Guide to Value Engineering

Contents
ABBREVIATIONS .......................................................................................................................................... IV
GLOSSARY ...................................................................................................................................................... V
1 INTRODUCTION ................................................................................................................................. 1-1
1.1 THE PURPOSE OF VALUE ENGINEERING ........................................................................................................ 1-1
1.2 DEFINITION OF VALUE ENGINEERING AND METHODOLOGY ............................................................................ 1-2
2 FUNDAMENTALS OF VALUE ENGINEERING .................................................................................... 2-1
2.1 HISTORY OF DEVELOPMENT ........................................................................................................................ 2-1
Value Methodology Policy in the Philippines .................................................................................. 2-2
2.2 BENEFITS OF VALUE METHODOLOGY TO AN ORGANIZATION ........................................................................... 2-3
2.3 TECHNIQUES .............................................................................................................................................. 2-4
General ............................................................................................................................................. 2-4
The Job Plan ...................................................................................................................................... 2-5
Functional Analysis .......................................................................................................................... 2-5
Weighted Evaluation Technique...................................................................................................... 2-8
Whole Life Costing .......................................................................................................................... 2-12
2.4 THE VALUE STUDY ................................................................................................................................... 2-14
General ........................................................................................................................................... 2-14
The Facilitator ................................................................................................................................ 2-14
Team Selection ............................................................................................................................... 2-16
Workshop Organization ................................................................................................................. 2-17
The Job Plan .................................................................................................................................... 2-19
3 PROJECT PHASE APPROACH ............................................................................................................ 3-1
4 PROJECT SELECTION ......................................................................................................................... 4-1
5 THE HIRING AND MANAGING OF VALUE ENGINEERING CONSULTANTS ..................................... 5-1
5.1 REQUIREMENTS ......................................................................................................................................... 5-1
5.2 SELECTION OF CONSULTANTS ...................................................................................................................... 5-1
6 REFERENCES ...................................................................................................................................... 6-1

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Volumes
Volume 1 Introduction and Overview
Volume 2A GeoHazard Assessment
Volume 2B Engineering Surveys
Volume 2C Geological and Geotechnical Investigations
Volume 3 Water Engineering Projects
Volume 4 Highway Design
Volume 5 Bridge Design
Volume 6 Public Buildings and Other Related Structures

Annexes
A Examples of Value Engineering
B Examples of Functions and Modifiers
C Examples of FAST Diagrams
D Discounted Cash Flows and Recurring Cost
E Checklist
F Creative Blocks
G Reason for Unsatisfactory Result
H Terms of Reference for Hiring Value Engineering Consultants

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Tables and Figures

Table 2-1 Worldwide Development of Value Methodology .................................................................................2-1

Table 2-2 Examples of VE Study Outcomes (FHWA3).............................................................................................2-4
Table 2-3 Weighting Evaluation .................................................................................................................................... 2-10
Table 2-4 Ranking Ideas ................................................................................................................................................... 2-11
Table 2-5 Example Using a Weighting Matrix ......................................................................................................... 2-26
Table 2-6 Evaluation Scorecard..................................................................................................................................... 2-27

Figure 1-1 Opportunity – Cost – Time Schematic.......................................................................................................1-3

Figure 2-1 Generic FAST Diagram .....................................................................................................................................2-8

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Abbreviations
Abbreviation Definition

AGS The Association of Geotechnical and Geoenvironmental Specialists (UK)

AusAID Australian Agency for International Development
AVS Associate Value Specialist (SAVE)
CVS Certified Value Specialist (SAVE)
DBM Department of Budget Management
DPWH Department of Public Works and Highways
FAST Function Analysis System Technique
FHWA Federal Highway Administration (USA)
LRT1 Light Rail Transit 1 (Manila)
NEDA National Economic and Development Authority
NEDA ICC NEDA Investment Coordination Committee
NRIMP-II National Roads Improvement and Management Program – Phase II
PICE Philippine Institute of Civil Engineers
SAVE Society of American Value Engineers
VA Value Analysis
VE Value Engineering
VM Value Management or Value Methodology

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Glossary
Acronym Definition

Function Analysis System A method for analyzing, organizing, and graphically displaying the interrelation of the basic and
Technique (FAST) secondary functions of a system, product, design, process, procedure, or facility.
Life-Cycle Cost Total cost of an item's ownership. This includes initial acquisition costs (right-of-way, planning,
design, and construction), operation, maintenance, modification, replacement, demolition,
financing, taxes and disposal as applicable.
Value Engineering The application of a value methodology to a planned or conceptual project or service to achieve
value improvement.
Value Management Recognizes that value principles are management tools applicable to a variety of problems only
one of which is cost. Internationally, the term has been adopted in preference to Value
Analysis or Value Engineering to differentiate the activity from the engineering functions in an
organization.
Value Methodology A systematic process used by a multidisciplinary team to improve the value of a product or
project through the engineering of its functions.
Worth of Basic Function An estimate of the least expensive way of performing a function, neglecting the actual
application of that function.

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1 Introduction
1.1 The Purpose of Value Engineering
This Guide draws on the content of the NEDA Value Engineering Handbook (NEDA,
2009) and maintains consistency with the requirements of that handbook, whilst
focusing on activities relevant to DPWH and other agencies involved in
infrastructure and building works. The GOAL Value Methodology Pocket Book
(GOAL, 2008) has also been drawn on in drafting this Guide.
VE is the most effective technique known to improve value, and eliminate
unnecessary costs in product design, testing, manufacturing, construction,
operations, maintenance, data, and processes and practices. While its application
to processes and practices is less well known, effectiveness in this area has been
highly successful.
Saving money and, at the same time, providing better value is a concept that
everyone can support. The benefits of optimizing infrastructure expenditures,
constructing more with less money, increasing efficiency and reducing the amount
of resource use must be recognized today and pursued in the future.
In the constant battle to find a better way to fight inflation, validate cost estimates,
and assure all stakeholders that the solutions being proposed are cost effective,
the application of VE comes to the forefront, for both government and private
decision-makers. VE is a proven technique used to combat runaway costs and is a
process proven by countless owners, manufacturers and government entities.
More specifically, VE is defined by an international certification body (SAVE
International) as: "the systematic application of recognized techniques by multi-
disciplinary team(s) that identifies the function of a product or service; establishes
a worth for that function; generates alternatives through the use of creative
thinking; and provides the needed functions, reliably, at the lowest overall cost".
Section 1 of this Guide provides an introduction to VE and Section 2 provides a
discussion on fundamentals of VE including history, benefits, techniques, and a
complete procedure for conducting a Value Study. Section 3 describes the phases
of a project and how VE can be applied in each phase. Section 4 deals with the
selection of projects for VE. Section 5 provides a procedure for hiring and
managing of VE Consultants.
The Guide provides specific guidance for analyzing VE studies to assure that the
studies have been accomplished in accordance with internationally accepted
standards and practices. Most importantly, the information included in these
chapters provides basic guidance in certifying that the study was accomplished
under the direction of a qualified expert, was accomplished by a multi-disciplinary
and certified team of bona fide experts, and was performed following the Job Plan.
The Job Plan is an internationally defined and accepted analytical process for VE.

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1.2 Definition of Value Engineering and Methodology

Value Analysis was conceived during the Second World War, initially to tackle the
problem of shortages of strategic materials.
Products were examined and options to replace materials in shortage with
different materials were developed. This soon led to real VA and the concept of
value:
Value = Function/Cost
From this simple equation we can see that value can be increased by:
a) removing any part or activity which does not contribute to the intended
function
b) providing the same functionality for less cost
c) improving the functionality for the same cost
From VA the ideas of VE were developed and have become fully institutionalized
in the United States in the subsequent decades. Elsewhere in the world the term
VE was considered less suitable to encourage adoption and the use of Value
Management or VM has become more common. American practice is now to refer
to VA/VE, and also more broadly to Value Methodology or VM. This Guide adopts
SAVE terminology and the use of the term VE.
VE, as defined by the Society of American VE International, is "the systematic
application of recognized techniques by multi-disciplined team (s) that identifies
the function of a product or service; establishes a worth for that function;
generates alternatives through the use of creative thinking; and provides the
needed functions, reliably, at the lowest overall cost".
VE may be defined in other ways, as long as the definition contains the following
three basic precepts:
An organized review to improve value by using multi-disciplined teams of
specialists knowing various aspects of the problem under study.
A function-oriented approach to identify the essential functions of the system,
product, process or service being studied and costs associated with those
functions.
Creative thinking, which uses recognized techniques to explore alternate ways
of performing the functions at a lower overall cost or otherwise improve the
design, process, service, or product effectiveness.
VE is predicated on the proposition that people spend their money on
accomplishing functions rather than simply obtain ownership. Concern for our
environment, energy and rising costs, requires that the functional needs of safe
and efficient project implementation be carefully analyzed to obtain these
functions in the most economical manner, with minimal disturbance to the
environment.
VE is often considered a management tool for cost control. In practice, however, it
really is a step-by-step process used in problem solving or in improving a product
or process.

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By definition, VE is a method for obtaining optimum value. The strength of VE lies

in its ability to delineate clear design alternatives and suggest choices based on the
necessity or desirability of a function, the availability of economic means of
achieving that function, and cost-worth relationships without compromising
essential functions, structural integrity, safety and security.
VE is not only effective for identifying and eliminating unnecessary costs; it is also
effective when directed at the conservation of all resources. VE has also proven to
be a valuable aid in improving the reliability, quality, safety, and performance or
products and processes, and in ensuring compliance with an implementation
schedule.
In order to effectively apply the principles of VE, the VE team members must be
knowledgeable and trained in the use of the VE job plan. Value analysts can have
varied backgrounds - a systems analyst, a shopkeeper, an engineer, an accountant,
or a homemaker, but what is most important is that they are certified in the VE
discipline.
A VE study done on a project is not likely to reveal anything startling to the VE
team members. However, when applied at the proper time that is at the earliest
stage of the project development cycle, the VE methodology will result in new and
unique ideas that are value adding. This is what makes VE effective. VE leads to
higher creativity in problem solving by following a precise sequence of steps
known as the VE job plan.
VE has now been developed into a formal series of procedures, with interventions
at key points in the project development cycle. The benefits of early intervention
are now well recognized and Figure 1-1 shows why. The maximum benefits are
obtained by starting the VM process at the concept development stage.

Figure 1-1 Opportunity – Cost – Time Schematic

The VE process is undertaken in the form of a series of workshops, bringing

together expertise in technical areas and in other key areas such as marketing,
logistics, construction and maintenance. The project or product is analyzed and its
functions are identified. From this, ideas for improvement in the design or delivery
can be developed and these are considered and ranked. The designer is then tasked

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with developing the alternative ideas and costing them. Whole Life Costing
approach is incorporated into the VE system.
The details of the workshop, the involvement and background of the facilitator, the
scope of the VE and other detail varies both by country and by individual project.
However the fundamental requirement is a facilitated structured engineering by
an appropriate knowledge group, adequately briefed on the project, with clear
goals and identified outcomes.
In order to deliver VE successfully there needs to be a culture within the
organization and its consultants of “no blame”. It must be understood before the
VE process starts that the benefits of VE outputs come from the combined efforts
of the whole team, and that the original concept or detailed designs will change
during the VM process. If the original designer is considered blameworthy for
failing to identify the potential improvements, then the system will be resisted and
its success will be compromised.
Where external consultants are involved in the design process, they must under
their contract:
Be required to take part in value workshops.
Be required to undertake assessments, redesigns and costing of the
alternatives identified during the VM process.
Accept responsibility for the revised design.
Be recompensed for the additional work they undertake.
If the outcome of the VE process identifies that the original design was below a
reasonable standard then that issue should be dealt with completely separately
and subsequently, so as not to damage the positive approach required in the VE
process.

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2 Fundamentals of Value Engineering

2.1 History of Development
Lawrence D. Miles, an engineer who was employed in the Purchasing Department
at General Electric, conceived VA in the 1940s. He focused on the functions of
manufactured components and created the process of function engineering, which
evolved into a formal practice called VE.
The benefits of VA became readily apparent and the technique was adopted by
many organizations and government agencies during the 1950s. Many
applications beyond product design were developed during the early growth of the
Value Methodology.
The Society of American Value Engineers was incorporated in 1959. The name of
the value society was changed to SAVE International in 1996 to reflect the
worldwide growth of the field of Value Methodology. The Value Methodology
spread out from America in two ways: through the private sector (initially the car
industry to Japan, Korea, India) and through public sector infrastructure. An
estimated chronology of the spread is shown on Table 2-1.

Table 2-1 Worldwide Development of Value Methodology

Country Year

United States 1940’s

Canada 1950’s

Japan 1957

United Kingdom 1966

India 1977

Hong Kong 1990

Australia 1991

Malaysia 2000

South Korea 2003

Singapore 2008

Many individuals and corporations have contributed greatly to the practice of VE

by developing related techniques. These include:
Function Analysis System Technique (FAST) Diagram, which was created by
Charles Bytheway during the 1960s.
Target Costing, which originated at Toyota in 1959.
Quality Function Deployment which was introduced by Yoji Akao in 1966.
Zero and First Look VE in new product development.
VA/VE Tear-down, which General Motors and others developed as a
competitive-engineering during the 1960s and Isuzu further refined during the
1970s.
Theory of Inventive Problem Solving (TRIZ) Systematic Innovation Process,
into which Genrich Altshuller incorporated principles of function engineering.

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The Lawrence D. Miles Value Foundation1 is a nonprofit foundation that strives to

develop, apply, and promote the use of VM worldwide. Its mission-to educate,
innovate, and advocate-is evidenced by the Foundation’s work in bringing the
study of VM to college and university undergraduate and graduate programs in
engineering, architecture and business, as well as by its partnership with
GOAL/QPC to create the Value Methodology pocket guide (GOAL, 2008).
The process of VE and the terminology used has diverged somewhat worldwide,
particularly in UK where Male et al (2005, 2006) have researched the processes
and recommended some alternative approaches. The UK Management of Value
Toolbox (MOV, 2011) was adopted for Government. However the SAVE
methodology remains the most widely adopted and is followed in this Guide.

Value Methodology Policy in the Philippines

The earliest identified activity relating to VE in the Philippines was a 40-hour
workshop, undertaken by consultants for the US Navy Facilities Engineering
Command Pacific Division, OICC SOWESTPAC, Philippines in 1985. It is reported
that local civilian professionals were invited to this workshop. The Workbook from
that workshop is still in circulation.
In 2006 under NRIMP-II 5 x 40-hour training courses, VA Workshop, and
production of a DPWH project Workshop Manual were undertaken in DPWH by an
external consultant over a period of three months.
In 2008-9 AusAID funded a project to introduce VA/VE into NEDA, and a VE
Handbook was produced (NEDA, 2009). The AusAID input was provided by SAVE
Certified Value Specialists. Training was given by a CVS under that project, both to
NEDA staff and to external parties including academics.
According to NEDA procedures, projects over a certain threshold are required to
be considered for VA/VE, and the decision is taken by NEDA Investment
Coordination Committee (ICC). The thresholds are:
Intended >PHP50M
Current >PHP500M
Proposed >PHP1B
RA9184: An Act providing for the Modernization, Standardization and Regulation
of the Procurement Activities of the Government and For Other Purposes took
effect in January 2003. Revised implementing Rules and Regulations for RA9184
were approved in Resolution 03-2009 and state, in Annex A: Detailed Engineering
for the Procurement of Infrastructure Projects (page 78):
Value Engineering – For major projects as specified by the agency, VE shall be
conducted according to accepted standards and practices. VE shall analyze
alternative schemes of achieving the projects objectives in order to delete or
reduce non-essential features and lessen the life cycle costs of the projects without
sacrificing the quality and integrity of the structure, while maintaining its
essential function, performance, and safety.

1
www.valuefoundation.org

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The Philippine Development Plan 2011-2016 states:

……. the following policy reforms shall be implemented:
Strengthening the capacity of NEDA and other government agencies in VE / VA
and Risk Engineering and Management to ensure that infrastructure projects
are not over-designed or over-specified and to minimize cost-overruns, project
implementation delays, and changes in scope of works;
Incorporation of VE/VA and Risk Engineering in the guidelines and processes
of the NEDA ICC;
These reforms were recommended under the 2009 Philippines-Australia
Partnership for Economic Governance Reforms (PEGR)-funded Reform Agenda
006-07 on Institution Strengthening of the NEDA and other oversight agencies on
VE, contract preparation, and performance monitoring of infrastructure projects.
It also notes that:
Development initiatives across infrastructure subsectors shall be coordinated and
integrated. Intended outcomes are better realized if there is a coordinated and
integrated strategy for infrastructure initiatives.
The development and institutionalization of VE within DPWH will therefore clearly
contribute to the development goals of the country.

2.2 Benefits of Value Methodology to an Organization

Benefits of the VM process are normally expressed in terms of cost savings, though
this should not be the only measure.
Experience in the United States is that a VE study can generate recommendations
to eliminate between 10% and 30% of the project's construction costs. The
designer/ user usually accepts about half of these recommendations, providing a
cost avoidance of at least 5% (FHWA, 2007). Historically, the cost of a VE study is
usually less than 10% of the implemented savings, giving a benefit/cost ratio of
around ten.
The FHWA in the United States collects information annually on VE
accomplishments achieved within the Federal-aid Highway Program, including the
projects administered by Federal Lands Highway. For VE studies conducted during
the design phase of projects, the FHWA tracks the number of studies conducted;
proposed and implemented recommendations. A summary of the VE study
outcomes for the period 2008 – 2012 is shown in Table 2-2. Additionally, similar
information is compiled for the VE change proposals (VECP) that are submitted by
contractors during the construction of the projects. For 20122, the average savings
reduced to 3.8%; however, the most notable statistic is the acceptance level of
recommended changes, which averages 41% but varies by state from 0% to 100%.
The report prepared by FHWA in 2007 (FHWA, 2007) identified the lack of
acceptance of VE recommendations as a major area of loss of benefit of the process.

2
http://www.fhwa.dot.gov/ve/vereport.cfm

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NEDA (2009) provide examples of cost savings achieved worldwide. Case studies
in other countries have shown savings of 30% or more and benefit/cost ratios of
VE of over 30.
A 2008 report3 identified the Ho-Nam High Speed Railway project in Korea as
having reduced cost by 3.8% but also increased performance by 6.1% to achieve
an overall value improvement of over 10%. This assessment was undertaken using
an extension of the Caltrans VE approach.

Table 2-2 Examples of VE Study Outcomes (FHWA2)

Annual Average Proportion of Cost/Benefits

FHWA 2008 – 2012 Unit over 2008-2012 as a Percentage Compared
with Construction Cost
Number of VE Studies Number 389
Cost to Conduct VE Studies and US$ Million 13.5 0.04%
Program Administration

Estimated Construction Cost of US$ Billion 31.2 100%

Projects Studied
Total Number of Proposed Number 3045
Recommendations
Total Value of Proposed US$ Billion 4.4 14.1%
Recommendations
Number of Approved Number 1303
Recommendations
Value of Approved US$ Billion 1.7 5.4%
Recommendations
Return on Investment n:1 125

Examples of value analysis are provided in Annex A.

2.3 Techniques

General
Among many techniques used to solve problems, only the VE approach calls for
function engineering followed by the application of creative thinking techniques.
Each step of the VE job plan (called phases) includes several tasks. To apply the VE
job plan, two important factors must be recognized:
An effective VE effort must include all phases of the job plan, as described
below. Omission of any phase will hamper the accomplishment of the
objectives. The amount of attention given to each phase, however, may differ
from one project to another.
A successful VE study requires a team effort. The cooperation and active
participation of several people produces synergy. This group dynamic plays a
key role in developing new ideas, and illustrates that the results of a team of
experts is greater than the sum of the effort of a number of individuals.

3
http://www.value-eng.org/2008conference/Park_HM-Multi-Level_Performance_Measurement.pdf

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The Job Plan

VE principles consist of key questions, techniques, and procedural tasks used in
pursuing the objective of the VE job plan. The objective is to achieve design
excellence by completing the seven phases described below; the outputs of these
phases are expanded upon in Section 2.4.5.

2.3.2.1 Phase 1: The Information Phase

The Value Team has reviewed the project design, objectives, and the preliminary
cost information. They understand the limitations on the project as well as the
expected benefits.

2.3.2.2 Phase 2: Function Analysis Phase

The team has defined the project functions using a two-word active
verb/measurable noun context. The team has reviewed and analyzed these
functions to determine which need improvement, elimination, or creation to meet
the project's goals.

2.3.2.3 Phase 3: Creative Phase

The team has employed professional creative techniques to identify other ways to
perform the project's function(s).

2.3.2.4 Phase 4: Evaluation Phase

The team has followed a structured evaluation process to select those ideas that
offer the potential for value improvement while delivering the project's
function(s) and considering performance requirements and resource limits.

2.3.2.5 Phase 5: Design Development Phase

The team has developed the selected ideas into alternatives (or proposals) with a
sufficient level of documentation to allow decision makers to determine if the
alternative should be implemented.

2.3.2.6 Phase 6: Presentation Phase

The team leader has developed a workshop report and/or presentation that
documents and conveys the adequacy of the alternative(s) developed by the Value
Team to the decision-making body of the proponent agency (e.g. a Management
Team or Executive Review Board).

2.3.2.7 Phase 7: Implementation Phase

The Executive Management Team has selected the value alternative to be
implemented and directs the proponent agency's project team to proceed with the
next steps.

Functional Analysis
The functional analysis requires the identification of function, modification to
achieve clarity, and the development of the functional analysis diagram, as
described in the following sections.

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2.3.3.1 Identify Functions

A user purchases an item or service because it will provide certain functions at an
acceptable cost. If something does not perform as intended, the item is of no use to
the user, and no amount of cost savings will improve its value.
Actions that sacrifice needed utility of an item reduce its value to the user. On the
other hand, functions beyond those that are needed also are of little value to the
user. Thus, anything less than required performance is unacceptable; anything
more is unnecessary and wasteful. To achieve the best value, carefully define
functions so their associated costs may be quantified.
Often there is a temptation to look at an item and say that the function it performs
is the required function. But this is not always true. Defining the function shows
one precisely which characteristics of the design are required.
Determine functions as soon as sufficient information is available for accuracy. All
members of the VE study group should participate in function analysis because the
determination of the required function(s) is basic and vital to the successful
application of the subsequent phases of the job plan.
After the team has developed the functional description, estimate the worth of
performing each required function. Compare the determined worth against the
estimate of the item's cost. This comparison indicates whether the study will
provide an opportunity for value improvements.
The objective of the VE study is to develop a design that closely approaches the
established worth.

2.3.3.2 Define the Functions

Attempts to identify and define the function(s) of an item can often result in several
long descriptions. While this method may describe the function(s) satisfactorily, it
is neither concise nor workable enough for the VE approach to function. In VE,
function is expressed using two words: an "active verb" and a “measurable noun”.
The "active verb" defines the action required (it may generate, support,
control, restrain, pump, protect, transmit, etc.).
The "measureable noun" describes what is acted upon (electricity, load,
temperature, force, liquids, surfaces, sound, etc.). It must be measurable and
understood because a specific value will be assigned to it in the evaluation
process, when cost is related to function. For example, the function of a water
service line to a roadside rest area could be defined as "provides service." This
service, not being readily measurable, does not enable us to seek alternatives
intelligently. On the other hand, if we define the function as "transports water,"
the noun in the definition is measurable, and accepted alternatives can be
determined based on the quantity of water being transported.
The system of defining a function in two words, a verb and a noun, is known as
two-word abridgment. This abridgment represents a skeletal presentation of
relative completeness. Advantages of this system are that it forces conciseness
and avoids combining functions or attempting to define more than one simple
function at a time.

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2.3.3.3 Modified Definition of Function(s)

The definition of a function as a two-word abridgment is standard practice.
However, there are cases when functions may be defined in more than two words,
provided that a clear definition of the function is the end result. It is permissible to
use a compound or a combination of adjectives, participles, or nouns if they result
in better understanding of the function by the team members.
Examples of the uses of modifiers are shown below:
Adjective: Generates electrical power
Participle: Protects recording mechanism
Noun: Measures hydraulic flow rate
Further examples of appropriate verbs and nouns are given in Annex B.

2.3.3.4 FAST Diagram

In 1964, Charles Bytheway developed a system for function analysis that has
become known as the Function Analysis System Technique (FAST). This
diagramming technique has been widely used since 1965 by value engineers
throughout the world as a tool to correctly identify the interrelationship of the
functions under study.
As in the case with most VE tasks, the development of a FAST diagram is best
accomplished as a team effort. The interplay of different viewpoints leads to
deeper thinking about the subject and, therefore, a more thorough conduct of the
information phase in the Job Plan.
The preparation of a FAST diagram of, at least, the first choice alternatives during
the Design Development Phase, allows for a re-examination of the solution.
Rethinking at this point can identify areas for additional savings that may have
been overlooked. A comparison of the FAST diagram for the original design and
that of the proposed alternative can be a valuable sales tool during the
presentation phase. A FAST diagram has great value as a communication tool,
because it is stated in functional terms that almost everyone can understand, no
matter how technical or complex the item may be.
As shown on Figure 2-1, the FAST diagram identifies the breakdown of functions
starting on the left with HOW a function is achieved, and on the right with WHY it
is required. The scope of the problem needs to be defined at an early stage so that
the analysis does not wander outside its required boundaries.

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Figure 2-1 Generic FAST Diagram

Annex C shows typical FAST diagrams, and also the FAST listing for a remedial
work in landslide areas in the Philippines.
The latter listing does not provide the full power of diagramming, as the functions
linkages are not identified; however, for complex projects it provides a means of
displaying the resulting data from a FAST workshop activity.

Weighted Evaluation Technique

The purpose of the weighted evaluation technique is to provide a more objective
method to evaluate subjective attributes and rank competing ideas for
consideration. Weighted evaluation is a two-step procedure. In step 1, the team
determines the criteria or attributes against which to evaluate each idea. The team
members determine how much importance each one will have in choosing the best
idea. In step 2, the team lists all the ideas and evaluates them against each attribute,
then scores and ranks them.
Step 1-Determining Criteria and Weights
1. Determine the subjective criteria or attributes for evaluating your proposals.

The attributes, features, or criteria you pick normally relate to the subject of
the study. For example, a manufactured product may be judged on its
reliability, durability, ease to manufacture, development effort, customer
acceptance, and so on - A car might be judged on its handling, style,
acceleration, operating cost, and so on.
Each criterion used should meet minimum user owner needs. That is, if safety
is being compared to cost, the comparison is not between unsafe conditions

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versus lower costs, but increased safety over the minimum required safety
versus cost.
Cost may be a criterion, but it is not recommended since all proposals must
also pass a business case evaluation.
2. Define the criteria so all team members understand them.

The more elements of criteria that are compared to each other, the better. This
reduces the chance that one or two elements will receive such weight that they
swing or govern the decision regardless of how the other elements score.
3. List all the criteria on the evaluation form, assigning each a letter of the
alphabet as shown in the Table 2-3.
4. Use a paired comparison to determine the weight to be used for each criterion.
Paired comparison is a technique based on the understanding that any person
or group of people can select between any two items or, if they cannot choose,
can call them equal in importance.
Compare each criterion to another in turn. First, ask which is more important,
A or B. In the example of initial cost versus maintenance, the answer is A.
Next, ask how much more important that answer is, rating it major, medium,
or minor - that is, giving it three, two, or one points. Again, in the example,
initial cost A is medium in being more important than maintenance and is thus
recorded in the scoring matrix as A-2.
Continue to compare A with C, then A with D, and so on, until all criteria are
compared with each other and recorded in terms of their importance. Note
that, in the example, when B is compared with C, a choice cannot be made
between them, so the selection is recorded in the scoring matrix as B/C.
All judgments of the relative importance of criteria are between minimum and
maximum performance levels, or between needs and desires, with the intent
to determine the relative importance of each in order to optimize them later or
make tradeoffs.
5. Add the total number of each letter of the alphabet recorded in the scoring
matrix. This is the raw score of the weight for each of the criteria selected. For
example, on the first row of scoring matrix, criteria A have scored 2, 1, 2 and 3
giving a total of 8. So the number 8 is transferred to the Weighting Evaluation
Table under column ‘Raw Score’ against the row ‘A Initial Cost’.
If one criterion receives a zero score, it means that the attribute is not
important to the team in evaluating the idea, and it can be dropped from
further consideration. If, however, the team disagrees with this automatic
conclusion, giving it a raw score of one can save the evaluation criteria. This is
demonstrated in Table 2-3. Notice the Raw Score for criterion D “Aesthetics”
has a value of “1” even though “D” does not appear in the scoring matrix.
6. Reviewing the raw score, determine the weight of importance of each of the
criteria on a scale of one to ten, with ten being the highest and one being the
lowest. Remember that not all criteria are created equal.
Prepare a scoring matrix as shown on Table 2-3.

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Table 2-3 Weighting Evaluation

SCORING MATRIX

B C D E F G H

A A-2 A/C A-2 A-3

B B/C B-3 B/E

C C-3 C/E

D E-3

DETERMINATION OF WEIGHTS

Project Title Project ID

HVAC Small Office Generic

Phase Date
Design Development Phase

Goals, Desired Criteria, Functions, Features Raw Score Assigned Weight

A Initial Cost 8 10
B Maintenance 5 6
C Energy Usage 6 8
D Aesthetics 1 1
E Reliability/Performance 5 6
F
G
H

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Step 2-Rank Each Idea

List each idea on an evaluation matrix similar to that shown in Table 2-4. Be sure
to list the current idea or present way as the first idea on the list. This is the one
that you are comparing with your new ideas.
Table 2-4 Ranking Ideas
RANKING IDEAS

Energy Reliability
Initial Cost Maintenance Aesthetics
Usage Performance

WT ASSIGNED
10 VALUE 6 8 1 6 TOTAL
PRESENT WAY
5 E E E E E RANK

One rooftop unit 4 VG VG VG VG VG 5

One mech. room 3 G √ G √ G

2 F F √ F √

1 √ P P P P
Subtotal 10 18 16 3 12 59
IDEA 1 5 √ E E E E

4 VG VG VG VG VG
One thru-wall unit 3 G G G √ √ 1
One rooftop Unit 2 F √ √ F F

1 P P P P P
Subtotal 50 12 16 3 18 99

IDEA 2 5 E E E E E
4 VG VG VG VG VG
3 √ G G G √ 4
2 F F √ √ F

1 P √ P P P
Subtotal 30 6 16 2 18 72
IDEA 3 5 E E E E E
4 VG VG VG VG VG
3 G √ √ √ √ 3
2 √ F F F F

1 P P P P P
Subtotal 20 18 24 3 18 83
IDEA 4 5 E E E E E
4 √ VG VG √ VG
3 G √ G G G 2
2 F F √ F √
1 P P P P P
Subtotal 40 18 16 4 12 90

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7. List the criteria and the weights you have just established across the top of the
form.
8. Take one criterion at a time and score all ideas against it.

Score each idea as:

- excellent - five points
- very good - four points
- good - three points
- fair - two points
- poor - one point
Multiply each idea’s score against the assigned weight at the top of the page
and record the subtotal as shown.
9. After each of the criteria is scored, one at a time and in turn, add up the
subtotals of each and record the raw score as shown.
10. The preferred solution with the highest score is ranked first, the next lowest
ranked second, and so on. In the example, note that the present way is ranked
fifth out of five. This means that any idea on the list is preferred.
If the team wants to press on with an idea that does not come out as good a rank
as the team expected, then analyze what causes that effect and brainstorm ways to
mitigate it during its development and presentation. A low score could indicate
potential roadblocks from future decision makers.

Whole Life Costing

In considering the value of an item or process, the team should consider the overall
life cycle cost of the item or process. In some cases, a higher initial cost of an item
could result in reduced life cycle costs. Similarly, a lower initial cost may result in
more frequent maintenance and shorter life cycle than a higher initial cost item.
Consider the following major factors when determining the life cycle cost of an
item:
Expected life of item
Construction (initial) cost
Maintenance and operation cost
Salvage value
Discount rate
The expected life of any object is, simply put, how long the item is expected to last.
Some items are used up at the end of their life cycle, but most can be maintained
indefinitely. When the cost of maintenance becomes excessive, however, these
items are replaced. Roads, bridges, drainage structures, etc., can be maintained
indefinitely, but at some point the cost of repair becomes so high that replacement
is more cost effective. This point of replacement, or major reconstruction, is the
life cycle of that item.
Construction cost is simply the cost to construct the item. Identify this during the
investigation phase of a VE study, usually from the construction estimate. If an item
is purchased rather than constructed, use the purchase cost of the item.

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Operation and Maintenance (O&M) costs are the costs associated with owning,
maintaining, operating, and using an item, or system. There are two types of O&M
costs, recurring and non-recurring. Recurring O&M costs are ordinary, routine,
repetitive maintenance expenses. On a highway, they include grass-cutting,
replacing traffic markings, and the cost of electricity for lights, drainage
maintenance, and guardrail maintenance. Consider these costs as a lump sum,
annual payment. Non-recurring O&M costs include replacement or irregular
activities, such as resurfacing a highway, re-decking a bridge, and crack and joint
sealing. Consider these costs individually.
Salvage Value is the value of selling or re-using items and material at the end of the
life cycle. For example, some items with salvage value are guardrail, recycled
pavement, bridge beams, rails, etc.
Another type of salvage value occurs when a highway’s life cycle is completed, and
a major reconstruction is undertaken. The salvage value of the old road would be
the right of way, grading, sub-base, etc., that will not have to be purchased or
performed for the reconstruction.
Perhaps the most difficult part of life cycle cost engineering to understand is the
time value of money. Put simply, money in the future is not as valuable as money
today. This has nothing to do with inflation, but with the flexibility of having the
money now, and the opportunity costs of not having the money now. The adopted
discount rates vary considerably from country to country; NEDA uses 15%. That
means that the value of a peso decreases by 15% for every year in the future. For
example, one peso in one year is worth PHP0.85 today.
Over the life cycle of different items or systems, costs are incurred at different
times. Because of the time value of money, it is not fair or consistent to compare
these costs at face value. For a fair comparison, refigure costs to today's pesos, by
applying a discount rate to bring future costs back to their value today.
To find the Life Cycle Cost of an item or system, the following steps are generally
followed:
Identify the expected life of the project element. This can be based on
background information, experience, policy, or by arbitrarily selecting an
expected life.
Identify construction costs of all alternatives. In most cases, this information
will be provided. If not, find it during the investigation phase of the VE study.
Identify recurring maintenance costs by year. This information is available
from maintenance staff, repair records, material usage, or accounting records.
Identify non-recurring maintenance costs by year. This information is also
available from maintenance staff, repair records, material usage, or accounting
records.
Identify salvage values, if any. For items such as right of way, grading, etc., the
initial cost can be used for the salvage value. Other items may require an
estimate on the part of the VE study team.
Using the discount rate chart, multiply recurring costs by the Uniform Series
present worth factor for the appropriate final year. For an item with a 20-year
life span, multiply the total annual recurring cost by the Uniform Series present

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worth factor for 20 years. This gives the total of all annual recurring costs for
the 20-year period.
Using a discount rate chart, multiply non-recurring costs by the Single
Payment present worth factor for the appropriate year. Multiply a cost
occurring during the 5th year by the Single Payment present worth factor for
year 5. This gives the present value of that payment in year 5 only. Multiply
other non- recurring costs by the appropriate factor individually.
Using the discount rate chart, multiply the total salvage value by the Single
Payment present worth factor for the appropriate (last) year. Find the salvage
value of an item in the last year of the life span, which is a single event. The
present value of the salvage is a NEGATIVE cost, since it returns money to the
owner. Subtract the salvage value from the total Life Cycle Cost of ownership
when finding the total cost.
The result of totaling the values from the computations gives the present worth
of the life cycle cost of the project.
As an alternative to the use of discount rate charts, use spreadsheet functions such
as the Excel NPV Net Present Value function. An example of a discount rate chart
is given in Annex D.

2.4 The Value Study

General
A Facilitator and the requirements for this position lead the value study, and the
stages of the study, are described in the following sections.

The Facilitator4
A facilitator is an individual who contributes structure and promotes participation.
He or she is a “content neutral” party who will help by supporting the team
member’s work more effectively, by doing their best thinking that enables the team
to achieve effective solutions. An example is a team leader offering team members
a method with which they can develop their own strategies to resolve a problem.
Although the leader is not giving answers, he or she has not abandoned the
members either. He or she attends the meeting to guide the members to their own
solution step-by-step.
A meeting chairperson can use the facilitation role to run those portions of a
meeting when they want the participants to offer their ideas and generate actions
they will implement. A leader can use facilitation whenever he or she wants
members to work a problem or activity themselves.
Instead of being a player, facilitators act more like a referee. They watch the action
more than participate in it. They control the pace and which activities happen and
when. They keep their finger on the pulse and know when to move on or bring
closure. Most important, facilitators help members define and reach his/her goals.

4
Facilitating with Ease! Core Skills for Facilitators, Team Leaders and Members, Managers, Consultants, and Trainers,3rd
Edition. Copyright © 2012 by John Wiley and Sons, Inc. Reproduced by permission of Jossey-Bass, an Imprint of Wiley.
www.josseybass.com

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When someone takes up the challenge of facilitating, they’re stepping into a very
clearly defined set of roles and responsibilities. These roles are:
To help the group define its overall goal, as well as its specific objectives.
To help members assess needs and create plans to meet them.
To provide processes that help members use their time efficiently to make high
quality decisions.
To guide group discussion to keep it on track.
To make accurate notes that reflect the ideas of members.
To help the group understand its own processes in order to work more
effectively.
To make sure that assumptions are surfaced and tested.
To support members in assessing their current skills as well as build new skills.
Using consensus to help a group make decisions that take all members’
opinions into account.
To support members in managing their own interpersonal dynamics.
To provide feedback to the group so that they can assess their progress and
make adjustments.
To manage conflict using a collaborative approach.
To help the group communicate effectively.
To help the group access resources from inside and outside the group.
To create an environment where members enjoy a positive, growing
experience while they work to attain group goals.
To foster leadership in others by sharing the responsibility for leading the
group.
To teach and empower others to facilitate: working oneself out of a job.
The main theory underpinning facilitation concerns the difference between
process and content. This theory states that in any interaction between people,
there are always two dimensions, the content and the process.
The content of any meeting is what is being discussed. It’s the task at hand, the
subjects being dealt with, and the problems being solved. The content is expressed
in the agenda. The content is the verbal portion of the meeting. It is obvious and
typically consumes the attention of the members.
The other element of any interaction is the process.
The process is how things are run. It refers to the methods, the procedures, the
format and the tools used. The process also includes the style of the interaction,
the group dynamics and the climate that is established. The process is silent and
harder to discern. It is the aspect of most meetings that’s largely unseen and often
ignored, since people are largely focused on discussing the content.

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When a meeting leader offers their opinion with the intent of influencing the
outcome of discussions, he or she is acting as the content leader.
When a meeting leader becomes neutral and non-directive in relation to the
content, he or she becomes the process leader or facilitator.

Team Selection
Depending on the scope of the project and time constraints for completion, VE
studies can vary from a small to large team effort, and may also have several people
assigned to support the team if and when their particular skills are needed.
Although there is no set size for an efficient VE team, five persons, supported on a
part-time basis by other elements of the organization (e.g. the proponent agency),
is usually a sufficient number. Selection of members to perform the study should
be based on the following criteria:
Use only staff/employees who have had VE training to support the VE team.
Team members should have attended an appropriate VE workshop-training
seminar, and should have familiarity with the VE process. If such experience is
unavailable, include a suitable orientation during the conduct of the study.
Identify work experience or background of the team members related to the
project under study. A mix of talent is desired to achieve different points of
view. Typical team members might include :
- Geotechnical engineer
- Right-of-way specialist
- Materials specialist
- Environmental specialist
- Structural engineer
- Design engineer
- Landscape architect
- Traffic operations specialist
- Maintenance engineer
- Resident engineer
- Cost estimator
- External stakeholders
The selection of individual team members is of paramount importance. As a
minimum, the team should be staffed with a higher level of experience and
expertise than the team performing the project or technical design. Team members
must have excellent communication skills and work easily within a team
environment. It is very important that the team be interdisciplinary. The particular
makeup of team members will vary depending on what point of project design or
implementation the VE study is occurring. At the preliminary planning or Concept
Development point more emphasis would be on staffing the team with planning
expertise rather than heavy with technical expertise. When VE is done at the
project Design Development Phase, Detailed Design or implementation stages, the
criteria for selecting the VE team members shift towards the technical
qualifications and construction expertise.

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The viability might be assessed with the help of a commercial knowledgeable

person from the private sector. The broader the representation the better the ideas
are generated, particularly at the concept stage. A Contractor would also provide
useful insights.

Workshop Organization

2.4.4.1 Workshop Site

No matter what application of VE is being planned, an important factor for a
successful event is choosing the proper location for the workshop. When
determining the proper location for a VE workshop, consider various factors, such
as ease of reviewing the facility and operations, minimizing travel expenses, and
minimizing distraction of the team members during the workshop.
For a VE workshop for a construction project, there may under some
circumstances be advantages to conducting the workshop close to or at the project
site, enabling a formal site visit and access to maintenance and operations staff.
This is especially true of a rehabilitation/ renovation project.
In all cases, a strong VE facilitator will be required to minimize distraction. But
access, travel, and distraction are the factors that need to be considered before a
workshop location is chosen.

2.4.4.2 Workshop Room Environment

Choosing the proper workshop room environment is also important to the success
of the VE study. Several items should be considered:
Size of space
Seating room for team and guests
Wall space for hanging worksheets and exhibits
Extra table space for exhibits and products
Location of space in the facility or manufacturing plant
Natural lighting/windows
Temperature control
Computer/internet access
Teleconference capability
Choose a room that is large enough to easily accommodate the VE team members,
the owner, the user, the designer and other visitors when seated at tables. In
addition, for manufacturing studies, it is helpful to have extra tables available in
the room to display the products or products being studied as well as any
competitive products or projects that will be analyzed during the workshop.
Choose a room where charts, graphs, drawings, and other required documentation
may be hung on the walls so the team can reference these documents throughout
the VE effort.
It is the VE facilitator's responsibility to ensure that the room has the space and
location to properly accommodate the study team and management team. The
actual arrangement of the room may be flexible based on the type of study, table
shape and size, and room shape. Generally, however, tables arranged at a forty-five

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degree angle to the front of the room are useful because the team members can
easily see information projected on a screen or wall and face each other. In all
cases, it is useful to have natural lighting/ windows, computer Internet access, and
temperature control. It is the facilitator's responsibility to arrange the room prior
to the workshop to accommodate the group and visitors.

2.4.4.3 Required Materials and Logistics

In order to properly facilitate a VE study, materials and logistical support are
required, including:
Computer
Projector and screen
Flip charts, stands, pads and marker pens
Tape and thumb tacks
Sticky notes
Extension cords
If they are not available, the VE facilitator will provide these items. Inquire what
will be allowed on the walls of the workshop room so the paint or wall coverings
are not damaged.

2.4.4.4 Facilitation Skills

A certified value professional should be chosen to facilitate a VE workshop since
he/she has the training and experience to manage the team, implement the
methodology, and maximize the benefits to the client and customers. During the
pre-workshop coordination meeting, the facilitator will establish the workshop
guidelines, which may include items such as:
Requiring workshop attendance at agreed-upon times (some team members'
participation may not be necessary for the full workshop).
Requesting that non-workshop related e-mail, Internet, and phone usage occur
during breaks and lunch.
Eliciting participation and consensus from all team members.
Maintaining the agenda and being punctual about starting times.
Encouraging the team members to contribute to the preparation of the
management presentation and participate in the presentation of results.
The VE facilitator should follow each step of VE. The effectiveness of the study will
be enhanced if each phase is implemented. Activities and tools that should be
included in a VE study include:
Reviewing competitive products, processes, or projects for comparative
purposes.
Reviewing other value models, such as time study, cost, life-cycle cost, space,
quality, risk, and sustainability models.
Performing functional analysis.
Preparing FAST diagrams.
Creating a cost/function diagram or similar relational technique.
Using brainstorming or other creative techniques.

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The Creative Phase includes:

Allowing discussion to clarify an idea not understood by the team.
Deferring judgment of ideas to the Evaluation Phase.
Encouraging each team member to participate in generating ideas.
Encouraging piggybacking of ideas already mentioned.
Limiting domination or control by any one-team member.
Emphasizing that there are no bad ideas and all ideas are important.
Conducting the Creative Phase "by function" as established by the cost/
function priorities or other function-based value models.
Developing a complete business case during the workshop.
Conducting a session presenting the results for management and the decision
makers.
If these guidelines are followed, the team will achieve the goals of the workshop
and true value will be recognized as the team presents its finding to the project
stakeholders at the conclusion of the workshop.

The Job Plan

2.4.5.1 Introduction to the Phases of the Job Plan

The phases of the job plan consist of information, function analysis, creativity,
evaluation, development and presentation. They are described in the following
sections.

2.4.5.2 Specific Value Engineering Project Plan Features

In preparing the VE plan, it is important that at the minimum, it must contain the
following features:
Detailed description of the objectives and scope of the project to assure
direction of the study.
Description of the qualifications of the team members, who must possess a
variety of relevant work skills and experience to conduct the project.

2.4.5.3 Phase 1: Information Phase

The objective of the information phase of the VE job plan is to acquire knowledge
of the design to be studied and to assess its major functions, cost and relative
worth.
This phase should provide a thorough understanding of the system, operation, or
item under study by an in-depth review of all of the pertinent factual data.
Complete information is essential to provide a solid foundation for the VE study.
The complexity of the VE project, the amount of information available, and the
study schedule will all influence the level of effort devoted to the information
phase. The second intent of this phase is to determine the functions being
performed and those that must be performed by the item or system under study.
VE identifies two classes of functions: the basic or secondary function and the
esteem or aesthetic function.

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The basic function of a design element satisfies the user's need for having an action
performed. The secondary function may or may not support the basic function. An
aesthetic or esteem function fulfills a desire to form something more than what is
needed.
These functions are not mutually exclusive and are frequently present in designs.
Good value occurs when the user is provided with the essential functions, and the
unessential ones he desires, at a reasonable cost.
An outline of the Information Phase is given in Checklist 1 and further checklists
on information gathering, general information, engineering and design, methods
and processes, material and procurement and function and worth are given in
Checklist 2 to 8 in Annex E.

2.4.5.3.1 Understand the Item, System, or Operation Under Study

There are three important actions to take in order to fully understand the VE study
that must be done:
Gather all Types of Information
Get the Facts
Get all Available costs
Gather all Types of Information. The VE team should gather all relevant
information, regardless of how disorganized or unrelated it may seem when
gathered. The data should be supported by credible evidence, where possible.
Where supported facts are not obtainable, the team should obtain the opinions of
knowledgeable persons. The information sought is seldom found in
comprehensive form in one place. The by-word for any VE study is "Record
Everything."
Information gathering may be subdivided into separate tasks and assigned to
individual team members. Various types of data, which may be obtained, are listed
in Checklist 2 in Annex E.
The team should obtain information from credible sources. There are two basic
principles in this area. The first is to seek information from multiple sources, and
the second is to seek the best source for the information desired. The following are
typical sources from which the required information might be obtained:
People Source. Project managers, designers, operators, maintenance, architects,
contractors, fabricators, suppliers, and expert consultants.
Data Source. Planning documents, drawings, computations, design analyses and
calculations, specifications, material lists, cost estimates, schedules, handbooks,
engineering and maintenance manuals, commercial and government standards
and codes, test and maintenance reports, user feedback, catalogs, technical
publications, previous study data flies, management information systems,
conference and symposium proceedings, and universities.
Complete, Pertinent Information. The type of data available will depend upon
the status of the design in its overall life cycle that is whether it is in preliminary
or final design or under construction.

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A set of design objectives and a statement of requirements may be all that is

available early in a project cycle. For an older, standard design, such useful data as
performance under use, maintenance characteristics, failure rates, and operational
costs may be available. In addition to specific knowledge of the project, it is
essential for the team to have all relevant available information concerning the
technologies involved, and to be aware of the latest applicable technical
developments. The more that factual information is brought to bear on the
problem, the higher the possibility of a substantial cost reduction.
Get the Facts. Get specific information about the item. Avoid generalities, which
serve only to protect the status quo. Work on each function individually before
attempting to combine them into a single multi-functioning project. The danger in
a generalized statement is that if one exception can be found, the statement is
proven wrong. If the proposal depends upon a generalized statement, the validity
of the entire study could be compromised.
Get all Available Costs. To make a complete analysis of any project, the total cost
of the item, the cost of each component and a breakdown of the cost of each design
component that are needed.
The team should obtain accurate and itemized cost estimates for each proposed
design to determine the alternative offering the greatest cost reduction.

2.4.5.4 Phase 2: Function Analysis Phase

2.4.5.4.1.1 Determine Functional Cost And Worth

Functional Cost
Functional cost is the method chosen to perform the function under consideration.
Where an item serves one function, the cost of the item is the cost of the function.
However, where an item serves more than one function, the cost of the item should
be pro-rated to match each function.

Functional Worth
Worth is the most inexpensive way to perform a function. Once all functions are
identified as basic or secondary and unnecessary functions discarded, the team
establishes the worth of a function, without considering where or how the function
is used. Functional worth determination is perhaps the most difficult step in VE,
but it is an indispensable step.
It is a highly creative endeavor because worth is a subjective rather than absolute
or objective measure. Skill, knowledge, and judgment play a major role in
determining the quantitative aspect of worth, in terms of pesos.

Life Cycle Cost Model

Throughout the VE job plan, the team should keep in mind that value is maximized
when performance is reliably achieved for minimum total cost. Thus, satisfactory
performance throughout the desired life cycle of the product is essential to good

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value. Value engineers look beyond initial cost. The costs of operation,
maintenance, and disposal or replacement must also be considered.
A complete life cycle cost model should include an engineering of the following
items calculated in terms of present value:
Capital cost - initial cost of construction, design, land, legal fees, other related
costs.
Maintenance cost - the cost of regular maintenance patrol, repair, salaries of
maintenance personnel, and maintenance contracts.
Rehabilitation / replacement cost - the cost of replacing materials, equipment
or other elements during the life cycle of the entire facility.
Refer to Checklist 8, Annex E for detailed requirements of the Information on
Function and Worth.

2.4.5.5 Phase 3: Creativity Phase

The objective of the creativity phase of the VE job plan is to "brainstorm" the
functions of design elements identified in the Information Phase, and develop a
number of alternatives to each. An outline for the Creativity Phase is:
Understand and control the positive and negative factors in creative thinking.
Plan for creative sessions.
Select the creative techniques to be used.

2.4.5.5.1 Positive and Negative Factors

The results achieved through the use of creative thinking, especially brainstorming
techniques, will vary with the creative ability of the individual. However, one can
enhance one's creativeness through conscious effort toward the development of
attributes such as those listed below:
Observation: Alertness and awareness of conditions that exist.
Problem Sensitivity: The ability to recognize when there is a problem.
Constructive Discontent: An attitude of questioning the status quo.
Motivation: Willingness to expend the time and energy to reach a given goal.
Flexibility: Adaptability and openness to change.
Originality and Resourcefulness: The ability to conceive a great number of new
and unique ideas that reaches beyond everyday solutions.
There are also factors that inhibit the creative process. One should recognize such
mental blocks and make an effort to eliminate them from one's thinking. These
blocks to creativity are outlined in Annex F.

2.4.5.5.2 Plan for Creative Sessions

During the creativity phase of the job plan, direct the team's creative effort towards
the development of alternative means to accomplish the needed functions. Do not
begin consideration of alternative solutions until the team thoroughly understands
the problem. All members of the VE task group should actively participate, for the
greater the number of ideas conceived, the more likely that better quality, less
costly alternatives will be among them.

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Challenge the present method of performing a function. Technology is

changing so rapidly that the rules of a few years ago are probably obsolete.
Create new ways (alternatives) for performing the necessary function(s) more
efficiently (lower total cost) or effectively. Take advantage of new products,
processes, and materials.
Use Creative Techniques. Use as many creativity techniques as necessary to get
a fresh point of view. Adopt a positive mental approach to any problem. In
developing ideas, do not allow negative thoughts or judicial thinking.
Concentrate on creating as many ideas as possible on how the function can be
performed. After writing down all ideas, consider all possible combinations to
determine the best method of performing the function.
Make every attempt during this phase to depart from the ordinary patterns,
typical solutions, and habitual methods. Experience indicates that it is often
the new, fresh, and radically different approach that uncovers the best value
solution(s).

2.4.5.5.3 Creative Thinking Techniques

Several techniques are available for use to the value engineer during the creativity
phase. Use them singularly or in combination, depending on the project under
study and the preferences of the team leader. Some of the more widely known and
used techniques are outlined below:
Free Association Techniques. Free association of ideas is the fruit of both the
conscious and subconscious mind. In fact, the subconscious mind is the most
creative portion of the brain, but the conscious portion forms the input.
Brainstorming. This creative approach is an uninhibited, conference type, group
approach, based upon the stimulation of one person's mind by another's. A typical
brainstorming session consists of a group of four to eight people spontaneously
producing ideas designed to solve a specific problem. The objective is to produce
the greatest possible number of alternative ideas for later exaltation and
development. Observe these rules during brainstorming:
Critical critiquing must be withheld. This means controlling the natural tendency
to evaluate ideas instantaneously:
Criticizing by word of mouth, tone of voice, shrug of shoulders, or other form
of body language that indicates rejection is not permitted. Come and encourage
"free-wheeling". The wilder the idea, the better; it is easier to tame down than
to think up.
Applying the technique of "hitchhiking" or "piggybacking" to expand on the
ideas of others by offering many variations (synergism).
Combining and improve ideas.
Setting a goal in number of ideas, or time, to force hard thinking.
The brainstorming process involves holding a freewheeling group discussion, with
the group leader questioning, guiding, and occasionally supplying problem-related
information. All ideas are listed so that all members of the group can see as well as
hear the ideas. The use of a flip chart and crayons, or felt tip pens, is preferable.
The filled sheets can be taped to the walls so that they are constantly in view.

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Refer to Checklist 9, Annex E for detailed requirements of the creative phase.

2.4.5.6 Phase 4: Evaluation Phase

The objective of the evaluation phase of the VE job plan is to analyze the results of
the creativity phase and, through review of the various alternatives, select the best
ideas for further expansion.
Evaluation Phase Outline:
Perform preliminary screening to separate the best ideas.
Evaluate the alternatives to aid development of solutions.
Determine criteria and objectives.
Weight the alternatives.
Weight the criteria and objectives of the project.
Compute the numerical rating.
Rank the alternatives.
Select the best alternates for development.
During creativity, the group makes a conscious effort to prohibit any judicial
thinking so as not to inhibit the creative process. Now the ideas produced must be
critically evaluated for acceptance.
Use the key questions listed below as the basis for a set of evaluation criteria to
judge the ideas:
How might the idea work?
Can it be made to work?
What is the cost?
Will each idea perform the basic function?
Which is the least expensive?
Can it be modified or combined with another?
What are the chances for implementation?
Will it be relatively difficult or easy to make the change?
Will the users' needs be satisfied?
What is the savings potential, including life cycle costs?

2.4.5.6.1 Preliminary Screening Techniques

Several techniques are available to evaluate alternate ideas. Examples are as
follows:
Comparison Technique. This technique is a method of comparing the various
features of all of the alternatives under consideration.
Advantages Versus Disadvantages Technique. In this technique, list the
advantages and disadvantages of each alternative. Then sort the ideas based
on the number of advantages and disadvantages of each. Choose those ideas
with the greatest total advantage for further evaluation.
Ranking Technique. The ranking technique allows the evaluators to assign a
numerical rating to the alternates. Start this process by judging an excellent
idea to be worth 5 points; a good idea, 4 points; a fair idea, 3 points; a poor
idea, 2 points; a very poor idea, 1 point. Group all 5-point ideas and evaluate

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further. Use the same method on all 4-point ideas, and, if necessary, on the 3-
point ideas.
Probabilities Technique. In this technique, assign subjective probabilities of
success to the implementation of acceptable ideas. A probability close to one
means that the idea has a good chance of being implemented. A probability
close to zero means the idea has little, if any, chance of being adopted.
Estimating Alternatives. Rank the remaining alternatives according to an
estimate of their relative cost-avoidance potential. Base the ranking on relative
estimates comparing each of the alternatives against the original design
method for providing the function. Develop the surviving alternative further to
obtain more detailed cost estimates. Proceed to more detailed cost estimates
only if the preceding step indicates that the alternative is still a good candidate.

2.4.5.6.2 Weighting Criteria and Objectives

The method most commonly used for the evaluation process is the criteria scoring
matrix. By comparing each criterion against the other and assigning a measure of
importance.
Table 2-5 shows an example of a "weighting matrix" used in this method. Measures
of importance may be as follows:
4 = Very Major Preference
3 = Major Preference
2 = Minor Preference
1 = Slight Preference
In the case of ties, each criterion is assigned 1 point.
It is seldom that "objectives" or "criteria" will be of equal importance; some should
have greater influence on the final decision than others. A weight factor or weight
of importance can then be introduced. Weights from 1 to 10 are often used with
the highest number given to the criteria with the most importance and the other
raw scores are adjusted in proportion (rounded off).
Following the development of "Weights of Importance", an analysis matrix is used
to analyze each alternative option being considered is initially judged on a 1 (Poor)
to 5 (Excellent) basis and that score is recorded in the lower portion of the square.
This number is then multiplied by the "Weight of Importance" number and
recorded in the upper quartile of the square. Finally the sum of these numbers is
recorded as a "Total".
Do not arbitrarily discard any idea; give a preliminary evaluation, as objectively as
possible, of each idea to determine whether or not there is some way the idea can
be made to work. These totals are then used as a tool to aid the team in arriving at
the "Best" alternative but should not be considered as totally conclusive.
In this example an individual is considering the purchase of an automobile and
wishes to utilize the "Matrix-Weighted Evaluation" process to objectively
determine the best value of three automobiles being considered. In order to
accomplish this, the individual identifies the criteria he/she wishes to consider and

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records them on the matrix sheet. For this example the criteria are: cost,
appearance, comfort, performance, and safety.
Next, the individual weighs each criterion against the other. In this example the
decision is that cost is better than appearance by a factor of "2" same for cost
versus comfort; and cost is better than performance by a number of "1". This
process is continued until each criterion is compared to all other criteria.
Next, each of the Letter scores is added and the sum recorded below as a "Raw
Score" and then weighted as described above. Finally it is shown that Automobile
A is favored by a score of 86 over B (80) and C (77).
The example of a Weighing Matrix uses information to illustrate the method. The
actual information for a project should be used in the Weighting Matrix.

Table 2-5 Example Using a Weighting Matrix

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An alternative and somewhat simpler approach, adopted for a contract evaluation,

is shown on Table 2-6.

Table 2-6 Evaluation Scorecard

Tender Evaluation Scorecard Conforming Bids Alternative Bids

Contractor 1

Contractor 2

Contractor 3

Contractor 4

Contractor 5

Contractor 6

Contractor 7

Contractor 8

Contractor 1

Contractor 2

Contractor 4

Contractor 5

Contractor 6

Contractor 7

Contractor 8
Weighting

Generic

Quality 5 10 10 10 10 10 10 10 10 10 10 5 10 5 10 5 15

Risk (10)

Cost risk 6 12 12 12 12 12 12 12 12 6 12 12 12 6 6 6 6

Time Risk 4 8 8 8 0 8 8 8 0 8 8 0 8 0 4 0 4

Environmental Impact 10 20 20 20 20 20 20 20 20 20 20 30 30 20 20 20 20

Time (10)

Start 5 10 10 10 10 10 0 10 10 0 10 10 10 10 10 10 10
La
La
ck
ck
of
of
D
Da
House at
ta
Delivery 2 2 2 2 2 2 2 2 2 2 0 4 0 4 0 a

Overall 3 3 3 0 3 3 0 3 0 0 3 3 3 3 3 6 6
Not Not Not
Mar Mark Mar
Cost 9 9 18 18 0 27 0 18 0 0 18 ked 36 ed 9 ked 0

Community/Beneficiary
Acceptance 9 36 36 36 36 36 36 36 36 36 36 0 27 36 36 0 36
11 11 11 12 11 11 13 10
Total 0 9 6 93 8 88 9 90 80 7 60 4 86 2 47 97

Maximum likely result. Needs more information to assess

Unacceptable

Struck out of Evaluation Committee Meeting

Source: Barry, 2009

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2.4.5.7 Phase 5: Design Development Phase

The objectives of the Design Development Phase of the VE job plan are to collect
additional data, analyze thoroughly those best alternatives selected during the
evaluation phase, and prepare cost estimates and initial designs that will ensure
acceptability and ultimate project implementation.
Design Development Phase Outline:
Determine sources for additional information.
Ascertain technical feasibility of the selected alternatives.
Determine economic feasibility of the selected alternatives.
Present findings in detailed change proposals.
Develop implementation plan.
This phase is an objective appraisal of the alternatives that provide the best value
for reliably performing the required functions. During this phase the most
promising alternatives selected during the evaluation phase will be further
developed into detailed alternative designs. The intent is to obtain and present
convincing data regarding design changes and costs for presentation to
management.
The best alternatives are completely developed, with the assistance of experts and
specialists, as required. Recommended design changes, materials, procedures, new
forms, changes to standards and policy, all costs, and implementation
requirements have to be documented. Develop each alternative until enough data
has been accumulated to prove it is the best choice. If there are other similar
alternatives that are also options to the existing situation, develop the next best
idea enough to prove its potential. If management rejects the team's preferred
alternative the second alternative may serve as a fallback recommendation that is
still an improvement over the existing design.

2.4.5.7.1 Design Development Phase Techniques

Use Search Techniques. Develop a list of the names of specialists and
suppliers who have the knowledge needed in developing the proposals, using
references and phone communications.
Consider Alternate Products and Materials. In developing ideas one should
give consideration to all possible design solutions, including different
products, and materials, as applicable.
Consult Specialists. To obtain better value in design, consult the most
knowledgeable specialists available to answer questions on technical and
construction problems. If the functions have been defined correctly, using
precise verbs and measurable nouns, the area of knowledge needed for value
can be identified. For example, "support weight" would indicate that a material
specialist or structural engineer/designer could contribute. While
consultation can be done by telephone or mail, having a personal meeting with
the specialists is usually more desirable. Effective use of specialists can remove
many potential roadblocks. The value analyst must be able to:
- Define the required functions and the cost problem.
- Indicate the importance and priority of the problem.
- Make the specialist a part of the project.

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- Direct the specialist’s efforts.

- Give credit for his/her contribution.
- Ask him/her to identify other specialist or sources of assistance.
Consult Suppliers. Each industry employs a unique group of suppliers,
particularly in the structural field, including personnel with the latest
information on structural shapes, pipe culverts, cements, chemical additives,
etc. Encourage your suppliers to suggest alternatives, other materials, design
modifications, etc., to learn from their experience. In design, do not demand
unnecessarily stringent requirements just to be on the safe side. Over-
specification may be safe and easy, but it is an expensive shortcut. Solicit
suggestions for improvement from the suppliers, and ask what there is about
the design that causes high cost. In early planning, thoroughly describe the
functional and technical requirements of the project, indicating those that are
critical and those where some flexibility exists. Keep abreast of the services
your suppliers have to offer, and maintain an up-to-date file of new services as
a potential source of ideas leading to tangible cost savings in future planning
and design.

2.4.5.7.2 Procedure
General. Subject each alternative to: (a) careful engineering to insure that the
user's needs are satisfied; (b) a determination of technical adequacy; (c) the
preparation of estimates of construction and life-cycle costs; and (d) a full
consideration of the costs of implementation, including redesign and schedule
changes.
Develop Specific Alternatives. Follow those alternatives that stand up under
close technical scrutiny to the development of specific designs and
recommendations. Prepare sketches of alternatives to facilitate identifying
problem areas remaining in the design. Perform a detailed cost engineering for
proposed alternatives to be included in the final proposal.
Testing. Perform any tests required to demonstrate technical feasibility before
the alternative is recommended for implementation. Often the desired tests
have already been conducted by another agency. Ask for a report on those
tests. If not available, the VE team may arrange for the necessary testing and
evaluation. Required testing should not delay approval of a proposal when: (a)
Risk is low; (b) Consequences of less success would involve nothing more
serious than less cost avoidance; (c) The element being tested involves an
intangible or subjective factor; and (d) The test is normal confirmation
procedure after an action is taken.

2.4.5.7.3 Develop Implementation Plans

Anticipate problems relating to implementation and propose specific solutions to
each problem. Particularly helpful in solving such problems are conferences with
specialists in areas such as: inspection, environmental, legal, procurement,
materials, and planning. Develop a specific recommended course of action for each
proposal that details the steps required to implement the idea, who is to do it, and
the time required. Refer to Checklist 10, Annex E for detailed requirements of the
Design Development Phase.

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2.4.5.8 Phase 6: Presentation Phase

The objective of the presentation phase of the VE job plan is to put the
recommendations before the decision-makers with sufficient information that the
decision-makers will accept the proposals. The checklist requirements for the
presentation Phase (Checklist 11) are referenced in Annex E.
Presentation Phase Outline:
Anticipate roadblocks to be overcome
Prepare written proposal
Summarize study
Identify expected benefits / disadvantages
Make recommendation of specific action
Suggest an implementation plan of action
A VE recommendation is a challenge to the status quo in any organization. It is a
proposal for improving value and providing a beneficial change. The success of a
VE team is measured by the cost avoidance and value improvement achieved from
implemented recommendations. Regardless of the merits of the recommendation,
the net benefit is zero if they are not accepted and implemented. Presenting a
recommendation, and subsequently guiding it to implementation, often requires a
greater effort than the proposal's actual generation.
The initial presentation of a recommendation must be concise, factual, accurate,
and conducted in such a manner that it creates management's desire to accept and
implement the change. Selling a recommendation depends to a large extent on the
use of good human relations. Present the recommendation in such a way as to
avoid any personal loss or embarrassment to those related to the study item. Give
proper credit to those who contributed and to those responsible for
implementation. The information contained in the VE recommendation will
determine whether the proposal will be accepted or rejected. Although sufficient
information may be available to the team, this information must be documented in
the proposal.
Since management must base its judgment on the documentation submitted with
a proposal, sufficient data must be provided to the reviewer to reach an informed
decision.

2.4.5.8.1 Written Proposal

Always complete the VE study with a written report detailing the VE
recommendations. Supplement the written report with an oral presentation of
study results. The systematic approach of the VE job plan includes the careful
preparation of a written report, from which a more concise oral presentation will
evolve.

2.4.5.8.2 Gaining Value Engineering Acceptance

Several hints that appear to be most successful in improving the probability of
acceptance are discussed in the following paragraphs:
Consider the reviewer's needs. Use appropriate terminology to the
organization and position of the reviewer. Each proposal is usually directed

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toward two audiences. The first audience, which is technical, requires

sufficient detail to demonstrate the feasibility of the proposed change. The
second audience, which is administrative, is one for whom the technical details
can be summarized, while the financial implications are emphasized. Long-
range effects on policies are usually more significant to the manager than to
the engineer.
Prepare progress reports. The manager who makes an investment in a VE
study expects to receive periodic reports with estimates of potential outcomes.
These reports assure top management awareness, support, and participation
in the VE program. Managers are seldom motivated to act by a one-time
exposure at the final presentation, no matter how just the cause.
Warn the value engineering team of objections early on. Early disclosure
of potential changes can serve to warn the VE team of any objections to the
proposal. This early warning will give them an opportunity to incorporate
modifications to overcome objections. lf management has been kept informed
of progress; the VE presentation may be only a concise summary of final
estimates, pro- and-con discussion, and perhaps formal management approval.
Relate benefits to organizational objectives. VE recommendations that
represent advancement toward an objective are most likely to receive
favorable consideration from management. Therefore, ensure that the
presentation exploits all of the advantages that a VE recommendation may
offer toward fulfilling organizational objectives and goals. The objective may
not only include cost avoidance but also the attainment of some other mission-
related goal of the manager.
Support the decision-maker. The cost avoidance of the recommendations is
likely to be improved if the proposal is promptly implemented. Prompt
implementation, in turn, depends upon the expeditious approval by the
individuals responsible for a decision in each organizational component
affected by the proposal. Identify these individuals and conduct the entire VE
effort under their sponsorship. Like any other well-prepared staff report, each
VE report should:
- Satisfy questions the decision-maker is likely to ask.
- Permit him/her to preserve his professional integrity and authority.
- Imply assurance that approval would enhance management’s Image.
- Include sufficient documentation to warrant a favorable decision with
reasonable risk factors (both technical and economic).
Adequate Return. To gain serious consideration of VE proposals by
management, include adequate evidence of satisfactory return on the
investment. Often, current contract savings alone will assure an adequate
return. In other cases, life cycle or total program savings must be considered.
Either way, evidence of substantial benefits will improve the acceptability of a
proposal.
Show Collateral Benefits. VE proposals often offer greater value benefits than
the immediate cost improvements specifically identified.
Some of the benefits are collateral in nature, and difficult to equate in monetary
terms. To increase the likelihood of acceptance of VE recommendations clearly
identify and completely describe all collateral benefits. Some typical collateral

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benefits are reduced maintenance, energy conservation, improved aesthetics,

better environmental quality, lower replacement cost.

2.4.5.8.3 The Value Engineering Workbook

The workbook documents all actions and efforts expended during the study. It
should be a complete and ready document to facilitate preparation of the summary
report and support the team's recommendations.
The VE team compiles a workbook throughout the life of a study, starting with the
information phase. If properly maintained during the project, the workbook will
require no additional preparation.
The type of information that should be recorded in the project workbook for each
project is listed in Checklist 12, Annex E.

2.4.5.8.4 Reasons for Rejection of Value Engineering Recommendation

Failure to provide adequate documentation is a major cause for proposal rejection.
Some typical reasons for rejection are indicated below. Further details of reasons
given for unsatisfactory outcomes are described in Annex G and form a basis for
risk analysis and mitigation during the value study.
Failure to Maintain Project Integrity. It is safe to assume that any approval
authority will want positive assurance that the integrity of the project is
maintained.
Technical Supporting Information Incomplete or Inaccurate. Provide all
salient technical information. Accompany it with proof of previous successful
use or tests supporting the change proposal.
Cost Engineering Incomplete or Inaccurate. Credibility of cost information
is of major importance. Erring on the conservative side with cost estimates
tends to gain more favorable consideration than presenting inflated claims of
savings. Although approval authorities know that cost information must
usually be estimated, reveal the basis and sources of the team's estimates.

2.4.5.8.5 Written Reports

Clear communications should be the basic function of all writing. No matter what
the purpose of the writing, the result should be the transfer of thought. The idea
you have may be top-rate, but until you've explained it clearly to others, neither
your organization nor you will gain from it.
One of the ways to improve upon your written reports is to observe these ten rules
of clear writing:
Keep sentences short. Long sentences make reading difficult.
Present simple thoughts and expressions.
Use familiar words.
Avoid using unnecessary words.
Put action in your verbs.
Write the way you talk. The written word sometimes gets "stuffy".
Use terms your reader can picture.
Write within your reader's experience.

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Use variety in expressions.

Write to express; not impress.

2.4.5.8.6 Visual Aids

Good graphic illustrations can translate a large mass of numbers into a simple
understandable management language. But entirely different yardsticks measure
the documentation on which a presentation is based, and the visuals that interpret
that documentation.
Documentation is based on detailed findings. The facts, figures and statistics that
make up the documentation should be as complete, up-to-date, detailed, authentic,
fully organized, and thoroughly indexed as possible. The visuals summarize the
situation at a glance. The charts, graphs or other visuals used in a presentation
should be as few in number and as significant, simple and free of detail as it is
possible to make them, pinpointing the high spots that the briefing seeks to
identify, clarify and establish.

2.4.5.9 Phase 7: Implementation Phase

The objective of the Implementation Phase of the VE job plan is to ensure that
approved proposals are rapidly and properly translated into action in order to
achieve the savings or project improvements that were proposed.
Implementation Phase Outline
Develop an implementation plan
Execute the plan
Monitor the plan to completion
Even after formal presentation, the objectives of a VE study have not been fully
attained. The recommendations must be converted into actions; hence, those who
performed the study and the manager who requested the study must all maintain
an active interest until the proposal is fully incorporated into the design or plans.
A poorly implemented proposal reflects discredit on all concerned. Where
unexplained delays are encountered, a polite follow-up note may serve as a
reminder to the responsible authority, pointing out that those who made the study
are available for assistance. An approved VE proposal should not be permitted to
die because of inaction in the implementation process.

2.4.5.9.1 Implementation Investment

The team needs to emphasize the need to invest time or funds in order to save
money when submitting value change proposals. Managers must provide funds or
personnel time for implementation to achieve the benefits of VE.
Successful implementation depends on placement of the necessary actions into the
normal routine of business. Progress should be reviewed periodically to insure
that any roadblocks that arise are overcome promptly.

2.4.5.9.2 Expediting Implementation

The fastest way to achieve implementation of an idea is to effectively utilize the
knowledge gained by those who originated it. Whenever possible, the VE team

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should be required to prepare initial drafts of documents necessary to revise

handbooks, specifications, change orders, drawings and contract requirements.
Such drafts will help to assure proper translation of the idea into action, and will
serve as a baseline from which to monitor progress.

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3 Project Phase Approach

Projects go through a number of phases:
Planning (including feasibility studies)
Design
Construction
Maintenance
Decommissioning
Each of these stages is capable of being analyzed using the VE approach. However
the initial focus should be on the Planning and Design phases, since VE can be
introduced to these stages within the current structure and regulations of DPWH.
VE at Planning Phase (feasibility stage) is known in SAVE terminology as the Zero
Look. It would examine the nature of the project, space and functionality of
projects, rather than detailed engineering options.
VE at Design Development Phase (Second Look or the 40 Hour Study) is the
major focus of VE and identifies through FAST approach the individual functions
of every part of the project. At this stage alternative engineering options are
considered and adopted when appropriate. This has to be conducted at the early
stages of the design (around 30% completion stage).
VE at Detailed Design Stage (The 95% or Audit) is generally undertaken only if
the project is not proceeding satisfactorily, either through budget estimate
overrun or technical problems. It is intended to identify a way forward that can
achieve the functionality of the project and overcome the identified problems. This
VE Stage is not a standard option.
VE at Construction Stage offers a number of possibilities; the workshop can be
undertaken during the procurement process to identify ways in which Tenderers
can minimize their costs. Alternatively the process can be built in to the contract,
which allows the Contractor to submit Change Proposals developed using VE
techniques; the savings can then be shared between the Client and the Contractor
in a manner set out in the contract. These approaches would require changes to
procurement regulations and laws, and should be considered as part of the long-
term strategy once VE is established. Introduction into Design and Build and PPP
projects would have similar potential benefits and be included for consideration
at that time.
Post Completion Audit differs from the normal VE workshop in that it does not
aim to add value to the project under consideration but rather to learn lessons
from the VE undertaken previously in the project for the benefit of future projects.
It should always be undertaken by the Value Unit for projects for which VE
workshops have been undertaken, and can consist of a simple questionnaire to the
stakeholders, interviews with major players, or a full workshop, depending on the
nature and outcome of the project.
VE during Maintenance offers opportunities in maintenance savings on complex
infrastructure, by means of the standard VA methods, and can be considered once
VE is well established in the Department.

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VE for Decommissioning would be applicable for complex decommissioning such

as a chemical plant, port or other major infrastructure. At present, DPWH does not
become involved in significant decommissioning of this nature but it should be
included in long-term strategy for assistance to other agencies, if required.

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4 Project Selection
The key to project selection is to identify candidate projects for a VE study. The
projects should have the potential to achieve maximum cost avoidance, energy
savings, or other benefits, such as a shorter construction schedule through a
complete VE. It is also important that the right team members are chosen for the
study.
Proper selection is vital to the success of the entire VE program. As VE resources
are limited, a major criterion in project selection should be the potential benefit
from the resources invested.
There are certain qualities or aspects of a proposal that serves as indicator for
possible VE. The following areas of high cost or causes of high cost, which may
indicate poor value, should receive the majority of the VE effort.
Projects appropriate for undertaking VE are those that are of sufficient size to
justify the costs of the VE study, sufficiently complex that they require the analysis
and will provide benefits from the study, and where the stakeholders will support
the undertaking of the study, which might result in some time delay in completion
of the stage under study to provide benefits in the overall delivery.
Project selection in DPWH requires a short-term and a long-term strategy. Starting
with the larger and more complex whilst resources are limited and moving
towards a more comprehensive approach in the longer term when resources are
more plentiful would be the recommended way forward. A final target of all
projects over PHP100m has been recommended; this can be reviewed as the VE
Unit develops; however it will always be the case that very small projects will not
provide value for money from the VE activity, and should be improved by trickle-
down from lessons learned from larger projects.
The Champion in consultation with the VE Unit Head and with relevant
stakeholders should select projects.
Since the value of a project has been used as the guide to selection for VE the status
of packaged and split projects needs to be addressed. Packaged projects are those
where small projects are grouped together for procurement purposes. Unless
there is a common thread in the package, which would be worth examining using
VE, these projects would be classed for selection according to the value of the
individual package.
Split projects are those where one major project is divided into parts to provide
resources, or for procurement purposes. This division is not relevant to the
consideration of VE process and the total project value should be considered in
selection.
Notwithstanding the comments above regarding packaged and split projects, the
decision on selection of projects should finally be taken taking account of all
factors, not just the value of a project

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5 The Hiring and Managing of Value Engineering

Consultants
5.1 Requirements
For any value study, a qualified value specialist is required to achieve the aims of
VE. Where an experienced person is not available in-house then they should be
procured externally either for single value studies or on a term-contract for studies
over a period.
The external value specialist can make use of in-house subject-matter experts or
can provide their own team. The latter approach ensures a level of independence
but the benefit of in-house members is their knowledge about the organization.
A standard Terms of Reference for the appointment for external consultants is
included in Annex H, taken from the SAVE document.

5.2 Selection of Consultants

Since no local companies are believed to have CVS qualified persons in the
Philippines, procurement of consultants will need to be undertaken
internationally. A list of appropriate companies is provided on the SAVE website.

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6 References
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Barton R, Back to Basics – an Overview of Value Management, HKIVM International
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Barton R, Entities, Attributes and Value: Unpacking the Australian Standard
Definition of Value, Value Times, June 2007.
Barton R, More on the New VM Standard - Defining Value Management Studies,
Value Times, 2008.
Barton R, Value, Values and Value for Money, CPG Learning Seminar, 2009
Best Management Practice: Management of Value (MOV) Toolbox, UK Government
2011.
Bohon J D et al, Value Methodology: A Pocket Guide to Reduce Cost and Improve
Value Through Function Engineering, GOAL/QPC, 2008.
Certification Examination Study Guide, SAVE International, September 2011.
Dallas M, Innovations in the Management of Value, APM Group Ltd.
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Male S, Kelly J, Gronqvist M and Graham D, Managing Value as a Management Style
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M.Saifulnizam, V.Coffey and C.N. Preece, Value Management: An Extension of

Quantity Surveying Services in Malaysia, International Construction Business and
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NDD Value Management Strategy, Network Delivery and Development Directorate,
Highways Agency, UK, 2012.
Project Development Procedures Manual, Chapter 19 Value Engineering, California
Department of Transportation, June 2013
http://www.dot.ca.gov/hq/oppd/pdpm/pdpmn.htm.
Proposed Revision to OMB Circular A-131 Value Engineering, Office of Management
and Budget, USA, 2012.
Rains J A, Creating and Maintaining an Effective and Successful Value Management
Program, Advanced Value Group, LLC
Saifulnizam M and Coffey V, Implementing Value Management as a Decision-making
Tool in the Design Stages of Design and Build Construction Projects: A Methodology
for Improved Cost Optimization.
USACE Value Engineering Manual of Practice Draft, US Army Corps of Engineers,
2012.
Value Engineering Guidelines, Idaho Transportation Department, July 2010.
Value Engineering in the Federal-aid Highway Program, Report MH-2007-040,
Federal Highway Administration, March 2007.
Value Engineering Handbook, National Economic and Development Authority,
Philippines, 219pp, June 2009.
Value Engineering Manual, West Virginia Department of Transportation, Division
of Highways, 187pp, January 2004
Value Engineering, Philippine Institute of Civil Engineers, October 2008.
Value Engineering Program Administration Manual, Virginia Department of
Transportation, 12pp, November 2012.
Value Engineering Report Guide, California Department of Transportation, 1999.
Value Engineering Team Guide, 3rd ed, California Department of Transportation,
180pp, 2003.
Value Engineering Team Member Guide, California Department of Transportation,
2013.
Value Engineering and Value Management – Is there any Difference, KPK Research
Digest, July 2012.
Value Management, Australian Standard AS4183-2007.
Value Management, European Committee for Standardization, 2000.
Value Management (VM) Concept and Implementation, Unit Perancang Ekonomi
Malaysia, 2011 (presentation).
Value Management In The Government Projects (Part I), Cawangan Kontrak and
Ukur Bahan JKR, June 2011.

6-2
Guide to Value Engineering

Value Management Guideline, TAM04-14, New South Wales Treasury, 26pp,

September 2004.
Value Methodology Standard and Body of Knowledge, SAVE International, June
2007.

6-3
Annex A Examples of Value Engineering
Guide to Value Engineering

Examples of Value Engineering

The two examples provided are from Value Analysis prepared by the group of DPWH staff members who participated
in the training and workshops conducted in the year 2006. The particular examples were provided by Engr Yacob N
Mambuay, Head of Technical Division of UPMO.

VALUE ANALYSIS EXAMPLE 1

FUNCTION: Provide Transportation

TITLE: Buy used vehicles (less than 3 year old models) in lieu of rental

A. ORIGINAL DESIGN:

Rent, operate, and maintain two service and four utility vehicles.

B. ALTERNATIVE DESIGN:

Buy six used vehicles (less than 3 year old models) to be operated and maintained during the
execution of the project. Immediately following completion the vehicles will be turned over to
the government to be bid out with a minimum asking price of 50% of the purchasing price.

C. SAVINGS DUE TO:

Change from rental to purchase.

D. ADVANTAGE:

* Reduce initial cost.

* Salvage Value of the vehicles is returned to the project.

E. DISADVANTAGE:

* It will increase maintenance cost.

F. ESTIMATED REDESIGN TIME: Minimum

G. TECHNICAL JUSTIFICATION:

Since the vehicles are to be sold at the end of the project, there will be no future maintenance
costs for the government as required by the Department of Budget and Management.

The vehicles could be purchased in urban environments to guarantee a less harsh treatment
and better condition of the unit.

COST SUMMARY INITIAL COST LCC TOTAL COST

Original Design PHP 22,699,962 P PHP 22, 699,962
Alternative PHP 10, 192, 169 P PHP 10, 192, 793
Savings PHP 12, 597, 793 P PHP 12, 597, 793

A-1
 Guide to Value Engineering

CALCULATIONS

ORIGINAL PLAN: COST

ITEM A(5)a - Provide, operate and maintain 2 units (rental basis) PHP 7,036,444.80
at PHP 97,728.40/per month for 72 months

ITEM A(5)b - Provide, operate and maintain 4 units utility vehicles PHP 14,230,149.21
at PHP 98,820.48/per month for 144 months
________________
Total Cost of Original Plan - PHP 21,266,594.00

ALTERNATIVE PLAN (Value Engineering)

ITEM A(5)a - Purchase 6 slightly used Frontier 4x2 used PHP 2,700,000.00
(3 year old) Double cab pick-up (Year model Direct
2003) at PHP 450,000.00/per vehicle Cost

24% of 4% overhead expenses/4% Contingencies of direct cost PHP 648,000.00

Direct Cost 4% miscellaneous expense, 12% contractors profit

10% VAT (Direct Cost to Mark up) (3.348M) PHP 334,800.00

________________
Sub-total of A(5)a PHP 3,682,800.00

ITEM A(5)b - Operate and maintain 6 slightly used frontier 4x2 PHP 6,480,000.00
Direct Double Cab pick-up (year model 2003) at
Cost PHP 30,000.00/month for 216 months

24% mark-up of Direct Cost PHP 1,555,200.00

________________
Sub Total of A(5)b PHP 8,035,200.00

GRAND TOTAL of Item A(5)a and A(5)b PHP 11,718,00.00

IMMEDIATE SAVINGS due to Value Engineering PHP 21,266.594.00

(-) PHP 11, 718,000.00
________________
Savings Upon Completion of Project, PHP 9,548,594.00
Projected Total Sales after 6 Vehicles
Sold to a bidder at minimum accepted bid
50% of Purchase Value PHP 1,350,000.00
________________
GRAND TOTAL of Savings PHP 10,899,594.00

COST SHEET

ITEM REFERENCE
1. Original Design

Item A(5)a PHP 7,036,448.80

A-2
Guide to Value Engineering

Item A(5)b PHP 14,230,149.21

_______________
Sub-total PHP 21,266,594.00

Mark-up 6.74% PHP 1,433,368.00

Total PHP 22,699,962.00

2. VA Alternative

Item A(5)a PHP 3,682,800.00

Item A(5)b PHP 8,035,200.00
_______________
Total PHP 11,718,00.00

INITIAL SAVINGS PHP 21,266,594.00

(-) 11,718,000.00
_______________
Sub-total PHP 9,548,594.00

Mark-up 6.74% PHP 643,575.00

Total PHP 10,898,594.00

FINAL SAVINGS AFTER PHP 9,548,594.00

6 VEHICLES WERE SOLD AT 1,350,000.00_
(PHP 1,350,000.00) PHP 10,898,594.00

A-3
 Guide to Value Engineering

VALUE ANALYSIS EXAMPLE 2

FUNCTION: House Engineers’ Office/Quarters

TITLE: Construct, operate, and maintain one building to serve as Office, Laboratory, and Living
Quarters inside the nearest Public School.
A. ORIGINAL DESIGN:

Construct, operate and maintain two separate buildings, one building for office and laboratory
and one building for quarters inside a lot to be purchased and secured.

B. ALTERNATIVE DESIGN:

Construct, operate and maintain one single building, longer than the original, to serve as office,
laboratory and quarters inside the nearest Public School.

C. SAVINGS DUE TO:

Reduce number of structures and eliminate cost of land.

D. ADVANTAGES:

* Reduce initial cost

* Reduce maintenance cost
* Eliminate cost of land

E. DISADVANTAGES:

* School yard gets noisy during school hours.

F. ESTIMATED REDESIGN TIME: Moderate

G. TECHNICAL JUSTIFICATION:
The idea proposed here has been and is being adapted in other projects in the Philippines. The
combination of the structures allows for a net reduction of 24 m2 area of building.

The idea to use land provided by a school for their future use, or as in other projects, land from
the local town to provide the structure for a future clinic is a win-win situation both for the
local government and DPWH. DPWH has plenty of office space and does not need to
accumulate any more, while the local governments may be in need of new structures such as
schools for the growing population.

COST SUMMARY INITIAL COST LCC TOTAL COST

Original Design PHP 17,490,283 P PHP 17,490,283
Alternative PHP 7,572,563 P PHP 7,572,563
Savings PHP 9,917,720 P PHP 9,917,720

A-4
Guide to Value Engineering

H. TECHNICAL JUSTIFICATION: (Cont’d)

Mutual cooperation and understanding between DPWH and the Department of Education
through a Memorandum of Agreement could be a much welcome idea and beneficial for both
entities. Construction of the building inside a Public School will give the necessary land
providing for the Engineer’s compound. It will only require minimum expenses to secure the
structure with fencing. The original design is shown below.

A-5
 Guide to Value Engineering

ORIGINAL DESIGN
Engineer’s Living Quarters
a. Const. Cost PHP 2,277,225.15
b. Operation and Maintenance Cost PHP 2, 356,200.00
Total PHP 4,633,425.00
Say: 4.6 millions
Field Office and Laboratory
a. Cost of Const. PHP 2,300,700.00
b. Operation and Maintenance Cost PHP 6,811,200.00
Total PHP 9,111,900.24
Say: PHP 9M
Office/Facilities Compound
a. Acquire/Site Dev PHP 418,000,00
b. Operation and Maintenance Costs PHP 2,222,550.00
Total PHP 2,640,550.00

SUGGESTED DESIGN – ALTERNATIVE

1. Construct 1 Building PHP 1,934,000.00

2. Operation and Maintenance PHP 4,960,000.00
3. Site and Dev./Fencing 200,000.00
Total PHP 7,094,400.00

A-6
Guide to Value Engineering

CEBU TRANSCENTRAL ROAD

SUMMARY OF UNIT PRICES OF CONSTRUCTION PAY ITEMS
Pay Item Final Final Unit
No.
Description Unit Quantities Cost (PHP) Amount
(PHP)
PART A – FACILITITES FOR THE ENGINEERS
A(1)a Construction of Engineer’s Field Office Compound 1.s. 1.00 418,000.00 418,000.00
A(1)b Operation and Maintenance of Field Office Compound mos. 36.00 61,737.50 2,222,550.00
A(2)a Construction of Field Office and Laboratory Building 1.s.
(Floor area = 168 sq.m.
1.00 2,300,700.24 2,300,700.24
A(2)b Provide office Furniture, Equipment and Appliances, 1.s. 1.00 1,192,400.00 1,192,400.00
Schedule A and B
A(2)c Provide Laboratory Furniture, Equipment and Fixture, 1.s. 1.00 2,308,575.50 2,308,575.50
Schedule D and E
A(2)d Operation and Maintenance of Field Office and mos. 36.00 189,200.00 6,811,200.00
Laboratory Building
A(3)a Construction of Engineer’s Quarters (Floor Area = 168 1.s. 1.00 2,277,225.15 2,277,225.15
sq.m.)
Provide Furniture, Fixtures and Appliances for
Engineer’s Quarters, Schedule F
A(3)b 1.s. 1.00 635,470.00 635,470.00
A(3)c Operation and Maintenance of Engineer’s Quarters mos. 36.00 65,450.00 2,356,200.00
A(4)a Provide Communication Facilities for the Engineer 1.s. 1.00 467,500.00 467,500.00
Operation and Maintenance of Electronic/Satellite
(Cellphone) Communication Facilities for the Engineer
A(4)b mos. 36.00 11,931.94 429,549.84
Provide, Operate and Maintain Service Vehicle, 2 mos.
units (Rental Basis)
A(5)a 72.00 97,728.40 7,036,444.80
Provide, Operate and Maintain Four (4) Utility mos.
Vehicles (Rental Basis)
A(5)b 144.00 98,820.48 14,230,149.12
Survey Equipment/Measuring Equipment/Monitoring
Instruments and Materials
A(6)a 1.s. 1.00 2,705,045.75 2,705,045.75
A(6)b Operation and Maintenance of Survey mos. 36.00 184,041.00 6,625,476.00
Team/Equipment
A7 Progress Photographs 1.s. 1.00 248,559.96 248,559.96
Sub-Total A 52,265,046.36

A-7
 Guide to Value Engineering

Note:
Original Estimated Cost PHP 16,385,875.39
After application of VE PHP 7,094,400.00
Savings PHP 9.29M

CALCULATIONS

ORIGINAL PLAN

Technical Description
1. Quarter Bldg. is 168 square meter (7x24)
2. Office Building is 168 square meter (7x24)
3. Office Compound 40m width and 45 length (1,800 square meter)
Item Acquire/Construction Cost Operation and Maintenance Total of A and B
Living Quarter PHP 2,277,225.15 PHP 2,356,200.00 PHP 4,633,425.15
Field Office PHP 2,300,700.24 PHP 6,811,200.00 PHP 9,111,900.24
Office Compound PHP 418,000.00 PHP 2,222,550.00 PHP 2,640,550.00
TOTAL PHP 4,995,925.39 PHP 11,389,950.00 PHP 16,385,875.39
Say 5.0 Millions Say 11.39 Millions Say 16.39 Millions

VALUE ENGINEERING PLAN

COSTING 24% Markup Total

Construct 1 Building (8mx39m) PHP 1,560,000.00 PHP 374,400.00 PHP 1,934,400.00

Serves as Office/Lab/Living Quarters

Operate and Maintain Office/Lab/Living Quarters 24% Markup Total
No. Rate/Month Duration Cost
Security Guard 3 PHP 6,000.00 36 mo. PHP 648,000.00
Laundry Utility 4 4,000.00 36 mo. 576,000.00
PHP 4,000,000 x 1.24

PHP 4,960,000.00
Material Engineer 1 9,000.00 36 mo. 324,000.00
Lab Technician 2 6,000.00 36 mo. 432,000.00
Lab Aide 2 5,000.00 36 mo. 360,000.00
Typist 1 6,000.00 36 mo. 216,000.00
Utility 1 4,000.00 36 mo. 144,000.00
Miscellaneous Electricity,
Maintenance, Bldg,
Site/Etc
25,000.00 36 mo. 900,000.00
Allowances for overtime
and SSS 800,000.00
Consumables 500,000.00
PHP 4,000,000.00

Total of Item 1 and Item 2 PHP 1,934,400.00

PHP 4,960,000.00
PHP 6,894,400.00

3. Site Development /Fencing PHP 200,000.00

A-8
Guide to Value Engineering

COST SHEET

ITEM REFERENCE
1. Original Design

1) Building (Quarters) Construction/Operate/Maintain PHP 4,633,425.15

2) Building (Office and Lab) Const./Operate/Maintain PHP 9,111,900.24
3) Office Compound (Acquire/develop/Maintain) PHP 2,640,550.00_
Sub-Total PHP 16,385,875.39

Say PHP 16.39 Million

Mark-up 6.74% 1,104,408.00

Total PHP 17,490.283.00

2. VA Alternative

1) Construction/One Building PHP 1,934,000.00

As Office/Lab/Living Quarter

2) Operate and Maintain One Building PHP 4,960,000.00_

As Office/Lab/Living Quarter
Total PHP 6,894,400.00

Say PHP 6.89 Million

3. Site Development/Fencing PHP 200,000.00

Sub-total PHP 7,094,400.00

Mark-up 6.74% PHP 478,163.00

Total PHP 7,575,563.00

Savings PHP 9,917,720.00

A-9
Annex B Examples of Functions and Modifiers
Guide to Value Engineering

Examples of Functions and Modifiers

Procedures

Verbs Nouns
Allocate identify alternative material
Allow improve awareness option
analyze increase concept order
Audit Inform control part
authorize maintain coordination performance
certify measure criteria personnel
compile monitor data plan
confirm obtain decision priority
copy organize design process
create procure deviation record
decrease protect direction regulation
develop provide documentation request
distribute receive facility resource
enter reconcile funds schedule
establish record goal shipment
evaluate report history source
facilitate set information staff
forecast specify instruction standard
generate test inventory status
guide transmit limit trend

Projects

Verbs Nouns
absorb heat air material
alter illuminate appearance objects
amplify impede balance oxidation
change improve beauty parking
circulate increase color people
collect induce communication power
condition insulate compression preparation
conduct interrupt convenience prestige
connect modulate current protection
contain prevent ego radiation
control protect enclosure sheer
convey provide energy sound
cool rectify environment space
create reduce features structure
distribute reflect feeling style
emit repel fire symmetry
enclose resist flow temperature
enjoy separate fluids tension
establish shield force texture
exclude smell form one
extinguish support heat torque
feel taste image utilities
filter think landscape view
finish transmit light voltage
generate ventilate load weight

B-1
Annex C Examples of FAST Diagrams
Guide to Value Engineering

Examples of Fast Diagrams

FAST Diagram for a Pen

C-1
 Guide to Value Engineering

FAST Diagram for a Dam

(Source: NEDA 2009)

C-2
Guide to Value Engineering

Function Analysis Presented in Tabular Form (DPWH, 2006)

FUNCTION ANALYSIS
BASIC FUNCTION: PROVIDE SHELTER
No COMPONENT VERB+NOUN TYPE
COST
A Facilities for the Engineer Provide Shelter B 28.43
A2 Laboratory Building Store Equipment S 9.05
A5 Service Vehicles Transport Personnel S 7.09
Ab Survey Instrument Collect Data S 6.02
A3 Engineer’s Quarters Provide Shelter S 4.09
A1 Field Office Compound Secure Area S 1.53
A4 Engineer’s Communication Communicate Instructions S 0.50
A7 Progress Photographs Support Documents S 0.16

TOTAL 56.87
BASIC FUNCTION: IMPROVE COMMUNICATIONS
No COMPONENT VERB+NOUN TYPE
COST
B Other General Requirements Provide Safety S 9.60
B11 Working Platform Provide Safety S 2.52
B3 Mobilization and Demobilization Provide/remove Safety S 2.42
B5 Traffic Control Devices Provide Safety S 1.98
Guide Motorist S
B12 Boring, Standard Penetration and Materials S 1.56
Determine Laboratory Test
Study Characteristics B
B2 Protect Personnel S 1.12

TOTAL 19.20
BASIC FUNCTION: CLEARING GROUND
No COMPONENT VERB+NOUN TYPE
COST
C Earthwork Remove Materials S 12.95
Establish Foundation S
C2 Surplus Common Excavation Remove Materials B 5.80
C4 Embankment Add/Support Materials B 2.50
C3 Bridge Exec., Found and Material Support Foundation B 2.28
C1 Removal of Existing Remove Structure S 1.43
C0 Clearing and Grubbing Clear Area S 0.47

TOTAL 25.43
BASIC FUNCTION: TRANSPORT GOODS
No COMPONENT VERB+NOUN TYPE
COST
D Sub-base and Base Course Support Pavement S 4.74
D0 Aggregate Sub-base Course Support Base Course S 5.98
D1 Aggregate Base Course Support Pavement S 3.53
D2 Crushed Aggregate Strengthen Base Material S 0.24

TOTAL 14.49
BASIC FUNCTION: SPAN OPENING
No COMPONENT VERB+NOUN TYPE
COST
F Bridge Construction Provide River Crossing B 25.90
Connect Highways B
Crossing Vehicles B
F0 Concrete Piles Support Structure S 12.78
F4 Reinforcing Steel Reinforce Concrete S 8.47
Strengthen Concrete S
F5 Concrete (Str. Seal, Lean) Strengthen Structure S 4.65

TOTAL 51.80

C-3
 Guide to Value Engineering

BASIC FUNCTION: SUPPORT VEHICLES

No COMPONENT VERB+NOUN TYPE
COST
E Surface Course Smooth Surface B 13.50
E10 Bituminous Concrete Surface Provide Riding Comfort S 12.09
E1 Bituminous Prime Coat Seal Base S 1.19
E2 Bituminous Tack Coat Bonding Surface S 0.22

TOTAL 27.00
BASIC FUNCTION: DRAIN WATER
No COMPONENT VERB+NOUN TYPE
COST
G Drainage and Slope Protection Protect Highway S 164.50
G8 Concrete Crib Protect Slope S 86.52
G10 Concrete Lined Canal Drain Water S 31.75
G13 Anchor, Mortar Spray, Geo-Grid Protect Slope S 26.40
G11 Concrete Chute Canal Collect Water S 11.60
G5 Stone Masonry Protect Slope S 2.40
G9 Gabions Protect Slope S 2.30
G4 Grouted Riprap Protect Slope S 1.13
G2 Concrete Catch Basin Collect Water S 0.86
G1 Under-drain Collect Water S 0.78
G6 Hand Laid Boulder/Apron Protect Slope S 0.35
G3 Cleaning of Existing Pipe/Line Restore Structure S 0.24
G0 Reinforced Concrete Pipe Culvert Drain Water S 0.16

TOTAL 328.83
BASIC FUNCTION: PROVIDE SAFETY
No COMPONENT VERB+NOUN TYPE
COST
H Miscellaneous Structures Prevent Accident S 7.28
H3 Metal Beam Guardrail Provide Safety S 2.06
H9 Grass and Wicker Work Protect Slope S 1.75
Control Erosion S
H12 Reflectorized Thermoplastic Guide Motorist S 1.30
Pavement
H10 Sodding Stabilized Slope S 1.12
H0 Concrete Curb and Gutter Collect Water S 0.79
H5 Road Signs Provide Safety S 0.18
H13 Concrete Informatory Signs Provide Information S 0.076

TOTAL 14.56

B = Basic Function
S = Secondary Function

C-4
Annex D Discounted Cash Flows and Recurring
Cost (Example)
 Guide to Value Engineering

Discounted Cash Flows and Recurring Cost (Example)

YEAR Total
A: Investment Cost 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1 Civil Works 513,946 1,541,838 - - - - - - - - - - - - - - - - - - 2,055,784
- Foreign Cost Component 256,973 770,919 - - - - - - - - - - - - - - - - - - 1,027,892
- Domestic Cost Component 256,973 770,919 - - - - - - - - - - - - - - - - - - 1,027,892

2 Mechanical and Equipment - - - - - - - - - - - - - - - - - - - - -

- Foreign Cost Component - - - - - - - - - - - - - - - - - - - - -
- Domestic Cost Component - - - - - - - - - - - - - - - - - - - - -

3 Environment and Social Mitigation - - - - - - - - - - - - - - - - - - - - -

4a Consultants - International 14,699 - - - - - - - - - - - - - - - - - - - 14,699

a. Project Management - - - - - - - - - - - - - - - - - - - - -
b. Technical Expertise 14,699 - - - - - - - - - - - - - - - - - - - 14,699
c. Capacity Development - - - - - - - - - - - - - - - - - - - - -
-
4b Consultants - National 132,288 56,695 - - - - - - - - - - - - - - - - - - 188,983
a. Project Management 13,229 5,669 - - - - - - - - - - - - - - - - - - 18,898
b. Technical Expertise 119,059 51,025 - - - - - - - - - - - - - - - - - - 170,084
c. Capacity Development - - - - - - - - - - - - - - - - - - - - -
Subtotal (A) 660,933 1,598,533 - - - - - - - - - - - - - - - - - - 2,259,466

B. Recurrent Cost (by government)

1 Salaries - - - - - - - - - - - - - - - - - - - - -
2 Accomodation - - - - - - - - - - - - - - - - - - - - -
3 Civil Works & Eqpt Operation and Maintenance - - 41,116 41,116 41,116 41,116 41,116 41,116 41,116 205,578 41,116 41,116 41,116 41,116 41,116 41,116 41,116 41,116 41,116 205,578 1,069,012
- Foreign Cost Component - - 20,558 20,558 20,558 20,558 20,558 20,558 20,558 102,789 20,558 20,558 20,558 20,558 20,558 20,558 20,558 20,558 20,558 102,789 534,506
- Domestic Cost Component - - 41,116 41,116 41,116 41,116 41,116 41,116 41,116 205,578 41,116 41,116 41,116 41,116 41,116 41,116 41,116 41,116 41,116 205,578 1,069,012
Subtotal (B) - - 41,116 41,116 41,116 41,116 41,116 41,116 41,116 205,578 41,116 41,116 41,116 41,116 41,116 41,116 41,116 41,116 41,116 205,578 1,069,012
-
Total Base Cost 660,933 1,598,533 41,116 41,116 41,116 41,116 41,116 41,116 41,116 205,578 41,116 41,116 41,116 41,116 41,116 41,116 41,116 41,116 41,116 205,578 3,328,478
NPV @ 12% 2,172,085

D-1
Annex E Checklists
 Guide to Value Engineering

Checklists
Checklist 1. Information Phase Outline ............................................................................................ 1

Checklist 2. Information Gathering ................................................................................................... 2

Checklist 3. General Information....................................................................................................... 3

Checklist 4. Information on Engineering and Design ...................................................................... 4

Checklist 5. Information on Methods and Processes ....................................................................... 5

Checklist 6. Information on Materials and Procurement ................................................................ 6

Checklist 7. Information on Maintenance ......................................................................................... 7

Checklist 8. Information on Function and Worth ............................................................................ 8

Checklist 9. Creative Phase ................................................................................................................ 9

Checklist 10. Design Development Phase ....................................................................................... 10

Checklist 11. Presentation Phase..................................................................................................... 11

Checklist 12. Value Engineering Workbook ................................................................................... 12

Checklist 13. Selection Phase ........................................................................................................... 13

These checklists provide general guidance on requirements. They are

available in Excel format for direct entry of checks.
As DPWH develops the VE process and capabilities some of these checklists
may be replaced with separate versions to suit specific project types or
stages.

E-i
Guide to Value Engineering

Checklist 1. Information Phase Outline

Project Project ID
Checklist 1 Information Phase Outline

• Understand the item, system, or operation under study

• Gather all types of information from the best sources
• Obtain complete, pertinent information
• Get the facts
• Get all available costs
• Determine, define, and classify the functions
• Identify and define functions
• Develop a Function Engineering System Technique
(FAST)
diagram
• Classify functions
• Determine function relationships
• Determine function cost, and function worth
• Determine cost of each function and overall project
• Identify high-cost functions
• Determine the function worth and overall project worth
• Determine function value
• Determine value opportunity index for each function
• Determine overall value opportunity index
• Identify areas of poor value
Prepared By: Date:

E-1
 Guide to Value Engineering

Checklist 2. Information Gathering

Project Project ID
Checklist 2 Information Gathering
Physical Data Performance Data
shape (requirements and needs)
dimensions design
material operation
skid resistance maintenance
color safety
weight utility
density
fire resistance
weather resistance Restrictions
sound absorption (on detailed specifications)
deflection resistance methods
horizontal alignment performance

vertical alignment procedures

operations
schedule
Methods data – How it is: cost
operated
constructed
developed Cost data
installed (detailed breakdown)
maintained labor
replaced materials
markups

Quantity Data
volume or repetition
Prepared By: Date:

E-2
Guide to Value Engineering

Checklist 3. General Information

Project Project ID
Checklist 3 General Information
• What is the objective of the project?
• Why is it needed?
• Are the functions listed?
• Are the redundant (secondary) functions listed?
• Does the team completely understand the functional requirements?
• Has the team reviewed the specifications and requirements?
• Are the specifications realistic? (That is, are all specified characteristics both
necessary and sufficient?)
• Can the team recommend to modify or to eliminate specification
requirements?
• Will a modification of the specification simplify design and construction?
• Are the specifications required, or are they guidelines only?
• Does the report state that all performance and environmental requirements
are necessary and sufficient?
• Has the planner and the designer interpreted the specifications correctly?
• Does the report identify what special performance or operating characteristics
are required?
Prepared By: Date:

E-3
 Guide to Value Engineering

Checklist 4. Information on Engineering and Design

Project Project ID
Checklist 4 Information on Engineering and Design
• Does the report state the background history?
• Who designed the project? When?
• Who determined the requirements?
• Who must review a change?
• Who must approve a change?
• Who must approve implementation funding?
• Who must implement the change?
• Does the design do more than required?
• What alternates did the designer consider?
• Why were alternates rejected?
• Are any changes to the design planned?
• Do drawings reflect latest state-of-the art?
• How long is it designed to last with normal use (design life)?
• What is its normal use?
• What is the measure of life (time, traffic volume, and cycles)?
• What are the life cycle costs?
Prepared By: Date:

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Guide to Value Engineering

Checklist 5. Information on Methods and Processes

Project Project ID
Checklist 5 Information on Methods and Processes
• Can we combine, simplify, or eliminate any functions?
• Are any non-functional or appearance-only items required?
• How is construction performed?
• Why is it performed that way?
• Are there high direct labor costs?
• Has the team identified high-cost areas or items?
• What is the schedule?
Prepared By: Date:

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Checklist 6. Information on Materials and Procurement

Project Project ID
Checklist 6 Information on Materials and Procurement
• Has the team identified any special, hard-to-get, or costly materials specified
by the designer?
• What alternate materials were considered?
• Why were they rejected?
• Are the materials used hazardous or difficult to handle?
• When was the material specified?
• Have new materials been developed that would perform the function for less
cost?
• Has the team interviewed the present suppliers to ascertain any problems
which contribute to high costs?
• Does the supplier or contractor have a value engineering clause in his
contract?
• Has there been any price, delivery, or quality problem?
• Is this a single source item?
Prepared By: Date :

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Checklist 7. Information on Maintenance

Project Project ID
Checklist 7 Information on Maintenance
• Has the team observed the item in use?
• Has the team solicited the people who use or maintain it for ideas?
• What is normal maintenance?
• What is frequency of maintenance?
• What is level of maintenance?
Prepared By: Date:

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Checklist 8. Information on Function and Worth

Project Project ID
Checklist 8 Information on Function and Worth
• Has the team assigned costs to each function?
• Has the team established a worth for each function?
• Has the team determined target costs for each function?
• Are designs requirements established which do not require any function to be
performed?
• Are functional requirements exceeded?
• Are unnecessary features called for?
• Is there a better way to perform the function?
• Can any function be eliminated?
• Can we do without it entirely?
• Does it cost more than it is worth?
• Has the team identified all the high and unnecessary cost areas and high-cost
/worth ratio areas?
• Do the potential cost savings appear sufficient to make further value engineering
information and proposal development worthwhile?
Prepared By: Date:

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Checklist 9. Creative Phase

Project Project ID
Checklist 9 Creative Phase
• Has the team used creative thinking techniques?
• Has the team provided an atmosphere that encourages and welcomes new
ideas?
• Has there been cross-inspiration?
• Have all members of the team participated?
• Did you set an output goal?
• Has the team recorded all the ideas?
• Has the team discouraged negative responses?
• Has the team reached for a large quantity of ideas?
• Has the team generated ideas without all the constraints of specifications and
system requirements?
• Has the team made a thorough search for other items that are similar in at least
one significant characteristic to the study item?
• Has the team identified all basic functions for this
• Has the team mad e a separate creativity phase worksheet available to be filled
out for each basic function description?
• Has the team dismissed from your thoughts the present way/method of
accomplishing the basic function?
• Has the team explained the techniques, method of approach, and "ground rules"
for group brainstorming before proceeding?
• Has the team provided for a sufficient incubation period to permit later addition
of more ideas?
• Has the team made provisions for a follow-up session to evaluate and refine the
ideas?
• Has the team submitted all of the basic functions of the project to the completed
creativity phase?
Prepared By: Date:

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Checklist 10. Design Development Phase

Project Project ID
Checklist 10 Design Development Stage
• Has the team planned the steps required to "sell" the
ideas?
• Has the team determined the time required for engineering/drawing changes?
• Has the team determined when the change can reasonably be incorporated?
• Has the team satisfied the user's needs?
• Did the team have all supporting data available?
• Did the project meet the operational requirements?
• Did the project meet the safety requirements?
• Are the maintenance requirements met?
• Has the team estimated the Life-Cycle costs?
• Has the team’s best ideas been thoroughly described?
• Has the team identified the type of people who can help support or develop the
value Engineering recommendation?
• Has the team solicited and recorded from specialists?
• Has the team considered all available solutions?
• Has the team considered locally available materials?
• Has the team double-checked the quantities and costs used in your calculations?
• Has the team developed the estimated net savings?
• Has the team examined the alternates for environmental impact?
• Has the tea m consulted appropriate organization and outside specialists?
• Has the team made all the other organizational functions a part of the team and
consulted them?
• Does the re-design make use of available standards?
• Has the team reviewed the new method or design with all those concerned or
responsible?
• Has the team made a strong attempt to overcome roadblocks?
• Did the team require any additional information?
• Has the team consulted all the best reference materials?
Prepared By: Date:

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Checklist 11. Presentation Phase

Project Project ID
Checklist 11 Presentation Phase
• Is the need for a change clearly shown?
• Is the problem defined?
• Is the proposal concise?
• Are all the pertinent facts included?
• Are dollar savings included?
• Is your value engineering workbook complete and accurate?
• Has the team double-checked your recommendations, costs, and savings?
• Is your information complete?
• Has the team prepared back-up material for questions that may be asked?
• Can use of vu-graph, opaque projector, flip charts or blackboard sell your
ideas?
• Has the team established a plan of action that will assure implementation of a
selected alternate?
• Is the change described?
• Are there pictures or sketches of before-and-after conditions?
• Has the best alternate been fully documented?
• Have all the constraints been considered?
• Has the recommendation been presented to the most appropriate responsible
manager or decision maker?
• Has the implementation plan been developed?
• Have the recommendations been extended to all areas of possible
application?
• Has the improved value design been considered for a standard or preferred
practice?
• Has credit been given to all participants?
• If you were a decision maker, is there enough information for you to make a
decision?
Prepared By: Date:

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Checklist 12. Value Engineering Workbook

Project Project ID
Checklist 12 Value Engineering Workbook
• An explanation of why this project was selected for
study
• List of team members and their specialty
• A functional evaluation of the process or procedure under study
• All information gathered by the group relative to the item under study
• A complete list of all the alternates considered
• An explanation of all logical alternates investigated, with reasons why they
were not developed further
• Technical data supporting the idea(s) selected, with other factual information
to assure selection of the most favourable alternate(s)
• Original costs cost of implementing the alternates being proposed and cost
data supporting all savings being claimed
• Acknowledgment of contributions made by others to the study
• Steps to be taken and the timetable for implementing the proposed alternate(s)
• Before-and-after sketches of the items under study
Prepared By: Date:

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Checklist 13. Selection Phase

Project Project ID
Checklist 13 Selection Phase
• 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 engineering 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
• Expensive construction
• Long foundation piles
• Excessive reinforcement
• Cofferdam dewatering
• Architectural embellishment
• Record seeking designs (Longest span, highest piers, deepest cut, etc.)
• Large safety factors
• Curb, gutter, and sidewalk (rural)
• Specially designed components that appear to be similar to low-cost off-the-
shelf items
• Components that include non-standard fasteners, bearings, grades, and sizes
• Sole-source materials or equipment
• Processes or components that require highly skilled or time-consuming labor
• Items with poor service or cost history
• Items that have maintenance and field operation problems
• Project costs that exceed the amount budgeted
• Standard plans that are in use for more than three or four years
Prepared By: Date:

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Annex F Creative Blocks
Guide to Value Engineering

Creative Blocks
1. Habitual Blocks

a) Continuing to use or approve "tried and true" procedures when new

and better ones are available
b) Lacking a positive outlook; lacking determined effort; conforming to
custom, and relying on authority
2. Perceptual Blocks

a) Failing to use all the senses of observation

c) Failing to investigate the obvious
d) Having difficulty in visualizing remote relationships
e) Failing to distinguish between cause and effect
3. Cultural Blocks

a) Needing to conform to "proper" patterns, customs or methods

b) Placing overemphasis on competition or on cooperation
c) Needing to be practical, above all things
d) Having confidence and faith only in reason and logic
4. Emotional Blocks

a) Fearing making a mistake or appearing foolish

b) Fearing supervisors and distrusting colleagues and subordinates
c) Being over-motivated to succeed quickly
d) Refusing to take any detour in reaching a goal
Probably the single most important factor affecting one's creative
accomplishments is the environment in which he or she must live and work.
A creative atmosphere, characterized by mutual respect for one another's
ability and the encouragement of individual thinking can spur a mind of
even average expressiveness to great heights.

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Annex G Reason for Unsatisfactory Result
Guide to Value Engineering

Reasons for Unsatisfactory Results

This section describes the numerous reasons why a VE study may lead to
unsatisfactory results. These reasons are as follows:
Lack of Information. The amount of accurate and up-to-date
information limits the effectiveness of VE. Failure to get sufficient and
relevant facts can be due to a misunderstanding of the full requirements
of the original project or a lack of knowledge about available resources.
Wrong Beliefs. Decisions that are based on erroneous beliefs, rather
than facts, compromise the effectiveness of VE. For example, planners
who make decisions on what a design should accomplish might not
properly sense the public's needs. Another example is that of a designer
that holds an inaccurate prejudice against a specific resource, and thus
might make an improper choice of the best technological alternative.
Habitual Thinking. It is essential that the VE team keeps up with the
state-of-the-art technology and methodology because thinking and
doing things in the same way is a frequent cause of poor value. Most
people have a tendency to re-use what worked the last time, or to copy
the standard set by others without considering the situation. Habitual
thinking is also inadvertently promoted by management, through rigid
use of a given set of standard designs, procedures, and customs.
Risk of Personal Loss. The tendency of risk averse decision-makers to
stick with previously successful methods, as opposed to more relevant
methods, reduces the effectiveness of VE. When decisions are based on
past experience of "nearly-related" data rather than on something new
or unfamiliar, it is difficult for best new ideas generated in a VE study to
be chosen.
Reluctance to Seek Advice. Designers and planners are often very
reluctant to seek advice from others because they fear it may be seen as
a sign of incompetence. Architects, planners and engineers should seek
the advice of other competent experts, as they may be able to provide
additional insight into the problem. By consulting others, they will be
better able to achieve maximum design value.
Time Constraints. When a project appears on a long-range or annual
construction program, there is often a critical demand that the project
stay on schedule. Frequently, the time pressure is so great that it is
impossible to consider properly, if at all, the value of the design
approach in development. In cases like these, the designers usually find
it necessary to accept the first workable solution to a problem in order
to complete the job on time. Seldom is there time to contemplate ideas,
or to design for value by developing alternative approaches. When
designs are developed under these conditions, they are normally good
candidates for a value study.

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Negative Attitudes. VE will not work when decision makers are

reluctant to make a change of any kind regardless of the merits of the
proposal, especially if the change directly affects their plan or design.
The same is true when value teams feel they always provide the best
value in their approach, even when only a few of the VE techniques and
procedures were used in their studies.
Changing Technology. When a Value Team fails to recognize and
consider rapid strides in the development of processes, products, and
materials, it limits the potential for uncovering higher-value adding
alternatives. The team must remain cognizant of the constantly
changing, and many times more inexpensive, ways of performing
necessary functions.
Strict Adherence to Requirements. Requirements and published
standards are often unrealistically specific regarding performance,
materials, safety or procedures. Sometimes the planner or designer
assumes requirements are specified when they are not. Traditionally,
designers have concentrated on developing designs that exceed all
known and assumed requirements. The net result is over-design, with
attendant waste of taxpayer funds. The VE team must challenge the
requirements to determine if they best meet a need of the project, or just
satisfy the published standards.
Performance At Any Cost. When a problem is identified, the natural
reaction is to develop a design that will solve it completely. However,
this may lead to a solution with a cost that far exceeds its value. The cost
of solving 95% of the problem may be within reason, but solving the
remainder can unreasonably increase the cost. Solving 95% of the
problem, and using the remaining funds to solve other critical problems
may be a more prudent approach.
Poor Human Relations. If the various specialists on complex projects
do not work together, they are likely to work at cross-purposes, wasting
a great deal of effort, with a final product that lacks value. Lack of good
communications, misunderstanding, jealousy and normal friction
between human beings is a frequent source of unnecessary costs.
Infrastructure projects require the talents of many people, and good
human relations are especially critical.

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Annex H Terms of Reference for Hiring Value
Engineering Consultants
 Guide to Value Engineering

Pro Forma
Terms of Reference
for
Hiring Value Engineering Consultants

This document is based on a TOR provided by

SAVE International, which is available, no
charge to organizations and Agencies considering
the retention of a Value Engineering Consultant.
The document is provided as a guideline only. This
document will require modifications to suit
individual circumstances .

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Contents
1.0 INTRODUCTION........................................................................................................................................... 1

2.0 SCOPE OF WORK...........................................................................................................................................1

3.0 REQUIRED QUALIFICATIONS.........................................................................................................2

4.0 SPECIAL REQUIREMENTS ..........................................................................................................................3

5.0 PROPOSAL FORMAT ...................................................................................................................................3

6.0 SELECTION PROCESS..................................................................................................................................3

List of Exhibits

EXHIBIT “A”-Scope of Work (Optional)

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1. INTRODUCTION
Insert Name of Client (“the Client”) is seeking a qualified value engineering
consultant to provide value analysis, value engineering, value enhancement, value
management (SELECT ONE) services related to Insert name of project, product,
system or study object.
Describe project, product, system or study object. The objectives of the value
engineering consulting assignment are:
1. To identify potential changes to the project, product, system or study object
design that would satisfy the essential functions of the project, product,
system or study object at a lower (capital or life cycle) cost.

2. To identify potential changes to the project, product, system or study object

design that would better accomplish the essential functions of the project,
product, system or study object while providing better overall value.

3. To improve confidence in the effectiveness of the design (if applicable).

4. To provide additional input into selected project, product, system or study

object decisions (if applicable).

5. (Other objectives as appropriate).

2. SCOPE OF WORK
It is intended that the selected value engineering consultant will conduct Insert
Number value workshop(s) to be conducted in Insert Location over a period of Insert
Number month(s).
The work will consist of the following individual tasks: (or as detailed in Exhibit “A”
Scope of Work:)

1. Communicating with the Client’s project manager either in person or by

telephone, and reaching a decision about the details of the value study
including the duration of each proposed workshop.

2. Communicating with the Client’s project manager either in person or by

telephone to review the project, product, system or study object and the
project, product, system or study object issues and reach an agreement
regarding the date for the value workshop (s) and the team members to be
provided by the Client, if any, and by the Value Engineering Consultant, if
any.

3. Prior to the value workshop accomplish the following activities:

i. Coordinate workshop logistics.

ii. Review the design documents and other documents about the project,
product, system or study object provided by the Client with the Value
Team members.

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iii. Using information provided by the Client and by the design team,
prepare cost, energy, life-cycle cost, space and/or other models as
appropriate.
iv. Conduct a validation of the estimated project, product, system or study
object costs.
4. Workshop(s) is/ are to be conducted using a job plan consistent with SAVE
International guidelines for value studies. The workshop(s) will be
conducted in the location identified in this Request for Proposal. The facility
in which the workshop(s) will be conducted will be provided and paid for by
the Client or Consultant (INSERT ONE). Each value engineering workshop
will consist of the following six phases conducted over a period of Insert
Number consecutive days:

i. Information Phase
ii. Function Analysis Phase
iii. Creativity Phase
iv. Evaluation Phase
v. Design Development Phase
vi. Presentation Phase

5. Following each value engineering workshop, conduct the following

activities:

i. Submit a preliminary value engineering report in electronic and hard

copy format, consisting of the workshop work products within fourteen
(14) days of the completion of the value engineering workshop.
ii. Review the design team written responses to the preliminary value
engineering report.
iii. Consult with the Value Team members as necessary, and prepare for a
decision-making meeting.
iv. Attend the decision-making meeting and provide information to the
decision-makers at the meeting relative to the pros and cons of each value
recommendation. Respond to the concerns raised by the design team and
others, and assist the designer, design project manager and the Client
project manager in reaching decisions about whether to incorporate each
value engineering recommendation into the project design.
v. Prepare a draft final report within fourteen (14) days following the
decision-making meeting that documents the entire VE study, including
the decisions made.
vi. Make appropriate revisions to the draft final report based on comments
from the Client project manager, and provide an electronic and Insert
Number hard copies within fourteen (14) days following receipt of
comments from the Client project manager.

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3. REQUIRED QUALIFICATIONS
The value engineering consultant shall provide the following team members:
1. A value team leader who is certified by SAVE International as a Certified
Value Specialist (CVS).
2. An assistant team leader who, at minimum, is certified by SAVE International
as an Associate Value Specialist (AVS).
3. Technical specialists with appropriate qualifications (List Required
Specialists including quantity surveyors if required).
4. Supporting clerical and administrative staff to participate in the workshops
and assist with the study documentation.
The value engineering consultant shall demonstrate corporate experience pertinent
to the subject matter of the value engineering study.

4. SPECIAL REQUIREMENTS
The selected value engineering consultant will be invited to enter into a contract in
the standard SAVE International Form of Contract for Value Consulting Services and
to begin work within fourteen (14) days of notification to proceed.
Insert special conditions of contract, if any, including expectations of the Value
Engineering Consultant related to venue, equipment and related matters.

5. PROPOSAL FORMAT
Proposals are requested in the following format:
1. Cover Letter
2. Table of Contents
3. Introduction/Understanding of Scope of Work
4. Proposed Methodology and Delivery Schedule
5. Corporate Qualifications and Experience (including client references) Brief
Biographies of Key Personnel
6. Fee Proposal (include under separate cover) Other Considerations

Please include detailed resumes and additional corporate information, if so desired,

in appendices. All Proposals shall be clearly marked on the outside with the
following:
“Proposal for Value Engineering Consulting Services for Insert Project, Product,
System or Study Name”.

6. SELECTION PROCESS

Submission Deadline
Proposals are due by Insert Date and Time at the following address:
Address Line 1

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Address Line 2
Any City, Any Country
Electronic copies may be transmitted by e-Mail to: Insert e-Mail Address
Proposals received after the date and time specified will not be considered.

Inquiries During the Proposal Preparation Period

Inquiries during the proposal preparation period may be addressed to:
Insert Name
Insert Title
Address Line 1
Address Line 2
Any City, Any Country
Insert Telephone and Facsimile Numbers
Insert e-Mail Address
Answers provided to proposer questions are intended to improve the proposer’s
understanding of the requirements of the request for proposal and the project
requirements. No verbal information provided to proposers will in any way change
the requirements or provisions of this request for proposals. Any changes to the
Request for Proposal will be made in writing in the form of an addendum that will
be sent to all holders of record of the Request for Proposal.

Evaluation and Selection Procedures

All proposals will be evaluated on the basis of the following technical criteria:

Criterion Weighting
Understanding and Approach 25%
VE Team Leader Qualifications 25%
VE Team Member Qualifications 25%
Previous Experience and Performance 15%
Availability and Schedule 10%
Depending on the results of the evaluation of proposals, interviews may be conducted
with a short list of the proposers to make the final selection of the firm to conduct
this work. If interviews are required, the shortlisted proposers will be advised of the
date and time for their interview. Each firm will have one hour for their interview
process. The first 30 minutes will be spent in a formal presentation by the firm
expanding on the information provided in their proposal. The second 30 minutes
will be spent responding to questions from the interview panel. The final selection
will be based on the same criteria listed above, and will use the same weights as
indicated for the proposal evaluation.
Once the highest rated firm has been selected, Insert Name of Client will endeavor to
negotiate a contract with that firm. Should the two parties not be able to successfully
negotiate a contract for the services, negotiations with the highest rated firm will be
terminated and negotiations will be opened with the second highest rated firm and
so on.
Insert Name of Client reserves the right to reject any and or all proposals.

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SCOPE OF WORK FOR VALUE STUDY

EXHIBIT
“A”

The Value Engineering Consultant will provide the following services in

accordance with this scope of work and the terms of the Agreement:

CONSULTANT STUDY TEAM

The Value Engineering Consultant will provide the study team members identified
below:

Name Required Qualifications

_________/Team Leader
_________/Asst. Team Leader (if applicable)
_________/ Team Assistant (if applicable)
_________/ Subject Matter Specialist (if applicable)
_________/ Subject Matter Specialist (if applicable)
_________/ Subject Matter Specialist (if applicable)
_________/ Subject Matter Specialist (if applicable)

__________/Cost Estimator

The Client will provide all other team members, at no cost to the Value E n gi ne eri ng
Consultant. The Value Engineering Consultant will communicate directly with all
study team members as needed relative to scheduling, pre-workshop, workshop and
post workshop activities.

PRE-WORKSHOP ACTIVITIES

The Value Engineering Consultant will perform pre-workshop activities to include

those tasks that must be accomplished in order for the study team to be able to
efficiently and effectively perform in the workshop.

These activities will consist of:

1. Scheduling study tasks.

2. Scheduling and coordination with study team members.
3. Assisting the Client with scheduling study participants.
4. Coordinating necessary project documentation on the project for distribution
by the Client to the study team members document review by Value
Engineering Consultant-supplied team members.

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5. Preparing cost, energy, life cycle cost, space models, etc. contingent on supply
by Client of the information needed for their preparation.

The Client will distribute the project documents and materials to be studied to the
study team members at least five working days prior to the workshop start. All team
members except the cost estimator are to spend _ (4-16) hours reviewing the project
documents and materials prior to the start of the workshop. The cost estimator will
spend (12-24) hours reviewing the documents and validating the cost estimate
provided by the Client.

WORKSHOP

The Value Engineering Consultant will conduct a - hour value engineering

workshop using a six-step job plan that is consistent with the best management
practices recognized by SAVE International. The workshop will include an
Information Phase, a Function Engineering Phase, a Creative Phase, an Evaluation
Phase, a Design Development Phase, and a Presentation Phase. A (site, plant or
facility) visit for the team members will be conducted on the first day of the workshop.
(optional)

The workshop will be initiated by presentations from the Client, who will describe
the objectives of the Assignment and any constraints that will be placed on the study
team. The designers will explain specifically how the design accomplishes the Client’s
objectives and the details of that design. The workshop will include a detailed
function engineering of the major project elements. The team will generate a list of
ideas for project improvement followed by an evaluation of those ideas. This
evaluation will include input from key Client decision makers before proceeding with
development of recommendations. On the last day of the workshop, a presentation
of the recommendations will be provided to the Client decision makers and key
representatives of the design team.

The workshop will be held at , in .

The cost of providing the workshop refreshments and all other costs associated with
the meeting facilities, including telephone, photocopying, and sending fax will be
borne by ___________.

To ensure that the study team has complete information about the project criteria,
the Client will provide at a minimum, the Client Assigned Manager and appropriate
key members of the design team for the first day and last day presentations as well as
the mid-point review meeting.

POST WORKSHOP

The Value Engineering Consultant will conduct a four-hour post-workshop study

Decision/ Implementation Meeting at ____________ location in the _______ area following
receipt by the study leader of the written designer responses to the Preliminary
Report. The purpose of this Decision/Implementation Meeting is to assist the Client in
making decisions regarding acceptance or rejection of the individual value proposals.
Attendees will consist of key Client staff, key designer staff and the study team leader.

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SCHEDULE

The work will be performed in accordance with the following schedule:

Pre-Study Activities Upon receipt of a signed contract and notice to

proceed
Workshop(s) ***Insert workshop dates****
Preliminary VE Study Report Fourteen (14) days after completion of the
Workshop
Decision/Implementation Meeting On a date to be determined by The Client, The
Value Engineering Consultant, and the designer
Draft Final VE Study Report Fourteen (14) days after the
Decision/Implementation Meeting
Final VE Study Report Fourteen (14) days after receipt of CLIENT
comments on the draft report

DELIVERABLES

This value study effort will include the following deliverables, all of which are related
to the results of the workshop. These deliverables are:
1. Study Team Presentation Handout
2. Preliminary Value Study Report
3. Draft of the Final Value Study Report
4. Final Value Study Report

The Preliminary Report will be prepared in the Value Engineering Consultant report
format, and will be a compilation of the handwritten products developed in the
workshop.
The draft Value Study Report will be prepared in the Value Engineering Consultant
report format. The purpose of this draft report is to give the Client and other
appropriate reviewers the opportunity to check the final Value Study Report prior to
its final issuance.

The final Value Study Report is the final documentation of the VE study. The report is
a finalized version of the Draft Report including the incorporation of the Client’s
comments. The submittal of the final report concludes the Assignment.
THE CONSULTANT will provide the Client with the following number of copies of each
report:
1. Preliminary VE Study Report (fill in # of copies desired)
2. Draft of Final VE Study Report (fill in # of copies desired)
3. Final VE Study Report (fill in # of copies desired)

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