What is Applied Value Engineering (AVE)?

Examines cost and functions of systems and components to ensure best value and effectives of the technical solution.
AVE are all the spontaneous investigations of value performed by a contractor in the later stages of a project.
The ability to use AVE is significantly influenced by the procurement route, traditional routes where the contractor was not involved in the initial design make it hard for the contractor to convince the client that further improvements can be made...
AVE provides rigorous and structured approach to the development of design revisions.
AVE attempts to mitigate the risk that a contractor's proposal will harm the project.
Harm is caused if: functionality is inappropriately reduced OR a revised design no longer reflects the client's values
Ideally, AVE incorporates function analysis and follows the Job Plan but sometimes may be impractical.
Without rigorous examination of the problem, inappropriate design revisions may De-Cost a project by harming functionality or De-Spec a project by harming it's quality.
There is particularly risk if there is unnecessary focus on construction costs.
If undertaken correctly, cost-effective or value-adding solutions can be developed.
Provides an auditable decision making trail.
Is simply a rigorous approach to decision making.
Two ways of implementing AVE: Challenge based value engineering OR Applied Value Engineering

Examples of AVE Applications

Stages of a Project

VM1 - Project Definition

VM2 - Concept Definition

VM3 - Applied Value Engineering

1. Challenge Based Value Engineering

Workshop is structured around the Job Plan to examine issues of significant magnitude that have become problematic for the whole project.
Typically comprise the design of a whole technical system.
A technical team with the appropriate skills is assembled to form the workshop with a design team leader to facilitate.
Increasing design fixity makes opportunities for changes to quickly expire.
Undertaken after design is substantially complete.
Can result in redesign to achieve cost savings.

2. Spontaneous Applied Value Engineering

Individuals/small groups of designers spontaneously adopt the Job Plan to rigorously consider value when proposing design revisions.
Enables the clients values to influence design changes within technical systems.
Workshops are generally not held, work is done by individuals/groups.
Design revisions are proposed with supporting analysis of how they will provide value.
Due to it's timing, has different focus to value management.
Less focus on the client, more focus on technical design.
Rare to engage stakeholders in workshops unless the problem is client-related.
Usually engineer led NOT facilitator led.

Reasons for Unnecessary Cost Developing

Barriers of This Method:

Time pressure in the industry may prevent designers spending time considering value.
Risk averse nature of the industry can limit willingness to explore better ways of providing client value.
The 'good enough is best' attitude is common among engineers and are unwilling to incorporate the better alternatives they know of.

Stages of Implementing an AVE Workshop

Clarify the Scope of the Problem - Using two methods: value trees or stakeholder personas.
Compile the Workshop Team - Assemble necessary technical team & determine if client body stakeholders need to be involved.
Appoint a Facilitator
Select tools and assemble a problem solving process, ideally incorporating Function Analysis.
Design the Workshop Process - Ideally following the whole Job Plan.
Establish a Proposal Review Method - To ensure alignment with client values where necessary.

Defining the Problem

Value Trees

Value Trees are simpler alternatives to FAST Diagrams.
Functions are elicited and agreed using simple short phrases and sentences.
Function interdependencies are merely debated and agreed by participants.
Value trues are simpler and faster than FAST diagrams but are ambiguous and introduce risk of participants assigning different meaning to functions.
They can be found to be illogical and cannot be verified like FAST diagrams.
Value trees do not indicate the client's priorities and therefore do not imply their underlying values.
Value Trees are limited to smaller studies of simple complexity where detailed function analysis & FAST diagramming isn't required.

Stakeholder Personas

If technical solutions require repeated input from a client body stakeholder, engaging them in the AVE workshop is impractical.
The expectations and requirements of such a stakeholder can be summarised in a persona.
This persona can then be referred to during the workshop.
A persona cannot be a stereotype of typical expectations but must accurately reflect the specific expectations of the stakeholder.
Personas only offer imperfect representations as the stakeholder may have not known they had certain values.

Analysing the Problem

Function Analysis

Allows the purpose of the design solution to be clarified/determined.
Even if a design solution exists, focusing on it's functional roles will provide a more detailing understanding.
Verb-noun expressions should be used if possible unless it is felt it would be incapable in providing the accuracy required to inform their redesign.
It is more desirable to use verb-noun expressions as they carry with them agreed, social constructed understandings of their meanings.

Function Cost Analysis

Maps the distribution of cost across functions.
Informs design revision decisions in determining if a component or element should be removed or re-designed due to the disproportionate amount of cost it consumes for the functions it provides.
The amount of cost/money allocated to a function should match the function importance.

Function-Metric Matrix

Provides a way to measure design performance in providing sought functionality.
Translates qualitative, intangible functions into quantitative, measurable metrics.
As many functions are intangible, it is helpful to associate them with design performance.
These metrics provide proxy measures for functionality.
Translates soft design problems into engineering problems.
Allows design options to be easily compared on a functional basis to determine the best option for implementation.
Creates audit trails and is more rigorous than judgement alone.
Design Performance providing some functions might need to be measured with more than one metric (see image below)

	Created by d.moran-10 over 10 years ago

Undergraduate Value Management & Engineering Note on Applied Value Engineering, created by d.moran-10 on 06/02/2014.