THE SYNERGY BETWEEN VALUE ENGINEERING AND

SUSTAINABLE CONSTRCUTION

Ankit Singhai

Student, Department of Civil Engineering

University of Illinois, Urbana-Champaign

Submitted to,

PROF. NORA EL-GOHARY

Department of Civil Engineering

University of Illinois, Urbana-Champaign

CEE 422

Construction Cost Analysis

Spring 2016

4th Credit Paper

Submitted on 18th April, 2016

Abstract

Sustainability of a project is playing a crucial role nowadays. More and more efforts are made to

make a project more sustainable – satisfying the needs of today while considering its future impact.

Value engineering (VE) is a systematic and structured approach for improving projects, products,

and processes. VE is used to analyze and improve manufacturing products and processes, design

and construction projects, and business and administrative processes. It helps achieve an optimum

balance between function, performance, quality, safety, and cost. The proper balance results in the

maximum value for the project. Value Engineering studies are now considered as mandatory

requirements for various government and private projects throughout the world. Traditionally, the

initial investment i.e. design, engineering and construction cost are the major things that are taken

into consideration while undertaking a project. But, the hidden cost factors like the operational

cost, maintenance cost, occupancy cost, energy cost, etc. that come in to play after the completion

of a project is often not considered. For the overall sustainability of a project, these hidden costs

are also required to be taken into consideration. This process of analysis the hidden costs in known

as Life Cycle Cost Analysis. Value Engineering takes into account the life cycle cost of the project.

Understanding these factors in the initial phases of a project can provide a useful tool for analyzing

the overall sustainability of a project and thus make a project cleaner and greener.

Keywords: Value Engineering, Sustainable Construction, Life Cycle Cost, VE Workshop, VE Job

Plan, Sustainable Development

Introduction

The indicators of development of a nation are its infrastructure. Buildings, roads, highways, trains,

high-rises, etc. contribute as a significant factor in projecting the development that has taken up in

a place and thus, can also be taken as an indication of prosperity. The development of infrastructure

depends heavily on the construction industry, as the construction industry is what converts

resources like a brick, cement, sand, mortar, asphalt, steel, etc. into a structure like office building,

residential building, roadways, railways and more which indeed are prime components and

indicators of a developed infrastructure. Everything comes with a cost, so does the input of

construction industry to the development of infrastructure. The impact on the development of

infrastructure can be considered as a positive impact, but construction industry also has a

significant impact on the environment, which is many times a negative impact. Sustainable

development and sustainable construction is an integral part of reducing the negative impact of the

construction industry on the environment as it accounts for a significant portion of greenhouse gas

emissions causing air pollution, global warming, depletion of natural resources, energy

consumption and creation of wastes. Value Engineering has globally proved its potential in

improving how a particular work is done, and it also plays a vital role in reinforcing sustainable

development and sustainable construction through its various merits.

Building Sustainably – Sustainable Development and Sustainable Construction

The World Commission on Environment and Development defines Sustainable Development as

"Development that meets the needs of the present without compromising the ability of future

generations to meet their own needs."

Sustainable Construction, thus, can be defined on the same premise. So, Sustainable Construction

means aiming to fulfill present day needs of infrastructure requirements by not compromising the

ability of future generations to meet their own needs and necessities in the time ahead. The

construction industry has the capability to make a substantial impact to shape a more sustainable

future for planet Earth.

Figure 1 - Sustainable Development

Environmental considerations advocating the need to create a viable natural environment, social

factors that require shaping a nurturing community, and economic factors which sponsor the

formation of a sufficient economy are the three key constituents of sustainable development.

Sustainable development is a development which fosters the creation of sustainable natural built

environment at the same time promoting economic development and an equitable social

environment.

Figure 2 - Principles of SD

Sustainable construction is the termed used for application of the principle of sustainable

development in the construction industry. The five principles of sustainable development (as

shown in Figure 2) are:

Living within Environmental Limits

Achieving sustainable economy

Promoting good governance

Using sound science responsibly

Ensuring strong, healthy and just society

Thus, we can say that if construction industry has to work as per the principles of sustainability,

then it has to either limit or slow down its growth, or use alternative ways to do the same things if

it has to continue growing at the same or higher pace. Thus, we can further say that sustainable

construction is the creation and responsible management of healthy build environment in an

ecologically beneficial and resource efficient manner. It takes into account that both developmental

growth and environmental protection are vital our survival in future.

Value Engineering

Many of the construction projects face the problem of cost overrun, delayed schedule, etc.

Healthcare and hospitality projects are facing these problems the most. Value Engineering is

gaining considerable attention throughput the construction industry. In the construction industry,

value analysis, value management and value engineering are used to describe a systematic

approach to improving the functions of a project which results in the delivery of the project in the

most effective and efficient manner. Website-gsa.gov defines value engineering as follows,

"Value engineering can be defined as an organized effort directed at analyzing designed building

features, systems, equipment, and material selections for the purpose of achieving essential

functions at the lowest life-cycle cost consistent with required performance, quality, reliability,

and safety."

Value Engineering concept was devised by Mr. Lawrence D. Miles in 1940's. During World War

II, there was an acute shortage of materials, and thus, Mr. Miles was appointed by General Electric

Company (GEC) to come up with solutions for this problem. He was expected to make changes

that would improve the manufacturing techniques or design by using alternative materials and also

lead to substantial cost reduction at the same time. He called it Value Analysis, and later, US Navy

applied the value analysis technique to the design of ships to improve cost performance. As US

Navy used VA to design and engineering principles and practices - it was called Value Engineering

(VE). VA or VE was eventually applied to various projects in varied industries throughout the

world. It is an organized approach to improving value and quality and is backed by impressive

success in different projects throughout the history of construction, production and manufacturing

alike. VE can also be defined as a practical and innovative team approach to problem-solving in

construction tasks to achieve the best value for money.

Following points summarize value engineering approach: -

It is a proven management technique which has proven history to back its merit in

various projects

It helps develop the work-process such that it improves value and performance by

enhancing quality, safety, operability, reliability, and optimizing the life-cycle-cost of

the project in long run.

It is a function-oriented analysis incorporating creative thinking, practical approach and

innovative techniques to satisfy customer desires, requirements, needs and expectations

in an efficient and effective way

Value Concept in Civil Engineering and Construction Management

An owner has some demands and expectations that he needs in his upcoming project. Keeping the

owner's perspective in mind, a team of architects and design engineers, by using their expertise in

engineering and design, come up with a product. The expertise and competencies of design team

play an important role in creating the final product. Thus, the final product is driven by engineer's

and designer's ability rather than owner's requirements. The Value Engineering approach considers

that owner's requirement should be the primary deciding factor governing the final product and

team of engineers and designers should be selected such that their proficiency and skills are in line

with the owner's vision. This decision-making methodology permits for a more holistic

understanding of the project by all the stakeholders involved. This requires a creation of a

multidisciplinary team which has representations from all parties concerned including the owner,

project users, operation and maintenance staff, architects, engineers, general contractor and

representatives from specialized trades, etc. Such a team is also called as an Integrative Project

Delivery Team (IPD), and it is considered wise to have representatives from all trades which will

affect the project during its predesign, construction, operation, and maintenance – this will allow

for inputs from all phases of the project and thus, various alternatives can be explored which will

affect the overall lifecycle of the project. In cases where representatives from some trade cannot

be included in the team, then it is viable to role-play those who are missing. The owner or the

owner representative plays a crucial role in the success of this team, and thus, he/she should always

be included in the team. The owner or the owner representative define the expectations and

requirements from the project and will help to set priorities based on them. Having a

multidisciplinary team from the beginning of the project can assist in making decisions that are

reached after considering the needs and constraints of all the stakeholders involved.

Value Engineering facilitates the overall effectiveness and efficiency of a project by setting the

functional requirements; and owner's goals, objectives, and needs in a multidisciplinary-team

environment – which eventually leads to decisions relating to the quality, quantity and cost features

to make the final product more practical and feasible.

Figure 3 - Value Concept in Civil Engineering and Construction Management

Life Cycle Cost is one of the prime factors that govern the efforts of value engineering in

construction projects. It helps explore alternatives that are not directly cost effective or feasible in

the short run but provide value addition to project in a long term considering the construction

aspects as well as the operational and maintenance aspect of the project life cycle.

Figure 4 – Target performance from VE application

Value Engineering can also be defined a balance between Function (F), Quality (Q) and Cost (C)

of a project,

𝑉𝑎𝑙𝑢𝑒 𝐸𝑛𝑔𝑖𝑛𝑒𝑒𝑟𝑖𝑛𝑔 (𝑉𝐸) = 𝑓(𝐹, 𝑄, 𝐶)

where,

- Function (F): functional requirements from a project i.e. it should serve the purpose it is

being built for

- Quality (Q): the project should be in confirmation with the needs requirements and

expectations of the owner and the user.

- Cost (C): it is the Life Cycle Cost (LCC) which includes initial cost of construction as well

as costs linked to running the facility. The running cost includes cost for energy

requirements; cost related to repair, maintenance and replacement during operation;

payment given O&M staff, general staff etc.

o It also considers the fact that, anything that does not add value is a waste.

So, Overall Cost/Expense = Real Cost/Expense + Waste, thus, VE also aims at

reducing wastes to maximize value and minimize cost.

Value is directly proportional to function and inversely proportional to cost. So, a more efficient

functioning accompanied by a lower cost means higher value addition.

Value = 𝐹𝑢𝑐𝑡𝑖𝑜𝑛 (𝐹)

𝐶𝑜𝑠𝑡 (𝐶)

Application of Value Engineering in Construction Industry

Value Engineering aims at reducing costs and wastes while maximizing the quality and functioning

of a product. As discussed earlier, VE in construction industry involves the formation of a

multidisciplinary team also called aa an Integrated Project Delivery Team. Thus, though VE can

be incorporated at any stage during a project development cycle, for extracting maximum benefits

at minimum additional costs it is imperative to include VE as early as possible. Most ideal time

for it being conceptual and predesign phase of a project development. Here, basis information

relating to the expectation and project requirements are known, and this can also be used with VE

to benefit the project as a whole.

Also, VE is not just a one-time process. It can be applied multiple times throughout the projects

life cycle whether be it predesign, planning, construction or operation, and maintenance. One thing

that should be kept in mind is that it is always beneficial to do value engineering as early as

possible, VE if done at later stages leads to more cost input while providing comparative lesser

value output.

Ideal way to apply VE would be to apply it during following three stages of a project development:-

VE-1 – The 1st VE study should be done during planning and design phase. The aim of

VE-1 is to set the functional requirements; and owner's goals, objectives, and needs in a

multidisciplinary-team environment. After the VE-1 study is done, a Value Engineering

Proposal should be formulated which identifies the above factors and makes proposals to

achieve them.

VE-2 – The 2nd VE study is done after completion of 15% to 30% of the design phase.

Here, detailed proposals of VE are made, and alternatives in design to improve

constructability, operability and maintainability of the project are discussed and recorded.

This is where a preliminary consideration for Life Cycle Cost of the project are focused

upon.

VE-3 – The 3rd VE study is done when the design phase of the project is nearing its

completion (80% to 85% project design is complete). Now, the compliance of various VE

alternatives (from VE-2) in agreement with codes, standards, and specifications are

checked. Often the construction has already begun during this phase of the project, and

thus, making VE changes require more effort.

Figure 5 explains the relation between cost implication and cost savings when VE is applied in

various phases of a project. During the VE-1 and VE-2 phase, the project is in its initial design

phase, and thus, a small effort in value engineering has the potential of producing a significant

impact on the project life cycle. As the project progresses, VE implementation cost increase while

its acceptance level and cost savings decrease.

Figure 5 - Applying VE at different stages of a project

Figure 6 further explains the potential savings that can be achieved by application of VE approach

during various stages of a project. It clearly shows that potential savings from VE decrease as time

increases. There is a net gain in project value when VE is applied during design and pre-

construction phases while the application is VE during construction and post-construction phases

often result in further cost and schedule overrun as changes require a lot of time and effort.

Figure 6 - Potential Savings from Application of VE

Methodology used for Value Engineering and Value Management

The Value Engineering Methodology is defined by SAVE-International Job Plan and American

Society for Testing and Materials (ASTM) standard E1699-14. Value Methodology is utilized for

recognizing new ideas for improvements and develop these ideas into viable proposals which result

in being beneficial for the project by increasing its value. As a part of value methodology, value

studies are conducted in following three stages: -

1. Pre-Study Stage: - In this stage, a team for implementing the value engineering

methodology is selected, and coordination meetings are held so that all stakeholders

understand each other and a foundation for working together as a team is set up. Owner's

requirements are assessed and based on the owner's requirements; data is gathered which

further aids in the design and modeling of projects.

Figure 7 - VE Phases

2. Value Engineering Workshop: - This stage involved information collection and idea

generation. Functional Analysis of the project is done, in which different function of the

project under study are recognized, observed and recorded. A project function's cost,

function's worth and function's performance are identified and validated. After functional

viability of these ideas is evaluated, further development of ideas and information takes

place. Different ideas are evaluated, and the ideas with the greatest potential of increasing

the projects value are selected and developed into alternatives to the original concept. All

this data, information, ideas, and alternatives are also recorded for future reference.

•Coordination

•Data Presentation

•Team Formation

•Modeling

Pre Study

•Infomation Exchange

•Functional Analysis

•Idea Generation

•Evaluation and Development

•Presentation

VE Workshop

•VE Study Report

•Creaing Implementation Strategy

•Followup with different trades

Post Study

Figure 8 - VE Phases & 7 Step Process

3. Post Study: - Here, Value Engineering Report based on the inputs from Stage 1 & Stage 2

is formed, and implementation plan is created to use these VE techniques on the project.

Implementation of these techniques on the project increases the project value.

The Value Engineering Job Plan

Value Engineering is applied in a logical process known as Value Engineering Job Plan. The VE

job plan helps the VE team to identify and focus on project functions that have the potential to

enhance the project value in a systematic way. This systematic approach of VE job plan helps in

creating new ideas and come up with alternative strategies for project value improvement. Value

Engineering Exercise, as defined by SAVE-International Job Plan and American Society for

Testing and Materials (ASTM) standard E1699-14, the value engineering job plan comprises of

seven successive phases which are as follows: -

1. Information Phase

2. Functional Analysis Phase

3. Creative Phase

4. Evaluation Phase

5. Development Phase

6. Presentation Phase

7. Implementation Phase

Figure 9 - The Seven Phases of the VE Job Plan – SAVE International

Synergy of Value Engineering and Sustainable Construction

All seven phase of value engineering job plan are performed in sequential order, though the

activities performed may differ to fit the context of study concerning the topic at hand or due to

time constraints. The result obtained from VE job plan are aimed at achieving a reliable and viable

value engineering performance of the project. The connection between Value Engineering and

Sustainable Construction (VE-SC) could be realized during the phases of Information, Creativity,

and Evaluation as described in SAVE International VE Job Plan shown in Figure 10.

Following is the general sequence followed in the preparation of Value Engineering Job Plan: -

1. Brief Description: Each phase of VE Job plan is described in brief to set a foundation for

steps which follow.

2. Preparing General Outline: Outline of VE activities to be followed in each phase is created.

3. Summarize Related Issues: A summary of issues related to the application of Sustainable

Construction methods and techniques identified in VE outline are discussed and recorded.

4. Defining VE-SC Synergy: After discussing the VE activities and SC issues, the approach

to be followed for combining them to obtain a synergy between them is defined.

Pre- Value Management Workshop Study Phase

In this phase, planning for the Value Engineering workshop is done. The Owner/ Owner

Representative/ Senior Management of the company plays a crucial role in this phase. For

successful implementation of VE Workshop, it is vital to have full support from them. Once the

support from the higher management is obtained, it is time to create a VE team and define the roles

and responsibilities of the different stakeholders involved in the VE team. Project Requirements

are established, Scope of Work is defined, and related data and the information is collected.

Various key documents like drawings and specifications, projects report, executive summary, and

project estimates, etc. are prepared. Then follows the identification and prioritization of various

strategic issues of concern; determining the objectives and scope of the study, and preparing study

schedule; Life Cycle Cost of project estimation, etc. All the information gathered in the pre-study

are shared with the management and all the stakeholders for review. Pre-Study helps in

establishing the needs of owner/higher management; strategic priorities; potential increase in

organizational value by improvements etc. This is the phase which defines Go or Not to Go

parameters for taking VE approach by making clear the potential benefits and increase in value

which may result in its adoption.

Information Phase

Knowing the background and various decisions that lead to the project are an important factor that

provides a basis for the development of project design. Thus, the owner/owner representative and

the design present an overview of the project to all the stakeholders involved like the general

contractor, landscape architects, cost estimators, sub-contractors, etc. This project description or

presentation includes elements like: -

History and background of the project and the project site

Basis of design

Constraints

Site Conditions

Factors influencing the decision-making

Criteria for selection of various equipments, materials and systems for the projects etc.

Project Cost and Schedule

The aim of this is to familiarize the team members with the project and foster a better

understanding of the project. In this phase, the selection of VE activities is made, and also, its

impact on the project is assessed. The issues relating to Sustainability of the construction process

are also discussed in detail. These are as follows: -

Minimizing resource consumption and maximizing resource reuse by designing for

minimum waste and maximum reuse

Promoting use of renewable and recyclable materials aiming at environmental protection

Incorporate Lean construction practices

Designing project to offer flexibility so as to allow to cater for use changes in future

Informational phase brings all the team members and stallholders to a common and basis level of

understanding of the project and includes various tactics, strategies and specifics.

Functional Analysis Phase

This phase is critical as it requires VE team to think and act while considering the functions and

the costs related issues. Ideas and thoughts generated in this phase often result in recommendations

for the project improvement and cost savings. Various functions that the project has to deliver are

identified and analyzed. The effects of these functions on the project cost, project time and

schedule, construction safety, and quality, energy use, aesthetic requirements, environmental

impact, etc. are assessed, and their impact on the overall sustainability and value addition is also

evaluated.

Creativity Phase

This phase involves brainstorming which encourages ideas to flow freely and involves generation

of ideas and recording these ideas as the process continues. The ideas that are presented in this

phase also included in VE Workshop report. Judgment for the ideas is suspended until the team

has no ideas to add further. It is a good practice to perform brainstorming session in separate teams

(comprising of individual from similar trade). Sustainability issues like minimization of project's

energy usage; pollution prevention; conservation of natural resources; efficient use of available

resources; renewable energy alternatives etc. are of prime focus here. A broad range of ideas that

come up during brainstorming sessions provides more for possible alternatives to perform the

required function as well add value and promote sustainable construction.

Evaluation Phase

In this phase, the feasibility analysis of brainstormed ideas is done, and evaluation of various

alternatives is done. Each idea is listed, and its advantages and disadvantages are noted down.

Doing this helps understand the ideas and select the best among them for the following steps.

Based on the benefits and cons, these ideas are ranked, and top ranking ideas are eventually chosen

as best alternatives.

Development Phase

The best alternatives are selected, and feasibility analysis of these alternatives is done. The analysis

includes studying and realizing cost estimates of using the alternatives; its life cycle cost,

constructability of these alternatives; and its impact on schedule, quality, safety, sustainability,

reliability, risk, availability, and convenience, etc.

Presentation Phase

This is Phase 6 of the VE Job Plan. The ideas that are refined in the Development Phase are

presented to the owner/ senior management and the design professionals so that they can fully

understand the importance and significance of using the alternatives before they are finally

implemented in the project. For this purpose, a written proposal is also prepared which highlights

how the various alternatives will beneficial to the project and what will be the value addition to

the project, both concerning VE and Sustainable Construction if they are used.

Implementation Phase

After getting a green signal (acceptance to move forward) from owner/ senior management and

designers to use the alternatives in the project, it is time to prepare the implementation plan and

schedule to ensure that implementation of these alternatives can be carried out in an effective and

efficient manner. Before VE workshop, there was an original design of the project which proposed

the use of some materials and resources. Now after the implementation of VE workshop, various

alternatives to the original design are introduced in the project. As such, implementation phase

also provides the opportunity to check how the original design has been affected by the use of VE

Job Plan, and what advantages it has offered. These advantages can be measured in terms of

improved schedule and cost; better quality and safety; and enhanced sustainability of the project

etc.

Post VM Study Phase

This stage includes the finalization of VE report to incorporate the VE proposals developed in the

seven stages of VE workshop. The designer incorporates these changes into the project's design,

or he might also reject them and ask for more improvements to some alternatives if he deems them

unfit for implementation in design. The advantages in cost savings, improved sustainability, etc.

are also documented.

Conclusion

Good teamwork and understanding of the VE principles forms the basis for successful

implementation of Value Engineering to aid in better and more sustainable construction. The main

aim is to avoid unnecessary costs while increasing the performance and quality levels of the project

which meet the owner’s needs. Like every improvement method, VE methodology also has some

weakness or limits which might cause obstruction in accomplishing the desired sustainability goals

for the project and they are discussed are follows: -

Conventional VE methodology is usually cost-driven and thus, many a times VE is taken

as a tool to reduce cost, and the facet of improving performance and quality is sidetracked.

VE uses advantages vs disadvantages approach to select the best alternatives for project,

and it ranks the alternatives on its basis. Thus, it ignores the fact that advantages to one

alternative may sometime be disadvantageous to other alternatives and reverse also holds

true. This can sometimes introduce additional problems and alternatives have to be re-

analyzed and re-ranked to strike a balance.

Sustainability oriented construction is a new approach, and brainstorming technique used

in VE methodology cannot cater to the creativity requirements for improving sustainable

outcomes. Team members should have an understanding of both the VE methodology as

well as Sustainable Construction for achieving desired results.

VE requires additional time and resources. If there is no support from higher management

and owner, then VE cannot be undertaken. Owners who do not understand its benefits will

often ignore VE on their project.

United States Green Building Council had created Leadership in Energy and Environmental

Design (LEED) rating s to access the sustainability of construction projects. The LEED assessment

of sustainability is based on factors like sustainable site selection, efficient use of water and energy,

use of renewable materials and energy etc. We have seen that there are certain limitations to the

application of VE to SC. Following steps can be taken to improve VE methodology to better fit

the Sustainable Construction criteria: -

Appointing experienced VE professional to facilitate VE Study and VE Workshops.

While cost reduction is important, improved performance and quality should be the prime

focus for VE studies. This approach aids in reducing the overall Life Cycle Cost of the

project. The success of value engineering approach is higher when it is aimed at increasing

performance rather than just reducing cost.

Sustainable construction is a new trend as such knowledge of sustainable construction

practices is also limited, so professionals must be encouraged to explore the field and be

creative while applying value engineering.

Owner’s create demand and thus, owners/senior management of projects must encourage

their teams to take steps to include value engineering and sustainable construction practices

while building a new project.

Value Engineering and Sustainable Construction have a long way to go, and together they have a

huge potential to increase the value of a project by improving the performance and quality of the

project at the same time reducing the overall cost. There are some difficulties in their application,

but once these minor hurdles are overcome, the project can benefit a lot from the combined

approach of VE-SC.

References

"World Bank Group." World Bank Group. Web.

http://www.worldbank.org/depweb/english/sd.html

"Principles of Sustainable Development." - Sustainable Northern Ireland. Web.

http://www.sustainableni.org/sustainable-development/sustainability-principles/index.php

"Value Engineering." Value Engineering. Web. http://www.gsa.gov/portal/category/21589

Al-Yami, A. "Exploring Conceptual Linkages between VE and Sustainable Construction."

Southborough University, Leicestershire, UK (2005).

Al-Yousefi, Abdulaziz S., and F. S. A. V. E. CVS-Life. "The Synergy between Value Engineering

and Sustainable Construction." CTBUH 8th World Congress, Dubai.

Mahadik, Urmila A., and Anil B. Mahadik. "Value Engineering Tool for Sustainability in

Construction Projects."

Wao, Joel, and S. MQSI. "A Review of the Value Engineering Methodology: Limitations and

Solutions for Sustainable Construction."