By Bolívar Solórzano, MSCE, MSM, PMP
Professor of the Project Procurement Management course in the Master in Project Management Program at the University for International Cooperation
In Wikipedia we find, regarding the concept of value engineering, that:
“Value engineering (VE) is a systematic method to improve the “value” of goods or products and services by using an examination of function. Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost. It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvements.”
“Value engineering is sometimes taught within the project management or industrial engineering body of knowledge as a technique in which the value of a system’s outputs is optimized by crafting a mix of performance (function) and costs. In most cases this practice identifies and removes unnecessary expenditures, thereby increasing the value for the manufacturer and/or their customers.”
Essentially, value engineering aims to identify and reduce unnecessary costs, while maintaining or improving the value of the result sought to be obtained. This requires a creative, methodical, scientific and ethical work. It is not just about reducing costs, which can often mean sacrifices in quality and performance of the resulting product. This is something that goes far beyond simply reducing costs, since what is sought is that the value that the product resulting from our processes or projects can deliver will remain the same and even increase, having, however, a lower cost than the product option we had before applying the principles of value engineering.
Let’s consider the example of a situation that we can be familiar with in construction. Suppose we are planning to build our dream house. We have already decided its location, its architectural layout, its area, its dimensions, the materials to be used and many other aspects necessary to meet the expectations we have of what will be our new home.
Among other things, we have decided that we want the walls to be made of concrete blocks and have a plaster finish with a pastel color tone. To achieve this, the usual process would be to build the walls of masonry blocks, then make a plaster with cementitious mortar, then apply several coats of acrylic-based pasting, and finally apply coats of paint with the chosen color. It could be further mentioned that the plaster may consist of a layer of mortar of about one inch in thickness.
If we analyze this, what we want is not specifically to make the walls with layers of plaster and then paint with a pastel color tone, but what we want is to have a plaster-type finish with a pastel color tone. This aim can be achieved with alternative methods that will lead to the desired result with a more favorable cost profile.
Consider the following alternative: We can build the wall with concrete block masonry and then, instead of the whole process of plastering, pasting, painting, etc. that we had originally planned, we can use as a method of finishing the application of a cementitious stucco. With this option, we can apply the stucco directly on the walls to achieve the plaster type finish. As the cementitious stucco has the color already integrated, it would not be necessary to carry out the plastering, pasting and painting processes that were required with conventional plaster. We would clearly have savings in labor, time, transportation, and even in the total weight of the finished walls (which could also mean savings at the structural level), etc.
It is not the intention, in this short essay, to do a detailed cost analysis to quantitatively compare the alternative processes that we have put as examples for this brief reflection. What we pursue is to illustrate how, by applying the principles of value engineering in our everyday processes and projects, we can achieve winning combinations of higher value at a lower cost. This is, therefore, a useful concept to be integrated into the procurement management processes of the projects in which we are involved.