20200905-Value Engineering-Eng.Mushtaq Rabbi

9/05/20 Closing the Performance Gap An Intro to VM Mushtaq Rabbi RPP MCIP CVS® Agenda Concept of Value Background Benefits Timing Case Study Why VM Works Certification Process 2 1

9/05/20 Where am I Now 3 Where am I Now 4 2

9/05/20 About Myself Architect (8 years) Urban Designer/ Planner (6 years) Value Specialist (12 years) Director, Value Analysis Canada Trainer, Value Management (VM) Lead VM Studies/ Sessions 5 Value Terminologies DO NOT Get Confused! Value Management Value Analysis Value Engineering Value • Portfolio • 15% Schematic Design Methodology • Programs • 30% Detail Design • Option Analysis • 60% Detail Design • Feasibility • 90% Detail Design • Concept Development • Constructability Review 6 3

9/05/20 3 Take-Away FUNCTION (WHAT DOES IT DO?) INNOVATION DECISION-MAKING 7 Value Mgmt. is Designed to Answer What is it? What does it DO? What MUST it DO? What does it cost? What else would do that? What does that cost? 8 4

9/05/20 Concept of Value…1731 “The determination of the value of an item must not be based on its price, but rather on the utility it yields.” Daniel Bernoulli (1700 -1782), Swiss Mathematician, Imperial Academy of Sciences, St. Petersburg 9 Concept of Value…1942 Function* Value ~ --------------------- Resources *A FUNCTION is an action or an intended action that must be performed by a program, project, product, process or service to meet stakeholders’ or business need. Expressed in a verb-noun format. 10 5

9/05/20 Value Management (VM) • Structured Methodology for Innovation • Engaging a Multi-disciplinary Team • Analysis of Essential Functions • Performed in a Workshop Format Function Performance Benefits Outcome Value ~ --------------------- ~ -------------------------- ~ ----------------------- ~ ----------------------- Resources Cost Expenditure Investment 11 History 1942 GE’s challenge during WW II Shortage of materials Lawrence Developed Value Analysis (VA) Miles Analyzed function of materials GE spent $1.0 M over 5 years Result Improved performance of products On time delivery $200.0 M cost avoidance/ savings 1947 GE adopted VA as a standard business practice 12 6

9/05/20 Value Mgmt. is Critical Now… 1. Uncertain Economic Times 2. Shrinking Budgets 3. Demanding Customers/ Citizens 4. Competing Priorities 13 Contextualizing Problem/ Opportunity Problem / Opportunity Matrix Solution / Strategy KNOWN UNKNOWN Problem / Opportunity KNOWN 1. Defined Problem 2. Requirements + Clear Solution (Design to meet) Medium Risk UNKNOWN 3. Applications 4. Investigation (Requirements unknown – (Feasibility, Data driven, 14 Opportunity or Benefit driven) Broad based) High Risk 7

9/05/20 Value Mgmt. is Critical Now… Value PROJECT MANAGEMENT Management 15 Value is Lost…Why? 16 8

9/05/20 Value is Lost… • Lack of essential information • Incorrect/ invalidated assumptions • Temporary decisions that become permanent • Honest wrong beliefs • Lack of specific idea • Old habits • Personal attitudes 17 VM is NOT… • Cost reduction exercise • Done after detail design • Responsibility of a consultant • Desk review of documents and drawings • Typical cost-benefit analysis 18 9

9/05/20 Value Mgmt. offers Multiple Benefits • Accurate assessment of scope • Reduces overall risks and schedule • Remedies planning/ design deficiencies and omissions 19 Value Mgmt. offers Multiple Benefits • Assurance for top management/ administration • Establishes organizational reputation • Brings alignment amongst stakeholders or teams • Confirms “Value for Money” option/ choice 20 10

9/05/20 Best Time to Apply Value Mgmt. 21 Structured Method 8 Step Job Plan Preparation or Pre-VM Implementation or Post-VM 22 11

9/05/20 ATTENTION CHECK! 23 What is the BASIC Function? (Not Activities and Tasks) PROTECT SURFACE BRAND IDENTITY 24 12

9/05/20 What is the BASIC Function? (Not Activities and Tasks) HEAT FOOD SPAN DISTANCE 25 What is the BASIC Function? (Not Activities and Tasks) SPAN DISTANCE 26 13

9/05/20 What is the BASIC Function? (Not Activities and Tasks) SHARE KNOWLEDGE 27 What is the BASIC Function? (Not Activities and Tasks) IGNITE FLUID DISPENSE TAPE ATTACH PAPER 28 14

9/05/20 What is the BASIC Function? (Not Activities and Tasks) HAMMER DRIVE NAIL DELIVER FORCE 29 VM Outcome 30 15

9/05/20 Results of VM (2009 – 2020) • 34 VM Studies • ROI >180:1 • 7% - 81% cost avoidance/ deferral • Avg. 16% • Avg. cost per VM 0.25% (of program/ project budget) 31 Case Study: Integrated Civic Facility 32 16

9/05/20 Case Study: Issues • Multiple Stakeholders • Unclear Scope • Lack of Governance • Budgetary Limitations • Delayed Schedule 33 Case Study: Issues • Stakeholders: Calgary Public Library, Arts & Culture, Affordable Housing (48 units), Future Transit Hub • Clarity of Scope: Needs vs. Wants • Governance: Territoriality • Budgetary Constraints: $53.0 M vs. $35.0 M • Schedule: 12 months over – no consensus 34 17

9/05/20 Case Study: VM Approach • 40 hours virtual workshop (in one week) • 22 participants with leading expertise (internal-external) • Focus on true integration (spatial and operational) • What really adds ‘value’ • Life cycle thinking 35 Case Study: Integrated Civic Facility 36 18

9/05/20 Case Study: VM Result • Over 300 alternative ideas • 32 alternatives developed as business cases • VM Team focused on: site development, spatial program, systems, delivery model 37 Case Study: VM Result • Clarified real need, scope • 35% - 45% cost avoidance of deferral – brought project within budget • Stakeholders decided/ aligned on options 38 19

Summary of Alternatives 9/05/20 Alter. Value Alternative Title Initial Costs O&M Costs Life Cycle 39 No. ENSURE CAPACITY $ 9,948,100 (PW ) Costs TEMPORARY AT GRADE PARKING ON $ 3,535,300 EC-0 0 UNDEVELOPED AREAS ADJACENT TO SITE $- $ 9,063,500 $ 19,011,600 EC-04 VALIDATE PROGRAM ELEMENTS $ 2,899,200 $ 3,579,100 $ 7,114,400 EC-05 $- $- EC-08 AMALGAMATE SOME OF THE SPACES FOR $ 4,080,000 $- $ 2,899,200 EC-25 MULTIPLE PROGRAMS $ 4,055,600 CONSIDER WOODFRAME TOWNHOUSE $- $- $ (36,000) EC-29 AND /OR STACKED TOWNHOUSES ON $- $ 4,080,000 EC-40 CONCRETE PODIUM $ 2,599,300 $- $ 4,055,600 EC-42 LIBRARY TO HAVE TWO ELEVATORS $ (50,000) $- $- EC-48 $- EE-0 0 SPLIT SERVICING COSTS FOR FUTURE $- $ (8,973,400) $ (6,374,100) EE-02 PHASES $- $- $ (50,000) EE-07 $- $- EE-19 STAND ALONE AFFORDABLE HOUSING $ (44,400) $- $- EE-28 ALLOWING COMBUSTIBLE DESIGN $ (671,800) $- $- EE-29 CLARIFY PROJECT GOALS TO ALIGN WITH $ (482,000) COUNCIL GOALS $ 174,900 $ 90,200 $ 45,800 EE-34 ENHANCE EXPERIENCE $- $ (671,800) EE-49 CONDUCT MARKET RESEARCH FOR $ 550,000 $ 264,300 $ (217,700) EE-72 LEASEABLE SPACES $ (24,000) $ 1,164,100 $ 1,339,000 EE-75 CONSIDER SOCIAL JUSTICE FM-00 IMPLICATIONS ON $ 324,600 $- $ 550,000 FM-28 REALIGN HOUSING ‘BAR’ TOWARDS EAST- $ 461,700 $- $ (24,000) FM-43 WEST ORIENTATION $- IP-00 ACTIVATE ALL EDGED OF THE FACILITY TO $ 1,037,900 $ 535,400 $ 860,000 IP-06 ENHANCE USER EXPERIENCE $ 1,461,600 $ (833,200) $ (371,500) IP-17 REVIEW AND ENHANCE PASSIVE COOLING $- $- IP-22 MEASURES (FOR USER COMFORT) IN $- $ 1,137,100 $ 2,175,000 IP-51 HOUSING $ 810,000 $ (1,249,800) $ 211,800 IP-55 USE EXPOSED MASS TIMBER FRAMING FOR LIBRARY ROOF AND FEATURE $ 1,905,600 $- $- OS-00 MOVE GARBAGE & RECYCLING WITHIN $ 108,000 $- $ 810,000 OS-09 PARKING TO IMPROVE STREETSCAPE $ (300,000) $- $ 1,905,600 OS-13 INTRODUCE BALCONIES FOR ENHANCING $ 5,967,000 $ 41,700 $ 149,700 EXPERIENCE WHILE PROVIDING SHADING $ 974,100 $ 674,100 OS-18 REMOVE ROOFTOP TERRACE; CREATE $ 330,400 OS-37 AMENITY SPACE ON HOUSING ROOF $ 397,600 $- $ 5,967,000 OS-46 FACILITIATE MOBILITY REMOVE BUS SHELTERS FROM THIS $ 751,100 $ 1,081,500 OS-70 PROJECT $ 4,700 $ 402,300 GOOD INTERNET ACCESS FOR ONLINE OS-87 ORDERS OS-88 INTEGRATE PROGRAMS CLARIFY DAILY OPERATIONAL NEEDS TO FURTHER INTEGRATE PROGRAMS ONE COOLING SYSTEM, ONE GEN SET, ONE HEATING SYSTEM, CENTRAL HRV MOBILE AND SHARED EQUIPMENT FOR PROGRAMMING FIRETRUCK – DELETE REQUIREMENT FOR INTEGRATING OLD FIRE TRUCK USE GROUND SOURCE HEAT PUMP SYSTEM (FOR HEATING, COOLING, AND HOT WATER) OPTIMIZE SYSTEMS DURABILITY SHOULD NOT EXCEED THE MID LIFE OF BUILDING STRUCTURAL SYSTEMS - EXPLORE CIP, WOOD/TIMBER COMBINATION WHERE POSSBIL E FIREWALL/STRATA TITLE TO SPLIT AREA COMBINE CHP/ EMERGENCY POWER ACHIEVE PASSIVE HOUSE CERTIFICATION FOR SUPER INSULATED AND AIR TIGHT BUILDING ENVELOPE THAT MANDATES VERIFICATION MOVE FORWARD WITH BEST PROUCREMENT STARTEGY FOR THE PROJECT REMOVE EXTERNAL WALL ON MAIN LEVEL PURSUE ALTERNATIVE SOLUTIONS CODE COMPLIANCE FOR MASS TIMBER TOWER SITE DEVELOPMENT Initial Cost O&M Cost LCC EC-04 TEMPORARY AT GRADE PARKING ON UNDEVELOPED AREAS ADJACENT TO $ 9,948,100 $ 9,063,500 $ 19,011,600 SITE $ 4,080,000 $ - $ 4,080,000 EC-40 SPLIT SERVICING COSTS FOR FUTURE PHASES 550,000 $ - $ 550,000 FM-28 REMOVE BUS SHELTERS FROM THIS PROJECT $ POTENTIAL VALUE REALIZATION OPPORTUNITY $ 14,578,100 Initial Cost PROGRAM/ BUILT FORM O&M Cost LCC EC-05 VALIDATE PROGRAM ELEMENTS $ 3,535,300 $ 3,579,100 $ 7,114,400 EC-08 AMALGAMATE SOME OF THE SPACES FOR MULTIPLE PROGRAMS $ -$ -$ - EC-25 $ CONSIDER WOODFRAME TOWNHOUSE AND /OR STACKED TOWNHOUSES 2,899,200 $ - $ 2,899,200 EC-29 ON CONCRETE PODIUM LIBRARY TO HAVE TWO ELEVATORS $ -$ (36,000) 4,055,600 $ EC-42 STAND ALONE AFFORDABLE HOUSING ALLOWING COMBUSTIBLE DESIGN $ - $ 4,055,600 -$ EC-48 CLARIFY PROJECT GOALS TO ALIGN WITH COUNCIL GOALS $ 2,599,300 $ -$ - EE-02 CONDUCT MARKET RESEARCH FOR LEASEABLE SPACES $ (50,000) $ (8,973,400) $ (6,374,100) EE-07 CONSIDER SOCIAL JUSTICE IMPLICATIONS ON SCHEMATIC/CONCEPUTAL $ -$ (50,000) EE-19 DESIGN $ REALIGN HOUSING ‘BAR’ TOWARDS EAST-WEST ORIENTATION -$ -$ - -$ -$ - EE-28 ACTIVATE ALL EDGED OF THE FACILITY TO ENHANCE USER EXPERIENCE $ (671,800) $ -$ (671,800) EE-49 MOVE GARBAGE & RECYCLING WITHIN PARKING TO IMPROVE STREETSCAPE $ EE-75 REMOVE ROOFTOP TERRACE; CREATE AMENITY SPACE ON HOUSING ROOF $ 174,900 $ 1,164,100 $ 1,339,000 FM-43 GOOD INTERNET ACCESS FOR ONLINE ORDERS $ (24,000) $ -$ (24,000) IP-06 CLARIFY DAILY OPERATIONAL NEEDS TO FURTHER INTEGRATE PROGRAMS $ 324,600 $ 535,400 $ 860,000 IP-22 MOBILE AND SHARED EQUIPMENT FOR PROGRAMMING $ -$ -$ - IP-51 FIRETRUCK – DELETE REQUIREMENT FOR INTEGRATING OLD FIRE TRUCK $ 1,037,900 $ 1,137,100 $ 2,175,000 POTENTIAL VALUE REALIZATION OPPORTUNITY $ 13,881,000 Initial Cost ENERGY EFFICIENCY O&M Cost LCC EE-29 REVIEW AND ENHANCE PASSIVE COOLING MEASURES (FOR USER $ -$ -$ - COMFORT) IN HOUSING IP-17 ONE COOLING SYSTEM, ONE GEN SET, ONE HEATING SYSTEM, CENTRAL $ 461,700 $ (833,200) $ (371,500) IP-55 HRV $ 211,800 OS-37 USE GROUND SOURCE HEAT PUMP SYSTEM (FOR HEATING, COOLING, HOT $ 1,461,600 $ (1,249,800) $ WATER) COMBINE CHP/EMERGENCY POWER 108,000 $ 41,700 $ 149,700 (300,000) $ 974,100 $ 674,100 OS-46 ACHIEVE PASSIVE HOUSE CERTIFICATION FOR SUPER INSULATED AND AIR $ TIGHT BUILDING ENVELOPE THAT MANDATES VERIFICATION POTENTIAL VALUE REALIZATION OPPORTUNITY $ 1,731,300 STRUCTURAL Initial Cost O&M Cost LCC EE-34 USE EXPOSED MASS TIMBER FRAMING FOR LIBRARY ROOF AND FEATURE 45,800 $ (44,400) $ 90,200 $ ELEMENTS $ $ (482,000) $ 264,300 $ (217,700) EE-72 INTRODUCE BALCONIES FOR ENHANCING EXPERIENCE WHILE PROVIDING SHADING -$ -$ - 810,000 $ -$ 810,000 OS-09 DURABILITY SHOULD NOT EXCEED THE MID LIFE OF BUILDING OS-13 STRUCTURAL SYSTEMS - EXPLORE CIP, WOOD/TIMBER COMBINATION $ 1,905,600 $ - $ 1,905,600 OS-18 WHERE POSSBILE $ 330,400 $ 751,100 $ 1,081,500 FIREWALL/STRATA TITLE TO SPLIT AREA 397,600 $ 4,700 $ 402,300 OS-87 REMOVE EXTERNAL WALL ON MAIN LEVEL $ OS-88 PURSUE ALTERNATIVE SOLUTIONS CODE COMPLIANCE FOR MASS TIMBER $ TOWER 2,917,200 POTENTIAL VALUE REALIZATION OPPORTUNITY $ PROCUREMENT Initial Cost O&M Cost LCC 40 OS-70 MOVE FORWARD WITH BEST PROUCREMENT STARTEGY FOR THE PROJECT $ 5,967,000 $ - $ 5,967,000 POTENTIAL VALUE REALIZATION OPPORTUNITY $ 5,967,000 20

9/05/20 Multidisciplinary Collaboration Traditional VM Discipline 4 Discipline Discipline 5 3 Discipline 5 Discipline Discipline Function 4 1 Discipline PM 1 Discipline PM 2 Discipline Discipline 3 2 Creativity “ … the vast majority of disciplines obey an inverted U curve of creativity. The shape 42 of the curve captures the steep rise and slow fall of individual creativity, with performance peaking after a few years of work before it starts a slow, gradual decline.\" Source: Age and Creative Productivity, Dean Simonton, Dept. of Psychology, UC Davis 2010 21

9/05/20 Convergent- Divergent Thinking Traditional Approach (Linear) Problem Identification 2-3 Alternatives Recommend Solution Information Function Creative Evaluation Development Present Analysis Recommendations VM Approach (Iterative, Opportunity and Performance Driven) 43 VM Benefits All Levels Projects Programs Portfolio 44 22

9/05/20 Who & Where Value Mgmt. is Used? • All Engineering Professionals Consulting Industry • Architects • Top Management of Strategic Planning Companies Transportation • Government Ministries Water, Wastewater Vertical Built Systems Information & Communication Tech. Mining Oil & Gas, Power Manufacturing Tourism Existing Operations & Maintenance Construction Industry 45 Value Methodology Certification SAVE International, USA : www.value-eng.org 46 23

9/05/20 Value Methodology Certification VMA Exam 240 Hours OR CVS Exam 6-8 Value Studies 1.5 Hours 3.0 Hours US$185 US$360 VMF 1 Value VMF 2 Certified Methodology Value Associate Specialist 47 Value Methodology Fundamentals 1 SAVE International, USA : www.value-eng.org • License # 10069 • 32 hours course • Certificate of Completion • Eligible for VMA (Value Methodology Associate) Exam • Separate Fee for Online Exam (Multiple Choice) 48 24

9/05/20 Value Methodology Fundamentals 1 Option 1: TRAINING AGENDA (SAVE prescribed min. 32 hours) DAY 01 & 02  What is Value – 0.5 hours  History of Value Methodology – 0.5 hours  Value Methodology (Core Competency 1.1 & 1.2) and Pre-Workshop Stage (Core Competency 6) and Transform Information (Core Competency 2.1 & 2.2) - 4 hours  Workshop Stage, Six Phases of the VM Job Plan Overview (Core Competency 7.1) and Information Phase (Core Competency 7.2) - 3 hours DAY 03 & 04  Workshop Stage, Function Analysis Phase (Core Competency 4.1 -4.3 & 7.3) - 8 hours DAY 05 & 06  Workshop Stage, Creative Phase (Core Competency 7.4) - 2 hours  Workshop Stage, Evaluation Phase (Core Competency 7.5) - 2 hours  Workshop Stage, Development Phase and Life Cycle Costing (Core Competency 7.6, 5.2, and 5.3) - 4 hours DAY 07 & 08 49  Workshop Stage, Development Phase (Core Competency 7.6) - 3 hours  Workshop Stage, Evaluation Phase (Core Competency 7.7) - 3 hours  Post Workshop Stage, Strategies - 1 hour  Summary of Course, Questions and Answers - 1 hour Value Methodology Fundamentals 1 SAVE International, USA : www.value-eng.org 50 25

9/05/20 Questions/ Comments [email protected] +1-403.888.7895 (Canada) LinkedIn Profile: https://www.linkedin.com/in/mushtaq-rabbi-rpp-mcip-cvs%C2%AE-600a7710/ 51 26