Engineering success project by project

value engineering for project managers

Abstract

As a Project Manager, are you effectively leading your team and your project to the best outcome for the project? Have you considered that the vision of the project or the specific objectives may need minor, perhaps major, adjustments? As the Project Manager for your projects, are you applying Value Engineering concepts to ensure that your projects and project teams are focusing on the right vision and objectives for the project?

Although Value Engineering methodologies and practices have existed since World War II, these methodologies and practices are often overlooked or underutilized by project managers. Value Engineering has existed in certain engineering sectors for many years but many industries can stand to benefit by more rigid application of these techniques to the start up of new projects and the project management process.

The purpose of this paper is to explore the use of Value Engineering techniques to augment the project manager’s toolkit. These techniques should be employed for the start up of all new projects and during the development of the project. Value Engineering can bring a new level of professionalism and business perspective to your role as a project manager. Value Engineering can help you engineer success for your clients (and you) project by project.

Introduction

“Pooh looked at his two paws. He knew that one of them was the right, and he knew that when you had decided which one of them was the right, then the other one was the left, but he never could remember how to begin.” (Hoff 1982, p. 12)

The motivation for this paper began with collaboration between the Houston, Texas chapters of PMI® and SAVE International. In the course of several joint meetings and discussions, members of both chapters realized the overlapping methodologies and benefits of the disciplines of Project Management and Value Engineering. Every Value Study conducted by a Value Engineer is a project and most projects, if not all, can benefit from the process of Value Engineering. While the Value Engineering techniques noted in this paper can be situationally applied throughout the project management process, particular emphasis is placed during the Project Management Initiation and Planning processes. In The 7 Habits of Highly Successful People, Steven Covey (Covey, 1989) teaches us to “begin with the end in mind.” Value engineering gives project managers the opportunity to systematically ask “why” and “how” to better derive value for the stakeholders of the project.

This paper will explore Value Engineering concepts and techniques which can aid in the start up of new projects, help evaluate Return on Investment, allow focus on the critical scope factors, and customize the project vision for mutual success. The following topics will be covered:

  • A brief introduction to Value Engineering for project managers.
  • The benefits of Value Engineering to project managers (and project teams).
  • Value Engineering mapped to the PMBOK Guide® process groups.
  • An introduction to tools and techniques of Value Engineering.
  • An introduction to FAST (Function Analysis System Technique) as a tool for engineering project success.
  • Integrating Value Engineering with Project Management.

Introduction to Value Engineering for Project Managers

What is Value Engineering?

A Guide to the Project Management Body of Knowledge (PMBOK® Guide) 4th Edition states that “effective project managers acquire a balance of technical, interpersonal, and conceptual skills that help them analyze situations and interact appropriately.” (PMI, 2008, p.409). Value Engineering, like many other tools and techniques noted in the PMBOK® Guide , is a technique which can augment the project manager’s effectiveness in evaluating and solving the project problem and more specifically, in product or scope analysis.

Value Engineering is described in the Value Standard and Body of Knowledge published by SAVE International, the Society for Value Engineering, as “the application of a value methodology to a planned or conceptual project or service to achieve value improvement.” (SAVE International, 2007, p. 31). While a project may be originated solely to identify and derive value, every project exists to provide value to its stakeholders. Value engineering provides methodologies and processes to systematically analyze functions and value of a product.

Lawrence Miles developed Value Analysis in 1945 as a method to support cost reduction activities by relating the cost of the individual components to their function contributions. To focus on the function of each component, he originated the use of an active verb and a measurable noun in order to better describe the benefit of the component and in turn, discover opportunities for cost and value improvement. Over time, Value Engineering has been expanded to encompass tools, techniques and processes to enhance value.

Common Themes

The following are common themes to both Project Management and Value Engineering:

  • Product Analysis – Value Engineering focuses heavily on product analysis and product decomposition in order to analyze value. Project Management uses product analysis to decompose product and project scope during the initiation and planning processes.
  • Problem Analysis and Resolution – Both Value Engineering and Project Management use various techniques to analyze and solve problems. Projects are normally initiated because of some business problem. Problems also surface during the product and project scoping processes.
  • Creativity – Solving project problems and finding value require the application of various creativity techniques. The creativity tools, techniques and processes developed for Value Engineering can be applied to multiple situations throughout the project life cycle.
  • Soft Skills – To be effective in project management or value engineering, soft skills for the leaders leading these efforts are essential. See Exhibit 1 below for a list of key Soft Skills for both disciplines.
Key Soft Skills

Exhibit 1: Key Soft Skills

The Value Study

The Value Study as outlined in the Value Standard and Body of Knowledge identifies three stages (SAVE International, 2007, p. 2):

  1. Pre-Workshop: to plan and organize the Value Study
  2. Workshop: execution of a six phase job plan:
    1. An information phase
    2. A function analysis phase
    3. A creative phase
    4. An evaluation phase
    5. A development phase
    6. A presentation phase
  3. Post-Workshop: documentation and implementation

From a project management perspective, the three stages may be addressed as a single project while in other cases, depending on the environment and situation, each of the stages may be addressed as a separate project. In many cases, the first two stages overlap with the PMBOK® Guide initiation and planning process groups.

Benefits of Value Engineering

Summary

This section briefly addresses some of the benefits of Value Engineering and its tools, techniques and processes to the Project Management process. While Project Management, by its nature, does not exclude any of the tools or techniques inherent in the Value Engineering process, only a small subset of project managers routinely use these tools and techniques.

Challenges of the Project Manager

Exhibit 2 below identifies typical challenges of a Project Manager and the potential solutions that Value Engineering provides to the Project Manager:

Project Management Challenges

Exhibit 2: Project Management Challenges

Benefits of Value Engineering for the Project Manager

“Doing the same thing over and over, yet expecting different results, is the definition of crazy.” – Unknown (Quotes on Creativity and Innovation, 2009).

By learning the Value Study process and the tools, techniques and processes associated with the Value Engineering discipline, the Project Manager can realize several major benefits. The following is a partial list:

  • Value to Sponsors and Stakeholders – by embracing the Value Engineering process, the Project Manager and project team can demonstrate value early in the project process.
  • Enhanced Professionalism – additional expertise, especially in analyzing, determining and providing value enhances the Project Manager’s image and leadership power.
  • Predictable results – using proven techniques help lead to predictable results.
  • Repeatable successes – the ability to provide success project by project through proven techniques enhances the team and organization image and credibility.
  • Enhanced business value – project managers and teams that not only deliver what’s expected but also deliver additional business value are in high demand.
  • Clear project vision and focus – by using the pre-project techniques and processes, project managers gain stakeholder buy-in and confidence early.
  • Leadership – the processes inherent in the Value Engineering approach help strengthen leadership and team building skills.
  • Creativity, innovation and problem solving – Value engineering tools and techniques enhance the Project Manager’s and project team’s performance and agility.

Mapping Value Engineering to the PMBOK®

Summary

Processes, tools and techniques from the Value Engineering discipline can augment the Project Management process groups as defined in the PMBOK® Guide. Each of the process groups will be addressed briefly in this section.

Initiating

Value Engineering can augment the Initiating processes as follows:

  • Clarify the Project Vision
  • Improve Return on Investment calculations
  • Enhance creativity in defining project solutions
  • Eliminate unnecessary product components and scope features
  • Function analysis enhances the cost evaluation and product value definition

Planning

Value Engineering can augment the Planning processes as follows:

  • Clarifies the Product and Project Scopes using function analysis techniques
  • Enhances the solution definition process
  • Improves Work Breakdown Structures (WBS) by defining measurable deliverables or “nouns”
  • Enhances activity definitions by more clearly defining “verbs”
  • Validates the business case
  • Enhances the planning processes through tools & techniques such as FAST, Value Job Planning, Facilitation, and more.

Executing

Value Engineering can augment the Executing processes as follows:

  • Validates the business case
  • Implements value alternatives
  • Provides coordination with other organizations or client quality improvement programs

Monitoring and Controlling

Value Engineering can augment the Monitoring and Controlling processes as follows:

  • Scope control
  • Application of VE techniques to scope changes
  • Avoidance of unnecessary scope additions
  • Innovative problem solving

Closing

Value Engineering can augment the Closing processes as follows:

  • Track value achievement resulting from implemented alternatives
  • Validate benefits of implemented change
  • Integrate Value Study results into organization’s lessons learned or program reporting

Value Engineering Tools and Techniques

The following, while not a complete list, identifies Value engineering tools and techniques which can be adapted to the project management process:

Function Analysis

This technique defines product components and functions using an active verb and measurable noun approach. The project team conducts an analysis of each component and function to determine which can be enhanced, eliminated or combined or if new functions need to be developed.

Cost-to-Worth Relationships

By analyzing and determining cost-to-worth relationships, this technique helps narrow scope and refines value definitions in terms that stakeholders would understand.

Cost-to-Function Allocation

By allocating costs to function, the project team can refine the Return on Investment and make informed scope decisions.

Managing Divergent Thinking

This technique enhances creativity and promotes innovation by providing team and bottom-up alternatives and solutions. This technique promotes out of the box thinking and encourages agility when required.

Idea Evaluation Techniques

These techniques provide for the evaluation of ideas, alternatives, and proposed solutions to ensure that the optimal ideas are selected. Convergent thinking is employed to help reduce alternatives.

Life Cycle Cost Analysis

This technique provide for the analysis of costs beyond the project timeframe and throughout the life of the products or assets resulting from the project. Performed early enough in the project life cycle, this analysis may determine that a project may not be viable.

TRIZ

TRIZ (Teoriya Resheniya Izobretatelskikh Zadatch) is a Russian acronym for a structured creativity approach created by Genrich Altshuller (1994). This technique can be especially beneficial in the development of a new product or process but can also be used to creatively solve problems.

An Introduction to FAST

FAST (Function Analysis System Technique) is an enhancement to the value analysis process developed by Charles Bytheway. (2007) FAST allows the project team which is composed of individuals with different backgrounds and perspectives to effectively analyze functions and resolve issues that occur during the analysis process. FAST is especially effective in analyzing complex systems.

FAST results in a diagram or model which is used to effectively enhance communications, analysis and decision making. FAST uses verb-noun rules to create a common language for the team performing the analysis. By visually representing the functions, communications with project sponsors and stakeholders is also enhanced.

The purpose of this technique is to effectively identify the problem. In doing so, there is no right or wrong result. Achieving consensus is the most important output of the process, “not the paper.” Once the team has achieved consensus, the team can then move on to the next step in the Value Study process.

Another key benefit of this technique is that it allows the team to analyze a complete system, not just the components. This is important because the diagram or model will also illustrate dependencies between functions.

Integrating Value Engineering with Project Management

So, how do we, as project managers, integrate Value Engineering into our Project Management discipline and processes? The following is a short list of recommended actions:

  • To the extent possible, seek training opportunities for you and your team on the key core processes such as FAST and TRIZ.
  • Seek opportunities to network with VE practitioners or attend SAVE conferences.
  • Seek access to the latest VE innovations.
  • Attend local chapter meetings and programs offered by SAVE.
  • Investigate potential certifications offered by SAVE on Value engineering.
  • At a minimum, try to routinely employ Value Analysis on all projects during the Initiation and Planning phases of your projects.

Conclusion

In conclusion, Value Engineering along with the tools, techniques and processes offered by the discipline will provide long term value to the Project Manager and the Project Management process. In current times, having the ability to add value, to innovate, and the ability to design and deliver the best possible result to your stakeholders using a language that can be understood by them is crucial for effective project management.

References

Altshuller, G. (1994) And Suddenly the Inventor Appeared: TRIZ, the Theory of Inventive Problem Solving Wooster, MA: Technical Innovation Center

Albert Einstein Quotes (2008). Retrieved from BrainyMedia.com, web site: http://www.brainyquote.com/quotes/

Bytheway, C.W. (2007) Fast Creativity & Innovation: Rapidly Improving Processes, Product Development and Solving Ft. Lauderdale, FL: J. Ross Publishing

Covey, S.R. (1989). The 7 Habits of Highly Successful People. New York, N.Y.: Free Press

Hoff, B. (1982). The Tao of Pooh. New York, N.Y.: Dutton

Project Management Institute. (2008) A Guide to the Project Management Body of Knowledge (PMBOK® Guide) 4th Ed. Newtown Square, PA: Project Management Institute.

SAVE International. (2007) Value Standard and Body of Knowledge (June 2007). Dayton, OH: SAVE International.

The Quotation Page (2008). Retrieved from The Quotation Page, web site: http://www.quotationspage.com/

Winnie the Pooh quotes (2001). Retrieved from Thinkexist.com, web site: http://www.thinkexist.com/

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2010, Eddie Merla, PMP
Originally published as a part of 2010 PMI Global Congress Proceedings – Milan, Italy

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