Value Engineering / Management, Life Cycle Costing


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Value Engineering / Management, Life Cycle Costing
401.649 Cost Planning for Construction Projects
Moonseo Park
Professor, PhD

401.649 Cost Planning for Construction Projects

39동 433 Phone 880-5848, Fax 871-5518
E-mail: [email protected] Department of Architecture
College of Engineering Seoul National University
1

History

 Formal Value Analysis first developed by Larry Miles working with GE in US in 1947

 Adopted by US Department of Defence in 1955

 Introduced to the U.S. Army Corp of Engineers and the U.S Navy Bureau of Yards and Docks in 1962 as VE became a mandatory requirement in the Army Services Procurement Regulations

 Adopted by agencies like NASA, Department of Transportation

Developed by Davis Langdon & Seah Singapore Pte Ltd, 2002,

reformatted by Moonseo Park, SNU, 2005

401.649 Cost Planning for Construction Projects

2

Value Engineering

“Systematic, interdisciplinary examination of factors affecting the cost of a product with the aim of devising a means to achieve its specific purpose at a required standard of quality and
reliability and at an acceptable cost”
Cooper and Slagmulkder, 1997

401.649 Cost Planning for Construction Projects

3

 A disciplined procedure directed towards the achievement of necessary functions for minimum cost.
 VE is essentially retrospective and tends to take place during the detailed design stage in response to a projected cost overspend.

Developed by Davis Langdon & Seah Singapore Pte Ltd, 2002,

reformatted by Moonseo Park, SNU, 2005

401.649 Cost Planning for Construction Projects

4

Core Concepts

The Value Engineering (VE) approach considers cost in relation to function, recognising that there is a threeway relationship between function, cost and value.

Value

Function =
Cost

Developed by Davis Langdon & Seah Singapore Pte Ltd, 2002,

reformatted by Moonseo Park, SNU, 2005

401.649 Cost Planning for Construction Projects

5

Cost cutting or adding value?: VE vs VM
Adding Functional Value or

Cost cutting

No-one got rich from getting smaller

Developed by Davis Langdon & Seah Singapore Pte Ltd, 2002,

reformatted by Moonseo Park, SNU, 2005

401.649 Cost Planning for Construction Projects

6

Value Management
 A service that maximises the functional value of a project
 by managing its development from concept to completion
 through the comparison and audit of all decisions against the value system initially determined by the client

Developed by Davis Langdon & Seah Singapore Pte Ltd, 2002,

reformatted by Moonseo Park, SNU, 2005

401.649 Cost Planning for Construction Projects

7

Core Concepts
 Based on what things do rather than what they are, thereby stimulating understanding and innovation.
 Short, structured, facilitated workshops, involving the whole multi-disciplinary teams, thus enabling mutual learning by all

Developed by Davis Langdon & Seah Singapore Pte Ltd, 2002,

reformatted by Moonseo Park, SNU, 2005

401.649 Cost Planning for Construction Projects

8

Core Concepts
 They result in proposals to add value for the Client, supported by the whole team
 Formal studies are underpinned throughout the project by Value Based Thinking

Developed by Davis Langdon & Seah Singapore Pte Ltd, 2002,

reformatted by Moonseo Park, SNU, 2005

401.649 Cost Planning for Construction Projects

9

VM helps to solve problems

 Problems need not be negative.

 Problem is the gap between where we are and where we want to be.

 VM helps close that gap through a process of mutual learning.

 Through a structured facilitated process embracing the whole team.

Developed by Davis Langdon & Seah Singapore Pte Ltd, 2002,

reformatted by Moonseo Park, SNU, 2005

401.649 Cost Planning for Construction Projects

10

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Value Engineering / Management, Life Cycle Costing