Zero Based Value Engineering

Content Framework

Original Document By : Engineering Deployment Manager (EDM)

Date : October 2023
Version : Revision 0

CONFIDENTIAL October 2023 1

TABLE OF CONTENTS
01 Introduction

02 Where Does ZBVE Sits?

03 Why ZBVE?

04 The Role of Mindset While Implementing ZBVE

05 The Difference Between VE and ZBVE

06 5 Key Principles of Efficient Design

07 When Is The Right Time To Do ZBVE?

08 Process Overview ZBVE

09 Summary

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1. INTRODUCTION

Zero-Based Value Engineering (ZBVE) is a strategic management and cost optimization methodology that
focus on re-evaluating and redefining the value of each activity, function, process or cost component
within an organization or project from a “zero base”. Unlike traditional cost-cutting methods, ZBVE starts
with a clean slate, requiring stakeholders to justify the existence and cost of every elements to meet
business affordability.

Zero-Based Value Engineering is particularly useful for an organization seeking to drive cost reduction,
increase efficiency and align their operation towards business strategy and offering. By emphasizing a
thorough evaluation of every expense and activity, it enables businesses to allocate resource more wisely
and enhance their competitiveness in a dynamic market.

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OBJECTIVE:
The objective of the framework is to target audience L1, L2 and L3 to get into knowledge level.

APPROACH:
1. Targeting new market to pilot the first site with ZBVE approach with the right process.
2. Replication sites to be deployed after pilot site has successfully OTP; not one time off.
3. Sharing best market practice as a guideline to develop a robust ZBVE exercise in local market.

BACKGROUND:
1. ZBVE exercise has been initiated in 2021 in Malaysia market and expanded to Philippines, Thailand
and Indonesia.
2. Philippines market has completed their Phase 1 and 2 with actual savings of 12% from market
investment for the building, canopy and forecourt.

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2. WHERE DOES ZBVE SITS?
Value Improvement (VI) is important to enhance perceived value or benefits of the service, product, process and activities continuously.
Therefore, VI has been embedded in the L2 contract as part of the assurance on the quality, continuous improvement, development and adaptation. VI aspects to
align with business needs and strategy. ZBVE is one of the systematic method to produce VI as below equation.

Value
Contract Engineering Improvement
(VI)

Cost Performance
Benchmarking Specification Lean Principle
Matrix

Bundle and Life Cycle Cost Value

Methodology
Negotiate Analysis Engineering

Procurement Manhour Zero-Based Value

Risk Management
Strategy Reduction Engineering (ZBVE)

Alternative or Sustainability & Technology

New Supplier / L3 Environmental Integration

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3. WHY ZBVE?

COST SAVINGS New WOW

Generate cost savings by optimizing New WOW: New way of working
the design from the scratch Breaking down the traditional design
and construction method with the
improved version for future sites

❑ Cost savings are crucial because they lead to financial stability, profitability, competitive advantages, and the ability to invest in growth and improvement.
In business operations, they are essential for achieving financial security and success.

❑ Adopting a new way of working is important because it enables organizations to stay competitive, adapt to change, improve productivity, and foster
innovation. It also addresses the evolving needs and expectations of the workforce, leading to a more satisfied, engaged, and productive workforce.

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4. THE ROLE OF MINDSET IN IMPLEMENTING ZBVE
The mindset for starting a new process is vital because it sets the tone for the entire journey. It shapes how individuals andteams approach challenges, changes, and opportunities,
ultimately influencing the outcome and success of the process. A positive and forward-thinking mindset can make the difference between a process that is simply initiated and one that is
effectively implemented and continually improved.

Openness to •It involves being willing to let go of traditional methods that may no
Change longer are effective or efficient.

Continuous •It involves seeking ways to optimize value at every opportunity, rather
Improvement than settling for the status quo.

•It requires the ability to critically assess the value contributed by each
Analytical Thinking element and make informed decisions based on data and evidence.

Results Orientation •It involves setting clear goals, monitoring progress, and taking decisive
action to achieve the desired outcomes.

Collaborative •Requires collaboration and cooperation across different teams and

Approach departments within the larger organization with expertise to identify
opportunities for improvement.

•It requires being aware of potential challenges or obstacles and being

Risk Awareness prepared to address them proactively via effective mitigation
measures. CONFIDENTIAL
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5. THE DIFFERENCE BETWEEN VE AND ZBVE
The difference between Value Engineering (VE) and Zero-Based Value Engineering (ZBVE) explained by categories below.
There is a significant impact when we optimize the design from scratch vs. when we optimize design that already existed on site.

Categories Value Engineering Zero-Based Value Engineering

Focus Primarily focuses on optimizing existing designs, processes, or
projects.
It rethinks the entire project, questioning the necessity of
every component, function, or process, starting from zero.

Methodology Analyze the current design or process to identify potential

improvements.
With expert every element is scrutinized for its relevance,
cost, and contribution to the overall value.

Objective Cost reduction and increased

compromising performance or quality.
efficiency without Not only to reduce costs but also to eliminate unnecessary
elements and activities.

Application Review annually and combined with a cost benchmarking

every 2 or 3 years.
NTI growth, Major VA Programs, EV Projects.

Skillset Able to plan, execute, monitor and control a value of

engineering project.
Require different skillset with the new version is outside of
comfort zone.

Program / Project Suitable for program level. New or major project.

What’s Next May or may not continue with replication to future sites. Set new benchmark and ready to suite replication.

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6. 5 KEY PRINCIPLES FOR EFFICIENT DESIGN

SIMPLICITY

INVENT &
REPLICATE EFFICIENT

FLEXIBILITY STANDARD

◼ Examples in the catalogue

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5 KEY PRINCIPLES FOR EFFICIENT DESIGN

#1 Simplicity: Simplifying the design helps reduce material costs, construction time,
and potential points of failure.
"Keep it simple, stupid" (KISS)
In summary, "Keep it simple, stupid" encourages construction professionals to
INVENT &
prioritize simplicity, practicality, and efficiency in their projects to reduce risks and
SIMPLICITY
REPLICATE optimize results. optimization to ensure the best possible outcomes.

FLEXIBILITY
EFFICIENT

STANDARD

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5 KEY PRINCIPLES FOR EFFICIENT DESIGN

#2 Efficiency: Focus on maximizing efficiency in all aspects of the structure.

This includes optimizing material usage, minimizing waste, and reducing
energy consumption. Efficient designs can help lower costs over the long
SIMPLICITY term by reducing resource requirements, such as raw materials and
utilities.
EFFICIENT

INVENT &
REPLICATE

STANDARD

FLEXIBILITY

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5 KEY PRINCIPLES FOR EFFICIENT DESIGN

#3 Standardized: The goal is to create consistency, efficiency, and quality in

construction projects by using standardized elements that have been proven
to work effectively.

EFFICIENT Standardization typically involves creating detailed specifications,

STANDARD guidelines, and protocols that ensure uniformity and compatibility across
different projects GIDS.

SIMPLICITY
FLEXIBILITY

INVENT &
REPLICATE

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5 KEY PRINCIPLES FOR EFFICIENT DESIGN
#4 Flexibility in construction can be achieved through various design and construction
strategies, including:
1. Open Floor Plans: Provide greater flexibility in space utilization.
2. Adaptive Infrastructure: Incorporating systems such as flexible electrical and
plumbing layouts, allows for easy modifications or additions without major
STANDARD FLEXIBILITY disruptions or extensive rework.
3. Accessible Service Areas: Such as raised floors or accessible ceiling spaces, allows
for easy access to utilities, wiring, and mechanical systems.
The benefits of flexibility in construction.
1. Cost Savings: This can result in cost savings compared to constructing new
INVENT &
structures or undertaking major renovations.
EFFICIENT REPLICATE
2. Adaptability: Flexibility allows buildings to be easily repurposed or adapted to
different functions or uses.

SIMPLICITY

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5 KEY PRINCIPLES FOR EFFICIENT DESIGN

#5 Inventing everything from scratch seem appealing, it's not a practical or efficient approach.
1. Existing Knowledge and Expertise: By building upon existing knowledge and expertise, we can
leverage the work that has already been done and avoid reinventing the wheel.
2. Time and Resources: ZBVE principles drive to improve design via standardize layout and
INVENT & optimize budget.
REPLICATE
FLEXIBILITY 3. Specialization and Collaboration: This collaborative approach fosters innovation and
accelerates progress.
4. Efficiency and Quality: By utilizing proven technologies and products, we can benefit from
their reliability, efficiency, and quality.

SIMPLICITY

STANDARD

EFFICIENT

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 Note:
1. Timeline shown high level only.
2. Timeline varies depending on country and council regulation.

7. WHEN IS THE RIGHT TIME TO DO ZBVE?

Month Month Month Month Month Month Month Month Month Month Month Month Month Month Month Month
Month Month
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
16 17

Market
Engage Initiation must start during FED stage. Market to invest
ment 3 months roughly 3 months to design, review and approve.
ZBVE Design, Review and Approval

IP
Submission
&
Approval
6 months

Permit and Local Council Submission and Approval

Tender
Drawings
Preparation
Tendering Stage and
L3 Award/Selection
Salient Points:
CRR and
➢ This is the critical time for ZBVE desktop study before Approval
deployment to the first pilot site for new market.
Operation Team
Therefore, we anticipate 3 months will be sufficient time Engagement &
Site Kick Off 4 months
to complete ZBVE design for new markets
Construction
➢ Site replication can be work concurrently or after pilot

site completion. Completion

Certification and
➢ If a desktop study is to begin post IP, then, VE will be Site Readiness for
OTP
more suitable in these cases.

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 8. PROCESS OVERVIEW ZERO BASED VALUE ENGINEERING
ZBVE will apply at program level to create on optimized standard to be replicated especially before starting a major program with a technical
complexity, a new technology or a change in CVP – e.g., NTI growth, E destination, Car wash, major shop VA etc..

All control points and stakeholders are depicted as follows.

Steps

Initiation Planning Optimization Evaluation Shake Hands Implementation Completion

• ZBVE Brief • MYP • Proposal • Narrow down • Engaging • Clearance • Post

• Market • Site Nomination • Pros and Cons all proposal by Stakeholders • Pilot on new Construction
Engagement • Timeline from technical sites or (NDM, NP, EM, standard Review
• Benchmarking perspectives program FM) • Execute • Lesson Learnt
(a) Site Layout • Cost • Finalizing • Knowledge sourcing • Ensure that
Control & Review

(b) Base Cost comparison proposal transfer from strategy and standard are
(c) Timeline • Detail design • Addressing the FED to secure supply embedded
• Establish R&R challenges and Deployment and services
• RASCI Matrix mitigation Team • Scale
• Define best • Final signed off Replication
sourcing and approval • Periodic
strategy • IP Submission Reports to
confirm saving
and
performance

TA3 Signed Off,

L1 EDM Engagement MYP Master Plan Lead by EM with Lead by EM with E2E Stage 3 PIR, Market
NP Clearance and IP
with Local EM EDM Support EDM Support Clearance Feedback
Submission

Provide reference / Front End ZBVE standard

ZBVE Final Checklist Pilot Completion PCR
L2 - benchmark Development with documented, RFP
has been Checked KPIs KPIs
ZBVE Assurance Strategy

CRITICAL STAGE OF ZBVE PROCESS CONFIDENTIAL October 2023 16

9. SUMMARY

In conclusion, Zero-Based Value Engineering (ZBVE) is a powerful approach that reevaluates every
aspects of a project or program, aiming to eliminate complexity design and maximize efficiency and
value in design. Starting from scratch and scrutinizing every component, ZBVE allows for impactful result
if following the right process. Embracing this methodology can lead to tremendous outcome → cheaper,
faster, safer and greener.

If you’d like to learn more about Zero-Based Value Engineering, please do not hesitate to reach out your
region Engineering Deployment Manager (EDM) or Dirk Kriechel via email dirk.kriechel@shell.com
Your questions and inquiries are always welcome, and we would be delighted to provide further insights
and information.

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DOCUMENT INFORMATION
Action Name Designation Date

Prepared By Nawal Mukhtar Engineering Deployment Manager 25.10.2023

Supported By Akil Harnesswala Engineering Deployment Manager 25.10.2023

Vetted By Nicholas Chan Global NFR Format Engineering Manager 25.10.2023

Reviewed By Dirk Kriechel Engineering Deployment Manager 25.10.2023

Approved By Jean Baptiste Bascou Global Head Engineering Deployment 25.10.2023

Manager

AMENDMENT HISTORY
No Date Author(s)* Comments / Changes

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CONFIDENTIAL 2Q 19