Feasibility studies, initial financial appraisals, town planning and development appraisal

This article focuses on the optional competency Project Evaluation (T066). The competency covers a wide range of issues in relation to projects, including feasibility studies, initial financial appraisals, town planning and development appraisals. If you go for this option then you'll be expected to have a reasonable level of knowledge to level 2. As this competency covers a number of issues, it's common to get asked specific questions in relation to project evaluation. So we're going to focus on one of those issues – value engineering and the type of questions that an APC assessor could potentially ask you.These span what is it; what is its purpose; what are the techniques etc. Value engineering is an issue that quantity surveyors deal with regularly and therefore you will be expected to understand and respond in a reasonable level of detail.

Level 1

Competency at Level 1 is generally focussed on having a knowledge and understanding of the competency – ‘knowing’.

In the final assessment, you might not be asked about value engineering directly. It is more common that candidates will be asked about a recent project they have been involved in where the cost plan or tender prices came in significantly in excess of the budget. As this discussion develops, you may get asked a question such as:

Question So the cost plan was significantly over budget, what techniques did you recommend to the client in order to review and test this?

Answer One of the issues you would be expected to highlight in your answer would be the consideration of value engineering strategies in order review the design, specification and cost currently on the table and consider areas where cost can be reduced without sacrificing quality or completely compromising the design concept.

You should then be prepared for a follow up question along the lines of:

Question Can you clarify what the difference between Value Engineering and Value Management is?

Answer It is often not appreciated that there is a difference between value engineering and value management.

Value Engineering looks at how you generate better value out of a specific process such as a building. For example can you redesign the foundations so that less concrete and reinforcement is used but the new solution still supports the building in the same way? Alternatively, can we use a different roof tile, which still provides the same quality, look and style but is cheaper? Also remember that this is a process the project team adopt and own – it is not something the QS does in isolation.

Value Management looks at issues at a higher level – it considers the process and procedures involved in an industry and considers how to do it better and more cost effectively to generate better value. For example is an entire function out sourced or dealt with internally? Can a particular function in a client organisation be re-engineered to provide better value (e.g. the baggage handling procedure in an airport, or the way mail is sorted at a sorting office)?

Level 2

As we have previously identified competency at level 2 is generally focussed on having an application of knowledge and understanding – ‘doing’.

From a quantity surveying perspective this means demonstrating a working knowledge of value engineering procedures. Taking the level 1 questions a little further to level 2 candidates may well be asked questions along the following lines:

Question How did you actually set about value engineering this project that was over budget? What issues did you take account of?

Answer Here you will need to describe the value engineering process that the project team adopted:

• Structured approach managed by one person

• Involvement of the whole project team including the client

• Involvement from relevant stakeholders

• Managed workshops

• Defined agenda highlighting the issues to focus on

• Encourage question and challenge

• Clear defined ownership of actions along with dates for completion (not everything will be resolved at the workshop)

• Risks indentified in parallel to the value engineering solutions

• Clear presentation of solutions and risks

• Buy in from client to proposed solutions

You may also want to identify some specific examples of where successful value engineering has been applied.

In addition to this you should also be aware that life cycle cost information is also relevant and should be considered as part of the process.

Question What are the benefits of value engineering?

Answer There are a number of benefits for both the client and the project team. These include:

• Clarification of the brief separating needs from wants

• Improved performance through efficiency savings

• Identification of alternative designs, solutions or locations

• Identification of alternative construction methods

• Empowered staff through multi-disciplinary teamwork

• Enhanced service / product quality

• Identification of risk

• Identification of additional functions that improve the outcomes of the project

• Improved staff morale, commitment and relationships

• Rationalisation of the project programme.

Question What are the risks associated with value engineering?

Answer There are a number of risk for both the client and the project team that need to be considered and minimised. These include:

• The exercise is undertaken too late for changes to be effective

• Inadequate information causing incorrect assumptions

• Insufficient participation by stakeholders

• Insufficient time allocated for the process

• Inadequate support by senior management

• Unskilled facilitator using improper application of the methodology.