Value Engineering

Value Engineering (VE)

• It was developed during World War II in the United
States. It began as a search for alternative product
components due to a shortage of critical items during
the war.
• It was discovered that a process of ‘‘function
analysis’’ produced low-cost products without
impacting functional characteristics or reducing
quality.
Value Engineering
• VE process
• 1. Gather information
• 2. Analyze the design
• 3. Alternative Solution
• 4. Review/Evaluate Alternative
• 5. Preparing Report
Value Engineering
• In the early 1960s, this concept of value was
introduced in the construction industry through
directives from the Navy and Army Corps of
Engineers relating to facility procurement
• Other major government agencies (e.g., Public
Building Service) joined this movement by
introducing incentive clauses in facility procurement
(construction) contracts,
• In Army Corps of Engineers contracts, the VE
incentive clause allows the construction contractor
to share 50% or more of the net savings in firm
fixed-price contracts. For example, if a contractor is
constructing bridge towers supported (in the
original design) by drilled pile foundations, and the
contractor can redesign the foundations as spread
mat footers with a savings of $400,000, a portion of
the savings (usually 50%) is distributed to the
contractor. The construction contractor must
prepare a value engineering change proposal
(VECP) which will be reviewed and then accepted
or rejected by the owner. A potential reward to the
contractor (in this case) of $200,000 is available if
the proposal is accepted.
• The VECP procedure allows the owner to harvest new
and innovative ideas from the construction
contractor.
• Construction contractors are typically more
knowledgeable about field conditions and
construction methods than design engineers
• The construction methods used to realize a given
design in the field have a great impact on cost.
Value Engineering
• VE can also be implemented during the design phase
of project development. It is use in various
procedures such as brainstorming, prioritization,
research, matrix analysis, and scoring systems to
evaluate design alternatives.
Value Engineering
• Criteria evaluation can be used to assess multiple
factors such as aesthetics, performance, safety, and
so on. A weighted analysis is used to do the final
analysis. In the weighting process, a criteria matrix
such as that shown in Figure 3.2 is used.
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• The idea behind VE is the improvement of design by
encouraging the contractor to make suggestions
during construction.
• The Contractor is encouraged to develop, prepare,
and submit value engineering change proposals
(VECPs) voluntarily.
• The Contractor shall share in any net acquisition
savings realized from accepted VECPs, in accordance
with the incentive sharing rates specified in the
contract.