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					                                     High Level Meeting on the Future of Cohesion Policy
                                             31 March – 1 April 2011, Budapest, Hungary




                          Value for Europe
  Improved cost efficiency and effectiveness

                                    Value Engineering


                                                                        Árpád Fodor
                                                      Certified Value Specialist-Life,
Value for Europe                                 Professional in Value Management
The European Governing Board
of the Value Management
Training and Certification System
Goals of Presentation


 1   Highlight the Importance of Value Engineering

 2   Regulation of Value Engineering

 3   Prevent Unnecessary Expenditures of € Billions / Years




                                        Value for Europe                    2
                                        The European Governing Board
                                        of the Value Management
                                        Training and Certification System
Agenda


1 Value Engineering Approach Through Examples and Results

2 Value Engineering in Hungary and Europe

3 Next Steps




                                      Value for Europe                    3
                                      The European Governing Board
                                      of the Value Management
                                      Training and Certification System
Agenda


1 Value Engineering Approach Through Examples and Results

2 Value Engineering in Hungary and Europe

3 Next Steps




                                      Value for Europe                    4
                                      The European Governing Board
                                      of the Value Management
                                      Training and Certification System
‘Functional Thinking’



   Focus on the
 function and not
on existing solution



                        5
We capitalise the functions!




                               6
Paks Nuclear Power Plant – Water Recuperation power plant




                                                        7
Paks Nuclear Power Plant – Water Recuperation power plant




                                                        8
Paks NPP - Water Recuperation power plant – Original idea




                                               €24 million




                                                             9
Paks NPP - Value Engineering proposal




                                        10
Paks NPP - Value Engineering proposal (cont)




                                               11
Paks NPP - Visualisation – November 2009




                 Result of Value Engineering:
  Cost savings of €3.5 million and the project has commenced
                                                               12
The visit of Pope John Paul II in Hungary – Gyõr, 1996




    Parameters: 150-200,000 believers, 15,000 cars,
         3,000 buses, 1 night and a half day

         Original cost (before VE): €1.6 million
                                                         13
 The visit of Pope John Paul II in Hungary – Gyõr, 1996

                        What are the functions?

Provide area – €0.4 million
Parking (bus, car)
Provide podium – €0.1 million
Illuminate area – €0.3 million
Coordinate traffic
….
….




12 VE Proposal – Total cost savings: €1.4 million (87%)
                                                          14
Motorway - Planning permission




        Dual 2-lane motorway + emergency lane
                  60 km, €357 million



                                                15
Motorway - Planning permission
K11 Canal Track – Original Idea




                                  16
Motorway - Planning permission
K11 Canal Track – crossroads object

Parameters of the object

 Length: 13.2 metre

 Width: 33.83 metre

 Surface: 447 m²

 Net unit cost €1,830 / m²


              Cost estimate: €0.85 million



                                             17
Motorway - Planning permission
K11 Canal Track (continued)




                                 1m




       Is there room for
    increasing efficiency?
                                      18
Motorway - Planning permission
K11 Canal Track (continued)




                                          1m




                  What is the function?
 From perspective of the designer: ‘to cross waterway’

 Interpretation of VE team: ‘to ensure water supply of the area’


                                                                19
Motorway - Planning permission
VE Proposal – Modification of K11 Canal Track




                                                €125,000

                                           Cost saving of
                                             €725,000


                                                            20
Motorway - Planning permission
Dirt Road Flyover




                                 21
Motorway - Planning permission
Dirt Road Flyover

                 60km - 12 dirt road objects
Track width of the objects: 7.5m; Track structure size: 8.63m




                                                                22
Motorway - Planning permission
Munich Ring, North (E52) - Dirt Road Flyover




                                               23
Motorway - Planning permission
Munich Ring, North (E52) - Dirt Road Flyover




                Width of dirt road 3.5m
               Existing asphalt road 4m
             Width of track structures 4.5m
                                               24
Motorway - Planning permission
Dirt Road Flyover

   VE proposal: Modify the width of the objects

          Impact of Value Engineering Proposal

     Current            Proposal A           Proposal B
(track width 7.5m)   (track width 6m)     (track width 5m)
   €9.2 million         €7.6 million         €6.6 million
  Cost Saving:       €1.6 million (17%)   €2.6 million (28%)


            …only 60-km motorway track!

                                                               25
Motorway - Planning permission




            Original cost estimate: €357 million

 Result of Value Engineering Study (20 proposals):
         Cost savings of €43 million (12%)
                                                   26
Agenda


1 Value Engineering Approach Through Examples and Results

2 Value Engineering in Hungary and Europe

3 Next Steps




                                      Value for Europe                    27
                                      The European Governing Board
                                      of the Value Management
                                      Training and Certification System
Value Engineering in Hungary


Public Procurement Act – from 1996

In the invitation to tender, the company or the
government body can require the tenderer
to apply Value Engineering methodology




                                                  28
Value Engineering in Hungary




                               29
 …and not only for Investment Projects

 Strategies

     National Autism Strategy – Preparation of Government Decree

 Drafting Laws, Professional documents

     Sign Language Interpreter Service

     Employment Act

 Projects

     Public Procurement action plan (National Development Agency)

     Balance of Payments – preparation of computer software
      (Hungarian National Bank)

     Process Management System (Paks Nuclear Power Plant)
      Original version: 155 Processes; VE Proposal: 57 Processes

     etc.
                                                                     30
Results of VE Studies in Motorway Investments, Hungary


                  Since 1999
  VE review of 85 Motorway Investment plans
                  in Hungary

Total Estimated Construction Costs: €2.9 billion
        Cost Savings: €393 million (13%)
       Additional Costs: €39 million (1%)

         … and at higher quality!

                                                         31
European Data

European Transportation Market in 2007-2013:

     Ten-T: €9 billion;

     Structural and Cohesion Funds: €43 billion;

     The Member States from their own Budget: €196 billion;

     European Investment Bank: €65 billion loan.

„The available funds of €300 billion will not cover all necessary
  investments.”

Zoltán Kalocsai: Through the common prosperity
  Roads and Transportation, XX. 1. Issue Februar 2011




                                                        Value for Europe                    32
                                                        The European Governing Board
                                                        of the Value Management
                                                        Training and Certification System
Would I spend my money this way?



  10% cost efficiency
 Return of Investment
    at least 100:1


                                   Value for Europe                    33
                                   The European Governing Board
                                   of the Value Management
                                   Training and Certification System
How can the European Union gain from the application of
Value Engineering?
                    More projects from the same budget
            1          Investments and projects at higher quality
            2
                          Higher standard of living in Europe
            3
            4               Quicker developments and reduced
            5               risk of delays
            6
                             Reduction of risk management
                             in decision making
                              Increased efficiency and
                              competitiveness of the
                              European Union




                                                                34
Agenda


1 Value Engineering Approach Through Examples and Results

2 Value Engineering in Hungary and Europe

3 Next Steps




                                      Value for Europe                    35
                                      The European Governing Board
                                      of the Value Management
                                      Training and Certification System
Next steps

 Analyze development methodologies
 (i.e. Value Engineering)

 Provide training and promote ‘functional thinking’

 Develop pilot scheme

 Mainstream implementation




                                       Value for Europe                    36
                                       The European Governing Board
                                       of the Value Management
                                       Training and Certification System
Thank you for
your attention!




                  Value for Europe                    37
                  The European Governing Board
                  of the Value Management
                  Training and Certification System
          Contact Details
                      Árpád Fodor
     Certified Value Specialist-Life,
Professional in Value Management
      Phone / Fax: +36-1-2838630
          Mobile: +36-20-9682938
                  www.microva.hu
                 microva@microva.hu




                                    Value for Europe                    38
                                    The European Governing Board
                                    of the Value Management
                                    Training and Certification System

				
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posted:9/27/2011
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