Article #105 Managing, Monitoring, Evaluating and Reporting Value Engineering Proposals on Capital Projects

The growing demand to optimize capital projects investments and to do more with less funds, project owners and more than ever, are now adopting the best practices of value engineering to identify and eliminate unwanted costs, while improving project’s function and quality. The aim is to increase the value of projects, satisfying the project’s performance requirements at the lowest possible cost. This involves considering the availability of materials, construction methods, transportation issues, site limitations or restrictions, planning and organization, costs, profits and so on. As well as increasing the benefits that can be delivered include a reduction in life cycle costs, improvement in quality, reduction of environmental impacts, and so on.

Project Management Information Systems (PMIS) like PMWeb can add great value for the value engineering process. Not only it adds value in ensuring that the right data needed for value engineering is captured in a transparent and accountable format but provides the VE team with a better platform to evaluate, analyze, visualize and report this data. In addition, it enables the organization to transform this data into knowledge that can be of great value for the next value engineering workshop.

PMWeb PMIS can be used to address the complete requirements of the Value Engineering (VE) three stages, Pre-Study where the project and team selection will be defined, VE Workshop or VE Study which includes five distinct phases: Information, Speculative/ Creative, Evaluation/ Analytical, Development/ Recommendation and Report, and the third stage is Post-Study which includes implementation and report results. Nevertheless, this article will address how to manage, monitor, evaluate and report on the value engineering proposals for which PMWeb custom form builder will be used this form. PMWeb custom form builder will be also used to create the other forms needed for the Value Engineering process.

In the Development/Recommendation phase, the best ideas from the Evaluation/Analytical Phase are developed into workable VE proposals. The VE team researches and develops preliminary designs and life cycle cost comparisons for the original designs and the proposed alternative ideas. The data generated during this phase will be captured in the Value Engineering Proposal form which will be another form created in PMWeb using the custom form builder. The form will include the following details Project System, Item and Function, Description of the original design and the proposed design (which is the VE Proposal) for the alternative idea, List of the advantages and disadvantages of the alternative idea including its impact on life cycle costs and other key facility issues, Discussion and Justification of the Value Engineering Proposal, Cost estimate and a life cycle cost analysis if necessary, for the original design and the alternative idea.

Similar to all other PMWeb modules, the VE Proposal form will include the different attachments which will include sketch of the original design and the alternative idea, the details of the cost savings calculation using net present value (NPV) along with other documents that could be needed. Similar to the other forms in PMWeb, a workflow can be assigned to the VE Proposal to formalize the submission and approval of the form.

The data captured in the VE Proposals can be reported on any desired form and format. The main objective is to provide the VE team with a real-time access and visualization for the VE proposals developed during the VE workshop. This report along with the other VE reports will be also used in the next phase, VE Report, when the VE team needs to submit their recommendations for the VE proposals to be implemented.

Next, the VE Team will produce a preliminary written VE Report which is intended to represent the results of the VE workshop activities and meet the VE Program objectives. The report will also include the Value Engineering Proposals summary report which summarizes the anticipated cost savings from the approved VE proposals.

The value engineering analysis data captured across the organization’s complete projects portfolio will provide executive management with an overview on the performance of the organization’s value engineering practice. For each project, the performance dashboard will report on the details of all ideas generated for each building system function, how many of those ideas were shortlisted and how many of those shortlisted ideas were developed into VE proposals. The dashboard will also detail how many of those developed VE proposals were rejected due to increased costs and not commensurate with benefits, VE Proposals considered for Design improvements, rejected VE Proposals after general considerations, accepted VE Proposals for further consideration and accepted VE Proposals at the Preliminary Design. The dashboard also details the initial cost savings, O&M cost saving and total LCC cost savings. The dashboard will also display a tabular log of those details which can be filtered by project or group of projects.

About the Authorfounder

Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with more than 35-year service record providing project management and controls services to over 100 projects with a total value in excess of US $5 Billion. Those projects included Commercial, Residential, Education and Healthcare Buildings and Infrastructure, Entertainment and Shopping Malls, Oil and Gas Plants and Refineries, Telecommunication and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training and business development.

Bassam is a frequent speaker in topics relating to Project Management, Strategic Project Management and Project Management Personal Skills. Over the past 35 years he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe and South America. He has written more than 250 articles on project management and project management information systems that were featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP) and Earned Value Professional (EVP) from the American Association of Cost Engineers (AACE) and Green Project Management (GPM).

Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA and London Business School, London, UK.


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