The Technique of Value Engineering (VE) in Architecture

Developed by Aikaterini Deli

Value Engineering (VE) is a sequence of procedures aiming to meliorate the value of the final product by having a better management through the overall steps, always considering the cost. Value Engineering is an organizing tool with origins from the science of Project Management which had been used during the World War II by “General Electric Co” and nowadays it is an approach commonly used for planning building projects. This technique constitutes one of the main processes of the Value Methodologies.

Most of the companies follow this technique in order to minimize the cost but not the basic function of the product. In the architectural field, the engineers are facing plenty of composite projects which have to meet the needs and requirements of their clients and also being in time and in budget. For this reason, the VE technique is preferable from large architectural offices because of the status of their clients. The bigger the project, the greater the need for examining continuously the budget through the design process. In a nutshell, Value Engineering is an organized creative review of the needs and requirements of the client which are satisfied through the functions of the product, always underlining its quality and its low life cycle cost.

This article will deliver an analysis of this management tool and will focus on the different stages that the team has to pass throught, the benefits on applying this technique and also its limitations. The article may be read by both practitioners and academics as a guide for applying the technique of Value Engineering.

Definitions

In this chapter some definitions of the Value Engineering will be developed for a better understanding of this term.

Miles (1972): A discipline action system, attuned to one specific need: accomplishing the functions that the customer needs and wants at the lowest cost.

Society of American Value Engineers (SAVE) International: The Value Methodology (VM) is a systematic and structured approach for improving projects, products, processes, services and organizations. VM, which is also known as Value Engineering, is used to analyze and improve manufacturing products and processes, design and construction projects, business and administrative processes, and both public and private sector services and organizations.

Sievert, R. W. (1991) - Project Management Institute: Value engineering is a function-oriented and multidisciplinary approach for planning building projects using a multi-disciplined team to identify and reduce unnecessary costs and poor performance, while maintaining product quality.

Investopedia: Value engineering is a systematic, organized approach to providing necessary functions in a project at the lowest cost. Value engineering promotes the substitution of materials and methods with less expensive alternatives, without sacrificing functionality. It is focused solely on the functions of various components and materials, rather than their physical attributes. Value engineering is also called value analysis.

D.R. Kiran (2017): Value engineering is a design engineering technique involving critical examination and analysis of the design of a component with reference to its functional value. It is a systematic and creative method using proven methods akin to the modern design for six sigma (DFSS) tool of define-measure-analyze-improve-control, to obtain the same or better performance at a lower cost, so as to improve the value of goods, or products and services by critical examination of its function.

Big Idea

The idea was born at General Electric Co in the 1940s by the engineers Lawrence Miles, Jerry Leftow, and Harry Erlicher. The combination of the high demand of products with the lack of raw materials, created the need for seeking alternative materials which will be in the same cost and function levels with the first ones. Hence, Miles developed a function-based approach which was named Value Engineering and until 1985, the idea of Value Engineering procedure had been spread around the world. Nowadays, Value Engineering is consisted by a multi-disciplined team which purpose is to identify and reduce unnecessary costs and poor performance, while maintaining product quality. Functional Analysis System Technique (FAST) diagrams illustrate the phases. The value engineering team has four to six members with complementary expertise in different disciplines. This tool can be applied at any step in a project, from the pre-workshop preparation to the post-workshop implementation.

The Society of American Value Engineers (SAVE) was formed in 1959 as a professional society dedicated to the advancement of VE through a better understanding of the principles, methods, and concepts involved. According to the Value Methodology Standard from the SAVE and the American Society for Testing and Materials (ASTM) standard E1699-14, Value Engineering can be described by the following 8-phases:

Preparation Phase, Information Phase, Function Analysis Phase, Creative Phase, Evaluation Phase, Development Phase, Presentation Phase and Implementation Phase

Value Engineering is also known by the terms 'Value Analysis (VA)' and 'Value Management (VM)'. The main difference which distinguishes the VE from the other terms is that this tool is related to new products and after its completion the stakeholders invest their capital.

Definition of Value

According to the Cambridge Dictionary, the principle definition of 'value' is the amount of money that can be received for something, and the following one refers to the importance or worth of something for someone. In the case of the Value Engineering, the second definition seems to be closer to the technique because it is the reliable performance of functions to meet customer needs at the lowest overall cost . The amount of value is depended on the relation between the level of the accomplishment of the subject under study according to the user functions and the needed expenditure to create it and it can be calculated by the following equation.

Value = Function Performance / Resources - Cost

The increase of the numerator, keeping stable the denominator or the decrease of the denominator, keeping stable the numerator, entails the increase of value. By the term Function Performance, quality, reliability, availability, maintainability, service ability could be used. When the resources are the lowest ones and the functions the most effective ones, then the result is the maximun value.

Key Principles

According to the The Institute of Value Management in UK and the BS EN12973:2020, there are four key principles of Value Management. These are the following:

Strengthen Value Orientation, Apply Function Thinking, Apply a structured holistic approach and Manage complexity, risk and uncertainty.

It is significant everybody in a project to be in line with a common vision, mission and values and especially the ones which are set by the stakeholders of the project. The available methods and tools increase the group's creativity and the structured approach reach a best result as the risks and the complexity are effectively disciplined.

Application

In order to have a valuable outcome with this tool, it is essential to follow the suggested methodology which is consists of the following eight (8) phases.

Preparation Phase

Understanding the project, First touch

In this step the description of the project is given and it is important for the value engineering team to be familiar with the project, which means that the team has to understand the need and the specifications that the customer demands and wants for the final product, especially what is to be studied and when. In this step, a list with the basic functions is created.

Information Phase

Gathering of Data

In this phase, the team has to research and investigate deeper about the project. Some parts have to be clear now, like the functions of each element and the design procedure. The deeper the research, the better the outcome and the understanding and the more comfortable the team is. The investigation could be in the fields of "Engineering", "Materials", "Costs", "Manufacturing" and "Scheduling". Some really good and helpful questions are the following: How, What, Why, Where, When. These data will contribute to the procedure. According to the Value Methodology Standard of SAVE, there are some activities which can be followed in order to reach the outcome faster, e.g. Identify and prioritize strategic issues. Tools: SWOT.

Function Analysis Phase

Analysis of the project, Clarification of the Purpose

In this step, the team defines the served by the building functions, some of the them are primary and the remaining secondary. The difference between them is that the first one reveals absolutely the purpose of the building while the second one describes an added value in this. On the basis of the Cambridge Dictionary, as primary is defined the most important than anything else; the main. On the other hand, a secondary function exists for supporting the primary one, is less important than related things and the building can perform its primary functions without the secondary ones. Based on the Standards of SAVE, a Function Analysis System Technique (FAST) and a tool for Cost to Function Analysis could be developed.

The Verb - Noun Approach

The Verb - Noun Approach is well known between the value engineering team, as they set the questions "What this function does?" and "What is this fuction?", which are aswered by a verb and noun respectively. Some advantages about this technique can be summarized like these:

1. The success of this approach makes clear that the team has understood the function and it is capable to describe it in two words.
2. With this technique, it is way easier to not be confused. This is a common phenomenon as the functions are plenty and it is not easy to seperate the different meanings of each.

According to D.R.Kiran, there is a guideline with purpose to assist in defining the functions:

• The function shall be defined only by two words, a verb and a noun.
• The noun shall be measurable and/or countable.
• The noun shall as much as possible signify the design-based constraint.
• The verb shall be active and affect the noun directly.
• The function shall be verifiable.

Creative Phase

Production of ideas which correspond the needs

Here, the team generates the ideas which are corresponding better to the functions. It is a brainstorming, productive and why not, an innovative process and for the designing team, it is the heart of the whole procedure. Through this step, the team adopt creative ways to to generate ideas from their own perspective, based on the results of the function phase. It is common to work in an individual level at this point where each of the members creates a list with alternative solutions. They can sometimes be unconventional, eccentric and undisciplined, but may also be clear-headed thought leaders. In architecture, creative phases are always in the front stage but not in the same level every time, with the most significant to be the one of the concept stage. This may not be so long in comparison with the whole procedure. Some tools for this stage are the Gordon Technique, the Nominal Group Technique and TRIZ.

Evaluation Phase

Ranking the Ideas

In this phase, the team considers about the advantages and disadvantages of each idea of the previous step. It is important the team members to be objective as a non-critical view may lead to wrong outcome in the end. The team performs a weighted matrix analysis to group and rank the alternatives, and the best alternatives are selected for consideration in the next phase. The outcome of this process is to create a shorter list of ideas which correspond the needs and purpose, with the greatest prospects. Some tools suggested by SAVE are the Pugh Analysis, Kepner-Tregoe, Life Cycle Costing, Choosing by Advantages (CBA) and Value Metrics.

Development Phase

Review and Selection of the most suitable ideas

An in-depth analysis follows the Evaluation Phase. The team now creates a profile for every alternative which has been selected previously in order to inform the client about the idea. The profile may consists of sketches, diagrams, 3D models, cost estimation and cost savings of the building but also of the negative factors which are associated with the alternative. Each of them should be clearly written so the stakeholders can understand everything. Last but not least, every profile should refer information about next steps and dates.

Presentation Phase

Presentation to the Stakeholders

The value engineering team meets the stakeholders. The Evaluation and Development Phases are now represented to the customers through reports, flow charts in a high level of detail in order to convince them about the outcome and the positive impact of their generated ideas.

Implementation Phase

Realization of the Selected by the Client’s Ideas

This step belongs to the post-workshop stage and it exists from the moment in which the stakeholders have been convinced and agreed with the previous presentations. Any changes should be incorporated into the implementation plan before this begins.

Benefits & Limitations

Benefits

Part of the benefits of the VE tool are listed below. By applying this methodology on architectural projects:

• It becomes easier to increase the efficiency in managing the projects, as every phase has a clear concept and content.
• The goals are well settled, so the communication and collaboration between the members will be better, so the outcome will be more accurate and more relative to the scope of the project.
• The creative parts are never missing, and each member contributes to the value addition of the project.
• The cost saving and cost reduction are always under consideration.

Limitations

The VE technique emphasizes on the cost of the final project which sometimes it is not preferable and this is not the objective of the tool at all. In this technique is easy to detect the limitations, which are man-made . Some of these are the following:

• Difficulties in the communication inside the multidisciplinary team.
• Lack of creativity.
• Lack of knowledge.
• Persistence from stakeholders for even less cost.

According to R. W. Sievert (1991), the value engineering team has four to six members with complementary expertise in different disciplines. Even if nowadays it is common to have multidisciplinary teams, this is not an effortless work formula. The differencies in the unique backgrounds and educational - professional experiences of every member may create obstacles in the process, leading to delayed outcomes. Sometimes, the one part does not take in consideration the others, they cannot cοmmunicate their ideas and work, they cannot be synchronized hence the result comes out of time. This is also related with the lack of knowledge. Another limitation of this technique is the lack of creativity. This happens when some approaches are scientific-oriented and there is no knowledge background, like the sustainability outcomes. To control this obstacle, better communicational skills and methods are needed inside the team which maybe comes in conflict with the previous limitation.

The VE tool is a cost-oriented technique but sometimes it is possible to overcome the limits which means focus on reducing the costs but not on improving elements of the Function Performance like quality, reliability, availability. Especially, as the VE technique is part of architectural projects, it is negative-related the fact that the sustainability approach is not taken under consideration at the very beginning of the methodology. Last but not least, as the stakeholder's purpose is to gain from every method, in this way maybe they will be more strict about the cost, whick has as an outcome the lack of creativity and motivation from the side of the value engineering team.

Annotated Bibliography

SAVE International Value Standard, VALUE METHODOLOGY STANDARD, (SAVE International Value Standard, 2007) & (SAVE International Value Standard, 2015)

This Standard was originally drafted in May 1997. The Value Methodology Standard is intended to provide a practical guide for applying the principles of the value methodology in a consistent manner. It may be used by both practitioners and management.

D.R.Kiran, Total Quality Management - Key Concepts and Case Studies, BS Publications, 2017, Chapter 33 - Value Engineering

Akoud, H. (1998). Value Engineering for the Practice of Architecture, Diploma Thesis, Faculty of New Jersey Institute of Technology, School of Architecture

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Joel Wao, Ph.D., MQSI, S. SAVE Intl, A Review of the Value Engineering Methodology: Limitationsand Solutions for Sustainable Construction, 55th SAVE International Annual Conference: SAVE Value Summit, San Diego, CA, USA, June 7-9, 2015