International Journal of Science and Research (IJSR)

ISSN (Online): 2319-7064

Index Copernicus Value (2013): 6.14 | Impact Factor (2015): 6.391

Concept of Value Engineering in Construction

Industry
Khaled Ali Alabd Ahmed1, R. K. Pandey2
1, 2

Civil Engineering, SHIATS-DU, Allahabad, India

Abstract: Nowadays, Value engineering (V.E.) is considered as a tool of construction management that can help companies to

improve their procedures, services and final products regarding the clients needs, as an end user, with respect to time, cos t and quality.
The V.E. process has evolved from previous methods based on the concept of value and functional approach. These methods were
pioneered by Lawrence D. Miles, in the 1940's and 50's, who developed the technique of Value Analysis (V.A.) as a method to improve
value in existing products. The concept of V.E. / Value Engineering (V.E.) has been developed through the years and numerous
standards and manuals have been created.The wider construction market (U.S.A., U.K., etc.) has identified V.E. value and has used the
practice extensively. The present study aims to clarify the concept of value management in construction industry, via literature review,
and references and books the use of V.E. in global level and to present a short description of the worldwide know-how. That will be
achieved by a historical review of V.E. and by the illustration of the most common definitions and a thorough terminology review. In
addition, we will present three different markets applying V.E. worldwide, the U.S.A., the E.U. and the Japan Standards for V.E.

Keywords: Value engineering, Function analysis, Value management, labour theory value, value planning

1. Introduction
Value engineering (VE) is a structured and analytical process
that seeks to achieve value for money by providing all
necessary functions at the lowest cost consistent with
required levels of quality and performance (AS/NZS, 1994).
VE, which has been widely used in many developed
countries for several decades, is a useful tool that can help
the industry to meet these challenges .
On one hand, the major reasons for choosing VE, according
[1], are to achieve cost saving, establish a clear project
objective and provide creative thinking for design
improvement. This target cannot be met unless there is a
clear cut picture of actual situation of the projects in terms of
time; cost and quality which are crucial cause of concern in
Value engineering process also, so that in order to assess the
process of value engineering, it is necessary to implement the
feedback system during execution of the project.
On the other hand, as a matter of fact, construction projects
are subjected to changes so that there is a requirement of this
issue to have the updated feedback throughout the whole
process of construction project.
Timely and targeted
feedback can able the project management to identify
problems early and make adjustment that can keep the
project on time and budget. Earned Value engineering
(EVE) has proven itself to be one of the most effective
performance measurement and feedback tools for managing
projects which is in close relation with the concerns of value
Value engineering (VE) is a structured and analytical process
that seeks to achieve value for money by providing all
necessary functions at the lowest cost consistent with
required levels of quality and performance (AS/NZS, 1994).
VM, which has been widely used in many developed
countries for several decades, is a useful tool that can help
the industry to meet these challenges. However, reluctance to
use VM often stems from the time that an expensive team has

Paper ID: NOV162492

to be employed to undertake the VE process (Shen and

Chung, 2002). It would therefore be helpful to find a way
that can make the process more efficient and effective to
make the cost of undertaking VE decrease .
VE has been used to improve the value of projects in
government, the private sector, and the manufacturing and
construction industries, and value concepts have spread
worldwide. Concurrent with this growth, a number of other
value improving tools, techniques, and processes emerged,
many of which were complementary to and were integrated
with the value concepts (SAVE International, 2007).
The first use of VE in the construction industry occurred in
the Navy Facilities Engineering Command in the USA in
1963 (Dell Isola, 1982). The application of this technique in
the construction industry expanded quickly as it became a
mandatory requirement in many public projects in USA. In
particular, the required inclusion of VE in the work scope of
construction management services further drove the
application of VE in this industry. After VE entered the
construction industry, approaches have been developed by
the combined effort of academic research and practitioners in
order to fit the unique characteristics of the industry
According to Kelly [2], in a comprehensive review of
briefing studies for construction, the major weaknesses of the
current briefing guides were too general and implicit to offer
real assistance to clients and designers. These guides show
what should be done without explaining how things can be
done. They concluded by suggesting the use of Value
engineering (VE) for the future development of the briefing
guide.
The major reasons for choosing VE, according to Shen and
Chung, are to achieve cost saving, establish a clear project
objective and provide creative thinking for design
improvement.

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International Journal of Science and Research (IJSR)

ISSN (Online): 2319-7064

Index Copernicus Value (2013): 6.14 | Impact Factor (2015): 6.391
Internationally, VE has been recognized as an emerging
paradigm that focuses on continuously increasing the value
provided to the client and is widely accepted as an important
tool in recent management of construction projects. The
construction industry is an important field for VE at the
international level VE is also critical to the success of
projects as it provides a basis for improving value for money
in construction. It also focuses on value rather than cost and
seeks to achieve an optimal balance between time, cost and
quality as it provides a method of integration in the building
process that no other management structure in construction
can provide. Hence, the functional requirements and seeks
overall optimization were explored accordingly (Shen 1995).
This was later endorsed by Liu (2003) who emphasizes the
importance of VE practice to the construction industry, as it
has proven to provide significant benefits to clients if it is
used correctly.
Value Engineering (VE) is connected originally with Value
Analysis aimed at obtaining the necessary functionality level
at the lowest cost without compromising the quality,
reliability, and without deterioration of service and delivery
(Crum, 1973). It is a systematic method to improve the
value of goods and services by using an examination of
function what affects the cost amount. In literature there are
numbers of definition given by the different expertise and
practitioners of VE technique: Miles [3] defined Value
Engineering as a discipline action system, attuned to one
specific need: accomplishing the functions that the customer
needs and wants at the lowest cost. Zimmerman (1982) said
about Value Engineering that it is a proven management
technique using a systematized approach to seek out the best
functional balance between the cost, reliability and
performance of a product or project. Connaught on and
Green (1996) defined VE as a systematic approach to
delivering the required functions at lowest cost without
detriment to quality, performance and reliability. Creativity
and proactive team approach within VE projects was
underlined [4]. Value engineering as a project at the lowest
cost that consists of efficient identification and the
elimination of unnecessary cost without detriment to: safety,
quality, reliability, performance and delivery was identified
by standing (2001). Development of the Value Engineering
concept is associated with General Electric Company, USA.
This method was invented by Electrical Engineer Lawrence.
D. Miles within General Electric Company, who noticed that
many of the substitutes were providing equal or better
performance at lower cost and from this evolved the first
definition of Value Engineering. The General Electric
Company is generally credited with developing the
technique, then known as Value Analysis [5]. In 1954, the
U.S. Navys Bureau of Ships applied the concept, which it
called Value engineering, to reduce costs during the design
stage. The Department of Defense (DOD) accepted VE as a
sensible means of obtaining the best practical value from its
procurements and, in 1961, adopted VE in contract clauses
under the Armed Forces Procurement Regulations (AFPR),
permitting contractor incentives in sharing VE contract cost
reductions.
There are some features of VE that are crucial for its success
such as:

Paper ID: NOV162492

1)Using many widely accepted analysis concepts and

techniques
2) systematic process following job plan
3) focusing on identifying and analyzing the function the
project component(s) or activity fulfils
4) Using creative analysis techniques
5) Performed by a team not associated in any way with the
design team and draws upon the individual and collective
viewpoints, experience, and knowledge of its members
6) providing the needed functions safely, reliably,
efficiently, and at the lowest overall cost
7) Improving the value and quality of the project and
reducing the time to complete the project.
1.2 Research Objectives
To study value engineering methodology in the
construction industry
To Identify the areas of value engineering in construction
industry
To Identifying the importance and benefits of application
of value engineering techniques

2. Historical review of value and V.E.

Karl Marx's 1865 lectures also offer a first definition for
value and especially for a commodity, obviously in a
standard of his days (it is considered by the modern
economists out-of-date by the theory of marginal utility).
Marx distinguishes value between several key uses of the
term value so that for any commodity [6]:
1)Value in use is the usefulness of this commodity, its
utility;
2)Value in exchange is the relative proportion with which
this commodity exchanges for another commodity (in other
words, its price in the case of money);
3)Value without any qualifying adjective refers to the amount
of labor embodied in commodity
2.1 U.S.A (save international) value methodology
standard
Value study team is the key to the successful application of
value study. Although the methodology is important, it has
been proved that a good study team can bring the best
value
The team leader plays important role to the success and
must have thorough training. The members of the team
must also have a good training, both in the V.M. and the
projects in general. These include cost, estimating,
procurement, design, construction etc. [7].
2.2 The Value Methodology Job Plan.
The Job Plan outlines specific steps to effectively analyse a
product or service in order to develop the maximum number
of alternatives to achieve the products or services required
functions (SAVE, 1998). A systematic Job Plan used by the
V.E. is illustrated in Table 2.2.1. The main part of the job
plan is the Value Study stage.

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International Journal of Science and Research (IJSR)

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Index Copernicus Value (2013): 6.14 | Impact Factor (2015): 6.391
This stage includes six steps:
1)Information Phase: Gathering of information to better
understand the project.
2)Function Analysis Phase: Analyzing the project to
understand and clarify the required functions.
3)Creative Phase: Generating ideas on all the possible ways
to accomplish the required functions.
4)Evaluation phase: Synthesizing ideas and concepts to
select feasible ideas for development into specific value
improvement.
5)Development Phase: Selecting and preparing the best
alternative(s) for improving value.
6)Presentation Phase: Presenting the value recommendation
to the project stakeholders.
The V.E. Job Plan consists of three main categories: 1) Prestudy, 2) Value study, 3) Post-study. All phases and steps are
successively executed. However, the team is possible to return
in a previous phase or step within a phase on a repetitive basis.
Table 2.2.1 Value engineering JOB plan

Pre-Study
Collect
User/Customer
Attitudes

Value Study
Information Phase
Complete Data Package
Modify Scope
Function Analysis Phase

Post-Study
Complete
Changes

Complete Data
File

Identify Functions
Classify Functions
Develop Function Models

Determine
Evaluation
Factors

Establish Function Worth

Cost Functions
Establish Value Index
Select Functions for Study

Scope the Study

Creative Phase
Create Quantity of Ideas by

Build Data
Models

Function
Evaluation Phase
Rank and Rate Alternative

Determine Team
Composition

Ideas Select Ideas for

Development
Development Phase
Conduct Benefit Analysis
Complete Technical Data
Package
Create Implementation Plan
Prepare Final Proposals
Presentation Phase
Present Oral Report
Prepare Written Report
Obtain Commitments for
Implementation

Implement
Changes

Monitor
Status

Value=
By the above ratio it is easily pointed out that the
improvement of value depends on the reduction of the
denominator or the increase of the numerator.
3.2 V.E. process description / How does V.E. work
Initially, the Project Manager and the potential client are
having a first briefing by the V.E. Facilitator to discuss if a
V.E study is needed and how it can be applied to support the
potential project. If there is an agreement, a first planning
meeting takes place. This meeting aims to set the objectives
for the study and to identify the constraints. Moreover, the
workshop team members and the timetable for the study are
agreed.
The initial bullet points of the meeting between the
stakeholders are:
The needs for the project
The scope
The deliverables
The key functions and risks.
At this stage, the first opportunities for innovation are
examined and the basic means of implementation are
developed according the economics, considering the required
factors, time and quality. In order to produce successful and
equitable conclusions and actions, the above mentioned team
must consist of stakeholders with the right balance of
knowledge, skills, experience and judgment. This is one of
the best ways to reconcile differences in view between
stakeholders.
3.3 Benefits of V.E

3. Role and application of V.E in construction

industry
3.1 V.E. in general

a) Simplification of methods and procedures resulting in less

recurrent costs and a more efficient process
Savings in time cost and energy
Expedited decision making
Risks can be better forecasted and understood by all
Resources and time wastage can be minimized
Savings can be redirected to add value
Programmers can be staged or phased, allowing progress
b)Better communication and understanding of the projects
objectives
Appropriate quality
Responsiveness to clients priorities
c) An opportunity for the client to formally participate in the
design process
Client insight into the project
d)Improved communication between the parties

4. Results & Analysis

Value in V.E. can be expressed as the operation presented

below, expressing that value correlates to what we get or
want and what we pay for a project. The V.E. study has to

Paper ID: NOV162492

optimize the ratio of required functions over the whole life

cost. In other words value is the satisfaction of needs over the
resources used.

The literature and books and references agreed that the value
engineering can be managed although this is difficult. The

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International Journal of Science and Research (IJSR)

ISSN (Online): 2319-7064

Index Copernicus Value (2013): 6.14 | Impact Factor (2015): 6.391
majority felt that a project management team is best equipped
to manage this process, although this was not unanimous and
with a larger sample the literature and books and references
may have been different. This result reflects the literature
review. Authors held a wide range of different views. The use
of the books and the internet and literature can be defended
equally as well as the use of a Previous studies. All agreed
that decisions made in a project's early stages have the
greatest effect on the final cost quality and time management.
They acknowledged that least money is spent on this stage as
a proportion of the total project budget. All agreed that VE is
an effective construction industry management tool that can
help to bridge the gap between design and construction.
There was a difference of opinion concerning when VE can
offer the greatest rewards, although all did agree that the least
benefits would come from its application in the occupancy
stage
A number of benefits, resulting from the use of VE, were
stated by the sources. These benefits centered on reducing
unnecessary costs, improving constructability and increasing
performance, quality and value. Other perceived benefits
included improved decision making as result of better team
morale and focusing on the design all felt that VE is not
simply a cost cutting exercise
The books and references considered the main barriers to the
implementation of VE to be the adversarial and fragmented
nature of the industry, ignorance, its cost and a lack off or
ward planning. This result parallels the findings of the
literature review. However what is noticeable is that the
culture of the industry and lack of education regarding VE
are thought by the references to be more important than a
lack of senior management support. Recommendations were
given as to how the barriers to the implementation of VE may
be overcome. The most common responses were to include it
as a mandatory service as part of a consultant's terms of
engagement, emphasize front end planning of projects to
ensure time is made available, to educate clients as to its
techniques and benefits and a change in industry culture to
promote a cohesive not confrontational working
environment.

The respondent experts, who answered positively in the

question if they recognize V.E. and other similar terms,
clarified that they are familiar with the terms mainly from
scientific papers and books, secondly from postgraduate
studies thirdly from seminars, conferences and scientific
meetings and finally from experience gained from work
(Graph 3).

4.1 Awareness of V.E

As far as the construction enterprises awareness of V.E. is
concerned it arises that most of them have heard of the term
V.E. or other similar terms such V.M., V.A., F.A., Job Plan
(J.P.). In specific, 88% of the respondents are familiar with
the term V.E. as opposed to 12% who have never heard of
the term VE. or other similar terms (Graph 1).

4.2Application of V.E.
In the question if there is any application of V.E. in any kind
of project in the company only 23.8% of the persons asked

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International Journal of Science and Research (IJSR)

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Index Copernicus Value (2013): 6.14 | Impact Factor (2015): 6.391
answered positively, whereas 76.2% of them answered
negatively, as illustrated in Graph 4

Most of the respondent do not know any other method

relative to the value of a project as opposed to some that do
know, for example Quality Management, Cost Benefit
Analysis and Risk Management. The results are illustrated in
Graph 5

A big percentage of the sample believes their clients would

be very much interested in increasing the value in a project,
through V.E. methodology. However, a small percentage
believes that this is not of great interest from the clients
point of view (Graph 7)

In many E.U. Countries such as the U.K. and Germany, V.M.

is applied in the private as well as in the public sector, where
savings vary between 6% and 20% without impact on time
and quality. The sample was asked whether this may interest
their enterprise, so that the company can gain these profits
and become more competitive in the sector. Obviously most
of them answered positively, although some negative answers
did occur. (Graph 8)

The next question compares the popularity of the methods in

the construction sector between Total Quality Management
(TQM), Six Sigma, Reengineering, and Risk.
Management (RM) and V.M. / V.E. The results are
illustrated in Graph 8 where TQM and V.M / V.E. seem as
the two most popular

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The last question about the use of V.E. examined the reason
why V.E. is not applied The answers were divided between:
is not required by the current legislation, is not required by
the client, lack of know-how and update, as illustrated in
Graph 9.

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International Journal of Science and Research (IJSR)

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Index Copernicus Value (2013): 6.14 | Impact Factor (2015): 6.391
n the question if there is any interest for further update on
V.E. via an informal conference, most of the sample
answered positively (Graph 10).

5. Conclusion
The necessity of effective the application of value
engineering is generally acknowledged by the construction
industry and the findings indicate that VE is recognized as an
effective construction industry Management tool. Many
concede that a variety of problems exist within the
construction industry process which need addressing such as
the amount of complex information to be communicated. The
literature supports the concept that an individual designer's
approach affects the design method which they employ,
endorsing the idea that construction industry is a complex,
creative and undefined process. Management techniques have
a definite origin and a structured development. Design and
management are therefore perceived to have contrasting
interfaces and conflicting agendas. A set of tools to aid
construction management can be identified although these
differ widely in the skills required and the issues dealt with.
The findings recognize VE as an effective design
management gests that VE has not reached its potential in the
tool. Much of the information construction industry. This
lack of implementation is considered surprising especially in
the light of the documented evidence of its potential benefits.
The findings of the literature review indicate that VE is
recognized and accepted. Within the construction industry as
being beneficial to the success of a project However, findings
imply that the industry is relatively inexperienced in using
VE. The education of all participants in the project
development process would lay the foundations for its wider
adoption. However the inference can be drawn from both the
literature review that the entrenched habits which exist could
be moderated by a more multidisciplinary education before
those joining the industry begin to work within their own
professions.
The books supported the findings of the literature review that
the early application of VE within a project's life increases
the rewards which can be reaped from focusing on design
functions and construction objectives, highlighting how the
budget cost can be achieved, while maintaining quality and
performance standards. The only obvious missing benefit
cited by literature that the respondents did not consider was
that VE could be used to benefit other similar work without

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completing another VE study encouraging the use of

feedback and data collection.
The need for change to overcome the problems which beset
the industry is much reviewed and long recognized. Over a
period of time documented evidence has reiterated the
benefits and barriers to the use of VE. However to date the
response from the industry is slow. A holistic approach is
difficult within a fragmented industry where each project is
developed by a multi-disciplinary temporary organization. It
can be surmised that the widespread use of VE techniques in
the US was promoted by government intervention as a
leading client in the construction industry. Elevating the
status of VE as a design management tool by experienced
and regular clients of the construction industry would support
its wider implementation. The study indicated that the present
culture in the UK industry is extremely time conscious. The
industry concentrating on the construction phase as this
activity is Observable and difficult to condense, and often
choosing procurement routes which allow for the design
process to parallel the construction process. Although
evidence shows that it is the decision making or design
process that has the greatest effect on the programming and
cost of later events, the period allocated to it is often reduced.
Embracing the concept of VE as part of effective
construction management would aid competitiveness
construction market. Therefore professionals involved in
managing the design need to understand the conflicting
agenda that exist between design and management and
understand the tools which can aid the management of the
construction process. The decisions made in the early stages
of a project affect all its aspects, yet the industry spends the
least on this stage, in contrast with other industries. There is a
need therefore to review how the budget of a project is
allocated. If this stage of a projects life is considered to be
one which has the greatest impact on the outcome of a
project, then the resources spent on this stage should reflect
its importance. It may be that there is as yet no universal
acceptance of the importance of the construction stage and
without this the standard use of design management tools,
such as VE, will not spread.
Our research suggests that a lack of management support is
not a primary cause of the lack of use of VE as a construction
management tool, which is at variance with the literature
review. The difference could be explained by the perception
within the industry of the extent to which senior management
has the power to change the culture of the industry. The
change culture of the construction industry that the
respondents call for implies that senior management needs to
appreciate the benefits of using V.E as a construction
management tool before its implementation can be increased.

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DRUMMOND,Value Management of Construction
Projects, Blackwell Science Ltd, 2004.

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ISSN (Online): 2319-7064

Index Copernicus Value (2013): 6.14 | Impact Factor (2015): 6.391
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