Value Engineering Evaluation Method for Sustainable ...

Wao, J.O. (2017). Value engineering evaluation method for sustainable construction. ASCE: Architecture Engineering Institute, Oklahoma, April 11-13, 2017, pp.1091-1102 http://dx.doi.org/10.1061/9780784480502.091

Value Engineering Evaluation Method for Sustainable Construction Joel Ochieng’ Wao, PhD, AVS, ENV SP, MQSi, A.M. ASCE1 1

Department of Construction Science and Management, Tuskegee University, 1200 W. Montgomery Rd, Tuskegee, Alabama-36088; PH (352)363-4066; FAX (334)7244198; email: [email protected] ABSTRACT Value engineering (VE) methodology can be a decision-making tool used to provide value to project owners by improving cost, quality and performance of systems. VE process mainly involves function analysis, creativity, and evaluation of systems to select the best system from a list of alternatives. Employing suitable evaluation method can be challenging especially when better sustainability outcome is the main goal. In evaluation, VE may utilize certain multi-criteria decision-making methods such as weighted-analysis method. However, some problems may arise. This research analyzed the value methodology and the use of weighted-analysis method in the evaluation phase of the conventional VE process was found to be limiting relative to sustainable design and construction. Specifically, the research aim was to refocus the conventional VE process to improve building sustainability outcomes. Choosing by Advantages (CBA) method was proposed to address the limitation. Both the conventional VE using weighted-analysis method and the alternative VE method utilizing CBA method were examined using a case study building. Masters students prepared VE final reports using the two methods that were then evaluated by faculty sustainability experts who rated the contribution of each of the recommended systems to building sustainability. SAS v.9.4 was used to analyze the data. The hypothesis was that the alternative approach would provide better building sustainability outcomes. The results showed CBA to be superior to weighted-analysis method and could be a valuable inclusion in the VE methodology to deliver better sustainable buildings. Keywords: Choosing by Advantages, Evaluation, Multi-Criteria Decision Methods, Sustainable Construction, Value Engineering, Weighted-Analysis Method INTRODUCTION Sustainable construction implies the application of sustainable development principles in the built environment. This involves using resources efficiently, incorporating ecological principles, focusing on improving the quality of the environment, and considering the economic constraints and socio-cultural issues (Kibert 2016; Wao 2014; Hajek 2002). Sustainable construction and development must achieve project economic success while protecting the ecological systems and providing better quality of life for users. In buildings, such include practices that increase the efficiency by which buildings use water, energy, and materials and can protect and restore human health and environmental quality over the life cycle of buildings (Wao et al. 2016). 1


The main goal is to meet the needs of the present people without endangering the ability of the future generation to meet their own needs. Incorporating and achieving sustainability goals in building (and infrastructure) projects can be challenging especially when sustainability assessment tools such as Envision, Green Globes, Green Mark, Building Research Establishment Environmental Assessment Method (BREEAM), Leadership in Energy and Environmental Design (LEED), and German Sustainable Building Certification (DGNB) are used to measure the level of sustainability. The assessment process can be costly, stakeholders may not be familiar with the process, and the outcome may not be economically feasible from the project owner’s standpoint. Nevertheless, the end benefits should improve building life cycle performance in energy use, indoor quality, occupants’ comfort and productivity. Even though the benefits tied to building sustainability may be profound, owners might hesitate to integrate sustainability strategies because of increased first cost. Research show that the key barriers to sustainable construction among project owners are linked to initial cost since most believe that sustainability principles add to the initial costs compared to ordinary buildings (Karunasena and Ruthnayake 2016; Wao et al. 2016; Castillo and Chung 2005). Researchers differ vastly on the issue of first cost. Castillo and Chung (2005) believe that integrating sustainability goals in building projects might increase initial costs by 2-7% over ordinary building costs; Morris (2007) find a 30% increase in total building cost while Bartlett and Howard (2000) state that the negative perceptions on initial costs are about the challenges in engaging sustainability principles. These research outcomes show major cost impacts that may make project owners hesitant to pursue sustainability goals. In spite of increased first cost, integrating sustainability principles in projects can have positive and significant effect in addition to reducing life cycle costs (Wao et al. 2016). Desire to reduce cost and mitigating building environmental issues pose the need for a robust decision support system that can improve building sustainability outcomes. However, achieving the needed sustainability outcomes can be challenging because the effort requires sufficient resource allocation and robust evaluation tool. This may entail selecting the best system from a list of alternatives that will achieve the best performance and quality standard as defined by sustainability principles. Value engineering (VE) is a potential tool that can be used to achieve better building sustainability outcomes since it focuses on the performance and quality improvements as well as cost savings. The current VE process lacks this capability especially when the goal is to deliver a high performing, resilient, secure and sustainable project. VE process is a systematic, strategic, and function-oriented tool that employs multidisciplinary team of professionals working in organized workshop to provide value by improving the quality and performance of systems, projects or services at the lowest life cycle cost. Launched in 1947 at General Electric to address scarcities of strategic materials required to produce items during World War II, Lawrence Miles with the idea of value developed function analysis concept, later called value analysis or value engineering (VA/VE). He upheld that items should be bought for what they could do best (Wao et al. 2016; Miles 1947). A group of VE practitioners formed the Society of American Value Engineers (SAVE) in 1959 with the aim of furthering VE 2


principles. Its growth had it opened up for the international forum hence the formation of SAVE-International in 1996 (Wao et al. 2016). VE is now applied in projects that are large, costly, repetitive and those that may require design changes (Wao 2014). Recent research has proposed the inclusion of sustainability principles in VE with the aim of removing unnecessary costs and improving the performance and quality of systems (Wao et al. 2016; Karunasena and Ruthnayake 2016). Their idea is that if VE can be used to select the most preferred system, then it can be used to arrive at better sustainable solutions. Thus, Rachwan et al. (2016) concluded that VE could influence project life cycle costs (LCC), quality, environment and trends in green construction. However, analysis of the current or conventional VE methodology show limitations in some VE phases, especially when improving sustainability outcomes is a goal (SAVE International 2015; ASTM E1699-14). Therefore, the purpose of this research was to refocus the conventional VE process to improve building sustainability outcomes. The objectives were to identify the limitations in the VE evaluation phase and finding ways for redress. The guiding standards reviewed were the SAVE-International job plan and the American Society for Testing and Materials (ASTM) standard E1699-14, also known as the Standard Practice for Performing Value Engineering (VE)/Value Analysis (VA) of Projects, Products and Processes. The evaluation phase is a key part of the VE job plan and so this study focused on it relative to sustainable building design and construction. LITERATURE REVIEW Multi-Criteria Decision Methods (MCDM) in the Value Engineering Process Success of VE exercise depends on good analysis of functions of systems and engaging teams that have good rapport with each other to develop viable solutions. The team must employ concerted effort in evaluating systems to select best solutions from a list of options. Usually, the team lists the evaluation criteria consisting of advantages and disadvantages of each alternative then rank them. Ideally, the evaluation phase is critical since the selected option will be part of the project. This means a sound decision-making or support system is required for use to select solutions that meet project requirements. Different people may have varied ideas about decision support system (DSS). Ideally, DSS is an interactive method that aids users in their judgment and selection. It informs the decision-making process by assisting users to know the significance of different decisions they make (Wao 2014). Green building decisions may require sound DSS since they involve multiple criteria and significant tradeoffs between short term and long-term pay-offs that may require life cycle analysis (LCA). This may incorporate value elicitation to assign quantifiable values on qualitative features such as educational value or environmental impact that links with the principles of sustainable construction (Wao 2014). Consideration for DSS include the relative advantages associated with them, cultural compatibility, ease of understanding, and observeability of results and outcomes (Wao 2014). The DSS to support green building implementation must evolve as well as realize success in achieving sustainability goals across the projects 3


and those adopting it. Overall, DSS must be created that allows quick and effective evaluation of different options to arrive at investment decisions that allow meeting the goals. These DSS include Multi-Criteria Decision-making Methods (MCDM). In green projects, owners may employ MCDM to select systems to achieve value. Many variations have similarities and include Goal Programming (GP), Utility Theory (UT), Weighted Analysis Method (WAM), and Analytical Hierarchy Process (AHP). GP focuses on finding valuable, realistic and feasible solution. It differs from other conventional methods of optimization by its adherence to ‘satisficing’ principle rather than optimizing (Wao 2014; Hassan and Loon 2012). UT assumes that the goal of the decision making team is to maximize utility or value function that depends on specific criteria. Its strength is its ability to capture risks (uncertainties) in the decision-making process (Wao 2014; Chastian 2010). WAM is based on the premise that the score of an alternative is equal to the sum of the performance of an alternative under each criterion multiplied by the relative weight assigned to that criterion (Sarika 2012). AHP gives a framework to structure decision problems by representing and quantifying elements, relating those elements to overall goals, and evaluating alternative solutions (Wao 2014; Saaty 1994). It starts by developing alternative options, specifications of values and criteria, and concludes with evaluation and recommendation of options (Farkas 2010; Triantaphyllou and Mann 1995). The structure consists of three levels. Goals are set at the top level, followed by criteria at the second level, and alternatives at the third level as shown in Figure 1. Goal / Recommendations

Criteria/values

Criteria/values

Alternatives

- ------1st level (top level) Criteria/values ---2nd level

Alternatives

-------3rd level

Figure 1. The structure of analytical hierarchy process (Wao 2014). Overall, the MCDM use pair-wise comparison of criteria method in addition to weighting, rating and calculating (WRC) method to arrive at optimal solutions. Conventional VE process may use one of these MCDM methods in the evaluation phase of the VE exercise. Usually, weighted analysis method is used in most projects because of its ease of use compared to other methods (Wao 2014; Adams 2004). Value Engineering and Sustainable Construction Sustainability concepts can be included in the VE process to attract clients by removing unnecessary costs in projects (Karunasena and Ruthnayake 2016). This process can link with SAVE International’s VE methodology and techniques that improve planning for sustainability during preconstruction and construction stages 4


(Wao et al. 2016). The main goal is to identify avenues to optimize life cycle costs without compromising the functions and sustainability goals of specific systems. Including sustainability principles in a project and the VE tool depends on the interest and commitment of the project owner and the knowledge of the VE team. The green features need to motivate the owners to pursue sustainability goals (Wao 2014). Motivation would drive the team to initiate better VE ideas. Effectiveness of the whole process requires early introduction of sustainability principles in the project and maintain its focus throughout the decision-making and execution phases of the project (Wao et al. 2016). The DSS for sustainability must develop to the extent of realizing overall success in sustainable construction. In light of this, Wao et al. (2016) and Karunasena and Ruthnayake (2016) proposed VE framework to guide practitioners in achieving better sustainable construction outcomes. Their processes could reduce LCC but they lack tangible evaluation approach to realize better outcomes. A new VE process is needed to achieve value in sustainable buildings. Limitations in the VE Evaluation Phase for Sustainable Construction Conventional VE based on ASTM E1699-14 and SAVE-International job plan has some characteristics that may hinder it from achieving sustainability goals. MCDM also have these characteristics. Thus, the weighted analysis method usually used in VE might be limited in achieving sustainability goals. The limitations are:  



Use of pair-wise comparison to determine relative importance of each alternative: Using pair-wise comparison of criteria to select the best system usually operates on abstract terms that may not yield sound outcomes. Abstract allocation of weights to criteria: The conventional VE relies on abstractions. In pair-wise comparison of criteria from quality model, it awards positive value to a criterion that has positive preference and zero (0) to one with negative preference. Further, where the difference between two criteria is zero (0), it assumes equal preference and awards one (1) or equal rating for both. Interpreted differently, when two criteria are compared it awards a zero (0) when the result after the pair-wise comparison is a negative value and one (1) when the summation of weights equal to zero. These abstractions require the team to fill in the gaps caused by missing information to arrive at decisions. Such decisions are unanchored and not based on relevant facts. Using advantages and disadvantages to rank alternatives: Evaluating the alternatives considers both the advantages and disadvantages. This can be incorrect as an advantage of one alternative may be a disadvantage of another alternative (Wao 2015; Wao 2014; Adams 2004). This can introduce double or multiple counting of advantages leading to errors in evaluation and outcome.

Approach to Counter the Limitation in the Evaluation Phase The limitations in the conventional VE method (ASTM E1699-14 section 7.3.4) can be improved by introducing a decision support system that is sound rather than the 5


unsound types of the MCDM. Choosing by Advantages (CBA) decision method can be the method to steer the VE team to achieve the required building sustainability goals. CBA is based on the premise that decisions must be made based on relevant facts and that only ‘advantages’, and not both ‘advantages and disadvantages’, are to be used during the evaluation process (Suhr 2009). This is because a disadvantage of one alternative is likely to be an advantage of another alternative in the same evaluation plan and vice versa. So listing both advantages and disadvantages or pros and cons may lead to an unsound decision outcome that is characterized by double or multiple counting of factors, omissions, distortions, and confusion. Specifically, CBA is based on the premise of comparing system’s alternatives based on the importance of advantages of alternatives. Additionally, CBA requires decision makers to continue learning and skillfully use sound methods of decision-making. However, CBA does not recognize the use of Weighting, Rating and Calculating (WRC) principle of MCDM such as conventional VE method that focus on using abstract terms, abstract allocation of weights to criteria, pair-wise comparisons of criteria, and use of both advantages and disadvantages in evaluating alternatives. This is because it considers these approaches unsound methods. Having CBA in the VE evaluation phase will enhance project outcome. The VE team will engage in evaluating alternatives using a method that incorporates both quantitative and qualitative factors in the decision process. Sound decisions made will provide the value that manifest in cost, performance and quality improvements. Thus, the project owner can obtain the best value (or outcome) for the lowest economic investment over the life of a project using sound VE approach. A research method is stated to validate this viewpoint. RESEARCH METHODS Aim, Objectives and Hypothesis The aim of this research was to refocus the conventional VE process to improve building sustainability outcomes. The objectives were to 1) identify the limitations in the evaluation phase and find amends, 2) assess the effect of the new VE method to sustainability. The hypothesis was that the new method would provide better building sustainability outcomes. The significance of the study was to provide project owners and practitioners with a value focused tool to improve evaluation process of the VE methodology. The VE methods were evaluated with case study. Case Study Part I A sustainable building in the construction stage (about 90% complete) in the state of Florida was used as case study. The $45 million 120,000 square feet building project was aiming at LEED Platinum Plus accreditation, i.e., a level higher than LEED Platinum. Construction management graduate level VE course students analyzed the building to provide value to the owner and prepared VE final reports comprising of 6


recommended systems. Faculty sustainability experts evaluated these reports on their ability to meet sustainability goals as set by LEED rating criteria. Students made field trips to the project to assess the building, hold discussions with the project owner or owner’s representatives, and determine the performance (or owner) requirements. The performance requirements were:    

Durability: Meeting the goal of materials lasting more than 50 years. Building image and marketing: LEED Platinum Plus certification aided in donor appeal. Energy performance: Meeting the requirements of energy efficient buildings. Carbon neutrality: Meeting the goal of becoming carbon neutral by year 2030.

Research experimental design and sample size. Students were grouped into four teams that were then randomly assigned in two VE methods of two teams each. Students who had LEED certifications (mainly LEED GA and LEED AP) led these teams. Three to four students were in each team as shown in Table 1. Table 1. Summary of research design involving VE students (N = 13). Method 1 Method 2 Team 1A Team 2A Team 1B Team 2B Total = 6 students Total = 7 students The methods employed in the study were as follows:  

Method 1 (Control VE method): Teams employed the conventional VE method that entailed developing quality model, pair-wise comparisons of criteria, and weighting, rating, and calculating method in evaluating systems. Method 2 (Alternative VE method): Teams used CBA in the evaluation of systems.

Students team training and analysis of building systems. Teams 1A and 1B did not receive training because they were the control group. Teams 2A and 2B received training in using CBA method. All teams conducted value analysis of the systems, prepared the VE final reports and presented their findings and recommendations. The reports were then analyzed. This was to find similar recommended systems developed with sustainability goals and to determine the level of sustainability achieved. Case Study Part II Faculty experts in sustainable design and construction (N = 4) provided their independent evaluation of the VE reports. They had to be experienced in the working of LEED rating system to evaluate the reports using the three LEED credit categories of energy and atmosphere, materials and resources, and indoor environmental quality. These categories were considered because of their abilities to gather more LEED 7


points towards sustainable building certification. A modified rating scale was established to assist in documenting the contribution of each system to sustainability. The rating scale was: somewhat fair contribution = 1, fair contribution = 2, good contribution = 3, very good contribution = 4 and excellent contribution = 5. This rating provided the data to assess the effectiveness of the two VE methods in attaining better sustainability outcomes. The data was analyzed statistically using SAS v.9.4. Data Analysis and Potential Assumptions Data analysis involved descriptive statistics, Analysis of Variance (ANOVA), and pooled t-test. The average measures were quantified using descriptive statistics. Oneway ANOVA utilizing Duncan’s Multiple Comparisons Test was conducted at p = 0.05 to find the level of statistical significant difference between the VE methods. The interpretation of p-value is to reject the null hypothesis if p < 0.05 suggesting a statistically significant difference in the statement or fail to reject the null hypothesis if p > 0.05 signifying scarce evidence to reject the null hypothesis. Further test with pooled t-test would follow if the result between the methods is significantly different. Assumptions underlying univariate statistical procedures were considered. RESULTS Faculty Evaluation of the VE Reports VE reports showed some similar systems developed. These were curtain walls, Heating Ventilating and Air Conditioning (HVAC), plumbing, lighting, window, flooring, and ceiling systems. Of the possible LEED credit categories under LEED v.4, energy and atmosphere, materials and resources, and indoor environmental quality were in focus. Results are shown in Tables 2, 3 and 4. Descriptive Statistics of the Recommended Building Systems Table 2. Summary of the ratings of the contribution of systems to sustainability Method 1 Method 2 Category N Mean Std. N Mean Std. Energy and Atmosphere(EA) 20 2.05 1.00 24 3.96 1.00 Materials and Resources (M&R) 18 2.17 0.86 23 2.65 1.19 Indoor Environmental Quality (IEQ) 16 2.19 0.75 22 2.50 1.19 On average, method 2 teams developed systems with relatively better contribution to EA credit (M = 3.96, SD = 1.00), MR credit (M = 2.65, SD = 1.19), and IEQ credit (M = 2.50, SD = 1.19) compared to method 1. It can be deduced from Table 2 that VE method 2 could be better than method 1. Figure 2 summarizes the results with graphical distribution and box plots of the EA credit rating for method 1 and 2. The box plots show outliers while the distribution shows the dispersion and skewness of the ratings. 8


Figure 2. Distribution of Energy and Atmosphere (EA) LEED credit rating. Analysis of Variance and t-test of the Ratings Table 3 shows statistical significance for EA credit, [F (1, 42) = 39.81, p