Multi-Level Performance Measurement for Value Engineering of Large-Scale Construction Projects

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1 Multi-Level Performance Measurement for Value Engineering of Large-Scale Construction Projects Jong-Kwon Lim (CEO/Ph.D./CVS) Heung-Min Park (CVS) Sung-Hun Kim Infra Asset Management Inc. Ltd.

2 Contents Introduction Multi-Level Performance Measurement Case Study Conclusions

3 Introduction

4 KOREA VE History External Growth Oriented Introducing VE at Construction Stage for only Construction Firms 1970~ Public Works Efficiency Policy Announced for VE Seongsu Grand Bridge Collapsed Sampung Department Store Collapsed

5 KOREA VE History VE Study Required By Korea Construction, Technology & Management Law VE Review base - All Public Construction Projects More than 50 Billion Won(5,000 Million $) - Based on Structurally Important Projects : Class # 1 & VE Study Projects Expanded (50 10billion $) - All Projects More than 10 Billion $ - Eliminating Class # 1&2

6 KOREA VE History SKVE (Society of Korean Value Engineers) Founded KCVE (Korea Construction Value Engineering Research Institute) Founded KLC/KRNA/Seoul City/Pusan City Newly Introducing VE Process Research Project for Efficiency of Construction VE Revision of VE Acts

7 Challenging Issues - Results Focusing on Cost Reduction Decreasing Performance Sacrificing User Needs and Demands Functions Poor Communication Poor Satisfaction of Clients and Stakeholders Poor Implementation

8 Challenging Issues - Reasons Lack of Knowledge of VE Concept Without VE Workshop A Kind of Design Review Wanting Cost Reduction Focusing on Superficial ROI

9 IAM Effort Research Projects Relating to LCC for VE of Clients KEC & KOWACO Invited Seminar supported by KICEM Awards by KOWACO & KEC

10 Muti-Level Performance Measurement

11 Backgrounds Characteristics of Korean Clients & Engineers Qualitative Quantitative VE Service for DB Project Simple Measurement Detailed Measurement Better Communication and Decision Subjective Objective Use Muti-Level Performance Measurement

12 Definition & Purpose Existing Attr. 1 Performance Attribute Attr. 2 Attr. 3 Attr. n n = 7~9 Evaluation for Complex, Large Scale Project isn t Objective but Subjective

13 Definition & Purpose Performance Attribute Attr. 1 Attr. 2 Attr. 3 Attr. n Proposed Detailed Attr. 2-1 Detailed Attr. 2-2 Detailed Attr. 2-3 More Detailed Performance Evaluation & Objective Assessment for Large Scale Project Sub Project 1 Sub Project 2 Sub Project 3 20~30 Performance Attribute

14 Process Pre-Study Preparing Draft of Performance Attribute(P.A.) Study Information 1st Level 2nd Level Attr. Weight Attr. Weight p-01 (B1) P-01 (A) p-02 (B2) p-03 (B3) : : : : Review Original Design Concept Modify P.A. Brainstorm P.A. Set up P.A. of Level 1 & 2 Determine Weight for Each Attribute Divide Major Sub-Projects Allocate Contribution to Each Major Sub-Project

15 Process Example) Important Index ( 0 ~ 5 ) 0 : No Effect 1 : not Important 2 : not Much Important 3 : Important 4 : Very Important 5 : Most Important 1st Level (Caltrans) Attr. Weight Attr. Weight P-01 (A) 2nd Level (Detailed) Important Index Weight Important Index Weight p-1.1 (B1) (C1) (D1) (E1) (F1) p-1.2 (B2) (C2) (D2) (E2) (F2) p-1.3 (B3) (C3) (D3) (E3) (F3) : : : : : : : : 7~9 Items 20 ~ 30 Items Sub Project-1 Sub Project-2 A, B is Calculated by Value Matrix(Caltrans & WSDOT)

16 Process Example) Important Index ( 0 ~ 5 ) 0 : No Effect 1 : not Important 2 : not Much Important 3 : Important 4 : Very Important 5 : Most Important 1st Level (Caltrans) Attr. Weight Attr. Weight P-01 (A) 2nd Level (Detailed) Sub Project-1 Important Index Weight Important Index Weight p-1.1 (B1) (C1) (D1) (E1) (F1) p-1.2 (B2) (C2) (D2) (E2) (F2) p-1.3 (B3) (C3) (D3) (E3) (F3) : : : : : : : : 7~9 Items 20 ~ 30 Items D1 = A*C1/sum(C) Sub Project-2 D, F is Calculated by Distribution of A, Considering C, E

17 Function Derive Upper Functions For Each P.A. Evaluate Functions Focusing on Performance Speculation Evaluation Development Presentation Implement Evaluate Ideas at 1st Level Quantify More Objective Performance Change Between Original Concept and Alternative Concept Discuss Evaluated Detailed Performance Change with Stakeholders Sell Alternative

18 Comparison Caltrans Value Analysis Report Guide TOTAL % A : Design & Construction Schedule b c a/d e B : Performance on Vasco b/c b b C : Performance on Freeway c c D : Right-of-Way / Access E : Maintenance d

19 Comparison Caltrans Value Analysis Report Guide <Performance Attribute Weight> P P P-02 Simple, Efficient! But Little Bit Subjective! P-04 P-03

20 Comparison Muti-Level Performance Measurement TOTAL % A : Design & Construction Schedule b c a/d e B : Performance on Vasco b/c b b C : Performance on Freeway c c D : Right-of-Way / Access E : Maintenance Divide These Attributes d

21 Comparison Muti-Level Performance Measurement <Performance Detailed Attribute Weight> p-5.1 p-4.2 p-4.1 p-5.3 p-5.2 p p-1.2 p p-2.2 p-2.3 p-2.4 Detail Assessment of Original & Different Weight by Sub Projects p-3.5 p-3.4 p-3.3 p-3.1 p-3.2 p-2.5

22 Consist of Attribute Project Sub 1 Sub 2 Sub 3 1st-Level 2nd-Level 3rd-Level

23 Case Study

24 Resent VE Experiences Project Name Cost (Billion Won) ROI VE Study Timing Ho-Nam High Speed Railroad 5, Preliminary 50% Gunnam Flood Control Dam Preliminary 50% Housing Land Development in Songpa Preliminary 70% Housing Land Development in Namyangju Preliminary 90% Sungnam Filtration Plant Detailed 50% Hwasung Industrial Water Tubing Detailed 50% Existing Road Relocation for Hwabuk Dam Detailed 50% Janghang Sewage Disposal Plant Detailed 50%

25 R.O.I. for VE Study Timing (%) 0 Preliminary Design Detailed Design

26 R.O.I. for Construction Cost Preliminary Design Detailed Design (Billion won)

27 Ho-Nam High Speed Railway Construction Projects Project Summary Length : km Project Cost : 6,137 Billion won VE Workshop 8~11. Oct. 2007, 4days Major VE Target Vertical Alignment Ho-Nam KTX (Daejon-Mokpo) Existing Seoul-Busan KTX

28 Ho-Nam High Speed Railway Construction Projects Derive Performance Attributes 8 1st-Level Items Derived 29 2st-Level Items Derived Rank Using Caltrans 10 Ranking Points

29 VE Process Information Function Preparation Development Implementation Presentation Speculation & Evaluation

30 Performance Attribute Tree Project Convenience of Operational Safety Constructability Environment-Friendly Maintenance Convenience of Users Landscape / Beauty Connection with High Plan p-1.1 p-1.2 p-1.3 p-1.4 p-1.5 p-2.1 p-2.2 p-2.3 p-3.1 p-3.2 p-3.3 p-3.4 p-3.5 p-3.6 p-3.7 p-4.1 p-4.2 p-4.3 p-5.1 p-5.2 p-5.3 p-6.1 p-6.2 p-6.3 p-7.1 p-7.2 p-7.3 p-8.1 p-8.2

31 Performance Attribute Tree Project Convenience of Operational Safety Constructability Environment-Friendly Maintenance Convenience of Users Landscape / Beauty Connection with High Plan Minimizing Construction Period Optimum Ground Volume Minimizing a Civil Appeal Constructability of a Field of Work Accessibility of Work Field Approach to a field of Work Optimizing Construct Method

32 Performance Attribute Weight 19 P P-02 8 P P P P-06 6 P-07 3 P-08 < Project > 1st Level 2nd Level

33 Define Sub-Projects Sub-Project-1 (L=39.64km) Sub-Project-2 (L=32.13km) Sub-Project-3 (L=31.40km) Sub-Project-4 (L=32.70km) Sub-Project-5 (L=40.45km) Sub-Project-6 (L=48.74km)

34 Performance Attribute Weight for Sub Projects P st Level Attr. Sub-01 Sub-02 Sub-03 Sub-04 Sub-05 Sub-06 p p p p p Sum : : : : : : :

35 Performance Attribute Weight < Sub Project - 02 > P P P-03 8 P P P P-07 6 P st Level nd Level : This Detailed Attribute Weight is Calculated by their Important Index

36 Performance Attribute Weight < Sub Project - 02 > P P P-03 8 P P P P-07 6 P st Level nd Level : These Detailed Attributes doesn t Affects Sub Project 02.

37 Assess Performance of Original Concept Rank Based Contribution-Based

38 Possibility of Performance Predicting Improvement Original vs Perfect P perfect -P original

39 Assess Performance Rank Based Contribution-Based

40 VE Conclusion Ho-Nam High Speed Railway Construction Projects Performance : 6.1% Improvement Cost(LCC) : Reduce Billion won (3.8% Reduction) Value : 10.3% Improvement

41 Ho-Nam High Speed Railway Construction Projects Summary

42 Conclusions

43 Performance Measurement Methodology Required Additional Time Existing Proposal - Not Additional Number of P.A. 7~9 20~30 Quantification Subjective Objective Precision Performance May be Overestimated Performance Could be Rationally Estimated Communication Not Bad Excellent Satisfaction Not Bad Very Satisfied Decision Difficult for Engineers Not Easy for Value Facilitator Easy for Engineers Very Easy for Value Facilitator

44 Conclusions More Objective Performance Evaluation is Essential for More Efficient VE. Proposed Performance Measurement Approach is Very Useful for Large Scale Construction Project. Better Communication with Clients, Stakeholders. Proposed Method is Very Efficient for Rapid Decision During VE Workshop and Implementation

A WEB-BASED VE SUPPORTING SYSTEM FOR VE FACILITATOR AND MEMBERS IN VE WORKSHOP

Page 1 A WEB-BASED VE SUPPORTING SYSTEM FOR VE FACILITATOR AND MEMBERS IN VE WORKSHOP Heungmin PARK, CVS, IAM corporation (whcool@hanmail.net) Coauthor: Jong-Kwon LIM, CVS, Ph D., IAM corporation Coauthor: