Value Engineering As a Decision Tool

As relative new comers to value engineering, we have been amazed at its adaptability and success under a wide range of situations.  As a process originally developed for the industrial engineering of household appliances, the method has proven far more applicable than its inventor, Larry Miles, ever conceived.  The process is routinely applied to construction as well as administrative processes, and time after time it has demonstrated that it is not only a creative problem solving technique, but a process that encourages and supports good decisions, often under very unfavorable circumstances. Typical barriers that value engineering must overcome in order to succeed include, active resistance to studying the problem, team members with personal agendas, complex problems or topics, politically charged situations, and stakeholder prejudice. In spite of these barriers, value engineering continues to develop viable, realistic proposals, suggest savings and improvements, overcome resistance and move “nay-sayers” to more neutral, if not positive, positions.  We were curious to find out how this could happen time and time again. What we found may be interesting to you.

Since most organizations lack a consistent, repeatable decision process, staff members typically rely on their individual history of successes and failures to develop a personalized approach to decisions. The inconsistency of personalized decision making and lack of organizational standards often results in poor decisions.  Researchers have concluded that, regardless of the professional field of the decision maker, poor decisions are generally due to at least one of the ten barriers to good decisions (Decision Traps) listed in Table 1.

Specialists in decision making say, however, that good decision making can be learned. This implies that there is a basic framework which contains certain specific elements that must be applied in a consistent manner to reach good decisions time after time. A successful decision process must contain four basic elements to avoid the ten most common decision traps.  They are: (1) properly framing the problem, (2) gathering adequate information about the problem, (3) arriving at sound conclusions, and (4) learning from feedback.

Let’s compare the Value Method, as a process, to the four elements required of a good decision process and see how it leads to overcoming the ten decision traps.  In addition to the Value Study, the Value Method includes Preparation and Implementation Phases. Hence, the three major components of the Value Method as a process are: A) Preparation, B) The Value Study (five phases: (1) information, (2) creativity, (3) analysis, (4) proposal development, (5) presentation), and C) Implementation.  These combine to provide the framework for the process, and ensure that the individual phases and techniques of value engineering are consistently applied. Table 2 briefly compares the two processes and associated activities.

In preparation for a Value Study, management identifies a process, problem, design or topic for study. The organizational and user requirements and objectives are established for the study, and generally acceptable outcomes are usually framed. The specific disciplines, or expertise, and talents needed for the study team members are determined, and members are designated. One requirement is that members have not had substantial previous involvement in the study object, but either have experience with, or are involved in, similar activities. This means that members of the design team which developed a design should not be members of a value team studying their design, but could be members of a value planning study team where they will be responsible for carrying out proposals resulting from the study. Team members can be from in-house staff, other parts of the organization, borrowed from other companies (agencies), or obtained by contract. A planned, thoughtful preparation sets the stage for the study and helps to ensure success and avoid decision traps 1-3, 6 and 7.

The five phases of a Value Study, properly performed, avoid decision traps 4 - 9, and allow a review of issues addressed during preparation to avoid decision traps 1 - 3. Frequently the fresh viewpoints of team members and the creativity process identify new ways of looking at the issues, and lead to either shifted paradigms or new frames. The intensive efforts to gather and consolidate information, perform functional analysis, measure value, generate alternate ideas, evaluate ideas and develop proposals represents an organized, thorough, and repeatable decision process.

In the presentation phase of the study, the conclusions, alternative ideas and proposed improvements are presented to a group of stakeholders and decision makers for comment and decision.  The study team incorporates feedback into the final study report, avoiding decision traps 9 and 10. Based on the presentation and final report, the responsible decision makers choose which proposals to adopt and then initiate implementation actions.  Within Reclamation, we use an “accountability report” to standardize and amplify the decision maker’s feedback. This document identifies which ideas or proposals were accepted and what their benefits were, including cost savings, as well as which ideas or proposals were rejected and why. In combination with the final study report, it allows the organization to “feedback” successes and rejections for future organizational use. The value engineering team leaders also represent a feedback mechanism, carrying experiences from study to study.

In addition to the processes that comprise the Value Method, several other features contribute to its success. Team studies take advantage of the benefits derived from using “high performance” teams. The method seeks out and optimizes the multi-disciplined, fresh viewpoints of people that it brings to the table, and it leverages the varied talents of those who are on or available to the team. It also provides opportunities for stakeholder participation in the information and presentation phases, or by service as team members. The method is flexible enough to allow incorporation of traditional, or newly developed, tools for data collection, analysis, evaluation and presentation. Techniques like flow diagrams, Pareto, time and frequency plots, or any method of data evaluation may be used. The method allows for back tracking and repeating previous steps as additional information is uncovered or breakthrough ideas are developed. The process can be carried out in stages. For example, the information phase can be stopped, customer surveys and focus groups used to collect needed data, and the process then restarted. Teams can also meet, adjourn for a period of time to work on assignments associated with the value study and reconvene at an appropriate time to continue the study.

Finally, a unique aspect of value engineering is that it examines and evaluates complex problems based on their overall and component functions. The consistent success of Value Engineering is its strongest argument to active resistance and stakeholder prejudice. It is the application of the process itself which overcomes personal and political agendas, addresses the solution of complex problems and topics, and avoids the ten decision traps.

The following examples illustrate how the Value Method was successfully applied to non-construction problems:

Power O&M Staffing and Training Planning: Due to reductions in workforce and retirements, personnel experienced in the operation and maintenance of hydro-power plants were being lost. This presented problems in staffing, and represented a threat to adequate plant maintenance, operation and safety. A multi-stage Value Study was used to identify strategic plans for staff development and training.

Data Communications System Upgrade: The rapid increase in use of computer networks (LAN, WAN and the Internet) as information resources threatened to overwhelm the datacom system for a major office of nearly 2000 people, performing the engineering, accounting and payroll functions. A questionnaire was used during the preparation phase to assess user utilization, expectations, satisfaction, future needs and requirements. The Value Method was used to evaluate system requirements, plan for short term remedies and long term goals, and establish a process for continuing evaluation and upgrade of the system to keep pace with user demand and technology advances.

Comprehensive Facilities Review (A Dam Safety Assurance Program): The current process was producing a satisfactory final product, but timeliness and cost efficiency were under scrutiny. The Value Method was used to evaluate the functional need and to develop improvement suggestions. The study was performed in stages. The information phase included the use of focus groups to collect data. Results from the focus groups were used to prepare questionnaires that were distributed throughout the organization. Performance, focus group and questionnaire data were evaluated and the ideas and proposals which were developed to simplify reporting, shorten the cycle time and improve records acquisition, storage and retrieval were accepted. A follow up value study was made to develop a strategy and plan for records management.

Hopefully we’ve presented enough to demonstrate the inherent power of the Value Method, and provide a glimpse of its potential for solving problems and aiding in making decisions on complex issues.

Dr. Francis McLean is a Professional Engineer who currently serves as the Value Engineer, and Manager of the Reclamation Value Engineering Program.  He currently serves on the Earthquake Committee of USCOLD, and as a member of the Codes and Standards Council of the Geotechnical Institute of the American Society of Civil Engineers.  Dr. McLean is the author of numerous published papers and is frequently called on to speak at conferences and seminars.

Chris Morell is an electrical engineer, architect and Certified Value Specialist.  He has been the Value Program Coordinator for the Bureau of Reclamation's Technical Service Center in Denver, Colorado since January 1995.  He has led numerous value studies for Reclamation and other Federal agencies, and speaks on value engineering at conferences and seminars.