Implementation of Value Engineering in the Infrastructure
Services of Indonesia’s Public Works Department
Yusuf Latief, Ph.D. & Ir. Vincentius Untoro K.
Abstract
Value engineering (VE), as one of the alternatives for im-
proving the efficiency and effectiveness of a budget plan, is a
creative approach where it will be linked to the goal to opti-
mize cost and/or performance of a system/facility. VE studies
are done by analyzing the function of the object in order to
identify any unnecessary cost, so that the cost may be reduced
while still considering the important functions.
Any constraints occurred in the implementation of VE in
the Public Works Department in Indonesia must be consid-
ered and dealt with proper regulation, implementing social-
ization and training for VE certification, and improving the
skills and competence of personnel in each working unit. VE
is implemented by considering any inefficient cost. By imple-
menting VE, it is expected that there will be cost reduction
around 11% - 15%.
Keywords
value engineering, inefficiency, function analysis
Introduction
Background
Based on the role and contribution of infrastructure ser-
vice at national level, issues and strategic environment de-
velopment, including the target, the infrastructure of public
work are demanded to provide a suitable level of service which
can guarantee a good implementation of socioeconomic ac-
tivities. Hence, the Public Works Department of Indonesia
established the 2005-2009 vision as follows: “Guaranteeing a
good and proper service for the infrastructure of public work
in order to provide a productive and sustainable life.”
From year to year, the Public Works Department was
grouped into the top five institutions receiving the largest
national budget and spending. In 2008, it was ranked as the
third position after the National Education Department and
Defense Department. However, based on the inspection re-
sults, there were various deviations occurred in the budget
spending that led to inefficiencies.
As one of the methods for improving the budget’s efficien-
cy and effectiveness, the method of value engineering (VE)
10 Volume 32, Number 3, Fall 2009
can be used. Generally, VE is defined as a creative and orga-
nized approach for optimizing cost and/or facilities or system
performance.
Problem Description
This research is based on several findings from Public
Works Department inspection. The findings are: lack of obe-
dience, incomplete and inaccurate analysis leading to ineffi-
ciency, and ineffectiveness of budget spending in the infra-
structure service of public work divisions.
In order to implement VE in the infrastructure service
of public works divisions, there is a question needs to be an-
swered: “What factors influencing the preparedness of the in-
frastructure service of public works divisions in implementing
value engineering?”
Objectives
The objective of this research is to identify main factors
influencing the preparedness of the infrastructure service in
Public Works Department in implementing value engineer-
ing.
By identifying these factors, the inspection division of
Public Works Department can evaluate them during their in-
spection reviews and may provide better solutions for mini-
mizing any inefficiency. It is also expected that this research
can be a proper feedback for the decision maker in the Public
Works Department in implementing projects.
Literature Reviews
Value engineering (VE) is a function of analysis approach
which aims for reducing the production or project cost. The
amount of cost needed in the planning and execution phase
and the process to save time in those phases must be analyzed
simultaneously. Problems which usually occurred is cost re-
duction by eliminating substantial elements, which may lead
to improper deliverables.
VE method was developed during the World War II,
when there was a resource crisis that led to changes in the
development of methods, materials and traditional designs. In
the beginning of World War II, General Electric Company
from USA (pioneered by L.D. Miles) implemented the VE
concept for providing cost-efficient war equipments. After-
V A L U EW O R L D
wards, VE method was developed quite rapidly in various sec-
tors. In 1985, the association for VE practitioners was estab-
lished, called as Society of American Value Engineers (SAVE),
which now has members from more than 35 countries. In
Indonesia, due to the increase of VE implementation, the as-
sociation for VE was also established in 2006 for improving
professionalism in optimizing budgets for infrastructure and
industrial projects.
A VE program is an effort to provide a significant change
by finding any unnecessary cost and eliminating them. SAVE
International implied that VE is more com-
prehensive than just analyzing cost:
construction material and equipment selection can be re-
viewed and analyzed by VE method.
Research Process
Research Method
This research was implemented by conducting surveys to
related respondents and experts. The data was collected by de-
veloping questionnaires and structured interviews. The data
was analyzed by statistical analysis and description analysis.
Table 1. Factors that Influence VE implementa�on

 VE is system oriented (reviewing the Variables Descrip�on Mean Index

process in a systematic approach); 1 Personnels’ level of educa�on 3,43
 multidiscipline team approach (analyzed 2 Personnels’ level of experience 4,77
by experienced experts); 3 Personnel’s’ level of competence in cost es�ma�on 4,41
 life cycle oriented (considering the to- 4 Level of knowledge in market/standard prices 4,61
tal cost based on the project’s life cycle,
5 Level of competence in developing working methods 4,44
including total cost for operating and
maintaining the facility/product); Personnel composi�on (architecture, civil, mechanical,
6 3,02
electrical, and environment)
 using a proven management technique;
and function oriented (correlating the 7 The number of personnel with VE cer�fica�on 1,11
function needed and the value that will The comprehension level of VE technique and
8 3,22
be received). management
Thus VE is not intended to correct the 9 Program op�miza�on using VE 4,33
designs or calculations made by the planner. 10 Project scale/type using VE 3,95
It is also not a cheapening process; VE is not 11 Project area using VE 4,49
meant to cut cost by eliminating important 12 Project cost/value which use VE 5,07
elements. VE is also not considered as part of 13 Construc�on drawings 4,10
the design review phase, but it is a part of a
14 Building func�on analysis and its elements 4,25
cost and function analysis during the design
phase. 15 Material specifica�on informa�on 5,31
The unnecessary cost needed to be de- 16 Informa�on about project problems 4,60
termined during the VE process are the costs 17 Design alterna�ves based on technical views 4,71
which occur due to limited time in the de- 18 Design alterna�ves based on cost 4,63
signing phase (there is not enough time to
19 High cost items 4,33
provide a more cost efficient design alterna-
20 Efficient construc�on method 5,13
tives); limited information; lack of ideas; im-
proper decision; mistakes in developing the 21 Efficient construc�on innova�on 5,21
concept; limited freedom in the designing 22 Alterna�ve selec�on 5,23
phase; politics (considering different needs 23 Alterna�ve priori�es 5,30
or importance); and reluctant or hesitant in 24 VE reports and recommenda�on 5,18
receiving feedbacks (Rochmanhadi,1992).
25 Coopera�on with related par�es 5,16
Based on the Public Works Ministry
Regulation No. 06/PRT/M/2008 on Con- 26 Coopera�on and interac�on with the internal VE team 5,16
struction Implementation and Monitoring 27 Logis�c support 4,51
in the Public Works Department, any indica- 28 The importance of regula�on in VE implementa�on 4,55
tion of inefficiencies in the design/planning, 29 VE implementa�on regula�on 2,69
working methods, construction methods, or 30 Incen�ves for contractors applying VE 3,70
31 Incen�ves for design consultants applying VE 3,83

V A L U EW O R L D Volume 32, Number 3, Fall 2009 11

Research Results ence in the Public Works Department and civil engineering
The research variables were identified from various ref- projects, such as water resources, roads and highways, build-
erences and it recognized 31 variables influencing the pre- ings, and project supervision.
paredness of VE implementation. The questionnaires were Based on the expert validation process, which analyzed
distributed to 99 respondents. The data was analyzed using using the scoring system, the main factors influencing VE
frequency distribution method. The results of analysis can be implementation was (1) regulation, (2) certification/training,
seen in Table 1 (see page 11), which illustrate the 31 variables/ (3) comprehension, (4) education, and (5) composition. This
factors influencing VE implementation together with its mean can be seen in Table 3.
index.
Based on the mean (average) index from the frequency Table 3. Validated Dominant Factors Influencing VE
distribution analysis, there are 5 (five) main factors that in- Implementa�on (validated by experts)
fluence the preparedness of VE implementation in the Public Mean
Works Department. Those factors are shown in Table 2. Rank Factor Descrip�on index
VE implementa�on
Table 2. Five Main Factors Influencing VE Implementa�on 1 Regula�on 4,6
regula�on
Variable Mean Cer�fica�on/ The number of personnel
No. Factor Descrip�on Index 2 3,8
training having VE cer�fica�on
The number of The comprehension level
Cer�fica�on/
7 personnel having VE 1,11 3 Comprehension of VE technique and 3,0
training
cer�fica�on management
VE implementa�on Personnel’s’ level of
29 Regula�on 2,69
regula�on 4 Educa�on educa�on (minimum 2,4
Personnel composi�on Bachelor degree)
(architecture, civil, Personnel composi�on
6 Composi�on 3,02
mechanical, electrical, (architecture, civil,
and environment) 5 Composi�on 1,2
mechanical, electrical, and
The comprehension environment)
8 Comprehension level of VE technique 3,22
and management Regulation plays an important role in determining the
Personnel’s’ level of preparedness of Public Works Department in implementing
1 Educa�on educa�on (minimum 3,43 VE. In general, VE implementation in Indonesia was first
Bachelor degree) established in 1986; however, the concept was not socialized
thoroughly. There was not any single government regulation
Moreover, based on the question in the questionnaire, determining and regulating the VE implementation, therefore,
there were also findings on the average percentage of efficiency there were constraints in applying the method with no distinct
that may occurred by implementing VE in a physical infra- guidelines. In 2007, there was a regulation from the Minis-
structure projects. Most of the respondents responded that try of Public Works for Public Building Construction Manual
there might be cost efficiency between 11% and 15% from
(No.45/PRT/M/2007) regulating VE implementation. Still,
the total contract value.
the directive was only for public buildings, and not suitable
Findings and Discussion for other construction projects. So far, there was no clear and
Referring to the results of the frequency distribution anal- concise parameter or guideline on VE implementation in
ysis for factors influencing VE implementation, there were construction and infrastructure projects. Although the Public
several factors with low mean index; i.e., below 3,50. It is con- Works Department had encourage the VE implementation in
sidered that these factors with low mean (average) index were their projects, but there was still no detailed regulation on this
the main problems influencing the Public Works Department issue. The regulators should consider creating and establishing
preparedness in implementing VE. VE implementation based on law like other countries. The
From those findings, it is validated five main factors by United States, for example, had implemented VE legally based
expert’s judgments. The five main factors were ranked and val- on their Public Law 104-106 sub section 36, which stated that
ued by corresponding experts using questionnaire instrument. each government department is obliged to implement and ex-
The criteria of expert herein are those with minimum educa- ecute cost efficiency process based on value engineering. The
tion of Bachelor Degree (in engineering), 20 years of experi- practice of value engineering as a professional service in the

12 Volume 32, Number 3, Fall 2009 V A L U EW O R L D

USA has enjoyed a comfortable niche in federally funded or
partially Federally funded projects of greater than $25 mil-
lion dollars costs and federal procurement regulation that all
significant U.S. DOD projects, including U.S. Corps of Engi-
neers, EPA, and the Departments of the Army, Navy, and Air
Force, as well as a host of minor federal agency projects must
have their proposed project plans reviewed in a formal value
engineering study (Fanning, 2005). Furthermore, FIDIC had
also affirmed that VE can be applied in construction works, in
which the contractors can propose the process to the techni-
cal directors in order to (i) accelerate the working duration,
(ii) reduce construction, operation, and maintenance cost, (iii)
improve cost efficiency, or (iv) increase profitability.
Regarding certification and training related to VE, the
number of people having VE certification was still small. There
were only 30 people having VE certification as Associate of
Value Specialist (AVS) in Indonesia. Nonetheless, Indonesian
value engineers had shown some effort in improving their af-
filiation and professionalism by creating an association called
Indonesia Value Engineering Expert Association (IVEEA) in
2006. This association has been collaborating with Society of
American Value Engineers (SAVE) International and since
then they have facilitated various training and local VE certi-
fication. This effort must be managed thoroughly in order to
publicize VE through training, certification, seminars, work-
shops, and other means of promotion.
The comprehension or understanding level of VE tech-
nique and management is still low due to the lack of VE
publication. Therefore, the Public Works Department should
facilitate the national VE association (IVEEA) in providing
various training/certification or workshops for their employ-
ees. A workshop will explore ways of making the VE process
more efficient, with the objective of making recommendations
in support of workshops with time constraints (Hunter and
Kelly, 2007).
VE analysis is a multi-discipline team approach, which
means that the team will consist of members with various aca-
demic background and disciplines related to their works (Raj,
2002). The limited number of personnel who had minimum
education background (minimum Bachelor degree) was related
to the working unit’s composition based on their knowledge
background (architecture, civil, mechanical, electrical, and en-
vironment). This constraint can be resolved by collaborating
with other party outside their working unit, such as external
consultants with VE expertise.
Conclusion and Recommendation
The value engineering (VE) implementation in the Public
Works Department, as one of the alternatives in improving
cost efficiency and effectiveness, is still experiencing problems
V A L U EW O R L D
and constraints. The main factors (which became problems)
that influence the implementation of VE are lack of VE guide-
lines and regulation, limited personnel with VE certification,
minimum knowledge of VE technique and management, and
last but not least, the limited number of personnel and work-
ing unit composition having sufficient education level and
knowledge background.
VE process should be implemented in work/project pack-
age which indicated any cost inefficiency (Davis, 2004). Those
indications may be derived from various inspections, such as
from public inspection, superior level inspection, or function-
al inspection.
Based on the conclusion, it is recommended that the Pub-
lic Works Department should:
 Create and determine detailed guidelines and regulation
about VE implementation for all projects in its division,
such as water resources, roads and highways, buildings,
and others.
 Develop promotion and socialization about VE to related
users, followed by conducting trainings and certification
by collaborating with related associations.
 Increase the number of qualified personnel with proper
composition for each working unit in order to provide a
suitable team for applying VE analysis in their works. If
needed, the VE process can also be applied by working
with external team having VE expertise.
 VE implementation should be applied to project/work
package which indicates cost inefficiency.
References
Davis, Kristin E.L., 2004, Finding Value in the Value Engi-
neering Process, Journal of Cost Engineering, Vol 46 /
no.12 December, USA.
Dell’Isola, Alphonse J., 1982, Value Engineering in the Con-
struction Industry, Van Nostrand Reinhold Company,
New York.
Fanning,Daniel, 2005, Value Engineering Study Services in a
Design Build World, Fanning & Company, USA
FIDIC, 1999, Conditions of Contract for Construction, for
Building and Engineering Works Designed by the Em-
ployer, FIDIC, Switzerland.
Hunter,Kirsty and Kelly,John, 2007, Efficiency in VM/VE
Studies and the Pressure for Shorter Workshops, Value
World Journal, SAVE International, USA
Miles, Lawrence D., 1972, Techniques of Value Analysis and
Engineering, McGraw-Hill, Inc., New York.
Raj,Hussain Mustansir, 2002, VE is not a “Group Cost Cut-
Volume 32, Number 3, Fall 2009 13
 ting”, AACE International Transactions, USA
Rochmanhadi, 1992, Teknik Penilaian Disain (Value Engi-
neering), Yayasan Gema Aproteknika, Semarang.

About the Authors

Dr. Yusuf Latief is a faculty member of the University of Indone-
sia’s Civil Engineering Department.

Ir. Vincentius Untoro K. has a degree in construction manage-

ment and serves as an internal auditor at the Department of Pub-
lic Works.

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new Facebook web page. Job Title

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important to the membership. Become a fan of
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society’s home page will take you right there! Cardholder Signature
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14 Volume 32, Number 3, Fall 2009 V A L U EW O R L D