2009 International Conference on Information Management, Innovation Management and Industrial Engineering

Application Research on the Investment Control of Construction Project

with Value Engineering at Design Stage

XU Bing
School of Economics and Management
North China University of Technology
Beijing, China
xbhello@163.com

Abstract—How to determine project investment reasonable

and to improve the utilization of funds is an important content II. THE IMPACT OF PROJECT DESIGN STAGE TO CONTROL
of owners’ investment management. However, as a function- INVESTMENT
cost analysis method, value engineering provides an effective Project investment will be completed gradually in the
way to solve these problems. This paper analyzes the
decision-making stage, the design stage and the
investment control method of construction project with Value
implementation stage. Therefore, the control activities of
engineering at design stage, focused on the application
procedure of value engineering, the objects choice of value project investment should run through every stage of project
engineering, features analysis of project, cost calculation of construction. However, it shows that the effect of investment
project and determination of function weight and so on, and control is different in the different stages of project (as
applies the results in cost control of construction project. shown in Figure 1, 2).
Practice shows that Value engineering will help owners to Percentage
control project investment actively at the design stage and to
improve the utilization of funds effectively. Finally, this paper
discusses the advantages and obstacles that use value 8
engineering to control project investment at design stage. 7
Keywords- value engineering; investment control; design 6
stage 5
75
4
I. INTRODUCTION
3
Project control investment refer to the process that
owners monitor project funds effectively and realize 2
investment objectives. Generally, project investment control 20
1 5
involves two aspects. The first is how to allocate investment
reasonable and how to obtain returns were as high as 0
Design stage Construction stage Completion stage
possible. The second is how to strict the use of investment
and control actual investment within the approved limit. Figure 1. The impact to investment of the project different stages
However, in practice, the projects investment control of
owners focused on how to prevent out-of-control of the Percentage
investment scale, and lack attention on how to use the project
investment more. 40
In Wenchuan earthquake, a large number of buildings
collapsed, and cause a great loss to the whole society. In 30
these collapse cases, a considerable portion of structural 40
system lack adequate security and reliability. A very 20
important reason is that there were serious "function-value” 20 25
mismatch for the use of investment in these projects. Project 10 15
investment of being used for decoration engineering and
installation engineering are larger relatively, that of being 0
Preliminary Technical Construction Construction
used for structural engineering are less relatively. As a result,
design stage design design prepare design stage
greater losses have been brought in earthquake.
stage stage
Therefore, it is necessary that using value engineering
optimize design scheme in the design phase of the project so
that to achieve a more reasonable match between functions Figure 2. The impact to investment of the project different design stage
and values.

978-0-7695-3876-1/09 $26.00
$25.00 © 2009 IEEE 411
DOI 10.1109/ICIII.2009.408
 Figure 1 shows the impact of project design stage to
control investment up to 75%, much higher than the impact
of project construction and completion stage to control
investment. Figure 2 shows there are different impact to
investment at the different design stage of projects. The
impact to the investment is about 20% at the preliminary
design stage, about 40% at the technical design stage, about
25% at the construction design prepare stage, about 15% at
the construction design stage. Therefore, the project design
phase is a critical stage of investment control.
III. THE METHODS OF USING VALUE ENGINEERING TO
CONTROL INVESTMENT AT DESIGN PHASE
A. The basic principle of value engineering
Value Engineering (VE) is also known as value analysis.
The core of value engineering is function analysis. It seeks to
achieve necessary functions of products reliable at the lowest
cost, and to pursuit the match of product features and costs.
Function refers to the properties of products that meet the
some needs of people. Cost means the product life cycle cost
which include the whole expense from product development,
design, manufacturing to using stage. Value refers to the
ratio between the function of products and the cost which
attain the function. Its expression is:
V=F/C
F - function
C - cost
From the expression, value is proportional to function
and inverse proportion to cost. Therefore, there are the
following five areas to improve the product value:
• To keep the same functions and reduce cost;
• To keep the same cost and improve functions;
• To reduce cost a little and improve functions
significantly;
• To reduce functions a few and reduce cost
significantly;
• To improve functions and reduce cost.
B. The work steps which apply value engineering at the
design stage
According to the general analysis process of value
engineering, and combined with the characteristics of the
project, the work steps which apply value engineering at the
design stage of construction project can be constructed as
shown in Figure 4.

Choose the sub- project of Identify problems, analyze the

value analysis design scheme
The purpose of this
feature The current cost of
each functions
Sub-project Sub-project cost
function analysis analysis
Means to achieve the
function The reasonable cost
of each function
Sub-project value analysis

The cost of each function Advance the new design

scheme
Possible alternatives
Whether to achieve the
design scheme
necessary functions reliably
Evaluate the new
design scheme
The effectiveness of the new Solve problems, optimized
design scheme design scheme
Determine design
scheme

Figure 3. The work steps which apply value engineering at the design stage

when using value engineering at the design phase of the

C. The discussion on the application of value engineering
at the design stage
The content and methods of value engineering which
involved in construction project design stage are basically
the same as that in other areas. However, by the impact of
project characteristics, the following are different aspects
project:
1) The choice objects of value engineering
In general, the project has been accustomed to divide
into a number of components by some specified standards.
Such as a construction project is divided into a number of
single projects, a single project is divided into a number of

412
professional projects, and a professional project is divided direct costs, indirect costs, taxes and profits. Profits can be
into a number of part projects. So, the choice object of value assumed by the average profit level.
engineering at project design stage should be combined with
the division methods of construction project, and correspond
with the design, pricing and construction process of Decorative modeling
construction project so that to function and cost analysis
expediently. Figure 5 is an object decomposition system Lighting and ventilation
which applies to general civil construction projects.
Seepage, moisture proof, waterproof
Building construction
engineering Thermal insulation

Building decoration engineering

Building decoration Sound insulation
engineering
General civil construction projects

Structure safety
Building water supply,
drainage and heating Pipeline installation and maintenance
engineering
Materials fire protection
Building electrical
engineering Indoor pollution control

Intelligent building Workability

engineering
Materials ' durability
Ventilation and air-
condition engineering Energy and material saving

Elevator engineering Daily maintenance

Figure 4. The object decomposition system of general civil construction

projects. Figure 5. Building decoration engineering feature analysis system

2) The determination of function project 4) The determination of function weight

The functions of the project vary with the project type.
When functional analysis, it is necessary that to define
project’s functions combine the characteristics of projects,
purposes and the role of the future. At the same time, the
function analysis need consider the sub-project which
contained in the project. In some literature, the functional of
residential projects are broken down into the application
performance, security performance, durable performance,
environmental performance, economic performance and so
on. Although the function system which determine by this
method is comprehensive, it lack the corresponding
relationship with the sub-project that the projects included in.
The results will bring more difficult to the cost analysis. A
feasible approach is to analysis respectively the function of
various objects by various sub-projects which obtained from
project object decomposition. Figure 6 is a functional
analysis for building decoration engineering
3) The determination of project cost
When determining the object of value engineering, the
project has been divided in accordance with the
construction’s customary methods. Therefore, the cost of
sub-project can be directly determined by the project budget
when cost analysis. The sub-project budgets will include the
The determination of function weight will impact
directly on the outcome of the function evaluation. Due to
the complexity of the project, there are big difference views
to weights among different evaluator. Therefore, the level of
analysis and expert scoring method should be combined to
determine weight. This method combine qualitative and
quantitative so that to ensure the objectivity of the weights
relatively.
IV. THE ADVANTAGES AND OBSTACLES OF USING VALUE
ENGINEERING TO CONTROL PROJECT INVESTMENT AT DESIGN
STAGE
A. Comparison with other control methods
The major methods of control project investment at
design stage include:
• Using bidding to choose design units
• Implementing quota design
• Adopting standardized design
• Utilizing value engineering to optimize design
scheme
In the above-mentioned methods, owns can choose an
appropriate design unit by bidding. However, this method

413
only create a necessary precondition to obtain a good design,
it does not guarantee access to good design scheme. Quota
design can achieve effectively the aim of control the total
project investment, but it can not guarantee the rationality of
the design scheme. Adopting standardized design can save
design costs significantly, speed up the pace of design
drawings, and shorten the design cycle, but it contributes
little to optimize the design scheme.
Value Engineering study how to obtain the necessary
functions with the minimum cost. It emphasizes through
functional analysis and functional improvements to make the
project design scheme reach the best combination at the
technical and economic. This is the advantage that the other
control methods do not possess. Therefore, there is great
significance to analyze and adjust the matching degree of
functions and cost among the various sub-project through
the use of value engineering at the design stage. Value
engineering will help to form a good design scheme, make
the project investment structure more reasonable, increase
the utilization of funds, and control project investment
effectively.
B. The obstacles of the using value engineering at the
design phase
As an important means of scheme optimization, value
engineering did not receive a valid application in the field of
projects investment control in China. The reason lies mainly
in the following areas:
1) Lack professionals which master the knowledge of
value engineering
When using value engineering, professionals should not
only master the method of value engineering, but also
understand construction technology and investment
management however, the phenomenon which is widespread
is that engineers do not understand the contents of
investment management, and investment managers know
little about the technical knowledge of construction.
2) Lack a special link which optimize the design scheme
by value engineering
Value Engineering is a process which combines with
technical scheme and economic evaluation. Under the
current management of project design, technical scheme and
economic evaluation are completed by different departments.
Technical and economic professionals work relatively
independent, lack a mechanism which completes the design
work jointly.
3) Lack a system which insure the use of value
engineering at the design stage
At present, there lack the special content which use value
engineering to review design scheme at design phase. There
isn’t a corresponding service fee rules and reward system for
the use of value engineering to optimize design scheme. As
a result, design units have no interest to optimize design
scheme and improve investment benefit by using value
engineering.
V. CONCLUSION
Base on the above methods, the paper analyzes projects
investment to a construction project in Beijing at design
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stage by value engineering, and use the results of the
analysis to improve project design. From the theoretical
analysis and project practice, the following conclusions
obtained in this paper:
• Value engineering can help the project design
scheme reach the best combination, and make the
project investment structure more reasonable, and
achieve the aim of control project investment.
• The key which use value engineering at the project
design phase s to identify the object. The object
determination of value engineering should
consistent with the custom division of construction
project so that to convenience the functionality and
cost analysis
• It is necessity that to set up a special link for value
engineering at the review of design scheme, and to
establish service fee rules and reward system for the
use of value engineering.
ACKNOWLEDGMENT
The paper supported by Funding Project for Academic
Human Resources Development in Institutions of Higher
Learning Under the Jurisdiction of Beijing
Municipality(PHR-IHLB).
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