Standards of Practice Course Value Engineering. AGENDA: 1) Overview 2) Functional Analysis 3) Keys...

Value Engineering

AGENDA:1) Overview2) Functional Analysis3) Keys to Success4) VE Approach5) VE Procedures6) Reporting

Procedures

© Construction Management Association of America. Do Not Duplicate or Reproduce.


“ … an organized effort directed at analyzing the functions of systems, equipment, facilities, services, and supplies for the purpose of achieving the essential functions at the lowest life cycle cost consistent with the required performance, reliability, quality, and safety.”

Source: Office of Management and Budget

“Price is what you pay. Value is what you get.” ~ Warren Buffet

Evolved during World War II

General Electric took lead after WW II

Expanded to design & construction in 1960’s

Government and private sector by 1970’s

Numerous VE programs active today

History of Value Engineering© Construction Management Association of America. Do Not Duplicate or Reproduce.


Alignment

Projects need to start right to finish right

Expectations

Scope

Budget

Ongoing Effort


Item-Oriented Optimization• Item-oriented optimization involves

looking at item A and asking: “How can item A be made at a lower cost?” The result is item A1, a modified version of item A, as shown below:

AlA


Function-Oriented Optimization

• VE involves looking at item A and asking the questions: “How can the basic functions of item A be provided at a lower cost?” The result is item B, which is sometimes a completely different item, as shown:

A BBasic

Functions of A


Function Analysis


Reasons for Unnecessary Costs• Lack of time• Lack of

information• Lack of key

ideas• Lack of budget• Temporary

circumstances

• Habits and attitudes

• Honest wrong beliefs

• Politics• Inadequate

definition of value


Attitudes Toward VE

• General negative attitude toward VE

• Consensus to do VE earlier• Conflict over emphasis• Diversity of opinion on approach


Industry Trends

• Emphasis on value• Timing of studies• A / E, owner, and user participation• “Zero-based” design


Value Improvement

• To improve value:– Improve benefits, maintain cost– Maintain benefits, reduce cost– Improve benefits, reduce cost– Reduce benefits, reduce cost *– Increase benefits, increase cost *

* If benefits remain within needs and cost within limitations.

ValueValue = = Functional benefitsFunctional benefits

CostCost


Functional Benefits: How are they measured?

• Esteem• Use• Reliability• Cost • Maintainability• Security• Expandability

• Aesthetics• Safety• Durability• Convenience• Accessibility• Flexibility• Perception


Key to Value Engineering Success

• What does “value” means to the owner

• Understand what is of “value” to the owner

• Understand how the owner measures “value”

• Understand how “value” is perceived• Define appropriate levels of “value”• Be precise in assessing “value”


Relationship Between Quality and Cost

MAX

MIN

HIGH

COST QUALITY LIMITS

LOWLOW MIN MAX HIGH

QUALITY

INITIAL COSTS

FUTURE COSTS

TOTAL LIFE CYCLE COST

Too Cheap

Too Expensive

LOWEST LCC


Pareto’s Law of Distribution

0

10

20

30

40

50

60

70

80

90

100

0 20 40 60 80 100

PERCENTAGE Of TOTAL FACILITY COMPONENTS

PE

RC

EN

TA

GE

OF

CO

ST

Best Value Focus


Sensible Trade-OffsFacility Value Target

01 02 03 04 05 06 07 08 09 10 11

Found

ati

ons

Sub

stru

cture

Sup

ers

truct

ure

Exte

rior

Clo

sure

s

Roofing

Inte

rior

Const

ruct

ion

Conveyin

g

Mech

anic

al

Ele

ctri

cal

Genera

l C

ond

itio

ns

Sit

ew

ork


Relationship of Time and Change

Cost of making changes

Best Opportunity for Improvement

Time

HighAbility to

make changes

Degree ofChange

Low

Planning Design Construction


Civil & Structural

ArchitecturalMechanical

Electrical

Focus on Interdisciplinary Areas

Owner’s requirementsOwner’s requirements


Sensitivity to Life Cycle Impact

Energy2%

Educational Staffing31%

Support Staffing11%

Furnishings/Fitout4%

Fees1%

Construction Contingency1%

Other Project Costs1%

School Allotment1%

Textbooks1%

Benefits/Overhead14%

Other Support Costs2%

Major Capital Replacements5%

Maintenance3%

Transportation5%

Construction18%


Care with Major Risks in the Budget

“It’s worth a $100,000!”

Are they the same?

$175,000$25,000

$100,000

$75,000 $125,000

“It’s worth a $100,000!”

© Construction Management Association of America. Do Not Duplicate or Reproduce. September, 2009

Project-Specific Issues

• Design approach

• Technical design

• Program• Flexibility• Reliability• Constructibility

• Expandability• Energy• Maintainability• Budget• Schedule• Procurement

approach


Value Engineering and Value Analysis

Planning & Design

Construction

Value Engineering

Value Analysis


Approach to a VE Study

3 Phases of a VE Study:• Pre-Workshop: preparation &

organization • VE Workshop: intensive & focused

team during a 3-5 day dedicated effort

• Post-Workshop: Follow-up, assessment, report, meetings if needed, implementationPre-

WorkshopVE Workshop Post-

Workshop

Value Engineering Study


Establishing a VE Team

• A most critical action! Good experienced team = successful VE

• Three choices:1. Select team from people involved in

project2. Select independent team not involved

in project3. Hybrid: i.e. some insiders/some

outsiders

© Construction Management Association of America. Do Not Duplicate or Reproduce. September, 2009

Advantages/disadvantages of the VE Team Composition

• A VE specialist facilitates the study using the existing design team, owner personnel, and other owner consultants

• Traditional outside, independent “cold team” which conducts the study, facilitated by a VE specialist

• A VE specialist facilitates the study using an independent “cold team” working with the design firm, owner personnel, and other owner consultants


VE Work Plan

• Information Objectives– Key issues & criteria– Function analysis

• Development– First cost– Life cycle cost– Non-economic

objectives• Speculation– Open-minded– Creative

• Report– Considerations– Implementation• Evaluation

– Performance against criteria

– Goals & objectives


Defining Value ObjectivesList Criteria / Objectives

• First cost• O & M cost• Energy

consumption• Space

requirements• Performance

• Image (owner’s vision)

• Flexibility• Reliability• Expandability• Schedule


Defining Value Objectives Determine minimum (or maximum) acceptable standards

• First cost NTE $150/sf

• O & M cost NTE $8/sf

• Energy consumption NTE 60,000 Btu/sf/p.a.

• Space requirements NLT 50,000 sf net program area

• Performance on scale of 1-10: 7 minimum

• Image on scale of 1-10: 5 minimum

• Flexibility 35% of space

• Reliability minimum toleration: 24 hours

• Expandability horizontal, one side

• Schedule September, 2003

Item Acceptable Standard


Defining Scope

• Program– Functional Space

Program– Blocking & Stacking– Public Space– Efficiency

• Geometric Drivers– Wall Area Ratio– Degree of Articulation

• Volume Drivers– Clear Ceiling Height– Plenum Height– Interstitial Needs– Atria– Light Shelves


Criteria and Standards

• Building systems standards• Energy standards• Codes -- local and national• Life safety considerations• Technical specifications• Document standards• Procurement standards


Functional and Operational Requirements

• Operating standards• Interface / support requirements• Redundancy• Security• Flexibility


Overview of VE Procedures

• Cost models• Energy / maintenance models• Function analysis• Issues analysis• Brainstorming and Group Dynamics• Economic Analysis/Life cycle

costing/Sustainability• Examples• Value Enhanced Design/Integrated VE• Standards


Cost ModelCOST MODEL

Contingency Escalation Construction Project Belmont Learning Complex

Construction + @ 0.00% + @ 0.00% = @ Bid Date Location Los Angeles, Ca. Date Dec-97

$0.00 $0.00 $0.00 $0.00 Phase Design Development$141.45 $0.00 $0.00 $141.45

Bldg Type High School GSF 369,757

Const. Type Steel Frame/Masonry NSF 0

Use Units 3,550 Students Floors 312

Site Building Comparative Ratios:

$0.00 $0.00 Legend: Parameter Target ACT/EST

$0.00 $141.45 Target Cost per Student $14,733

Actual/Estimated SF per Student 104

Overhead 08 09 11 10

& Profit Structural Architectural Mechanical Electrical Equipment GC, OH & Profit

$0 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$0 $29.74 $61.66 $18.17 $15.51 $1.47 $14.89

Site 01 04 Service & Fixed Mobilization

Preparation Foundation Ext. Closure HVAC Distribution Equipment Expenses (Bond)

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$0.00 $6.94 $27.04 $10.47 $4.14 $0.52 $0.00

Site Special 05 Lighting Job Site

Improvement Foundations Roofing Plumbing & Power Furnishings Overheads

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$0.00 $0.00 $5.24 $6.03 $6.76 $0.95 $10.79

02 06 Fire Spec. Elec. Special

Site Utilities Substructure Interior Const'n Protection Systems Construction Demobilization

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$0.00 $2.57 $28.08 $1.68 $4.61 $0.00 $0.00

03 07 Conveying Spec. Mech. Off Expense

Off-site Work Superstructure Systems Systems & Profit

$0.00 $0.00 $0.00 $0.00 $0.00

$0.00 $20.23 $1.30 $0.00 $4.10

3.4 COST MODEL


Function Analysis - Assigning cost to functions

Item Function Cost

Acoustic Tile Ceiling Retard Fire $0.85

Hide Structure $0.35

Absorb Sound $0.30

Total $1.50 sf


Facility Level Function AnalysisProject: High School System: Programming

Date: May-97 Item: Total Facility

Location: Metropolitan D.C. Function: House People & Equipment

Client: School Board Page: 1 of 1

ITEM NO. FUNCTION VALUE INDEX

DESCRIPTION VERB NOUN KIND COST WORTH C/W COMMENTS

1.0 SITE:Preparation Establish Elevation P $1,387,250 $1,250,000 1.11 Adjust Ballfields

Improvements Allow Access R/S $1,885,775 $1,600,000 1.18 Limit Parking

Creates AmbianceUtilities Convey Waste R/S $688,311 $500,000 1.38 Potential Simplified Drainage

WaterEnergy

2.0 STRUCTURAL:Foundation Support Loads P $344,792 $340,000 1.01 Minimum

Substructure Support Loads P $1,000,846 $800,000 1.25 Thinner Groundslab

Superstructure Support Loads P $1,987,380 $1,500,000 1.32 Bracing &/or Selected Load Beraing Walls

3.0 ARCHITECTURAL:Exterior Closure Control Environment P $2,602,348 $2,500,000 1.04 Limited Material Substitution

Roofing Control Environment P $548,737 $540,000 1.02 Minimum

Interior Construction Protect Surface P $4,168,402 $4,000,000 1.04 Material Substitution

Separate AreaConveying Systems Move Vertical Loads R/S $40,000 $40,000

4.0 MECHANICAL:HVAC Control Environment P $3,424,093 $3,000,000 1.14 System Choices (LCC Impact?)

Plumbing Convey Water P $1,105,006 $1,000,000 1.11 Potential Simplification

WasteStorm

Fire Protection Protect Structure R/S $387,801 $380,000 1.02 Minimum

Special Systems Control Environment P $0 $0

5.0 ELECTRICAL:Service & Distribution Distribute Energy P $501,358 $500,000 1.00 Limited

Lighting & Power Illuminating Area P $1,241,734 $1,100,000 1.13 Altenate Systems Possible

Convey PowerSpecial Systems Convey Energy P $1,061,760 $800,000 1.33 Emergency Generator

EQUIPMENT:Fixed Support Program P $723,600 $650,000 1.11 Alternate Materials

Special Construction Support Program $0 $0

SUBTOTAL $23,099,193 $20,500,000 1.13

LEGEND Active Verb KIND P = Primary COST/WORTH RATIO Cost/Worth Ratio of Basic Function Only

Measurable Noun R/S = Required Secondary C/W Ratio: 1.13

S = Secondary 3.6 FUNCTION ANALYSIS

3.0 ARCHITECTURAL:Exterior Closure Control Environment P $2,602,348 $2,500,000 1.04

Roofing Control Environment P $548,737 $540,000 1.02

Interior Construction Protect Surface P $4,168,402 $4,000,000 1.04

Separate AreaConveying Systems Move Vertical Loads R/S $40,000 $40,000


Fast DiagramCapital Program Management

Notify Tenants

HOW WHY

ModernizeElevators

ManageCapital

Program

Plan/ProgramProjects

AccessConditions

ProcureContractors

ManageProjects

BidProjects

ProcureDesigner

DefineRequirements

DevelopCapital

Program

DesignProjects

BudgetProjects

CoordinateContractors

ImproveReliability

ReduceLife Cycle

Cost

ImproveMaintainability

MeetCodes

ImproveAppearance

PrioritizeProjects

MinimizeDisruptions

NotifyTenants

ImproveCommunication

BetweenContractors

ClarifyContractor

Responsibilities

PrequalifyContractors

DevelopProject

Schedule

AssessProject

Conditions

ProcureD/B/O

FAST - Technical - Example


Issues Analysis

• Define key issues• Tie functions to key issues• Identify benefits / costs• Identify priority• Define trade-offs


Unlocking CreativityTwo Kinds of Thinking• Analytical

– Logic based– Limited/unique

ideas– Convergent

thinking– Vertical

thinking– Works well

inside the envelope

• Creative– Imagination

based– Many & varied

ideas– Divergent

thinking– Lateral thinking– Tests the edges

of the envelope


Brainstorming Techniques

• Defer judgment• Focus on the key issues identified• Start with most general & work to

specific• One individual records ideas• Maintain one discussion at a time• Everyone is equal• Keep a good sense of humor


Barriers to Creative Thinking• Unwillingness/inability to focus on

critical issues• Conformity• Not challenging the obvious• Extreme focus on details• Evaluating too quickly• Fear of looking like a fool• Self-imposed barriers


Checklist for Generating Ideas• Inordinately

expensive items• Complex &

complicated items• Construction

difficulties• High maintenance

items• Potential operational

difficulties• Non-standard

products

• Multiple use & repetitive items

• Critical materials• Obsolete materials• Restrictive criteria• Extreme safety

factors• Restrictive

tolerances• Proprietary

specifications


Group Dynamics & Partnering• Recognize the importance of group

dynamics• Avoid unnecessary conflicts• Base VE process on common goals &

objectives• Address the issues not the individuals• Understand that the whole is larger than

the sum of the parts• Use VE process to develop partner

relationships


Economic Analysis Techniques

• Present Value Analysis• Annualized Cost• Rate of Return• Break Even/Payback Period• Savings/Investment Ratio


50

LEED© Checklist taken from LEED® Green Building LEED® Green Building Rating System™Rating System™

Yes ? No ChecklistSustainable Sites 14 Points

Y Prereq 1 Erosion & Sedimentation Control Required

Credit 1 Site Selection 1

Credit 2 Urban Redevelopment 1

Credit 3 Brownfield Redevelopment 1

Credit 4.1Alternative Transportation, Public Transportation Access 1

Credit 4.2Alternative Transportation, Bicycle Storage & Changing Rooms 1

Credit 4.3Alternative Transportation, Alternative Fuel Refueling Stations 1

Credit 4.4Alternative Transportation, Parking Capacity 1

Credit 5.1Reduced Site Disturbance, Protect or Restore Open Space 1

Credit 5.2Reduced Site Disturbance, Development Footprint 1

Credit 6.1Stormwater Management, Rate or Quantity 1

Credit 6.2Stormwater Management, Treatment 1

Credit 7.1Landscape & Exterior Design to Reduce Heat Islands, Non-Roof 1

Credit 7.2Landscape & Exterior Design to Reduce Heat Islands, Roof 1

Credit 8 Light Pollution Reduction 1

Yes ? No

Water Efficiency 5 Points

Credit 1.1Water Efficient Landscaping, Reduce by 50% 1

Credit 1.2Water Efficient Landscaping, No Potable Use or No Irrigation 1

Credit 2 Innovative Wastewater Technologies 1

Credit 3.1Water Use Reduction, 20% Reduction 1


Yes ? No

Energy & Atmosphere 17 Points

Y Prereq 1 Fundamental Building Systems Commissioning Required

Y Prereq 2 Minimum Energy Performance Required

Y Prereq 3 CFC Reduction in HVAC&R Equipment Required

Credit 1.1Optimize Energy Performance, 20% New / 10% Existing 2





Credit 2.1Renewable Energy, 5% 1



Credit 3 Additional Commissioning 1

Credit 4 Ozone Depletion 1

Credit 5 Measurement & Verification 1

Credit 6 Green Power 1

Yes ? No

Materials & Resources 13 Points

Y Prereq 1 Storage & Collection of Recyclables Required

Credit 1.1Building Reuse, Maintain 75% of Existing Shell 1

Credit 1.2Building Reuse, Maintain 100% of Shell 1

Credit 1.3Building Reuse, Maintain 100% Shell & 50% Non-Shell 1

Credit 2.1Construction Waste Management, Divert 50% 1


Credit 3.1Resource Reuse, Specify 5% 1


Credit 4.1Recycled Content, Specify 25% 1


Credit 5.1Local/Regional Materials, 20% Manufactured Locally 1

Credit 5.2Local/Regional Materials, of 20% Above, 50% Harvested Locally 1

Credit 6 Rapidly Renewable Materials 1

Credit 7 Certified Wood 1

Yes ? No

Indoor Environmental Quality 15 Points

Y Prereq 1 Minimum IAQ Performance Required

Y Prereq 2 Environmental Tobacco Smoke (ETS) Control RequiredCredit 1 Carbon Dioxide (CO2 ) Monitoring 1Credit 2 Increase Ventilation Effectiveness 1Credit 3.1Construction IAQ Management Plan, During Construction 1Credit 3.2Construction IAQ Management Plan, Before Occupancy 1Credit 4.1Low-Emitting Materials, Adhesives & Sealants 1Credit 4.2Low-Emitting Materials, Paints 1Credit 4.3Low-Emitting Materials, Carpet 1Credit 4.4Low-Emitting Materials, Composite Wood 1Credit 5 Indoor Chemical & Pollutant Source Control 1Credit 6.1Controllability of Systems, Perimeter 1Credit 6.2Controllability of Systems, Non-Perimeter 1Credit 7.1Thermal Comfort, Comply with ASHRAE 55-1992 1Credit 7.2Thermal Comfort, Permanent Monitoring System 1Credit 8.1Daylight & Views, Daylight 75% of Spaces 1Credit 8.2Daylight & Views, Views for 90% of Spaces 1

Yes ? No

Innovation & Design Process 5 Points

Credit 1.1Innovation in Design: Specific Title 1




Credit 2 LEED™ Accredited Professional 1

Yes ? No

Project Totals 69 Points

Certified 26-32 points Silver 33-38 points Gold 39-51 points Platinum 52-69 points

Yes ? No ChecklistSustainable Sites 14 Points

Y Prereq 1 Erosion & Sedimentation Control Required

Credit 1 Site Selection 1

Credit 2 Urban Redevelopment 1

Credit 3 Brownfield Redevelopment 1

Credit 4.1Alternative Transportation, Public Transportation Access 1

Credit 4.2Alternative Transportation, Bicycle Storage & Changing Rooms 1

Credit 4.3Alternative Transportation, Alternative Fuel Refueling Stations 1

Credit 4.4Alternative Transportation, Parking Capacity 1

Credit 5.1Reduced Site Disturbance, Protect or Restore Open Space 1

Credit 5.2Reduced Site Disturbance, Development Footprint 1

Credit 6.1Stormwater Management, Rate or Quantity 1

Credit 6.2Stormwater Management, Treatment 1

Credit 7.1Landscape & Exterior Design to Reduce Heat Islands, Non-Roof 1

Credit 7.2Landscape & Exterior Design to Reduce Heat Islands, Roof 1

Credit 8 Light Pollution Reduction 1

Yes ? No

Water Efficiency 5 Points

Credit 1.1Water Efficient Landscaping, Reduce by 50% 1

Credit 1.2Water Efficient Landscaping, No Potable Use or No Irrigation 1

Credit 2 Innovative Wastewater Technologies 1



Yes ? No

Energy & Atmosphere 17 Points

Y Prereq 1 Fundamental Building Systems Commissioning Required

Y Prereq 2 Minimum Energy Performance Required

Y Prereq 3 CFC Reduction in HVAC&R Equipment Required









Credit 3 Additional Commissioning 1

Credit 4 Ozone Depletion 1

Credit 5 Measurement & Verification 1

Credit 6 Green Power 1

Yes ? No

Materials & Resources 13 Points

Y Prereq 1 Storage & Collection of Recyclables Required

Credit 1.1Building Reuse, Maintain 75% of Existing Shell 1

Credit 1.2Building Reuse, Maintain 100% of Shell 1

Credit 1.3Building Reuse, Maintain 100% Shell & 50% Non-Shell 1







Credit 5.1Local/Regional Materials, 20% Manufactured Locally 1

Credit 5.2Local/Regional Materials, of 20% Above, 50% Harvested Locally 1

Credit 6 Rapidly Renewable Materials 1

Credit 7 Certified Wood 1

Yes ? No

Indoor Environmental Quality 15 Points

Y Prereq 1 Minimum IAQ Performance Required

Y Prereq 2 Environmental Tobacco Smoke (ETS) Control RequiredCredit 1 Carbon Dioxide (CO2 ) Monitoring 1Credit 2 Increase Ventilation Effectiveness 1Credit 3.1Construction IAQ Management Plan, During Construction 1Credit 3.2Construction IAQ Management Plan, Before Occupancy 1Credit 4.1Low-Emitting Materials, Adhesives & Sealants 1Credit 4.2Low-Emitting Materials, Paints 1Credit 4.3Low-Emitting Materials, Carpet 1Credit 4.4Low-Emitting Materials, Composite Wood 1Credit 5 Indoor Chemical & Pollutant Source Control 1Credit 6.1Controllability of Systems, Perimeter 1Credit 6.2Controllability of Systems, Non-Perimeter 1Credit 7.1Thermal Comfort, Comply with ASHRAE 55-1992 1Credit 7.2Thermal Comfort, Permanent Monitoring System 1Credit 8.1Daylight & Views, Daylight 75% of Spaces 1Credit 8.2Daylight & Views, Views for 90% of Spaces 1

Yes ? No

Innovation & Design Process 5 Points





Credit 2 LEED™ Accredited Professional 1

Yes ? No

Project Totals 69 Points

Certified 26-32 points Silver 33-38 points Gold 39-51 points Platinum 52-69 points


Value Engineering Reporting Procedures

• Summary of Results / Implementation matrix

• Executive summaries• Proposals• Cost estimates• Appendix materials

– Cost models– Function analysis– Idea listings– Agenda– Miscellaneous


53

Value Engineering Proposal For U.S. Embassy Project

DEVELOPMENT PHASE VALUE ENGINEERING PROPOSAL

Proposal No. AS-18

PROJECT: New Office Building SYSTEM: Architectural

LOCATION: Overseas Location

CLIENT: US Department of State

DATE: April 18-21, 2000

ITEM: Consider alternate finishmaterial on the north, east and westwalls of the NOB.

ORIGINAL DESIGN:The entire north elevation of the NOB (59 m wide x 23 m high) is finished with painted plaster (excluding stonewater course).Parts of the east and west elevations (each 17 m wide x 23 m high) are painted plaster (excluding stone watercourse).

PROPOSED DESIGN: Stone veneer panels in lieu of painted plaster finish on the major building elevations.

[Alternate: architectural finished concrete if the appropriate concrete skills are locally available]

ADVANTAGES: Provides an exterior finish material that is in keeping with the representational image of a U.S. Embassy. Low maintenance material; does not require periodic patching and painting that is required by painted

plaster.DISADVANTAGES:

Higher initial cost; possible impact on project delivery schedule.

DISCUSSION/VERIFICATION:ISSUES: Representational Image; Maintainability; Life-cycle Costs.The goal of FBO is to provide buildings that are representational in nature. Although it is understood that paintedplaster is a frequently used material in the vicinity of Overseas Location, there is a question if this material is themost appropriate to be used so extensively on the highest profile building in the compound.

There is also a question of the maintainability (life-cycle costs) of plaster veneer in a climate of frequent freeze/thawcycles. Although plaster veneers is used frequently in the vicinity of Overseas Location, it will require periodicpainting and repair. While this may be an acceptable maintenance issue in the private sector in Overseas Location,this periodic maintenance may be disruptive to the activities at the NOB.

Attached are two life cycle cost analyses presenting a seven-year replacement cycle and a ten-year replacementcycle for the stucco. The seven-year cycle indicates a 5.8-year payback and the 10-year cycle indicates a 10.6-yearpayback cycle. A precise determination of component life is very difficult but the LCC analyses are presented toassist in FBO’s value judgment.

LIFE CYCLE COST SUMMARYCOSTS & SAVINGS (PRESENT VALUE)

Initial Cost O&M Total LCC

Original Design 530,000

Proposed Design 1,327,000

Savings (796,000)


54

LCC Analysis for VE Proposal For U.S. Embassy Project

Life Cycle Costing - General Purpose WorksheetNOB Overseas Location, Overseas Location Stucco Veneer Stone Veneer

Exterior Wall Exterior Wall Study Title: Comparison Stucco to Stone Cladding (AS-18)

Discount Rate : 6.0% Date: Estimated Present Estimated PresentLife Cycle (Yrs.) 30 Costs Worth Costs Worth

Initial/Collateral CostsA. North Elevation Stucco 224$ 1350 m2 302,400 302,400

B. East Elevation Stucco 224$ 480 m2 107,520 107,520

C. West Elevation Stucco 224$ 540 m2 120,960 120,960

D. North Elevation Stone 560$ 1350 m2 756,000 756,000

E. East Elevation Stone 560$ 480 m2 268,800 268,800

F. West Elevation Stone 560$ 540 m2 302,400 302,400

G.

H. Total Wall Area = 2370 m2I.

J.

Total Initial/Collateral Costs $530,880 $530,880 $1,327,200 $1,327,200Difference ($796,320)

Replacement/Salvage Inflation/ PW

(Single Expenditures) Escal. Rate Factor

A. Stucco Replacement 7 2% 2.134 743,232 1,586,047

B. Stucco Repaint/Refinish 4 2% 3.964 51,002 202,191

C. Stone Cleaning 10 2% 1.144 30,601 35,008

D.

E.

F.

G.

H.

I.

J.

Total Replacement/Salvage Costs $1,788,238 $35,008Annual Costs Inflation/ PW

Escal. Rate Factor

A. Annual Maintenance 2% 17.458 6,120 106,847 2,040 35,616

B.

C.

D.

E.

F.

G.

H.

I.

J.Total Annual Costs $6,120 $106,847 $2,040 $35,616

Sub-Total Replacement/Salvage + Annual Costs (Present Worth) $1,895,085 $70,624Difference

Total Life Cycle Costs (Present Worth) $2,425,965 $1,397,824Life Cycle Cost PW Difference $1,028,141

Payback - Simple Discounted (Added Cost / Annualized Savings) 6.0 Yrs.Payback - Fully Discounted (Added Cost+Interest / Annualized Savings) 7.7 Yrs.

Total Life Cycle Costs - Annualized Per Year: $176,244 Per Year: $101,550

April 24, 2000

OccuranceYear -or- Cycle

(7 Year Cycle)

INIT

IAL

/ C

OLL

AT

ER

AL

CO

ST

SR

EP

LAC

EM

EN

T /

SA

LVA

GE

CO

ST

SA

NN

UA

L C

OS

TS

LIF

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YC

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S


Sample Implementation Matrix

HANSCOMB INC.SUMMARY OF VALUE ENGINEERING STUDY RESULTS

POTENTIAL IMPLEMENTATION MATRIX

Project: Child Development Center System: ArchitecturalLocation: Andrews AFB, Camp Springs , Md.Date: February 12 - 13, 1998Client: EFA Chesapeake Page: 1 of 1

COST ANALYSIS IMPLEMENTATION

Proposal Initial Future Total ActionNo. Type Description Cost Cost LCC Action Action Accept or Comments

Savings Savings Savings By Date Reject

0 ProposalsPotential Total

Cost Savings $0 $0 $0

Legend:

P = Proposal (approximate value of suggestion is identified)

DS = Design Suggestion (value of suggestion is not quantifiable)


Value Enhanced Design

• Integration of value management, cost management into design process

• Utilizes design team of record• Emphasizes owner & user

participation• Must start at outset of project• Objective is to assure alignment of

scope, expectations & budget


Value Enhanced Design Delivery

Cost Management

Design

Value Management

Internal workshops to improve value and to enhance

constructibility

On-going, interactive cost management supplementing

milestone estimates$ $ $


Value Enhanced Design DeliveryAdvantages

• Improved team communications• Better control over cost• Improved clarity of value

expectations• Faster feedback on cost impact of

decisions• Reduced chances of redesign• Improved relationship with owner


Standards


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Standards of Practice Course Value Engineering. AGENDA: 1) Overview 2) Functional Analysis 3) Keys...

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