Table of Contents
1. Purpose
This document defines the procedure for the application of Value Engineering techniques within Company.
2. General
2.1 Definition
Value engineering (VE) is an organized effort to analyze project concepts, critical features, function(s) of systems, equipment and facilities for the purpose of achieving the essential functions at the lowers life cycle cost, consistent with required performance, reliability, quality and safety.
It has to be recognized that VE is much more than a cost cutting program; it seeks more economical solutions through creative thinking and more innovative approaches, and ultimately augment product value and quality.
2.2 Background
Value Engineering is a problem solving technique based on encouraging free thinking and creative ideas to provide innovative alternatives. The alternative solutions are evaluated first on a technical merit basis and then the solution that optimized life cycle costs is pursued.
The purpose is to eliminate unnecessary cost without sacrificing quality, function, performance, safety or reliability.
Consideration is given to the effect of implementing potential changes identified by the VE evaluation on the project execution process.
2.3 Execution Outlines
Value Engineering methods and techniques are recommended throughout project development, from conceptual design through project completion. This is especially recommended for large complex projects; but on any project, the earlier the implementation of a Value Engineering Program, the greater the long-term benefit.
In the process of evaluating a function one should ask:
- What is it?
- What does it do?
- What does it cost?
- What else will do the job?
- What will that cost?
The following value engineering techniques are used within Company:
- the “value engineering record” is used to record innovative improvements and saving;
- the “value engineering workshop” consists of a systematic approach which seeks to enhance value by eliminating "unnecessary costs" whilst maintaining function reliability and performance of the project to be executed without impact on safety or operability.
The philosophy of value engineering workshops is based on the premise that a certain amount of "unnecessary costs" is inevitable in executing design work due to the inherent complexity of the process.
Unnecessary costs in any given design are the additional costs of that design compared to a more economical design which provides the same function, such as: over-specification, unnecessary material costs, excessive requirements, inclusion of "nice to have" features, inclusion of non essential redundancy, over-design for expediency and the desire for technical excellence before cost considerations.
Unnecessary costs can also be caused by a failure to consider the construction implications of a design. This can lead to an inefficient use of labor and plant resources during the construction phase.
3. Responsibilities
The Project Director/Manager shall initiate the execution of value engineering techniques on his project. He will set the program, the schedule, the frequency of the formal meetings and the budget, and promote the use of value engineering forms.
4. Procedure
4.1 Value Engineering Records
All members of the project taskforce should look for innovations and improvements and bring those to the attention of the Project Manager on the special “Value Engineering Record” form (see attachment 1).
The form should be completed by the originator in sufficient details and submitted to the Project Manager for review and decision.
The Project Manager shall register the form and decide on further disposition.
Improvement ideas that are accepted by the Project Manager will be covered on a Change Request (ref. 6.1).
4.2 Value Engineering Workshop
As already elaborated above, the value engineering covers almost every aspect of plant design that is from conceptual and project specification phase, detailed design, selection of materials, constructability, operations and maintenance. Value and quality do not conflict, but a balance needs to be established based upon experience and client direction. While the early stages of engineering and design provide the most opportunities for effecting the value elements, value engineering should be considered at all stages of the project.
Value engineering cost prevention potential continually diminishes as a project progresses and the cost to change continually increases.
Value Engineering should be planned in various sessions in the stages of the project when the maturity of design info is suitable for this exercise. The key major areas to focus shall be:
- process (preferably early enough using PFDs as a basis)
- engineering specifications
- utilities and logistics
- plotplan
- project execution plan (EPC)
A multi-discipline team must be established to formalize and document the value analysis.
The value engineering workshop allows the team to evaluate the information in a structured format. The objectives and scope of the subject evaluated are analyzed using the value engineering functional approach. The current design is evaluated against the functions identified by the team, to check for technical, cost optimization and other considerations to ensure the optimum design has been presented. Any alternatives are also evaluated identifying the benefits and risks of any changes to the alternative design.
The components for a successful value engineering program are an organized, multi- disciplinary approach in which there is an open door policy for ideas to be input by every team member regardless of rank in the project. Creative thinking must be encouraged and brainstorm techniques shall be used.
It is necessary to outline project constraints prior to the value engineering workshop. In this way the value engineering team does not make recommendations that are contrary to the design of the client.
4.2.1 Value Engineering Team
In order to maintain flexibility and speed it is recommended that a core team size of 7-10 members is not exceeded, amongst whom the following functions should be established: "
- Chairman
- Facilitator
- Recorder
- Team members
Client and Company Management sponsor should be designated to make sure that the value engineering team will be able to make the work a success.
To assure free thinking and unbiased opinions, it is recommended to use the mixture of people from inside and outside the project design team, considering also experienced engineers from other Company offices.
VE facilitator with a specific expertise in all aspects of VE should be considered to lead a workshop in order to structure the approach, streamline the process and to improve the effectiveness of the program.
The cooperation of a client contributes significantly to the success of the VE exercise and to the ultimate acceptance and implementation of final VE recommendations.
The team members will be selected on a basis of subject evaluated, however, the Project Engineering Manager and Process Supervisor shall participate whenever any design aspects are reviewed. The same applies for Procurement Manager and Construction Manager in their domains.
Supporting disciplines like estimating and planning will be involved on as required basis.
The Project Director/Manager will not be a member of the value engineering team. He will in most cases perform the role as a team sponsor and will attend a kick-off and wrap-up meeting as an observer, ensure the availability of task force resources to the team, liaise with the client and request client's approval/decisions as appropriate to incorporate changes arising from the value engineering team activities.
4.2.2 Value Engineering Execution Process
Every client and every project are to a certain extent unique. Therefore VE activities will be customized to fit the projects unique needs.
A detailed strategy and plan will be developed by Project Director/Manager and VE facilitator, where in general the following phases shall be followed:
-
Information phase
Information/cost gathering and functional analysis.
-
Creative phase
Brain storming/creation of alternative ideas.
Involve vendors and technology licensors when applicable.
-
Evaluation phase
Systematic assessment of alternatives ideas.
-
Investigation phase
Short-listed ideas investigated.
-
Recommendation phase
The best ideas identified and cost savings attached.
-
Presentation phase
The value engineering team presents the findings to (Project) Management.
-
Implementation phase
The Project Director/Manager in agreement with client select/approve VE recommended changes and ensure proper implementation.
Bringing the value engineering ideas into fruition can be a hard step to pursue, since recommendations are essentially a challenge to the original design. Therefore the information should be well documented and summarized in a clear and concise manner covering:
- brief summary of the original design/concept;
- developed alternative(s);
- criteria for selecting the recommended solution(s), including technical evaluations of the original design and selected solution;
- potential savings due to proposed recommendations with relevant estimate back-up, considering also life cycle costs elements.
All identified ideas shall be registered and recorded on the value engineering record form (see attachment 1). These forms are to be included in the value engineering workshop reports.
4.3 Reporting
Besides the final reports from each formal VE Workshop following regular reporting will apply:
- monthly summary timed for inclusion in the monthly report and for inclusion in Company Management Project Reviews;
- end of job summary report.
Log shall be maintained of all value engineering workshop items and forms including;
- entry number
- items considered
- items accepted/rejected
- recommendation on timing of implementation of accepted items
- ROM estimate (by item and cumulative) of Total Installed Cost reductions arising from the value engineering activities.
5. Flowchart
Value Engineering Workshop
6. References
|
Document Number |
Title |
Level |
|
|
6.1 |
CM-PE-313 |
Control of Project Variations |
2 |
7. Attachments
-
Value Engineering Record (REC24022)
