Value engineering (VE) is widely used in the transportation industry today. The VE process outlined in this book was developed by Muthiah Kasi and his colleagues at Alfred Benesch & Company over the past 30 years. The techniques are based on work that was created by Larry Miles, Thomas J. Snodgrass, Ted Fowler, Thomas Cook and other eminent value engineers. This book, focusing on one transportation case study, illustrates the method to create an appropriate way to address transportation needs. It is a guide on how to perform a VE. It includes:Identification of users, owners and stakeholders and their needs, desires and constraintsDevelopment of project functions based on the constraints, needs and desiresAnalysis of the functions and consideration of function costIdentification of value and mismatchesDevelopment of creative ideasCreation of alternativesMeasurement of alternatives against performance, acceptance and costDevelopment of leading alternatives Recommendation and presentation of a performed alternative with support documentation

Function Approach to Transportation Projects

A Value Engineering GuideBy Muthiah Kasi

iUniverse, Inc.

Copyright © 2009 Muthiah Kasi
All right reserved.
ISBN: 978-1-4401-5144-6

Contents

Preface..................................................vAcknowledgements.........................................ix1.0 Introduction.........................................12.0 Information Phase....................................93.0 Information Phase-Functions..........................194.0 Information Phase-Function Logic.....................275.0 Information Phase-Cost...............................456.0 Information Phase-Function Cost......................577.0 Speculation Phase....................................758.0 Evaluation Phase-Screening...........................879.0 Evaluation Phase-Ranking.............................10110.0 Development Phase...................................12311.0 Presentation Phase..................................13312.0 Organizing a VE Study...............................15113.0 Conclusion..........................................161Glossary.................................................171References...............................................177Index....................................................179

Chapter One

Introduction

Objective

The objective of this chapter is to introduce the VE methodology and VE job plan.

History Of Value Engineering Methodology

Larry Miles developed the concept of value methodology while working at General Electric during World War II. Due to shortage of materials, parts and personnel, products were in great demand. Mr. Miles, when purchasing, approached the problem of shortage by asking the question, "What does it do?" Once he had an answer, he explored the question, "What else will do the job?" Through this process he substituted an equivalent or better product that performed the same function as the one in shortage. This new "function based approach" became very successful and was accepted as a value analysis technique. Larry Miles defined value analysis as "... a system for use when better than normal results are needed."

In the 1960's, Charles Bytheway developed a structure for functions which later became a widely known concept, Function Analysis System Technique (FAST). Later, Thomas J. Snodgrass and Ted Fowler developed the concept of a customer-oriented FAST diagram. The term FAST in this book refers to a Function Logic Diagram.

What is Value?

Value is achieved when the project has a very high performance while reaching a broad acceptance at a reasonable cost. Value is subjective. It reflects people's feeling and their needs at the time. Sometimes people can't define or describe what they want. They confuse needs and desires leading to the perception of a constraint.

People value things differently. Consider this the next time you are in a large parking lot. You will see cars of different types, size, color and price. Each one of those cars was purchased because the owner decided it was the best value for them. As an outsider, we cannot make assumptions about the motivation behind those purchases because we don't know the owners. Don't be surprised if a wealthy person chose an economical car or if a luxury car owner can't quite afford the car payment. Similarly, value engineers should not assume how owners set emphasis on the variables that define value. The VE process described in this book places a high priority on understanding the stakeholders-including the owner, their needs, desires and constraints-in order to determine value.

For example, during a VE study of a train station entrance, the owner insisted on an entrance with the best spatial quality. The team developed the entrance with various shapes and dimensions. The owner kept rejecting each idea as too small, too big, too intimidating or too restrictive. As the team got frustrated, they asked him to define his version of spatial quality. He calmly replied, "I will tell you when I see it." The team proposed more ideas until the owner became excited and said, "That's it!" This example demonstrates how subjective the term value can be and how important it is to involve the owner in this part of the process. When the owners, or their representatives, participate in the study, it helps the team define the value of a project.

Determining Value

Exploring the definition of value is a key task during any VE study. When defining value, value engineers should weigh the circumstances under which value is determined. In addition, they should recognize that the constraints, needs and desires of the users, owners and stakeholders influence value.

Years ago, I arrived at a train station around 5:30 am. The temperature was -20 degrees with a lower wind chill index. I needed 40 cents for a bus ride. I checked my pocket and realized that I had only 39 cents. I checked my wallet for a dollar bill to drop in, but all I had was a $20 bill. I couldn't find a cab anywhere. I ended up walking a mile to the office in the cold weather. I would have used as much as $5 to get a bus ride. The question is "What is my estimated value of a penny?" It is definitely not $20. Under the circumstances, I set an upper limit value of $5. What I learned was that the circumstances often dictate the value, but there is always a limit.

Value by Comparison

Value engineering encourages people to ask the question "Why?" It makes people compare the benefits of various options and determine their worth. This approach can be practiced within the context of every decision in life. When my son, who was living in Illinois, wanted to go to an out-of-state university, I asked the question, "Why do you prefer to go to an out-of-state university?" His answer indicated that he wanted to go school with some of his friends. Out-of-state tuition would have cost $9,000/year ($36,000 for four years). For my son the out-or-state school would accomplish the function of Feel Comfortable. Instead of telling him it would cost us an additional $36,000 we equated that to a cost of a sports car. We promised him a car upon graduation if he chose the in-state university. He was given a choice of two functions: Feel Comfortable vs. Receive Gift. In the end, he chose the Attract User function over Assure Convenience function by opting for the in-state school. When he graduated from school, his accomplishment and his maturity made him decide he didn't want the sports car from us. He understood later that his decision to stay in-state resulted in a much higher value. My wife and I were not surprised with the outcome. Similarly in projects, value engineers should look for ideas with alternative functions to compare. Decision makers will be able to understand appropriate value comparisons and will be able to better appreciate its long term use.

Consider an interchange reconstruction project with two alternatives: one would keep all ramps open for a three year construction period, the second would require the ramp traffic to be rerouted with a two year construction period. Which alternative has more value, more inconvenient for a shorter period or less inconvenient for a longer period? These questions are very subjective. Under various circumstances both alternatives are acceptable. Defining value is a critical part of the VE process and instrumental to the ultimate satisfaction of the stakeholders. One way to define value is by comparing various alternatives.

What is Value Engineering?

Value engineering is a systematic team approach to creatively enhance the value of a project or product. In the industry, VE is often referred to with various other names such as value analysis, value planning and value management. When the technique is applied during project planning, it is called value planning. If the techniques are used on an already designed or constructed project, it is called value analysis. The approach to each of these varies slightly, however the job plan remains the same.

VE Job Plan

Value engineering advocates a step-by-step, systematic approach to solve a problem. This systematic approach is embodied within a job plan that has several phases and imposes a set of rules that must be adhered to. The rules may appear to be simple, but they are vital to the success of the value engineering study. This section describes a typical job plan and explains the rules of the job plan and the reasoning behind them.

A typical job plan consists of the following phases:

Job Plan

* Information Phase - Function Analysis Phase * Speculation Phase

* Evaluation Phase

* Development Phase

* Presentation Phase

These phases are illustrated below and are described in more detail in the chapters that follow. These phases can also be summarized with a series of questions, also presented here.

Information Phase

The Information Phase is divided into two sections. The purpose of the first section is to understand the user, owner and stakeholders, and their constraints, needs and desires. The second section is to translate this information into functions of the project. This includes a unique VE technique, function analysis. Function analysis lists the functions, places them in a logical manner and allocates cost to each of them. High cost functions will be tested for their worth. This will be the basis for the speculation of ideas.

Critical questions answered:

What is it?

What does it do? (functions)

What does it cost?

What should it cost? (function cost)

To define functions of the project, the VE team needs to know the owner's/designer's intended solution. The status of this solution depends upon the stage of the project. The following are suggested terms to use to convey the status of the project:

Phase Designation

During Planning As Given

During Design As Intended

At the Completion of Design As Designed

The VE alternatives generated by the VE team should be designated As Proposed.

Speculation Phase

In this phase, the VE team explores alternative ways of performing functions that enhance, or at least maintain, performance or acceptance at a reasonable cost. The key to speculation is to let the mind wander freely, with no limitations. Several techniques can be used to assist the participants in exploring the widest possible range of ideas. These are described in Chapter 7.

Critical questions answered:

What else will do the job?

What if ...?

What is the least expensive way of performing each function?

Evaluation Phase

In the Evaluation Phase the VE Team will rate and rank feasible ideas. The evaluation phase is performed in two steps, screening and ranking.

Critical questions answered:

Will it work?

Will it be acceptable?

Can we afford it?

Development Phase

In this phase the VE team will add information that will facilitate selection of a preferred alternative among the highest ranked alter- natives in the Evaluation Phase.

Critical questions answered:

How can we make it acceptable to owners/users?

What can we do to make it better?

What can be done to make it cost less?

What are the strengths and weaknesses of the leading alternatives?

Presentation Phase

In the Presentation Phase the VE team prepares to convince decision makers to accept the study results. This is accomplished through an effective presentation with facts and features.

Critical questions answered:

How do we present our recommendations?

What are the road blocks?

Who really makes the decision?

Rules for the VE Job Plan

The rules that govern each phase of a value engineering study are briefly described next.

Information Phase

Do not speculate

Do not jump to conclusions. Gather as much information as possible

Do not evaluate

Understand the problem

Speculation Phase

Do not bring preconceived notions to the discussion

Do not question the validity of an idea

Encourage everyone to participate in the creative phase

Evaluation Phase

Do not create

Do not jump to conclusions

Judge each idea against the criteria

Always be prepared to explain your ratings

Development Phase

Improve ideas

Double check that assumptions are reliable

Presentation Phase

Do not assume that ideas are good

Demonstrate their worth

Follow these three steps: inform, instruct and influence

Conclusion

In this chapter, an overview of the value engineering methodology was presented. The questions listed under each phase provide foundations for the understanding of the phase. Rules were presented for each phase. These can be used as checkpoints to ensure the overall objectives for that phase are being met, while adhering to the appropriate parameters. The next chapter describes the first part of the Information Phase: Understanding the project and the stakeholders.

Chapter Two

Information Phase

Objective

The objective of this chapter is to understand the purpose and need of the project. Needs and desires of the stakeholders, owners and users are also discovered. The team needs to understand the problem, the given solution, the stakeholders affected by the problem and the expectations of these stakeholders. This understanding will later be translated into project functions. Project functions are described in the Chapter 3.

Introduction

"If I had only known what I know now, I could have saved a lot of time and pain."

We have all heard similar statements many times in our lives. Exploration of ideas or events prior to the conclusion is key to a better decision process. This is exactly what value engineering process expects in its job plan. Understanding the existing conditions, exploring people's needs and desires are all a part of the information gathering phase. The job plan for VE begins with the Information Phase. In this phase the following questions are asked and answered:

What is it?

What does it do?

What does it cost?

What should it cost?

These questions can be addressed by describing existing conditions, understanding the issues or the problems, identifying the people behind the issues, discussing the As Given solution, if any, and estimating the cost of the solution. In addition, the question "What does it do?" is addressed in terms of functions. The concept of function is the backbone of the VE process. This process is explained in detail in Chapter 3.

Process

In order to ensure that all of the appropriate information is gathered, the following steps are listed as a guide. Explore each of these steps in detail and document the results. This list is only a guide, feel free to explore other areas that may uncover information useful to the project.

Information

Step 1. Describe project including the project history (Chapter 2)

Step 2. Identify stakeholders and develop constraints/needs/desires (Chapter 2)

Step 3. Determine the project functions from the list of stakeholder constraints, needs and desires (Chapter 3)

Function Analysis

Step 4. Develop a Function Logic Diagram from the perspective of the project. (Chapter 4)

Step 5. Determine the cost of each element. (Chapter 5)

Step 6. Distribute the cost of each element to each of its functions and analyze its worth. (Chapter 6)

Stakeholders

A key component of the Information Phase is to identify the stakeholders. Stakeholders are the ones who determine if the project is a success or failure.

There are three kinds of stakeholders: users, owners and others.

Owner

* Financially responsible for funding the project

* Shares in the funding

* Represents the owner's interests

* Manages the project

User

* Actively uses or maintains the project

Others

* Financially affected by the project

* Environmentally concerned about the project

* Disturbed by any required change in habits or recreation

Define Stakeholder Constraints/Needs/desires

Each stakeholder has expectations regarding the project. These expectations are grouped into constraints, needs and desires. Descriptions of these are as follows:

Constraints

* Legal requirements

* Standards of the owner

* Physical conditions of the site

* Commitments to stakeholders

Needs

* Expectations that must be fulfilled by the project if constraints are not violated

* Limitations or restrictions that are imposed by stakeholders but which can be violated. The degree of violations will be considered in the evaluation of alternatives.

Desires

* Expectations that should be fulfilled if cost is not a factor.

There are several points to keep in mind when identifying the stakeholder constraints, needs and desires. First of all, the majority of constraints are dictated by the law and the applicable codes and standards for land use. These constraints are too numerous to be listed for each VE Study.

(Continues...)

Excerpted from Function Approach to Transportation Projectsby Muthiah Kasi Copyright © 2009 by Muthiah Kasi. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.