Value Engineering

We are all trying to reduce Project costs.

A methodology has recently been introduced: the Value Engineering.

This presentation walks you through this procedure and, most

importantly, aims at sharing cost saving items among ourselves.

© 2015– Hervé Baron

Please contribute by sharing the cost savings that you have implemented.
 Value Engineering

What is Value Engineering?

© 2015– Hervé Baron

 Value Engineering

What is Value Engineering?

A process aimed at reducing CAPEX

• Equipment cost
• Bulk cost
• Quantities (piping, structure, concrete)
• Manhours
• Site Construction manhours
• Construction cost
• Project duration
• Weight (offshore)

© 2015– Hervé Baron

 Value Engineering

What is Value Engineering?

When shall it be done?

© 2015– Hervé Baron

 Value Engineering

What is Value Engineering?

When shall it be done?

The sooner, the more impact it can have

© 2015– Hervé Baron

 Value Engineering

What is Value Engineering?

When shall it be done?

Value Engineering features

 Scope

 Participants

 Method

© 2015– Hervé Baron

 Value Engineering

What is Value Engineering?

When shall it be done?

Value Engineering features

 Scope

© 2015– Hervé Baron

 Value Engineering

What is Value Engineering?

When shall it be done?

Value Engineering features

 Scope: Plot Plan, PFD, discipline

© 2015– Hervé Baron

 Value Engineering

What is Value Engineering?

When shall it be done?

Value Engineering session

 Content: identify technical alternatives

 Scope: Plant Layout, Process scheme, special equipment

 Participants: Engineering, Engineering Head of

Departments, Vendors, Sub-Contractors

© 2015– Hervé Baron

 Value Engineering

What is Value Engineering?

When shall it be done?

Value Engineering session

 Scope

 Participants

 Method

© 2015– Hervé Baron

 Value Engineering

A stepped Method

 Focus on highest cost areas

 Identification of the cost saving idea

© 2015– Hervé Baron

 Value Engineering

A stepped Method

 Focus on highest cost areas

 Identification of the cost saving idea

Category Key words

Reduce Can the equipment capacity be
reduced?
Is over design justified?
Is spare required?
Is it a nice to have?
Standardize Use existing/vendor standard
Standardize materials

© 2015– Hervé Baron

Simplify Easy to build
Is automation required?
Technology Could another technology be applied?
 Value Engineering

A stepped Method

 Focus on highest cost areas

 Identification of the cost saving idea

 Evaluation of the idea (feasibility, impact, risk and mitigation)

 Decision

 Monitoring of the implementation

© 2015– Hervé Baron

 Value Engineering

What is Value Engineering?

When shall it be done?

Value Engineering features

 Scope

 Participants

 Method

Examples

© 2015– Hervé Baron

 Value Engineering
Examples 1/2

 De-packaging to remove mark-up of package vendor

 Project specifications (piping class, instrument specifications): do not

apply to packages, especially utility packages, use Vendor standards

 Review different types of equipment technology, e.g., for compressors,

waste heat boilers (fired or water tube?)

 Review and challenge sizing criteria: Contractor self imposed?

 Perform Value Engineering with Vendor: focus on most expensive item

(materials/manhours/NDE etc.)

© 2015– Hervé Baron

 Value Engineering
Examples 2/2

 Review if another technology exists when not very familiar, e.g., for
water treatment

 ANSI centrifugal pumps instead of API for non-hydrocarbon services

 Manufactuer standard instead of API for SRU air blowers

 Single mechanical seals for pumps in non-hazardous fluids service

 Service test in lieu of hydrotest for ASME B31.3 cat D fluids (non-
flammable non-toxic + design P<10 bar).

Did you implement any other cost saving?

© 2015– Hervé Baron

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