Abdulaziz S. Al-Yousefi, CVS

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TOTAL VALUE MANAGMENT
TVM
Abdulaziz S. Al-Yousefi, CVS
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Please remember the professional Ethics
I believe in sharing knowledge with all
professionals. This is one of several
presentation about Total Value Management. It is
part of a 3-5 days course that I frequently offer
in Saudi Arabia and the Gulf Area and the Arab
World. It is OK to Copy and Distribute this
presentation to your collage as long as you
mention the source Abdulaziz S. Al-Yousefi,
CVS Certified Value Engineering Consultant
Value_at_alyousefi.com
I appreciate your comments and feedback
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Total Value Management
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Total Value Management
TQM
VM
TVM Total Value Management
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Total Value Management
VE
TQM
TVM
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Total Value Management
Total Quality Management (TQM) Concentrate on
improving managing the quality of the design
and the quality of doing business Value
Engineering (VE) is used to identify and initiate
improvements that establish a TQM attitude and
awareness Total Value Management (TVM) is the
synergy of both
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Total Value Management
U se VM to improve Value. Use TQM to improve
Quality. Use TVM to improve Both.
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Total Value Management
Quality ?
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Total Value Management
Why VALUE Engineering
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Total Value Management
85 Of our income comes from Oil
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Value Engineering
Oil Market Supply demand on Oil
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Value Engineering
What is VALUE Engineering
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Value Engineering
When do we have " Good Value ? !
only if customer requirements are met
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Value Engineering
Value
Function Quality Cost
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Value Engineering
Function The specific work that a product must
do. Quality Customer needs, desires and
expectation Degree of excellence, Do it right
at the first time Cost The Life Cycle Cost
(LCC) or Total Cost Customer The person(s) for
who the output is created Value The lowest cost
to reliably accomplishes function(s), needs,
desires and expectations of the customer
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Value Engineering
Example Three types of Air Conditioning
systems (A, B and C)
F Q
V
C
AC System
Function
Quality
Cost
Value
A
8
5
6
2.16
B
7
10
10
1.7
C
9
7
7
2.29
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Value Engineering
VE Definition
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Value Engineering
Value Engineering
Improving (upgrading) Value is Customizing
Quality and optimizing the life cycle cost (LCC)
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Value Engineering
Value Engineering
Customize Quality
Not always Improving Quality
Improve Value
Optimize Cost
Not always Reducing Cost
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Value Engineering
Value Engineering
Is actually coming up with
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Value Engineering
Efficiency vs. Effectiveness
Efficient
Do things right
Useful Idea
Effective
Do the right thing
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VE examines Life Cycle Cost LCC
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LCC
Life Cycle Costing
A technique used during VE approach. If focuses
on the total cost
Total Cost Initial Cost Follow on cost
Follow on costs (or Ownership cost) Are all the
associated cost of running the facility. It
covers energy, maintenance, repair replacement,
staffing.. Etc.
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Life Cycle Costing
Where are the Hidden Costs ?
The Client
Site Cost
Capital cost
Fees
Furnishing
Occupancy Cost
Energy Cost
Maintenance Cost
Operating Cost
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Life Cycle Costing
Life Cycle Costing
For a 160 bed Hospital - Life span is 25 years
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Life Cycle Costing
Level of Influence on Cost
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Paretos Law
100
80
20 of the items Makes
up 80 of the cost
of Total Cost
60
40
20
0 20 40
60 80
100
of Items
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Value Engineering
Again Why VE
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Value Engineering
Where senior managers invest their time
Common Sense is not always Common Practice
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Value Engineering
According to a survey (In Saudi Arabia, 1991)
When asked after the completion of the
facility-
Q. Are you satisfied with what youve got ?
A.
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Value Engineering
According to KSU , 1999
When asked after the completion of the
facility-
Q. Are you satisfied with what youve got ?
A.
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Value Engineering
Reasons for unnecessary Costs

• Lack of information
• lack of Ideas
• Temporary circumstances
• Honest wrong beliefs
• Habits and attitudes
• Change in the owner requirements
• Lack of communication coordination
• Using unsuitable standards specification
• Others

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Value Engineering
VM Stages
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Value Management
Value Management
The 3Stages of the VM Study
1 - 3 Days
3 - 5 Days
1 - 4 Weeks
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Value Engineering
VE Job Plan
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Value Management
The 7 Phases of The VE Workshop
VE Job Plan
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Value Management
Function Analysis
Conventional Method
A
A
VE Technique
B
A
Example AC system Function is Control
Temperature Alternative Insulation
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Value Engineering
Function Analysis

• Determine Function
• Active Verb Measurable Noun
• Classify Function
• Basic, Secondary and Required Secondary
• Develop FAST
• Relationship between functions
• Test Validity of functions
• Identify Missing functions
• Comprehend the project

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Total Value Management
The 1- 10 - 100 Rule
1 10 100
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Total Value Management
The 1- 10 - 100 Rule
100 Fixing the problem After it
gets to the customer
10 Fixing the problem before it get to
the customer
Cost
1 Preventing the problem
Time
The 1-10-100 rule states if a problem is not
fixed when it occurs, it will only become more
costly to fix later . in terms of both time and
money.
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Value Engineering
When to apply VE ?
The 1- 10 - 100 Rule
100 10 1
Cost Effort
Cost of Implementation
Construction Documents
Planning Analysis
Schematic Design
Design Development
Working Drawings
Construction
Operation Maintenance
Project Life Cycle
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Value Engineering
VE is Creative Team Work
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Value Management
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Value Engineering
Creativity in VE

• Create as many ideas as possible
• Quantity not quality( at this stage )
• Absolutely no judgments or discussion
• Go Wild !!
• Challenge every thing (. Even your standards )

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Value Engineering
Have you heard these lately .

• Thats impossible !
• We dont things that way !
• We tried something like that before, and it
  didnt work !
• We would be laughed at !
• Its against our !
• Please, be serious !
• It cant be done !
• Its my job !
• Were different !
• I know that boss wont like it !
• We have been do it successfully for that last 15
  years, why change!

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Value Engineering
Ideas Evaluation

• Eliminate Nonsense
• Establish Evaluation Criteria
• Use T - Chart
• Identify Pros Cons
• Rank ideas Out of 10
• Select best ideas for development

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Idea Evaluation
Potential Impact High Low
Method 1
Easy Hard
A C B D
Implementation
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Idea Evaluation
Method 2 Weighted Evaluation Matrix
Rank out of 10, based on weight
Method 3 5 system Rank out of 10,
based on vote
Method 4 Conceptual Ranking High,
Medium and Low
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Value Engineering
Presentation Format

• Introduction
• Introduction of the VE Team Members
• Define Scope
• Main topic discussed
• Function Analysis FAST Diagram

• Body
• List of Ideas Recommendations ( 20-30 ideas )
• Total Saving (Addition )
• Talk about 10 VEP
• Present at least one WEM and one LCC

• Conclusion

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Value Engineering
How to present

• Relax and talk informal ( Conservation mode )
• Speak rapidly .but not quickly
• Face the audience, look in the eye ( 3-5 seconds
  )
• Learn your presentation point by point
• Be excited and enthusiastic
• Use clear good AV
• You do not have to answer all the questions.
• Face the people concerned ( Decision maker )
• Practice, Practice, Practice see your self.

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Management
Doing a good VE Study is not enough
If the VEPs are not Implemented We have done
nothing
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Value Management
In life Every thing is created 3 times
Idea VEP
Solution
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Management
Management ???
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Management
What is Management ?
It can be defined as
Source Management a problem solving process
A problem-solving process of effectively
achieving organization objective through the
efficient use of scarce resources in the changing
environments
This is actually Value Management
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Management
What is Project Management ?
The application of knowledge, skills, tools,
and techniques to project activities in order to
meet or exceed stakeholder needs and expectation
from the project
Source PMPOK
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Management
Value Management (FITT Program )
How to assure the success of the VE Program
We need the right
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Total Quality Management
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Total Quality Management
Quality Philosophy

• Inspection Problem to be solved
• QC Problem to be solved
• QA Problem to be solved
• TQM Strategic Quality Management

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Total Quality Management
What is TQM ?

• There is no agreeable definition exist.
• Different authors tried to define it differently.
• A group of thoughts and principles. It consists
  of methods, tools and techniques and years of
  experience.

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Total Quality Management
Total Quality Management

• Total
• Overall integrated and continuous effort from
  the CEO to the labors (all departments involved)
• Quality
• Meeting the customer needs, desires and
  expectations
• Management
• The process of performing activities through the
  efficient use of resources

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Total Quality Management
TQM is
A cooperation form of doing business that relies
on the capability of both labor and management,
using teamwork, to continuously improve quality,
economy and productivity to the complete
satisfaction of the customer.
Source Dick Sharad
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Total Quality Management
Continuous Quality Improvement
Maintain momentum, give recognition
Build awareness of needs, set goals
Report progress, keep score, communicate result
Organize to reach the goals,train, solve problem
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Total Value Management
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Total Value Management
Customer-Supplier Loop
Owner
Designer
Customer
Supplier
Requirements

Supplier
Customer
Plans Specs Codes etc.
Facility
Constructor
Supplier
Customer
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Total Value Management
Customer Network
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Total Value Management
Cost of Quality Management

• Crosby
• What costs money are the unquality things
  all the actions that involve not doing jobs right
  at the first time
• Deming
• Inspection does not improve quality, nor
  guarantee quality. Inspection is to late
• Juran
• 20-40 of the companies efforts are spent in
  redoing things that went wrong because of poor
  quality

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Total Value Management
Who is responsible of Quality Problem ?

• Crosby Senior management is.
• Deming Senior manager is responsible for 94
  of quality problem.
• Juran Senior manager is responsible for 80
  of quality problem

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Total Value Management
Total Value Management (TVM)
Can be defined as
An organizational improvement methodology that
focuses on needs processes in order to
customize quality, optimize cost, integrate
work, increase functional efficiency and shorten
process cycle time.
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Total Value Management
Cause-and-effect Diagram by
Ishikawa
Also call the fishbone Diagram
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Total Value Management
TVM Principles
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Total Value Management
Level of Communication
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Total Value Management
TVM Role Out

What is the actual ? What is desired ? What are
the causes for the deference ? Analyze
Synthesize
Are the desired and actual the same ? If not
recycle
Improve
Identify
TVM

Value Engineering Vertical Thinking Lateral
Thinking Systematic Thinking Intuitive Thinking
Is it effective ? Is it efficient ?
Measure
Think
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Total Value Management
Many of unacceptable quality due to the
approach taking during design and in
management Total Quality Management
(TQM) Concentrate on improving managing the
quality of the design and the quality of doing
business Value Engineering (VE) is used to
identify and initiate improvements that establish
at TQM attitude and awareness Total Value
Management (TVM) is the synergy of both used to
identify and initiate improvements that establish
at TQM attitude and awareness
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Total Value Management
VE and TQM Integration
Integrating VE with TQM would results in the
involvement of managers and engineers in a
totally integrated effort toward improving
performance at every step. Application of VE
with the TQM approach will more closely achieve
the desired concept of the owner and the end
user.
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Total Value Management
U se VM to improve Value. Use TQM to improve
Quality. Use TVM to improve Both.
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Change
VALUE ENGINEERING
is a Systematic Approach to manage
cost through Innovative Change
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Change
Change is to Progress
The only constant thing is Change
VE makes Change on purpose
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Total Value Management
Conclusion

• It is time to expand the concept of Value
  Quality and VE/VM/VA.
• Treat the way we think see things as
  variable.
• Without discontent, there is no change.
• TVM challenges the status quo.
• TVM create quality culture.

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For more information
SAVE International www.value-eng.org va
lue_at_value-eng.com TVM Services www.alyousefi.com
Value_at_alyousefi.com Engineering
Committee President
SAVE International Arabian Gulf
Chapter www.saudieng.org