Phase Training Sampler
The first step in the Value Method is to generate an opportunity through a job plan activity called the selection phase. The following information
is Chapter 4, Section from our Internet online Introduction/Refresher course. Please feel free to use this information to help you select the activity,
expertise, and team balance needed to turn that unprofitable problem into a success. Alternatively, you can contact us and we will perform a selection analysis for you.
- The Value Method Job Plan
- Selection Phase
Selection of an activity is the first step of the
Value Method job plan. The person that is in the "trenches"
is usually the person that has the greatest ability
to recognize the potential of an activity for value
study and benefit from it. Unfortunately, due to lack
of training in the field and the phenomena of being
"so close to the trees that you forget it is really
a forest," the staff that has the best: ability to
recognize it, affect high quality value study results,
and benefit from its use, are often the last ones
to suggest it. Therefore, it is crucial in any introductory
discussion of the Value Method to review some of the
selection procedures so the people using the discussion
can better recognize opportunities when the Value
Method can produce benefits for them and their customers.
When an activity is just beginning, the cost to enact
a change to the project is negligible and the potential
benefits available due to a change are very great.
As the activity progresses, choices are made, data
are collected, resources are obligated and expended,
customer and regulatory buy-offs are attained, etcetera.
Accordingly, the cost to change the project goes up
and the potential benefits available due to a change
decline. For a time, at some point, the cost to change
may exceed the benefits available. This means that
the more effort placed into improving the value at
the initial phases of the activity, the greater the
potential benefits. This behavior is illustrated below.
- Value enhancement assessment should not be considered
to be exclusively expenditure reductions. Other factors
such as: schedule improvement or recovery, improved
product, improved client satisfaction, reduction of
risk, and other features beneficial to the mission and
intent of the activity should be considered value enhancements
too. Further, if the proposed activity approach does
not appear to have appropriate value to the customer,
entails too much risk, or has other troublesome qualities,
a person may wish to initiate a value study irrespective
of the projected expenditures. When the comparison indicates
that the benefits are sufficient, a value study should
be scheduled and performed.
- Typical Percent Value Enhancement Expected in
Value Study. One of the techniques used to estimate
the potential for typical value enhancement available
from value study is to multiply the total estimated
project cost by a simple ercentage. The percentages
used are based upon experience in the Value Method
Although it is not an optimum approach, calculating
the potential for savings in a value study through
use of a percentage reflecting the expected value
enhancement can be used. In the event that the current
activity information is too scarce to make better
determination or a person with the adequate expertise
is not available to perform and FAST or other technique,
the percentages listed in the table below may be
used as a conservative estimate of cost savings,
cost avoidance, and/or efficiency, in percent of
original estimated cost or value involved, for various
phases. Examples of savings greater or less than
these averages abound.
||Generate Method- Final
||Maintain Activity Operation
Recommended common value study result percentages
used to estimate potential due to operation of a
single value study.
- Assessment of Value Enhancement Expectation. The best
method to determine if an activity would benefit from
value study is to make an actual assessment. Two basic
techniques are common, historical and actual estimates.
- Historical Common Value Mismatches. Value Method
professionals have generated lists of items that
are the more common features determined to contain
a value mismatch. The list shown below is a result
of our examination of publications that show common
categories of endeavors and components that are
often found to offer significant value enhancement
through a value study.
The following endeavors and components are often
found to offer significant value enhancement through
a value study: If you find one or more are present
in your activity, value enhancement, greater than
that usually found in a value study, may be possible.
- Involves large amount of expenditures or resources
(staff or equipment). In such cases even a minuscule
reduction can involve large expenditures or
- Costs exceed budgeted amount.
- Great complexity is noted in plans. (Often
the more complex the plan, the more opportunity
to improve value and performance.)
- Potentially involves major resource impacts
(staff or equipment).
- Activity cycle is highly compressed. (Such
situations usually generate short cuts. Often,
the potential value impacts of shortcuts have
not been fully evaluated.)
- Involves critical, exotic, hard-to-get, or
expensive resources (materials or staff) and/or
requires sole-sourcing to obtain them.
- Activity uses non-standard components such
as specialized software, fasteners, unique sizes,
computer equipment, or other resources.
- Plans include use of specialized components
that have comparable counterparts available
- Activities involve advancement in the state-of-the-art.
- Involves status enhancement, new records (e.
g., largest database, first time used), embellishment,
special interest requirements, high viability,
extensive political objectives, or strong controversy.
(Such projects often involve strong, often conflicting,
requirements that increase the costs and resources
involved. Sometimes, the true cost, purposes,
and tradeoffs of such requirements have not
been fully considered.)
- Highly skilled labor or time consuming tasks
- Items with poor service or cost history, or
have high maintenance and staff operations,
are proposed or being used.
- Plans have been in use or "on-the-shelf" for
more than five years. (These activities, especially
if they receive little or no changes in that
period, are prone to losing touch with the present
situation and overall mission objectives.)
- Solutions are included in activity to solve
problems or improve conditions unrelated to
immediate cost. Examples are: reliability, aesthetics,
reliability, noise, safety, risk protection,
simplification (KISS), maintainability, standardization,
time, quality, resource use (e. g., energy,
limited staff or equipment), environmental factors,
performance, or past history avoidance.
- Components or functions are identified in
a Value Methodology FAST diagram as being a
potential value mismatches.
- Similar components or functions are being
commonly submitted and accepted as Value Engineering
Change Proposals (VECP's). This situation indicates
that the VECP is not acting as only an added
"safety net" to reduce costs and that added
value at the initial stages should be examined.
- Activity has repetitious components. Repetitious
examples include: several organization units
being formed and/or destroyed or awarding multiple
- Activity has fallen behind the specified schedule.
Such a condition often generates poor value
situations in the effort to get the activity
back on schedule. The nature of the value study
effort can be used to illuminate the problem
generating the delays and bring the project
back on schedule.
- Activities have been operating for a long
period of time without extensive review or modification.
Such activities often continue to solve problems
that are no longer relevant in the organization
or do not include use of new innovations in
- Issues involved are highly charged with diverse
interests present. Such situations often have
highly favored solutions, that may have been
the best option once, but continue to be favored
long after the value has declined below optimum.
They are often retained due to the perception
that to change them would create problems in
acceptance and would be difficult.
- Conditions have changed in the base assumptions
used to make previous selections such that they
are more costly, difficult to implement, and
otherwise reduced in value. Larger projects
often have this problem since the small issues
are more difficult to keep track of and are
perceived to be of lessor importance.
- Construction or rehabilitation activity involves:
intricate shapes, deep excavations, high embankment
slopes, steep slopes, large dewatering requirements,
long material hauls, extensive quantities of
borrow and/or waste, extensive reinforcement,
and embellishments of a visual nature.
If one of these are present, a value study is typically
highly beneficial. If the potential looks promising,
a more detailed examination of the activity by a
person with the appropriate Value Method selection
expertise, may be helpful.
- Actual Estimate Techniques. The staff at the location
of, or involved with the activity, often have a
good idea of where they think they are not getting
good value. When they augment this expertise with
Value Method techniques (FAST, function-worth-cost,
cost modeling, etcetera), an extremely good estimate
of the potential value enhancement can be attained.
In the event that the activity staff does not understand
the Value Method sufficiently to make a detailed
assessment, Value Method professionals with a good
understanding and technical expertise in the activity,
can make, or assist activity staff in making, assessments
of the potential for value enhancement at any point
in the activity cycle.
- Relative Cost Ranking. This method uses the
relative cost of components to identify the
most costly parts or functions of an activity.
When the activity is large and/or complex, or
the costs to perform a value study for the complete
project appear to be too large, the use of Pareto's
Law, "80-percent of the costs occur in 20-percent
of the parts" is often used in the selection
process of the activity section as well as value
study operations. Highlighting the most extensive
parts of the organizational budgeted program
stretches limited resources to obtain maximum
A caveat to relative ranking method use is prudent.
Exclusive use of this method may generate losses
in overall Value Method results and organizational
- Computation of Return on Investment Expectation.
The apparent benefits (value enhancement) are
usually compared to the expected incremental
cost to perform the value study endeavors. If
personnel will be needed to be doing that type
of work anyway, then no incremental cost would
be incurred. In fact, in this situation, it
is probable that their actual costs would be
reduced due to the improved efficiency of their
using the Value Method to perform those tasks.
The Return on Investment (ROI) equation is:
|Value Study Cost
If the resulting ROI is sufficient, use of the
Value Method should be initiated. If the effort
shows sufficient promise such that forming a
value study team for the activity is appropriate,
a person trained in the application of the Value
Method should be contacted to assist in team
leader and other selection criteria. So that
the best effort can be attained and duplication
of effort can be minimized, it is strongly recommended
that someone with Value Method Value Study Team
Leader / Facilitator expertise be contacted
so they may assist and coordinate in the value
study endeavor. An ROI is between 1 to 5, a
value study should pay for itself and entails
little risk of returning less than is invested.
When the ROI is between 5 to 20, the return
is usually good enough to invest the expertise
of a Value Study Team and minimal risk of returning
less than is invested in the value study. When
the ROI exceeds 20, the project return is excellent
and no risk of lack of return is contemplated.
(The maximum ROI actually achieved in a a Systematic
Analytic Methods and Innovations value study
was more than 2,500 and its projected ROI in
the selection phase was about 100.)
- Mandated Project Selection. Federal government
agencies have laws and that specify that construction
related projects, with award amounts greater
than specified thresholds, are selected for
performance of a value study by default. Such
projects also have mandatory goals and reporting
requirements. The definitions for these types
of projects are given in OMB A-131 and agency
internal regulations. In general, depending
on the agency, all construction related projects
must be value studied if they are either $1,000,000
or $500,000 or more in final awarded value.
The awarded amount of similar component parts
on the same Program, Project, or Activity (PPA
in the Federal government), whether involving
several contracts or not, are often considered
to be a single PPA within the confines of the
regulations and reported as such.
- Value Study Team Selection. Once a project
has been selected for value study, selection
of a team to perform the study is needed. (If
you are planning to do an individual type value
study, consider yourself the team of you, yourself,
and I. See the types of value studies section
in this short course for more details.) Selection
of the team membership should incorporate the
multi-discipline team procedures. To avoid the
"group think" that can develop and hinder team
performance, no more than two of any one discipline
should be allowed. Ideally, the staff responsible
for the activity's execution are conferred with
to obtain their viewpoint on the major types
of expertise that they believe is needed. A
common error in team selection is using a strict
cost basis. High cost but simple off-the-self
components may not gain as much value enhancement
from value study as a much less costly, but
very complex and difficult to complete component.
- Blending. Combining the team member attributes
is an important feature in team selection
to the success of the value study proposals.
Study components that have high importance
need more than just one person's expertise
working on it. If this is allowed the team
effort can end up being more of an individual
rather than team effort. However, extremely
similar backgrounds should be avoided too.
An appropriate, and if possible, optimum
balance is desired. The team members should
also have sufficient experience that will
allow them to understand the difficulties
involved in the activity being studied.
Another common mistake is paying too much
attention to the technical side of the activity.
non-technical expertise should be included
too. Client, site, and other viewpoints
should be represented on the team by participation
from the organizations with the most affect
on the project. However, inclusion of different
viewpoints should not be allowed to bias
the study result.
- Group Interactions. Expertise and expertise
blending go a long way towards ensuring
that a team can generate good value study
proposals. However, it takes more than smart
people to make a good team. Team selection
should also consider if the members can
operate as a smart group. The Value Method
uses many techniques to generate a high
performing team. The process is tuned to
get team members to an optimum performance
level quickly. However, the individual human
equation can harm this performance. Team
membership needs to include people that
can understand not only their specialty,
but can also interact with and accept the
concepts of other disciplines, accept the
philosophy of changing an approach (think
"outside the box"), play with the team and
accept a team selected direction, able to
understand and apply the Value Method procedures
and principles, and will accept responsibility.
- Prior Involvement. In all cases, a general
rule applies and is generally accepted by
practitioners throughout the Value Method
field in team type value studies of an ongoing
activity. No team member should be intimately
involved with the activity, its design,
or prior decisions nor should they have
had strong participation in the design,
planning, management, or execution of the
activity. There are a multitude of reasons
for this stipulation.
- It is difficult for a person who has
been heavily involved with the current
conceptual design to be objective enough
to take an "outsider's view" of the
- Most people use their most recent
experience for ideas, people involved
in the design under study are usually
unable to divorce themselves from the
project enough to garner a different
idea as is desired and a stated object
for performing the study;
- Other team members may come to rely
too heavily on the activity intimate
knowledgeable person and this can effectively
constrain other team members to preset
solutions already considered;
- It is unfair to ask a intimately involved
person to pursue, develop, and support
ideas which may affect the present accepted
direction of the activity or could generate
unpopular proposals (e. g., "How could
you propose to downgrade our jobs?",
"As your client I told you that I did
not want to consider that!", and "Why
did you present the idea of using concrete
when we had already agreed to use steel?");
- Results of such studies indicate a
reduction in the value of proposals
generated by the value study team. Further,
in the case of Federal government construction
related projects, it is contrary to
the specified practices as listed in
guidance from various agencies (e. g.,
Corps of Engineers, Interior, and Reclamation.
It should be noted that study while
team membership is not appropriate or
accepted, consulting people with prior
involvement is not only encouraged,
but study and activity team cooperation
is even required. Failure by the these
teams to consult is a criteria used
in specifying poor value study performance
and may be a basis for criticism of
the value study.
- Study Team Quantity. To perform optimally,
the team should consist of no more than
about five to eight people. Due to the number
of sub-group interactions that can be formed
and other factors, teams with nine to ten
people become hard to manage and productivity
suffers. Therefore, if possible, formation
of a large study team should be avoided.
the limited version of the computable template made available
on this website. Provided free so we can assist you in calculating
the actual estimate (see next page).