Value Engineering - Design-Build for Water and Wastewater Projects - page 248

necessary to accomplish the specified requirements. The proper balance results in the
maximum value for the project (SAVE International 2011).
Value engineering differs from other management practices in three specific areas:
1. VE is based on the analysis of functions.
2. VE is performed in a facilitated environment with multidisciplinary workshops.
3. VE teams follow a defined step-by-step process, or teams, to achieve cost reduction.
Value engineering's structured approach enables the project team to achieve project
goals in terms of capital construction cost (i.e., initial costs), operation and maintenance
costs (i.e., life cycle), and overall procurement structure (i.e., project delivery strategy)
using multidisciplinary teams to investigate and analyze the delivery of the essential ele-
ments of a project at the lowest total ownership cost. VE is an analytical tool that the proj-
ect team may use to balance the owner's construction budget against the life-cycle costs
and impacts to the rate payer.
For water and wastewater projects, the VE team considers that these projects have
an important stakeholder, the rate payer, who ultimately funds the project through user
rates. One of the important goals of the VE process is to provide the owner with a cost-
benefit analysis of alternatives in a structured environment that allows the owner to make
informed decisions as the design, construction, and VE teams strive to strike the appro-
priate balance among capital cost, life-cycle cost, and the basic functions of a project,
while minimizing the impact on the rate payer.
Nearly every project presents the opportunity to improve value by reducing capital
cost and life-cycle cost while maintaining or improving functionality. Ideally, the disci-
plined application of VE principles accomplishes all three. The term value can be best
understood as follows:
Value = Function / Resources
Where function is defined by the owner's needs for performance and resources are
defined as the capital, operation, and maintenance costs, as well as materials, labor, and
time to accomplish the function. Essential in the determination of resources is balancing
the owner's construction budget with the total cost of ownership. This relationship can-
not be overlooked, especially in light of the tremendous pressures faced by rate payers,
who ultimately fund public water and wastewater projects.
HOW VALUE ENGINEERING IS INCORPORATED
IN DESIGN-BUILD PROJECTS VERSUS
TRADITIONAL PROJECTS
Methods to incorporate VE into traditional DBB projects are widely practiced and the
logistics of conducting the structured analysis are well defined. The concepts and prac-
tices for DB are similar to DBB projects. It is recognized that incorporating VE principles
in the earliest phases of any project provides the greatest benefits (Figure 20-1). This is
true for both DB and traditional DBB projects.