Value Engineering

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Value
Engineering
IN CONSTRUCTION PROJECTS
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World War II created difficult shortages of component

parts, skilled labor, and raw materials.
Engineers and Project Managers at General Electric (G.E)

facing shortages, were forced to find alternatives to
HISTORY OF unavailable or cost-prohibitive “standard” choices.
VALUE G.E. began to notice that some of these alternatives
actually led to better products, lower production cost,
ENGINEERING? faster procedure.
Born out of necessity, the success of the process of
analyzing alternatives led to a change in the structure of
design.
Lawrence Miles “the father of value analysis and value
engineering” introduce these techniques at G.E and
formalize this process following the war.
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VE IMPLEMENTATION IN
THE PHILIPPINES
 In 2004- VE was promoted by World Bank to help the GOP in its effort
to keep under control unnecessary capital expenses and combat
corruption.
 There were initially 26 professionals trained in VE conducted by World
Bank that founded the Philippine Association of Value Engineers
(PAVE).
 In 2005, the use of VE became a GOP policy as a means of
rationalizing and achieving cost savings efficiently in infrastructure
investment and to combat corruption. The DPWH adopted VE as one
of the ways to cut costs and combat corruption.
 The roll out program of a series of VE training and workshops for
Government Agencies, LGUs, and State Universities were conducted
by World Bank in 2005.
THE PHILIPPINES
 The GOP pursued the Project as part of its program to equip Philippine
professionals with a working knowledge of VE and to institutionalize VE
as a professional tool to achieve more economical and functional
infrastructure facilities.
 The Medium-Term Philippine Development Plan for 2005-2010

recommended the implementation of VE for all major infrastructure
projects costing P50 million to ensure the most cost-efficient designs
and avoid overpricing of projects.
 June 2009 – NEDA published the Value Analysis Handbook funded and
assisted by AusAID under the Partnership for Economic Governance
Reform (PEGR). The Handbook presented the theory and techniques
applied in conducting a value analysis to a project for the government
to achieve value for money in major development projects, optimize
infrastructure expenditures, and increase the efficiency and
effectiveness of infrastructure projects.
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THE PHILIPPINES
 The Philippine Development Plan 2011-2016 and 2017-2022
strongly recommended the use of VE to government
infrastructure project.
 The 2016 Revised IRR of GPRA incorporated VE in the detailed

engineering activity requirements.
 March 2023, the DPWH Secretary issued Special 0rder 62, series
of 2023 for the creation of VE Committee to establish policies
and processes relative to the conduct of value engineering
studies and identification of DPWH projects that require value
engineering studies and share information with other
government agencies on Value Engineering benefits, and
experiences of the Department.
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OVERVIEW
OF
VALUE ENGINEERING
VALUE ENGINEERING 6
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WHAT IS VALUE
ENGINEERING?
Value Engineering (VE), Value Analysis (VA) and Value
Management (VM) are all terms that can be used
interchangeably.
VE/VA/VM - all refer to a structured methodology that uses a

combination of creative and analytical techniques to identify
alternative ways to achieve objectives or outcomes.
 The aim of value engineering is to minimize the overall
cost of production without affecting the quality of the
product.
 The goal of value analysis is often to review an existing
set of costs and benefits with the intention of enhancing
its value.
 The aim of value management is to optimize value for
money by reviewing costs, quality and function.
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What are the types of

Value?
1. Esteem Value - Often related to the target consumer of the
product.
2. Cost Value - How much will be spent to produce an item or
complete a project?
3. Exchange Value - How much can the item be bought for on the
open market?
4. Use Value - What is the value to the Owner of the item or
project resulting from the function it provides?
 has value only in use and is realized only in the process of
consumption (product) or utilization of facility
(construction).
 Use value is the key to value engineering
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Example: Think about Quantifying the Value of Building a Facility.

In Value • There are costs that can be easily quantified: materials, floor areas, equipment, etc.
Engineering, • Function, worth, and satisfaction are much more difficult to quantify.
“Value” refers to To determine the function, you need to ask questions like
the following:
importance,  How long will those materials or equipment last?
worth, or What is their performance? Can it be improved?

 What type of maintenance will they need in the future?
usefulness of  Will they work more efficiently and cost less to operate?
something. Value The best place to start is to ask yourself:

can not be easily What is/are the most important part(s) of the project and
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what performance do you want the project to achieve?

quantified.
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How does VE provide value?
The goal of VE is to maximize function and performance while seeking

cost-effective solutions. It can be summarized in the formula below:
Function or Utility (Desired Performance) Worth to you

Value= =
Overall Cost Price, you pay
The Value Ratio describes the relationship between the Satisfaction of

Needs (benefits) and the Use of Resources (expenditures).
Satisfaction of Needs (Benefits)

Value =
Use of Resources (Expenditures)
VALUE ENGINEERING 10
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In the end,
functionality is
determined by HIGH COST/
LOW VALUE
HIGH COST/
HIGH VALUE
the Owner’s and

User’s goals.
LOW COST/ LOW COST/
LOW VALUE HIGH VALUE
COST
VALUE
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Example of “Value” in Value Engineering

For air travel over a distance of 1,355 kms (CDOC to Manila), the plane ticket price is
P6,000. The comfort of the air travel can be monetized at P3,000, and the monetary
value of time saved because of air travel is P6,000. What is the value of air travel be?
From the formula:
Function or Utility Worth to you
Value= =
Overall Cost Price, you pay
Monetary Functions include: Using the equation for Value:

Comfort of air travel = P3,000.00
Monetary value of time saved = P6,000.00 Value = Functions / Overall Cost
Cost of Monetary Function = P9,000.00
Value = 9,000.00/6000.00
The overall Cost of Travel:
Cost of plane ticket = P6,000.00 Value = 1.50
The value of air travel indicates a LOW COST but HIGH VALUE travel.
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What is the difference between

VE and VA?
Value Engineering (VE) is the technique often used
before a product has been fabricated.
 In the construction industry, VE is most cost-effective if
used at pre-construction stage.
Value Analysis (VA) is the technique used to analyze

an existing product.
 In the construction industry, value analysis is used to
analyze an on-going project.
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What is VE in the Construction Industry?

Value Engineering (VE), is an organized effort directed
at analyzing designed building features, systems,
equipment, and material selections for the purpose of
achieving essential functions at the lowest life cycle
cost consistent with required quality, and safety.
VE tries to improve the value of the project with

lesser consumption of resources or through creative
ideas and decisions.
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When to use Value Engineering Consider the following major factors when
in Construction? determining the life cycle cost of an item:
 Expected life of item
 Construction (initial) cost
The VE process can be use in any phase of the
 Maintenance and operation cost
project’s life cycle, i.e., at pre-construction,
 Salvage value
construction, and post-construction phase.
 Discount rate
The most cost-effective VE are those being
done during the pre-construction stage. In some cases, a higher initial cost of an item could
result in reduced life cycle costs.
In construction, the VE evaluation is focused on
three main criteria: Similarly, a lower initial cost may result in more
1. Cost reduction frequent maintenance and shorter life cycle than a
2. Added quality higher initial cost item.
3. Lifecycle/maintenance cost
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The potential cost

savings and functional
impact decrease with
each progressive phase
of a project as
illustrated in the Chart
shown.
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Effects of Value Analysis Saving Opportunities of Value

Analysis in a construction project.
Seven Most Significant Factors Responsible for Savings Actions
Feedback from
User's
VA study can generate
Advance
Change in User's
Needs
6% Technology
23% recommendations to eliminate ten
12%
to thirty percent (10%-30%) of the

Design Deficiency
4% project construction costs. The
designer/user usually accepts
Redesigning Cost
15%
about half of these
recommendations, providing a cost
avoidance of at least five percent.
Questioning Specs
Excessive Cost
22% Historically, the cost of a Value
18%
Analysis study is usually less than

ten percent of the implemented
Source: Dell’ Isola, Value Engineering Practical Application
savings. 17
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VALUE
ENGINEERING
PROCESS AND
METHODOLOGY
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VE Process in Typical
Construction Project:
 Value Engineering (VE) is a process using multi-disciplined
teams to review projects and standards to identify high-cost
functions with improvement potential.
 The team follow the systematic, creative VE job plan to

establish an optimum value for selected functions.
 The Team will identify alternatives which will provide the

necessary functions at the most economical initial capital
cost and/ or life cycle cost, and are developed consistent
with requirements for safety, quality, operation,
maintenance, and aesthetics.
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Step 1: Picking the team or

VE Process in Typical Construction Project
creating the VE team:
The VE Team will compose of the following:

Once the team is established and organized, pre-
workshop or study will be conducted by the Team.  Certified Value Specialist (CVE) – the
The team will conduct: person who holds all line of
communication for the project.
 Site Visit  Design Team – architect, structural,
 Review design documents electrical, mechanical, sanitary, etc. for
 Create cost estimates. their design perspectives.
 Analyze cost estimate  Owner – discuss the overall objectives
 Modify existing estimate. and desires of the project or NEWs
(needs, expectations, and wants)
The objective of this Phase is for the Team to have a
thorough understanding of the project with all the VE  Contractor – to have the production
perspective of the project.
members of the Team.
 Cost Estimator – determine the existing
After this study is done, the Team will proceed to the estimates and the VE values of ideas
actual workshop which is the VE workshop/VE Plan  Construction Manager – to discuss the
overall operation perspective of VE
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Step 2: The Value Analysis Job

Plan or the VE Plan
(6 phases):
1. Information Phase
The information phase consists of finding the following:
 Evaluate the project function criteria and design
concepts (What’s the owner’s objective, the user’s and 2. Functional Analysis Phase
stakeholders’ needs and value)
 Define function as generally as possible to allow for highest 3. Creative Phase
amount possible options.(a thorough understanding of the
decisions that influence the design of the project). 4. Evaluation Phase
 Identify the project’s high cost-elements 5. Development Phase
 Conduct a functional analysis of the high-cost elements.
(Value vs. Cost) 6. Presentation Phase
 Assess their cost/worth relationships (looking into the
systems, equations and the value and scope of the project
to the Owner, and then identifying the likely target for VE
and then narrowing the target).
 During this phase the Owner’s project objectives and
definition of value are established.
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Plan or the VE Plan
(6 phases):
To facilitate this understanding, the information and
data is organized to make it easy for the VE team to 1. Information Phase
review and understand.
After listing all the identified system for VE, the Team 2. Functional Analysis Phase
will then proceed to the next phase 3. Creative Phase
By the end of this phase, all VE team members have a 4. Evaluation Phase
thorough understanding of the project or process,
requirements, constraints, and any solutions proposed 5. Development Phase
to address it.
6. Presentation Phase
Example 01: (High-Cost Element identified for VE)
 Owner concerned about safety of personnel near
windows at facility.
 Architect designs blast resistant windows.
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Example of Areas to Focus for Value Analysis
 Great complexity in the Design — Generally, the more complex the design, the
more opportunity for improving value and performance.
 Advancement in the state-of-the-art — Those aspects of design that go beyond
the state-of-the-art usually offer potential value analysis savings.
 High degree of time compression in the design cycle — A project having an
accelerated design program usually contains elements of over design.
 A component or material that is critical, exotic, hard-to-get, or expensive
 Intricate shapes, deep excavations, high embankments, steep slopes, etc.
 Components that appear to be difficult to construct
 Overly long material haul — excessive borrow; excessive waste
 Record seeking designs (longest span, highest piers, deepest cut, etc.)
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Example of Areas to Focus for Value Analysis
 Expensive construction  Specially designed components that

 Long foundation piles appear to be similar to low-cost off-the-
 Excessive reinforcement shelf items
 Sole-source materials or equipment
 Cofferdam dewatering
 Processes or components that require
 Architectural embellishment
highly skilled or time-consuming labor
 Large safety factors
 Items with poor service or cost history
 Curb, gutter, and sidewalk (rural)
 Items that have maintenance and field
 Standard plans that are in use for operation problems
more than three or four years
 Project costs that exceed the amount
 Components that include non- budgeted
standard fasteners, bearings,
grades, and sizes
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Plan or the VE Plan
(6 phases):
2. Functional Analysis Phase
The team will look at each potential system for VE and ask
questions that are briefly used during the Information Phase:
 What is it? 2. Functional Analysis Phase
 What does it do? (What is the function?)
 What must it do? (Is its function basic?) 3. Creative Phase
 What is it worth?
 What does it cost? 4. Evaluation Phase
From Example 01(HCE Identified: blast-resistant windows) 5. Development Phase
 Design documents call for a specific window brand,
which is blast and pressure resistant window. 6. Presentation Phase
 Owner objected and need only blast resistance
windows.
 From this, there is potential savings for the project.
Then proceed to the next step.
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Functional Analysis
Function Analysis is a technique used to identify and understand the needs of the project,
product or service, (what does it do, what must it do).
It is an essential component of the Value Engineering/Value Analysis process.

In Function Analysis, functions are described in two-word verb-noun definitions that
describe the needs of the project, product or service being examined.
The two words used to describe a function include an active verb and a measurable noun.
The measurable noun identifies something that can be described and quantified.
Although the function of a project, product or service could be provided in a descriptive

paragraph, a verb-noun definition ensures concise descriptions that focus on one function
at a time.
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Example of Functional Analysis
Highway Ditch:
One of the functions of the ditch is to “channel water”.
 The word 'channel' is an active verb.
 The word 'water' is a measurable noun as the amount and type of "water“ can be
described and measured.
If the highway ditch is also needed to "support habitat" the area of focus might
change.
The use of two-word descriptions of functions allows the team to communicate in

a common language
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Example of Functional Analysis
Pencil:
A pencil may be used to make a list, sketch a diagram, or mark a board

for cutting but what must the pencil do in each of these applications?
What is the basic function of the pencil?
The verb-noun definition for the function of a pencil could be to "mark surface".
If the pencil does not “mark surface” it cannot achieve its basic purpose or function.
The verb “mark” is an active verb and the noun “surface” is measurable and can
be described.
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Where can Function Analysis be used?
 Defining Project requirements.

 Identifying needs and purpose.
 Problem Solving.
 Defining and specifying requirements for services
 Project Planning with stakeholders (to reach common understanding of Project goals).
 Defining requirements for Information Technology Projects.

 Developing Performance Based Specifications
 Understanding how an existing activity, process, or solution addresses the
needs of a project, service or product
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Plan or the VE Plan
(6 phases):
3. Creative Phase (Brainstorming or Speculation Phase)
 Team members generate creative alternatives to satisfy the
functions. 2. Functional Analysis Phase
 The team have to seek cost effective alternative system 3. Creative Phase
while maintaining the same necessary functions of the
system. 4. Evaluation Phase
 The team applies brainstorming method to develop realistic 5. Development Phase
alternatives to conventional or current design.
 The team applies creativity (rough ideas) to evaluate 6. Presentation Phase
(discussions) all possible solutions to the problem presented
in each function identified in the information phase. This is
where the experiences and knowledge of the system are
needed the most.
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VE Process in Typical Construction Project Step 2: The Value Analysis Job

Plan or the VE Plan
(6 phases):
From Example 01 of the blast resistant windows:
Creative /Rough /Alternative ideas has been identified and listed 1. Information Phase
as follows:
 Safety concerns for shredded glass 2. Functional Analysis Phase
 Trash out blast resistant window
 Provide shatter proof film over standard windows
3. Creative Phase
 Provide additional security measures, i.e, barricades and 4. Evaluation Phase
bollards at the entrance of the facility that would deter
intruders. 5. Development Phase
 The Architect isn’t thrilled with the idea and instead will use
trees and shrubs at entrance of the facility.
 The entire team supports with the concept and would like to
push through for the next step.
Note:
After discussion/brainstorming of the rough ideas presented,
the Team will have a consensus on what ideas to be pursued
further for development.
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Plan or the VE Plan
(6 phases):
4. Evaluation Phase
 The team evaluates each produced or created ideas 1. Information Phase
during the brainstorming session.
 Team uses highly structured method to evaluate and
3. Creative Phase
rank ideas subjectively.
 The ideas are evaluated on cost and how well they 4. Evaluation Phase
address functions identified in the information phase.
5. Development Phase
 Ideas with the greatest potential savings and function
improvement (not function addition) are selected to be
developed in the next phase.
Some of the rough ideas will be discarded and some

rough ideas will be developed further if beneficial and
cost effective to the project.
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Plan or the VE Plan
(6 phases):
From Example 01 of the blast resistant windows.
 The team takes into consideration the provision of
barricades and bollards at the entrance of the facility. 2. Functional Analysis Phase
 The team noted that the proposed utility lines will go 3. Creative Phase
on the way where the barricades and bollards will go.
4. Evaluation Phase
 Fortunately, the project is still in the pre-construction
stage. 5. Development Phase
 The team proposed to move the utility lines 3.0m from 6. Presentation Phase
the entrance of the facility.
After the Analytical Phase, the Team will proceed in the

next phase.
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Plan or the VE Plan
(6 phases):
 Ideas/alternatives are developed in sufficient detail so that
they can be compared against the originally proposed 1. Information Phase
solutions.
 The team develops the kept VE ideas into workable and
technically feasible proposals, each one accompanied by a 3. Creative Phase
list of pros and cons, along with cost comparisons.
 How much does it cost? 4. Evaluation Phase
 Compare to original cost.
 Supporting documentation 5. Development Phase
 Team develops descriptions, drawings/sketches, and
lifecycle cost estimates for best options. 6. Presentation Phase
 Team performs all necessary calculations to provide a
recommendation to stakeholders.
During this phase, the team will present multiple options
that shows that the alternative ideas meets or exceeds the
original one.
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Plan or the VE Plan
(6 phases):
The Team will develop the alternative ideas to
completely show that the function of the alternative 1. Information Phase
idea/new system meets or exceeds the original one.
Back from Example 01:
 The Team will determine the added cost for the 3. Creative Phase
protective film of windows, barricades and bollards,
shrubs, and any additional work for the utility lines. 4. Evaluation Phase
 Compare the total additional cost with the total 5. Development Phase
cost of blast and pressure resistant windows as
the cost was based on the original budget. 6. Presentation Phase
 Need to develop supporting documentation to clearly
show that this meets or exceeds the objectives of the
facility.
 Once all the documentation requirements are
completed, the team will proceed to the next step.
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Plan or the VE Plan
(6 phases):
 The team makes a formal written presentation of their 1. Information Phase
findings accompanied by an oral presentation to
clients, users, and designers. In this final stage, the
client can determine which value proposals will be 3. Creative Phase
incorporated into the project.
4. Evaluation Phase
 The recommendation includes cost-value analysis,
life cycle cost estimates, sketches/drawings, and all 5. Development Phase
documentation and information necessary for the
stakeholder/owner to make an informed decision in 6. Presentation Phase
the next steps.
 The recommendation is typically done in a report and
formal presentation form.
 The recommendation should include more than one
option.
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VE Process in Typical Construction Project Plan or the VE Plan
(6 phases):
After finalizing the alternatives and cost savings, the 1. Information Phase
pros and cons of the alternatives, and supporting
documentation, the team will then present the 2. Functional Analysis Phase
options to the Owner without reservation.
3. Creative Phase
At this point, it is the Owner’s decision on whether to
accept any or all, or some of the alternatives for 4. Evaluation Phase
implementation into the project.
Alternatives Original Cost Alternative Cost

Idea 1 65,000.00 46,000.00
Idea 2 38,000.00 28,500.00
Idea 3 42,800.00 37,850.00
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VA Presentation Phase Checklist
The following checklist will prepare  Has the team double-checked your
the value analysis team for the recommendations, costs, and savings?
presentation:
 Has the team prepared back-up
 Is the need for a change clearly material for questions that may be
shown? asked?
 Is the problem defined?  Can use of vu-graph, opaque projector,
 Is the proposal concise? flip charts or blackboard sell your
 Are all the pertinent facts included? ideas?
 Are money savings included?  Has the team established a plan of
 Is your value analysis workbook action that will assure implementation
complete and accurate? of a selected alternate?
 Is your information complete?  Are there pictures or sketches of
before-and-after conditions?
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VA Presentation Phase Checklist
 Is the change described?  Have the recommendations been

 Has the best alternate been fully extended to all areas of possible
documented? application?
 Have all the constraints been  Has the improved value design been
considered? considered for a standard or
preferred practice?
 Has the recommendation been
presented to the most  Has credit been given to all
appropriate responsible manager participants?
or decision maker?  If you were a decision maker, is
 Has the implementation plan there enough information for you to
been developed? make a decision?
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VE Process in Typical Construction Project Plan or the VE Plan
(6 phases):
Implementation Phase
The Executive Management Team has to select the 2. Functional Analysis Phase
value alternative to be implemented and directs the 3. Creative Phase
proponent agency's project team to proceed with the
next steps. 4. Evaluation Phase
It is not the VE Team to decide what options to be 5. Development Phase
implemented.
 The VE method is used to evaluate and make
recommendations during construction phases. Implementation Phase
 The cost-benefit of VE decreases as project
progresses, but on large projects it can be highly
beneficial to use.
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1.
Information
Phase  Some organizations may elect to define
6.
2. the Job Plan as having more or less
Functional phases, but the overall methodology
Presentation
Analysis
Phase remains unchanged.
Phase
 The value study Job Plan typically

includes pre-workshop, workshop,
5.
Development
3. Creative and post-workshop activities.
Phase
Phase
4. Evaluation
Phase
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VA Report Formats II. Information Phase

It must demonstrate that the VA Team has
reviewed the proposed project’s criteria
I. Introduction and objectives and has reviewed
preliminary cost information and
understand project’s expected benefits
Fully describe the project and present
and limitations. The section should contain
the credentials of VA Team Leader at least 6-Subsections:
and Members and should contain the
 Approach
following sub-sections:
 Briefing Process
 Description of the Project
 The Problem
 Value Analysis Team
 Value Analysis
 Costs
 Site Visits
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VA Report Formats
III. Functional Analysis Phase IV. Creative Phase

It must demonstrate that VA Team has defined the
project functions using an active verb and a It must demonstrate that the VA Team
measurable noun. The section must also has employed professional creative
demonstrate that the VA Team has reviewed and techniques to identify other ways to
analyzed these functions to determine which need perform the project's function or
to be improved, eliminated or added to meet the functions
project's objectives. The section should contain at
least 5-Subsections: The Section should contain at least 2-
 Approach Subsections:
 Preliminary and Supporting Functions  Approach
 FAST Diagram
 Alternatives
 Cost-Worth Analysis
 Allocation of Cost by Function and Results of
Cost-Worth Analysis
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V. Evaluation Phase
VA Report Formats

followed a structured evaluation process to VI. Development Phase
select the ideas that offer the potential to
improve the project's value while delivering
developed the selected ideas into
the project's function or functions and
alternatives or proposals with a sufficient
responding to performance requirements
level of documentation to allow decision-
and resource limits. It should contain 5-
makers, including the design team (in a
Subsections:
feasibility study or project management in
 Approach
case of a variations proposals) and the
 Criteria (used to rank and evaluate)
executive management team of the
 Ranking of Alternatives
proponent agency, to determine if each
 Providing the Function
alternative should be implemented.
 Advantages and Disadvantages of
Proposed Alternatives
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VA Report Formats VII. Presentation Phase

VI. Development Phase developed a report, a presentation, or
It should contain 5-Subsections: both, to document the work of the value
 Approach analysis team and its recommendations.
 Sketches, Drawings and Tables The report or presentation documents the
 Cost Estimates value analysis process that led to the
 Life-cycle Costing recommendations and conveys the
 Implementation and Value Enhancement adequacy of the alternative(s) developed
to the implementing agency's Executive
Management Team. It should contain 3-
Subsections:
 Audience at Presentation
 Presentation and Issues Discussed
 Recommendations of the VA Team
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VA Report Formats
VIII. Appendices NOTE:
It should contain 5-Subsections: * Other Supporting Documents refers to

 Summary of information in the VA Report, information that supports the description
i.e., tabulated form showing two columns, of the VA or The Job Plan, such as cost
1-for Parts of the Report and 1- for Brief assumptions and calculations, project
Description. sketches and drawings.
 Credentials of the VA Team Leader and
Members
 Selection of the Value Analysis Team
 Other Supporting Documents*
 Acronyms and Abbreviations
 Bibliographical References
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Wrapped Up:
Value Engineering in Review People involve in VE should be able to

 Value Engineering is Not Cost Cutting Method. establish the following:
 Effective challenge to design criteria
 Value Engineering is a creative structured method of and accepted standards.
achieving an outcome of Highest Quality Product
at the Lowest Cost.  Access and evaluation of operational
and maintenance cost.
 VE focuses on Function or Utility.
 Focus on high-cost areas and replace
 “Value” in value engineering is directly proportional with lower cost.
to function and inversely proportional to cost or  Selection of effective alternatives
simply the ratio of function to cost.
 Value Engineering is Best Executed Early in a

Project.
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How does VE Work?
 VE follows a structural thought process to evaluate option.

 Every VE session goes through a number of steps.
 Gather information, what is being done now?
 Measure performance – How will the alternatives be measured?
 Analysis functions – What must be done? What does it cost?
 Generate Ideas (Brainstorming)- What else will do the job?
 Evaluate and Rank ideas – What are the impacts? What is the cost?
What is the performance?
 Present Ideas/ Sell Alternatives
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The Advantages of Carrying Out VE in Construction
 Cost Savings (one of the Primary Benefits of VE in Commercial

Construction)
 Risk Reduction
 Schedule Improvements
 Improved Design, and Better Collaboration
 Safety and Durability
 Environmental Impact
 Improve the Sustainability and Environmental Impact of a
Project
49
7-Most Significant Factors Responsible for Savings Actions
1. Advance Technology
2. Design Deficiency
3. Excessive Cost
4. Questioning Specs
5. Redesigning Cost
6. Change in User’s Need
7. Feedback from Users.
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The Average Percentage Cost Savings that Value Analysis study can
be generated in a Construction Project:
 10% to 30% of the Project Construction Cost.
The Cost of Value Analysis Study in a Construction Project:
 Less than 10% of the Implemented Savings.
51
References:
Implementing Value Engineering in the Philippines – Juan DeVincenti, CVS-Life
Value Analysis Handbook – National Economic and Development Authority (NEDA)
Value Engineering in Construction – K. Ilayaraja and MD. Zafar Egyaabal
Value Engineering Handbook – Jay Mandellbaum & Danny L. Reed
Value Engineering: A Guidebook of Best Practices and Tools
https://www.valueanalysis.ca/va_in_depth
https://hermosillo.com/value-engineering-explained-in-160-characters-with-examples/
52
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VALUE
ENGINEERING
53
53
VALUE ENGINEERING 3. Value engineering is one of the

professional tools used by government in
order to control unnecessary capital
Please tick the circle with the appropriate answer: expenses and combat corruption.
o Yes
1. The aim of value engineering is to: o No
o Determine the value of overall production.
o Relate values of a work 4. Are value engineering studies a part of
o Minimize the overall cost of production without detailed engineering activities and is
affecting the quality of a product. prescribed in the Government
o All of the above Procurement Reform Act (GPRA)?
o Yes
o No
2. In value engineering approach, the value of the product is:
o Directly proportional to its function and inversely 5. The term “Value” in value engineering
proportional to its cost refers to:
o Directly proportional to its function as well as its cost o Cost
o Inversely proportional to its functions and directly o Depreciation
proportional to its cost o Utility
o Directly proportional to its functions as well as its cost o Selling Price
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VALUE ENGINEERING
8. The criteria for evaluating Value Engineering
in construction projects includes:
Please tick the circle with the appropriate answer: o Cost reduction
o Added quality.
6. In value engineering, “Worth” is value of: o Lifecycle/maintenance
o Service o All of the above
o Product
o Function 9. Is Value Engineering a technique often used
o System before a product has been fabricated?
o Yes
o No
7. Is value engineering and value analysis the same?
o Yes 10. Is Value analysis a technique used to analyze
o No an existing product?
o Yes
o No
55
VALUE ENGINEERING
Please tick the circle with the appropriate answer:
11. In construction project, the most Cost- 12. In value engineering, the term value refers to:
Effective Value Engineering proposal is done
o Functions or utility
during:
Cost
o Pre-construction stage
o Construction stage o Cost
o Post construction stage Functions or utility
o All of the above
o Functions or utility x Cost
o None of the above
56
25/12/2023
Group Workshop #01

Case Study:
Applying VE for a proposal to build a BARANGAY HEALTH CENTER.

The Client/Stakeholders are reluctant to accept the financial feasibility study of
the proposed project. The Client/ Stake-holders decided to VE the design down
to an acceptable cost.
Describe the VA process and identify the likely high-cost elements and systems to apply VE of the
proposed build so that Client/Stakeholders goals and expectations are meet or achieve.
57

Value Engineering

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Value Engineering

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25/12/2023

World War II created difficult shortages of component

Engineers and Project Managers at General Electric (G.E)

 The Medium-Term Philippine Development Plan for 2005-2010

 The 2016 Revised IRR of GPRA incorporated VE in the detailed

VE/VA/VM - all refer to a structured methodology that uses a

What are the types of

Example: Think about Quantifying the Value of Building a Facility.

worth, or What is their performance? Can it be improved?

something. Value The best place to start is to ask yourself:

what performance do you want the project to achieve?

How does VE provide value?

The goal of VE is to maximize function and performance while seeking

Function or Utility (Desired Performance) Worth to you

The Value Ratio describes the relationship between the Satisfaction of

Satisfaction of Needs (Benefits)

the Owner’s and

Example of “Value” in Value Engineering

Monetary Functions include: Using the equation for Value:

What is the difference between

Value Analysis (VA) is the technique used to analyze

What is VE in the Construction Industry?

VE tries to improve the value of the project with

The potential cost

Effects of Value Analysis Saving Opportunities of Value

to thirty percent (10%-30%) of the

Analysis study is usually less than

 The team follow the systematic, creative VE job plan to

 The Team will identify alternatives which will provide the

Step 1: Picking the team or

The VE Team will compose of the following:

Step 2: The Value Analysis Job

Step 2: The Value Analysis Job

Example of Areas to Focus for Value Analysis

Example of Areas to Focus for Value Analysis

 Expensive construction  Specially designed components that

Step 2: The Value Analysis Job

Then proceed to the next step.

It is an essential component of the Value Engineering/Value Analysis process.

Although the function of a project, product or service could be provided in a descriptive

Example of Functional Analysis

The use of two-word descriptions of functions allows the team to communicate in

Example of Functional Analysis

A pencil may be used to make a list, sketch a diagram, or mark a board

Where can Function Analysis be used?

 Defining Project requirements.

 Defining requirements for Information Technology Projects.

Step 2: The Value Analysis Job

VE Process in Typical Construction Project Step 2: The Value Analysis Job

VE Process in Typical Construction Project Step 2: The Value Analysis Job

Some of the rough ideas will be discarded and some

Step 2: The Value Analysis Job

After the Analytical Phase, the Team will proceed in the

Step 2: The Value Analysis Job

VE Process in Typical Construction Project Step 2: The Value Analysis Job

VE Process in Typical Construction Project Step 2: The Value Analysis Job

Step 2: The Value Analysis Job

Alternatives Original Cost Alternative Cost

VA Presentation Phase Checklist

VA Presentation Phase Checklist

 Is the change described?  Have the recommendations been

Step 2: The Value Analysis Job

 The value study Job Plan typically

VA Report Formats II. Information Phase