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8/9/2019 Value Base Planning Using Value Engineering Value Analysis Value Management_20100113_143402
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July 25, 2002 Value Based Planning Using VE/VA/VM
Financial Implications of Disaster
Value Base Planning UsingValue Engineering / Value Analysis / Value
ManagementPresented By: Fred McAuley, Jr.
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What is VE / VA / VM?
Value Methodology (also called Value Engineering, Value Analysis or Value Management) isa powerful problem-solving tool that can reduce costs while maintaining or improving
performance and quality requirements.
It is a function-oriented, systematic team approach to providing value in a product orservice. The value methodology helps organizations compete more effectively in local,national and international markets by:
-Decreasing costs -Increasing profits
-Improving quality -Expanding market share
-Saving time -Solving problems
-Using resources more effectively
Value methodology easily produces savings of 30 percent of the estimated cost for manufacturing aproduct, constructing a project or providing a service. The return on investment that public and privateorganizations derive from implementing VM programs averages 10 to 1. That is, for every dollar invested ina VM study - including participants' time and implementation costs - $10 in net savings results.
- S.A.V.E. International
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U.S. Law Mandates VE Use in the Public Sector:
The 1996 Defense Authorization Act (Public Law 104-106) states that each executiveagency must establish and maintain cost-effective VE procedures and processes.
- Definition: . . .[T]the term Value Engineering means an analysis of the functions of a program, project,system, product, item of equipment, building, facility, service, or supply of an executive agency, performed by
qualified agency or contractor personnel, directed at improving performance, reliability, quality, safety, and life
cycle cost.
The 1995 National Highway System Designation Act requires states to carry out a VEanalysis for all federal-aid highway projects with an estimated total cost of $25 million ormore.
The 1993 Office of Management and Budgets OMB Circular A-131 requires federalagencies to use the value methodology as a management tool to reduce program andacquisition costs.
"Value engineering is a proven management tool that can be used by agencies to streamline operations, improve quality
and reduce contract costs.
- Franklin Rains, U.S. Office of Management and Budget
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How Does the Value Methodology Work?
The value methodology works through a VE/ VA/ VM study thatbrings together a multidisciplinary team of people who own theproblem and have the expertise to identify and solve it. A VM studyteam works under the direction of a facilitator who follows anestablished set of procedures - the VM job plan - to review theproject, making sure the team understands customer requirementsand develops a cost-effective solution. SAVE International
Definition of Value Engineering:
An organized study of functions to satisfy the users needs with a quality
product at the lowest life cycle cost through applied creativity. - USACE
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VE Study JobVE Study Job
PlanPlan
I -- INFORMATION PHASE -I -- INFORMATION PHASE - Project FamiliarizationProject Familiarization
II-- SPECULATION PHASE -II-- SPECULATION PHASE - Creative BrainstormingCreative Brainstorming
III -- ANALYSIS PHASE -III -- ANALYSIS PHASE - Critical JudgmentCritical Judgment
IV -- DEVELOPMENT PHASE -IV -- DEVELOPMENT PHASE - Develop AlternativesDevelop Alternatives
V -- PRESENTATION PHASE -V -- PRESENTATION PHASE - Present AlternativesPresent Alternatives
(Continues)(Continues)
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F.A.S.T.F.A.S.T.DiagramDiagram
Verb-Noun
Function
Verb-Noun
Function
Verb-Noun
Function
Verb-Noun
Function
Function Analysis System Technique
Generating a Function Picture
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Higher OrderFunction
Basic
Function
Required
Secondary
Function
Beyond
Study
Scope
Required
Secondary
Function
Functions that
Happen All the
Time:
Scope of Problem Under Study
Functions that happen all the timeand/or are caused by some otherfunctions
How Why
Wh
en
Design
Objectives:
F.A.S.T.F.A.S.T.
DiagramDiagram
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Weighted Value Evaluation
Given: System #1 vs. System #2
Cost (LCC) - #1 $$ < #2 $$$ Performance - #1 < #2
Risk - #1 = #2 Safety - #1 < #2 Appearance - #1 = #2
Cost (LCC)Performance
System #1System #2
Risks
A-2
Appearance
A-3
A-1C-1 D-BB-E
Safety
A-1
C-2D-3
D-2
1 6 3 2 7
1 9 4 3 10
3 3 273 8 2 9 3 40 4 87
3 3 364 8 2 12 4 30 3 89*
Weighted Evaluation Form from:Value Engineering: Practical Applications, for Construction, Maintenance &OperationsBy Alphonse DellIsola, PE (RSMeans Copyright 1997)
Shown in Red
AnalysisAnalysis
MatrixMatrix
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Function + Performance + QualityBest Value
Worth Cost
What are We Defining Cost, Worth or Value?
Function, Performance and Quality Must Meet the Owners MinimumRequirements
Best Value Worth can be Defined as the Least Cost to Accomplish the Function
to an Acceptable Degree
Note that Increased Costs Lowers Best Value Worth - Unless there is an Equal or
Greater Increase in Function, Performance or Quality
Also note that Funding Limits and Shortfalls May Stop Progress, DelaySchedules or End Project Implementation
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Aransas National Wildlife Refuge
Can a Value Engineered Project Capture aNational Honors Award? Yes!Do Environmental Projects have Risk? Yes!
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Aransas National Wildlife Refuge -Environmental and Commerce InterestsPartner to Protect Habitat Whats at Risk?
~120 Pairs of Whooping Cranes ANWR is Sole Winter Habitat13 Miles of Gulf Coast Intercoastal Waterway Pass throughANWRRisk Assessments Identify Probability of Petro-Chemical Spill atOnce in 8,000 Years
High Winds Break Barge Tows Barge is Run Aground - at RiskSpilling Contents during VE StudyVE Study Identifies Alternative Means of Responding to SpillRisk (Alternative Protective Boom Anchoring System andSupport by Hazard Response Contractor)
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Life Cycle Highway Safety Cost ModelTotal First Cost $72.82 Million (Accident Damage/Loss Cost $82.92)
AccidentDamage/Loss
53%
ConstructionCost39%
ConstructionSupervision
1%
Maintenance6%
Engineering1%
What Color is YourMoney?
Can a Capital
Construction ProjectConsider otherEconomic Interest?
Enhance Public Safetyand Address Risk Costto Construction Cost forWhole Economic Picture
Does this Capture TotalNet Savings? Yes, . . .Benefit $s > Cost $s
Accident Costs Justify Capital Improvements Guardrails,Rock Cuts & Side-slope Cut/Fill, Grades and Curves
Credit: Steve J. Taylor, P.Eng., M. Eng., CVS, Totten Sims HubicikAssc.,
SAVE International - Proceedings 1999 (*These Next Two Slides)
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Rock Line Original Grade
Rock Line Original Grade
Standard Rock
Excavation Face
VE Proposed RockExcavation Face
Earth Fill Over Rock Face
10M Clear Zone
10M Clear Zone
Original Design and VE Proposed Design
(Net Savings $4 Million Accident Loss Reduction)
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Old Problems are New Problems:
Formerly Utilized Sites RemedialAction Program (FUSRAP)
Created to address radiological contamination at sitesused by DOEs predecessor agencies, the ManhattanEngineer District (MED) and the Atomic EnergyCommission (AEC) from the 1940s through the 1960s
The waste at FUSRAP sites consists mainly of lowlevels of uranium, radium and thorium on buildingsurfaces and in soil. Much of this residual radioactivematerial resulted from processing ore to recover
uranium and thorium during the 1940s, 1950s, and1960s
The Army Corps of Engineers assumed control of theFormerly Utilized Sites Remedial Action Program orFUSRAP in October 1997 from the Dept. of Energy
VE Studies Addresses Risk Based Cleanup of Sitesand Saves $56 Million
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Where Do I Get HelpIdentifying Risk? How Do IRespond?
Identify Vulnerability & Risk
Develop Schedules & Plans Commit Resources Addressing Risk
Seek out Training for Staff, EngageConsultants
Add VE / VA / VM to Your Process Resolve Problems and ReinvestSavings Net Optimized Solutions
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When VE is Performed
Savings FromVE ProposalImplementation
Cost orSavings
Net Loss
Resistance Curve
Acceptance Curve
Early Pre- Design Construction Dwgs & Construction O&M
Plan Design Development Documents
Plan for VE - Why is Earlier Better?
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Why Do You Plan Programs and Projects Using VE / VA / VM? Demonstrates Compliance with Law - VE Reports to OMB and Congress, . . . Shows Respect
to Taxpayers, . . . Good Use of Resources
Advertises Costs Effectiveness, . . . Builds Public Confidence, . . . Demonstrates Compliancewith Law
VE Validates Scope, Performance, and Costs Scope ~ Build it, . . . they will come, . . . Users and Community Needs Must Be Met! Life Cycle
O&M Too!
Total Integration and Creative Opportunities for Project Changes are Identified
Costs ~ Reassessment of Baseline Costs, . . . Recapture Contingencies, . . . Optimization ofResources Assures Schedule and Project Execution
Level of Performance is Identified ~ Impact and Risk is Defined for Proposed Change, . . . thatSupports the Decision Process
Significant Cost Savings/Avoidance ~ Reinvest First Cost Savings as Life Cycle Savings
Problem Solving & Review (Quality Assurance & Transfer Innovative Technology)
Better Coordination (Designers - Consultants & In-House, with End-Users & Operators)
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Plan Ahead for Effective VE / VA / VM Efforts
Schedule Time, Personnel and Commit Resources
Select the Best People for Your Team
Empower the VE Team to Gain Momentum Create Opportunities
Put Your VE / VA / VM Team to Work For Your Program andProjects!!!
Keep A Positive Attitude to Change!!!
OPPORTUNITYISNOWHEREOPPORTUNITYISNOWHERE
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Fred McAuley, Jr., General Engineer
USACE / OVEST
100 W. Oglethorpe Avenue
Savannah, GA 31401-3640
Telephone: 912-652-5715 (FAX 5956)
How to ContactHow to Contact
MeMe
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VE/VA/VM Points to Contact:http://www.thomas.loc.gov/cgibin/query/C/c104:.temp/~c104MIXp0Y
(Public Law 41 USC 432 - Thomas Law Library )
http://www.whitehouse.gov/omb/circulars/a131.html
(OMB Circular A-131)http://www.mrps.doi.gov/ve1.htm
(Department of Interior, Office of Managing Risk and Public Safety)
http://www.usbr.gov/valuprog/home.html
(Department of Interior, Bureau of Reclamation)
http://www.fhwa.dot.gov/mine/index.htm
(Department of Transportation, Federal Highway Administration)
http://www.hq.usace.army.mil/cemp/e/ev/policy.htm
(US Army Corps of Engineers)
http://www.value-eng.org/vmbenefits.html
(SAVE International)
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Thank You,
Any Questions?