Abdulaziz S. Al-Yousefi, CVS

1. TOTAL VALUE MANAGMENT TVM Abdulaziz S. Al-Yousefi, CVS

2. Please remember … the professional Ethics I believe in sharing knowledge with all professionals. This is one of several presentation about Total Value Management. It is part of a 3-5 days course that I frequently offer in Saudi Arabia and the Gulf Area and the Arab World. It is OK to Copy and Distribute this presentation to your collage as long as you mention the source : Abdulaziz S. Al-Yousefi, CVS Certified Value Engineering Consultant Value@alyousefi.com I appreciate your comments and feedback

3. TVM TVM Total Value Management

4. Total Value Management TQM VM TVM Total Value Management

5. Total Value Management VE TQM TVM

6. Total Value Management Total Quality Management (TQM) Concentrate on improving & managing… the quality of the design and the quality of doing business Value Engineering (VE) is used to identify and initiate improvements that establish a TQM attitude and awareness Total Value Management (TVM) is the synergy of both

7. Function + Quality F + Q Value = = Cost C Total Value Management U se VM to improve Value. Use TQM to improve Quality. Use TVM to improve Both.

8. Total Value Management Quality ?

9. Total Value Management Why VALUE Engineering

10. Total Value Management 85% Of our income comes from Oil

11. Value Engineering Oil Market Supply & demand on Oil

12. Value Engineering What is VALUE Engineering

13. Customer Requirement Fair Cost Customized Quality Functional Efficiency Results Value Engineering When do we have " Good Value” ? ! … only if customer requirements are met

14. Function + Quality F + Q Value= = Cost C Value Engineering Value Function Quality Cost

15. Function + Quality F + Q Value = = Cost C Value Engineering Function:The specific work that a product must do. Quality: Customer needs, desires and expectation Degree of excellence, Do it right at the first time Cost:The Life Cycle Cost (LCC) or Total Cost Customer:The person(s) for who the output is created Value:The lowest cost to reliably accomplishes function(s), needs, desires and expectations of the customer

16. Value Engineering Example : Three types of Air Conditioning systems (A, B and C) F + Q V = C AC System Function Quality Cost Value 8 5 6 2.16 A 7 10 10 1.7 B 9 7 7 2.29 C

17. Value Engineering VE Definition

18. Value Engineering Value Engineering Improving (upgrading) Value is Customizing Quality and optimizing the life cycle cost (LCC)

19. Value Engineering Value Engineering Customize Quality Not always Improving Quality Improve Value Optimize Cost Not always Reducing Cost

20. Useful Ideas Value Engineering Value Engineering Is actually coming up with …

21. Value Engineering Efficiency vs. Effectiveness Efficient Do things right Useful Idea Effective Do the right thing

22. VE examines Life Cycle Cost LCC

23. LCC Life Cycle Costing A technique used during VE approach. If focuses on the total cost Total Cost= Initial Cost + Follow on cost Follow on costs (or Ownership cost) Are all the associated cost of running the facility. It covers energy, maintenance, repair replacement, staffing.. Etc.

24. Life Cycle Costing Where are the “ Hidden Costs “ ? The Client Site Cost Capital cost Fees Furnishing Occupancy Cost Energy Cost Maintenance Cost Operating Cost

25. Case 1 : Initial Cost = SR 124 Millions Life Cycle Costing Life Cycle Costing For a 160 bed Hospital - Life span is 25 years 17 %

26. Life Cycle Costing Level of Influence on Cost

27. Pareto’s Law 100 80 20% of the items Makes up 80% of the cost % of Total Cost 60 40 20 0 20 40 60 80 100 % of Items

28. Value Engineering Again Why VE

29. Actual What they Say ... Value Engineering Where senior managers invest their time … Common Sense is not always Common Practice

30. Value Engineering According to a survey (In Saudi Arabia, 1991) When asked … after the completion of the facility:- Q.Are you satisfied with what you’ve got ? A.

31. Value Engineering According to KSU , 1999 When asked … after the completion of the facility:- Q.Are you satisfied with what you’ve got ? A.

32. Value Engineering Reasons for unnecessary Costs: • Lack of information • lack of Ideas • Temporary circumstances • Honest wrong beliefs • Habits and attitudes • Change in the owner requirements • Lack of communication coordination • Using unsuitable standards & specification • Others

33. Value Engineering VM Stages

34. 1 2 3 Information Function Analysis Idea Generation Evaluation Development Presentation Coordination Data Preparation Team Selection Modeling VE Study Report Implementation Plan Follow-Up VE Workshop Post-Study Pre-Study Value Management Value Management The 3Stages of the VM Study 1 - 3 Days 3 - 5 Days 1 - 4 Weeks

35. Value Engineering VE Job Plan

36. No Creativity Yes Implementation Follow up Information Function Analysis Evaluation Value Circle Decision Development Presentation Value Management The 7 Phases of The VE Workshop VE Job Plan

37. Basic Function Value Management Function Analysis Conventional Method A A’ VE Technique A B Example AC system Function is Control Temperature Alternative “Insulation”

38. Value Engineering Function Analysis • Determine Function • Active Verb & Measurable Noun • Classify Function • Basic, Secondary and Required Secondary • Develop FAST • Relationship between functions • Test Validity of functions • Identify Missing functions • Comprehend the project

39. اكتشاف المشكلة وحلها في حينها أي إثناء التصميم اكتشاف المشكلة وحلها بعد التصميم حل المشكلة أثناء الإنشاء Total Value Management The 1- 10 - 100 Rule 1 10 100

40. Total Value Management The 1- 10 - 100 Rule 100 Fixing the problem After it gets to the customer 10 Fixing the problem before it get to the customer Cost 1 Preventing the problem Time The 1-10-100 rule states if a problem is not fixed when it occurs, it will only become more costly to fix later …. in terms of both time and money.

41. DR VE VEP Saving Acceptance Line From VE Value Engineering When to apply VE ? The 1- 10 - 100 Rule 100 10 1 Cost & Effort Cost of Implementation Construction Documents Planning & Analysis Schematic Design Design Development Working Drawings Construction Operation & Maintenance Project Life Cycle

42. Value Engineering VE is Creative Team Work

43. INDIVIDUAL EFFORTS PM Designer Owner User Engineers VE APPROACH VE TEAM EFFORT SOLUTION Value Management

44. Value Engineering Creativity in VE • Create as many ideas as possible • Quantity not quality( at this stage ) • Absolutely no judgments or discussion • Go Wild !! • Challenge every thing (…. Even your standards )

45. Value Engineering Have you heard these lately …. • That’s impossible ! • We don’t things that way ! • We tried something like that before, and it didn’t work ! • We would be laughed at ! • It’s against our ! • Please, be serious ! • It can’t be done ! • It’s my job ! • We’re different ! • I know that boss won’t like it ! • We have been do it successfully for that last 15 years, why change!

46. Value Engineering Ideas Evaluation • Eliminate Nonsense • Establish “ Evaluation Criteria “ • Use “ T - Chart “ • Identify Pros & Cons • Rank ideas “ Out of 10 “ • Select best ideas for development

47. Idea Evaluation Method 1 Potential Impact High Low Easy Hard A C B D Implementation

48. Idea Evaluation Method 2 : Weighted Evaluation Matrix Rank out of 10, based on weight Method 3 : 5+ system Rank out of 10, based on vote Method 4 : Conceptual Ranking High, Medium and Low

49. Value Engineering Presentation Format • Introduction • Introduction of the VE Team Members • Define Scope • Main topic discussed • Function Analysis & FAST Diagram • Body • List of Ideas & Recommendations ( 20-30 ideas ) • Total Saving (Addition ) • Talk about 10 VEP • Present at least one WEM and one LCC • Conclusion

50. Value Engineering How to present • Relax and talk informal ( Conservation mode ) • Speak rapidly ….but not quickly • Face the audience, look in the eye ( 3-5 seconds ) • Learn your presentation point by point • Be excited and enthusiastic • Use clear good AV • You do not have to answer all the questions. • Face the people concerned ( Decision maker ) • Practice, Practice, Practice …see your self.