A key objective in effective management of our resources is to obtain the maximum return for an investment. This definition holds for small and 1arge projects and perhaps anything we attempt. One of the means of achieving this objectives by reducing and controlling costs.
In small project management. however, control of costs are often neglected and the results in many cases are significant overruns. In addition many of the cost reduction techniques are never applied.
This paper discusses two areas of small project cost control in which we have been devoting considerable effort and feel we have made some achievements. The first of these is in the cost reduction area and is used during the very early stages of a project. It is commonly referred to as Value Engineering. The second has to do with project control during definitive and detailed project design. It is in the area of contract administration.
We believe that because of these factors uniform Procedures for the administration of contracts as well as documentation during the life of the project are basic concerns if quality, schedule control, cost control and safety are to be maintained within corporate requirements.
Any new project regardless of size is an exceptional opportunity to economize. It is a chance to start fresh, build from experience, rectify old mistakes, uti1ize the 1atest technology and break away from stagnating traditions. One of the ways we have been striving to achieve all of these is through Value Engineering.
According to Riggs, Value Engineering is defined as "The search for and selection of new means to reduce cost and improve value during the design phase".
Briefly it is a procedure of deliberately searching out an unnecessary high cost item or facility component, identifying the function of that item, establishing a value for the function (worth as opposed to what it costs), brainstorming the problem to list and explore all conceivable alternative methods of performing the function, and then deciding which alternative will perform the required function at the least cost. The basic steps of Value are illustrated in figure #1.
The procedure forces us to look at what we are trying to do and why – forgetting about the ways we achieved it in the past. Is there a cheaper and faster way to achieve the put-pose or function as distinct from modifying or changing a design especially in these particular circumstances. What are the purposes of the components of a particular facility? This is different from just taking an old design and trying to refine it and make it cheaper.
The value of anything can be no more than the value of the function it performs. Unnecessary costs disappear when there is a less expensive method that performs the same functions without downgrading functional capability.
Value Engineering requires a team approach composed of all the major disciplines involved in the project being studied. This opens many areas for discussion and forces a coordinated end result.