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What Is Value Engineering


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#1 ekar

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Posted 08 November 2018 - 11:19 PM

Dear All,

 

My company is bidding for a FEED project that designs a gas treatment facility based on a nearby existing plant (essentially a new train). The scope of work includes value engineering. There is a difference in opinion between us and the client - our management thinks it should be done on the design of the existing plant before the FEED starts, and the results are then applied to the current design, while the client believes it is to be done later during FEED after FEED design is significantly developed.

 

Being new to value engineering, I have the following questions on the subject and hope anyone could shed some light. My apologies if this is not the right forum. 

 

- What is value engineering?

- How is it done and when is it normally conducted during design stage?

- What technical documents are needed to conduct the review?

 

Your inputs and any suggestions are greatly appreciated.

 

 

Thanks,

Ed

 

 

 

 



#2 Bobby Strain

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Posted 08 November 2018 - 11:28 PM

When dealing with clients, you apply the golden rule. "The client has the gold; she makes the rules."

 

Bobby



#3 Zauberberg

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Posted 09 November 2018 - 03:07 AM

Value Engineering is functional analysis of a project. VE methodology looks at what functions the project is supposed to achieve, versus the value it consumes in order to get there. It is normally done in the earliest stages of the project where flexibility for changes is highest.

 

There is no point to look at the existing train and then "alter" some aspects of design. This would simply be a small-scale optimization effort of isolated segments of the plant. Value Engineering looks at the big picture and, in many instances, has many things in common with the conceptual design. The beauty of it is that it can be applied to any project phase.

 

Here you can read about the formal methodology: https://c.ymcdn.com/...ments/vmstd.pdf



#4 Technical Bard

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Posted 10 November 2018 - 07:28 PM

Value Engineering is one of many Value Improvement Processes.  The traditional "VE" session is often performed nearer the end of a FEED phase once you have a design that can be analyzed.  

 

The challenge with this plan is that it can create significant rework if significant aspects of the design are changed as a result of the VE exercise.  I have seen VE conducted on P&IDs prior to HAZOP that resulted in PFD-level changes that had plot plan consequences, causing significant engineering cost increase and negative schedule consequences.

 

In my mind, it is better to focus on BIG PICTURE items earlier in the design.  Look at the overall process scheme at the PFD level and ask the team what the purpose is and whether there is a simpler (fewer parts) route to accomplish it.  Especially when you have an existing plant, technology and design methods may have advanced since it was built.  That way you can fix the PFD, equipment sizing, etc. earlier, and reduce the risk that later Value Engineering will break the design. 

 

You can then perform Value Engineering at the later date with a focus on smaller details (i.e. do I need CV bypasses, etc.).   This should be done before HAZOP, else you break the safety of the design.



#5 Bobby Strain

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Posted 10 November 2018 - 11:14 PM

I would, as a client,  evaluate licensors and design contractors thoroughly and avoid any such thing as Value Engineering. Things that are a part of VE come from an assembled group of mostly dummies. But, clients slough through because VE has been dictated by someone in the client's organization. I't kind of like a HAZOP, only less useful. Sometimes harmful. Good luck.

 

Bobby



#6 Sharma Varun

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Posted 12 November 2018 - 03:44 AM

I would, as a client,  evaluate licensors and design contractors thoroughly and avoid any such thing as Value Engineering. Things that are a part of VE come from an assembled group of mostly dummies. But, clients slough through because VE has been dictated by someone in the client's organization. I't kind of like a HAZOP, only less useful. Sometimes harmful. Good luck.

 

Bobby

 

I totally agree with Bobby 

 

Dear All,

 

My company is bidding for a FEED project that designs a gas treatment facility based on a nearby existing plant (essentially a new train). The scope of work includes value engineering. There is a difference in opinion between us and the client - our management thinks it should be done on the design of the existing plant before the FEED starts, and the results are then applied to the current design, while the client believes it is to be done later during FEED after FEED design is significantly developed.

 

Being new to value engineering, I have the following questions on the subject and hope anyone could shed some light. My apologies if this is not the right forum. 

 

- What is value engineering?

 

Its basically detailed review of a design and could be performed at various stages with intention to further review the possibility of any improvement in the design, be it from cost saving, space saving or time saving perspective. If an existing design is there repeat engineering is an acceptable value engineering practice which saves entire exercise of engineering, off course minor corrections in exiting design can be made based on operating experience or advanced technology.

 

- How is it done and when is it normally conducted during design stage?

In my experience we have done value engineering exercise post FEED stage, in beginning/ during detail engineering phase. But as Bobby pointed out thorough review at initial phase itself can be very fruitful. 

 

- What technical documents are needed to conduct the review?

You need the basic design documents developed till date, including design basis & other documents defining design intent. 

 

Your inputs and any suggestions are greatly appreciated.

 

 

Thanks,

Ed


Edited by Sharma Varun, 12 November 2018 - 03:46 AM.


#7 linda_pro

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Posted 14 November 2018 - 02:47 AM

In my previous bidding, we had submitted a value engineering document. In this we offered some changes in comparison with the base case of ITB which help to reduce the cost of project (mostly Capex and construction cost) and we have awarded one project based on our Value engineering.

 

Linda,



#8 ekar

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Posted 21 November 2018 - 07:25 AM

Technical Bard,

 

Our company's concern is with potential re-work, which you identified. I never heard of doing VE twice in a project stage. Is it a common practice?

 

 

Thanks,

Ed



#9 ekar

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Posted 21 November 2018 - 07:30 AM

Linda,

 

In the bidding you mentioned, did you perform value engineering in house as part of proposal preparation? How did the client see that? Typically it would involve them, no?

 

I think it is a great initiative as long as we are willing to budget for the effort. In our case, anything under bidding stage is not paid by Client, so the inclination is to do the minimum necessary. We did not perform design review or value engineering in this case.

 

Thanks,

Ed



#10 Technical Bard

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Posted 21 November 2018 - 09:20 PM

You don't do full VE twice.  You break down what parts you do when.  For instance, you do a Process Simplification assessment on the PFDs, to see if there is any chance you achieve the goal in fewer steps, with fewer parts.  Then you do an Energy Optimization (pinch analysis) to see if you have the right balance between CAPEX and OPEX.  In parallel with these you do a review of specifications and standards to see if there is unnecessary "gold-plating" in the specs that will add cost for limited (or no) benefit.  This will help avoid putting things into the design you don't need.  

 

Later, during P&ID review you analyze where you are putting instruments and alarms.  One of the stupidest things I have seen done on projects is to go through P&ID review and HAZOP, and then late in engineering decide to do "alarm rationalization".  If you don't need the alarms, why did they get on the P&IDs in the first place?

 

In this manner, you can avoid the worst aspects of value engineering, where you decide late in the design that the plant costs too much and the project is uneconomic, unless you spend a bunch of time and money reworking the engineering - this also hurts project economics.






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