Planning and Scheduling Highway Construction

1

King Fahd University of Petroleum Minerals


LIFE CYCLE COSTING
Appling The UK Manufacturing Industries
Experience of Value Analysis Into Construction
D
r
ARE-512
Presented by MUBARAK ALQAHTANI
I.D. 969260
SAADI ASSAF
January 12, 2008
2

• Abstract
• Value Analysis is concerned with the
  identification of best value. Too often its
  associated techniques are applied to new
  situations without consideration of its
  underlying philosophy.
• There has been a fall off in the formal
  application of Value Analysis within UK
  Manufacturing Industries.
• The principles are however still claimed to be
  accepted. Value Opportunities exist within the UK
  Construction Industry but Value Analysis is not
  practiced.
• Can the experience of the UK Manufacturing
  Industries' informal commitment to Value Analysis
  be applied to the UK Construction Industry in
  order to gain acceptance of the Value Ethos.
  Keywords Value Analysis, Quantity Surveying,
  Procurement Procedures .

3
Outline

• Introduction
• The Development of Value Analysis
• Opportunities for Value Analysis in Construction
• Experience in UK Manufacturing Industries
• Applying the Experience of the UK Manufacturing
  Industries to the Construction Industry
• Current Reflections of Value Analysis in the UK
  Construction Industry
• Conclusion

4
Introduction

• "Value Analysis is an organized effort to obtain
  optimum value in a product, system or service by
  providing the necessary function at the lowest
  cost".

5
"Value Analysis is an organized effort to obtain
optimum value in a product, system or service by
providing the necessary function at the lowest
cost".

• Value analysis is an example of an identifiable
  subject area. It however comprises previously
  established techniques, discipline and ideas.
  Value Analysis derives its uniqueness from the
  way in which the component elements are combined.
  Similarly the established subject of Value
  Analysis assumes further 'newness' when it is
  applied in a discipline other than the one for
  which it was originally developed.

6
Introduction

• "Value may be defined as the relationship between
  function and cost. In all cases value is greatest
  when the cost of obtaining a required function or
  service, at a particular time and place with the
  essential qualities, is at a minimum. "

7
LOWEST COST REQUIRED PERFDRMANCE (OPTIMUM PERFORMANCE).
Total cost
Figure 1 Cost and Value in Relation to Performance
8

• The Development of Value Analysis

• L D Miles(l) is recognized as the 'Father of
  Value Analysis'.
• He originally conceived the idea some 50 years
  ago when, while working as a design engineer with
  General Electric, he was surprised by the
  apparent lack of consideration given to cost. The
  advent of World War 11 put great pressures on
  resources.

9

• Value Analysis is concerned with the search for
  best value To achieve this it must be more than
  just a cost control technique as cost can not be
  reduced at the expense of performance.
• Value Analysis may use many varied techniques,
  some of which are more traditionally associated
  with cost control, e.g. Life Cycle Costing and
  Cost in Use Analysis, but the object is to
  establish best value not just lowest cost. This
  means that, unlike pure cost reduction, the
  levels of qualify and performance are 'not
  allowed to deteriorate.
• This means that, unlike pure cost reduction, the
  levels of qualify and performance are 'not
  allowed to deteriorate.

10
Opportunities for Value Analysis in Construction

• The objective of Value Analysis is to identify
  and eliminate unnecessary cost. Such value
  opportunities are not restricted to anyone part
  of the life cycle of a building. Value Analysis
  does however attempt to focus attention on those
  areas where there is potential for the greatest
  return on the effort exerted. Value Analysis
  would be most profitably applied where the net
  savings potential is greatest, as illustrated in
  Figure 2.

11
(No Transcript)
12
A popular stage for applying Value Analysis is
during design which is an identifiable action
which offers large net saving potential.
Traditionally a design would be developed to In
developing a design through the application or
Value Analysis (possibly more properly termed
Value Engineering at this stage)

• Value Analysis recognizes. Aesthetic Value as one
  of the needs to be addressed when balancing the
  design equation and by developing a Value Index
  (the ratio of the cost of the proposed design to
  the lowest cost alternative) a more objective
  evaluation can be made.

13

• A second area popularly chosen for the
  application of Value Anal sis is the construction
  stage. As is evident from
• The net savings potential is substantially
  reduced by this stage. Contractors can conduct
  Value Analysis exercises on their own operations
  to increase efficiency. Part of these benefits
  will be passed on to the building

14
Experience in UK Manufacturing Industries

• Value Analysis was imported into the UK as a well
  developed set of procedures. These procedures had
  been developed in the US and were taken on board
  by UK managers, tantalized by the apparent
  potential for savings or because they were
  directed by a multi-national parent company or
  even to demonstrate their openness/acceptance for
  change.

15

• In order to gauge current practice regarding the
  use of Value Analysis in the UK interviews were
  conducted with 6 firms. These firms represent
  heavy engineering, micro engineering, aerospace
  and petro-chemicals. All the organizations had
  formerly employed specialist Value Analysis
  staff. All but one however considered that they
  still had a commitment to the principles of Value
  Analysis and utilized techniques associated with
  Value Analysis. In two of the organizations all
  products are subject to review by an independent
  group, either during the design stages or at
  prototype stage. Although neither firm currently
  had Value Analysis staff they both considered
  that their staff were sufficiently familiar with
  the techniques to ensure that the original design
  work and the review embraced the value principle.

16
Applying the Experience of the UK Manufacturing
Industries to the Construction Industry

• The early involvement of producers or production
  departments is seen as a valuable means of
  reducing production costs. In the Traditional UK
  procurement procedure the Architect completes the
  detail design before the Contractor is selected
  and there is no formal means for the Contractor
  to contribute to the 'design. The procedure of
  Management Contracting has been' developed with
  the intention of securing the independent
  contribution of a Contractor at the design stage.

17

• At the other extreme from the Traditional
  procedure, Design and Build places the Contractor
  in full control of the design possibly excluding
  an independent Architect. Where size or cost
  precludes the use of Management Contracting and
  the project requires greater Architectural
  control than is possible through Design and
  Build, the Traditional procedure could be
  modified to more fully embrace Performance
  Specifications. This would reflect Value Analysis
  in that the function is defined in the
  performance specification, alternative solutions
  are developed by the competing contractors and if
  contractor selection is based on cost the lowest
  cost, solution is identified. _

18
Current Reflections of Value Analysis in the UK
Construction Industry

• The foregoing illustrates how Value Analysis
  might be applied within the construction
  industry.
• The following are two initiatives which introduce
  Value Analysis into UK construction

19
first is a procurement procedure which
incorporates features of US procedures.

• second is in the Public Works Department of Local
  Government where Value

20

• Analysis is to be directly applied as part of a
  rat1onalisation programmed. British Property
  Federation considered that the performance of the
  construction industry in the UK compared
• unfavorably with other countries. In order to
  overcome the e shortcomings they developed their
  System for Building Design and Construction (6)
  This broke considerably with traditional UK
  procedures. Certain aspects can be seen as
  reflecting Value Analysis procedures.

21

• The client is required to take greater
  responsibility especially at the early stages
  when a fully considered brief is to be prepared
  (functional. analysis). The Architect is required
  to develop the design
• to the level which requires Architectural control
  allowing the Contractor to develop the 'detail'
  design
• (This allows a variety of technical solutions
  to be developed, by the contractors, for the
  outstanding features).

22
Conclusion

• Value Analysis has not had continuing support
  within the UK
• manufacturing industries. In formal Value
  Analysis terms its use has encountered
  'roadblocks' which should be overcome.

23

• The principles and some techniques however linger
  on " at a level which is apparently
  satisfactory to the users and the situations in
  which they find themselves. Should this be the
  'experience' that the construction industry gains
  from the manufacturing industry?

24

• Critics of Value Analysis applied in construction
  have looked at techniques such as brainstorming,
  multi-criteria diagramming and numerical
  weighting of factors and have dismissed them as
  impractical or inappropriate in the construction
  industry. If we look beyond the techniques back
  to the origins of Value Analysis the basic
  motivation is appropriate to construction, that
  is to reduce cost through the development of
  alternative solutions.

25

• The problems of the construction industry can be
  held to be different from other industries. There
  is a one-off product required to satisfy
  multiple-criteria which is produced by a unique
  grouping of personnel. The parties involved may
  have conflicting interests and the traditional
  approach fosters such divisions by requiring each
  party to defend their actions thus resulting in
  sub-optimization of the total project .

26

• Value Analysis is concerned with the evaluation
  of function, cost and worth which can provide a
  unifying vehicle, directing effort to the mutual
  benefit of all parties and the total project.
  Further study is required to identify how best to
  apply Value Analysis to the UK construction
  situation in order to achieve acceptance of the
  procedures.

27
Thank you Any ?