Having spent my entire professional career in Engineering, project management and the Navy, I am well acquainted with almost every inappropriate explicative in every combination that has been uttered. But there is one phrase, which on the surface seems so innocuous and so benign, that I find the most objectionable. Every time I hear this phrase, I can feel myself cringe. What is this phrase? Value Engineering. While initially, I’m sure this was meant to convey the actual use of real engineering to optimize the value of a project being delivered to the customer, now it has become a horrible misnomer used as an excuse for cutting capital costs, and usually transferring an unequal burden to the future owner; hardly engineering or valuable.
Origins and Extremes of Value Engineering
The actual intent of Value Engineering was to review designs and plans and to optimize the design so that it delivers the maximum value to the end user while eliminating features that add little or no value. In essence, it was intended to be the lean version of the design to track the value chain and verify that the design and equipment that are installed all add to the value of the facility. Thus, things that may have been thought of as necessary, but did not contribute to the efficient operation of the facility could be eliminated. This list typically included extra creature comforts that, while pleasant, did not add direct value, such as enhanced color schemes, advanced flooring systems, skylights, etcetera. Thus, the end user could be presented with a list of components or features that could be eliminated to save money but which did not affect the overall design’s ability to deliver the actual user requirement. This allowed the end user to decide, based on their own values, what extras they wanted to pay for, or which could be eliminated with little to no impact. This was a great concept, and over the years, eliminated many gold-plated fixtures.
However, like the Fire department in Fahrenheit 451, what started out as a good and appropriate concept, gets turned into something that has little in common with the original intent. What started as a good and appropriate engineering function has turned into an exercise that is driven not by engineering and objective measurements but rather by the tool of the dreaded bean counters to cut costs, regardless of the consequences. As most readers are now familiar, the usual edict is to “remove anything that isn’t immediately needed to produce a product.” This is a huge mistake. The faulted logic is, if it is not needed now, get rid of it to save money, and we can be more profitable. This, of course, is done, usually saving direct capital costs, regardless of the long-term consequences or downstream costs. Of course, the most poignant example of this mentality is the Titanic. Lifeboats, they are not needed to cross the Atlantic. And they are not, right up until you need them.
How do we help the term Value Engineering regain its reputation as a good and useful Engineering exercise?
First, to do any engineering, you need to determine what you are calculating and then compare it against design criteria. We do this for every other aspect: do we have sufficient power, what is the static load, is our floor strength sufficient, what is our expected roof snow loading during the New England winter. But in its current form, value engineering has lost this objective measurement. What is needed is the ability to compare the current cost to the future value of the component under scrutiny, and that future value must come from the end user, and NOT the director of capital projects. Armed with a value, the engineer can then calculate if the cost of the feature or component is greater or less than it’s expected benefit.
At this point a simple example is warranted from my past, a chilled water Isolation valve. The rationalization was simple, and probably familiar to all. Is that valve needed for the chilled water system to operate, and perform its function? The answer was a simple no, it was to be open almost it’s entire existence, and only closed if the branch it served needed to be isolated for repairs. So, the valve was eliminated based on its current cost compared to its Immediate value. But this was wrong!! What should have been calculated was the cost of the valve vs the future value it represented to an operating facility. Just like every passenger on the Titanic would have been glad to pay a few % extra to have sufficient lifeboats available, having that valve installed would allow that section of chilled water piping to be isolated and repaired, and the remainder of the facility to remain operational and producing product. What is the value in that? That is what the end user must answer! A good engineer will work with the end user to clearly express the direct cost of the component (in this case a valve), and the benefit that having it will provide if needed, so that an informed decision can be made. To further illustrate the point, imagine that the facility in question is producing a biotech product that is capacity constrained. Your market is limited only by your ability to produce the product. Now imagine you have a leak in the chilled water system., Without an isolation valve, the entire chilled water system must be shut down to allow for the repair, requiring an entire plant shutdown! The future cost may be millions in lost sales. At this point, the few thousand for a valve seems like a bargain.
Presenting Workarounds Use Case
Of course, this is a simple example, and one could argue to eliminate the valve, and use a freeze seal if needed. Yes, and in some cases, workarounds are available and should be presented as options. But those options should be well understood, and the cost and consequences analyzed. Yes, you can lower all your ceilings and save money on HVAC, but then if an agitator needs to be removed, you need to either cut holes in the roof and move interference, or you must cut and then reattach the agitator shaft. All possibilities need to be discussed and understood by the end user, who will bear the cost (and delays) of these decisions.
Value engineering can be a great exercise and help the end user meet their requirements in an efficient manner. Still, as is practiced today, it is neither adding value nor long-term operational benefits. If help is needed in conducting a true value engineering exercise, or worse yet, in arguing to reverse poorly done value engineering, following the chemistry of full-scale operations of process, project, staff, and quality, Bothwell can offer a large contingent of experienced personnel to help in assessing the merits of the value engineering recommendations.
Lou Traglia, a US Navy Veteran and Bothwell Engineering Consultant brings invaluable expertise to the table, offering genuine Value Engineering solutions to prominent manufacturers of treatment therapies.
