Value Engineering for Innovation

Philip Mok, PMP, VMA, CF APMP

Principal
PMOK Consulting LLC
History of
Value
Engineering
(VE)
• Emerged from
World War II
• Embargoes,
rationing,
shortages of
skilled labor,
materials,
parts
History of
VE (cont.)
• GE Procurement Engineer
Lawrence (Larry) Miles

“If I can’t get the product,

I need the function”
History of VE (cont.)

• Created systematic process for developing and

implementing innovative solutions (Value Analysis)

Infor mation Analysis Creativity Judgment Development

Research and Utilize Free use of Performed by Performed by

list facts, functional imagination one person, one person,
assumptions, thinking to while deferring consulting consulting
and missing identify judgment others as others as
information functions required required
 History of VE (cont.)

• 1954: US Navy Bureau of Ships

Chief Adm. Leggett met with
Larry Miles, refused to award
GE further contracts unless
Miles taught them Value
Analysis (which they referred
to as “Value Engineering”)
History of VE (cont.)
• 1959: Society of American Value Engineers
established
History of VE (cont.)

• 1965: Charles Bytheway presents paper entitled

“Basic Function Determination Technique”
introducing the FAST Diagram

• Function
Analysis
System
Technique
History of VE (cont.)
• 1996: Society of American Value Engineers goes
international…SAVE International

• SAVE International® is the global voice of value

and the recognized authority on the Value
Methodology that promotes, advocates, certifies,
and educates.
 VE Process & Applications
• SAVE International Value Management Body of
Knowledge/ 6-Step VE Job Plan

2. Function 5. 6.
1. Information 3. Creativity 4. Evaluation
Analysis Development Presentation
VE Process
• Requires a multidisciplinary team
• Example: Transportation Project Value Team-
 Value Facilitator
 Cost Estimator
 CPM Scheduler
 Construction Manager
 Architect
 Structural Engineer
 Civil Engineer
 Geotechnical Engineer
VE Process: 1. Information
• Information-gathering stage
• Conduct as much research as possible
• Identify:
- What are the problems?
- What are the requirements?
- What are the goals?
- What can be touched?
- What should be left alone?
• In-brief presentation
VE Process: 2. Function Analysis
• Ask: What does it do? Why? What is the purpose?
• Tools & Techniques:
 Random function identification – identify functions
from individual activities or parts, group
 FAST Diagramming
 Assigning cost to function
VE Process: 3. Creativity
• Brainstorm ideas
based on
identified functions
• No judgment of ideas
• Quantity is key
VE Process: 4. Evaluation
• Evaluate ideas, combine, eliminate “bad”/unfeasible
ideas
• Many methods:
 Dot method
 Weighted attributes
 Straight up/down
 Rating system ex. 1-5, 1-10
VE Process: 5. Development
• Further flesh out/develop final ideas
• Some ideas may be eliminated when investigated
further
VE Process: 6. Presentation
• Present findings and developed ideas to client
• Deliver report to client
VE Applications
Benefits of VE:
• Synergistic effect of many minds collectively
working together vs. individual
• Develop innovative ideas -> innovative solutions
• Develop overall understanding of
project/program/product/process/problem
• Create consensus
• Facilitate decision-making
• Develop insights
VE Applications

•Projects
•Programs
•Products
•Processes
•Problems
VE Applications

Manufacturing Design Construction Business Administrative

Strategy Processes
VE Applications
Organizations that use VE?
Return on Investment (ROI)
• US Army Corps of Engineers VE Program:
-Over 2 BILLION in cost avoidance and savings
-136:1 ROI (Cost avoidance/program cost)