1999 AACE INTERNATIONAL TRANSACTIONS

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Perceptions and Reality of Value Engineering

Farid Fam Mansour, PE CCE

BACKGROUND sis, or a brainstorming session. Sometimes, VE is considered a

replacement or a substitute for a chief engineer review.

I
n 1988, a value engineering (VE) program was established Although these efforts may produce some cost reductions, they
at Raytheon Engineers and Constructors (RE&C), for- are limited in respect to achieving maximum design optimiza-
merly United Engineers and Constructors. Since then, tions and the savings that can be generated by a genuine VE
the VE program has gradually grown. Orientation and study.
training seminars have been conducted, procedures have been
issued, a dynamic organization has been set up, and numerous
VE studies have been performed across the company’s various VE CONCEPT
product lines.
During the past few years, RE&C has been expanded glob- Value engineering is a problem-solving approach based on
ally. Several organizations have been acquired and integrated creative and positive thinking that is used to fulfill the required
within the RE&C Incorporation. Due to the fast and vast expan- function(s) and provide the appropriate quality at the minimal
sions, as well as the increase in the number of employees, the cost. VE studies are always performed with cooperative team-
understanding of the VE concept needs to be unified across the work. The diversified (multidiscipline) VE team usually consists
company. of several specialists who are coordinated and facilitated by a
qualified leader (VE specialist). The VE team is composed of
participants suitable to the project circumstances, and its syner-
OBSERVATIONS gy reflects the nature and the major components of the study. It
is vitally important to perform VE studies independently from
During the past couple of years, cognizant company man- the original design team to ensure free thinking and to avoid
agers noticed the following trends: biased opinions. VE workshops are conducted according to a
systematic job plan.
• an increased awareness of value engineering as a discipline;
• a better understanding (fundamentally) of the VE concept;
• increases in the number of performed studies; BASIC ELEMENTS
• more clients requesting VE; and
• the US government demanding VE studies on their proj- The value engineering methodology is distinguished from
ects. other cost saving efforts by the following elements.

RE&C’s top management not only accepted the VE technique

but endorsed it and was committed to its implementation. Systematic Approach
Many projects had experienced genuine VE studies. These Genuine VE studies always proceed according to a system-
projects are not limited to those designed by RE&C but also atic (step-by-step) methodology known as a “job plan.” The VE
some projects developed and designed by competitors. teams follow those steps in the proper sequence. The job plan
A great majority of the personnel involved in those studies may include 5 to 9 steps. The one adopted by RE&C consists of
became strong believers and supporters of the VE concept. the following seven phases: information phase, analytical (func-
However, VE has not been requested by managers for imple- tion analysis) phase, creative (ideation) phase, evaluation phase,
mentation on all projects. Some feel that they are performing recommendation and presentation phase, and implementation
VE as a matter of routine on everyday activities. Accordingly, phase.
there is no need for formal or independent VE studies. In spite Proceeding accordingly, the sequence of the job plan not
of their sincerity, those efforts do not produce VE results. only produces better results but also prevents the VE team from
Frequently, VE is perceived as a cost-cutting measure (reducing undesirable pitfalls such as collecting partial (incomplete) infor-
the scope or cheapening the end products), a comparison analy- mation, perceiving inaccurate ideas, aborting innovative think-
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ing, rushing decisions, developing subjective evaluations, reach- VE study activities. To increase the chances of success, the team
ing unmerited judgments, leaning on not-thorough investiga- leaders (the VE specialists) should possess specific qualifications
tions, or drawing imperfect conclusions. including considerable experience in performing VE studies,
substantial skills and knowledge in the line of business/applica-
tion, and a clear understanding of the principles of engineering
Function Analysis sciences and business environment. He/she also should be gen-
The basic premise of value engineering is defining what the erally curious, inventive, motivated, and resourceful, and be
customer really needs or wants and finding efficient and qualita- able to develop and promote effective interactions between the
tive way(s) to achieve it. This premise must be addressed by team members and participants. For these reasons, in 1974 the
defining the required function(s). During the analytical phase US General Service Administration (GSA) requested establish-
of the VE workshops, many questions have to be asked and sev- ing recognized credentials (certification) to qualify VE special-
eral answers derived. The questions are what does it do and ists.
what should it do? SAVE-International (the Society of American Value
There are several techniques for analyzing the function(s). Engineers) developed the basic requirements for VE practition-
The basic one is defining the primary, secondary, and lower ers. SAVE also issues and administers various grades of certifica-
degree functions by describing the functions in verb and noun tions. The US government, as well as many private organiza-
form. There is a more comprehensive methodology called the tions, demands that a VE team leader should be registered as a
function analysis system technique (FAST) diagram. This tech- certified value specialist. This requirement is to ensure the
nique is used in the manufacturing industry and for complex essential capabilities needed to conduct successful studies.
issues. This approach segregates the cause from the symptoms.
Regardless of the adopted technique, no study can be called a
VE study without a clear identification of the required func- Team Independence
tion(s). It is fundamentally important that the VE team must be
(functionally/organizationally) independent from the original
design team. This is to shield the VE team from the inherited
Teamwork project decisions, perceptions, instructions, status quo, and cir-
The crux of any VE study is always a product of a team cumstances. Normally, the design team is objective and strives
(group) of specialists working simultaneously. The intention of to develop a good design (economically and technically).
using the team concept is to seek the group dynamic. The team However, due to the project evolution and circumstances
can be encouraged to work together due to the following: each (client’s preferences, management directives, schedule pres-
has information and experience the other’s needs, each has been sures, budget limitations, changes of basic data, and other
assigned to the task jointly, and each will benefit personally from issues), the design personnel are channeled into a certain
the success of the task. Behavior scientists have observed and approach or solution. These conditions can fix the mind of the
recognized the magic of teamwork. Among the noticeable original designer into rigid concepts, emotional attachments,
advantages are the following: better face-to-face communica- and artificial boundaries. These conditions can influence the
tions, igniting creative thinking, and building up personal rela- thinking and judgment of the original designer. An independ-
tionships. Ideally, the VE team includes a mix of skills and mul- ent team with a fresh viewpoint can normally review the project
tidiscipline specialists who are suitable for the considered study. objectively and freely. It is natural that independent reviewers
A nontechnical person on the VE team can help to challenge can detect mistakes and pick up alternatives not noticeable to
the experts by asking obvious questions and using common others. Moreover, an independent team directed by a trained
sense. VE specialist (who performs the study according to a systematic
Occasionally, the team leader requests an individual inves- procedure) can effectively ferret out inefficiencies and develop
tigation of a peripheral issue by a team member. Such investi- better alternatives.
gation presents a supplement (not a replacement) to teamwork.
The scope, procedure, and results of the special investigation
should be subjected to the review, evaluation, and endorsement Proactive and Positive Attitude
of the whole team. The VE team can be supported by a pool of The VE alternatives are developed based on creative solu-
experts (available on an as-needed basis) to respond to any ques- tions fulfilling the required function(s), which are evaluated
tions beyond the team’s knowledge and/or capabilities. based on technical merits. The VE specialist is trained to be
consciously alert for directing VE efforts, without engaging in
negative criticisms or subjective opinions of the original design
A Qualified Team Leader or introduced ideas. The VE concept is geared toward develop-
The function of the team leader is not to solve the problem ing creative solutions or innovative designs through a positive
or to provide a design, but rather to manage, coordinate, and mode. This approach is proactive and quite different from oth-
facilitate the VE workshop activities. The team leader’s respon- ers. Evaluations such as peer reviews or other auditing proce-
sibilities include preparing for the study, deciding on the size dures are usually based on personal judgment and the individ-
and composition of the team, selecting the proper expertise to be ual’s background and experience.
on the team, coordinating between the involved parties, creating
the proper atmosphere, ensuring compliance with the VE
methodology, and managing the budget and schedule for the
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Free and Creative Thinking the proper evaluation criteria and establish their relative impor-
Creativity or innovative thinking (in generating ideas) is the tance through a ranking system. These promising alternatives
principal element (backbone) in the value methodology. It is an should be evaluated quantitatively and/or qualitatively based on
accepted fact that any person possesses, to a certain degree, the predetermined criteria. This procedure provides an objective
ability to be creative. Human behavior scientists have found that evaluation methodology, reduces the possibility of jumping to
individual creativity is much more than he/she recognizes or conclusions, and/or reaching subjective judgments. The evalu-
assumes. However, such creativity is driven by the person’s ations in VE studies are not based on the opinion of the majori-
imagination and is influenced by knowledge and experience. In ty of the team but on the collective inputs of all team members.
addition, any diversified group working as a team has the ability
to generate more ideas and better alternatives than the total of
the team members individually. Accordingly, it is one of the pri- Other Parties’ Participation
mary duties of the VE team leader to deliberately provide an The concept of value engineering provides a proper
environment that encourages creativity and welcomes new arrangement and suitable climate for various involved parties to
ideas. It is imperative that the VE specialist has the ability to positively participate. For example, typical parties on large
inspire the team, liberate the team’s minds from any previously projects in the engineering/construction industry may include
perceived ideas and typical solutions, and can ignite their imag- the owner, operator, developer, designer, construction manager,
inations (individually and collectively). In the idea generating and contractor(s). VE is a good technique to unify the parties (of
phase, the facilitator should encourage developing a great vol- different interest) to positively work together and develop mutu-
ume of innovative ideas and nontraditional solutions. ally beneficent solution(s).

Merited Evaluations Life-Cycle Cost

The value methodology dictates a process for selecting the In the construction industry, some owners and contractors
best solution(s) and recommending the selected alternative(s) perform VE studies to increase their profits by reducing the con-
based on technically merited evaluations. Numerous tech- struction (capital) cost. This application is needed, useful, and
niques are available to assess the promising alternatives. The VE effective. However, it should be recognized that this is a partial
team, with the directives of the VE specialist, should determine implementation or a specific application of VE. Sophisticated

Table 1—Comparison Between Value Engineering and Other Cost Saving Concepts

TECHNIQUE Good Peer Rev. Brain- Cost Value

Engineering Or Chief Storming Cutting Engineering
ELEMENTS Practice Engineer Measure
Rev.

Systematic approach Y * N N Y
(Job Plan)
Function Analysis N N N N Y

Team Work * N Y * Y

Qualified Team Leader * * * * Y

Team Independence N Y * Y Y

Proactive and Positive * * * N Y

Attitude
Free and Creative * * Y * Y
Thinker
Merited Evaluations * Y * * Y
Other Parties N N Y Y Y
Participation
Life Cycle Cost * * N N Y

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owners/developers are aware of, and interested in, the total life-
cycle cost (LCC) of projects. Total LCC may include various
costs from planning and developing to decommissioning and
removal. Usually, for most large production facilities, the con-
struction cost is a small portion of the operational costs.
Accordingly, the actual economic success of such a project is a
function of the total LCC. For this reason, many owners request
formal VE studies in the due diligent phase as well as in the early
engineering (preliminary design) phase to ensure the maximum
return on their investments.

COMPARISON

Table 1 presents a comparison between value engineering

and other cost saving concepts.

T
hose who do not practice VE may resist the imple-
mentation of this technique for various reasons. Some
of these reasons relate to a perception of a duplication
of other activities such as peer review, the chief engi-
neer audit, cost-cutting measures, comparison analysis, or brain-
storming sessions. In reality, VE is a structured methodology
that has its own distinguished features and characteristics. Other
techniques should not be confused with VE. The basic ele-
ments of value engineering are provided in this article. I hope
that this may promote a realistic accurate understanding and
enhance the implementation of VE.

Farid Fam Mansour, PE CCE

Raytheon Engineers and Constructors
30 south 17th St.
Philadelphia, PA 19103

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