BE A PROJECT HERO…. - APWA Washingtonwashington.apwa.net/Content/Chapters/washington... ·...

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BE A PROJECT HERO….

| © MENG Analysis 2018. All Rights Reserved.2

BE A PROJECT HERO,

EMBRACE VALUE ENGINEERINGAPWA Washington Fall 2018 Conference, October 3, 2018 Wenatchee, Washington

Value you can Build On!

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About usAt MENG Analysis we are passionate about improving quality of life through optimization of the built environment. We leverage world-class expertise to perform independent quality and cost performance services that increase value, reduce risk, and deliver exceptional project performance.

© MENG Analysis 2018. All Rights Reserved.

Timothy BuckleyAIA, VMA, LEED AP BD+CPrincipal,ArchitectFacility Condition AssessmentsValue AnalysisConstructability Review

Sarah PartapMBA, VMA, Principal,Director of OperationsProject ManagementFacility Condition Assessments

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Life-Cycle of ServicesMENG Analysis provides Independent Quality and Cost Performance Services


Commissioning(Cx)

Constructability Review

Value Engineering (VE) / Value Analysis

CostAnalysis

Performance Engineering

Facility Condition Assessment

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01Value Engineering Best Practices

• What is Value Engineering• Standards & Laws• Certified, Qualified, and

Independent Team of Professionals

• Value Methodology & VM Workshop

• Optimal schedule for VE

02The Benefits of Value Engineering• Function• Budget• Scheduling

Presentation ObjectivesHow To Maximize the Value of Value Engineering.


03The Role of Risk Analysis Within a Value Engineering Workshop

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VALUE ENGINEERING

• What Value Engineering is NOT, and what it IS• Origins, Evolution, SAVE International • Advantages with an Independent Professional Team• Value Methodology & VM Workshop• Laws• The Best Time to schedule the study


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Its NOT about cutting quality to reduce project costs.

Its NOT about short-term, short sighted revisions.

To be truly effective, VE should NOTbe conducted by anyone on the team with a conflict of interest.

When key function got “VE’d” out.

It is NOT about cost-cutting (trade-offs, or gutting projects).

Its NOT about just using cheaper materials.

It is NOT used just to get a project “back on budget”. What Value

Analysis is NOT

Debunking Misconceptions


…..These are rarely: in the Owners best interest, and don’t protect quality or preserve value!

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VALUE ENGINEERING IS:A systematic process implemented by a multi-discipline team to identify alternatives that improve the value of a project with the most resource-efficient solutions.

Risk Analysis

Value Methodology

Performance FocusValue =

Function / Resources

First Costs +

Life-Cycle Costs


SAVE International® is the premier international professional society devoted to advancing and promoting the Value Methodology. SAVE provides its members with education and training, publications, promotional tools, certification, networking and recognition.

Value Methodology (VM). Also known as value engineering, value analysis and value management, the process can decrease costs, increase profits, improve quality and performance and enhance customer satisfaction on projects, processes and products.

Value = Function (or Performance)Resources

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OriginsWORLD WAR IICritical shortages of resources: materials, labor, parts, time, and funding.

1940’s: Larry Miles at GE developed the Value Method:A Systematic approach to problem solving. based on evaluating Functions of products, systems, and services.

Increased efficiency and continued production by analyzing functions and generating alternative materials & systems accomplishing the required tasks at a lower cost.

Function Analysis Approach: more creative and opens the door to generating more problem solving alternatives, than focusing on the product of process.

1957 the Society of American Value Engineers (SAVE) incorporated.

The Systematic Value Methodology Job plan process and Value Methodology Workshop have continuously been refined for improvements, but remain time tested and proven effective.© MENG Analysis 2018. All Rights Reserved.

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Value MethodologyAdopted Worldwide

Advantage of the Qualified Independent Team

Qualified Teams of diverse subject matter experts apply fresh eyes to projects, detached from the day to day, using the Value Methodology process based on Functions, bring new perspectives, creativity, and can also be more free to explore alternatives.In collaboration with the stakeholders, the Independence of the review team gains additional benefits. With no preconceived history is free to explore fresh ideas, and no real or apparent conflict of interest.


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11 © MENG Analysis 2018. All Rights Reserved.

TEAMHighly qualified team comprised of diverse professional subject matter experts:• Trained and Certified SAVE International team leader

and facilitator.• Experienced, highly qualified design professionals, mirror

the major disciplines of the Design team to provide peer to peer review.

• Cost Estimator with up to date local industry knowledge. • Contractor / Construction Manager.• Independent, third party review.

Value Analysis

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01Information Phase

Obtain an understanding of the project.

02Function Analysis Phase

Identify, classify, and organize Functions, Identify the greatest opportunities for Value.

03Creative Phase

Generate a large number of alternate ideas to accomplish the desired Functions.

04Evaluation Phase

Judge and filter ideas generated in the Creative Phase.

Value MethodologyThe Value Methodology (VM) is a systematic and structured approach for improving projects, products and processes. VM, which is also known as value engineering, is used to analyze and improve manufacturing products and processes, design and construction projects, and business and administrative processes.VM helps achieve an optimum balance between function, performance, quality, safety and cost. The proper balance results in the maximum value for the project.Value is the reliable performance of functions to meet customer needs at the lowest overall cost. - SAVE International


05Development Phase

Analyze, refine and develop ideas into proposals and estimates.

06Presentation Phase

Report back to the Owner and A/E team on the study Value opportunity findings.

VM WorkshopSystematic and scientific approach focused on value in six essential steps:

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Washington State:• State Law, and Legislative Intent• Value Engineering Guidelines: it is the

policy of the State of Washington that major facility designs be based on achieving the best value over the life of the project. The value can be achieved in the initial construction cost, building efficiency, long term operating cost, maintenance costs, or personnel costs necessitated by a particular design.

Excerpt From DES Value Engineering Guidelines

Federal• OMB Circular-A131, Requires Federal

Agencies use VE• Value Engineering; using a process

consistent with SAVE International and SAVE International’s Job Plan as well as criteria that the State sets forth.

• GSA generally contracts for two value engineering studies - one at concept design and the second at completion of design development. Value

Engineering by Law

Recognizing Value and the advantages to improved Functions, Quality, First-Costs and Life-Cycle Cost savings for taxpayers, Numerous Governmental Agencies mandate Value Engineering be included in the process


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Department of Defense (DOD), reported project savings between 2011-12

$10 Billion

Federal Office of Management and Budget (OMB)

“Value Engineering is an effective technique for cutting waste and inefficiency—helping Federal agencies reduce acquisition costs, improve performance, enhance quality, and foster innovation. “

“According to recent reports of VE activities submitted to OMB, VE has generated billions of dollars in savings and cost avoidance.”


Department of Transportation, Federal Highway Administration,project savings between 2010-12

$1-2 Billion/year

Department of State,life-cycle savings already captured since 2008

$100’s of Millions

40:1 ROI often seen from VE StudiesAccording to OMB

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SCHEDULINGThe optimal time to conduct Value Analysis is in the early design phase, where design solution concepts have been established along with the project cost estimate, but it is not too late to make course alterations based on optimizing value based on the findings of the Value Engineering Study.

Cost Estimate

Completed

Opportunity lost if later in process

Earlier Design

Package

75 -100%SD Phase


VA

Opportunity to Influence Project

Expenses of Project Changes

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SCHEDULING VA in Alternative Delivery Public Works ProjectsThe optimal time to conduct Value Analysis in Alternative Public Works Projects is still the early design phase,But now the opportunity includes inclusion of the “Constructor” in the Value Analysis Process.

Constructor Involved

Early

Reduced OwnerControl

Risk Shift

VA in Initial Design


VA

DesignPreTraditional Design – Bid - Build

Bid Construction$

Pre Design and Construction

Bid

$Design-Build

VA

Bid

Bid Bid Bid

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VE in Alternative Delivery Projects• Maximize opportunities for the

independent ”Second Opinion”• VE team is focused on the interests of

the Owner.• Emphasis on Function, Quality, Budget,

Maintenance and Operations, and Life-Cycle Costs.

• Diverse Multidiscipline Professional Peer to Peer VE team.

• Solutions are not just cost-cutting.• Constructor included in VE process.• Value Engineering solutions Buy-In.• VE and implementation decisions prior

to Negotiating Guaranteed Maximum Price.

• Reduce optics concern for conflict of interest .

• New Ideas and validation of past decisions.


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AnalysisUsing Value Engineering for Risk Management:• Identifying Project Risks• Risk Evaluation• Risk Response Planning

Value Engineering


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Risk Analysis:While Risk Management should be conducted throughout the life-cycle of a project, Risk Analysis integrated in the systematic VE study utilizes the skills and experience of the independent subject matter experts. Identifying, evaluating, and prioritizing potential project risks.

Prioritize

EvaluateIdentify Risks

Informs Risk Management

Planning


Evaluate Risks: Establishes priorities Using a Qualitative Risk Analysis Method, evaluating each identified risk’s:• Probability of occurrence, • Impacts of the occurrence to project costs and schedule.

Identify Risks: Utilizing the VE Teams subject matter experts and experience to generate a list of potential project risks that threaten the Projects Goals, Objectives, and Deliverables.

Risk Mitigation / Contingency: During the Development Stage of the Value Engineering Process, the VE team can begin to address possible strategies to address priority risks. Capture the expertise to inform the owner and project teams Risk Management Plan activities.

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Probability

Cost Impact

Schedule Impact

Identify

Prioritize


Prioritization ExampleSimple Qualitative Risk Analysis Method:

Method for assessment of priorities for each identified Risk register item. The team jointly intuitively quantify the risk items on scales adjusted to the project scope:

Assumed Probability of Risk occurrence: Example Scales:• Low Probability L = 1• Low Medium LM = 2• Medium M = 3• Medium High MH = 4• High Probability H = 5

Quantify Cost Impacts if the Risk item occurs: Example Scale:• L (0-2.5% impact to budget)• LM (2.5% - 5%)• M (5% - 7.5%• MH (7.5% - 10%)• H (10% - < )

Estimate Schedule Impacts: Example Scale:• L < 1 week • LM 1-2 weeks• M 2-3 weeks• MH 3-4 weeks• H 4 weeks and up

Brainstorm to generate a Risk RegistryImpacting: Function, Cost, Schedule

RISK REGISTER FACTORS PROB IMPACT SCHED PROB IMPACT SCHED SCOREConcealed ConditionsSoilsBid ClimateHazmatSite / Work AccessService InterruptionSafety for Students / Staff/ VisitorsUnresolved Agency IssuesFloor Elevation between kitchen and commons

RISK REGISTER FACTORS PROB IMPACT SCHED PROB IMPACT SCHED SCOREConcealed Conditions H 5Soils MH 4Bid Climate H 5Hazmat H 5Site / Work Access MH 4Service Interruption M 3Safety for Students / Staff/ Visitors L 1Unresolved Agency Issues L 1Floor Elevation between kitchen and commons L 1

RISK REGISTER FACTORS PROB IMPACT SCHED PROB IMPACT SCHED SCOREConcealed Conditions H M 5 3Soils MH M 4 3Bid Climate H H 5 5Hazmat H LM 5 2Site / Work Access MH L 4 1Service Interruption M L 3 1Safety for Students / Staff/ Visitors L L 1 1Unresolved Agency Issues L L 1 1Floor Elevation between kitchen and commons L L 1 1

RISK REGISTER FACTORS PROB IMPACT SCHED PROB IMPACT SCHED SCOREConcealed Conditions H M M 5 3 3 45Soils MH M M 4 3 3 36Bid Climate H H L 5 5 1 25Hazmat H LM L 5 2 1 10Site / Work Access MH L L 4 1 1 4Service Interruption M L L 3 1 1 3Safety for Students / Staff/ Visitors L L L 1 1 1 1Unresolved Agency Issues L L L 1 1 1 1Floor Elevation between kitchen and commons L L L 1 1 1 1

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Risk Response Planning :• Acceptance• Contingency• Transfer• Mitigate• Avoid

Example Risk Categories:

• Technical• External• Organizational• Project Management


The Value Engineering Risk Analysis informs the Owner, Project Manager, and Project Team about potential Risks, and Recommended Priorities to include in further Risk Response Planning in the Risk Management Plan

Risk Response Planning Options

• Acceptance – Acknowledge and accept consequences

• Contingency – Define response actions to reduce impacts.

• Transfer – Pay to shift responsibility to others, purchase insurance.

• Mitigate – Take early action to reduce risk impact potential.

• Avoid – Take concrete action to change the project and eliminate the threat.

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Risk Response and Risk Management PlanningFrom the Risk Analysis Prioritization, develop strategies to address the priority Risk Register Items.Explore potential options to each Risk Priority item (Accept? Contingency Plan? Transfer Risk, Mitigate Risk, or Avoid Risk).

The Owner and Design Team can use this information to support the Risk Management Plan. Identify roles and responsibilities, determine step by step qualitative strategies, timelines, monitoring, and controls.


Risk ID

Risk Impact Discussion Risk Category

Response Type DiscussionAccept No changes to plans. Additional funding may be required if discovered conditions exceed estimate

Contingency Increase Budget Contingency for unknowns, see Cost Estimate Adjustment

Transfer Increase budget and Switch to GC/CM with Guaranteed Maximum Price (Contractor bears risk)

Mitigate Conduct pre‐project selective demolition to expose conditions.

Avoid New in Lieu of Modernization (build all new structure, and demo the existing), see proposal P3

Accept It is what it is, hope for the best.

Contingency Add monitoring of the existing structure to the scope, add additional budget contingency.

Transfer Require soil remediation/protection as bidder‐design (include protection of existing structures)

Mitigate Adjust the allowed construction schedule to accommodate dry weather construction.

Avoid Add compaction grout injection to existing foundations to strengthen soils and improve life‐safety

Accept Bid as per current schedule, plan, and public notice requirements.

Contingency Identify significant Alternates. Or, possibility of rejecting all bids, re‐designing and re‐bidding.

Transfer Increase budget and Switch to GC/CM with Guaranteed Maximum Price (Contractor bears risk)

Mitigate Proactively recruit High Quality GC's and bidders, host a pre bid period "Open House" event.

Avoid External Market Condition event outside control of Team, no "Avoid" strategy yet identified

3 Current supply demand economics have

Contractors spread pretty thin, and

numerous projects are bidding high with

very little competition.

25 External

2 36 Technical

Bid Climate

Priority SCORE

Based on the age, scope, complexity, and

concealed existing conditions, there is a

high probability of RFI's, Change Orders,

and revisions to the work with significant

impacts to the project Cost & Schedule

Poor soils are likely to be encountered,

construction work adjacent to the existing

structure could impact the existing

foundation systems. Additionally the soils

are moisture sensitive.

Possible Risk Response Strategies for use in Risk Management Planning

1 45 TechnicalConcealed Conditions

Soils

Risk Register Event

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7 Hero Tips for success:1. Show VE in the Master project timeline,

include requirements in RFQ/RFP Schedule from the start, at 75% -100% SD

2. Select a quality SAVE certified VE team lead that uses diverse multi-discipline design professionals

3. Lock it in with your VE Team early (get priority booking (and time to assemble the right team for your specific project)

4. Verify all documents will be available in time for the study team:

1. Program Requirements2. Geotechnical report (and other)3. Owners Project Requirements

(OPR)4. Basis of Design (BOD) and project

discipline narratives.5. LEED, WSSP, other green targets6. Drawings and design documents7. Cost Estimate

1. (all divisions broken down)5. Owner / Stakeholder voice at the kickoff6. Embrace VE as an opportunity7. Take the VE Implementation seriously to

maximize value, and make yourself a project Hero!© MENG Analysis 2018. All Rights Reserved.

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Get in Touch2001 Western Avenue, Suite 200, Seattle, WA 98121206.838.9797

BE A PROJECT HERO, EMBRACE VALUE ENGINEERING


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BE A PROJECT HERO…. - APWA Washingtonwashington.apwa.net/Content/Chapters/washington... ·...

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