United States
Environmental Protection
Agency
Office of Water
Program Operations (WH-547)
Washington, D.C. 29460
July 1976
EPA-430/9-76-008
Value Engineering
Workbook For
Construction Grant
Projects
REGION VI LIBRARY
U. S. ENVIRONMENTAL PROTECTION
AGENCY ^
1445 ROSS AVENUE f
DALLAS, TEXAS 7520? ,4
MCD-29
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NOTE
To order this publication, MCD-29, Value Engineering Workbook
for Construction Grant Projects, write to:
General Services Administration (8FFS)
Centralized Mailing Lists Services
Bldg. 41, Denver Federal Center
Denver, Colorado 80225
Please indicate the MCD number and title of publication.
This publication should be placed in Part III, Guidelines of
the Municipal Wastewater Treatment Works Construction Grants
Program Manual of References, to replace the Procedural
Handbook for Value Engineering, MCD-18.
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VALUE ENGINEERING WORKBOOK
FOR
CONSTRUCTION GRANT PROJECTS
REGION W LIBRARY
U, S. ENVIRONME
AGCNCY
1445 ROSS AVENUE
DALLAS, TEXAS 7520?
MUNICIPAL CONSTRUCTION DIVISION
OFFICE OF WATER PROGRAM OPERATIONS
ENVIRONMENTAL PROTECTION AGENCY
JULY 1976
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Foreword
The Federal Water Pollution Control Act Amendments of 1972
established an interim goal of water quality which provides for
the protection and propagation of fish, shellfish, and wildlife,
and recreation in and on the water by 1983. In 1972, $18 billion
was authorized by Congress to control pollution from municipal
sources. Subsequent needs surveys have identified the need for
additional billions of dollars. The sheer magnitude of the dollars
required to construct municipal waste treatment facilities calls
for cost controls to insure that Federal funds are being used
effectively. Even minor percentage reductions in waste treatment
facilities' costs would result in great dollar savings.
Value engineering is a cost control technique which has the
proven ability to provide significant savings. Value engineering
was first used in Federal Government construction projects by the
Department of the Navy in 1954. Since then 14 Federal agencies in-
volved in financing the cost of constructing facilities have in-
corporated value engineering programs in the design and/or construc-
tion of facilities.
EPA introduced a voluntary value engineering program in 1974.
Several EPA construction grant projects have been subjected to
value engineering under this program. Significant savings in capital
costs and operating and maintenance costs were identified. It was
concluded from these voluntary studies that value engineering was
effective for cost control in wastewater projects; cost savings can
be substantial; with proper management, delays will be insignificant;
savings can be achieved without sacrificing project quality or re-
liability; and widely applicable, improved design techniques are
developed.
In light of these favorable results, a policy for a mandatory
value engineering program is being developed by EPA with initial
emphasis on larger projects. For those projects where value engineer-
ing is not required, EPA encourages the institution of voluntary en-
gineering studies. The costs of value engineering efforts approved by
the Regional Administrator are eligible for construction grants.
The Workbook is presented in the context of the Environmental
Protection Agency1 construction grant program which anticipates that
major grant projects will conduct value engineering studies early in
Step II. This Workbook supercedes the earlier Procedural Handbook
for Value Engineering which served as an interim working document
while this Workbook was being prepared. The Workbook describes
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to municipalities and their engineering consultants and to State
and Federal environmental agencies, the EPA VE program as well as
the basic concepts of VE. It is however, primarily intended to serve
as a working guide on the practice of value engineering for waste-
water projects to those actually participating in VE studies on waste-
water projects and is not intended to serve as a complete text on
value engineering. For those interested in more detailed study in
VE, a bibliography of recommended reading is offered.
EPA is confident that application of value engineering to the
water pollution control projects will provide significant savings
and will be a valuable tool in insuring better use of the re-
sources available.
Andrew W. Breidenbach, Ph.D.
Assistant Administrator
Water and Hazardous Materials
ii
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ABSTRACT
This workbook describes procedures for applying Value Engineer-
ing (VE) techniques to wastewater treatment projects. The relation-
ships between YE analyses and the EPA construction Grant Program are
described. Information on organization of VE study plan and selection
of a VE Team Coordinator is presented. Typical VE ideas and results
for wastewater projects are presented.
iii
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CONTENTS
Foreword i
Abstract iii
Figures vi
Introduction 1
What is Value Engineering 1
Function 1
Value 2
How VE Differs From Conventional Design and Design
Review Practices 3
Value Engineering and Cost-Effectiveness Analysis 3
Grant Eligibility of VE Studies 4
The VE Study in Relation to the EPA Construction
Grant Program 4
The VE Study Program From the Designer's Viewpoint .... 6
The VE Study Program From the Owner's Viewpoint 7
Availability of Training in Value Engineering
Techniques 7
Reference Materials on VE 8
VE Study Procedures 9
VE Proposal to EPA 9
Scope of the VE Effort 9
When VE Should Be Done 10
Level of Effort 11
Selecting the VE Team Coordinator and Participants .... 13
VE Fee 15
Conducting the VE Study 15
Pre-Project Workshop Preparation 15
The VE Study Job Plan 18
Information Phase 18
Speculative or Creative Phase 21
The Evaluation or Analytical Phase 29
The Investigation Phase 29
The Recommendation Phase 31
Follow-Up or Implementation Phase 34
The VE Report 34
Oral Presentation 34
Preliminary Report 34
Preliminary Report Review 36
Final VE Report 36
Typical VE Ideas and Results For Wastewater Projects ... 38
Site 38
Electrical/Energy , . 38
Structural 39
Process 39
Plainville, Connecticut Project Workshop 40
Ocean County Sewerage Authority Project Workshop ... 45
iv
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CONTENTS (cont)
Appendices
Worksheets
Bibliography
Glossary
Cost-Effectiveness Analysis Guidelines
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FIGURES
Number Page
1 Step II VE Study Flowchart 5
2 Cost Proposal for VE Study 16
3 Plainville, Connecticut Process Before VE Workshop 41
4 Plainville, Connecticut Process After VE Workshop 43
vi
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INTRODUCTION TO VALUE ENGINEERING
What is Value Engineering?
Value Engineering (VE) is a disciplined effort to analyze the func-
tional requirements of a project for the purpose of achieving the essen-
tial functions at the lowest total costs (capital, operating, and
maintenance) over the life of the project. Value engineering is a sys-
tematic, organized approach to obtain optimum value for each dollar spent.
Through a system of investigation, using trained, multidisciplined teams,
value and economy are improved by eliminating or modifying items not
essential to required performance. By using creative techniques and
current technical information on new materials and methods, alternative
solutions are developed for specific functions. Unlike simple cost-cutting
by using smaller quantities or cheaper material, VE analyzes the function
of an item or method, asking such questions as:
What is it?
What must it to?
What does it cost?
What is it worth?
What other equipment or method could be used to do the same job?
What would the alternative cost?
Should the alternative be used?
The heart of a VE study is the Project Workshop where the multi-
discipline teams, under the guidance of the VE Team Coordinator, analyze
the project for unnecessary costs. Cost reduction is accomplished without
degrading essential performance, reliability, or maintainability. Through
eliminating unnecessary design complexity, value engineering consistently
improves reliability, maintainability and performance rather than degrading
these factors. It is not an attempt to, for example, build a cheaper trick-
ling filter but to find a way to achieve the same function as the trickling
filter at a lower cost.
This workbook will describe the VE techniques that have been developed
which provide a systematic approach to thoroughly investigating the above
questions. Two of the key concepts underlying the VE approach are:
Function
Value
Function
If there is a single concept that is unique to value engineering, it
is that of function. When confronted with a need to improve value, the
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value engineer thinks first of function. Unlike value, a highly abstract
concept, a function can be precisely defined in just two words, one verb,
and one noun. The purpose of reducing the function to the verb-noun form
is to eliminate confusion and to clear away all but the essentials so the
mind can focus on other approaches which would provide the needed function.
In the examination of functions of the components of a wastewater
project, more than one function will ordinarily be identified. Those can
be categorized as basic functions without which the item would have no value ,
and secondary functions, which support the essential functions, but which
might not even be present if a different design concept had been pursued.
For example, the function of the aeration basin in an activated sludge plant
is basic (treat waste) while the function of a walkway leading to a platform
mounted aerator (provide access) is secondary to the wastewater treatment
plant. Many VE studies have completely eliminated secondary functions by
providing alternative designs which achieve the basic functions. For this
reason, only basic functions are considered to have value.
Value
A discussion of value is made difficult by the many meanings of the
word. Values usually are measured in relation to other values. Compari-
sons of values often can be simplified by being expressed in the common
measurement of money. Cost values can be misleading, however. For example,
the embroidered logo of an "in" fashion designer increases the market price
of a man's tie or a woman's scarf above what the bare article would bring.
Esteem value is the difference.
^ value is that part of value attributable to the functions that
a thing performs, and is the type of value with which VE is concerned. If
we credit value to only basic functions, we arrive at the limit: maximum
value results when essential functions are provided at minimum cost.
The walls of the building enclosing activated carbon columns in a
wastewater treatment plant would have no value if the equipment could be
designed to function outdoors year around. The white glazed tile on the
inside walls of a vacuum filter building could have more than their apparent
esteem value, through the useful functions enhance lighting, and minimize
maintenance . Of course, these values must be balanced against their total
costs.
The value of an item bears no relationship to the losses that would
result as a consequence of its failure in service. For example, the value
of the nut and bolt which is essential to holding the wing of an airplane
to the fuselage is not the over $1,000,000 passenger liability that could
result if the wing falls off and the plane crashes, but is instead only the
lowest cost at which a nut and bolt which will hold the wing to the fuse-
lage can be manufactured (probably a few dollars). Similarly, if the dikes
of a sludge storage lagoon should burst and spill a sea of sludge onto
downstream residents and industries, then those dikes did not perform
their essential function, contain sludge, and they had no value. The value
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of adequate lagoon dikes is simply the lowest cost at which the dikes could
be built and still hold safely even during the most adverse design condi-
tions with an appropriate safety factor. The value is totally unrelated
to the magnitude of the damage caused if the dikes fail.
How VE Differs From Conventional Design and Design Review Practice
Value engineering is not -
— what a good designer does anyway
— an effort to trade off essential functions to cut costs
— merely a review to eliminate "gold-plating"
— a method for reducing costs through degrading performance and
reliability
— in any way intended as a reflection on the competence of the
designer
Often times, after the Step I selection of the cost effective approach,
many key components (i.e., treatment process sizing) of the plant are
accepted by the design team as given and little added effort is made to
consider the costs of other alternatives. As a result, conventional design
reviews often center upon assurance of adequate performance, contract
technical compliance, and progress toward contract schedules, with cost
given lesser rank. The thrust of VE is to give cost equal, but only equal,
ranking throughout the design effort. It is not an effort to cheapen the
design. It is not an effort to trade off essential functions to cut costs.
Its purpose is to eliminate the costs related to non-essential functions,
and to reduce to a minimum the cost to provide the essential functions. It
differs from typical practice in that VE does not depend on the chance
occurence of creative thinking by individual designers, but offers effective
techniques and imposes mental disciplines that enable competent designers
working together to channel their talents and experience in a way that
achieves results ordinarily expected only from an exceptionally innovative
and assertive few.
Value Engineering and Cost Effectiveness Analysis
Step I efforts for wastewater projects must select the most cost
effective system of wastewater collection, transport, and treatment, con-
sidering total life cycle costs to design, construct, operate and maintain,
the project being funded. EPA guidelines (40 CFR 35, Appendix D) for cost
effectiveness analysis in Step I require that all feasible alternative
waste management systems shall be identified, screened, and analyzed as to
their cost effectiveness and establish certain ground rules for cost analy-
sis (interest rates, useful life, etc.). Thus, properly conducted Step I
work will select the lowest cost approach to the problem solution and
establish general project concepts. However, schedules often preclude an
adequate opportunity in Step I work to "fine tune" the selected project
concept to minimize costs.
Experience has shown that VE can improve on even the basic concepts
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of many good designs. No aspect of the design is exempt from analysis by
the Step II VE study. In short, there is no incompatibility between the
requirement for cost effectiveness analysis in Step I, and VE in Step II
for yet more economy.
Grant Eligibility of VE Studies
The cost of conducting a VE study is grant eligible upon approval by
the EPA Regional Administrator. A request for the VE study should be made
concurrently with the basic Step II grant application. In some cases, VE
costs may be added to an existing Step II grant. Unless specific and
unique justification is offered, the VE study should consider the entire
design under the grant.
The VE Study in Relation to the EPA Construction Grant Program
The interplay between the municipality, its selected designer, the
VE Team Coordinator, the State, and EPA can be best described by reference
to Figure 1.
With the advice of the Designer, the Owner (municipality) or Designer
solicits proposals for conducting the Step II VE study (1,2), and selects a
VE Team Coordinator (as described in detail later), who will provide a de-
tailed plan for the study (3). The VE study may be conducted by the
Designer provided that the VE study personnel have not been significantly
involved in the Step I or II work on the project. The VE study plan is
made a part of the Step II grant application (4) which is submitted to the
State (5) and the EPA Regional Office (6). Upon approval, the Owner may
contract directly with the VE Team Coordinator to conduct the study, and
the Designer to support it (7,8,9) or the VE Team Coordinator may be a
subcontractor to the Designer. The detailed study is conducted by using
multidisciplined teams, each with an assigned area to study for unneces-
sary costs. It may prove valuable to include as the last step in the VE
study prior to preparation of the preliminary VE report, an oral presenta-
tion to the Owner, Designer, State, and EPA of the study results by the VE
Team Coordinator. The purpose of this presentation is to make sure that
all parties understand the recommended changes and to determine concerns
which the preliminary VE report should address. Such an oral presentation
is essential on large projects. On smaller projects, such a presentation
can be scheduled as part of the last day of the VE workshop.
Immediately following the oral presentation, the VE Team Coordinator
prepares the preliminary report (10). Comments during the earlier oral
presentation should not cause the deletion of a change that had been favor-
ably evaluated by the VE teams. Action copies of the preliminary report
are presented to the Owner and the Designer, with information copies to
the State and Federal environmental agencies. Each recommended change will
be reviewed in detail by the Designer. After the Designer has evaluated
the preliminary report, a conference should be scheduled between the Owner,
Designer and VE Coordinator to insure that no VE recommendations are re-
jected due to lack of communication between Designer and VE Team Coordinator.
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A final report is then prepared by the Designer (11) representing
the concensus of Owner and Designer as to feasibility and cost effective-
ness of every recommendation of the preliminary YE report. A price tag
is put on the design, construction, and operation effects of each recom-
mended change. Reasons for rejection of recommended ideas are presented
and documented. An amendment to the Step II grant application is pre-
pared to reflect the change in design effort associated with implement-
ing the VE changes. Copies of the final VE report (12) are distributed
to the State environmental agency, to the EPA Regional Office for review
and approval and to the VE Team Coordinator. By signature and distribu-
tion of the final report, the Owner indicates concurrence. If the EPA
and/or State disagrees with the justification for rejection of any
recommended VE change, they may call a meeting with the Owner, Designer,
VE Team Coordinator, State, and EPA to resolve the differences so that
approval may be granted. Having received the Regional Offices approval,
the Owner works with the Designer to incorporate the approved recommended
VE changes (15,16).
The VE Study Program From the Designer's Viewpoint
With a VE study now made a part of EPA's grant program, the Designer
may be exposed to a previously unexperienced level of design review. A
natural first reaction is one of resentment and reluctance to cooperate
based on concerns that his client will be puzzled by the need to conduct
added design effort, that unusual expertise or proprietary information
may be exposed to competitors, that time will be wasted in responding
to poorly thought out suggestions, that unjustified criticism by the
Owner may result and be aired in the public media, and the project will
be delayed.
Each of these concerns need to be addressed. First, the Designer
should recognize that VE provides another powerful approach beyond the
scope of conventional design practice to provide cost savings and that
the overriding goal is to achieve savings for the Owner which will far
outweigh the costs of the VE study. The Owner should seek the Designer's
advice in selecting a VE Team Coordinator and teams, to avoid competitive
conflicts of interest and ensure selection of a technically qualified
firm. The VE effort may be contracted for either directly by the Owner,
or subcontracted by the Designer as part of his contract extension. A
well planned VE study should not cause any unreasonable delay in the flow
of the design. Delays can be minimized by scheduling the VE effort at
points in the project when other major, intermediate design reviews (by
the State or by the Designers own firm) would normally occur and by in-
volving State review personnel in the VE study so that later review times
are minimized. Careful screening of the VE Team Coordinator's qualifica-
tions, experience, and past performance will insure that the VE Team
Coordinator selected produces results, not just paper exercises, so that
frivolous ideas will not plague the program.
Too much emphasis cannot be given to making clear that no blame will
be placed or recriminations made when new ideas are found by the VE effort
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that result in cost savings. This attitude must prevail with all parties.
A full commitment to the end result of minimum total life cycle cost for
a system that meets all performance requirements is required. This goal
can only be achieved by all parties working together in a harmonious and
constructive atmosphere.
The VE Study Program From the Owner's Viewpoint
The Owner, if unfamiliar with the opportunity for savings made pos-
sible by VE, may see the mandatory VE study as another hurdle to progress
and as an additional expense or a dilution of the available design budget.
The cost of the VE study should instead be weighed against the potential
savings in total life cycle cost to design, construct, operate and maintain
the facility. As pointed out in a later example, the potential savings to
the Owner over the life of one 3.8 mgd project were several million dollars.
At the conclusion of the VE study, the Owner will participate with the VE
Team Coordinator and the Designer to review the recommended VE changes,
and to make the final decision as to which changes to include in the final
report recommendations to State and Federal environmental protection
agencies.
Availability of Training in Value Engineering Techniques
Fortunately, the concepts of VE are relatively universal and the
opportunities to obtain training in their use are widespread and frequent.
The engineering and business departments of several large universities
conduct continuing education courses in VE in cooperation with various
VE consulting firms. These sessions are typically forty (40) hours long,
either a week straight through, or only mornings (or afternoons) for two
weeks, to allow other activities to continue on a part-time basis.
The format of teaching is almost universal, and is termed a "VE
Training Workshop", where the concepts and techniques of VE are first
taught in formal classroom lectures, with training aids and examples suited
to the product or industry involved. This is followed by dividing the
students into small groups of mixed technical skills and experience, work-
ing together to practice the analytical and creative techniques just learned
by application to a sample design problem. Periodically the groups are
exposed to reinforcement of previous teaching, as well as new techniques.
The sample design problem should ideally be a real one, provided by the
student's firm, but may be a proven example furnished by the VE Teaching
Consultant. While the latter can be more carefully controlled, an example
from the students' own experience can, if well chosen, provide a spontan-
aeity that is a more credible learning experience. In the latter case,
the VE Teaching Consultant should be expected to provide guidance before-
hand in selecting projects that are neither too simple nor overwhelmingly
complex.
Individuals or small groups of professionals desiring training should
consider courses oriented toward construction projects such as the one
week courses conducted from time to time in major cities by such groups as
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the American Consulting Engineers Council and the American Institute of
Architects.
Reference Materials on VE
The workbook Appendix contains a list of VE reference materials which
provide detailed background information on the principles and practice of
VE.
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VE STUDY PROCEDURES
VE Proposal to EPA
The applicant must submit the VE proposal to the State environmental
regulatory agency as part of the Step II grant application for those pro-
jects where VE is to be provided. The State, upon its approval, will sub-
sequently forward the proposal to the EPA Regional Office. Upon approval
of the Regional office, the costs of the VE effort become grant eligible.
The grant eligibility of the VE study cost is limited to the actual VE
analysis of the project. The applicant may incorporate training as part
of the proposed VE workshop. However, the intention must be so stated in
the proposal, and all costs associated with such training must be computed
separately. For example, the cost for a VE instructor, additional time
and room space, etc., must be itemized and separately identified for train-
ing. The additional costs for training are not grant eligible. Fees for
additional engineering effort required to implement an accepted VE recommen-
dation is grant eligible when approved by the Regional office prior to the
redesign.
There are five essential points that must be contained in the VE pro-
posal; (1) the scope of the proposed VE effort; (2) the timing of the VE
effort; (3) the proposed level of effort and fee; (4) the organization and
qualifications of the VE team; and (5) the delineation of responsibility
of the VE Team Coordinator in the resolution of differences in regard to
implementation or rejection of VE recommendations.
Scope of the VE Effort
The VE effort should include analysis of all portions of the project.
Should the applicant desire to restrict the scope of the VE study to only
a portion of the overall grant project, he must justify the restricted
scope in the proposal. Legal or regulatory requirements (such as discharge
permit limitations) are not to be modified by the VE process. The time re-
quired to modify these requirements falls outside the time frame acceptable
for construction projects. The extent to which the VE study reexamines
work in the Step I facility plan must be a matter of judgement between all
parties to the VE study (municipality, designer, State, EPA regional office).
Obviously the Step I effort represents a great deal of work on cost effec-
tiveness. Unless there is new information those conclusions should not
change. Beyond the cost effectiveness portions of Step I, there is a con-
siderable amount of collateral Step I work on environmental assessment,
infiltration/inflow, and public hearings. Reopening fundamental Step I
conclusions may result in a requirement to reopen the collateral Step I
work. The result could be unacceptable delays with little tradeoff in
benefit.
In general, therefore, the broad conclusions of the Step I work may
be reviewed only under the most unusual circumstances. Even in these cases,
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it must be clearly shown that the potential impact of this review will not
reopen major collateral Step I studies with significant impacts on project
timing or the environmental assessment. While precise rules cannot be used,
it is possible to define the extreme cases. For example, consider a project
where the Step I study concluded that treatment and discharge using com-
pletely mixed activated sludge is the best wastewater management technique.
A YE proposal for industrial reuse of the wastewater with discharge in
another drainage basin would almost always not be acceptable. Conversely,
a VE proposal to use step aeration in place of completely mixed activated
sludge could usually be implemented without major issues in the Step I
study.
When VE Should Be Done
There is a dilemma in selecting the point in design when VE should be
performed. The more complete the design, the more readily will the VE
teams understand the functions of the entire system and evaluate and price
the basic and alternative designs accurately.
Contrarily, the cost to incorporate a VE change will increase as more
and more drawings are prepared, specifications detailed, and more work must
be done over. While such design costs are linear, other costs are step
functions, which, having been passed, are nearly impossible to reverse.
Examples are the early procurement of long lead time equipment, where at
the very least, termination costs will be incurred, and early contracting
for site acquisition and preparation, where a change to a space-saving sys-
tem such as pure oxygen activated sludge or independent physical-chemical
treatment would not be able to enjoy one of its principal advantages. Thus,
it becomes necessary to strike a reasonable balance between the opposing
factors of: (1) accuracy of VE results increase with increasing complete-
ness of design, and (2) costs to implement VE changes also increase with
increasing completeness of design.
The proposal must contain a detailed schedule for the VE work in re-
lation to the design and design review. In some larger and/or complex
projects, it may be desirable to schedule two VE reviews during the course
of the design. The first may occur when 10-30% of the design is complete
and would concentrate on basic factors -such as project layout; processes
used; general approach to electrical, instrumentation, controls, etc. The
second review would occur when the design is complete enough (approximately
50-60% complete) that a detailed review of the electrical, mechanical, and
structural designs could be made. In the many projects where only one VE
review is made, this latter point is generally too late as basic changes
resulting from the VE work are costly to implement. Thus, when one review
is proposed, the timing must represent a reasonable balance between the
ease of implementing VE ideas developed early in the project and the poten-
tial for added savings when detailed design information has been completed.
EPA discourages any VE review after 80% design completion because of the
costs associate with implementing changes at this late stage, the delays
which could result, and the increased resistance of all parties to changes.
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The proposed VE schedule must also show when the oral presentation will
be made, when the preliminary VE report will be available to the Designer
and when the final VE report will be completed by the Designer. Notify EPA
and the State in advance of any changes in the schedule.
Level of Effort
When a number of multidiscipline teams has performed a good VE study
of a number of areas of high cost, the savings in design and construction
historically has far outweighed the cost of performing the study. There
is often only one opportunity to make a VE savings, and that opportunity
might be missed with too small an effort.
Depending on the size and complexity of the project, the VE effort
may vary from one team and one study to multiple teams and/or multiple
studies in order to adequately review the project. As noted above, some
projects may justify two separate studies. The determination of how many
teams and how many studies must be made on a case-by-case basis. For
example, a large advances waste treatment project may readily justify
separate teams, each with a study area such as structures, mechanical,
electrical, process, and site. If the system in question is simply an
add-on to an existing plant to provide a single process, the level of
effort may be relatively small and readily handled in one VE review. On
the other hand, a small but highly refined system, to provide the ultimate
that today's technology can achieve, would require above average effort,
perhaps two reviews. If the conventional design is divided among two or
more consultants, coordination and review efforts of YE would be above the
norm. When a project has been divided into several, sequential steps the
required VE effort is increased by the need for smaller studies, each
with the same coordination, review and reporting costs. These factors
illustrate the fact that the VE level of effort must be tailored to each
specific project. Approval of the actual level of effort proposed lies
with EPA and the State as part of the Step II grant-approval process.
Obviously, the proposed level of effort must have a reasonable relationship
to the potential savings which might result from the VE effort. The
following example illustrates the breakdown of a VE study budget for a
hypothetical project involving a relatively complex set of collection and
treatment components:
VE Team
Pre-Coordination - VE Team Coordinator collects drawings and
specifications; reviews, divides into projects. Finalizes arrange-
ments with team members, arranges logistics for study.
2 man weeks
During Study
VE Team Coordinator 1 man week
Team Members - 5 five-member teams 25 man weeks
-11-
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Travel for team members and VE Team
Coordinator
After Study - VE Team Coordinator prepares
Preliminary Study Report, and coordinates
with Owner and Designer. Reviews Designer's
draft response.
Designer
Pre-Coordination - Provides copies of
drawings and specifications.
During Study - Provides support to study.
Answers specific inquiries about original
design. Provides additional data.
$5,000
2 man weeks
2 man weeks
1 man week
After Study - Reviews VE Team Coordinator's
Preliminary Report. Investigates technical
feasibility, validity, of cost estimates.
Prepares draft response and coordinates
differences with VETC and Owner.
Prepare final report.
Total Labor
10 man weeks
43 man weeks
Total Travel
$5,000
A breakdown similar to that shown above should be submitted for each
project. The VE Team Coordinator's costs are relatively - but not com-
pletely - fixed regardless of plant size and complexity with the chief
variable being the Team Member level of effort noted in the preceding
table. VE costs are a function of both project size and complexity. As
plant size increases, there is justification to search harder for economics
perhaps using more than one team for each major sub-system - even in the
simplest of projects. Addition of teams results in a step increase in
costs. As the plant complexity increases (i.e., more sub-systems), the
number of justifiable teams for a given plant capacity increases.
Although it is difficult to generalize on the appropriate level of
VE effort, the following represents the maximum effort envisioned as
reasonable by EPA, unless the project is unusually complex:
Grant Eligible
Project Costs
$ 5,000,000
50,000,000
100,000,000
Maximum
VE Effort
10 man weeks
50 man weeks
100 man weeks
-12-
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Selecting the VE Team Coordinator and Participants
The first step of conducting a VE study is the selection of the VE
Team Coordinator and the teams that will participate. The VE team can be
made up of members of the design firm (provided the designer certifies
that the team members have not been significantly involved in any part of
the proposed project design or Step I study except for VE analysis) or the
VE effort can be subcontracted to or contracted directly with an outside
firm. The objectivity of the VE Team Coordinator and participants is
essential to the success of the VE effort. The Owner must assure the
relative independence of the VE Team and the VE Study Proposal must dis-
cuss the means by which this assurance will be achieved. If this assurance
is lacking, then another approach must be adopted. When an outside firm
is used, the VE Team Coordinator should be selected with the advice of the
Owner's design firm, but should perform the VE study independently. In
cases where the VE effort is a separate contract, the selection of the VE
Team Coordinator should be in accordance with EPA regulations for the pro-
curement of architectual or engineering services (subsection 35.936-35.939,
Federal Register, December 17, 1975).
In selecting the VE Team Coordinator who will lead the VE study, and,
those who will participate as team members, several attributes should be
considered. First is qualifications of the VETC in both theoretical
knowledge and practical experience in the use of the techniques of value
engineering. He should have the first hand knowledge and experience to
guide and overcome the various negative responses that can arise during a
VE study. Practical experience relating to directing the study, and pre-
paring an implementation plan to effectively incorporate the recommenda-
tions of the VE study teams is desirable. Second, and equally important,
is technical and managerial competence of Team members. They should be
highly qualified in the disciplines they represent. The creativity of the
teams will be proportional to the competence of their members, and to
judicious selection of the mix of those disciplines. Selection of a VE
Team Coordinator should also consider these factors: (a) the individual's
record of recent accomplishments by the use of VE techniques in construc-
tion, preferably of wastewater treatment projects, and (b) that the pro-
posed study coordinator is particularly well qualified in VE related to
construction oriented projects, and in managing such a study. The par-
ticipants proposed for the study should have current design, construction,
procurement, operation or administrative experience suited to the analysis
of the subject design.
A record of past accomplishments on wastewater projects will become
available in EPA Regional Offices as the VE study program progresses. In
the interim, similar records from the GSA's Public Building Service (PBS)
VE Program and from the Corps of Engineers, may be considered.
A typical VE team has five members and is composed of members who
bring interdisciplinary skills to the project. For a treatment plant,
a typical team composition might be an electrical engineer, a mechanical
engineer, a civil/structural engineer, a sanitary engineer, and a cost
estimator. However, some projects may require other disciplines. The
-13-
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interdisciplinary composition of the Step II VE team is vital to the VE
concept. It is also vital that the VE team members be completely isolated
from their normal duties during the Project Workshop. The team members
must be experienced professionals in their own field. It may be desirable
to designate a leader for each team, preferably one with some VE experience,
if the bulk of the team members have limited VE experience. It is accept-
able that persons other than design engineers may constitute a part of the
total study group. The Public Works Administrator, Sanitation District
Director, City Auditor, Purchasing Division Manager, Treatment Plant
Superintendent, and others from similar positions, or their designated sub-
ordinates often can contribute to a value study by providing a fresh view-
point that "doesn't know that it can't be done". When such administrative
persons share the responsibility for recommending value enhancing changes,
the probability of adoption of the idea is often improved. The VE team
coordinator should not be a member of any one VE study team except when
only one team is conducting the VE study. The attendance at actual VE
sessions should be limited primarily to working members of the teams. VE
sessions, particularly those sessions involving idea generation, weighing
and analysis, will work best if the number of non-participating observers
is held to a minimum.
Final approval of the VE team qualifications is at the discretion of
the Regional Office. In reviewing the proposal, the Regional Office will
consider the size and complexity of the project. The Regional Office may
use the following definitions to designate an acceptable level of capabili-
ties for a given project.
Level _!; The VETC and all teams members have completed a 40 hour
VE training workshop and have experience on at least two other VE studies
of construction projects.
Level 2; All team members have completed a 40 hour VE training work-
shop and 50% of the team members (including the VETC) have experience on
at least two other VE studies of construction projects.
Level 3: Fifty percent of the team members have completed a 40 hour
VE training workshop and the VETC has experience on at least two other VE
studies of construction projects.
Level 4: 4a - The VETC has completed a 40 hour VE training workshop
and has experience on at least two other VE studies of construction projects.
4b - The VETC has completed a 40 hour VE training workshop
and has experience on at least one other VE study of a construction project.
4c - The VETC has completed a 40 hour VE training workshop.
VE training workshops are conducted by organizations such as the
General Services Administration, the American Institute of Architects, the
American Consulting Engineer Council, or an accredited university. The
Society of American Value Engineers conducts a certification program but
does not distinguish between construction project or non-construction project
experience.
-14-
-------
VE Fee
The applicant should submit a detailed fee schedule for conducting
the VE analysis. The fee schedule should list the man-hour requirements
for the recommended level of effort. Man-hour unit costs, overhead costs,
and profit should be given. A sample form (EPA Form 5700-41) is shown in
Figure 2.
Conducting the VE Study
The heart of the VE study is the VE Project Workshop where the VE
study teams analyze the project. However, both pre- and post-workshop
efforts are important.
Pre-Project Workshop Preparation - The success of a VE Project Workshop
is greatly dependent on proper preparation. Certain information and
documents should be furnished by the Designer to be distributed to the team
members by the VE Team Coordinator before the Project Workshop. This will
prepare the study teams for their particular area of study, and help the
teams determine what reference material to bring. The Owner, Designer, and
VE Team Coordinator should meet to agree upon the extent and format of
materials to be used in the Project Workshop. This may impact the Designer's
priorities in the early phase of design. Copies of drawings, detailed cost
data, specifications, reports, and pertinent regulations are required in
sufficient numbers to permit team members to investigate various areas
simultaneously. The availability of these materials at the start of the
Project Workshop is critical in light of the coordination required to
assemble the VE teams. Documents needed by each team include:
Drawings: One complete set of team's area of study. If the
total number of drawings in the entire set is relatively small,
it may be desirable to have one complete set of drawings per
team. If it is decided that each team will have a copy of
drawings pertinent to only their particular study area, then it
is highly desirable to have one or more complete reference sets
for use by all teams. If final design drawings are not yet
available, design sketches showing the layouts of all equipment
and structures, piping, valves, etc. should be provided. These
drawings need not be on final plan sheets, but should be read-
able and reasonably to scale. They are the type of sketches an
engineer would hand to a good designer or draftsman for incor-
poration into the final plans.
Background Report: This report should summarize the history of
the project; the highlights of the project reports and other
applicable documents such as discharge standards, soils reports
and pilot study data; flow diagrams and mass balances; process
calculations; process and instrumentation drawings; site and plot
plans; design criteria; hydrologic and weather data which might
influence design; a listing of applicable local codes; regula-
tions and permit criteria from local planning groups; and names
and phone numbers of members of the design firm and owner where
-15-
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COST OR PRICE SUMMARY FORMAT FOR SUBAGREEMENTS UNDER U.S. EPA GRANTS Form Approved
(Sec accompanying instructions before completing this form) OMB No. 158-R0144
PART I-GENERAL
1. GRANTEE
Municipal Utility District, Riverville, Calif.
3. NAME OF CONTRACTOR OR SUBCONTRACTOR
ACE Consulting Engineers
5. ADDRESS OF CONTRACTOR OR SUBCONTRACTOR (Include ZIP code)
100 Main Street
Newton, California
2. GRANT NUMBER
C-10-2000
4. DATE OF PROPOSAL
July 10, 1976
6, TYPE OF SERVICE TO8E FURNISHED
Value Engineering Study
PART II-COST SUMMARY
< P y a
VE Tpam Pnnrrlinahor
VE Team Participants from ACE
Consulting Engineers (13)
DIRECT LABOR TOTAL:
6. INDIRECT COSTS (Specify Indirect coat pools)
Overhead
INDIRECT COSTS TOTAL.
ESTI-
MATED
HOURS
400
520
RATE
96%
*
DOURLY
RATE
* 15.00
12.00
x BASE =
$ 12,240
._•;_,
ESTIMATED
COST
* 6,000
6,240
ESTIMATED
COST
$ 11,750
, ^, ^
9. OTHER DIRECT COSTS
8. TRAVEL
(l) TRANSPORTATION (See Support Data for Details)
(2) PER DIEM 70 man days @ $35
TRAVEL SUBTOTAL
b. EQUIPMENT, MATERIALS. SUPPLIES (Specify categories)
Printing
EQUIPMENT SUBTOTAL:
'. *•*
OTY
Ir. fc '. •••
COST
S 1,200
c. SUBCONTRACTS
12 VE Team Participants (See Support Data for Details)
SUBCONTRACTS SUBTOTAL- [
d. OTHER (Specify categories)
OTHER SUBTOTAL
e.' OTHER DIRECT COSTS TOTAL:
£^.. -
^--^
* "*
ESTIMATED
COST
$ 920
$ 2,450
$ 3,370
ESTIMATED
COST
S 1,200
ESTIMATED
COST
$ 9,800
J 9,800
ESTIMATED
COST
$
$ 14,370
> ' •"*• ','H*;?"*"Ci
*• ; * • - "
10. TOTAL ESTIMATED COST
1 1. PROFIT
12. TOTAL PRICE
TOTALS
™Wft#* j'£»»r->- \ «• """•" ' 'i-W",*^**"*
gV^-tv , >•>- &?„ %-;<'
&&<;'! v^ifV/^V-
; **, " ££?-" / -'£ ^ J ' -K'^, < ;
:|v ,T*"^; - /r'* ' *#$&&*
. • ' *^%1
_ ,.^^^1
$ 11,750
' /
, 5t * *
$ 14,370
$ 38.360
* 2.685
* 41.045
EPA Form 5700-41 (2-76)
PAGE 1 OF 5
FIGURE 2
-16-
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additional information and clarification can be obtained. The
entire information package should be discussed and agreed on by
the Designer and the VE Team Coordinator. The package should be
assembled by the Designer and provided to the VE Team Coordina-
tor in the agreed on number of copies prior to the first VE
session. At the first VE session, the Designer should present
the background report and answer questions from the VE team.
Detailed Cost Data: The cost data should be as complete and as
detailed as practicable.
Copies of the specifications, design criteria, regulations, and
report. If relatively complete specifications are not yet
available at the time of the VE study, outline specifications
should be provided. These should be written by the Designer who
should also list the design philosophy, discuss alternatives that
were considered by the designer; tell whose equipment was
selected and whose would be accepted as substitution; give load-
ing rates, flows, power requirements; discuss standby capacity
and reliability and describe how the process will be controlled.
The written specifications should be supplemented by at least a
process and instrumentation diagram for the system showing im-
portant details not yet incorporated in the plans.
Copies of design calculations
Sufficient guidance on any constraints of the VE study's scope should
be provided. It should be clear as to what the VE study will be allowed
to consider regarding process changes. For instance, the following series
represents an escalating severity of constraints:
You must retain the requirements for an effluent BOD of 30 mg/1
- You must use the activated sludge process
You must use the oxygen activated sludge process
- You must use the oxygen activated sludge process with covered
tanks
You must use the oxygen activated sludge process with this load-
ing, configuration, temperature, redundancy ....
If any such constraints are proposed, they should be clearly justified.
Following collection of the available data, the VE Team Coordinator
should analyze and validate the original cost estimate prior to the initia-
tion of the workshop. The importance of this step cannot be overemphasized
because it will establish the basis (i.e., unit costs, quantities, etc.) of
the original estimate, it will serve as the basis of comparison for other
alternatives generated in the workshop, and it insures that all costs are
determined in a consistent manner. There are several approaches to valida-
tion of the original cost estimate. The VE Team Coordinator and the Designer
may agree to use throughout the VE study, the same cost estimator who pre-
pared the Designer's original cost estimates. This approach in essence
accepts the original estimates as valid. A potential weakness in this
-17-
-------
approach is that if the original estimates are seriously in error, the
absolute value of all other estimates will also no doubt be in error. The
VE Team Coordinator may have another cost specialist available or may re-
tain such a specialist as a consultant for the VE study. In this case, it
is desirable to obtain the detailed cost estimates (unit quantities and unit
prices) from the Designer. The VE cost specialist can then evaluate the
unit prices used by the Designer and readily determine any differences from
unit costs he considers accurate for the project locale. If such differences
occur, the Designer and the VE Team Coordinator must agree on a common basis
for cost estimates so that all alternatives are priced consistently.
Worksheet 1 can be used in evaluating the original cost estimate and
in determining the areas of differences. (Note: Blank worksheets in re-
producible form may be found in the Appendix. Where appropriate, example
completed forms are presented in the text.) Worksheet 2 can be used for
summarizing the results. An example of Worksheet 2 is shown for an example
project. In this case, the VE coordinator was in reasonably close agree-
ment with the estimate developed by the Designer.
The VE Study Job Plan - It is the purpose of VE to provide a systematic
approach that is efficient and less susceptible to oversight. The frame-
work of that approach is termed the VE Job Plan. The VE job plan consists
of six phases of activity which constitute the bulk of the VE study. They
are:
The Information Phase
The Speculative or Creative Phase
The Evaluation or Analytical Phase
The Investigation Phase
The Recommendation Phase
The Follow-Up and Implementation Phase
The following sections discuss each of these phases in detail and
present specific examples.
Information Phase - The purpose of this phase is to collect all facts,
opinions, and data that are pertinent to the design being considered.
Typical are these:
What are the essential functions
Field experience in other locales with the system
Reliability records
Equipment availability - lead times
Performance versus cost, size, etc.
Need for further development
Materials and alternates
Ease of operation, need for training
Necessary ancillary equipment
Energy and consumable materials demands
Space requirements
Safety to operators
Safety, annoyance to neighbors
-18-
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Worksheet 2 - Example
COST VALIDATION
PROJECT COST SUMMARY
ITEM
Sitework
Structures
Major Equipment
Piping
Electrical
Heofing, Ventilating, Air conditioning
Miscellaneous Equipment
Other :
Plumbinq
Potable Water Bldg.
SUBTOTAL
Contingencies
TOTAL
ORIGINAL ESTIMATE
2,813,000
10,853,000
10,497,000
5,755,000
6,183,000
2,477,000
647,000
440.000
250,000
39,915,000
3,992,000
43,907,000
NEW ESTIMATE
2,367,500
12,024,100
10,000,000
5,280,000
6,087,700
2,230,000
646,600
!369ronn
200,000
39,204,900
1,960,200
41,165,100
-19-
-------
Discipline must be exercised here to insure that time is taken to
collect facts and to check them out, rather than relying on unfounded
opinion. Ask "What are the assumptions here - which may be masquerading
as knowledge"? List the assumptions, and review them one by one. Dis-
cipline must also be exercised not to begin suggestion of alternatives
until the information collection phase has been completed.
For projects involving expansion or upgrading of an existing plant,
a visit to the existing plant is recommended as part of the information
gathering phase. A presentation of the process fundamentals, problems and
applications by the VE Team Coordinator is an excellent technique to get
the information session underway and for educating non-process members in
what they are studying. Maintenance and operation of components, space
requirements, safety, clearances, utilities, weights and other features
can be discussed. Other team members who may be familiar with all or
specialized requirements of the equipment can also discuss them. During
this introductory discussion, it will also be helpful for the Team
Coordinator to review VE methods to be used, approximately how much
time is to be allotted to each event, etc. The briefing is helpful even
when all team members are familiar with VE methods and have worked to-
gether previously. The basic questions to be answered in this phase are:
what is the system, what does it do, what does it cost? In order to do
this, the project is first broken down into sub-systems and their functions.
The "verb-noun" concept discussed earlier is used to define the functions.
The functions are then classified as "basic" or "secondary" as discussed
earlier. In the case of the overall wastewater treatment facility, the
functions can be placed into two classes: (1) basic- a sub-system which
treats wastes; (2) secondary- sub-systems which do not treat wastes.
Worksheet 3 provides a form for tabulating the results of the functional
analysis.
The cost of each sub-system is also tabulated and compared to its
"worth". Worth is an indication of the value of performing a specific
function. Extreme accuracy in estimating the worth is not critical since
it is merely used to determine areas of high potential savings and not to
determine a specific design alternative. Sub-systems performing only
secondary functions have no worth because they are not directly related
to the basic function of the plant to treat waste. An example would be
access roads to a treatment plant. Although roads may be required, roads
don't provide treatment. Thus, they are a good place to look for savings
without affecting the basic function. The worth of the primary sub-system
is determined by estimating the cost of the simplest and most functional
alternative to achieve the same function. The cost of this alternative is
the worth of the sub-system. The alternatives considered in determining
worth may be developed by asking the basic questions "what else will per-
form the essential function" and "what will that cost". Approximate costs
are determined for the alternatives to determine the worth. For example,
accomplishments of the basic function of a pencil, make marks, can be
accomplished by a bare piece of lead costing two cents. Therefore, the
worth of making marks is two cents. A metal holder for the lead would
have a secondary function, contain lead, and would have no worth. The
-20-
-------
cost-worth ratio for a $2 mechanical pencil then becomes 100:1. A ratio
this high certainly indicates that savings could be realized while still
meeting the basic function. High values of the "cost-worth" ratio suggest
large potential cost savings, in which case the sub-system is selected for
additional analysis. Also, the cost-worth evaluation will indicate those
areas where effort should stop because of diminishing returns.
An example (using Worksheet 3) for an entire wastewater treatment plant
is shown. An example of worth calculation may be offered by the design of
a stormwater retention basin with a volume of 10 million gallons. The basic
function may be defined as "retain water". The design under review includes
a covered concrete basin with an estimated cost of $2,700,000. The worth
of this basin is the lowest initial cost way to retain 10 million gallons
of water which would be an unlined, earthen basin. Such a basin has an
estimated cost of $70,000. Thus, the cost to worth ratio is $2,700,000/
$70,000 or about 38:1. Such an extremely high ratio would certainly lead
to pursuit of alternates. Perhaps the earthen basin used to determine worth
would not meet all the criteria, but it might lead to selection of a steel
tank with a cost of $538,000.
To further refine the identification of those sub-systems and compon-
ents of a treatment plant offering the most potential for cost savings,
each sub-system is divided into its main components wherever possible. In
a manner similar to that used in determining the worth of each sub-system,
the worth of each component is determined by estimating the cost of the
simplest and most functional alternative to the component. A team evalua-
ting, for example, the structural sub-system would perform a similar, but
more detailed analysis (as shown in the second example using Worksheet 3)
where the basic function of the sub-system is defined as shown. The basic
function of the sub-system differs from the basic function of the total
system. In the example, the basic function of the underground structure
sub-system is "transmit load" while the total system basic function was
"treat waste". When the total system was broken down into the sub-system,
items such as reinforcing steel which are not directly related to "treat
waste" then have worth. The sum of the worth of all the components and/or
sub-systems then provides a model plant which provides an indication of the
reasonableness of the original cost of each sub-system.
This "cost model" is then used to select areas for further study -
i.e., those areas having the greatest difference between the "model" and
"actual" costs. Worksheet 4 may be used to present the cost model. An
example is presented for an activated sludge plant. In this case, the cost
of each sub-system was divided by the design capacity of the plant and the
costs then expressed as dollars per gallon per day of capacity. The model
indicated that the areas with the most potential for savings were: process
(secondary and tertiary), plant layout (because of its major effect on
interface costs), waste transport, pumping, piping, and electrical distri-
bution. These selected areas would then be subjected to detailed evalua-
tion in the Project Workshop.
Speculative or Creative Phase - The desired output of this phase is com-
pletely free interplay of ideas, to create an extensive list of alternative
-21-
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Worksheet 3 - Example
ITEM:
BASIC
FUNCTION:
Underground
Structure
Transmit
Load
FUNCTIONAL
ANALYSIS
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-22-
-------
Worksheet 3 - Example
ITEM:
BASIC
FUNCTION:
Total Plant
Treat Waste
FUNCTIONAL
ANALYSIS
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Worksheet 4 - Example
MODEL
0.50
[ACTUA
1
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0.285
i
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1
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ALi-LVrtTtL) SJjULHot
TREATMENT PLANT
(Costs in Dollars
Per Gallon Per Day)
L°15.2_I
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-24-
-------
ways to perform the essential function found during information gathering.
The key to results is to delay any critical judgement or comments until
after all the ideas have been generated. There will be a strong tendency
to discuss some ideas or to argue about their relative merits when they are
suggested. Such evaluation will suppress creative thinking. VE texts offer
a list of thought provoking questions to get a slowstarting creative session
under way such as:
What is the input?
What is the output?
What should go in between?
Could this be done automatically?
Is all of the known information available to me?
What emotions or attitudes am I dealing with?
Are specifications tight or loose?
Could this be done somewhere else?
What would happen if this weren't done at all?
Could this be done mechanically? Electrically? By hand?
Could you twist present structures to improve them?
What other fields have this kind of problem?
How much of this is a result of custom? Tradition? Opinion?
What else could this be made to do?
How could this be done piecemeal?
How else could the basic function be accomplished?
Where is our greatest economic effort expended?
Why hasn't anyone done this before?
How would postponement of this objective affect the project?
Can better use be made of existing facilities?
Are the "ground rules" real or imaginary?
What can be combined?
What should be divided?
Why are the present limits adopted?
How can this be made more compact?
What other layout might be better?
Can it be made safer?
What other materials would do this job?
If all specifications could be forgotten, how else could the
basic function be accomplished?
Could these means be made to meet specifications?
The more ideas, the better. Care is taken to avoid evaluation of
suggestions; rather, members are encouraged to generate and share their
ideas regardless of how "far out" they might appear. Negative comments
on any idea are to be avoided during this phase. Creativity is inhibited
by simultaneous evaluation. During the Speculative Phase, every idea raised
should be recorded immediately, against the possibility it might be for-
gotten. Every idea has the potential of value as illustrated by the follow-
ing example. A group of aerodynamicists, using the wing area, power and
weight of a bee, demonstrated analytically that the bee could not fly. The
bee, howevever, wasn't aware of this, so he just flew anyhow. The aerody-
namicists erred by limiting their analysis to fixed-wing theory. The bee
-25-
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used ornithopter theory. It worked. Moral: Sometimes the expert special-
ist limits himself by what he knows so surely. Keep an open mind. There
is no such thing as a foolish speculation.
Worksheet 5 may be used for listing the ideas as they are generated.
An example of ideas generated by a team working on a wastewater pumping
station and outfall portion of a project is shown to illustrate the concept.
A good method for developing ideas is termed functional analysis. A
tool for this method is the "ladder of abstraction", where each rung repre-
sents either more specific or more abstract objects or functions. The
series Treat Waste, Protect Stream, Enhance Environment, Protect Life,
illustrates this concept, where each following item includes the previous,
but is more encompassing. In the investigation of functions, the question,
"Why verb-noun" leads upward to a function more abstract than before, while
the question, "How verb-noun" leads downward to a more specific function.
The classic example from VE teaching is the pencil, whose function is to
"make marks". The increasingly abstract series, write words, transmit
thoughts, communicate ideas, change attitudes, answers the repeated "Why?",
while "How?" leads from make marks to smear graphite. If the first answer
to a pencil's function had been write words, the "How" would force the
answer, make marks. Write words is only one of the answers to, "Why make
marks?" Others are to sketch pictures, to mark sawcut. At each rung of
the ladder, other functions can be conceived. Another reason to write words
might be simply to take notes, and that to aid memory. Other ways to make
marks are a paint brush, a spray can, a typewriter. Thoughts are transmitted
and ideas communicated by television, cinema, radio and speeches. Notes can
be taken by tape recorder or camera. The reader can visualize not merely a
ladder, but a whole matrix of more and less abstract functions at each
level, with many answers to "How?" and "Why?" at each level. Persistently
questioning "what else will do that?" fills out the breadth of the matrix.
Pursuing the "How" and "Why" questions, a VE study team can increase the
probability of drawing out an innovative insight that will free them from
routine design answers.
An outgrowth of this matrix of abstraction is termed FAST diagramming,
from Function Analysis System Technique. The purpose is not to produce a
diagram per se but only to serve as another tool to stimulate thinking.
Convention is for the path of abstraction to run horizontally, with why?
answers at the left, and how? at the right (see Worksheet 6). An additional
dimension is added by searching for support logic, for example, inquiring
into the time relationships of functions, "When is verb-noun performed?" and
when that function is performed, what else must be happening concurrently,
or just before or after. Other questions ask whether the manner of per-
forming a function causes some other, dependent, function to come into
existence. These concurrent requirements are plotted vertically in rela-
tion to the other function. Since team understanding of the relationships
of functions can vary so much during the course of analysis, it is useful to
write each function on a separate card, to allow easy changes of the matrix.
The team begins by listing the basic function of the item (i.e., decrease
BOD in example Worksheet 6). By then listing specific (or less abstract)
ways of achieving the basic function (moving from the question of "why"
-26-
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Worksheet 5 - Example
LIST ALL IDEAS -
EVALUATE LATER
SPECULATIVE PHASE
ITEM:
BASIC FUNCTION:
Pump Station
Transport Waste
Combine pumps
Use one pump
Modify piping
Change hydraulic gradient
Relocate pump station
Change pump type
Use higher speed pumps
Use submersible pumps
Combine influent lines
Change pipe material
Use reciprocating pumps
Use frequency variation
Use hydraulic coupling
Use eddy current coupling
Use common speed pumps
Reduce pipe friction
Use factory assembled station
Change valving
Eliminate valves
Reduce fittings
Relocate discharge line
Reduce initial pump sizes
-27-
-------
Worksheet 6
FAST DIAGRAM
IT EM : I SECONDARY PROCESS
t
O
X
X
i
13 "0
-------
to the question of "how"), the team may generate many ideas and a wide
variety of ideas. For example, one of the ways of reducing BOD is the
introduction of oxygen. In moving toward the less abstract question of
"how", ideas such as aerate mechanically, inject pure oxygen, etc., are
generated.
The Evaluation or Analytical Phase - During the speculative or creative
phase, all critical comment and judgement was suspended, in order not to
inhibit the flow of ideas, no matter how wild. With that behind, the team
now considers the feasibility of each of those ideas, but looking positively
for a way that each could be made to work, rather than critically for an
excuse for rejection. The faults of each idea must be identified, of course,
but for the sake of fault elimination, possibly by combining two or more
ideas in a way to correct the faults of each. Preliminary rough cost esti-
mates may be needed to help narrow down the field as well as evaluation of
technical strong and weak points, and unusual requirements such as special
labor skills to build or operate, higher or lower than normal material
costs to operate, space economies, etc.
The ideas generated in the speculative phase should be screened by
criteria such as:
Are the performance requirements met?
Does the alternative meet the quality requirements?
Are the reliability requirements met?
Are the original reliability requirements unreasonably high?
Will the system accept the alternative without excessive redesign
in other areas?
Is there an improvement, or at least no loss, in the maintain-
ability of the system?
For each of the ideas selected, the workshop team identifies potential
advantages and disadvantages. The relative merits are then discussed by
the team and a numerical rating assigned to each idea (see Worksheet 7
using same pumping station project as in Worksheet 6). During this phase,
it will be seen that the VE job plan is not a pat one-two-three routine,
but that it is normal to return to earlier phases, as for example here, to
gather new information that had not been anticipated, or to save ideas that
would be rejected for some shortcoming by combining them creatively.
Finally, with these data in hand, the best ideas are selected for further
investigation.
The Investigation Phase - In this phase, the most feasible alternatives
are investigated more completely. All specifications (performance, re-
liability, etc.) must be met. Use of standard materials, parts, and equip-
ment should be maximized. Implementation costs (both labor and other
costs) to redesign, and possibly to discard, remove or modify existing
facilities must be carefully evaluated. Collateral advantages to the Owner
may be found, in byproduct values (i.e., recyclable compost) and social
benefits. Equal depth of investigation should be followed for all alterna-
tives, rather than simply for the one seen as best, in order that review
agencies can confirm these data if desired. All of the data developed in
-29-
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Worksheet 7 - Example
IDEA EVALUATION
ITEM:
Pump Station
BASIC FUNCTION:
Transport Wastes
IDEA
Use screw-lift pumps
Relocate Pump Station
Relocate Lines
Constant Speed Pumps
Common Trench for Lines
Factory Assembled Pump
Station
Submersible Pumps
Change Pump Controls
Reduce Initial Pump
Size
ADVANTAGES
Initial Cost
Operating Cost
Operating Cost
Maintenance Less
Initial Cost
Initial Cost
Initial Cost
Initial Cost
Initial Cost
Initial Cost
Initial Cost
0 & M Savings
DISADVANTAGES
Less Flexible
Future Replacement
Redesign Building
Initial Cost
Redesign
Shorter Life
3perating Efficiency
Redesign
Operation
availability
Redesign
aesthetics
Maintenance
^ode Requirements
Redesign
Redesign
Redesign
IDEA*
RATING
5
2
9
4
8
3
1
6
10
10 -MOST DESIRABLE, 1 = LEAST DESIRABLE
-30-
-------
this investigation should be documented and retained, to support any
proposals.
Worksheet 1 can be used for capital cost calculations. The evaluation
of alternatives also includes comparison of annual Operation, Maintenance,
Replacement (OMR) costs. These costs are coupled with the annual capital
costs to determine the total life cycle costs (see Worksheet 8 again using
the pump station example). Also, refer to Appendix D for the EPA Cost-
Effectiveness Guidelines on interest rates, useful life, etc. Obtaining
accurate cost estimates for several alternative approaches may be difficult
in the short time available during the project workshop. For this reason,
it may be desirable in some cases to temporarily adjourn the project work-
shop after the speculative phase for 1-2 weeks to permit the VE Team
Coordinator to conduct the cost estimating work. Even with inclusion of
a cost specialist in the project workshop it may be necessary to telephone
manufacturers and suppliers for capital costs and other users of the equip-
ment for operation and maintenance costs. EPA and State offices may be a
source of cost data from recent grant projects. Published papers and re-
ports are often a useful source of cost data. Where there is some uncer-
tainity associated with costs for a given alternative, a sensitivity
analysis can be made by assuming what appears to be a mid-range value and
then determining the effect of the high and low range of possibilities. The
VE team must carefully document the method of estimating and sources of costs
as later disagreements on the practicality of a recommended change may well
hinge upon this factor.
Factors other than costs - such as improved performance, reliability,
aesthetics, and flexibility - also influence the desirability or acceptability
of the alternatives. Such factors are assigned a weight from 1 to 10, with
higher values for greater importance. Each alternative is then evaluated
against each factor and subjectively rated - 1 for poor, 2 for fair, 3 for
good, and 4 for excellent. The rating is multiplied by the factor's
weighted value and totals arrived at for each alternative. Based on these
totals, the alternatives are then ranked (see Worksheet 9) by the relative
attractiveness of each alternative.
The Recommendation Phase - Since the VE Team Coordinator will be either an
outside consultant or an uninvolved member of the-design firm or the Owner's
design group, he will not be in a position to decide to implement any of the
ideas favored by the VE study teams, and so a proposal must be made to the
decision makers. This consists of an oral presentation to all parties in-
volved, as described earlier (see Figure 1 and related text) followed by a
written report in more detail. The total report of the VE study should be
broken down into separate sections for each idea to be considered. Each
section should start with a one-page summary of old way vs. new way, and
the life cycle cost savings to be realized. Succeeding pages should include
sketches and cost analyses of the old and new, and all of the data described
in "Investigation Phase", presented in a manner to answer the questions that
can logically be expected from decision makers who may favor the status quo.
The recommended alternates should be described as concisely as possible
with the cost benefits summarized. Rationale should be presented for each
-31-
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Worksheet 8 - Example
LIFE CYCLE COSTS
ITEM: Pump Station
INITIAL COSTS (in $1,000)
Base Cost
Interface Costs
(a)
to
Other Initial Costs
(a)
(b)
TOTAL INITIAL COST
REPLACEMENT COSTS
Year 12 <9> 10 % Amount (Add 4th Pump)
Present Worth of Future Replacement Cost
Year (g) % Amount
Present Worth of Future Replacement Cost
Year (§) % Amount
Present Worth of Future Replacement Cost
ANNUAL COSTS
Amortized Initial Cost @ 6 1/|t*20 Year
Capital Recovery of the Present Worth of the
Replacement Cost
(a) Year 12
(b) Year
(c) Year
Annual Costs
(a) Maintenance
(b) Operations
(c) Maintenance plus Operation
TOTAL ANNUAL COSTS
Annual Difference
PRESENT WORTH OF ANNUAL DIFFERENCE
ORIGINAL
840
965
1,805
157
192
349
-
ALT 1
648
965
1,613
388
124
141
'l3
154
308
41
470
ALT 2
648
863
1,511
388
124
132
13
154
299
50
573
ALT 3
648
863
1,511
388
124
132
13
119
264
85
975
*Source = Water Resources Council
Federal Register
-32-
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Worksheet 8
Example
LIFE CYCLE COSTS
ITEM- Pump Station
INITIAL COSTS
Base Cost
Interface Costs (a)
(b)
Other Initial Costs (a)
(b)
TOTAL INITIAL COST
REPLACEMENT COSTS
Year 12
-------
Worksheet 9 - Example
ALTERNATIVE EVALUATION
ITEM-T
Pump Station
FACTOR WEIGHT
10 = MAXIMUM ^
Initial Design
Relocate Line
Reduce Initial
Pump Size
Change Pump
Speed Controls
Change Pumps
to Screw Lift
Use Constant
Speed Pumps
FACTORS *
CAPITAL COST
8
2
16
4
32
4
32
3
24
1
8
2
16
(-
(f)
o
o
5
cfi
0
8
2
16
3
24
4
32
2
16
3
24
2
16
REDESIGN
3
4
12
2
6
2
6
2
6
1
3
2
6
rPLEMENTATION
TIME
5
4
20
4
20
3
15
3
15
3
15
3
15
PERFORMANCE
10
3
30
3
30
4
40
3
30
3
30
2
20
RELIABILITY
10
2
20
2
20
4
40
3
30
3
30
2
20
SAFETY
9
4
36
4
36
4
36
4
36
4
36
4
36
TOTAL
150
168
201
157
146
129
X.
-z.
<
o:
4
2
1
3
5
6
* EXCELLENT = 4, GOOD = 3, FAIR=2, POOR = 1
-33-
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of the proposed changes. Worksheet 10 provides a form for such a presenta-
tion using the earlier pump station example. Whenever appropriate, drawings
which graphically present the recommendations should accompany th^ narrative.
Any thoughts that the workshop team has on implementation of the recommended
changes should be incorporated in the recommendation for consideration in
preparation of the VE report.
At the conclusion of the VE workshop, each of the teams' workbooks are
compiled into a single volume, the VE Job Plan Workbook.
Follow-Up or Implementation Phase - The VE study will have no value if
its recommendations are never implemented, or are delayed until only a few
are feasible. Thus, expeditous completion of Steps 11 and 12 in Figure 1
is important. Pride of authorship will make the Designer less than enthu-
siastic about suggested changes. Having selected the Designer, and having
been a part of the Step I study, the Owner's staff has a similar pride of
authorship. To a lesser degree, the State and Federal environmental protec-
tion agencies identify with the logic paths that led to the existing design.
To a greater or lesser degree, there are many who would interpret VE
recommendations for change as a criticism of either their design efforts,
or of their concurrence with the design as it developed. The VE Team
Coordinator is biased toward change. Having been assigned to develop
better ideas, he must expect client dissatisfaction if none result. By the
nature of roles, the Team Coordinator is the constant force for change.
For that reason, the VE study program gives to the Coordinator the task of
pulling together the best of the study suggestions, presenting them in an
objective manner, and following up to insure that the Designer has fully
understood every advantage of the recommended changes.
Certain negative reactions may be expressed during this phase, and
a carefully conducted and well-documented VE study is essential to answer-
ing these objections. It is the VE Team Coordinator's responsibility to
see that the VE study recommendations are fully considered. The astute VE
Coordinator will include on his study teams, members from the Owner's
staff, the Designer's staff (within the limitations discussed), and State
agency and EPA regional offices. By helping to develop the VE study recom-
mendations, they will understand the changes, and have the background to
objectively support the VE recommendations.
The VE Report
The Oral Presentation - As the last step of the Project Workshop, the VE
Team Coordinator makes an oral presentation. This presentation includes
all recommendations of the VE Teams. The response from those attending
the presentation will enable any concerns expressed to be addressed in the
written, preliminary report.
Preliminary Report - This report is prepared by the VE Team Coordinator
from the information contained in the VE Job Plan Workbook. The VE Job Plan
Workbook, calculations, and other detailed data must be included in an
appendix.
-34-
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Worksheet 10 - Example
VE. RECOMMENDATION
ITEM:
Pnmn Si-.at- i on
PROPOSED CHANGE:
1. Relocate the pipelines. This provides a savings in initial cost.
2. Reduce the initial pumping capacity by using 3 pumps, 24 mgd each,
and add one 24 mgd pump at 12 years rather than using 3 pumps at 33.6,
38.5, and 39.5 mgd capacity. This provides a saving in initial and
total costs.
3. Achieve motor speed adjustment through frequency change instead of with
liquid rheostat control. This will enable use of squirrel cage motors
instead of wound rotor motors. The change will improve energy and
maintenance costs.
COST SUMMARY
INITIAL - ORIGINAL
INITIAL - PROPOSED
INITIAL SAVINGS
TOTAL ANNUAL COSTS - ORIGINAL
TOTAL ANNUAL COSTS - PROPOSED
ANNUAL SAVINGS
PRESENT WORTH -ANNUAL SAVINGS
51,805.300
1,511.400
?9T qnn (16%1
377,000
287,000
90,000 (24%)
880.000
-35-
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The report should include:
Overall project description, including project estimated con-
struction cost
Present design, showing cost and drawings
Proposed design, showing cost and sketches
Estimated implementation costs
Implementation procedures, timing, and problems, if any
Instant contract savings
Operations, maintenance, and replacement cost savings
Total life-cycle costs
This method of expressing cost savings should be presented in both
present-worth amounts and in annual savings amounts, in accordance with
EPA cost effectiveness analysis guidelines. In addition, the savings
should be presented as percent of system and percent of entire construction
costs or total annual costs.
Distribution of the preliminary report by the VE Team Coordinator
shall include at least the following:
No. of Copies
Designer
Owner
State Pollution Control Agency
EPA, Regional Office
j— Action Copies
"r—Information Copies
Preliminary Report Review - The Designer and the Owner shall review the
preliminary VE study report. It is their responsibility to accept or re-
ject the proposals of the report. The report copies for EPA and the State
agency are information copies. After the Designer has evaluated the pre-
liminary report, a conference should be considered between the Owner,
Designer and VE Coordinator to insure that no VE recommendations are re-
jected due to lack of communication between Designer and VE Team Coordina-
tor, and that the Owner has an opportunity to hear both sides of any
differences of opinion.
Final VE Report - The Designer prepares a final VE study report describing
those VE recommendations accepted and those rejected. He responds to all
recommendations contained in the preliminary report.
For those recommendations accepted, an implementation plan, schedule,
and costs are shown. In addition, the resultant savings are presented in
present worth amount and in amortized form, including the following:
a. Initial cost savings
b. Operating, maintenance and replacement cost savings
c. Implementation costs
d. Improvements in reliability, maintenance, or operation
-36-
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For those recommendations rejected by the Designer and/or Owner, jus-
tification for rejection shall be included in the report. Rejection may be
based on cost effectiveness, reliability, project delay, unusual operating
and maintenance problems, and other factors that may be critical to the
treatment process or to the environmental assessment.
The Designer shall include in this report his redesign fee associated
with the accepted recommended changes and an appropriate request for a
Step II grant amendment. Two copies of the final VE study report shall
be sent by the Designer to the EPA Regional Office with agreed upon num-
bers of copies being sent to the State Pollution Control Agency for review
and approval. If the EPA and/or State disagrees with the justification
for rejection of any recommended VE change, they may call a meeting with
the Owner, Designer, VE Team Coordinator, State and EPA to resolve the
differences so that approval may be granted.
-------
TYPICAL VE IDEAS AND RESULTS FOR WASTEWATER PROJECTS
It is the purpose of this section to describe some ideas generated in past
VE efforts on wastewater projects to illustrate the nature of ideas genera-
ted in the speculative phase. These illustrative ideas (presented below
in the general technical areas of site, electrical/energy, structural, and
process) are followed by specific ideas and results from actual workshops.
Site
Consolidate structures
Relocate structures
Replace grass with ground cover or gravel
Reduce roads, walks
Change paving type
Reroute pipes
Shorten utilities runs
Do landscaping with in-house staff
Reduce fencing
Use plant effluent for irrigation
Relocate site
Modify on-site parking
Change plant layout
Purchase more land
Change hydraulic profile
Electrical/Energy
Use methane for fuel
Recycle waste heat
Use solar energy
Use independent power source for backup rather than on-site generator
Use intermediate weight conduit
Use plastic conduit with concrete envelope
Use direct burial cable
Use precast manholes
Space manholes further apart
Use multiplexing control systems
Reduce lighting levels
Change lighting fixture type
Relocate load centers
Use aluminum instead of copper
Use switches and fuses rather than circuit breakers
Modify heating and cooling ducts
Modify insulation
-38-
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Change fuel source
Structural
Combine buildings
Use multi-story buildings
Use pre-engineered or pre-fabricated buildings
Minimize building area by use of outdoor equipment
Revise interior finishes
Use precast structural system
Change wall siding material
Change roofing material
Use high strength concrete, steel
Use lightweight concrete
Use steel tanks
Use post-tensioned concrete
Vary wall and slab thickness
Use gunite construction
Simplify formwork
Use metal stairs
Use common wall construction
Reduce reinforcing steel in concrete
Relocate or omit water stops
Replace precast covers with metal decks
Optimize tank dimensions
Use tension rings
Eliminate windows
Consolidate doors
Revise door types
Use drywall
Change framing materials
Process
Use flow equalization to reduce peak loads
Change pump type
Use multiple, stepped constant speed pumps rather than variable speed
Change unit process
Combine unit processes
Use existing structures for different function
Use gravity flow rather than pumping
Change pipe material
Combine pumps
Change hydraulic gradient
Use open channels rather than pipe
Use factory assembled pump stations
Reduce number of valves
Use common trench construction
Change valve type
Change aerator type
Implement water conservation program
Realign sewer routes
-39-
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Plainville, Connecticut Workshop - This section summarizes a VE workshop
which was conducted on the Plainville plant when the design was 15% com-
plete. The treatment plant studied was an existing secondary treatment
plant with present flow of 1.7 million gallons per day (MGD) to be expanded
to a 3.8 MGD capacity to include tertiary treatment facilities to meet the
following treatment levels:
Final Effluent
Parameter (mg/1)
BOD
Suspended Solids
Ammonia Nitrogen
Phosphorus as P
UOD
Design
Inf.
180
200
33
20
371
Primary
Eff.
126
80
33
20
290
Secondary
Eff.
10
20
2
15
24
W/Filtration
5
10
2
14
17
W/Filtration
& Chemicals
2
1
2
2
12
The project construction costs previous to the VE Workshop was estimated
to be $7,550,000, increased by engineering fees of $750,000 totalling
$8,300,000. Prior to the VE, the recommended project included the following
elements (see Figure 3):
a. New pretreatment facilities for coarse screening, grit removal,
comminution and flow monitoring equipment.
b. Primary clarification - two additional primary settling tanks to
operate in conjunction with the existing units.
c. New sewage pumping facilities to lift the settled sewage to the
subsequent treatment units.
d. Flow equalization capacity achieved by utilization of the exist-
ing trickling filter basins and existing sewage pump station.
e. Multi-stage rotating biological disc system designed to remove
94% of the ultimate oxygen demand (UOD) present in the raw
sewage influent.
f. Chemical treatment utilizing suitable coagulants in conjunction
with final clarification to achieve 90% removal of the phosphorus
present in the raw sewage and to insure consistent effluent
quality for acceptable operation of the subsequent filtration
facilities.
g. Multi-media filtration followed by disinfection and post-aeration
of the final effluent to obtain 99% suspended solids removal and
an effluent free of pathogenic organisms with a minimum dissolved
oxygen concentration of 7.0 mg/1 at point of discharge.
h. Sludge handling facilities to include utilization of the existing
anaerobic digesters for primary sludge; additional heated aerobic
digestion for the secondary and tertiary sludges, two vacuum
filters for sludge dewatering and two new dump trucks for hauling
of the dewatered sludge to the Town landfill for final disposal.
In addition to the basic treatment elements, a new administration
-40-
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building was proposed to be erected to include room for administrative
offices, laboratory facilities, maintenance shops and storage space for
trucks and other related vehicles and equipment. Also proposed for the
first stage of construction was greater capacity in the main interceptor
entering the treatment plant.
After gaining the approval of the Town, the State Department of En-
vironmental Protection (DEP), and EPA, the design firm retained a separate
firm to conduct a VE Workshop. Five workshop teams were organized. Con-
sisting of about five members each, the teams (Site, Energy, Process,
Buildings, and Underground Structures) were composed of engineers, archi-
tects, landscape architects, a chemist, value engineering specialists,
three key members of the Town of Plainville, and a member of the State DEP.
The following summarizes the major recommendations of each team:
Site - Consolidate several proposed separate structures into one build-
ing. This single structure would include the bio-discs, tertiary facili-
ties, new pump station, new aerobic and existing anaerobic digesters, and
administration building. This would substantially reduce the cost of inter-
face piping, the item which had the highest cost-to-worth ratio.
Energy - Use heat pumps for heating and cooling using the plant effluent
as a source of heat energy; use programmed electrical demand limiters on
motors to allow cycling, reducing demand charges; use solar heating for
space heating and domestic hot water.
Process - Use existing trickling filters instead of converting them to
flow equalization basins; convert existing secondary clarifiers (which do
not work hydraulically) to chlorine contact chambers; retain existing
sludge beds instead of abandoning them; eliminate septic waste holding
tank; eliminate 4 Bio Contactors through continued use of trickling filters;
substitute conventional flocculation equipment for 2 Bio Contactors;
eliminate diffusers and compressors in discarded equalization basins; use
screw pumps with no building structure instead of centrifugal multi-speed
pumps; use gravity in place of pressure filters; eliminate 3 pumps and
standby generator by designing for gravity flow. Figure 4 shows the revised
process.
Buildings - Reduce the building area required from 40,200 sq.ft. to
17,800 sq.ft. by use of outdoor-rated equipment, elimination of pretreat-
ment building, elimination of pump station building, and consolidation of
buildings.
Underground Structures - Consolidate structures to save excavation, back-
fill, pumping, and dewatering during construction, use of common walls and
revise configuration of tank construction to produce significant savings
(approximately 35% of the concrete walls and flow channels were eliminated),
use high strength reinforcing as well as substitution of wood baffle walls
where water tightness is not a consideration.
-42-
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-43-
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The following summarizes the cost savings by teams:
Team
(1)
(2)
(3)
Site
a. Energy-Mechanical
b. Energy-Electrical
Process
(4) Buildings
(5) Underground Structures
TOTALS
Base Cost Pre-Workshop
Workshop Savings
Savings (New Budget)
New Budget Design to Cost Model
First Cost Savings
$ 316,600
155,600
73,400
209,000
322,300
362,000
Annual OMR Cost
Savings
$ 38,400
22,500
89,900
28,000
33,800
$1,438,900(100%)
7,550,000
1,438,900(100%)
1,151,120( 80%)
$212,600 (100%)
533,000
212,600 (100%)
$6,398,880
$320,400
The significance of the above savings can be demonstrated when related
to first cost, financing, administration, and accumulated maintenance,
operation and replacement (OMR) costs during the life of the project. The
30 year Life Cycle Cost (Total Savings) is $9,000,000 (first cost savings
of $1,151,120 with assoicated interest and annual OMR savings of $212,600).
The local government will be recipients of the major portion, or $6,600,000
of the $9,000,000 overall savings, the major portion of which occurs in the
form of OMR Savings. Converting the above savings to a present worth value
may be summarized as follows:.
Present Worth, Savings
Total Local Portion
First Savings
OMR Savings
($212,600/yr., 7%
interest, 30 years)
TOTAL
$1,151,120
2,636,240
$3,787,360
$ 287,780(25% of total)
2,636,240(100% of total)
$2,924,020(77% of total)
These savings are those projected by the VE study but implementation
of the recommended changes was still pending at the time of preparation of
this workbook. The cost of the VE study was about $50,000.
-44-
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Ocean County Sewerage Authority Workshop - This workshop was conducted
on a regional wastewater treatment facility with treatment units designed
for a peak hydraulic capacity of 41.2 mgd. Unfortunately, the VE study
was made after the design was completed. As a result, the scope of the VE
effort was limited and excluded any review of the treatment process or any
proposals which would delay the original schedule. In spite of these re-
strictive circumstances, changes resulting in initial savings of about
$700,000 were actually implemented.
The treatment plant consisted of the following processes:
influent pump
aerated grit removal
primary clarification
activated sludge aeration basin
secondary clarification
anaerobic sludge digestion and centrifugation
chlorination
ocean outfall
The cost of the project was estimated by the design consultant as
$43,907,000. Four areas were investigated in the VE study: Piping and
pumping; structural; sludge handling facility; electrical. The follow-
ing paragraphs summarize the major proposals of the VE teams.
Pumping and Piping
Relocate pipelines (influent line, outfall, storm drain)and resize
influent pumps from 3 ea. at 33.6, 38.5, 39.5 MGD to three 24 MGD pumps
initially and add one(l) 24 MGD no sooner than twelve years. Adjust motor
speed through frequency change instead of with liquid rheostat control
enabling use of squirrel cage motors in lieu of wound rotor motors. Use
unlined ductile iron pipe in lieu of glass lined ductile iron pipe for
grit and septic sludge lines. Use schedule 80 PVC for potable water.
Use no Hub CI soil pipe for sanitary lines. Reduce the number of lawn
sprinkler heads.
Structural
Retain digester wall heat by using insulation, reduce wall and mat
thickness using tension rings and eliminate parapet. For primary and
scondary clarifiers: reduce wall thickness, reduce reinforcing steel,
reduce slab thickness.
Sludge Handling Facility
Reduce the weight of the roof section by using metal decks, rigid
insulation, achieve roof pitch by tapering the insulation or sloping the
structural steel and use cantilevered beams where possible. For the
exterior wall, use utility brick and reduce the thickness of backup
blocks. Eliminate parapet and limestone coping in favor of a gravel stop.
-45-
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Electrical
Use fiber conduit in concrete rather than rigid steel conduit for
power and control ducts. Use intermediate weight conduit rather than
heavy weight conduit. Reduce minimum conduit size from 3/4-inch to 1/2-
inch. Reduce lighting levels. Use less expensive lighting fixtures.
Eliminate two manholes. Use lead acid batteries in place of nickel
cadmium.
The cost savings as estimated by the VE teams were:
First Cost Savings Annual Savings
Pumping and piping 500,000 90,800
Structural 790,000
Sludge handling 220,600
Electrical 500,000 126,000
2,010,600 216,800
The teams felt that if the VE effort had been carried out earlier,
there were added areas that could have been considered. For example, the
electrical team felt that evaluation of obtaining peaking power from solar
energy (especially since solar energy peaks correspond to the plant peak
power demand) and reduction of energy costs through process changes were
two specific areas in this category. This study underscores the need for
proper timing of the VE study.
A detailed evaluation of the VE recommendations by the design engineer
and the State and Federal regulatory agencies lead to the adoption of items
which had the following savings and associated redesign costs:
Savings, VE and Redesign
Capital OMR Costs
Pumping and piping 108,000 3,640
Structural 110,640 10,760
Sludge Handling 275,000 17,360
Electrical 203,400 22,200
697,040 53,960
Cost of VE study - 54,750
Cost of Review by Designer - 17,400
Some of the ideas suggested by the VE teams were rejected based upon
a common agreement by the Designer, Owner, State Agency and EPA because
of potential delays in the project schedule as well as other valid reasons.
-46-
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APPENDIX A
WORKSHEETS
-------
Worksheet L
COST WORKSHEET
ORIGINAL ESTIMATE
NEW ESTIMATE
Item
Units
No. Units
:ost.
Unit
Total
;ost/
/Unit
Total
-------
Worksheet 2
COST VALIDATION
PROJECT COST SUMMARY
ITEM
Sitework
Structures
Major Equipment
Piping
Electrical
Heating, Ventilating, Air conditioning
Miscellaneous Equipment
Other :
SUBTOTAL
Contingencies
TOTAL
ORIGINAL ESTIMATE
UPDATH)
ESTIMATE
-------
Worksheet 3
ITEM:
BASIC
FUNCTION:
FUNCTIONAL
ANALYSIS
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Worksheet 4 - Example
! MODEL
1
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ACTIVATED SLUDGE
TREATMENT PLANT
| (Costs in Dollars
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1
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Worksheet 5
LIST ALL IDEAS -
EVALUATE LATER
SPECULATIVE PHASE
ITEM:
BASIC FUNCTION:
-------
Worksheet 6
FAST DIAGRAM
ITEM: I
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Worksheet 7
IDEA EVALUATION
ITEM:
BASIC FUNCTION'
IDEA
ADVANTAGES
*
DISADVANTAGES
IDEA*
RATING
*
10 = MOST DESIRABLE, 1 = LEAST DESIRABLE
-------
Worksheet 3
LIFE CYCLE COSTS
ITEM:
INITIAL COSTS
Base Cost
Interface Costs (a)
(b)
Other Initial Costs (a)
(b)
TOTAL INITIAL COST
REPLACEMENT COSTS
Year (r$ % Amount
Present Worth of Future Replacement Cost
Yenr (q) % Amnunt
Present Worth of Future Replacement Cost
Year
-------
Worksheet 9
ALTERNATIVE EVALUATION
FACTOR WEIGHT
10 = MAXIMUM >
FACTORS *
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-------
Worksheet 10
VE. RECOMMENDATION
ITEM: |
PROPOSED CHANGE:
COST SUMMARY
INITIAL - ORIGINAL
INITIAL - PROPOSED
INITIAL SAVINGS
TOTAL ANNUAL COSTS - ORIGINAL
TOTAL ANNUAL COSTS - PROPOSED
ANNUAL SAVINGS
PRESENT WORTH -ANNUAL SAVINGS
-------
APPENDIX B
BIBLIOGRAPHY
-------
BIBLIOGRAPHY
6.
7.
Value Engineering in the Construction Industry, Alphonse Dell'Isola,
1973, $16.50, Construction Publishing Company, 2 Park Avenue, New
York, N.Y. 10016 (Telephone: (212) 889-0170). This text is addressed
specifically to the technologies of the construction trade. Its
examples are more closely related to wastewater treatment design
than other texts which treat factory fabricated assemblies. This is
one of the texts used in the ACEC-AIA workshops.
Techniques of Value Analysis and Engineering, Lawrence D. Miles,
2nd Edition, 1972, $15.50, McGraw Hill, 1221 Avenue of the Americas,
New York, N.Y. 10036, (Telephone (212) 997-1221). This is a new
edition of the first VE text by the "Father of VE".
Value Management, Value Engineering and Cost Reduction, Edward D.
Heller, 1973, $12.50, Addison-Wesley Publishing Company, Jacob Way
Reading, Mass. 01867, (Telephone: (617) 944-3700). Although this
book is out of print, copies can still be obtained from the publisher
and is worth searching for. Heller brings to a single volume a total
and current "How To", technical, administrative, and political, with
insights into designer and customer attitudes and management policy
decisions, and an elegant and uncontrived mathematical support for
some of the judgement calls that are intutive to the successful
VE practitioner.
Value Management, A GSA Handbook No. PBS P 8000.1, General Services
Administration, Order from Director Value Management, Public Buildings
Service, GSA, Washington, D.C. 20405, $5.00.
Value Management Workbook, GSA Form 2760. Order from -Director-
Value Management, Public Buildings Service, GSA, Washington, D.C. 20405,
$1.00.
Value Analysis in Design & Construction, James J. O'Brien, P.E.,
1976, McGraw Hill.
Value Analysis to Improve Productivity, C. Fallen, CVS, 1971,
John A. Wiley.
-------
APPENDIX C
GLOSSARY OF VE TERMS
-------
Glossary of VE Terms
Value Engineering (VE)
A specialized cost control technique which is based on
a systematic and creative approach to identify unnecessarily
high cost in a project in order to arrive at a cost saving
without sacrificing the reliability or efficiency of a project.
VE Team Coordinator
A person who is qualified to direct and conduct a VE
study on a waste treatment project. The VE team coordinator
must have sufficient VE background to meet the qualifications
specified by the Environmental Protection Agency.
VE Study or VE Workshop
A project study or review session where the objective is to
review an actual project to propose cost saving alternatives to
the designer. The workshop is performed by a VE team or teams
chaired by a VE team coordinator. Each team session may take
40 hours or less depending on the size and the complexity of the
project. Sometimes, a review session may be divided into 2 or
3 sub-sessions of 8 to 24 hours each.
VE Training Workshop
A workshop where the major objective is to provide at least
40 hours of academic training in VE methodology with application
of the methodology to example or actual projects.
Life Cycle Costs
Ownership costs for the functional life of the project.
It includes cost for design, construction, operation, mainte-
nance and replacement.
Implementation Cost
Costs incurred for implementing the VE recommended changes.
This normally includes costs for reviewing the VE change proposal,
final report writing and project redesign (if required).
Cost Effectiveness
The economy and effectiveness of performing a required
function in terms of life cycle cost.
-------
APPENDIX D
EPA COST-EFFECTIVENESS ANALYSIS
GUIDELINES
-------
COST-EFFECTIVENESS ANALYSIS GUIDELINES
APPENDIX A
COST EFFECTIVENFSS ANALYSIS GUIDELINES
A. Purpose.—These guidelines provide a
b&sic methodology for determining the most
eosUeflectlve waste treatment management
system or the most cost-effective component
part of &ny waste treatment management
system
b. Authority.—The guidelines contained
heroin »re provided pursuant to section 212
(2) (C) of the Federal Water Pollution Con-
trol Act Amendments of 1972 (the Act).
c. Applicability—These guidelines apply
to the development of plans for and the
selection of component parts of a waste
treatment management system for which a
Federal grant Is awarded under 40 CFR,
Part 35.
d. Definitions—Dcftnltlons of terms used
In these guidelines are as follows:
(1) Waste treatment management sys-
tem.—A system used to restore the Integrity
of the Nation's waters. Waste treatment
management system Is used synonymously
with "treatment works" as defined In 40
CFR, Part 35.D05-15.
(2) Cost-effectiveness analy'sis.—An analy-
sis performed to determine which waste
treatment management system or compo-
nent part thereof will result In the minimum
total resources costs over time to meet the
Federal, State or local requirements.
(3) Planning period.—The period over
which a waste treatment management sys-
tem Is evaluated for cost-effectiveness The
planning period commences with the Initial
operation of the system.
(4) Service hie.—The period of time dur-
ing which a component of a waste treat-
ment manager-lent system will be capable of
performing a function.
(5) Useful life —The period of time dur-
ing which a component of a waste treat-
ment management bystem will he required to
perform a function which Is necessary to
the system's ope-at!on.
Title 40—Protection of the Environment
CHAPTER I—ENVIRONMENTAL
PROTECTION AGENCY
SUBCHAPTCR t>—GRANTS
PART 35—STATE AND LOCAL
ASSISTANCE
Appendix A—Cost-Effectiveness Analysis
On July 3, 1973, notice was published
In the FEDERAL REGISTER that the En-
vironmental Protection Agency was pro-
posing guidelines on cost-effectiveness
analysis pursuant to section 212(2) (c) of
the Federal Water Pollution Act Amend-
ments of 1972 (the Act) to be published
as' appendix A to 40 CFR part 35.
Written comments on the proposed
rulcmaking were invited and received
from interested parties. The Environ-
mental Protection Agency has carefully
considered all comments received. No
changes were made in the guidelines as
earlier proposed. All written comments
arc on file with the acency.
Effective date.—These regulations shall
become effective October 10, 1973.
Dated September 4, 1973.
JOHN QUAKI.ES,
Acting Administrator.
e. Identification, selection and screening
of alternatives—(1) Identification of alter-
natives —All feasible alternative waste man-
agement systems shall be Initially Identified.
These alternatives should Include systems
discharging to receiving waters, systems
using land or subsurface disposal techniques,
nnd systems employing the reuse of waste-
water. In Identifying alternatives, the po&sl-
bllitv of staged development of the system
shall be considered.
(2) Screening of alternatives.—The Iden-
tified alternatives khall be systematically
screened to define those capable of meeting
the applicable Federal, State, and local
criteria.
(3) Selection of alternatives.—The
screened alternatives shnll be Initially ana-
lyzed to determine which systems have eoet-
efiectlve potential and which bhould be fully
evaluated according to the cost-effectiveness
analysis procedures established In these
guidelines.
(4) Extent of effort—The extent of effort
and the le\el of sophistication used In the
cost-effectiveness analysis should reflect the
size and Importance of the project.
f. Cost-F.fJcrilvc analysis procedures—(1)
Method of Analysis.—Tlie resources costs
shall be evaluated through the use of oppor-
tunity costs. For those resources that can be
expressed In monetary terms, the Interest
(discount) rate Cbtahlishcd in section (f) (5)
will he used Monetary costs shall be calcu-
lated in terms of present worth values or
equivalent annual values over the planning
period as defined In section (f)(2). Non-
monetary factors (e.g., social and environ-
mental) shall be accounted for descriptively
In the analysis In order to determine their
significance and impact.
-------
24640
The most cost-effective alternative shall be
the waste treatment management system
determined from the analysis to have the
lowest present worth and/or equivalent an-
nual value without overriding adverse non-
monetary costs and to realize at least identi-
cal minimum benefits in terms of applicable
Federal, State, and local standards for ef-
fluent quality, water quality, water reuse
and/or land and subsurface disposal.
(2) Planning period.—The planning period
for the cost-effectiveness analysis shall be 20
years.
(0) Elements of cost.—The costs to be
considered shall include the total values of
the resources attributable to the waste treat-
ment management system or to one of Its
component parts. To determine these values,
:U1 monies necessary for capital construction
costs and operation and maintenance costs
shall be Identified.
Capital construction costs used In a cost-
effectiveness analysis shall Include all con-
tractors' costs of construction including over-
head and profit; coats of land, relocation, and
right-of-way and easement acquisition;
design engineering, field exploration, and en-
gineering services during construction; ad-
ministrative and legal services including
costs of bond sales; startup costs such as op-
erator training; and Interest during con-
struction. Contingency allowances consistent
with the level of complexity and detail of the
cost estimates shall be included.
Annual costs for operation and mainte-
nance (Including routine replacement of
equipment and equipment parts) shall be
Included In the cost-effectiveness analysis.
These costs shall be adequate to ensure ef-
fective and dependable operation during the
planning period for the system. Annual costs
shall be divided between fixed annual costs
and costs which would be dependent on the
annual quantity of wastewater collected and
treated.
(4) Prices.—The various components of
cost shall be calculated on the basis of mar-
ket prices prevailing at the time of the cost-
effectiveness analysis. Inflation of wages and
prices shall not be considered In the analysis.
The implied assumption Is that all prices
involved will tend to change over time by
approximately the same percentage. Thus,
the results of the cost effectiveness analysis
will not be affected by changes In the gen-
eral level of prices.
Exceptions to the foregoing can be made
if their Is Justification lor expecting signifi-
cant changes in the relative prices of certain
items during the planning period. It such
cases are Identified, the expected change In
these prices should be made to reflect their
future relative deviation from the general
price level.
(5) Interest (discount) rate.—A rate of 7
percent per year will be used for the cost-
effectiveness analysis until the promulgation
of the Water Resources Council's "Proposed
Principles and Standards for Planning Water
and Belated Land Resources." After promul-
gation of the above regulation, the rate
established for water resource projects shall
be used for the cost-effectiveness analysis.
(6) Interest during construction.—In cases
where capital expenditures can be expected
to be fairly uniform during the construction
period, Interest during construction may be
calculated as IX y, PXC where:
I=the Interest (discount) rate in Section
f(5).
P=the construction period in years.
C=the total capital expenditures.
In cases when expenditures will not be
uniform, or when the construction period
will be greater than three years. Interest dur-
ing construction shall be calculated on a
year-by-year basis.
(7) Service life.—The service life of treat-
ment works for a cost-effectiveness analysis
shall be as follows:
Land Permanent
Structures 30-50 years
(includes plant buildings,
concrete process tankage,
basins, etc.; sewage collec-
tion and conveyance pipe-
lines; lift station struc-
tures; tunnels; outfalls)
Process equipment 16-30 years
(Includes major process
equipment such as clarifler
mechanism, vacuum filters,
etc.; steel process tankage
and chemical storage facili-
ties; electrical generating
facilities on standby service
only).
Auxiliary equipment 10-15 years
(Includes Instruments and
control facilities; sewage
pumps and electric motors;
mechanical equipment sucb
as compressors, aeration sys-
tems, centrifuges, chlori-
nators, etc.; electrical gen-
erating facilities on regular
service).
Other service life periods will be acceptable
when sufficient Justification can be provided.
Where a system or a component is for
interim service and the anticipated useful
life Is less than the service life, the useful
life shall be substituted for the service life of
the facility in the analysis.
(8) Salvage value.—Land for treatment
works. Including land used as part of the
treatment process or for ultimate disposal of
residues, shall be assumed to have a salvage
value at the end of the planning period equal
to Its prevailing market value at the time of
the analysis. Right-of-way easements shall
be considered to have a salvage value not
greater than the prevailing market value at
the time of the analysis.
Structures will be assumed to have a
salvage value it there is a use for such struc-
tures at the end of the planning period. In
this case, salvage value shall be estimated
using straightline depreciation during the
service life of the treatment works.
For phased additions of process equipment
and auxiliary equipment, salvage value at the
end of the planning period may be estimated
under the same conditions and on the same
basis as described above for structures.
When the anticipated useful life of a facil-
ity Is less than 20 years (for analysis of in-
terim facilities), salvage value can be claimed
for equipment where it can be clearly dem-
onstrated that a specific market or reuse
opportunity will exist.
[FR Doc.73-19104 Piled 9-7-73;8:45 am]
.S. GOVERNMENT PRINTING OFFICE: 1980-0-677-094/1 133
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