Value for Europe Improved cost efficiency and effectiveness Value Engineering Árpád Fodor...

Value for EuropeValue for Europe

Improved cost efficiency and effectivenessImproved cost efficiency and effectiveness

Value EngineeringValue Engineering

Árpád Fodor

Certified Value Specialist-Life,Professional in Value Management

High Level Meeting on the Future of Cohesion Policy31 March – 1 April 2011, Budapest, Hungary

The European Governing Boardof the Value Management Training and Certification System


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Goals of Presentation

1 Highlight the Importance of Value Engineering

2 Regulation of Value Engineering

3 Prevent Unnecessary Expenditures of € Billions / Years



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Agenda

1 Value Engineering Approach Through Examples and Results

2 Value Engineering in Hungary and Europe

3 Next Steps



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Agenda



3 Next Steps



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Focus on the Focus on the function and notfunction and not

on existing solutionon existing solution

‘Functional Thinking’

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We capitalise the functions!

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Paks Nuclear Power Plant – Water Recuperation power plant

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Paks Nuclear Power Plant – Water Recuperation power plant

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Paks NPP - Water Recuperation power plant – Original idea

€24 million

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Paks NPP - Value Engineering proposal

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Paks NPP - Value Engineering proposal (cont)

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Result of Value Engineering:Cost savings of €3.5 million and the project has commenced

Paks NPP - Visualisation – November 2009

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The visit of Pope John Paul II in Hungary – Gyõr, 1996

Parameters: 150-200,000 believers, 15,000 cars,3,000 buses, 1 night and a half day

Original cost (before VE): €1.6 million

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What are the functions?

Provide area – €0.4 millionParking (bus, car) Provide podium – €0.1 millionIlluminate area – €0.3 million

….….

12 VE Proposal – Total cost savings: €1.4 million (87%)

The visit of Pope John Paul II in Hungary – Gyõr, 1996

Coordinate traffic

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Dual 2-lane motorway + emergency lane60 km, €357 million

Motorway - Planning permission

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Motorway - Planning permission K11 Canal Track – Original Idea

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Parameters of the object

Length: 13.2 metre

Width: 33.83 metre

Surface: 447 m²

Net unit cost €1,830 / m²

Cost estimate: €0.85 million

Motorway - Planning permission K11 Canal Track – crossroads object

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1 m

Motorway - Planning permission K11 Canal Track (continued)

Is there room for increasing efficiency?

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What is the function?

1 m

From perspective of the designer: ‘to cross waterway’

Interpretation of VE team: ‘to ensure water supply of the area’

Motorway - Planning permission K11 Canal Track (continued)

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Motorway - Planning permission VE Proposal – Modification of K11 Canal Track

€125,000

Cost saving of €725,000

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Motorway - Planning permission Dirt Road Flyover

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60km - 12 dirt road objectsTrack width of the objects: 7.5m; Track structure size: 8.63m


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Motorway - Planning permission Munich Ring, North (E52) - Dirt Road Flyover

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Width of dirt road 3.5mExisting asphalt road 4m

Width of track structures 4.5m

Motorway - Planning permission Munich Ring, North (E52) - Dirt Road Flyover

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Current

(track width 7.5m)

Proposal A

(track width 6m)

Proposal B

(track width 5m)

€9.2 million €7.6 million €6.6 million

Cost Saving: €1.6 million (17%) €2.6 million (28%)

Impact of Value Engineering Proposal

…only 60-km motorway track!

VE proposal: Modify the width of the objects


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Original cost estimate: €357 million

Result of Value Engineering Study (20 proposals):Cost savings of €43 million (12%)

Motorway - Planning permission

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Agenda



3 Next Steps



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Public Procurement Act – from 1996

In the invitation to tender, the company or the government body can require the tendererto apply Value Engineering methodology

Value Engineering in Hungary

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Value Engineering in Hungary

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Strategies

National Autism Strategy – Preparation of Government Decree

Drafting Laws, Professional documents

Sign Language Interpreter Service

Employment Act

Projects

Public Procurement action plan (National Development Agency)

Balance of Payments – preparation of computer software(Hungarian National Bank)

Process Management System (Paks Nuclear Power Plant)Original version: 155 Processes; VE Proposal: 57 Processes

etc.

…and not only for Investment Projects

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Since 1999VE review of 85 Motorway Investment plans

in Hungary

Total Estimated Construction Costs: €2.9 billionCost Savings: €393 million (13%)Additional Costs: €39 million (1%)

… and at higher quality!

Results of VE Studies in Motorway Investments, Hungary

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European Transportation Market in 2007-2013:

Ten-T: €9 billion;

Structural and Cohesion Funds: €43 billion;

The Member States from their own Budget: €196 billion;

European Investment Bank: €65 billion loan.

„The available funds of €300 billion will not cover all necessary investments.”

Zoltán Kalocsai: Through the common prosperityRoads and Transportation, XX. 1. Issue Februar 2011

European Data



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10% cost efficiencyReturn of Investment

at least 100:1

Would I spend my money this way?



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1

More projects from the same budget

Investments and projects at higher quality

Higher standard of living in Europe

Quicker developments and reduced risk of delays

Reduction of risk management in decision making

Increased efficiency andcompetitiveness of the European Union

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How can the European Union gain from the application of Value Engineering?

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Agenda



3 Next Steps



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Next steps

Analyze development methodologies(i.e. Value Engineering)

Provide training and promote ‘functional thinking’

Develop pilot scheme

Mainstream implementation



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Thank you for your attention!



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Contact Details

Árpád FodorCertified Value Specialist-Life,

Professional in Value Management

Phone / Fax: +36-1-2838630

Mobile: +36-20-9682938

[email protected]



Value for Europe Improved cost efficiency and effectiveness Value Engineering Árpád Fodor...

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