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A. J. Dell'isola2 defines total costs as "construction, operation, maintenance, and replacement."

18-2 W h y So Much Unfunctioning Cost in the Construction Industry?
The industry is bound by obsolete codes and by differing codes in differing jurisdictions. Examples of codes that have remained unchanged through twenty to thirty years despite enormously changed conditions are far too common. Obsolete design details are repeated from job to job. Materials that bring no user function (either use or aesthetic) are often used. New functional materials are not used. Practices from the past are followed. Habits from the past enter the design, contracting, and construction. Most construction jobs involve three businesses: architects and engineers, contractors, and owners.
The Architects and Engineers

The objective of the architect and engineer is to produce a good competitive design from available materials and skills without uncertainties and at minimum design cost. Most of the time, using newer materials and/or approaches means time and expense searching and testing. In addition, there is the time, expense, and uncertainty involved in attempting to communicate with and convince the owner. Lastly, the contractor may have problems in finding the equipment and skills needed to utilize the new approach in the construction phase. Changing from past practice means uncertainties in prices. Also, because the fee is usually a percentage of the project costs, the architect, for all of his extra work and expense, ends up with a lower fee. More work, more uncertainty, and a lower fee are the outlook for the architect. Why should he search for, test, and promote the new, spend much effort in getting approvals of the contractor and owner, or use valuable energies in long drawn-out processes with governing bodies to get codes changed? Present methods of material selection involve the architect-engineer,
2 Construction consultant, McKee-Berger-Mansueto Inc., Washington, D.C. Also, pioneer in the use of the value engineering system in the architectural, contractor, and construction phases of the construction industry and the source of much material and all examples in this chapter.

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who selects materials that conform to the design criteria of the owner. The architect-engineer is responsible for determining which materials are most suitable from the point of view of economy, function, and maintenance. Generally the selection of the bulk of the material is done by the architect or engineer working on a particular aspect of a design. For example, the electrical engineer selects such items as conductors, conduits, and panel boxes. The architect selects the material for such items as windows, doors, hardware, and exterior finish. In certain major areas, economic studies are conducted, for example, in fuel selection and structural system. However, in most instances, any selection of material or any studies are made by an individual or group within the same discipline. Normally no formal overall plan is followed, no interdiscipline benefits are developed, and no full-time employee is available to coordinate activities or follow through the development of new ideas.
The Contractors

To the contractor, uncertainty is "poison in the soup." He relies on his experience in quoting prices. H e knows the ease or difficulty in getting various skills, equipment, and coordination and mutual assistance between groups in overlap areas. He also knows the probabilities of making mistakes or incurring delays due to error or misunderstanding. He wants to do his work in the manner that he has always done it, with the skills that he knows he can get, with each man doing a task that he knows "forward and backward," and with the interfaces between the various tasks predicted and proved by the involved work groups. Different materials mean different fabricating methods, unpredicted problems, and perhaps costly delays and repairs. The contractor naturally is reluctant to bid in areas of change without adding contingency costs, which may nullify the benefits of the change on that job. Understandably, the contractor, in general, is not the promoter of change.
The O w n e r s

The owner relies upon the architects and engineers to design for him the building that most economically will meet his needs and wants for use and aesthetic functions. He can and often does, in general terms, encomagc the use of new functional products and processes, but he must leave the actions and responsibilities in the hands of the architects and engineers.

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18-3 How the Value Engineering System Is Being Used
EXAMPLE (FIGURE 18-1): Place the source of the hot water and compressed air where it is needed. Reduce initial costs $46,000 and life cycle (twenty-year) costs an additional $57,000. Eliminate a low-water-table problem. EXAMPLE (FIGURE 18-2): Simplify the design of door canopies. Reduce costs from $400 to $150 each. Make unnecessary the involvement of seven trades. EXAMPLE (FIGURE 18-3): Change parking-area pavement from 12-inch compacted subbase and crushed-rock base to 8 inches of lime stabilized subgrade and 4 inches of subbase and crushed-rock base. Secure change of government specifications. Reduce construction cost $8,000.

Use the Functional Approach

The following six questions may be used as a guide to the work, which sets the problems and solves them.

PLANNED WALK- THROUGH TUNNEL

d-

--

PRESENT

SUPPLIED BY STEAM COMPRESSED AIR SUPPLIED BY UNIT A T BUILDING CHANGED, SIMPLIFIED TUNNEL

Fig. 18-1 Planned walk-through tunnel and simplified tunnel; $46,000, lower initial cost; $103,000, lower life-cycle cost.

Using the System to Reduce Construction Costs
5-PLY BUILT-UP ROOFING
':

317

1
I

PLYWOOD SHEATHING

I
NT PLASTER ON METAL L A T H I

I
I P L A N N E D DOOR CANOPIES

ALUMINUM SHEET ALUMIN FASCIA

CHANGED DOOR CANOPIES

Fig. 18-2 Planned and changed door canopies. Costs reduced from $400 to $150 each.

1. What is the item, project, or service? 2. What does it do (define the function)? 3. What is the (dollar) value of the function? 4. What does the item, project, or service cost? 5. What else will perform the function? 6. What will that cost?

COMPACTED SUBGRADE BEFORE. $ 2 . 2 0 SO YD

MIX-SUBGRADE A F T E R : t 1.80 SO YD

Fig. 18-3 Parking-area pavement.

Name and Evaluate FunctionsCompare with Present or Planned Costs and Proceed with the J o b Plan

Figure 18-4 shows the naming of the functions, the assigning of planned costs, and the meaningful comparisons that are at once made visible.

Techniques of Value Analysis and Engineering

COMPONENTS

Fig. 18-4 Functional analysis of power distribution system. Transformers performing a secondary function-change voltage, cost twice as much as conductors performing a basic function -transmit power. Conduit cost twice as much for a secondary function-provide protection. A different type of distribution system was recommended, which made it possible to eliminate some transformers, and it was recommended to use lower-cost plastic conduit encased in concrete.

The following examples are illustrative of conductors that perform the basic function and their protection, a secondary function. 18-5)3 Embedded conductors In the planned design the armoured shield, which performs only a secondary function (protects conductors), costs more than three times as much as the conductor itself. The problem-solving plan with its disciplined thinking brought forth two good alternatives, as shown in Figure 18-5.
EXAMPLE (FIGURE

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319

Considering the function required and the function-producing capability of some less traditional materials brought forth the potential of lower costs for equivalent performance, in the examples of Figure 18-6. Lower costs were obtained using newer functional materials.

18-4 How to Locate Areas Having Potential for Cost Zmprovement
The following guidelines are often helpful: Bulk of costs area or item. Repetitive item.
( A 1 BEFORE

FOUR-CONDUCTOR COPPER ARMORED CABLE 8 . 8 0 PER FT ( B ) AFTER ALTERNATIVE 1

4 ONE-CONDUCTOR ALUMINUM WIRES, DIRECT- B U R I A L TYPE $ 2.23 PER FT COSTS LOWERED $ 67,987 ( 7 0 % )
IC1

Fig. 18-5 Buried conductors and their protection.

FOUR-CONDUCTOR ALUMINUM ARMORED CABLE $ 2.90 PER FT COSTS L O W E W D $ 56,173 ( 5 8 % )

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Techniques of Value Analysis and Engineering
";1 THICK FLEXIBLE INSULATION WITH FACING OF LAMINATED ALUMINUM FOIL AND KRAFT PAPER AND GLASS YARN FILLER
\

I" THICK RIGID INSULATION WITH 2 ; MIL THICK ALUMINUM FOIL

I

'SEALED JOINTS
BEFORE AFTER

VE C H A N G E SUBSTITUTE 1 THICK FLEXIBLE DUCT ; " INSULATION WlTH FACING OF LAMINATED ALUMINUM FOlL AND K R A F T PAPER AND GLASS YARN FOR SPECIFIED 1" THICK RIGID INSULATION WlTH 2 ; " MIL THICK ALUMINUM FOlL FOR DUCTS I N CRAWL SPACE ( A I CRAWL SPACE DUCTS

SAVINGS

SUBSTITUTE POLYVlNYl CONDUIT FOR STEEL CONDUIT,

VE CHANGE SUBSTITUTE 4" RIGID POLYVINYL CHLORIDE CONDUIT FOR STEEL CONDUIT

SAVINGS

6 5,000

CHANGE OF GOVERNMENT CRITERIA WAS REQUIRED ( B I CONDUIT

Fig. 18-6

Lower costs using newer functional materials.

Item is an expensive component. Materials are critical. h4aintenance costs are high. Operation costs are high. .Total cost appears out of line by experience. Other similar items are lower cost. Previous value engineering study areas. Outdated criteria or standards.

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These guidelines brought forth the following examples.

18-7): Aircraft parking apron A value engineering functional study resulted in the recommendation to use vibroflotation instead of removing underlying material. As a result, unsuitable subgrade was properly compacted and did not have to be removed. Costs on the job were lowered $54,000.
EXAMPLE (FIGURE

EXAMPLE (FIGURE

18-8): Foundation plun Understanding the function, knowing the technology, and creatively applying the job plan saved another $40,000.

18-9): Area fur value work determined by cost/ value ratio In this example, the use of a wooden deck was temporarily assumed, which resulted in an estimated value of $2,500 for each basic function. After the costs for the original design were listed from the estimate, the cost/value ratios were determined. They were $11,150: $2,500 or 4 : s for the timber section and $6,160:$2,500 or 2 : s for the concrete section. This identified the timber section as the area most in need of work.
EXAMPLE (FIGURE

18-5 When in the Life Cycle Is Value Engineering Most Productive?

The phases in the life cycle of the typical construction item may be listed as follows: Conceptual Developmental Preliminary design Final design Construction Operation and maintenance Replacement
BEFORE COST PER SQ YD = $10.80 AFTER COST PER SO YD = $7.42

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Techniques of Value Analysis and Engineering

4 6 0 CAST-IN -PLACE PILES 3 3 0 CU YD PILE CAP CONCRETE TOTAL COST (A) BEFORE

$
$

108,780 10,347 119,127

189 PRESSURE-INJECTED PILES 2 4 9 CU YD PILE CAP CONCRETE 312 CU FT GRADE BEAMS TOTAL COST

$

$

66,380 12,450 31 2 79,142

(B) AFTER

Fig. 18-8 The foundation plan.

Using the System to Reduce Construction Costs
( A ) BEFORE: t 17,550 METAL SHEAR REINFORCED-CONCRETE DECK\ /CONNECTOR ( 0 ) AFTER: t 11,790 REINFORCED-CONCRETE DECK,

323

PlLE CONCRETE DECK 2 " X 6" TREATED JOIST BEYOND 2'1X4 " N0.4 GAG, WIRE TREATED @ 6" 0.C. WELDE JOIST TO STEEL DECK 12" x 12" (C) RESULTS TABULATED QUANTITY UNIT
3,555 SQ Fr

2 0 GAGE PROTECTED STEEL DECK 12" X 12" TIMBER P l L E CAP

TlVE REINFORCING ED FELT DISK DRIFT BOLTS EXPLANATION
f&W/L& LOAD

GALVANIZED BOLTS

COMPONENT
17m8EU SgCT/DN

FUNCTION VERB
?U#NSM!r

I

I LOAD

NOUN

KIND
P

WORTH f 2,500

'"o'lE ORIGINA
# 475L

Fig. 18-9 Pier deck. Cost/value ratio used to determine value work needed.

Earlier work was done in the construction phase because of definite results measurement, as was true in the earliest phases of value analysis use. Here were the costs as planned and the costs as changed for uncontestable direct comparison.
Started in Construction-Now Moving Back

Figure 18-10 shows the higher potential earlier in the cycle and the higher cost to change later. It shows that most early work started in the construction phase and is now working back into the earlier phases.

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Techniques of Value Analysis and Engineering

CONCEPT

DEVEL

DESIGN

CONSTR.

~evelbpment Conceptual I costs I costs

1

+
j
Design costs

TIME LIFE-CYCLE COST

-

USE

j
I

Construction costs

I

I

Operation and maintenance costs

I

[~eplacement costs

Fig. 18-10 Relation of costs and benefits to phases in cycle of construction work.

18-6 Ending Nonproductive Nonproduction Costs
Each cost is changed into the terms of the function it provides. Each function is classified as to basic or second degree. The contribution of each function to the real objectives is examined. Functions are evaluated by comparison. Through the disciplined thinking of the job plan and the practical knowledge of the architects and engineers, better, lower cost methods are established. Figure 18-11 shows how $80,000 of nonproductive cost was stopped on one construction project.
18-7 How Basic Obstacles Are Being Overcome

Certain truths seem self-evident:

1. To effectively and continuously move out large amounts of uncontributing costs, as a matter of routine operation, extensive value analysis and engineering work will have to be done in the offices of the architects and engineers in their work on the final design phase, the preliminary design phase, the development phase, and sometimes the conceptual phase. 2. Architects and engineers are in the position under traditional in-

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325

( A ) BEFORE

(13)A F T E R

Fig. 18-11 Ending nonproductive costs ( handling and reproduction of drawings ) . ( A ) Before: From the functional analysis sheet it was determined that the cost of the required number of full-size ( F-size) prints represented the greatest area of unnecessary costs and that too much storage space for drawings was being used at the home office. ( B ) After: $80,000 reduction of costs. More microfilm and half-size (C-size) drawings were used. The number of full-size prints was greatly reduced. Making, shipping, and storing the half-size prints all contributed substantially to reduction of costs. Additional equipment required was factored into costs before determining the reduction amount.

326

Techniques of Value Analysis and Engineering

dustry service and fee patterns of being required to expand their services to save large unnecessary costs to owners. Some of this reduction of costs must be paid to cover the cost of the new service and the proper profit on the service. As illustrated in this chapter, the lowered costs are a "something for something" matter. Extra people were given extra training and worked extra time to "dig out" the unobvious, which normally saves the owner from five to twenty-five times this extra cost. Business arrangements are being developed that properly pay for this essential added work. 3. Because this extra contribution has not and could not be made in the offices of the architect and engineer in the past, large amounts of unnecessary costs are mandated by the final drawings and specifications. Some of these costs can be retrieved in the construction stage if the extra talent, how-how, and cost are provided. Again, the return is often from five to twenty-five or more times the cost. Therefore, means must be and are being provided to deduct from savings the proper expense and profit for this extra contribution. 4. Taking steps to change outmoded building codes and standards takes effort, time, and money, but the use of today's materials and practices yields so much benefit to builders, owners, and society that we will see better programs reaching essential objectives sooner.

18-8 Where Eaective Work M,ust Be Done
Work must be done in the decision-making area, which is responsible for the choice of shapes, materials, methods, and processes used in construction. Figure 18-12 shows the breakdown of costs under the life-cycle cost concept and the distribution of total costs for a typical facility. Note that only approximately 5 per cent goes for engineering yet the decisions made in engineering will either cause or prevent large expenditures made later in the construction work (expenditures much greater than the total 5 per cent fee).

18-9 Some Factors That Require Search, Inputs, and Investigation
In regard to factors needing further study, Professional Engineer Alphonse J. Dell'isola has stated: Using VE methods, this optimization of costs is attempted by the systematic development of alternate proposals covering isolated high cost

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327

- f

COSTS-LIFE CYCLE

-A

(A1 TOTAL COST CONCEPT

TOTAL COSTS

1
OPERATES 8. MAINTAINS

( 8 1 TOTAL COST DISTRIBUTION

Fig. 18-12 Total cost concept and total cost distribution of a typical facility. ( A ) Total cost concept: Typical cost breakdown for a facilities construction. ( B ) Typical cost distribution for a facilities construction.

areas. During these efforts a number of factors are involved. A listing of some of the principal factors indicates the complexity of the problem and the amount of effort required to arrive at meaningful decision. Each factor requires investigation and evaluation, and input from various sources. 1. Availability of required design data. 2. Initial and installation costs. 3. Maintenance requirements. 4. Source of required material and availability. 5. Prime and/or sub-contractors' reaction and know-how. 6. Conformance to a standard. 7. If standards are not applicable, existence of sufficient data to develop standards. 8. Impact on design. For example, marginal subgrade conditions requiring special treatment. 9. Impact on other necessary requirements, e.g., safety, land use, etc. . . . Teams seek to arrive at decisions by using creative problem solving techniques on a formal, organized basis. A group of multi-disciplined trained, personnel are gathered together, and an organized effort made to bring out their latent creative ability. Various high cost areas of a design are challenged by the group and many ideas are generated for alternate solutions. More and better ideas are generated by this approach than by any single individual or by a group not trained in creative problem solving techniques. In addition, one of the principal causes of unnecessary costs, lack of communication amongst specialists, is overcome. The use of a multidisciplined team approach to decision making is the real core of the VE approach. Lastly, incentive contracting principles are being used to inspire better,

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Techniques of Value Analysis and Engineering

more economical decisions by designers a n d to enlist the support of contractors-and, t o reward them with extra profit for worthwhile proposals."

18.10 Some Typical Changes
Component Structural system foundation and 1st floor Original concept Concrete beam and girder with 4 in. concrete floor slab poured in place Proposed change
1. Use composite steel deck

Estimated savings

Mechanical system (heating, ventilating, and airconditioning)

Specified 5-multizone air handling units, with 47 mixing boxes Hot and cold over and under ducts same size Use 800 fm for design air velocity in ducts Rounded off air exhaust requirements to high side of each room Use of an elastomeric system over metal deck with insulation slope 1 in. to the foot (no guarantee available)

Roofing system

forms-thicken slab to 635 in.; eliminate every other beam 2. Use reinforced CMU foundation walls around crawl space 3. Use 50 Zone Fan coil units with F A and steam coils 4. Redesign ducts in accordance with actual loads approx. ratio 4 to 1 5. Changed design to use 1,200 fm max. velocity of design criteria 6. Used exact calculation to determine air-conditioning load (7 tons less) 7. Use of conventional built-up roofing with nailers as required by initial criteria 8. Request waiver on use of nailers-new revised criteria do not require nailers for 1 in. slope. (Use steep slope asphalt)

26,300

3,500

Total.. . . . 3Roads and Streets, January, 1970.

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18-11 Typical Summary SheetWork Based upon Final Design
The initial cost estimate of the total project was $3,300,000.
Potential contract Additional savings based life-cycle on team cost recommendations savings

Description Architectural, civil, and structural: Foundations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Precast stone, fixed glass filler wall. . . . . . . . . . . . . . . . Concrete strength and column sizes. . . . . . . . . . . . . . . Floorsystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vibration isolation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mechanical: Utility tunnel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Heating, ventilating, and air-conditioning systems. . . Mechanical room relocation. . . . . . . . . . . . . . . . . . . . . . Plumbing and domestic water supply. . . . . . . . . . . . . . Vertical transportation (elevators) . . . . . . . . . . . . . . . . Electrical: Feeder cables.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Branch circuit wiring and elimination of separate neutral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Underfloor duct and related cost.. . . . . . . . . . . . . . . . . Total. . . . . . . . . . .