Value Engineering: A Powerful Team Approach to Save Money & Improve Facility Performance

Transcription

1 Value Engineering: A Pwerful Team Apprach t Save Mney & Imprve Facility Perfrmance Richard Sievert, Ph.D., CFM, CVS, PMP, CCC It is incumbent upn facility managers t develp plans t maximize value and minimize csts. Facility managers can intrduce psitive change in their rganizatins and develp substantial savings by using the value engineering methd t analyze peratins and prgram prjects. Value engineering (smetimes called value analysis r value management) is a systematic team methd t analyze the functins f a prject, prcess, prduct, system, r service, establish the wrth f thse functins, and prvide the required functins at the lwest verall cst withut lss f perfrmance. Sme facility management applicatins fr value engineering studies/wrkshps that represent pprtunities fr substantial cst savings include: Prgram and budget facilities prjects Develp new facility design, peratins, and maintenance standards Reduce the cst t cnstruct r remdel a facility Reduce crprate real estate divisin perating expenses Evaluate HVAC system replacement and/r energy retrfit ptins Optimize existing prperty, plant, and equipment assets Reduce annual energy csts Make better decisins regarding envirnmental plicy and sustainability alternatives The value engineering methd was develped by Larry Miles during the Wrld War 2 era at General Electric Cmpany while he was wrking in the purchasing department. He was frustrated because the parts and prducts that GE needed t fulfill manufacturing cntracts were t cstly r impssible t btain because f the war effrt. He asked tw simple questins, What des the prduct d and what else will d the jb? He sn discvered that by specifying perfrmance requirements in terms f functins, rather than the actual prduct r part, General Electric was able t meet its cntractual requirements at reduced cst and ftentimes at imprved perfrmance. The use f value engineering spread thrughut manufacturing, cnstructin and gvernment as a prject prgramming and cst management tl. Hwever, applicatin f the value engineering methd became less ppular in the United States ver the years as rganizatins were able t make mney in spite f their inefficiencies. Tday there is a renewed interest in value engineering wrldwide as rganizatins are searching aggressively fr ways t survive and cmpete in ur increasingly resurcecnstrained glbal business envirnment. Facility managers shuld seriusly cnsider making value engineering a cre cmpetency and standard practice within their rganizatins. Value engineering prvides a way t accmplish mre with less and expedites cnsensus decisin-making necessary t explit changes as prfitable business pprtunities. Perfrming a value study als demnstrates gd stewardship ver use f resurces and demnstrates a cst avidance effrt t senir management and investrs. 1

2 Cst/enefit Analyses Peridic value engineering studies n buildings, systems, and peratins are necessary t insure that they are designed, cnstructed, perated and maintained in the mst ecnmical way, taking int cnsideratin functinal requirements and life-cycle csts. The apprach is t examine the prcesses, systems, and cmpnents that require the greatest expenditures, t challenge the csts and functins, and cmpare them with alternatives n a cst/benefit basis. Peple knw the price f smething when they make a purchase but they seldm knw its value. Determining the value f smething invlves a cmparisn f what else will d the jb. Value is the lwest cst way t perfrm the functins required by custmers. Prblems are understd best when they are brken dwn int their varius functins and cmpnents. Define the functins f the value study subject and develp the parts r tasks required t accmplish the functins, r list the parts r tasks f the value study subject and then identify the assciated functins. Gd cst data is essential in any meaningful value study. Areas that represent the highest life-cycle csts are the best candidates fr value engineering savings pprtunities. Paret s Law f Distributin states that 80 percent f the items tend t represent 20 percent f the csts f a prject, prduct, system r service. Prepare an itemized breakdwn f the csts that make up the subject being studied; and lcate the high cst areas fr value study using Paret s Law. Distributin f csts t functins helps custmers understand hw their mney is being spent. Value engineering is a rigrus prcess that is accmplished by fllwing the steps in each phase f the standard value engineering study jb plan: THE VALUE ENGINEERING JO PLAN Phase 1: Infrmatin Gathering Define the Prblem Cllect Data Select Subject fr Study Cnduct Custmer Attitude Survey Create a Cst Mdel Phase 2: Functin Analysis Identify and Classify Functins Determine Functin Csts Prepare a F.A.S.T. Diagram Allcate Csts t Functins Apply Paret s Law Identify Value Mismatches 2

3 Phase 3: Creativity Generate Alternative Slutins rainstrm Ideas Phase 4: Evaluatin Evaluate Ideas Apply Life Cycle Cst Analysis Phase 5: Develpment Develp the est Alternatives Phase 6: Presentatin Present Recmmendatins fr Cnsideratin by Tp Management Infrmatin Gathering and Functin Analysis During the Infrmatin Phase cst data is cllected alng with sufficient infrmatin needed t understand the custmers prblems, attitudes, needs and pririties. Custmers have a tendency t want mre than they can affrd frm their facility investments s it becmes necessary t separate needs frm wants. Next, during the Functin Analysis Phase the value study team identifies, classifies, and analyzes functins within the scpe f the value study. Functin analysis is the characteristic which mst clearly differentiates value engineering frm cnventinal cst reductin methds. Functins describe required perfrmance actins withut describing specifically hw each functin is perfrmed. Identifying perfrmance requirements in terms f functins frees ne s mind frm all restrictins assciated with the riginal prduct, system r service and thus has the ptential f stimulating many different ideas fr slving the custmer prblems. Functin descriptins shuld be as brad and generic as pssible t help fster ideas fr satisfying custmer requirements. Figure 1 is a chart that identifies the cmpnents, functins, and related csts fr installatin f an HVAC system serving a typical ffice space. It als classifies the functins as basic (essential) r secndary (supprt) functins. A fundamental rule f value engineering is that all functins must be described using tw wrd verb-nun cmbinatins. Fr example, during a value study f facility peratins, csts fr material, labr, equipment and utilities are identified and translated in terms f functins. Examples f facility functins might include manage prjects, adjust capacity, maintain facilities, safeguard ccupants, cntrl envirnment, illuminate space, cnserve energy, assure cnvenience, enhance image, and dispse waste. Sme functins like assure cnvenience r enhance image might nt be essential fr a prduct, system, r service t wrk but they increase custmer acceptance and help smething sell. Imprving Value versus Reducing Csts Precisely defining the verb-nun requires a better understanding f what the custmer wants and what the facility, service, prduct, r system must d fr the custmer. This is a radical departure frm cnventinal cst reductin, which simply asks the questin What is it? and then cncentrates n making the same item less expensive by asking hw d we reduce its cst. Mrever, many peple equate cst reductin with staff reductins and cannt be expected t be enthusiastic with a prject t d 3

4 that. Imprving value is the cncept behind value engineering. Value study results may even indicate that it is necessary t apply additinal resurces t thse areas which are mst critical t maximize custmer value. Analysis f thse functins that make smething wrk and sell als differentiates value engineering frm traditinal cst avidance r cst reductin effrts. Value engineering helps businesses understand what functins the custmer needs and is willing t pay fr and then uncvers new lwer cst ways t satisfy thse requirements. Prjects, prducts, systems, and services are justified by their ability t perfrm functins desired by the custmer. During the Functin Analysis Phase the value engineering study team allcates actual csts t functins n a F.A.S.T. (Functin Analysis System Technique) Diagram t graphically shw functins and their relatinships. Develping a F.A.S.T. diagram als aids in identifying missing functins and value mismatches. Value mismatches are high cst functins with lw acceptance frm the custmers viewpint. Figure 2 is F.A.S.T. Diagram that identifies, classifies, and shws the lgical relatinship between functins fr a crprate facility management department. Allcating csts t functins n a F.A.S.T. diagram helps teams t identify value mismatches. Generating Ideas, Evaluating Ideas, and Develping Slutins During the Creativity Phase brainstrming techniques are used t generate alternative lwer cst ways t satisfy custmer requirements. The ideas generated during the creativity sessin are ranked accrding t their feasibility, cst, and prbability f being accepted by the custmer during the Evaluatin Phase. Ultimately the ideas that represent the best pprtunities fr value imprvement are develped int a written reprt with recmmendatins and presented t the custmer fr cnsideratin. Value engineering is a pwerful team methd fr defining custmer, stakehlder and user requirements, develping prject budgets, and demnstrating a cst avidance effrt. The prcess helps multidisciplinary teams build a shared understanding f the functins f a subject under study and their assciated csts and wrth befre prducts, systems, and methds are selected and lcked int the prject f building peratin specificatins. Value engineering can be perfrmed anytime it is prfitable t d s. Hwever, cst savings pprtunities are greatest when a value study is perfrmed in the planning and cnceptual phase when the scpe rather than details f a prject are being defined. 4

5 FUNCTION COMPONENT CHART EXAMPLE FOR AN HVAC SYSTEM VALUE STUDY COMPONENT COST FUNCTIONS VER NOUN AIR CONDITIONING UNIT (INCLUDING REMOTE CONDENSER) $18, COOL AIR FILTER AIR HUMIDIFY AIR CLASSIFICATION = ASIC S = SECONDARY OUTSIDE AIR ECONOMIZER INTAKE LOUVER RELIEF LOUVER PRESSURE RELIEF FAN PIPE,VALVES & FITTINGS $ $1, $3, $15, $3, SUPPLY AIR FREE COOLING RELIEVE PRESSURE TRANSPORT FLUID CONTROL FLUID PIPING LAOR $9, INSTALL PIPING INSULATION PIPE $1, INSULATE PIPE DUCTWORK $1, INSULATE DUCTWORK TEMPERATURE CONTROLS $15, CONTROL TEMPERATURE Figure 1 5

6 ASIC FUNCTIONS HOW? FACILITIES 25% DISPOSE WASTE 1% UTILITIES 2% FFE 2% INVENTORY F.A.S.T. DIAGRAM HVAC 50% CUSTODIAL 25% ROOF 2% GROUNDS 23% ENERGY TELECOM/DATA CLEAN FLOORS WASH WINDOWS CUT GRASS REMOVE SNOW WHY? FACILITIES PERSONNEL TASK SECURITY FOOD-SERVICE PROCURE INVENTORY SPACE 10% PLAN FACILITIES ADMINISTER LEASES PLAN WORK PLAN UDGETS SCHEDULE WORK PAY RENT/TAXES/ INSURANCE PROJECTS 30% RELOCATIONS SUPPORT FUNCTIONS ASSURE CONVENIENCE SATISFY USER CONSTRUCTION ASSURE DEPENDAILITY ATTRACT USER Figure 2 Reference: Sievert, Richard, The Value Engineering Jb Plan, FMJ Nv/Dec 2011, IFMA 6