Value Base Planning Using Value Engineering Value Analysis Value Management_20100113_143402

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




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




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




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)

[email protected]

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?