives to the decisionmakers, and c) we

would recommend use o f a C B A facilitator i n evaluating the VA

recommendations and making f ina l decisions.

The VA team completed the analysis in a professional and

t ime ly manner w i t h ownership o f only the process and the

recommenda t ions . The p r o j e c t managers, w o r k i n g as a

decisionmaking team, made the f ina l decisions. The V A team

identified eight primary functions and concluded they were, i n fact,

• C B A Factors. The alternatives were evaluated i n two steps:

1. The V A team described how w e l l each alternative

performed each primary function, or, i n C B A terminology,

described the attributes o f each alternative in each factor.

2. Then, they compared the attributes wi th in each factor to

determine which attributes best performed the primary

functions. Based on this determination, they identified

the advantages o f the alternatives and fo rmed their

recommendations.

During one week (Monday-Friday), the VAteam developed

five alternative designs. They also developed a display o f attributes

and advantages, showing how we l l each alternative performed the

eight iden t i f i ed pr imary funct ions . O n the f o l l o w i n g Friday

morning, the V A team leader, also trained i n C B A , worked wi th

the decisionmaking team to facilitate the decision process.

The decisionmaking team m o d i f i e d the attributes and

advantages based on their knowledge and experience. Then, they

weighted the advantages to aid i n making the decisions. The display

o f attributes and advantages, showing how wel l each alternative

would meet each primary function, helped them to further improve

the project. Several design features o f the non-selected alternatives

proved to be better than the corresponding features in the preferred

alternative, so they were incorporated into the final design. I n this

way, the VA team's recommendations, wi th improvements, were

adopted. The decisions reached that morning were relayed to the

designer the fol lowing Friday.

The result was amazing and refreshing! The implemented

recommendations changed the project f r o m $1,500,000 before V A

to $800,000—well wi thin the $900,000 budgeted for the project.

We were on to something big!

Lessons learned:

•I Volume .'(>, Nuinhoi I , Spi ui|* 2003 i n w m W O R L D

• The C B A decisionmaking methodology helped focus the VA

team on developing and evaluating alternatives and presenting

re levant i n f o r m a t i o n — l e a v i n g f i n a l decisions to the

decisionmakers.

• The decisionmakers were able to fo l l ow the C B A process

and quickly make informed decisions.

• This process minimized the problem o f experienced and

qualified employees not wanting to be on a second or third

V A s tudy "because management never accepts our

recommendations." I t also resulted in a faster decision

process.

The next several requests fo r V A studies included three

administration site (off ice) decisions: Remodel vs. lease vs. new

construction vs. location We quickly realized that the C B A

process, u t i l iz ing certain phases o f the V A process, was more

applicable to administrative office decisions than was the generic

V A process.

The table below shows the basic relationships between the

V A and C B A study processes. I t also answers these questions: Is

V A the reconsideration phase o f CBA? Or, is C B A the evaluation

phase o f VA? The answer to both questions is: YES!

Current and future use of the VA and C B A methodologies in

the U S D A Forest Service:

1. C B A lias been incorporated into the Evaluation and Development

phases in the VA Study Workbook, Summary Book, and framing

classes. Modifications to the VA process include:

• Allow the VA team leader lo list both advantages and

disadvantages or just advantages in the Evaluation phase.

Listing both advantages and disadvantages may be useful

early in the VA process lo aid in identifying pertinent

information. This creates double counting. Therefore, the

disadvantages will be convened to advantages and double

counting will be eliminated in the Development phase.

" ( • Replace the Weight-Ratc-und-Calculatc methods (WRC) that

have often been used in VA with the appropriate C B A methods

in the Development phase.

• Use advantage points and cost analysis in place of total score

or cost-benefit analysis.

• Volunteeruse of CBA-trained facilitators (usually a VAteam

member/leader) to aid the decisionmakers in choosing

between alternatives.

The Relationships between VA and CBA

This Shows VA in the CBA Process This Shows CBA in the VA Process

I. The Stage Setting Phase

II. The Innovation Phase

III. The Decisiorjiriaking Phase (Activities in this Phase of CBA)

• Attributes • Advantages • Importance • Total Importance

IV. The Reconsideration Phase (VA Phases in the CBA Process)

1. Investigation 2. Analysis 3. Speculation 4. Evaluation 5. Development 6. Presentation

1 and 2. Investigation and Analysis

3. Speculation

4 and 5. Evaluation and Development (CBA Activities in the VA Process)

• Attributes • Advantages • Importance • Total Importance

6. Presentation

V. The Implementation Phase

V a L T H W O R L D Volume 26, Number I, Spring 2003 5

2. C B A training is a prerequisite to V A training.

3. CBA workbook and summary books incorporating appropriate

steps from the VA process are being developed for administrative

office/facil i ty studies

4. The VA Study process, incorporating CBA methodology, is used

for studying recommended alternatives and designs.

5. Providing CHA/VA team leader training in the spring o f 2003 to

prepare team leaders to use the most appropriate methodology

for the assigned study, i.e. VA or CBA.

Where has CBA Been Used in the VA Process? By Klclmrd lurk

I Isc of ('hoosing by Advantages (CBA) began in the National

I'urk Service in 1996 with its adoption as the method for bringing

"benefit to cost" decisionmaking to bear on the service-wide

construction priority setting process. Congress emphatically to ld

the NPS to develop a more "overtly objective" pr ior i ty setting

system that weighed both benefits and costs. The National Park

Service mission is two fo ld as defined in its organic act.

"...to promote and regulate the use of the...national

parks...which purpose is to conserve the scenery and the

natural and historic objects and the wild life therein and to

provide for the enjoyment of the same in such manner and

by such means as will leave them unimpaired for the

enjoyment of future generations. "

The National Park Service Organic Act (16 U.S.C. 1 2 3, and 4)

The character o f this mission framed an agency that is

grounded in achievements related to non-monetary benefits. For

example, what is the value o f sitting in solitude and contemplating

ii sunset over the r i m o f the Grand Canyon, the value o f hiking

through the Narrows in Zion Canyon, or the value o f viewing the

I iberty Bell in a modern intrusion free context and contemplating

the origins o f our country? H o w do you measure such advantages,

how do you put value on them i n terms o f dollars? H o w are value

methods used in this process?

('onfronted with these questions, a Department o f the Interior

tusk force researched alternate ways o f br inging benefit-cost

discipline to the priority setting process. Based on the findings o f

the task force, the National Park Service chose Choosing B y

Advantages (CBA) as a way to avoid the dilemma o f f ix ing a dollar

value on such lofty mission goals. C B A allows the NPS to evaluate

Ihc relative importance o f advantages or benefits o f over 200 piojccls submitted for each line i t em construction ca l l . A n

assessment team o f NPS experts quantifies the relative importance

ol non-monetary advantages for each project. Then, the team

combines the non-monetary advantages with project cost estimates

and establishes a 5-year Line Item Construction plan. The 5-year

pliin then reflects the combination of projects that provides the most

lu-iielil for the annual appropriation. This simple introduction o f a

new decisionmaking system started the NPS on a journey to improve

iH decisionmaking.

Value Analysis is required to be used by the National Park

Service on most projects over $500,000.

"(a) All NPS programs, projects, and activities will use value

analysis as a management and decisionmaking tool in (1)

'performing or contracting for the planning, design,

construction, repair and rehabilitation/renovation of

facilities,' and (2) 'administrative and management

programs to improve operations, identify and remove

nonessential capital and operating costs, and improve and

maintain optimum quality of program and acquisition

functions."'

DIRECTOR'S ORDER #90: Value Analysis, October 2, 2002

The NPS value analysis program had tradit ionally used

weighted factors as part o f its process. Value methods have typically

been used in two ways: 1) to make value-based decisions from

among a range o f alternatives and more traditionally 2) to improve

and validate facil i ty designs using value studies.

Confronted wi th the adoption o f a C B A pr ior i ty setting

process that discourages the use o f weighted factor analysis, the

NPS value analysis program experimented wi th the use o f C B A as

an evaluation method in value studies. These efforts showed that

C B A provides sound methods for making decisions, and more

clearly documents rationale and benefit cost trade-offs than the

traditional weighted factor decisions. Today C B A is consistently

used as a method for evaluation i n NPS value analysis, particularly

when confronted wi th decisions that must balance relative non­

monetary benefits between alternatives.

As more people within the NPS learned CBA, it was used in

other value-based decisionmaking arenas. Today i t is being used to

set general management planning, alternate transportation, and

federal lands highways program priorities; to make hiring decisions,

and to allocate park positions; and even to help manage real time

decisions in a f lood recovery context.

The National Park Service Value Analysis program has strived

to bring value methods to bear earlier in the general management

planning, implementation planning, pre-design and design phases

o f their work, where greater costs can be avoided and greater dollars

saved. A planning decision using value methods that elects to bui ld

fewer or smaller facilities, while meeting park functional needs,

can avoid significant costs o f construction and development. Value

methods and studies utilizing C B A have been used to make treatment

decisions concerning historic structures, sewerage treatment plants,

and visitor centers; to determine performance criteria for design-

bui ld contracts; to select faci l i ty sites; and to improve benefits and

reduce costs throughout the NPS.

One o f the most powerful applications o f V A and C B A has

been occurring i n the craf t ing o f General Management Plan

preferred alternatives for parks. The planning team uses function

analysis, brainstorming to ensure an adequate range o f alternatives,

sound methods to evaluate and compare the advantages o f the

alternatives, l ife cycle costs to price the alternatives, and sound

methods to select a preferred alternative.

The CBA evaluation gives the planning team great knowledge

about what the agency and stakeholders value among the attributes

o f the alternatives. Using this knowledge it is possible to craft and

Volume .'(>, Nuiiibn I, Spiuu.; >(HH i ' M H I I J W O R L D

S E Q U O I A N P - G E N E R A L M A N A G E M E N T P L A N

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8000

7000

6000

5000

4000

3000

2000

1000

7 0 0 0

A l te rna t i ve B (No A c t i o n ) 2 4 4 5

A l t e r n a t i v e A 1 2 7 5

6 3 2 5

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$50,000,000 $100,000,000 $150,000,000

INITIAL COST

$200,000,000 $250,000,000 $300,000,000

create a preferred alternative that in many cases provides more

advantages to the NPS for a lesser investment. For example, using

VA and C B A on the Sequoia National Park General Management

plan a preferred alternative (labeled Preferred, on the fo l lowing

display) was identified that provided more benefits than any o f the

original alternatives (A , B, C, and D) . A t the same time, it avoided

on the order o f $ 100 mi l l ion in costs, compared wi th the alternative

that was initially preferred (Alternative D) .

In the display above, the sloping lines represent increments,

which are similar to what Arthur Wellington called increases. He

said:

No increase o f expenditure over the unavoidable minimum

is expedient or justifiable, however great the probable

profits and value o f the enterprise as a whole, unless the

INCREASE can wi th reasonable certainty be counted on

to be, in itself, a profitable investment (15).

In C B A , an increment is defined as an increase in cost,

coupled wi th an increase, a decrease, or no change in the total

importance o f advantages. On the one hand, an increase in cost

f r o m either Al te rna t ive A or Al te rna t ive B to the Preferred

Alternative is clearly a profitable investment. On the other hand,

an increase f rom the Preferred Alternative to either C or D is clearly

not a profitable investment.

The Choosing B y Advantages version o f Value Analysis can

and should be used wherever a major decision is being made,

particularly a decision where benefits must be balanced against

costs. The merger o f C B A and V A makes a powerful tool to structure

decisionmaking that soundly considers a set o f alternatives.

References: Grant, Eugene L . and W. Grant Ireson. 1970. Principles of engi­

neering economy. 5th ed. New York: The Ronald Press Com­

pany.

Suhr, Jim. 1999. The choosing by advantages decisionmaking sys­

tem. Westport, CT: The Greenwood Publishing (iroup/Quorum

Books.

Wellington, Arthur Mellen. 1887. The economic theory of the

location of railways. 2ded. New York: John Wiley and Sons.

Jim Suhr is retiredfrom the USDA Forest Service, where he served

as a civil engineer. He was instrumental in the development of the

CBA system, and served as a CBA instructor and facilitator. He is

now president of the Institute for Decision Innovations, Inc.

Rich Harris is retired from the USDA Forest Service, where he

served as a civil engineer. He also served as a ( HA instructor and

facilitator. He now serves as a private ( HA consultant.

John Steward is the Group Leader for Geotechnical, Geology,

and Dam Safety Engineering in the Pacific Northwest Region of

the USDA Forest Service. He is also a ('HA and I A instructor and

facilitator.

Richard Turk is the National Park Service Value Analysis Program

Coordinator responsible for encouraging sound value-based

decisionmaking throughout the service. He is an architect by

training, historical architect and planner by experience, and a

VA and CBA facilitator.

V a L n m W O R L D Volume 26, Number I . Spring 2003 7

Technology

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VE TEAM PARTICIPATION (Technical Support to the VE Practitioner)

phone 212-206-0304/contact: Stuart Sokoloff fax 212-243-4121 email email@cts-group.net website www.cts-sroup.net

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How Much Value Is There In Knowledge Creation?

Gary R. Myers, PE, CVS

"It 's probably just a waste o f money," I thought, as I leafed

through the book in the airport g i f t shop. I t looked like just another

o f the myriad o f books which had managed to work the word

"knowledge" into its t i t le, hoping to ride the latest wave o f hot

business topics to fame and fortune before the business w o r l d

moved on to the next surefire solution to all its problems. This

time the variation was "knowledge creation."

I t was natural for me to be suspicious. Value practitioners,

especially those who are engineers, don't often f a l l for hype. We're

too wary o f being fooled by slick talk and big promises. We pride

ourselves on our abilities to see past the fancy wrapping to the

substance o f what's inside. It 's what we do for a l iv ing .

But some interesting phrases caught my eye as I f l ipped

through the pages. I found talk o f ad hoc, self-organizing, mul t i -

disciplined teams focused on a common goal; o f wi thhold ing

judgment to encourage the creation o f new ideas; and o f j u s t i fy ing

ideas wi th respect to the teams' goals. These and other practices

promoted by the authors all sounded a lot like V M .

Sti l l , I wasn't convinced. Af t e r al l , the book focused on the

development o f innovations in the manufacturing field that often

took months, i f not years, to complete - a far cry f r o m a V M

workshop that normally lasted merely a week. But at that point, I

remembered something that Peter Ducker had written in describing

2 1 s t Century management challenges: "Now the assumption to start

w i t h is that the technologies that are l ikely to have the greatest

impact on a company or industry are technologies outside its own

field." (23) Could this approach to knowledge creation, the product

o f a totally different field, be relevant to V M ?

Now, the possibility o f improving V M grabbed my attention,

because I ' m interested in anything that might be related to V M .

I ' m a total convert. In fact, my devotion to V M is so strong that

m y w i f e has begun suspecting it's a cult.

So I was hooked. As proof, I of fer that I bought the book

right there at the airport g i f t shop, uncharacteristically paying f u l l

price for something I could have purchased on-line at a substantial

discount. I decided I ' d better not tell my wi f e ; such impulsiveness

concerning something having to do w i t h V M would be more

evidence o f the cult.

The book was The Knowledge-Creating Company, by

Japanese authors Iku j i ro Nonaka and Hirotaka Takeuchi. As I read

during m y long f l igh t home, I found that Nonaka and Takeuchi's

concept o f knowledge is more readily illustrated by example than

by formal defini t ion - i tself an example o f what they see as the

Japanese understanding o f knowledge. Western th inking, they

contend, views knowledge as something " formal and systematic,"

characterized as being "easily communicated and shared in the

f o r m o f hard data, scientific formulae, codif ied procedures, or

universal principles." (8)

But they maintain that this "expl ic i t" knowledge is but a

f ract ion o f an individual 's body o f knowledge. The Japanese

perceive knowledge as being primarily hidden and hard to express.

This is owed in large part to it being strongly influenced by personal

experience, values, and intention. This "taci t" knowledge is

comprised o f both technical and cogni t ive dimensions. The

technical dimension consists o f that hard-to-describe, hands-on

, " k n o w h o w " exh ib i t ed by master c raf t smen. The cogni t ive

dimension includes "schemata, mental models, bel iefs , and

perceptions so ingrained that we take them for granted." (8) Tacit

knowledge is therefore not only contextual, but also dynamic since

beliefs and perceptions can change over time. This leads to the

Japanese view o f knowledge as a "just if ied true belief," as opposed

to the Western focus on a more absolute "truthfulness." (58)

As an engineer, I had more than a little trouble w i t h their

challenge to the absolute "truthfulness" o f knowledge. Trained in

The Japanese perceive knowledge as being primarily hidden and hard to express.

math and science, we usually see things as being pretty much black

and whi t e . A concrete pavement o f a certain thickness and

constructed o f specified materials can handle a certain level o f

stress. Period. End o f discussion.

As I thought about this, however, something else came to

mind. That pavement might "mean" different things to different

people. A c iv i l engineer usually thinks o f it in terms o f performance,

because that's where her main interest lies - that is, in how i t

performs. As a value practitioner, though, m y experience tells me

that the pavement probably means big bucks, as pavement is often

the biggest single cost i n a roadway project. In fact, performance

and cost are the two factors that we compare as our primary way

o f judging value (SAVE 5).

"But , " I thought, "those are just two perspectives." To a

highway maintenance supervisor, that concrete pavement could

mean lower future maintenance as compared to asphalt pavements

that require periodic overlays or rehabilitation. Or, (and this line

o f thought was really starting to disturb me) that same concrete

pavement could mean higher future maintenance to the same

supervisor. Maybe his experience jack-hammering out failed slabs

and wrestling w i t h closely-spaced grids o f heavy reinforcing steel

bars had lef t h im wi th misgivings about the maintenance o f concrete

pavements.

V a L J H W O R L D Volume 26, Number 1, Spring 2003 9

My mind started to reel. What's that same pavement "mean"

to othm'' I low about the c iv i l engineer charged wi th designing a

pio |ci t \ dunnage system; would it mean reduced inf i l t ra t ion and

laMci ntttoff to him? To an environmentalist, might i t mean

»h«M(.;mK bio-systems, reducing habitat, reduced green space, and

cutMon'.' Surely interrupted access would be on a landowner's mind,

while it would mean delays to a commuter. I t seemed endless!

O K , so maybe I could buy the concept o f "just if ied true

belief" Fach of the people I ' d thought about could consider the

Mime proposed concrete pavement and create a different "true

bel ie f which would be " jus t i f i ed" w i t h respect to his or her

individual experiences, beliefs, values, and intents.

As I got back to my reading, I learned that the authors

proposed that interactions o f taci t knowledge and exp l i c i t

knowledge would create new knowledge through four modes o f

"knowledge conversion." These modes "constitute the 'engine' o f

the entire knowledge creation process." (57) The four modes o f

knowledge convers ion are soc i a l i za t i on , ex te rna l i za t ion ,

combination, and internalization. As I read, I grabbed the napkin

f r o m under my drink and started to sketch. I developed m y version

o f the "spiral" these modes supposedly f o r m as knowledge is

created, based on the authors' concepts and illustrations (Figure

! ) •

Socialization. Socialization is the creation o f knowledge

though the sharing o f tacit knowledge between individuals. What

the authors call " f i e l d bui ld ing" triggers socialization by creating

a setting that encourages the creation o f shared mental models and

technical skills, as wel l as enhancing mutual trust. (62, 63) A n

example o f socialization is the relationship between a master

craftsman and an apprentice. Their relationship creates the situation

( f ie ld building) where the two share tacit knowledge ( in this case,

largely a one-way f l o w o f knowledge). Since tacit knowledge is

primari ly involved (which, I remembered, cannot be verbalized

easily), the apprentice learns by observation, imi ta t ion , and

practice. I n the cognitive dimension, Japanese companies such as

Honda have used "brainstorming camps" where problems are

discussed "while drinking sake, sharing meals, and taking a hot

bath together in a warm spring." Such a camp is not only used to

F i g u r e ±. The F o u r Kv^owltd^t COLA , v e r s i o n M o d e s

(f rom. NoiA,atea a\A,d T a k e u c k i <£>2 § J - ± )

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K.NOWLET><qE IN

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socialization

.ska r i n g Tacit

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^ ^ \ Creativity ^ \ j u s t i f y i n g ^ \ ^ B u i l d i n g a n \ q z ^ j y ^ ^ C o n u f t ^ ^ ^ ^ C o i ^ c e p t s ^ ^ ^ ^ ^ r c k e t y p e ^ ^ S's

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EXPLICIT

KNOWLEDGE \ 17

create new ideas, but also to "reorient mental models in the same

direction, but not in a forceful way." (63)

T h i n k i n g back to the jus t -concluded workshop, I was

reasonably sure that there had been no communal bathing going

on, al though the environmental specialist and the structural

engineer had seemed to be getting pretty friendly. But I did see

examples o f socialization when the team members had gathered

for meals and other after-hours activities. The site visits also created

the opportunity (more field building?) fo r the team members to

have a shared experience and creative dialog whi le dr iving or

t romping around the project site. Overa l l , I concluded that

socialization migh t be an under-uti l ized mode o f knowledge

creation in current V M practice. ( I decided to draw the l ine,

however, at the bathing th ing , as the image o f some o f m y

colleagues in a warm spring didn' t really set too wel l . )

Extemalization. The second mode o f knowledge conversion,

extemalization, is triggered by dialog or collective reflection.

During extemalization, tacit knowledge is converted to explicit

knowledge. Specific techniques cited by the authors include

inductive and deductive reasoning, metaphors, analogies, concepts,

hypotheses, and models. (64-67)

E x t e m a l i z a t i o n had been present at the workshop in

abundance. The D O T chief engineer and the project designer had

shared their tacit knowledge w i t h the team by expressing hunches,

intuition, insights, and "gut feels" about the project. Team members

had tried to articulate their tacit knowledge when evaluation factors

were determined and w h i l e analyzing the func t ions of the

components o f the project. They 'd continued externalizing as they

generated ideas, ranked and weighted alternatives, selected

alternatives for development, and conducted benefit analyses.

The ease w i t h which the members o f the team exlernali/ed

their views reminded me o f something I'd read. I duj? a handy

book on creativity out o f my briefcase and paged through it until I

found the right section. There it was a paragraph desi iibm^ how

Japanese firms had developed creativity techniques that avoided

the k ind o f open verbal dialog that Westerners seem to cinoy

"Being more reserved than people ofolhei nationalities mid

reluctant to dispute the opinions of others, the Japanese do not

often express their thoughts openly," the aulhoi had w niton As a

result, Japanese f i rms created variations ol tec lmi(|iir* such as

brainstorming to adapt "the creative powet ol the pun o»» to cieale

a socially acceptable technique." (Hi^ ins , I . ' • ! ) I llumylu I might

V a L Wk W O R L D Volume 2o. N I I H I I H I I , Sitting . ' 0 0 1 1 1

Figure 3. V M as a One-spiral Knowledge Creation Process

sharing T acit Knowledne

\n{orw.a\ ion

I A Vhur.tr,

Creating Concepts

Justifying Concepts

~B>uilding an Archetype

Cross -Leveling Knowledge

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EXPLICIT KNOWLEDGE

keep this in mind wi th respect to knowledge conversion modes

such as soc ia l i za t ion that d o n ' t r ead i ly adapt to Western

sensibilities. "Maybe I needed to f i n d socialization techniques

that arc acceptable for my own team members," I thought. I made

myself a note to look into this.

Iwen though my team had externalized their views readily, I

wondered if I had really gotten the most out o f them. I realized

that I tended to stick to a rather l imited number o f tools to promote

exlcrnali/.ation. During much o f the workshop, I had led the team

in an open discussion, encouraging each member to verbalize his

oi her ideas. But Nonaka and Takeuchi warned that "such

c*picssions are often inadequate, inconsistent, and insufficient."

((»•!) I had also encouraged deductive reasoning ( looking for

ovei lying principles that can be applied to specific circumstances)

and inductive reasoning (looking for characteristics o f specific

c m umstanccs that can be applied to the whole).

The authors wrote that the Japanese have f o u n d that

<<Mu< M r reasoning is also particularly useful in the extemalization

pnness (K6) This third category o f reasoning involves the use o f

liyuialive language such as metaphors and analogies. Analogies, I

found, tcsult from a search for similarities between apparently

dissimilar things, while metaphors (a specific k ind o f analogy)

l i n k dissimilar things though a common factor. (Higgins 61-63) I

nude another note: look into analogies and metaphors.

Combination. The third mode o f knowledge conversion,

, • . » < / • ( / ( , I / I K / I , cicatcs knowledge by converting one f o r m o f explicit

knowledge to another. Conventional education and t ra ining;

uiiH'iit leseaich, and the exchange o f verbal, wri t ten, and

< IVi I K M I K data a i r typical ol this mode. It can also be accomplished

•*» M> %"uliyuiitiK csisiiii).: explicit knowledge, such as when data

ii«xl4 It #n' developed oi financial analyses are prepared.

I t.iuld tee tin* mode had also been at vvoik din ing much of

(ft. «*><lilu<|> l i . i i i u . i ' . )Milicit'd and ntaitipiilalrd, calculations

were made, and the team's efforts were recorded on a variety o f

media ranging f r o m f l i p charts to sketches, manual and electronic

text, spreadsheets, presentation software, C A D D drawings, etc.

A l l o f these activities seemed to be examples o f the combination

mode.

Internalization. Finally, I got the last o f the four knowledge

conversion modes, internalization. This mode involves the

conversion o f explicit knowledge to tactic knowledge. It's triggered

by some k ind o f experience that results in al l the team members

sharing mental models or technical knowhow. (69) This goes

beyond just academic learning; i t involves developing the k ind o f

deeper understanding that leads to a "gut f e e l " f o r a topic.

Internalization techniques can include anything f r o m actual hands-

on activities to a v iv id ly retold experience that leaves a lasting

impression on the listener or reader.

I n the recent V M workshop, I ' d suspect that some degree o f

internalization had occurred as the team absorbed information

about the DOT's goals, the designer's concerns, and the particulars

o f the project. The most effective internalization had l ikely

occurred during the site visit, as the shared physical experience

and diversity o f sensory inputs had enhanced the process. Looking

at t raff ic count data i n a quiet off ice is one thing; hearing the roar

o f heavy, high-speed traff ic and feeling the rumble o f 18-wheelers

going by leaves a more lasting impression.

But I also realized that the degree o f internalization that had

taken place during the rest o f the workshop had probably varied

considerably. Since tacit knowledge was being created, i t was by

defini t ion influenced by each team member's experiences, values,

beliefs, and even intentions. I t was entirely dependent on the skills

and abilities o f each individual i n everything f r o m the simple

performance o f their senses to their education, expertise, and even

their cognitive learning abilities. I t was also affected by the fo rm,

W M i m i ,'r. \ « n i j » i I S|<« Dt|f ' o n l W O R L D

content, and presentation o f the explicit material that was to be

internalized, and even on my abilities as a presenter and facilitator.

I grabbed my last napkin and sketched out Nonaka and

Takeuchi's model o f organizational knowledge creation (Figure

2). As I sketched (did the act o f drawing help me to internalize it?)

its similarities to the V M process were immediately apparent. Their

f i rs t step, sharing tacit knowledge, seemed to relate to the team's

in i t ia l efforts in the information phase as they got to know each

other, learned about the project, and discussed i t as they reviewed

the technical data package and visited the site. The next two steps,

creating and just i fying concepts, could hardly correspond any more

directly to the creative and evaluation phases o f V M . The for th

step, building an archetype, where tangible prototypes or models

are developed based on the " jus t i f ied" concepts, easily correlates

w i t h V M ' s development phase. Finally, the presentation phase

could be considered equivalent to the f i f t h step o f the model, cross-

leveling knowledge.

Their knowledge creation model also featured enabling

condit ions: in tent ion, autonomy, f luctuat ion/creat ive chaos,

redundancy, and requisite variety. D i d V M make use o f these

conditions? We had made our intent clear - reduce the project's

cost while maintaining its functionality. The team definitely had

autonomy on several levels. I t had been clearly independent from

outside influences such as the normal D O T hierarchy. Wi th in the

team, everyone had been an equal participant and the members

decided internal assignments amongst themselves.

The workshop setting had ensured redundancy as the open

discussions exposed all team members to information that went

"beyond their immediate operational needs." (80) The condition

o f requisite variety had also been met by the multi-discipline nature

o f the team and the variety o f their backgrounds.

Was fluctuation (an "order whose pattern is hard to predict

at the beginning" (78)) present in the most V M workshops? I wasn't

sure, but its intended result, "a 'breakdown' o f routines, habit, or

cognitive frameworks" was certainly accomplished through the

workshop setting and the V M process itself. (78) The pressure o f

completing the process and presenting meaningful results by the

end o f the week had contributed to the sense o f crisis that creative

chaos achieves.

So, I supposed, what would the V M process look like i f I

superimposed i t on the knowledge creation model? I sketched out

a knowledge creation spiral using V M terminology (Figure 3). As

I ' d discovered earlier, i t seemed to f i t pretty wel l .

"This knowledge creation stuff may not be so bad after a l l , "

I thought as I made my way to the baggage pickup area. As I

waited at the carousel for my luggage and the boxes containing

the fruits o f the workshop, I made a mental list o f just a few o f the

possibilities that were racing through my mind based on m y limited

understanding o f knowledge creation:

• Could I f i nd a way to make better use o f socialization as a

knowledge conversion mode? Recognizing the frequent

Western aversion to activities suspected o f being too "touchy-

feely," could I f i nd techniques better suited to the sensibiities

o f m y typical V M team members?

• Could I be a better facilitator by using a wider variety o f

techniques f o r e x t e m a l i z a t i o n , i n c l u d i n g abduc t ive

reasoning?

• Finally and this is what really excited m e - c o u l d knowledge

creation be viewed as a "higher order o f abstraction" for the

V M process, opening the door to alternatives that could

improve V M in ways we hadn't even imagined?

I was excited as I loaded the gear into my car and got ready

to drive home. I felt that Nonaka and Takeuchi's concepts o f

knowledge creation provided a new perspective with which to view

the value methodology. This perspective supported V M by

uncovering the strong foundation upon which it was built. It also

hinted that improvements to the V M process might lay waiting to

,be discovered.

I couldn't wait to wake my wife and tell her all about it as

soon as I got home.

"On the other hand," I thought, "maybe I ' d better keep it to

myself." She might start searching for a de-programmer.

References Drucker, Peter F. 1999. Management challenges of the 21" cen­

tury. New York: Harper Collins Publishers, Inc.

Higgins, James M . 1994.101 creative problem solving techniques.

Winter Park, Florida: New Management Publishing Company.

Nonaka, IkujiroandHirotakaTakeuchi . 1995. The knowledge-cre­

ating company. New York: Oxford University Press.

SAVE International, Inc. 2002. Value methodology standard.

Internet: http://www.value-eng.org/manuals/vmstd.pdf [cited

July 26, 2002]

GaryR. Myers, PE, CVS, is president ofEpsilon Engineering, Inc.,

Houston, TX.

vmnn W O R L D Volume 26, Number 1, Spring 2003 13

Improved Road Safety Is No Accident!

David C. Wih

"Road Safety and Value Engineering have diametrically

opposed objectives," chortled the senior design engineer to the

team members at a recent Value Engineering (VE) workshop for a

major highway project. "Safety ideas increase costs - money we

just don ' t have," noted the Project Manager. " I n fact, value

engineering actually reduces safety," added the Traff ic Analyst.

Who is correct, i f anyone? More importantly, does an inverse

relationship really exist between Value Engineering and Road

Safety?

The opening remarks in this article are just some o f the

comments I r o u t i n e l y hear as a V E f a c i l i t a t o r f o r m a j o r

transportation projects. I ' m especially tuned in to remarks l ike

these due to m y own professional background as a Cert if ied Value

Specialist and as a Transportation and Road Safety Engineer.

Road Safety The subject o f Road Safety has emerged as a critical aspect

o f the road design process i n several countries, most notably,

Bri tain, Australia, Canada, and now the United States. Significant

research undertaken annually in the United States contributes to

move the safety yardsticks forward. A n d yet wi th all o f these safety

initiatives worldwide, most designers (and V E teams) are missing

out on opportunities to improve road safety and are not taking f u l l

account o f the consequences o f design decisions.

Is i t because Road Design Engineers resist change more

effectively than others? Is i t because not enough funding is going

into the highway design process? Probably not. In m y o w n

experience (wearing m y different hats-Highway Engineer/Road

Safety Engineer/and CVS) these reasons have been appropriate in

several cases, but surely not in the majority o f situations. The

reasons seem more related to the fact that Designers perceive

themselves to have a good understanding o f Road Safety. The

reality, however, suggests that this is probably not the case. Let's

consider a couple o f examples to illustrate this.

Example 1 - Roadside Safety I n a recent V E study w i t h a state DOT, the V E team was

considering the merits o f a change i n the design o f a high

embankment. The or ig inal design called fo r a 25 foot high

embankment to be constructed w i t h a 4:1 foreslope over very soft

soils. The f i l l material had to be imported at a significant cost and

le f t i n place fo r some t ime to improve the compaction o f the

embankment. The V E proposal suggested tightening up the slope

to 2.5:1 to reduce the amount o f f i l l material required in the swampy

area. Guardrail would be installed along the shoulder to shield

the steeper embankment from the t raff ic . Dur ing the workshop, a

senior Road Engineer argued that placing the guardrail along the

shoulder was less safe. He rationalized that the presence o f the

guardrail posed a hazard. The Design Team (responsible to accept,

i, P.Eng., CVS

modify , defer, or reject the V E proposals) decided to leave the 4:1

slopes as originally designed.

Does this situation sound familiar? I t should. I t is played

out i n almost every road jurisdiction you can name, almost every

day. But the more important question is . . .Was i t the right decision?

I t depends on what you're t rying to achieve. The Road Engineer's

suggestion o f that the guardrail was a hazard is correct. Everything

that we intentionally or unintentionally traverse or, come in contact

w i th , while dr iving can be considered a hazard, but they dif fer i n

terms o f severity (the measure o f the extent o f injuries you might

sustain or how likely your vehicle w i l l be damaged). The addition

o f the guardrail increased the cost. The reduced amount o f f i l l

material substantially decreased the cost resulting in a net reduction

in the capital cost o f project. However, the guardrail would have

to be maintained and this adds annual repair costs over the l i f e

cycle o f the project.

I f we stop here (and most V E Teams do just that), the L C C

calculation w i l l most l ikely yie ld that i t is cost-effective to add the

guardrail and to increase the slope. But the Design Engineer's

assertion that this would be less safe became the show-stopper.

Af te r al l who knows more about safety than Road Engineers? A d d

to that my Transportation Truth Number 1 (see insert) and you

w i l l f i n d that the whole V E team feels that they are specialists in

Road Safety!

Was this decision the best for the DOT? Probably not. But

the V E Team was not able to overcome the hurdle required to sell

the idea. They might have been able to convince the decision­

makers i f they had developed safety costs for the alternatives. The

consequences o f hitting the guardrail are generally considered much

less severe than traversing down a 25 foot embankment, and these

situations can now be modeled to measure the performance o f the

alternatives.

Example 2 - Driveway Entrances A Design Team, recently considered eliminating a frontage

road along a major arterial, which serves as a City gateway. A

number o f hotels, service stations, and fast food restaurants are

located along one frontage road. The Design Team had proposed

to simply widen the major arterial, eliminate the frontage road, and

Transportation Truth No. 1: If you

possess a driver's license, you're a

Transportation and Safety Engineer.

14 Volume 26, Number 1, Spring 2003 1 U - . I I I M W O R L D

to connect the commercial driveways directly to the arterial.

Sounded reasonable. Saved money. The Design Team had even

considered road safety in their evaluation. The trouble was, they

rationalized their decisions qualitatively. I n this case, the V E Team

included a Road Safety Engineer who was able to determine

quantitatively that having direct access would result i n a higher

potential o f crashes than before. Societal benefits calculated far

outstripped the potential capital savings over the l i fe o f the project.

The City elected to accept the V E Team's recommendations to

maintain the frontage road. The alignment o f the arterial was shifted

to allow the frontage road to remain, while providing space to widen

the arterial.

Was this decision the best for the city? Probably. They were

able to consider the f u l l cost implications and performance o f the

alternatives when making their decision. D i d i t cost more? Yes,

slightly. But they were able to take i t into account in the decision­

making process.

Example 3 - Staged Interchange The third example pertains to a recent freeway interchange

project. (Refer to Exhibit 1 below) During the ini t ia l construction,

it was decided that only certain ramps would be constructed (to

and from the West - Ramps N-W, S-W, and W-N/S), considering

that the highway would st i l l be extended to the east in the future.

The original planning had included a f u l l Parclo A 4 interchange

(partial cloverleaf w i th loop ramps in two quadrants) located on

the existing tangent alignment o f the arterial. However, when

designed, the Design Team "value engineered" the preliminary

design and shifted the arterial using a curvilinear alignment. The

rationalization for this was that by doing so, the contractor could

save on bui lding a detour and that a small sliver o f surplus land

Exhibit 1 - Staged Interchange

The original Arterial alignment (shown in gray) was shifted to eliminate a

detour road. The requirements for the ultimate stage ramps (shown

dashed) were not fully incorporated into the initial design work.

could be sold off to an adjacent p r o p e r l y owner The i n i t i a l phase

of the interchange was operated lor about loin years In-fore that

additional ramps were constituted mid opened So wtieie's the

problem here? D O T s do this all the tunc

The safety challenges can In- consulted on two levels telated

to the ini t ia l and ultimate conditions In the initial phase, the

Designers introduced a veiy eutvihncai ahgniiN-M lo cirate the

opportunity for the contractor to build the budge in a g t ec r i lield

situation rather than providing a detour road to b u i l d t l ie b r i d g e on

the existing alignment. However, introducing a number o l laiily

tight curves (required to fit existing constraints) increases the crash

potential. Statistics provide reasonable proof of this The decision

to save a f ew dollars during construction gets lost in the l o n g trim

societal cost obligation that was taken on with the decision lo move

the arterial.

The second safety concern emerged when the additional

ramps were constructed. The crossfall (banking of the pavement)

on Ramp N - E must severely r o l l from lef t to right near the ramp

bullnose to fit the opposing curves o f the arterial and the ramp

alignments. This transition is awkward at best. In addition, the

exit taper o f the ramp N - W now extends across the intersection

for the E-N/S Ramp. However, at the stop blocks the ramp lane is

only about a ha l f a standard lane wide. As such, drivers headed

for the freeway are unsure o f where they should stop when the

l ight turns red (see Exhibi t 2).

I t is doubtful whether the consequences o f that early and

misguided attempt to value engineer the interchange were fully

recognized. I t is even more doubtful that the safety consequences

were considered by the decision-makers, given the state o f road

safety i n Nor th America at the time. Nevertheless, it does serve as

an example o f having to live w i th less than optimal designs in the

long term on the promise o f short term gains.

Road Safety and Value Engineering Can Successfully Coexist

The purpose o f this article was not dwell on the shortcomings

o f previous decisions related to road safety i n V E studies, but rather

to promote a path to where road safety and V E can harmoniously

coexist. It 's really not to far f r o m where we are now, but it does

require some discipline to make i t happen. I t also requires the V l i

Teams to break down the safety paradigm.

To this point, road safety has typically been dealt with in V E

workshops on a comparative basis, but the comparison has usually

been l imi ted to a "more safe "/"less safe" gut feel assessment. Wc

need to walk away from this practice and replace it with an explicit

safety analysis. The explicit analysis does not automatically imply

cumbersome effor t because a great deal of recent research has

been distilled into easy to use algorithms. But it might mean getting

more involved w i t h academics or at least becoming more aware of

the road safety research and methodologies. That linkage between

practitioners and academics has been forged in other areas road

safety is just the latest.

A key shift needed is the relationship between standards and

safety. Standards do not guarantee safety. In fact, the misuse of

standards can even compromise safety. In simple terms, standards

V a L HH W O R L D Volume 26, Number 1 , Spring 2003 15

Exhibit 2 - Staged Interchange. The initial configuration of the

interchange did not include the ramp shown to the left or the

intersection. The original taper for the N-W Ramp shown to the

right of the picture still exists and is approximately half a lane

wide at the intersection stop block (where the car is stopped).

The narrow width of the exit lane is apparent in this photograph

looking south towards the freeway. This photograph looking south

towards the freeway.

define the physical attributes o f the road that correspond to a desired

opera t ional pe r fo rmance and the capaci ty to pay f o r that

performance. In fact, many DOT's are required to provide certain

features/standards in order to obtain federal funding.

One major challenge fo r the DOT's is the issue o f return on

in vestment. Most DOT's when faced w i t h a need for capital outlay

iiuist realize a positive benefit/cost. Dealing w i th road safety makes

this more d i f f i c u l t . This is because benefits associated w i t h

increased project costs related to road safety do not directly

return to the D O T (i.e.: costs are internal; benefits are external).

I-or example, by adopting a V E idea that improves road safety, the

D O T spends X dollars (the cost), but the return o f Y dollars (the

benefi t - assuming Y is greater than X ) is actually realized

externally in the health care system, insurance companies, etc. To

make this work, the government must decide i t wants to have a

positive benefit/cost on a societal level.

Summary Value Engineering Teams must look at ways to effectively

improve project performance, considering societal costs, where

possible, over the l i fe o f the project. In doing so, i t is l ikely that

more road safety enhancements w i l l emerge from V E workshops

and w i l l ultimately be accepted. However, existing challenges at

the team level and wi th the Road Agency must be overcome in

order to succeed. New safety tools and an increased awareness

w i l l l ikely help to meet this challenge. As this comes to f ru i t ion ,

we can become more and more convinced that Improved Road

Safety is N o Accident.

David C. Wilson, P. Eng., CVS, is Vice President of NCE Limited,

Markham, ON, Canada.

Ift Volume .'ft, Number I . Spring 2003 ramra W O R L D

Value Management: The Objective Forensic Analysis Tool!

Ronald J. Tanenbaum, PhD, PE, HE, ('F.S'

Abstract Value management and al ternative dispute resolut ion

methodologies are quite similar. App ly ing value management

techniques to dispute resolution through mediation or arbitration

processes offers promise to resolve conflicts, calm the waters, open

avenues o f dialog, accelerate the process, and reach a more

equitably allocation o f costs and liability. Undoubtedly, practicing

value engineers can embrace such a "marriage" o f these two

professional skills. I t w i l l be more d i f f i cu l t to convince practicing

attorneys o f the benefi ts to be real ized by app ly ing value

management principles to dispute resolution.

Introduction The application o f value management ( V M ) to forensic

investigations, dispute resolution, arbitration and mediation is an

untapped venue worth assessing. This conclusion comes f rom

personal experience where V M was applied to a specific case to

develop alternative repair schemes to that recommended by

p l a i n t i f f ' s technical experts. Results may min imize f inancial

obligations that defendants might face as the mediation process

approaches its logical conclusion.

W h y apply value management in the legal profession? B y

focusing on construction defect conflicts, the reasons become

apparent. A common scenario in the legal wrangl ing o f two

opponents is f o r p l a i n t i f f ' s experts to generate repa i r

recommendations, and costs, which are large - very large. This is

done w i t h the hope that once a settlement is reached, which is

usually less than that proposed by p la in t i f f ' s expert, there are

sufficient funds (after the attorneys and experts are compensated)

to accommodate reasonable repairs o f defects. On the other hand,

defense experts generate the lowest cost solution to control losses,

should defendants be found even partially liable. Should defendants

prevai l , there might be l i t t le l e f t to satisfy any damage once

a t torneys (and exper t s ) have been compensa ted . O f t e n

compensation costs proposed by both sides are vastly different;

and, representing the extremes o f the case, neither is t r u ly

reasonable.

Wouldn' t i t be beneficial i f a method could be applied that

generates a reasonable solution and cost that, after al l external

parties are compensated, wou ld resolve the confl ict and correct

the construction defects that were the basis for the lawsuit?

The value management methodology, when applied in an

objective, unbiased manner, offers an excellent opportunity to

provide solutions that may be t ruly defensible in court. A t the

least, the process offers the opportunity to calm the waters and

open dialog among the parties.

Value Management Is? I t is assumed thai readers ol ' this article are thoroughly

familiar wi th the definition o f value management and the important

steps contained in its Job Plan, f o r those unfamiliar wi th the

process you are referred to the S A V I ' International web page,

www.value-eng.org. c l i ck ing on About SAVIv and then V M

Standards. I t is important to remember what value management is

i not:

• Value management is not "checking the calculations," "peer

review," or "quality assurance quality control," which are a

normal part o f engineering design.

• Value management is not an organized effort to reduce the

cost o f the project or eliminate it altogether.

• Value management is not intended to replace or direct the

design or to embarrass the designer by emphasizing mistakes

made in design.

Value management is a strictly adhered-to process, defined

by the Job Plan that fo l lows specific steps and procedures. For

future comparisons, the steps in the Job Plan may be listed as:

Step 1. Preparation

Step 2. Information

Step 3. Function

Step 4. Speculation

Step 5. Evaluation

Step 6. Development

Step 7. Report

Step 8. Implement and Audit

Alternative Dispute Resolution Is? Lit igat ion, in most cases, is an inefficient, costly process.

Fortunately there exist alternatives that can, i f properly applied,

shorten the process, improve efficiency, reduce the costs to be

borne by participants, and achieve a fair and equitable resolution;

hopefully, avoiding the animosity generated through litigation that

often leads to long lasting acrimony among the parties. These

alternatives are grouped under the t i t le o f alternative dispute

resolution ( A D R ) .

Michael Adams early paper (1992) listed the A D R options,

in order from least to most control o f the parties over the outcome,

as fol lows:

• Arbi t rat ion

• Summary ju ry tr ial

V a L JTi W O R L D Volume 26, Number 1, Spring 2003 17

1

• Mediation-arbitration

• Min i - t r i a l

• Mediation

• Conciliation

• Negotiation

For descriptive purposes, Michael states:

Arbitration, a quasi-judicial process conducted before a panel of

neutrals [or neutral indiv idual ] , is the most time-tested ADR

approach. Sometimes in the f o r m o f binding arbitration, i t is an

old technique that has been applied to the construction industry

for a long time. The discovery process is often relaxed or even

eliminated in the arbitration process to the point where both parties

may not be able to examine the other's documents and positions.

Negotiation, at the other end of the ADR spectrum, is a process

involving the parties directly and jointly in seeking a mutually

acceptable solution without outside assistance.

Conciliation is a process whereby a third party brings the parties

together and assists in maintaining lines of communication

between them as they negotiate a settlement.

Mediation is a facilitated negotiation process. A neutral, selected

by the parties, provides assistance with issue definition and

development of settlement options. The facilitator, process, and

agreement, however, are all fully under the control of the parties.

The mediator, who possesses the confidence o f a l l parties, tries to

reach a middle ground acceptable to both sides. The mediator

gains sufficient knowledge o f al l positions so that the min imum

resolution acceptable to each is understood.

Not included i n Michael ' s l is t are two additional A D R

techniques:

• Resolution by experts

• Private litigation

Resolution by experts can work w e l l i n purely technical

disputes. F.ach side selects an expert, they in turn select a third

expert to act as the chair, and these individuals then reach a solution

to the technical issues that w i l l be accepted by a l l parties.

Private litigation (perhaps the 'min i - t r i a l ' i n Michael 's list)

inv nl ves engaging the services o f a private jurist , typical ly retired,

to act as the judge in a private court a l l parties agree to fund .

Noiinal litigation rules for c iv i l cases apply to this process, which

esc hides a jury and can reach resolution swi f t ly for potentially

significant savings to all participants.

A new approach to ADR involves merging the A D R concepts

«ii l i paMnering. Jim Chodzko (2002) has created this merger in

wliiit he let ins a Dispute Management Program (DMP) . A D M P

l>i<>% ides the framework and components essential to support

|Mitii< nny I \eiyonc benefits. Contractors are paid and project

, »« i M i , p,n no nunc than a lair price lor cMra work and legitimate

" H H I M I , linn impacts |*io|ecl designers, construction managers

,* <«mii,i, i iidiiuuisiititois, ,ui(l ownei representatives arc able to

focus on building the project while avoiding haggling and potential

l iabi l i ty for alleged errors. The seven components o f DMP, when

al l are present, w o u l d help the process run smoothly perhaps

avoiding the 8th and f ina l step, binding arbitration, i f the program

fa i l s i n some way. As paraphrased f r o m J im's paper, the

components are:

1. Total Quality Project Management including policies,

procedures and t eamwork to insure better p ro jec t

management wi th fewer errors, changes and other sources

o f conflict .

2. Improved People Skills, through training, for al l project

personnel improving communications and interpersonal

dynamics whi le lessening tension and conflicts.

3. Par tner ing , i n the t r a d i t i o n a l sense, i n v o l v i n g a l l

part icipat ing parties to promote a successful project

environment where al l parties work together and claims

are avoided or readily resolved.

4. Dispute Avoidance and Collaborative Problem Solving

Techniques used to avoid disputes and jo in t ly solve

problems, bui ld a sense o f teamwork, and employ the

results o f creative value management proposals that

reduce cost whi le maintaining or enhancing the work

performed.

5. Win /Win Negotiation which includes looking for mutual

benefits and seeking increased value in order that both

parties examine the basic interests instead o f positions

on an issue, crafting a solution meeting each party's needs.

6. Change-Order Management Programs to help contractors

and project owners identify, track, document and negotiate

settlement o f extra work and impacts without adversely

affecting partnering.

7. Standing Neutrals consisting o f experienced construction

experts (neutral expert or a dispute review board) who

monitor progress in order to understand and help resolve

problems as they develop.

Regardless o f the technique employed, the objective o f A D R

is clear - reach a settlement avoiding costly depositions, exhibits,

and ultimately tr ial , w i th the inherent risk o f undesirable outcomes

and eternal acrimony. Disputes can be resolved i f the parties want

them to be resolved. This is most important for A D R processes to

be successful. Without a mutual desire to resolve the disagreement

among al l the parties, l i t igation becomes the only recourse.

The value management process offers the most promise in

mediation. Once all stake holders have agreed to abide by the

results o f mediation, the mediator can use the V M process to seek

out the best solution. For the results to be acceptable, the p la in t i f f

needs to be sat isf ied/"made w h o l e " where the defects, i n

9* UtliniK' .'fi Ntimlnt I, Spiing .'(Kit l l f s l l l M W O R L D

construction cases, are corrected, returning the facili ty to its original

condition - but no further.

The defendant agrees to a solut ion that does not add

enhancements to the project. For more information, the reader

is encouraged to examine the Dispute Resolution Board Foundation

website at www.drb.org.

Are Attorneys Listening or Even Interested? When you broach the topic o f applying V M principles and

methodology to cases in litigation, the reaction, even f r o m those

practicing V M , is not as positive as one would hope. Some argue

that attorneys have l i t t le or no vested interest i n the V M approach.

Some true skeptics c la im that attorneys only want to "maximize"

the return to the p l a in t i f f or minimize the damage to the defendant

- depending on which side they represent. I have heard the term

"tunnel vis ion" used where attorneys are set i n their ways on how

they do things that can incorrectly appear to the public as i f they

are "mi lk ing the system." I n reality, they see an absolute necessity

to go through a l l o f the steps, including depositions, to satisfy

themselves that they have identified the "smoking gun" that w i l l

bolster their position. They would be reluctant to use the V M

methodology i f i t could sidestep some portion o f this legal journey,

achieving a solution in less time and/or reducing pla in t i f f ' s award,

or increasing damages borne by the defense.

Is there any hope o f marrying V M into the legal process?

Actually, as others have examined, there is an excellent correlation

between the two professions, particularly when applied in some o f

the techniques associated wi th alternate dispute resolution ( A D R )

including mediation and arbitration.

There Is A VM/Legal Correlation Relevant literature is scant. Two papers address or focus on

this topic. Virginia Will ingham's (1990) (Ginger Adams) paper

contains one small section, "Value Analysis in the Legal System,"

germane to this issue. Here, Ginger compares the V M Job Plan

wi th the Legal Process and notes these significant similarities:

V M Job Plan

Information Phase

Speculation Phase

Analysis Phase

Development Phase

Presentation Phase

Implementation Phase

Follow-Up Phase

Legal Process

Discover process, depositions

Research; looking up precedents;

considering what opposing counsel

w i l l present

Applicat ion o f precedents to case at

hand; counter arguments to

opposing counsel's case

Development o f case presentation;

which precedents to use in court;

what defense/prosecution to present

Hearing/Trial

Verdict

Freedom - Sentencing - Probation

The second paper, mentioned earlier, is a more in-depth

examination o f the application ol value management in the legal

arena. Michae l Adams ' (1992) papei examines how A D R ,

specifically the mediation process, exhibits siniilatities lo the value

management process. As the only detailed discussion o l the topic-

published, to my knowledge, we w i l l examine it in more detail,

I n focusing on the mediation process as the most likely A l )R

technique to find value management an acceptable tool, Michael

quotes two papers by Cooley (1986) and Moore (1986), also

referenced herein. Each describes the mediation process in a scries

o f steps wi th Cooley having eight and Moore twelve. Michael

reorganizes these into seven groups for comparative purposes:

Cooley - 8 Phases of Mediation Group I

1 1. Initiation

2. Preparation

Group II 3. Introduction 4. Problem statement

Group III 5. Problem clarification

Group IV

6a. Generation of alternative

Group V

6b. Evaluation of alternatives

Group VI 7. Selection of alternatives Group VII 8. Agreement

Moore - Twelve Phases of Mediation Group I 1. Initial contacts with the disputing

parties 2. Selecting a strategy to guide

mediation 4. Designing a detailed plan for

mediation 5. Building trust and cooperation

Group II 3a. Collecting background information 6. Beginning mediation session 7. Defining issues and setting agenda

Group III 3b. Analyzing background information 8. Uncovering hidden interests of the

parties

Group IV

9. Generating options for settlement

Group V

10. Assessing options for settlement

Group VI

11. Final bargaining

Group VII 12. Achieving formal settlement Now, i f the reader recalls and understands the value

management Job Plan and al l the steps that the facilitator takes in

the V M process, i t becomes clear that, by creating the seven groups,

Michael has cleverly developed the fo l lowing association between

mediation and value management:

Mediation

Components

Job Plan

Components

Group I Step 1: Preparation Group I I Step 2: Information

Group I I I <=> Step 3: (Function) Analysis

Group I V Step 4: Speculation (Creativity)

Group V Step 5: Evaluation Group V I Step 6: Presentation

Group V I I Step 7: Implementation

V a L [113 W O R L D Volume 26, Number I, Spimg 2003 19

I he V M step requiring u report is omitted as, in legal cases,

a tepoii is rarely i f ever prepared; but, can be incorporated into

Step () as desired.

An Example I recently applied value management to a case where the

parties had agreed to mediation. Because the mediation is ongoing

at the time this paper is being prepared, details, names and the

specific Ca l i fo rn ia loca t ion cannot be disclosed. S t i l l , the

fundamentals o f the process employed and the outcome achieved

can be described as an example o f applying V M i n the legal arena.

The issues in the case relate to alleged construction defects w i t h a

retaining wal l .

The V M workshop was requested by defendants who were

searching for lower cost alternatives to the repair recommendations

proposed by plaint iff 's expert. The plaint i ff ' s repair was extensive

and expensive; but, would resolve the perceived problems. As

facilitator, I assembled a team o f geo-technical engineering,

retaining wa l l design/construction, cost estimating and other

experts, some representing different defendants named in the case.

Originally, I conceived o f a team o f experts w i t h no previous

involvement in the case. However, since the study was funded by

the defendants rather than jo in t ly w i th the plaintiffs (the preferable

approach), defendants' experts were invited to participate at their

request. This team composition created certain requirements.

Experts for the p la in t i f f were also invited to participate at the

start of the study to present their recommended repair alternative

and respond to team questions. They then lef t so as not to hinder

the free discussion o f the project or the creativity o f the team.

It was explained that the V M process would lead the team

to acceptable solutions to mi t igate distress at the pro jec t .

Furthermore, i n order to generate acceptable and defensible

recommendation(s), it was made clear that participants had to leave

their biases and independent representations fo r their clients at

the door. Even the hint o f a conflict o f interest or nonobjectivity

would destroy the results o f the study, wasting everyone's time

and money. Objectivity was the key to success. This demand was

tepcatcd frequently during the study, which, fo r economic and

scheduling reasons, lasted only two days. Again, the reader is

reminded that this is a less-than-ideal s i tua t ion w i t h true

independency preferred. The team recognized and accepted that

the generated recommendations might be acceptable to a l l

delendants, but not well-received by the plaint i ff . St i l l a good

solution might strengthen defendants'position before the mediator,

and suggest a more reasonable cost o f repair.

Once all understood and accepted the rules, we rapidly

prm ceded through the V M process, while taking certain liberties

demanded by the concentrated two-day schedule. The team

m \ epted my definition of the project function to repair an allegedly

damaged returning wall. Thus, we did not spend time developing

a I AS I diagram, Also, the attorneys did not request a formal

ir\*tt\ An oial picscntation of our findings and recommendations

« * » M I I I U tent All leniiiining steps in the V M Job Plan were

•dlxwcd to, a l though their was little r oom fo r extended

, O H M M J I I . H I I t c ivonr hud lo leinain Ionised ou the task.

Deliberate steps were taken to improve objectivity, minimize

bias, and create recommendations that could be convincingly

presented to the mediator. The team ini t ia l ly developed criteria by

which each idea would be evaluated, and weighted the criteria f r o m

most to least important.

The creative process developed 43 ideas. W h i c h when

reviewed, took the team through a second ini t ial rating level. This

was done again to impart as much objectivity as possible into the

process that w o u l d select ideas w o r t h y o f b e c o m i n g

recommendations. Many received low ratings and were rejected;

11 became recommendations w i t h order-of-magni tude cost

estimates. These 11 were then subjected to a f ina l rating system

where each was numerically ranked f r o m excellent to poor when

compared to the original evaluation criteria. A mathematical matrix

was developed that multiplied the ranking times the weighted value

for the criteria. For each idea/criteria combination, the total (sum)

weighted criteria was calculated. This number, when divided by

the estimated cost for the recommendation, created a value ratio

for each. Those three recommendations that had the highest value

ratio were selected for presentation to the attorneys.

When a l l was said and done, the V M team freely admitted

that the exercise was extremely valuable, that a large number o f

alternatives were available to resolve the problems at the site (more

than each participant had anticipated), and that the best-choice

recommendations generated were objec t ive and defensible,

regardless o f the role o f their clients in the case. Specifically, for

those readers preferring numbers, the solution wi th the highest value

ratio had an estimated cost o f about 25 percent o f the p la in t i f f ' s

solution.

How To Make VM A Successful Component of ADR

As stated earlier, the goal o f the V M process is to generate

an alternative recommendation or solution that is objective and

defensible. Once achieved, i t becomes d i f f i cu l t for either side to

promote arguments that debunk the results o f the study. Below are

some additional suggestions that would enhance the successfulness

o f the V M study:

1. Assemble a team o f experts truly independent o f the case/

project, wi th not even a hint o f conflict among them. This

would increase the objectivity/acceptability o f the process/

recommendations. A team o f independent experts, and the

recommendations they generate, would be o f significant value

to the mediator/arbitrator who, ideally, would commission

the study wi th f u l l support o f both plaint iffs and defendants.

2. Assemble a team o f independent experts wi th experience and

skills specific to the nuances o f the issues. Neither side should

be i n a position to challenge the participation o f any team

member.

Wlui ir »(.. Number I , Spiuuf «MMIl H J s l l l l J W O R L D

3. Include a qualified independent cost estimator in each study.

This is c r i t i ca l . A n y objections levied at the selected

recommendation(s) w i l l l i k e l y center on cost estimate

accuracy rather than on the method o f repair proposed. The

estimates prepared must include anticipated soft engineering

costs ( a d d i t i o n a l design, i nves t iga t ion , cons t ruc t ion

management, etc.), other contingencies, inf la t ion, and l i f e -

cycle costs. The details and accuracy o f the estimates must

be greater than what is no rma l ly developed i n value

management studies during the typical one-week workshop.

It may be best to retain the cost estimator for a period o f

time beyond the completion o f the workshop to allow the

preparation o f more detailed estimates that w i l l be defensible

and acceptable to al l stake holders.

4. As demonstrated i n the case his tory above, there are

occasions where team members can be individuals who have

participated in the project or are experts designated for the

case. Most likely, this would be a study supported only by

the defendants and runs greater risk o f reject ion by the

p l a i n t i f f s . S t i l l , the study cou ld assist the defense i n

s o l i d i f y i n g / u n i f y i n g / s t r e n g t h e n i n g i t ' s p o s i t i o n . The

participation o f the team members must come wi th conditions

to maintain the objectivity and defensibility o f the study:

a. Have at least one totally independent team member.

b. The team members already "attached" to the case

must understand and accept that they leave their

biases and 'advocacy' for their client outside the room

at all times.

c. They must be totally objective in creating, promoting

and developing ideas and recommendations.

d. The facilitator must be the "role model" o f objectivity

for everyone, and must continually remind/emphasize

that a l l recommendat ions deve loped must be

objective and free o f any perceived bias - otherwise

it w i l l not be defensible later on and the entire effort

would have been wasted. The input o f bias into a

so lu t ion w i l l l i k e l y backf i re on the i n d i v i d u a l

responsible f o r v io la t ing the "rules," negatively

impacting everyone else.

e. The cost estimator on the team should be complete ly

independent without bias or confl ict .

f. The team must accept the fact that this effort , and its

results, may be a "hard sell" to the other side who,

regardless o f the professing o f objectivity, would

view the results as biased and suspect. Even so, the

solidified conclusions and recommendations may be

o f great value to the mediator i n bringing both sides

closer to resolution.

Now The Hard Part - A Conclusion? It should be easy to convince practicing value engineers that

they can provide their expertise to the legal profession, particularly

those who have forensic/expert experience. Af t e r a l l , this would

represent an expansion o f their value management practice. Where

the d i f f icu l ty arises is in convincing attorneys and "combatants"

that they would benefit f rom the application o f value management

to their situation. A logical step in achieving this goal might be to

enlist the support o f carriers o f errors and omissions ( E & O )

insurance. Michael Adams has suggested incorporating the use o f

V M i n dispute resolution through a partnering approach wi th

insurance companies providing E & O coverage. This certainly is

worth considering as part o f the implementation process. J im

Chodzko is suggesting another partnering path w i th the Dispute

Management Program that o f f e r s considerable promise i f

implemented at the start o f construction while merging a value

management process as an integral component wi th in the program.

But, returning to attorneys, the role o f the legal participants

w i l l impact their willingness to use V M in their case:

Plaintiff's Attorney - least l ikely to support the application o f V M

as they typically seek the highest cost alternative that allows them

negotiating room i n which to maneuver. It becomes d i f f i cu l t to

convince them that the lower cost alternatives recommended by

the V M workshop w i l l be in the best interest o f their client.

Defendant's Attorney - more l ikely to support the application o f

V M as they are seeking defensible solutions that w i l l reduce the

exposure o f and/or cost to their client (that is once they overcome

the 'tunnel vis ion ' described earlier in this paper). This assumes

that they lack the evidence needed to prepare convincing arguments

for dismissing their client f r o m the case. They may also harbor

some fear that the V M process could generate acceptable solutions

at costs greater than anticipated. They might feel "trapped" by the

recommendations generated by the workshop.

Mediator/Arbitrator/Special Master/Judge - most l ikely to accept

the V M process. These individuals are attempting to reach a

solution to a problem that is reasonable in cost, makes each party

as whole as possible, and is acceptable to all ; and, to do this i n the

quickest manner so as to min imize the legal costs. Value

management can be a very cost-effective, forensic analysis tool

for achieving these goals.

Expecting attorneys to quickly embrace value management

is truly a naive, idealistic view. I t w i l l be d i f f i cu l t to convince

attorneys that value management does not threaten their position,

negatively impact their clients, or cause a significant reduction in

their income. Acceptance and implementation o f value management

in the legal arena w i l l be a slow, painful , uphi l l battle. Successful

applications that are we l l publicized w i l l be the best ammunition

in this battle.

Over 20 years o f forensic experience has taught me that,

contrary to the popularized negative image o f attorneys as greedy

individuals out to " m i l k the system" (although there are some who

VFVTJn W O R L D Volume 26, Number 1, Spring 2003 21

f i t this description), most are professionals seeking to best represent

the interests o f their c l ients . G iven this real i ty , the value

management profession should be able to develop convincing

reasons why the process can benefit the case. A n d in those few

situations where we encounter the unscrupulous lawyer out to

extend a case in order to maximize their prof i t in lieu o f serving

their client, we w i l l never be able to get them to accept the benefits

o f value management. However, the attorney opposing these less-

than-professional lawyers might embrace the tool and f i n d ways

to use i t to strengthen their position.

Addit ionally, the reader is reminded o f the close similarity

o f the two professions as described by Ginger and Michael Adams.

Th is para l le l me thodo logy re la t ionship should a l l ow open

discussions between the two professions o f how value management

and alternative dispute resolution can benefit f r o m a "marriage"

o f skills. Once embraced, attorneys, mediators and arbitrators w i l l

f i n d that, as a min imum, value management w i l l "calm the waters"

and open dialog making early resolution achievable.

I t is going to take a few courageous attorneys to get the ball

ro l l ing and promote the use o f value management as a forensic

investigation tool . We just have to approach i t one case at a time.

Acknowledgements The author wou ld like to gratefully acknowledge the input

and advice o f George Bartolomei, CVS, Michael Adams, CVS,

Merle Braden, CVS, and James Chodzko, Esq. whose valuable

guidance and suggestions made this paper vastly more complete

than originally conceived.

References Adams, Michael S. 1992. The value managed mediation o f con­

struction disputes. In SAVE proceedings volume xxvii, confer­

ence held in Phoenix, Arizona May 31-June 3, 1992, edited by

O. James Vogl. Northbrook, I l l inois: The Society o f American

Value Engineers, Inc.

Chodzko, James. 2002. Disputes and dispute resolution. To be

presented Risk allocation and dispute minimization on public

and private complex construction projects in Arizona and Else­

where, September 10, 2002, Tucson, Arizona.

Cooley, John W. 1986. Arbitrat ion vs. mediation - Explaining the

differences. Judicature, February - March, Vol . 69, No. 5:21¬

22.

Moore, Christopher W. 1986. The mediation process, San Fran­

cisco: Jossey-Bass Publishers, pp. 32-33.

Will ingham, Virginia R. 1990. Value management. Universal

applicability, l imited usage. Value World, July/August/Septem­

ber, Vol . 13, No. 2: 23-27.

Ronald J. Tanenbaum, PhD, PE, GE, CVS, is president ofGeoVal,

Inc. in San Diego, CA., He is also president of SAVE International's

San Diego Chapter and is SAVE's Southwest Regional Director.

Give Yourself

the

SAVE Advantage

The best and most convenient way to learn the techniques of the Value Methodology and their application and to contribute to the growth and development of value technology is as a member of SAVE International. See page 24 for your SAVE Membership Application. Get more information about SAVE membership benefits at www.value-eng.org.

S A V E I N T E R N A T I O N A L

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Volume 26, Number I , Spring 2003 UJslllM W O R L D

2002 Value World Index I n d e x b y A r t i c l e A Philosophy o f Value ( M y Value Career). Phillips, Martyn. Value

World 25 (1): 21 (Spring 2002).

A Value & Risk Management Approach to Project Development. Phillips, Martyn. Value World 25 (2): 7-10 (Fall 2002).

Beyond the Cost Savings Paradigm: Evaluation and Measurement o f Project Performance. Hunter, George; Stewart, Robert B . Value World 25 (1): 2-7 (Spring 2002).

Doing V M W i t h Passion and Excitement. Sperling, Roger B . Value

World 25 (2): 1 (Fall 2002).

FAST Diagramming for Transportation Projects. Lenzer, W i l l i a m

F. Value World 25 (1): 11-14 (Spring 2002).

Formula for Transportation Projects: Reduced Risk + Improved Schedule = Better Value. McClintock, Scot. Value World 25 (1): 15-17 (Spring 2002).

From Ordinary to Extraordinary (Editorial). Sperling, Roger B . Value World 25 (1): 1 (Spring 2002).

Integration o f Value Analysis i n the Planning and Construction o f Mass Transit Projects i n Quebec. Donais, Rene; Vezina, Richard. Value World 25 (2): 16-18 (Fall 2002).

Odyssey o f a Value Engineer ( M y Value Career). Sperling, Roger B . Value World 25 (2): 7-10 (Fall 2002).

Optimizing the Peer Review Method. Koga, John. Value World 25 (1): 8-10 (Spring 2002).

Putting the Value Back Into Planning. Wilson, David C. Value World

25 (2): 11-15 (Fall 2002).

Resolving Severe Conflicts i n Value Management Studies. Hahn, Wi lhe lm. Value World 25 (2): 2-6 (Fall 2002).

Understanding Value Engineering. Sperling, Roger B . Value World

25 (2): 19-21 (Fall 2002).

Value Management i n Higher Education: A Pilot Project at a Spanish University. Garcia Sanchez, Rosa . Value World 25 (1): 18-20 (Spring 2002).

I n d e x b y A u t h o r Donais, Rene and Vezina, Richard. Integration o f Value Analysis

in the Planning and Construction o f Mass Transit Projects in

Quebec. Value World 25 (2): 16-18 (Fall 2002).

Garcia Sanchez, Rosa. Value Management i n Higher Education: A Pilot Project at a Spanish University. Value World 25 (1): 18¬20 (Spring 2002).

•Hahn, Wilhe lm. Resolving Severe Conflicts i n Value Management •' Studies. Value World 25 (2): 2-6 (Fal l 2002).

Hunter, George and Stewart, Robert B . Beyond the Cost Savings P a r a d i g m : E v a l u a t i o n and Measu remen t o f P r o j e c t Performance. Value World 25 (1): 2-7 (Spring 2002).

Koga, John. Opt imizing the Peer Review Method. Value World 25 (1): 8-10 (Spring 2002).

Lenzer, Wi l l i amF. FAST Diagramming for Transportation Projects.

Value World 25 (1): 11-14 (Spring 2002).

McClintock, Scot. Formula for Transportation Projects: Reduced Risk + Improved Schedule = Better Value. Value World25 (1): 15-17 (Spring 2002).

Phillips, Mar tyn. A Philosophy o f Value ( M y Value Career). Value

World 25 (1): 21 (Spring 2002).

Phillips, Martyn. A Value & Risk Management Approach to Project Development. Value World 25 (2): 7-10 (Fall 2002).

Sperling, Roger B . Doing V M Wi th Passion and Excitement. Value

World 25 (2): 1 (Fall 2002).

Sperling, Roger B . F rom Ordinary to Extraordinary (Editorial) . Value World 25 (1): 1 (Spring 2002).

Sperling, Roger B . Odyssey o f a Value Engineer ( M y Value Career).

Value World 25 (2): 7-10 (Fall 2002).

Sperling, Roger B . Understanding Value Engineering. Value World

25 (2): 19-21 (Fall 2002).

Stewart, Robert B . and Hunter, George. Beyond the Cost Savings Pa rad igm: E v a l u a t i o n and Measu remen t o f P r o j e c t Performance. Value World 25 (1): 2-7 (Spring 2002).

Vezina, Richard and Donais, Rene. Integration o f Value Analysis in the Planning and Construction o f Mass Transit Projects in Quebec. Value World 25 (2): 16-18 (Fall 2002).

Wilson, David C. Putting the Value Back Into Planning. Value

World 25 (2): 11-15 (Fall 2002).

i v m n W O R L D Volume 26, Number 1, Spring 2003 23

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24 Volume 26, Number 1, Spring 2003 1V : I I IM W O R L D

SAVE I n t e r n a t i o n a l S t a f f

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Value World is published twice a year by SAVE International and is

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E d i t o r i a l P o l i c y

Value World welcomes original articles on value engineering and related disci­

plines. Reprints or abstracts from other journals or periodicals are acceptable,

provided that prior permission is obtained from the copyright holder(s). Value

World's policy is to provide a medium for contributors to express themselves

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World are neither approved nor disapproved by SAVE International.

E d i t o r i a l S t a f f

Editor-in-Chief: Michael S. Adams, AIA, PP, CVS (Life)

Associate Editors: Patrick S. W. Fong, PhD; Theodore C. Fowler, CVS (Life);

Terri L. Faris

B o a r d o f D i r e c t o r s

President: Russ Brzezinski, CVS, CME

Executive Vice President: John L. Robinson. PE, CVS

Immediate Past President: Laurel Dennis. CVS

Vice President-Communications: Herman E. Goodwin. Jr., BS, CVS, CPE

Vice President-Construction: Del L. Younker. CCC. CVS

Vice President-Education: Joseph F. Otero. Jr.. CVS

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FAIM. M H K I V M (VMF). MIIE

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