Engineering value

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How can the principles of value engineering benefit your contracts? In an MEP special, Arkady Siterman and Eugene Siterman outline what you need to know, while Paul McConnell explains how it's being applied at the Trump Tower Hotel project.

The consultant's perspective

Briefly outline the concept and principles of value engineering.

Arkady: Value engineering, or value analysis, is not a new idea and is being widely used in many industries worldwide, including construction. It is a focused effort of achieving the design intent in the most simple, direct and economical way. It is not, as is sometimes misunderstood, an exercise of cutting costs by taking away function and performance.

Value analysis is based on a fundamental principal that nothing is so perfect that it cannot be improved. This vision drives value analysis consultants to utilise the latest design methods, advanced technologies and adhere to the latest rules and regulations, while keeping cost reduction as a priority.

How can value engineering benefit those in the MEP sector?

Eugene: MEP, as the infrastructure of a building, impacts structural and architectural design decisions. It forms a major proportion of the total construction costs, ranging from 30-35 % and consumes most of the building energy.

Rules and regulations governing the construction of MEP systems are regularly updated and are becoming more stringent to minimise the negative effects of buildings on the environment. The use of the sustainable design methods and the use of LEED certification has now become mandatory on all new construction in Dubai. Value analysis closely analyses all of the criteria with a purpose to reduce construction costs, installation time, minimise operational energy consumption and ensure compliance with the latest building rules and regulations.

In which areas of MEP systems do you generally see the biggest potential savings?

Arkady: From our experience, the biggest potential savings typically come from over-sized equipment; inefficient system layout; and the use of outdated rules and regulations.

This happens for several reasons. Many designers have, as I call it, the ‘rule of thumb syndrome', whereby they use the same design figures and methods as they have done for years, even though the rules and regulations have changed, as have the design methods.

It is also very common for designers to use vendors' assistance and manufacturer figures in the selection of MEP equipment. All too often this causes the system to be out of balance, which costs more and consumes more energy.

For example, it is normal for chiller manufacturers to advertise their equipment based on the lowest kW/TR, but what they do not tell you is that to achieve this value you may need more condenser water flow, to provide a larger cooling tower and to provide more power to the cooling tower fans and condenser water pumps. The right way to design a system is to use an holistic approach to optimise and balance the entire system, not just its individual components.

Additionally, limited time for design, a shortage of qualified personnel and outdated design philosophy compels many companies to use the ‘cut-and-paste' approach.

This is based on the idea that if it worked yesterday, it will work today. This approach creates many opportunities for potential savings because the needs and technology in construction are constantly changing.

What benefits can value engineering bring to a project overall?

Eugene: Besides the most apparent benefit of capital cost savings, the use of value analysis can help to compress the construction schedule; improve constructability; optimise energy consumption; meet the latest rules and regulations; and comply with LEED requirements, thus optimising owner investment.

At what stage should the principles be applied and how should this be carried out?

Arkady: To take full advantage of potential cost saving solutions, value analysis consultant should join the design development team at the conceptual or schematic stage of a project's design and stay involved throughout the complete design process.

At each stage of design, a workshop is typically held to review and analyse proposed value analysis strategies.

Agreed upon strategies are then implemented by the designers in the next set of drawings. Such process should continue until the final design documentation is issued.

What is the uptake of value engineering in the Middle East market?

Eugene: The Middle East market is unique in a sense that there is colossal amount of construction in progress and forthcoming, yet the market is still relatively young.

Value analysis has not yet been embraced by many - it is still in its early stages - but market trends are indicating that it will soon become a necessity. Construction costs are rising; a shortage of energy and rising market competition is driving developers to be smarter with their investments.

How do you foresee the future of the use of value engineering principles in the Middle East?

Eugene: When an owner hires a firm, they expect the best design for their building. Unfortunately in many cases this does not happen.

Typically, designers are appointed based on their portfolio of similar projects rather than the quality of their work. In their defence, the rapid growth of the market has forced design firms to hire more people to keep up with the enormous volume of work but experience and qualifications take some time to achieve, it doesn't happen overnight.

There is a serious shortage of qualified, top level designers in this market. This is one of the negative side-effects of a rapidly growing real estate market, it's the gold rush of construction and the owner ends up paying the price.

Value analysis consultants can fill that gap and bring additional design and construction experience and expertise to the project. Because of this, I strongly believe that value analysis will become an indispensable component of the design process in the very near future.

For which projects has VE Solutions already provided value engineering solutions in the Middle East?

Eugene: We are currently working on the Trump International Hotel & Tower as well as a few other projects on the Pam Jumeira. Our portfolio in the Middle East is rapidly growing.

What are the typical benefits that have been achieved?

Arkady: Typically, savings of 10-20% on the construction costs of MEP systems can be achieved. In addition, operating costs will be significantly reduced due to the optimised energy consumption which, in some cases, allows the achievement of a higher level of LEED certification.

What are the biggest challenges to the application of value engineering and how can these be overcome?

Arkady: The biggest challenge is when value analysis is performed at the end of the design process.

Too often, value analysis consultants are called in when the design is already in the final stages and the owner realises that the project is going over the budget. This is not the optimum way of utilising value analysis.

At the end of the design process value analysis consultants face a lot of resistance from MEP designers, architects and other trades because no one wants to redesign their work. This creates a lot of friction and many cost-saving strategies would actually cost more to implement and may impact the construction schedule.

The most effective way to utilise value analysis is at the right time and the right place.

The right time is at the beginning of the design process, usually at concept or schematic design stages.

The right place is being appointed as an independent consultant to the developer to work alongside designers on specific and focused objectives. In this way, value analysis is harmoniously integrated into the design process and the benefits achieved are much greater.

How positive has the market response been to using value engineering?

Eugene: The value analysis approach is still relatively new to the Middle East construction market and as with anything new and unfamiliar, there is always a period of learning and adjustment. Nonetheless, the response has been increasingly positive.

Many developers are recognising the tremendous benefits of value analysis and are implementing it throughout their portfolio. Once there is more information and exposure to value analysis in this market, I am quite sure that most developers will implement it. It is simply a smarter way to build.

Arkady Siterman and Eugene Siterman work for VE Solutions Group International.

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READERS' COMMENTS

Excellent piece of journalism on Value Engineering!
Posted by Hal, London, United Kingdom on Tuesday 21 October 2008 at 06:01 UAE time

It is rather refreshing to read articles regarding enhancement of buildings for people, rather than trying to enhance people for the buildings. Value Engineering is one aspect of design where buildings are designed for us and we are conditioned to chose the correct pieces to make up the puzzle; the result which we call happy building or sick building or economical building or expensive building..

In layman's terms, buildings work on a simple principle of 'Productivity'.. what usage you get out of them (OUTPUT) for what reasons it was designed for (INPUT).. if the balance is right then you have a happy working building (PRODUCTIVITY = OUTPUT/INPUT). Then comes the question of 'Effectiveness'.. that is a simple way to say if I remove wastage from my building, then my productivity levels are high, so the easiest way to remove wastage from any building is to make it energy wise, stop wasting space (building may be too big for the purpose!! or people simply do not use all the facilities etc..) EFFECTIVENESS = PRODUCTIVITY - WASTE).. The last piece of the puzzle is the 'Efficiency'.. that is to say if the 24 hour cycle of usage of the building actually achieves high productivity and effectiveness, then we shall have building working like a 4 stroke engine.. always according to design and always giving us the desired output.. the secret of desired design !!
Happy living and 3 cheers for VE

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