VALUE ENGINEERING

VALERIANO HANDUMON/ITP

How can the principles of value engineering benet your contracts? In an MEP special, Arkady Siterman and Eugene Siterman outline what you need to know, while Paul McConnell explains how its being applied at the Trump Tower Hotel project.

ENGINEERING VALUE

THE CONSULTANTS PERSPECTIVE

advanced technologies and adhere to the latest negative effects of buildings on the environment. rules and regulations, while keeping cost reduc- The use of the sustainable design methods and the use of LEED certication has now become tion as a priority. mandatory on all new construction in Dubai. ARKADY: Value engineering, or value analysis, is not a new idea and is being widely used in many MEP: How can value engineering benet those in Value analysis closely analyses all of the criteria with a purpose to reduce construction costs, inindustries worldwide, including construction. It the MEP sector? stallation time, minimise operational energy conis a focused effort of achieving the design intent sumption and ensure compliance with the latest in the most simple, direct and economical way. EUGENE: MEP, as the infrastructure of a building, impacts structural and architectural design building rules and regulations. It is not, as is sometimes misunderstood, an exercise of cutting costs by taking away function decisions. It forms a major proportion of the total construction costs, ranging from 30-35 % and performance. MEP: In which areas of MEP systems do you Value analysis is based on a fundamental and consumes most of the building energy. generally see the biggest potential savings? principal that nothing is so perfect that it cannot Rules and regulations governing the construcbe improved. This vision drives value analysis tion of MEP systems are regularly updated and ARKADY: From our experience, the biggest consultants to utilise the latest design methods, are becoming more stringent to minimise the potential savings typically come from over-sized
MEP: Briey outline the concept and principles of value engineering.
26 MEP Middle East - October 2008 www.arabianbusiness.com/construction

VALUE ENGINEERING
equipment; inefcient system layout; and the use of outdated rules and regulations. This happens for several reasons. Many designers have, as I call it, the rule of thumb syndrome, whereby they use the same design gures and methods as they have done for years, even though the rules and regulations have changed, as have the design methods. It is also very common for designers to use vendors assistance and manufacturer gures in the selection of MEP equipment. All too often this causes the system to be out of balance, which costs more and consumes more energy. For example, it is normal for chiller manufacturers to advertise their equipment based on the lowest kW/TR, but what they do not tell you is that to achieve this value you may need more condenser water ow, to provide a larger cooling tower and to provide more power to the cooling tower fans and condenser water pumps. The right way to design a system is to use an holistic approach to optimise and balance the entire system, not just its individual components. Additionally, limited time for design, a shortage of qualied personnel and outdated design philosophy compels many companies to use the cut-and-paste approach. This is based on the idea that if it worked yesterday, it will work today. This approach creates many opportunities for potential savings because the needs and technology in construction are constantly changing.
MEP: What benets can value engineering bring to a project overall? MEP: What is the uptake of value engineering in the Middle East market? MEP: What are the typical benets that have been achieved?

EUGENE: The Middle East market is unique in a sense that there is colossal amount of construction in progress and forthcoming, yet the market is still relatively young. Value analysis has not yet been embraced by many it is still in its early stages but market trends are indicating that it will soon become a necessity. Construction costs are rising; a shortage of energy and rising market competition is driving developers to be smarter with their investments.

ARKADY: Typically, savings of 10-20% on the construction costs of MEP systems can be achieved. In addition, operating costs will be signicantly reduced due to the optimised energy consumption which, in some cases, allows the achievement of a higher level of LEED certication.
MEP: What are the biggest challenges to the application of value engineering and how can these be overcome?

EUGENE: Besides the most apparent benet of capital cost savings, the use of value analysis can help to compress the construction schedule; improve constructability; optimise energy consumption; meet the latest rules and regulations; and comply with LEED requirements, thus optimising owner investment.
MEP: At what stage should the principles be applied and how should this be carried out?

ARKADY: To take full advantage of potential cost saving solutions, value analysis consultant should join the design development team at the conceptual or schematic stage of a projects design and stay involved throughout the complete design process. At each stage of design, a workshop is typically held to review and analyse proposed value analysis strategies. Agreed upon strategies are then implemented by the designers in the next set of drawings. Such process should continue until the nal design documentation is issued.
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ARKADY: The biggest challenge is when value analysis is performed at the end of the design process. Too often, value analysis consultants are called in when the design is already in the nal stages and the owner realises that the project is going over the budget. This is not the optimum way of utilising value analysis. At the end of the design process value analysis consultants face a lot of resistance from MEP designers, architects and other trades because no one wants to redesign their work. This creates a lot of friction and many cost-saving strategies MEP: How do you foresee the future of the use of would actually cost more to implement and may value engineering principles in the Middle East? impact the construction schedule. The most effective way to utilise value analysis EUGENE: When an owner hires a rm, they exis at the right time and the right place. pect the best design for their building. UnfortuThe right time is at the beginning of the design process, usually at concept or schematic nately in many cases this does not happen. Typically, designers are appointed based on design stages. The right place is being appointed as an their portfolio of similar projects rather than the quality of their work. In their defence, the rapid independent consultant to the developer to growth of the market has forced design rms to work alongside designers on specic and hire more people to keep up with the enormous focused objectives. In this way, value analysis is volume of work but experience and qualications harmoniously integrated into the design process take some time to achieve, it doesnt happen over- and the benets achieved are much greater. night. There is a serious shortage of qualied, top level designers in this market. This is one of MEP: How positive has the market response been the negative side-effects of a rapidly growing real to using value engineering? estate market, its the gold rush of construction EUGENE: The value analysis approach is still and the owner ends up paying the price. Value analysis consultants can ll that gap and relatively new to the Middle East construction bring additional design and construction expe- market and as with anything new and unfarience and expertise to the project. Because of miliar, there is always a period of learning and this, I strongly believe that value analysis will be- adjustment. Nonetheless, the response has been come an indispensable component of the design increasingly positive. process in the very near future. Many developers are recognising the tremendous benets of value analysis and are impleMEP: For which projects has VE Solutions already menting it throughout their portfolio. Once there provided value engineering solutions in the is more information and exposure to value analysis in this market, I am quite sure that most deMiddle East? velopers will implement it. It is simply a smarter way to build. EUGENE: We are currently working on the Trump International Hotel & Tower as well as Arkady Siterman and Eugene Siterman work for a few other projects on the Pam Jumeira. Our VE Solutions Group International. portfolio in the Middle East is rapidly growing.
October 2008 - MEP Middle East 27

The right time is at the beginning of the design process, usually at concept or schematic stages.

VALUE ENGINEERING

THE CLIENTS PERSPECTIVE

MEP: Why was the decision made to apply value engineering solution to the Trump Tower project?

MEP: How are these challenges being overcome?

more cost effective design, without compromising on quality, performance, or integrity.

MEP: What specic changes were/will be made to the MEP design as a result of applying these principles?

PAUL: Value engineering solutions are the standard protocol during design, to achieve the optimum commercial development.
MEP: Did the Nakheel actively seek out such a solution; if not, who prompted its use?

PAUL: As standard protocol this was something that had been actively sought out, working alongside our project management consultant [Bovis / Project Management and V.E. Solutions Consultants].
MEP: At what stage was VE Solutions brought onboard to offer value engineering solutions eg concept design, nal design, on site etc?

PAUL: A far more efcient mechanical system will be created. Internally there have already been some changes made during the schematic design process.
MEP: What is this expected to mean in terms of savings at the construction stage in terms of time and costs?

PAUL: Preparation is key by planning the procurement strategy and taking cognizance of the value engineering at an early stage of the project the right balance can be achieved. The solutions that the value engineering consultant provides can then be evaluated to make sure that they are conducive to the overall project. It is important that the value engineering consultant has a precise understanding of the design intent so that the value engineering proposals do not compromise the design integrity.
MEP: Would you use value engineering principles on future projects?

PAUL: Value engineering solutions were predominantly introduced at the schematic design stage, but was not undertaken by an independent consultant.
MEP: What members of the construction team were involved in the process and why?

PAUL: It is denitely something we will be PAUL: The value engineering undertaken has considering for future projects. Because a provided a more cost effective and practical solu- brief for the value engineering consultant has to be provided prior to appointing an external tion that will save both time and money. consultant, timing is very important. With the times lines set out in advance and the goals MEP: What are the projected savings in energy and water use once the building is complete and the clearly highlighted then the principles of value engineering are far easier to put into practice. long-term operational cost savings? PAUL: While we are unable to give an exact gure, it is clear that the value engineering which has been undertaken has achieved a more practical design, which from an operations perspective, will signicantly reduce the costs of maintaining and operating the building.
MEP: Is there anything you would have done differently in the process?

PAUL: The value engineering was done in isolation with the clients professional team. The contract did not provide an incentive to the contractor to undertake the value engineering. It was undertaken to ensure that quality and performance were not compromised.
MEP: What benets are expected to be gained for the Trump Tower project as a direct result of applying value engineering principles?

PAUL: Timing is essential. If I were to change anything I would have started the value engineering at schematic design, so that the agreed solutions were incorporated then.

PAUL: The overall benet will be to achieve a

MEP: What have been the biggest challenges in terms of successfully applying the value engineering MEP: Any other points youd like to make? principles? PAUL: The key message is that value engineering is extremely benecial to contractors and PAUL: One of the biggest challenges has been to strike the right balance between achieving developers if the process is managed correctly an optimum design without delaying the project and at the right point of development. and compromising on quality, function and the integrity of the building. Paul McConnell works with Nakheel.

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28 MEP Middle East - October 2008

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