Understanding the Value in Value Engineering

When New York’s Four Seasons Hotel and Private Residences needed to find ways to reduce overall project costs, it took a closer look at its heating, ventilation and air-conditioning (HVAC) design. This system was targeted because it was estimated to incur 15% of the total cost.

How did the property reduce the cost, and concurrently ensure that its five-star quality was not compromised?

Enter value engineering. Using software called Virtual Environment (VE), a performance simulation tool from Integrated Environmental Solutions, the property’s engineering team was able to build a 3D model, simulate the loads, and vary the system inputs to arrive at an optimal system. Ultimately, it reduced cost, while meeting specifications.

“The 3D model allowed VE to create a different profile for each space, then run them as room and block loads,” says Eugene Siterman, managing director of VE Solutions Group. He says that the simulation modules allowed the team to examine how heat conduction from people, lighting, the sun and throughout the building itself would affect comfort levels.

Defining Value Engineering

Value engineering is often associated with the architect engineering design community with applications like that of the Four Seasons. However, it has a healthy presence in product design as well.

“If you provide an alternate system or product, and it doesn’t meet the original specifications and provides diminished quality or experience, you are not doing true,” says Jeff Luckett, director of engineering at MBX Systems. “Value engineering is applying engineering know-how to meet the original objectives, at a lower cost or greater value. Engineers are utilizing simulation to run ‘what if’ scenarios to study the outcomes of design decisions for the product, as well as the manufacturing and assembly processes.”

DFA 10 software from Boothroyd Dewhurst Inc. guides engineers though a series of questions to identify areas for consolidating unnecessary individual parts into multifunctional components and assemblies. The screen above shows a motor assembly (right) before redesign and a graph (left) showing areas that are open to improvement through product simplification. Image courtesy of Boothroyd Dewhurst Inc.

“Back in the day, product and system engineers were given a problem and they set about designing a solution working comfortably in their silo,” notes Steve W. Bannes, a professor and director of graduate studies in construction management at Washington University, St. Louis. “In many cases, their design criteria included low initial cost so the product or system could ‘sell.’”

Jamie Buchanan, director of Altair ProductDesign in the UK, defines value engineering as the consideration of all costs associated to the part or product, including material costs (raw, processing and recycling considerations), manufacturing costs (production and assembly), and operating costs (servicing, warranty).

“These costs must be looked at in context of performance and ability to meet the required specification,” Buchanan continues. “Although traditionally thought of in the context of re-engineering, a lot of the concepts and metrics should be applied to new product development processes as well. There are clear direct benefits to product lifecycle management, as it enables the assessment and consideration of total life costs during the design phase.”

Beyond Cutting Costs

There is a discernible difference between designing to reduce costs and designing with value objectives. Value objectives may be achieved via design tradeoffs.

“Value engineering is often confused with cost-cutting,” says Brian Frank, product line manager for Autodesk. “But cost-cutting usually leads to degraded performance, life expectancy, higher maintenance costs or other trade-offs that are not ideal. Trade-offs in developing requirements are always required, but value engineering is about achieving those requirements without sacrificing quality. It is really about applying the art of engineering to develop the best and most effective solution to the problem.”

Achieving value objectives and employing the principles of value engineering are most often achieved with the help of simulation, Frank points out.

“In reality, the ways in which value engineering can be realized all point to the increased utilization of simulation, both as solutions are being designed, and as a tool or method to find areas of optimization after a product or project has been completed,” he continues. “Sometimes schedules prohibit you from performing all of the simulations that should be done to help you understand the product. Time to market, competition, production schedules, and other factors all have an influence on the design schedule.”

At the completion of a project, hasn’t everyone had that feeling that there were a few more things they wish they had been able to explore? Frank says this is a great opportunity to introduce a value engineering project for the product.

“Value engineering encompasses a number of disciplines, and they can all be viewed at any time in the lifecycle of an offering,” he notes, suggesting questions like the following to provide a springboard to discussion:

• Can I make this with a different process?
• Can I assemble it differently?
• Can I use different materials?
• Can I change one system for another?
• Can I change the packaging and transportation to affect the cost?

Function-based Solutions

Value analysis and value engineering (VAVE) shifts the focus for the system-design engineers to the functional requirements of the product, service, or process such that the customer’s needs, expectations and preferences are met or exceeded at the system level, according to Chris Tsai, AVS, DFMA Implementation Services Manager at Boothroyd Dewhurst Inc.

“It moves focus away from the parts, subsystems and/or technology that is embedded, enabling visibility to other solutions,” Tsai continues. “VAVE process experts can facilitate the value review process with a development team, enabling them to design to the functional requirements of a project.”

As a basic example, Tsai offers, imagine an automotive engineer responsible for designing a new car. The engineer focuses her efforts on the function of “generate torque” instead of on the design of an internal combustion engine. The internal combustion engine is one potential solution to the function, but other solutions may be more effective and less costly.

Tsai notes that value engineering actually originated in the product and system-design space, and was first introduced in the late 1940s by Larry Miles, a GE engineer.

“Its use waned as other techniques rose in popularity,” he says. “But today, VAVE is making a resurgence due to its ability to directly correlate benefits to cost, directly impacting gross margin. Most engineers and purchasing professionals who are charged with VAVE responsibilities are focused on cost reduction activities after a product has been launched.”

Once a product is launched, Tsai points out, the ability of VAVE to significantly reduce cost thereafter is, in most cases, limited. While VAVE tools and techniques can help identify opportunities, the actions are often limited to supplier negotiations and minor redesigns from things like material changes and wall thickness reduction.

“The larger opportunity resides in the development process, and in trying to most efficiently provide functional performance,” he says. “This is where design for manufacture and assembly (DFMA) comes into the picture.”

DFMA, while similar to value engineering, is actually a disparate topic, notes Washington University’s Bannes.

“DFMA is a component of the lean manufacturing process, where the goal is to simplify and therefore reduce initial manufacturing and/or assembly costs,” Bannes explains. “Value engineering’s goal is not necessarily to reduce initial cost, but to define the best value options to the specified client and project. The VE process may actually increase initial cost in favor of achieving the defined value goals.”

So whether it’s a mechanical solution or an HVAC system in a five-star hotel, value engineering is—and will continue to be—a key driver in engineering design and simulation software.

Jim Romeo is a freelance writer based in Chesapeake, VA. Contact him at JimRomeo.net, or send e-mail about this article to [email protected].

More info

Altair ProductDesign

Autodesk

Boothroyd Dewhurst

Integrated Environmental Solutions

Lawrence D. Miles Value Foundation

MBX Systems

VE Solutions Group