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IN THIS ISSUE:1 Editor’s Message: Achieving Effi ciency by Unlocking

Innovation in System Design and EngineeringMohammed A. Berawi, Ph.D.

3 Value Engineering Advisory System in Construction Projects (VEAS)I. Albalushi, F. Usman, and A. Alnuaimi

21 Business Sustenance through Open Innovation at Tata Motors LimitedG. V. Srirama Kumar

32 Improving Feasibility of Mega Infrastructure Project Development Using Value Engineering MethodMohammed Ali Berawi, Bambang Susantono, Suyono Dikun, Tommy Ilyas, Herawati Zetha, Abdur Rohim Boy Berawi, Teuku Yuri Zagloel, Perdana Miraj, and Jade Sjafrecia Petroceany

32 Do Your VEERP?Arnecia Williams, AVS

47 Numerical Value Analysis and Evaluaton Techniques of the Esteem FunctionKayo Uchida

VOL. 37 | NO. 1 | SPRING 2014The Journal of SAVE International®

© 2014 SAVE International®

1VALUE WORLD | VOL 37 | NO 1 | SPRING 2014PUBLISHED BY SAVE INTERNATIONAL®

Achieving Efficiency by Unlocking Innovation in System Design and

EngineeringM. A. Berawi, Ph.D.

During the process of developing innovative products or projects, the use of a method-based principle on an integrated product/project develop-ment is highly importance. A holistic perspective to optimize system performance can lead to innovative, cost-efficient and robust solutions.

When designing new products/projects/services, the innovation breakthrough often leads to an in-creasing production cost, but in a system view it can be resulted in cost efficiency since it brings additional values and optimizing the value for money. On top of that, it can also be used to create and, further, gain more market share since most innovative products/projects have come up with new processes, functions or purposes. Let’s take an example of innovation in mobile phone industry. Although in terms of produc-tion cost the conventional mobile phone (with basic function to communicate through voice and text mes-sage) has lower tag price than multi-function mobile phone (with additional functions of displaying mov-ing pictures, accessing internet and online services, helping further to solve office work, etc), yet the la�er has succeeded in creating its own market. In system engineering, the la�er has a lower cost to perform all given functions compared to multiple products. In this context, cost efficiency is an outcome that has been resulted from improved processes or end products/projects under study. Therefore, we can see that VE method is highlighted on its capability to offer wide range of possibilities or alternatives that could lead to improve performance of new processes, products or projects, even further se�ing new context or purposes in the system design and engineering.

Innovation and Efficiency = Value for Money

Improvement of the linkage between innovative solution and cost in a project/product/service offered in system engineering can be used as an indicator for defining optimum value for money. Fostering competitive products or projects will bring more improvements that need to be made to whole life cycle of business process, from conceptual design to product or project development, maintenance and operation, including selection of processes, methods and technologies for the realization of innovative solutions.

Responding to this issue, this edition of Value World presents five selected papers from the journal submission and CVS® paper submission to stimulate debate and to explore the application of value engi-neering in order to achieve efficiency by unlocking innovation in the projects/products development.

The first paper, wri�en by I. Albalushi, F. Us-man and A. Alnuaimi, proposes an innovative Value Engineering Advisory System (VEAS) that uses func-tion analysis to achieve the project objectives, maxi-mize value and minimize cost. The authors argue that VEAS expands the function analysis system technique (FAST) and performs risk-value analysis in evaluating the project’s functions, requirements, and cost during the design stage, and produces plans to minimize cost overrun during construction stage. Four design alternatives in a construction project in Oman were developed and compared with a baseline concept. As a result, the authors argue that appli-cation of VEAS system on the alternatives yielded improvements on value index and cost performance.

The second paper, wri�en by G.V.S. Kumar, highlights the use of value engineering for business sustenance through open innovation at TATA Mo-

2 VALUE WORLD | VOL 37 | NO 1 | SPRING 2014PUBLISHED BY SAVE INTERNATIONAL®

tolerable value of parameters for each sense item, can help to improve the added values and to optimize the outcomes of VE study.

I hope this edition of Value World conveys some new insights in the way we conduct our value meth-odology studies. I can be contacted at [email protected] and would be pleased to accept and respond to any comment and enquiry you may have on the direction and content of Value World.

With warmest regards from editorial desk,Dr. M.A. Berawi

Faculty of EngineeringUniversity of Indonesia

16424 JakartaIndonesia

tors by integrating various business processes at manufacturing site, supply and logistic chain. He argues that open innovation with a blend of value engineering has strengthened the company in man-aging material resources towards designing (new) products that provide be�er value to the customers and stakeholders. As a result, Tata Motors is saving a considerable amount of steel, aluminum and various consumables materials used in the manufacturing stage and accounting a remarkable benefit in terms of cost saving, and further, is able to gain more market share in automotive industry.

The third paper, wri�en by M.A. Berawi, B. Su-santono, S. Dikun, T. Ilyas, H. Zetha, A.R.B Berawi, T.Y. Zagloel, P. Miraj, and J.S. Petroceany, outlines the use of VE method to improve project feasibility of mega infrastructure project development. VE study is used to identify additional functions, to provide creative and innovative ideas to enhance value for money for the project. The result of VE study on Soekarno-Ha�a International Airport Rail Link (SHIARL) indicates that SHIARL is an innovative conceptual design to overcome congestion and flood through the integration of airport rail link and MRT line in one tunnel called Public Railway and Storm-water Infrastructure (PRASTI) Tunnel. Furthermore, the life cycle cost (LCC) analysis has shown that the feasibility of the proposed project is significantly increased.

The fourth paper, wri�en by A. Williams, outlines the use of value engineering process in managing Los Angeles’ river ecosystem restoration project by opti-mizing and performing engineering-related activities through the most cost-effective methods. During VE study on the ecosystem restoration project, various performance a�ributes were evaluated, including habitat improvement and connectivity, sustainability, water quality improvements, and public acceptabil-ity. As a result, more than 71 creative ideas and eight solid combined proposals were developed from VE study that enhancing creative decision-making and utilization of suitable technology.

The last paper, wri�en by K. Uchida, outlines the use of methods of analysis and evaluation of esteem function, in which she defined as a function related to the users’ senses, such as preciousness or satisfaction when they own certain products or receive certain services, and the incorporation of the function into VE job plans in the field of medical services in Japan. The author argue that by quantifying and evaluat-ing esteem functions through sensitivity range, i.e. the difference between the maximum and minimum


Value Engineering Advisory System in Construction Projects (VEAS)

I. Albalushi, F. Usman and A. Alnuaimi

AbstractThis paper presents an innovative Value Engineer-

ing Advisory System (VEAS) that uses function analy-sis to achieve project objectives, maximize value and minimize cost. VEAS expands the function analysis system technique (FAST) and performs risk-value analysis in evaluating the project’s functions, require-ments, and cost during the design stage and produce plans to minimize cost overrun during construction stage. It breaks the project into components and sub-components using the Work Breakdown System (WBS). The system was validated using a real case study of a construction project in Oman. Four design alterna-tives were developed and compared with a baseline concept. Application of VEAS system on the alter-natives yielded results of improvements on perfor-mance ranging from 1.58% to 58.51% and improve-ment in value ranging from 2.26% to 58.72% against the baseline concept. The improvement in the value index ranged from 24.3 to 38.57. The best alternative (improvement in performance of 58.51%, and value 58.72%) was used in WBS analysis and further im-provements in performance and value with reference to the baseline design concept reached 69.57% and 75.23%, respectively. The value index improved from 38.57 to 42.58 and the cost reduced from USD 11.68 million to USD 11.32 million.

Keywords:Value Engineering, Simulation, Decision Tool,

Function Analysis, VEAS

1. IntroductionThe construction cost escalation and cost over-

run cause detrimental effects on construction projects and disturb development plans almost everywhere. The cost escalation is related to inflation and de-

mand and supply of material and workers while the cost overrun, which occurs after the project award, is related to planning, design and construction. The evolution of a project from inception to completion of construction requires striking balances between requirements and cost at all stages. Value engineer-ing and risk analysis should be applied to maximize value and minimize uncertainty. The cost overrun can be defined as the additional money spent above the contract value to complete the project. Countless researchers have studied cost overruns in different types of projects all over the world, and identified causes, effects and suggested remedies (e.g., Perkins (2009), Alnuaimi et al (2010), Kaming et al (1997), Almomani (2000), Frimpong et al (2003), Akpan and Igwe (2001), Wu et al (2005), Lee (2008), Acharya et al (2006), Arzai et al (2010), and Jaapar et al (2012)). These types of studies contributed to the understand-ing and quantifying the variables causing cost and time overruns, their effects and sometimes sug-gesting solutions that can be implemented during construction stage. The causes can mainly be sum-marized as consequences of unclear owner objectives and/or requirements, or of inadequate investigations or study by the designers. Other research work was directed towards developing models that can im-prove facilitating and managing project time and cost overruns (e.g., Arun and Rao (2007), Al Barami (2012), Sharma (2012)). These models concentrated on value engineering and value management simula-tion that can predict time and cost overruns based on different methods but do not address the project objectives and requirements as the main source of change orders that lead to cost and time overruns. Researchers like Shen et al (2004), Yu (2007), Assaf et al (2000), Stewart (2004), In et al (2009), Creedy et al (2010), Sofia (2007), and Jong et al (2009) applied methods that dealt with the project objectives and users requirements in a closer way. They introduced methods which incorporate users’ requirements to be satisfied during design to reduce change orders and minimize cost and time overruns during construc-


tion. Yuh and Ching (2005) and Dallas (2006) and others incorporated risk analysis and risk manage-ment in the value engineering and value manage-ment models. the models concentrated on identifying and controlling risks during the design and construc-tion stages. This type of work helped predicting the risk of cost overrun and examining the components of the project to deliver projects with high value, within budget. How-ever, these models do not incorporate control measures on the cost and risk during design stage. Ranesh et al (2012) carried out qualitative research using semi-structured interviews to identify the similarities between the risk man-agement and value engi-neering processes along with the benefits and critical success factors for the integration of RM and VM in projects. They found that “formal” RM and VM studies are rarely undertaken. There are barriers against the integration of VM and RM and there is a need for the development of a systematic process to enable the integration of risk and value man-agement to occur. The Minnesota Department of Transportation (2012) reported that they used cost model, performance a�ribute matrix, func-tion analysis and FAST diagramming to assess the risks and improve on a baseline concept project of a road con-nection. This is an im-provement to previous works; yet, it is limited to a certain project and does not show a general

systematic approach and control measures to allevi-ate budget growth during design and cost overrun during construction.

In this research, a Value Engineering Advisory System (VEAS) model was developed for the design of construction projects. VEAS integrates VE tools in the function analysis with risk and performance mea-�

No

Inception

Objective Setting &Requirement Analysis

Performance Criteria & Measurement

Baseline�Concept�&�Conceptual�Cost and�value

Function Settings

Functional�Decomposition

Component�Decomposition

Concept�Selection�&�Analysis

Component�selection�with�preliminary�Cost�estimate and value

Compare�preliminary�cost�and�value�with�conceptual�cost and�value

Cost�increase?

Work�Breakdown�Structure�for�the�System�(WBS)

Subcomponents Selection

Detailed�Estimated�Cost�and�Value�for�the�Project

Compare Detailed Cost and value with Preliminary Cost and value

Compare�the�Detailed�Cost�Estimate�with�Tender�Price�

Cost�increase?

Risk�factor�identification�&�categorization

Performance�evaluation�

Further�Tender�Analysis

Risk�Review�

Risk�identification�&�analysis�for�components�

Performance�evaluation�

FAST

Yes

Yes

Yes

No

No

Functio

n��

Phase��

Compo

nents�

Phase�

Subcom

pone

nts�

Phase�

Tend

er�Pha

se� Risk�analysis�for�

allocating�the�construction�risk�management�plan�

Risk�identification�&�analysis�for�

subcomponents�

Inception�&�

objectives�

Phase �

Cost�increase?

Monitoring the construction works and ensuring that the risk management and

control plans are implemented.

Constructio

n��

Phase�

Figure 1. VEAS Model Diagram


surement during design stage. It aims to eliminate or at least minimize cost overrun during construction. The function analysis and performance measurement techniques are used to select high value components and sub-components of project functions in order to maximize overall project value. A real construc-tion project was used as a case study for testing and evaluating the model.

2. Value Engineering Advisory System (VEAS)

The Value Engineering Advisory System aims to eliminate cost overrun and improve the value of construction projects. VEAS examines, weigh, and arrange the priorities of requirements and design components to alleviate random changes and allows successful and controllable risk-taking, contributing to the implementation of innovative solutions. The

system involves parties that can select the best alter-natives for accomplishment of project objectives. Fig-ure 1 (previous page) shows the structural diagram of the VEAS. The risks are systematically identified and assessed at four stages starting from the project inception to tender phase to ensure performance and reduce uncertainty. The cost growth is controlled at three different levels to ensure compliance with the conceptual cost while achieving a successful outcome. The project objectives and requirements are used to generate project functions, component decomposition and perform analyses using Function Analysis System Technique (FAST). The Work Break-down Structure (WBS) technique is used to develop project’s subcomponents, examine their elements and evaluate their interrelations. The risk of cost overrun during construction is prevented or minimized by implementation of plans developed during design to ensure performance, cost, and function value. Table 1 (below) summarizes the differences between the

Table 1. Comparison between the traditional design system and the proposed VEAS

Traditional Design System VEASObjectives may not be clear or well-described in the brief.

Objectives are studied and revised until they become clear.

The requirements are readily collected from the client or users and implemented in the design.

The requirements are based on the objectives and undergo function development and risk analysis before being implemented in the design.

The engineer dictates the design stage. Little input from the client or users. No team work.

The design stage includes collective inputs from the value and design engineers, the client, and the users. Team work.

Focus is on object-model according to methods, disci-plines, or states of the art.

Focus is on system-model and surrounding environ-ment.

Very little or no function weighing and measuring process.

Functions are weighed and performance is measured in a rigorous way.

It is very difficult to measure outcomes. Outcomes are measured in terms of objectives, cost, performance, risk and functions.

The designer develops the model based on problem constraints.

The team develops the model based on performance attributes and function analysis. The model should fit the required functions.

Focus is on technical constrained optimality. Focus is on functions and values.

Consideration of risk factors is minor and depends on client request or the design case.

Risk analysis is part of the performance and integrated with the design system. The risk management system starts early at the design stage and continues during the construction.

The designer focuses on the main elements of the requirements, which are set by the client or the users. Analysis for value changing or improving are minor.

WBS is used in the design elements, the chances for value improvement are very high.

Costs are hard to control and depends on the require-ment presented by the client.

Costs are controlled and more analysis is done to keep to approved level with value improvement.


traditional design system and the VEAS. The VEAS approach employs a task orientation focused on function modeling, which is a revolutionary break-through by comparison with traditional approaches, as the design process becomes a collective team inter-action rather than depending on a single expert. This allows a wide range of prospective during design and contributes in eliminating large changes during construction. The mechanism of VEAS emphasizes “How-Things-Should-Work”.

3. VEAS PhasesTable 2 (below) shows the activities that are car-

ried out in each phase.

3.1 Phase 1: Inception and objective phase

In this phase, the idea of the project is developed due to need or improvement of specific services. The client identifies the project objectives, and require-ments. The design team reviews the objectives and requirements for further discussions with the client and users. Risks are identified and categorized. Per-formance criteria and measurement are set to ensure quality and value. This phase ends with the selection of baseline concept of the project and conceptual cost estimate. It is important that the client, users and de-sign team reach a shared understanding of essentials and project objectives. Based on criteria set by the project design team, a performance a�ribute analysis is carried out to establish priorities, and to assist in

Table 2. Phase activities of VEAS

VEAS Phase Activities and Application of Phase

Inception and objectives

1. Set objectives and list requirements2. Form a value and design team3. Risks identification and categorization4. Set baseline concept and performance criteria5. Estimate conceptual cost6. Allocate budget that covers the estimated conceptual cost.

Fun

ctio

n, C

om

po

nen

t an

d S

ub

-co

mp

on

ent

Ph

ases

1. Information1. Collect required infromation about location and environment of

project2. Study user and client requirements

2. Function analysis

1. Create functions using FAST technique2. Integrate the requirements into the functions3. Decompose functions into components4. Risk review5. Preliminary cost estimate

3. Speculation

1. Use creative thinking to develop alternatives2. Repeat steps in function analysis on all alternatives3. Select the best alternative ensuring objectives, requirements, and

cost are within allocated budget

4. Evaluation

1. Performance evaluation2. Arrangement of components3. Prioritizing of functions4. Creation of WBS, cost and performance measurements, risk analy-

sis, and rating of market prices5. Detailed cost estimate within the allocated budget

5. Development and presentation

1. Drawings, specification, and quantities2. Verification and reporting3. Presentation and approval4. Develop control plans for construction

Tender1. Tender evaluation and cost analysis2. Risk analysis

ConstructionMonitor construction to ensure performance, cost, and function value using control plan prepared during design


defining project values. This improves achievement of project objectives and values by assessing alternatives for selected project components and sub-components. Table 3 (right) shows an example of performance a�ributes and a 5-point Likert scale for a typi-cal project with maximum planned construction period of 20 months. The generation of the rating scale depends on the definitions of the a�ributes and the project requirements, e.g. if there is a requirement for the project to be completed within at most 20 months, then any shorter period will give high-er value to the client and users. The same concept can be applied to other a�ributes. VEAS allows the number of performance a�ributes to be selected by the design team, utilizing knowl-edge about project size, environment, and conditions. The risk is integrated in the performance measuring system in the design and construction stages. Table 4 (below) shows the objectives of the risk analysis and manage-ment during the design and construction stages. In

Table 3. Example of performance attributes and rating scale

Attribute DefinitionRating Scale Measurement Unit

Project Schedule

The time to com-plete the projectProject planning construction period: within 20 months

5 Less than 13 months

4 13-14 months

3 15-16 months

2 17-18 months

1 19-20 months

External Impact

Approximation of temporary issues ex-ternal to the project: traffic, dust, vibra-tion noise, etc.

5 No impact

4 Very minor impact

3 Minor impact

2 Moderate impact

1 Major impact

Risk

Hazards that affect the success of the project, increasing costs and disputes, and minimizing values

5 Very low

4 Low

3 Moderate

2 High

1 Very high

Table 4: Risk objectives and management in VEAS phases

VEAS Phase Risk Study Objective Risk Management Risk Study Output

1. Inception and objectivesRequirements fit the ob-jectives of the project

Strategic risk study, risk identification, and catego-rization

Recommendation for the design

2. Function phase

Identify the functions which serve the project objectives and require-ments

Project risk identification, analysis and set manage-ment and response plans

- Risk allocation- Risk response outputs

3. Components phaseIdentify the components of the functions

Review risk analysis for components alternatives and set response and management plan

- Further risk allocation- Update risk response

outputs

4. Sub-component phase

- Identify the subcom-ponents that serve the components and func-tions of the project

- Optimize cost and value

Project risk review and analysis for the selected subcomponents, cost and value of the project

- Risk allocation.- Detail project risk review

5. Tender phaseProject cost analysis and setting a contingency

Project risk analysis and review for allocating a risk management plan for construction

- Risk response outputs.- Construction risk plan

6. Construction phaseElimination of cost over-run

Monitor performance, cost and function values

Construction risk plan implementation


IDENTIFY THE OBJECTIVES OF THE RISK ANALYSIS FOR VEAS PHASE

PROJECT DEFINITION

RISK IDENTIFICATION OUTPUTS- Register of risks with characteristics

descriptions - Clear understanding of threats and

opportunities associated with the project by all parties

- Initiate risk response options

RISK IDENTIFICATION

RISK ANALYSIS OUTPUTS - A clear understanding of which threats

require response and which opportunities should be pursued

- Appreciation of risk exposure distribution within the project by parties

- Most significant risks which effect cost and value

- Probably distributions of project outcome values

RISK ANALYSIS AND SCORING

RISK IDENTIFICATION OUTPUTS - The alternative strategies for dealing with

significant risks - The strategy or strategies chosen for

implementation in each - Allocation of risk among project parties

RISK RESPONSE

REVIEW THE RISK ANALYSIS FOR OTHER PHASES

CONSTRUCTION RISK MANAGEMENT & CONTROLLING PLAN

TECHNIQUES - Brainstorming - Assumption analysis - Delphi - HAZOP studies - Risk registers - Check lists

QUALITATIVE ANALYSIS TECHNIQUES - Delphi - Risk mapping - Probability Impact tables - Other

QUALITATIVE ANALYSIS TECHNIQUES - Decision trees - Monte Carlo simulation - Sensitivity analysis - Other

RISK RESPONSE TECHNIQUES - Risk control measures - Risk finance provision

RISK RESPONSE METHODS - Alternatives (methodologies,

design, project) - Contingency plans - Procurement strategies - Insurance - Financial instruments - Provisions - Other

RISK RESPONSE OPTIONS - Risk avoidance - Risk reduction - Risk transfer - Risk retention

INFORMATION- Past projects

historical data - Output from other

planning services - Organization

knowledge and experience of participants

PARTICIPANTS- Client - Project team

members

Figure 2. Risk Analysis Framework

this phase, strategic risk factors are identified, catego-rized, and set as part of the performance measure-ment system, as shown in Table 3. Figure 2 (below) shows the framework for identifying, categorizing and controlling risks during the design and the con-

struction stages. The framework specifies six main steps: risk definition, risk identification, risk analy-sis and scoring, and planning of risk control and management, using techniques such as brainstorm-ing, Delphi, HAZOP, and others. The system uses


risk avoidance, reduction, transfer, and retention as response options for creating risk response method-ologies and managing the plan. Once performance criteria have been finalized, a Performance A�ribute Matrix PAM is used to determine the relative im-portance of a�ributes. PAM compares performance a�ributes in pairs and identifies the more important a�ribute by use of a le�er code. A le�er code (e.g. “A, B, C”) is entered into the matrix for each pair, identi-fying which of the two is more important. If members of a pair are considered to be of equal importance, both le�ers (e.g., “A/B”) are entered in the relevant box. The important criteria are chosen by collective votes of design team and client based on priorities and relative project objective. Table 5 (above, top) shows a Performance A�ribute Matrix (PAM) exam-

ple. In this table the vertical a�ributes are compared with horizontal a�ributes in pairs and the selected important a�ribute’s mark is inserted in the second, third and fourth columns of the table. The penulti-mate column shows the total marks of each a�ribute sequentially (i.e. total A marks = 2, total B marks = 2 and total C marks = 2). The last column gives the percentage weight of each performance a�ribute (i.e. (2/6) x 100 = 33.33%). The criteria set in Table 3 and the weights calculated in Table 5 were used in Table 6 (above, middle) to develop performance, cost and value of the baseline concept. The value Index (VI) is rate of the performance to the cost. Several base-line concepts that satisfy the project objectives and requirement are, usually, proposed and only one is selected to be the project baseline. The project base-

Table 5. Performance Attribute Maxris (PAM)

Performance attribute

A. Project Schedule

B. External Impact C. Risk

Total performance

attributeWeight

%A. Project Schedule A A C 2 33.33

B. External Impact B B 2 33.33

C. Risk C 2 33.33

6 100

Table 6. Example of Performance Rating for the Baseline Concept Using Table 3

Attribute Weight Concept

Performance Rating Scale

Performance1 2 3 4 5Project Schedule 33.3

Baseline

1 33.3

External Impact 33.3 4 133.6

Risk 33.3 3 99.9

Total Performance (P) 266.8

Cost ($ millions) (C) 10

Value Index = (P/C) 26.68

Table 7: Example of Project Baseline Description against Performance Attributes

Performance attributes Baseline concept Rating scale

Project ScheduleThe maximum time to complete the baseline concept is 20 months as per the initial calculation of the designer to the project schedule (Table 3)

1

External ImpactExternal impact will be very minor as the designer has prepared com-plete plan to control the impact of the traffic, dust, and noise (Table 3)

4

Risk The risk analysis of the baseline concept is moderate (Table 3) 3


line undergoes measured assessment process using the rating scale of Table 3. Table 7 (previous page, bo�om) shows project baseline description and rat-ing against performance a�ributes for the example addressed in Tables 5 and 6.

3.2 Phase 2: Function analysis phase

VEAS uses a subsystem structuring approach to break down the project into basic functions, second-ary functions, components, and subcomponents, as shown in Figure 3 (above). The system anticipates more than one basic function serving the higher-or-der function of the project. The innovative approach of VEAS is visible in how it extends the function block from the traditional FAST diagram to present the function components and subcomponents for the complete scope of the project in the function analy-sis diagram (Figure 4, next page, top). The VEAS function diagram constitutes four levels of analysis: selection of functions, decomposition of functions into Basic, secondary and required, selection of com-ponents, and selection of subcomponents. The cost and value are addressed at each level. These levels are connected together and any change in one part affects the other parts. Finally, the diagram imposes final overall examination and analysis to ensure performance, cost and value to the accepted levels. Component and subcomponent selection is based on

the performance measuring system and project objec-tives. The features of the VEAS function diagram can be summarized as follows:

The VEAS diagram provides full insight into the functions of the project, components, and sub-components, and how they relate to each other. This includes not just basic or supporting func-tions but also how one function supports or cre-ates another, and how changes to function com-ponents in terms of cost, performance, or value affect other functions and the project as a whole.

The VEAS diagram forces all functions into a “how-why” logic, using one scope line to contain functions in a logical way in relation to compo-nents and subcomponents.

The VEAS diagram represents the cost and value of functions, components and subcomponents. The addition of cost data (actual or estimated) to the diagram enhances the calculation of func-tion/cost in relation to the elements causing the changes.

The VEAS diagram highlights high-cost areas, assists in providing cost distribution information for decision-making, and pinpoints cost reduction opportunities.

�

Level 1 Basic Function

Level 2Secondary Function

Level 3Required Secondary

Function

Level 4Function

Components

Level 5Function

Subcomponents

Func

tion

Dec

ompo

sitio

n

�

Com

pone

ntD

ecom

posi

tion

Figure 3. Function Decomposition System


Table 8. Example of Performance Rating for Component Alternatives

Alternate Performance% of

ImprovementTotal Cost

(Million Dollars)Value Index

% Value Improvement

Baseline Concept 266.8 control 10 26.68 control

Components Alternative 1 270 1.2% 10.5 25.71 -3.64%

Components Alternative 2 275 3.07% 9.5 28.95 8.51%

�

Level 1: Selection of Function

Level 2: Functions’ decomposition

Basic (1) Secondary R. Secondary Components A

Components 1

Components 2

Components 3

Components B

Components 1

Components 2

Components 3

Sub componentsA

SubComponents 1

SubComponents 2

Sub componentsB

SubComponents 1

SubComponents 2

Final Performance cost and value examination

Level 3: Component selection Level 4: Sub-Component

selectionExamination &

Analysis

Scope of Work Selection Process 1

Analysis and selection of alternatives by performance measurement system

& evaluation Matrix

Selection Process 2

Cost and value Cost and value

Cost and value Cost and value

Figure 4. VEAS Function Analysis DiagramThe VEAS diagram is useful for cost targeting by control-ling component or subcomponent costs, leading to better control of function’s costs.

3.3 Phase 3: Components phase

The aim of this phase is to define and select the best component alternative for meeting client objec-tives as per the performance criteria and function analysis. Appropriate selection of components is very important for enhancing project functions and achieving the required value. Brainstorming or relat-ed techniques can be used for generation of alterna-tives, and components can be categorized by use and specification (civil works, mechanical, electrical etc.).

For the selection process, the performance measur-ing system and risk analysis are then applied to the proposed components. Alternatives are then weighed and compared to components from the baseline con-cept for further cost comparison and value improve-ment (Table 8, below).

3.4 Phase 4: Subcomponents phase

In this phase, components are decomposed into subcomponents level using WBS to identify alterna-tive subcomponents, and to establish interrelations between them, as shown in Figure 5 (next page). WBS is a deliverable-oriented hierarchy of decomposed project components representing the detailed project


scope statement that specifies the work to be accom-plished. The WBS process continues until the details of components and subcomponents are finalized. During this process, a numbering scheme is used to indicate the interrelationships of components and subcomponents in the hierarchy, and to facilitate the integration of data. This assists in investigat-ing missed subcomponents and components and describes the interrelation between component and subcomponent levels. Alternative subcomponents are measured and weighed, and the overall cost and value are identified. The risk analysis is reviewed for further risk ranking in relation to the proposed subcomponent alternatives. Costs and values of alternatives are compared to the conceptual cost and value, and to the baseline cost and value (Table 6). This process helps to provide an accurate and de-tailed estimated cost and value of the project, and to select the best high-value alternative. Inflation and safety factors of the market prices are also taken into account.

3.5 Phase 5: Tender phase.

Here, tender submissions are analyzed and com-pared with the detailed cost estimate. If the concep-tual cost estimate is significantly lower than com-prehensive tender amounts, further analysis of the tenders is made. A risk review is also established to plan risk management and control for the construc-tion implementation phase.

3.6 Phase 6: Construction phase.

Work in this phase is limited to monitoring the progress of works and ensuring that the risk manage-ment and control plans are implemented.

4. Case StudyThe case study concerns the design of a student

hostel at a private college in Muscat, Oman. The objective of this project was to provide decent ac-commodation and recreation facilities for a thousand students. The project was established as a design-bid-build contract. The designer was an interna-tional consultant, with local mechanical, electrical, and services sub-consultants. Design of the project was managed by a project management and techni-cal commi�ee comprising members from the client, investors, designer and end-users, from different disciplines that include civil, architectural, and structural engineering, and associated value special-ists. The main requirements were submi�ed by the client, and the VEAS model was applied as discussed above. Project requirements were revised to properly meet the objectives, and a performance measuring system was prepared. Based on brainstorming of the team, nine performance a�ributes were identified. Table 9 (next page) shows performance a�ributes and rating scales. Each a�ribute includes different factors affecting cost and value. Figure 6 (page 14) shows the

�WBS

Section 5WBS

Section 4WBS

Section 3WBS

Section 2

WBSSection 1

3. Connect Services

DevelopBusiness

1. Accommodate Staff

1.1 Facilitate place

1.1.1 Construct office building 1.1.1.1 Substructure

1.1.1.2 Superstructure 1.1.1.3 Structural Metal 1.1.1.4 Carpentry Works 1.1.1.5 Finishes and paints

2.1.1.1 Subcomponent 12.1.1.2 Subcomponent 22.1.1.3 Subcomponent 3

2.1.1 Component 1

2.1.2 Component 2

2.1.3 Component 3

2.1 Meat Space2. Control Environment

2.2 Control Humidity

Figure 5. Example of WBS for Construction of Office Building


Table 9. Performance Attributes and Rating Scales

Attribute DefinitionRating Scales Unit Measurement

Construction Schedule

Time to complete the project from the issue of purchase order to the completion

Client requirements:Construction to be completed within 24 months.

54321

< 12 months 12 – 15 months 15.1 – 18 months 18.1 – 21 months 21.1 – 24 months

Design SafetyQuality assurance of the design to implement the BS codes and Oman design standards for building safety.

54321

ExcellentHighModerateLowVery low/unavailable

End User ConvenienceConvenience for the user of office spaces, land-scapes, availability of required facilities, and usage suitability.

54321


ConstructabilitySecurity, convenience, construction conve-nience, traffic control, storage control, site safety and availability of required materials.

54321


Construction Impact Pre-vention

Temporary construction issues of traffic to the existing facilities, dust, noise during working hours, site housekeeping.

54321

ExcellentHighModerateLowVery low

Maintenance AspectsAvailability of materials and tools in local mar-ket, availability of service agents, materials suit-ability, materials delivery period, spare parts.

54321


Client/End User Satisfac-tion

Availability of stakeholder requirements, sat-isfaction of project purposes and objectives, utilization of lands.

54321


Usage of Existing ServicesPrevention of removing or disturbing existing services of power, water, and sewage.

54321


Risks

Hazards affecting successful delivery of the proj-ect, including project techniques, building and labor safety, constructability, maintenance and government interventions.

54321

Very low riskLow riskModerate riskHigh riskVery high risk


identified initial risk factors which are based on risk analysis carried out by the project team, classified as technical and management risks valid particularly for this project. As a result of the performance a�ribute classifications and weigh-ing shown in Table 10 (above), it was found that the design safety has the highest value. Stakeholder satisfaction, maintenance aspects, end-user convenience, constructa-bility and risks are also found to be high. Relatively, construction schedule, construction impact and using existing services are lower than others, and are expected to have less impact on performance evaluation. Based on project objectives and requirements, the designer proposed three base-line alternatives. One baseline concept was selected, consisting of four buildings, two accommodation blocks, an administration building, and service substation. Each accommodation building is made of seven floors, the administration building had two floors, and the substation was a single-story building. A cost model for this baseline concept was USD 11.7 million, with a construction period of 17 months. An initial risk identification and analysis of the baseline concept and suggested alternatives were measured and com-pared at different phases. The risk level of the base-line was high as shown in Table 11 (right). The main reason for high risk level of the baseline concept was due to absence of consensus of the design compo-nents and subcomponents with project objectives,

�

PROJECT RISKS

MANAGEMENT RISKS

TECHNICAL RISKS

PlantLabor

SiteMaterials

Construction

Cost

Financial (Project)

Timeframe

Sub-contractor

Design

Environment

Location

Authorities

Economics

Physical

Political

Technological Change

ProjectManagement

Construction System

Figure 6. Risk Factors Identification

Table 10. Performance Attribute Matrix for Weighing the Attributes

Performance Attributes A B C D E F G H I Total Score WeightA Construction Schedule A B C D A/E F G H I 2 4.49

B Design Safety B B B B B/F B B B 8.5 19.10

C End User Convenience C C/D C/E C C/G H C 5 11.24

D Constructability D D F G D D/I 5 11.24

E Contruction Impacts Prevention E F G H I 2 4.49

F Maintenance Aspects F G F F/I 6 13.48

G Stakeholder Satisfaction G G G/I 7 15.73

H Useage of Existing Services H H/I 4 8.99

I Risks I 5 11.24

Total 44.5 100

Table 11. Risk Level Comparison for the Baseline and Alternatives in the Components

and Subcomponent Phases

Alternatives

Risk levelComponent

PhaseSubcomponents

PhaseBaseline concept High (2) High (2)

Alternative 1 Moderate (3) Low (4)

Alternative 2 Low (4) Low (4)

Alternative 3 Low (4) Very low (5)

Alternative 4 Low (4) Very low (5)


requirements and functions. Table 12 (above) shows that, the performance system of the baseline concept was 284.27, and the value index was 24.30. A VEAS workshop was conducted using function analysis according to the rules and objectives given in Table 1. Figure 7 (next page) shows the VEAS function dia-gram for the project. A higher-order function was in-troduced to improve education services for students. The basic functions of the project related to accom-modating students. The secondary functions were to control the environment, connect services, transfer power, provide IT services, enclose the space, and prepare the site. An idea-generation session using brainstorming yielded further suggestions, allocating alternative components and examining the baseline components. Table 13 (below) shows that, a total of 122 ideas were generated for the components of project functions. From those, 63 ideas were accepted for evaluation due to consensus with the objectives and the requirements of the project. 30 ideas were chosen from the selected 63 for development as they indicated to give improvement to the project value. Accordingly, 14 design proposals were presented for the project. As a result, four categorized alternatives were selected for further performance measurement and comparison with the baseline concept (Table 14, see page 17). Each alternative comprises a complete package for development of the baseline design

proposal which includes but not limited to, total area, mechanical electrical services, external works, roads, architectural items, wood and carpentry works, and structural works. The alternative categorization was based on the components of the project and gener-ated ideas. The selected alternatives were examined and weighed in reference to the performance at-tributes to get the total performance and compare it with baseline performance. The risk review and iden-tification of further factors were conducted in relation to the objectives presented in Table 4. Table 12 shows comparison between baseline performance and VEAS alternatives. Alternative No. 1 achieved improve-ments in the performance and value of the project of about 1.58 % and 2.26 % respectively, so that the cost of the project was lower than the baseline design. The improvement achieved by alternative No. 2 was greater than the baseline, at 36.76 % and 37.08 % for performance and value respectively. The cost of alter-native No. 2 also remained within the project budget. However, alternative No. 3 was the best proposal, with improvement in performance of 58.51 %, and value improvement of 58.72 %. The total estimated cost of the project was calculated as USD 11.68 mil-lion. Alternative No. 4 was the second best proposal, with improved performance at 50.99 %, and im-proved value at 54.53 %.Thus, alternative No. 3 was selected for more development and allocation of sub-

Table 12: Value and Performance Comparison for Component Alternatives

Overall Performance

Total Performance

% Performance improvement

Total cost $ millions

Value index (P/C)

% Value improvement

Baseline Concept 284.27 Control 11.7 24.30 Control

Alternative 1 288.76 1.58 % 11.62 24.85 2.26 %

Alternative 2 388.76 36.76 % 11.67 33.31 37.08 %

Alternative 3 450.60 58.51 % 11.68 38.57 58.72 %

Alternative 4 429.21 50.99 % 11.43 37.55 54.53 %

Table 13. Brainstorming Session Results for Component Selection

FunctionIdeas

GeneratedIdeas Accepted for Evaluation

Ideas Chosen for development

Design Proposals

Accommodate students 25 15 9 3

Control environment 25 12 6 3

Connect services 13 6 4 2

Transfer power 23 10 4 2

Enclosed space 19 12 4 2

Prepare site 17 8 3 2

Total 122 63 30 14


�

Scope of work

Removewaste

Functions Components�

Terminal line 1 for selecting the

components

Connect external water and sewage lines�

Provide landscape design�Landscape area

Prepare utilities

Prepare site

Level pad

Transfer powerEstablish earthworks�

Remove waste materials�

Construction of guard�

Construction of boundary walls�

Enclosed space� Separate space

Secure space

Provide tech. service

Designate space Selecting the proper land�

Internal tel. network and services

Approve the design

Internal data services��

UPS System�

Power distribution system�

L.V panels and networkTransfer power�

Construction of power station�

H.V network connection�

Connectservices

- Provide access control. -Supply lighting system

-Provide mechanical �And plumbing services.�

Construction of swage networks and stations

Construction of water network and stations�

Supply and �Fix HVAC �

System�

Construction of building�

Supply service

Facilitate space

Control �environment�

Heat space

Establish security

Control humid

Circular air

Illuminate area

Improve business�

Accommodate students�

Facilitateplace

WHY�

High - order Function�

(Secondary Functions, Cost Value)�

(BasicFunctions, Cost

Value)

HOW�

(Components Cost Value)�

Figure 7. VEAS Function Diagram for the Project

Table 14. Performance Measurement for Component Alternatives

AttributesAttribute Weights Concept

Performance

Total Performance1 2 3 4 5

Construction Schedule 4.49

Baseline Concept 2 8.98

Alternative 1 3 13.47




Design Safety 19.10






End User Convenience 11.24






Constructability 11.24






Construction Impacts 4.49






Maintenance Aspects 13.48






Stakeholder Satisfaction 15.73






Use of Existing Services 8.99






Risks 11.24







Table 15. Brainstorming Session Results for Subcomponent Selection

Function Idea

s G

ener

ated

Idea

s A

ccep

ted

for E

valu

atio

n

Idea

s D

evel

oped

Accommodate Staff 32 14 12

Control Environment 22 15 9

Connect Services 11 8 5

Transfer Power 5 4 2

Enclosed Space 15 12 8

Prepare Site 13 10 6

Total 98 63 42

Table 16. Performance and Value Comparison Alternative No. 3

Overall performance Tota

l Pe

rfor

man

ce

% P

erfo

rman

ce

Impr

ovem

ent

Tota

l Cos

t $

Mill

ions

Vlal

ue In

dex

(P/C

)

% V

alue

Im

prov

emen

t

Baseline Concept 284.27 Control 11.7 24.30 ControlAlterna�ve 3(Component Phase)

450.60 58.58% 11.68 38.57 58.72%

Alterna�ve 3(Development Phase)

482.03 69.57% 11.32 42.58 75.23%

components using WBS. Table 15 (above) shows the brainstorming results for the subcomponent selection process. In total, 98 ideas for subcomponents devel-opments were created during this session; 63 ideas satisfying the minimum require-ments and criteria were accepted for further evaluation, including performance weighing and risk analysis. From this process, 42 ideas were developed. In line with the subcomponents development results, the performances of 9 components were also improved. Table 16 (right) shows the perfor-mance and value improvements for alternative No. 3. The improve-ments in performance and value with reference to the baseline design concept were 69.57 % and 42.58 %, respectively. The detailed estimated cost of components and subcomponents was USD 11.32 million. The value of alternative No. 3 in the development phase was increased 10.40 % above the component level. In ad-dition, the application of VEAS reduced the risk level of the design from high to very low (Table 11).

5. ConclusionIn this research a revolutionary Value Engineer-

ing Advisory System (VEAS) was developed. The VEAS presents a new procedure and techniques for

improving the value of construction projects within the approved budget. The VEAS features include full insight into the functions of the project, components, and subcomponents, and how they relate to each other, apply “how-why” logic, uses cost and value functions in components and subcomponents, risk management and improves performance and value. The system was validated using a real case study of a construction project in Oman. Four design alterna-tives were developed and compared with a baseline concept. Application of VEAS system on the alter-natives yielded results of improvements on perfor-mance ranging from 1.58% to 58.51% and improve-ment in value ranging from 2.26% to 58.72% against the base line concept. The improvement in the value index ranged from 24.3 to 38.57. The best alternative (improvement in performance of 58.51%, and value 58.72%) was used in WBS analysis and further im-provements in performance and value with reference to the baseline concept reached 69.57 % and 75.23%, respectively. The value index improved from 38.57 to 42.58 and the cost reduced from USD 11.68 million to USD11.32 million.

6. ReferencesAcharya N. K., Lee Y. D., and Im H. M. (2006).Con-

flicting factors in construction projects: Korean perspective. Engineering Construction and Archi-tectural. Management, v13, n6, pp 543–566.

Akpan, O. P., and Igwe, O. (2001). Methodology for determining price variation in project execution, Journal of Construction Engineering and Man-agement, 127(5), pp 367– 373.


Al-Barami, A. (2012). Application of Value Engineer-ing in Oman. MSc Thesis. School of Engineering and Design, Brunel University.

Al-Momani A. H. (2000). Construction delay: A quan-titative analysis, International Journal of Project Management, v18, n1, pp51–59.

Alnuaimi A. S., Taha R. A., Al-Mohsin M. and Al-Harthi A. (2010). Causes, Effects, Benefits and Remedies of Change Orders on Construction of Public Projects in Oman. Journal of Construction Engineering and Management, ASC, v136, n 4, pp 615 – 622.

Arazi, I., Olanrewaju, A. A., Mohd, F.K., Mohd, S. (2010). The implementation of Value Engineering among the Malaysian construction Consultant, MiCRA: Management in Construction Research Association 9th Annual Conferences’ and Meet-ing.

Arun, C., and Rao, B. N. (2007). Knowledge based de-cision support tool for duration and cost overrun analysis of highway construction projects, Journal Institution of Engineering. (India), Part AG, v88, n8, pp27–33.

Assaf S., Jannadi O. A. and Al-Tamimi A. (2000). Computerized System for Application of Value Engineering Methodology, Journal of Computing in Civil Engineering, ASCE v14, n3, pp. 206-214.

Creedy G. D., Skitmore M. and Wong J. K. W. (2010). Evaluation of Risk Factors Leading to Cost Over-run in Delivery of Highway Construction Proj-ects, Journal of Construction Engineering and Management, ASCE, v136, n5, pp 528-537.

Dallas, M. (2006). Maximizing project value through integrated risk and value management. SAVE International Journal, v9, Issue June.

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In C. H., Kung I. N. and Hyun C. T. (2009). A Study on the Consecutiveness of the Function Analysis and Idea Creation Phase with Function Integra-tion (FI) and Hierarchical Value Engineering Con-cept Modules(HVECM), Value World, Published by Save International, Spring, v32, n1, pp16-27.

Jaapar A., Maznan N. A., Azmi N, and Zawawi M. (2012). Implementation of Value Management in Public projects, Procedia - Social and Behavioral Sciences, v68, pp 77–86.

Jong, K., Ho, K., Heung, R. (2009). Advanced Value Metrics for Value Analysis of Construction Proj-ects. SAVE International Journal, v9, Issue June.

Kaming, P., Olomlaiye, P., Holt, G., and Harris, F. (1997). Factors influencing construction time and cost overruns on high-rise projects in Indonesia. Construction. Management and Economy, v15, pp83–94.

Lee J. K. (2008). Cost overrun and cause in Korean social overhead capital projects: Roads, rails, airports and ports, Journal of Urban Planning and Devision. v134, n2, pp59–62.

Minnesota department of transportation (2012). Re-port on Cost Risk Assessment and Value Engi-neering Workshop, Office of Project Management and Technical Support, 395 John Ireland Blvd. MS 696, St. Paul, MN 55155, USA.

Perkins, R. A. (2009). Sources of changes in design/build contracts for a governmental owner, man-agement of engineering and technology, Port-land International Centre for Publication, v5, n9, pp2148–2153.

Ranesh A., Zillante G. and Chileshe N. (2012). To-wards the integration of risk and value man-agement, Australasian Journal of Construction Economics and Building, Conference Series, v1, n2, pp43-51.

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Shen, Q.P., Chung, K.H., Li, H., Shen, L.Y., (2004). A group support system for improving value man-agement studies in construction. Automation in Construction, v13, n2, pp 209–224.

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Wu C., Hsieh T. and Cheng W., (2005).Statistical analysis of causes for design change in highway construction in Taiwan, International Journal of Project Management, v23, n7, pp 554–563.

Yu, T. W. (2007). A Value Management Framework for Systematic Identification and Precise Repre-sentation of Client Requirements in the Briefing Process, PhD. Dissertation. Department of Build-ing and Real Estate, The Hong Kong Polytechnic University, Hingham, Kowloon, Hong Kong.

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About the AuthorsIbrahim Ali Albalushi, MSc,

AVS, took his Bachelo of Science degree in civil engineering in 2001, at Sultan Qaboos Uni-versity in Oman. He obtained his Master’s degree in civil engineering (structural spe-cialist) in same university in 2010. Currently, he is a doctoral researcher in Universiti Tenaga Nasional in Malaysia. His research topic is ‘’Development of Value Engineering Advisory System in Public Construction

Projects of Oman’”. He has worked in the public construc-tion sector for 10 years and participated in construction of an aluminium smelter in Oman (US$3 billion project) as a senior project engineer for two years.

Dr. Fathoni Usman is the senior lecturer and head of the academic unit in civil engineer-ing department in the College of Engineering , Universiti Tenaga Nasional. He took his Ph.D. and Master’s degrees in civil engi-neering (structure and materi-als) at the Universiti Teknologi Malaysia, Malaysia, and earned his Bachleor’s degree in civil engineering at the Universitas

Sriwijaya, Palembang, Indonesia. His research expertise focuses on structure and materials, artificial intelligence, construction information technology system design and development, industrial building systems, and sustainable construction.

Dr. Ali S. Alnuaimi is an associate professor with the department of civil and archi-tectural engineering at Sultan Qaboos University, Oman. Dr. Alnuaimi took his Ph.D. from University of Glasgow, UK; and earned Master of Science

and Bachelor of Science dgrees from the University of Southern California, USA. His research expertise focuses on structural design and analysis, estimating construction cost and administration of construction contracts. He has published more than 33 journal papers and presented more than 30 conference papers.


Business Sustenance through Open Innovation at Tata Motors Limited

G. V. Srirama Kumar

AbstractWith rapid global change in economy, social

requirements and technological advancement, it has become indispensable for every organization to be agile enough to adopt the changes and perform bet-ter through delivery of enhanced value products or services through value optimization at various nodes right from the product conceptualization to delivery and providing valued support and services through-out its life cycle.

This is topped up by a continuous increase in Input raw material price (steel, aluminum, copper, consumables etc.), availability of limited natural resources, increase in pollution across the globe and has compelled the organizations to explore the ways which could reduce, reuse and recycle various products/process byproducts in order to minimize the waste generation and consequently the impact of resources and pollution to the surroundings.

The only way to create value at various nodes is by integrating the various processes at manufactur-ing site, supply chain, logistic chain and business process with the systematic approach of the Value Methodology—the soul of innovation.

In this paper we are going to present how seam-lessly value management and innovation are inte-grated at Tata Motors at various nodes of processes, both manufacturing and business processes to for-mulate both short term and long term strategy to achieve the organizational goal of becoming a world class organization.

1. IntroductionIn the organizational context, innovation may be

linked to positive changes in efficiency, productivity, quality, competitiveness, market share, and others. In today’s tough market conditions, it has become in-dispensable for the industry to innovate for a sustain-able business. Be it the business model, technology or

the operations, innovation is required in all spheres of business for bringing creative and insightful ideas successfully to the market. However, only ideation does not give rise to innovation, but it is the process of moving more and more ideas to market success-fully and faster. So in a way, innovation is bigger than just an idea, a thought, or a new concept. It is the implementation of all of it to create a product.

Traditionally, technological innovation has been within the domain of in-house research and develop-ment (RandD) departments, where intellectual equity is created solely for in-house consumption. In this insular corporate model, the fruits of “innovation” are jealously guarded resources for corporate differ-entiation, used primarily to keep an organization’s product pipeline filled, get to market faster or drive down operational costs. This insular viewpoint dictates that the quantity of innovation an organiza-tion can deliver correlates directly with the amount of resource invested or in other words, the breadth of the innovation pipeline is ultimately constrained by the size and wealth of a company’s RandD depart-ment (Embracing Open Innovation). Innovation has been the mantra of the industry to stay ahead of the competition. The fruits of the innovation have always remained the propelling force behind churning out new products and solutions to keep the core busi-ness running. But hitherto, this has been a highly insulated model in most of the organizations, where employees listen only to the top management while fail to listen to the users, who want a be�er value for the product. The value of the product depends on ability to deliver a be�er product at a cheaper price. When the companies fail to do that, the value curve for the product starts declining. The repeated failures of the industries to come up with innovative prod-ucts and solution for the problem have forced them to reinvent their model of innovation (Natarajan). A very recent example from the last decade is the fail-ure of Nokia feature phones with Symbian operating system, which is a closed development environment, beaten to ground by the Samsung smart phones with


Android OS, which has an open-source market place where individual developers can showcase their applications. Nokia failed to foresee the possibilities of the impact an open development environment could make, which eventually did happen, taking Nokia down from the market leader to a laggard in the smart phone market. Similar fate was shared by Research in Motion’s Blackberry as well, which once occupied the podium in the corporate mobile seg-ment, is now struggling for survival.

Having said that, it’s needless to say that old models, therefore, aren’t agile enough to keep prod-uct pipelines stocked and differentiate companies from their peers through closed, insular models of RandD-driven innovation alone. As a result, big organizations like Tata Motors Ltd. have realized the importance of restructuring themselves so as to en-sure a synergy not only amongst its various organi-zational verticals but also with vendors and channel partners, lest the “lake of innovative ideas” falls short of water which is always dangerous to the business sustainability. This “lake of ideas” mentioned above is known by the term “Open Innovation,” which was coined by Chesbrough and can be described as com-bining internal and external ideas as well as internal and external paths to market to advance the develop-ment of new technologies. It turns out that “Innova-tion Networks” rather than “Isolated Innovation Cen-ters” is the way forward where firms will co-innovate with customers, expand RandD productivity through partnerships, develop suppliers to match the innova-tion services required and last but most importantly, scout for talent across national borders (Radjou).

2. Innovation and Value CreationInnovation has been the mantra of success for

industries to stay ahead of competition. The fruit of the innovation has been the propelling force behind churning out the valued products and services to keep the business ahead. Basically, Innovation can be categorized into two models:

Closed InnovationOpen Innovation

2.1 Closed Innovation

In closed innovation (Figure 1, top), a company generates, develops and commercializes its own ideas.

This philosophy of self-reliance on its develop-ment and marketing process prevails. The closed innovation model is internally focused and highly insulated. It does not take into account any external viewpoints (like customers, vendors and channel partners).

This system has failed to deliver be�er value to their customers as the system is not able to reap the benefit of external ideas and technology. The re-peated failure of the organizations to come up with innovative products and services for their customers has forced them to embrace open innovation.

2.2 Open Innovation

Open Innovation is the business model which uti-lizes both internal and external ideas to create value at different process nodes which are involved in the value chain, right from conceiving the product to fi-nal delivery and aftermarket support to the customer. Normally, product design is intrinsic to the Com-pany, however the requirement of today is to look beyond the organizational boundaries and exploit external resources at the time of product design (Ven-dor and Channel partners, customers, Technological partnership etc.). This system helps in synchronizing external technical changes with internal expertise for product development.

The above picture (Figure 2) represents the way to address target market (customer requirements)

Target Customer

Organizational Boundary

Research Projects

Research Development Figure 1. Closed Innovation Model


by leveraging technology and ideas from various sources. The internal technology/ideas, synergized with that of external sources, give an organization the operational advantages like access to vast pool of knowledge and technology, reduced time to market at overall minimum cost while enabling it in provid-ing the valued products and services to the target market. These factors contribute in enhancing the overall product value.

This process of open innovation (Figure 3, below) integrates various design, manufacturing and busi-ness processes to drive innovation at their diff erent nodes.

Open Innovation is based on two core ideas:

Companies should use external knowledge and technology to strengthen their own innovations

1.

Companies should also create value from inter-nally developed innovations that may not be im-mediately applicable in their current business.

It provides a mindset in dealing with a business environment where relevant ideas are generated by internal and external sources. Value is created by continuously synchronizing internal and external development eff orts.

A good example of this is the Tata Nano (Figure 4, above), the world’s cheapest car. This was possible for the reason that the Nano team was able to connect to the customer need and aff ordability with its ven-dors integrated as a part of the process. This car was developed with a price tag of Rs. 1 lakh which was possible only through innovation at various nodes of diff erent processes right from engineering to market-ing. This was achieved by building partnerships with vendors and bringing everyone in the same boat to generate innovative ideas and make improvements. Suppliers were engaged in very early stage of design to co-create a low cost yet reliable product while meeting all the features and specifi cations for this segment of the market.

3. Sustenance Model At Tata Motors

Tata Motors is aligning its entire development and manufacturing processes including business process towards business sustenance by integrating the Value Methodology with Open Innovation. This methodology is being utilized to manage the 3Rs (Reduce, Reuse and Recycle) through rigorous people involvement by creating an environment conducive

2.Figure 2. Model combining internal and external resources

4

Fig. 3 Fig. 4


1. Companies should use external knowledge and technology to strengthen their own innovations

2. Companies should also create value from internally developed innovations that may not be immediatelyapplicable in their current business.

It provides a mindset in dealing with a business environment where relevant ideas are generated by internal and external sources. Value is created by continuously synchronizing internal & external development efforts.

A good example of this is Tata Nano (Fig. 4), World’s cheapest car. This was possible for the reason that the Nano team was able to connect to the customer need and affordability with its vendors integrated as a part of the process. This car was developed with a price tag of Rs. 1 lakh which was possible only through innovation at various nodes of different processes right from engineering to marketing. This was achieved by building partnerships with vendors and bringing everyone in the same boat to generate innovative ideas and make improvements. Suppliers were engaged in very early stage of design to co-create a low cost yet reliable product while meeting all the features and specifications for this segment of the market.

3. SUSTENANCE MODEL AT TATA MOTORS

Tata Motors is aligning its entire development & manufacturing processes including business process towards business sustenance by integrating Value Methodology with Open innovation. This methodology is being utilized to manage the 3Rs (Reduce, Reuse & Recycle) through rigorous people involvement by creating an environment conducive to creativity and innovation. This is not only helping in reducing the cost of delivery to the customers but also in reducing the consumption of natural resources through optimum resource utilization.

The sustenance model at Tata Motors can be divided into four pillars:

3.1 Reduce

3.2 Reuse

3.3 Recycle

3.4 HR Involvement – Fostering Innovation at TML

Figure 3. Open Innovation Model

4

Fig. 3 Fig. 4


1. Companies should use external knowledge and technology to strengthen their own innovations

2. Companies should also create value from internally developed innovations that may not be immediatelyapplicable in their current business.

It provides a mindset in dealing with a business environment where relevant ideas are generated by internal and external sources. Value is created by continuously synchronizing internal & external development efforts.

A good example of this is Tata Nano (Fig. 4), World’s cheapest car. This was possible for the reason that the Nano team was able to connect to the customer need and affordability with its vendors integrated as a part of the process. This car was developed with a price tag of Rs. 1 lakh which was possible only through innovation at various nodes of different processes right from engineering to marketing. This was achieved by building partnerships with vendors and bringing everyone in the same boat to generate innovative ideas and make improvements. Suppliers were engaged in very early stage of design to co-create a low cost yet reliable product while meeting all the features and specifications for this segment of the market.

3. SUSTENANCE MODEL AT TATA MOTORS

Tata Motors is aligning its entire development & manufacturing processes including business process towards business sustenance by integrating Value Methodology with Open innovation. This methodology is being utilized to manage the 3Rs (Reduce, Reuse & Recycle) through rigorous people involvement by creating an environment conducive to creativity and innovation. This is not only helping in reducing the cost of delivery to the customers but also in reducing the consumption of natural resources through optimum resource utilization.

The sustenance model at Tata Motors can be divided into four pillars:

3.1 Reduce

3.2 Reuse

3.3 Recycle

3.4 HR Involvement – Fostering Innovation at TML

Figure 4. Tata Nano

TargetMarket

InternalProduct

InternalTechnology

ExternalTechnology

External Development


to creativity and innovation. This is not only helping in reducing the cost of delivery to the customers but also in reducing the consumption of natural resources through optimum resource utilization.

The sustenance model at Tata Motors can be divided into four pil-lars:

3.1 Reduce3.2 Reuse3.3 Recycle3.4 HR Involvement – Fostering Innovation at TML

3.1 Reduce

The Value Methodology is a major contributor in reducing the consumption of valuable non-re-newable natural resources like steel, aluminum, rubber, fuel, power etc., which go into the product as raw materials or as inputs to the various value addition processes. In line with the concept of Open Innovation, Tata Motors exploits the innova-tions, ideas, proposals generated in house by its own people and at the same time taps the expertise of its channel partners for the same.

3.1.1 Involvement of Internal ResourcesVarious forums have been established to maxi-

mize the involvement of internal resources including top managements.

A) Top Management: Because of intense global pressure on reducing the selling price of the product and increase in cost of input materials, the organiza-tion integrates and aligns cost reduction opportu-nities with its business plan. The target is decided based on the above points and opportunities identi-fied which is cascaded down to plant level, then to division level and finally to every individual level. This becomes an important key performance measure for every individual. In order to drive the process and extend the support to the divisional coordina-tor, the value engineering central team, the spon-sors from senior management team of the plant are identified and are reviewed by the plant head with regular frequency and high value ideas are reviewed by steering commi�ee comprising of senior manage-ment of the company.

B. Employee

B.1 Through Workshop/Suggestion: Various workshops involving people from different disci-plines are organized by VE and ICR cell and the sug-gestion team against the various themes:

Terminate rust and corrosionEffective utilization of oil, grease and coolant on the shop floor to reduce our carbon foot printRecycling of treated effluent on shop floor for various applications to reduce carbon footprintEnhancing safety at work and homeManaging climate change Improvements in materials procurement and logisticsImprovements in manufacturing processes

These activities help in identification of various improvement opportunities. Various levers are used for identifying such opportunities and optimization potential with regard to design and process. These are further evaluated using systematic methodology of value engineering (job plan) by a panel called the Syndication Panel. Ideas then go through a series of testing, validation and implementation. Robust sys-tematic process based on the job plan is positioned which helps in reducing input material through iden-tification of optimization opportunities. Table 5 (pre-vious page) lists the various levers through which the potential for VA/VE for cost reduction at Tata Motors Ltd. is identified. These are broadly classified

Table 5. Levers for Cost Reduction

Levers for Enhancing Contribution

Technical Levers

Specifications Levers

Feature De-contenting

De-specification

Design Leavers

Material Substitution

Weight Reduction

Complexity Reduction

Parts Substitution

Modularization

Manufacturing Levers

Manufacturing Process Change

Commercial LeversSupplier Management Levers

Make vs. Buy

Joint Process Improvement

Alternate/Global Sourcing

Negotiation Improvement

Value Enhancement Levers

Specifications Levers

Feature Addition

Specification Upgradation


into Technical, Commercial and Value Enhancement levers.

Once the potential is identified, it has to go through a systematic validation process in order to reach the implementation stage. Table 5 (below) gives a condensed layout of this methodology.

B.2 Through Concept competition: Tata Motors has separate cell called ICM (integrated cost man-agement) which arranges the concept competition with regard to design optimization, improvement on driver ride and comforts and various value enhance-ment concepts for both passenger and commercial vehicles. This competition runs through all location of Tata Motors. The best idea is implemented to pro-vide be�er value to the customer.

B.3 Through CFT formation: The current chal-lenging environment demands the companies to be agile and responsive enough to the changes occur-ring around them. This requires the involvement of all its stake holders and channel partners. With this objective various CFTs are formed in order to tap the internal as well as external resources to meet the increased business challenges jointly.

B.3.1 CFT for waste minimization at supplier’s end: Tata Motors hand-holds the existing channel partners to make them agile to adopt the faster change in busi-ness challenges with regard to quality and delivery.

This helps in partnering for longer term and even in contingent situation.

B.3.2 CFT for Direct Material reduction — VA/VE: In order to mitigate the increase in input raw ma-

terial price and reduce the consumption of non-value adding raw materials, CFT approach is practiced. The recurring benefit accrued contributes to the bo�om line (i.e., profit line) thereby improving the selling margin which is important for long term business sustenance.

B.3.3 CFT for Logistic Cost Optimization: For an automobile giant like Tata Motors, logistics is one of the major non-value adding cost head. Especially with its Go Green policy for long term sustenance, its optimization is very critical. Thus, with the objec-tive of reducing fuel consumption during outbound logistics and improvement in supply chain, reduction in inventory carrying cost and avoidance of transit damage, CFT is working on creating a vendor park near the company premises. TML, Pantnagar has es-tablished a vendor park nearby its premises and the same concept is under implementation stage at TML, Jamshedpur and is being horizontally deployed at other locations.

Apart from this, for the vendors who are not able to shift immediately we are trying to reduce the logistic cost through optimization of logistic routes. Consultants have been involved for such optimiza-

Figure 5. Value Engineering Methodology at TML

Idea Generation Idea EvaluationIdea

S di tiDesign &

M k t T ti

Idea Implementation

Syndication Market Testingp

& Audit

• Idea generation workshops cum Benchmarking

• Identification of

• Develop ideal cost for each element

• Clean sheet ideal

• Technical feasibility clarified

• Go-ahead given

• Design drawings approved

• Supplier contracts signed

• Identify implementation requirements

• Get change

KeyActivities

aggregate for VA/VE Study

• Detailed study using VA/VE systematic approach – JOB PLAN

cost build-up if appropriate

• Evaluate feasibility/timing of ideas

• Verify potential cost savings

by all stakeholderso QAo ADDo Marketingo Serviceo ERC

• Marketing & service approval obtain

approvals• Initiate

engineering changes

• Discuss savings ideas with suppliers andPLAN cost savings

• Prepare discussion/ negotiation strategy for suppliers

• Identify

o ERC suppliers and agree on price

• Idea “installed” in vehicle

• Bottom line impact validatedCustomer Focus

yinvestment required

K

• Choice of projects to pursue

• Exhaustive list of rigorously evaluation with syndication estimate of the total

• Test Reports• DML Release

• EPA• Try out• Material

ClKeyActivities

pursue• Ideas for Commonization

of components

with syndication estimate of the total savings potential

• Go-no decision on ideas taken by the Steering Committee

DML Release Clearance• MBPA• BOM updation• Cost audit by

Finance


tion. The improvement in logistics of goods not only reduces the cost but also reduce the consumption of fuel. This also helped in reducing the line interrup-tion by just-in-time delivery of goods from various vendors thereby delivering the required quantity to our customer. It also reduces the pollution impact to the surrounding which is important for long term sustenance of the globe.

B.4 Awareness on VA/VE through Training: As a part of induction training, all the new recruits have to undergo compulsory training on VA/VE and TML perspective of it. The training is imparted by a pool of internally created Associate Value Specialists through and internal training module to employees at different levels (operator, supervisory and mana-gerial level).

B.5 In-house KAIZEN Activities: In order to reduce the non-value adding process steps and opti-mizing the necessary process steps thereby improv-ing productivity, quality, delivery and reducing waste generation, Tata Motors has a dedicated Kaizen department, thereby helping providing be�er value to both internal and external customers. This process is well aligned and integrated with our Balanced Score Card (BSC) which takes care of monitoring, review and the progress of corrective and preventive action against identified key performance measures (KPMs) from financial, customer, process and learning and sharing across location at all levels.

3.1.2 Involvement of External ResourcesA) Vendors and Their Technology: For the en-

tire new product’s introduction, the vendors are involved very early at the conceptualization stage to avoid unnecessary cost and value improvements. For improving the value of already established products, the central team organizes IGS wherein the related suppliers are enrolled for their valuable suggestions. TML systems allow passing on the cost benefit if the ideas are originated from supplier’s end. This is how the vendors’ motivation levels are kept up and, in return, they suggest options which may be valuable to both customers and the organization. Implemen-tation of parabolic and value engineered springs instead of conventional ones is one of the classic cases of vendors and their technical and technologi-cal capability involvement.

A.1 Front Suspension with Parabolic Spring (Fig-ure 6, above): This was developed for be�er life, ride and comfort, improvement in load carrying capacity and KMPL thereby improved value. This also helped in reducing consumption of spring steel by approxi-mately 40 percent and consequently in consumption

of natural resources consumed in making this steel and pollution level to this extent.

A.2 Rear Suspension with Value Engineered Spring: Weight reduction of spring steel (Figure 7, below) by 11Kg through systematic VA/VE study at the vendor’s end.

B) Through Expert Consultants: With a challenge of maximizing the product value, continuous efforts are being made for cross fertilizing the internal prac-tices with the best one being used at competition end. For such cross fertilization, Tata Motors is involving experts in such domain as per the need.

Fig. 7 Parabolic Spring Fig. 8 VE Spring Figure 6. Parabolic Spring

Fig. 7 Parabolic Spring Fig. 8 VE Spring Figure 7. VE Spring


Launch of CREST Program: This program was launched by Tata Motors in year 2010 with involve-ment of a team of consultants (M/s A. T. Kearney) expert in this domain. The program “Cost Reduction through Engineering and Sourcing Transformation’” (formally called CREST) is aligned towards one of the major strategic planks; i.e., to become a low-cost manufacturer.

Internal resources from different disciplines across all locations were identified for joint study with M/s A. T. Kearney to identify opportunities for cost reduction and value enhancement. During the journey, technical expert at international level on different aggregates were also engaged to identify and help in syndication from different stake holders. Teams had to work with the target of 6 percent cost reduction across each aggregate blending the exper-tise of internal, external, and suppliers and experts which is core of the open innovation.

3.2 Reuse

Tata Motors has a well laid down process to ensure the reuse of parts with minor modification at some other business unit (the second requirement of Open Innovation). Tata Recon is a well-established unit which is accountable for reconditioning of old aggregates (engine, gear box, cooling systems) and is sold as Recon exchange in the market. In this process the old aggregates are brought in, dismantled and segregated followed by inspection as per well-estab-lished Recon norms.

Items which can be directly consumed.Items which can be used after salvaging and test-ing.Items which cannot be used at all (scrapped items).

Items which cannot be salvaged are replaced with newly manufactured parts. Salvageable items under-go a well proven salvaging process and testing and are used after rigorous testing. Recon products are at par with the OE products and have similar warranty period.

It is one of the key processes contributing to busi-ness sustainability by reducing the consumption of natural resources in supply chain but also impacts the bo�om line of the organization positively.

Major aggregates with almost 70 percent buy in a vehicle (e.g. engine, gear box, turbocharger, cool-ing package etc.) are being reconditioned, reiterating

1.2.

3.

Tata’s corporate responsibility towards environmen-tal sustenance with higher value to the customer at lower cost.

Following is the list of aggregates which are re-conditioned for reuse at Tata Recon:

S.No Product1 Long Block

2 Gear Box

3 Turbocharger

4 FIP

5 Power Steering

6 Oil Pump

7 Air Compressor

8 Clutch

Figure 8. Turbocharger: profile repair by gas welding with the help of filler.

Figure 9. Cylinder head cover: crack repairing and flatness checking.


S.No Product9 Alternator

10 Starter Motor

11 Release BearingAssly-1.75

12 Carrier Housing

13 Air Dryer

14 Brake Actuator

15 Aux. Coolant Tank

16 Oil Separator

17 Brake Valve

18 Relay Valve

19 Brake Caliper

20 System Protection Valve

21 Quick Release Valve

22 Intercooler

23 Radiator with Frame

24 Tire

3.2 Recycle

Recycling is a key component of modern waste reduction and is the third component of the “Reduce, Reuse, Recycle” waste hierarchy.

Tata Motors has been promoting recycling activi-ties both at in-house and suppliers end to enhance the use value of items being scrapped. Major break-through has been recycling of paint sludge. The worldwide accepted process for paint sludge dispos-al is incineration. However, Tata Motors pioneered that project of developing useful products from this hazardous non-biodegradable waste. These products are being as casting sealers and anti-corrosive paint being used for painting engines, truck chassis frames, transmission housings and axle assemblies.

Benefits obtained through this innovation are:

Air is cleaner by 207 tCo2e per annum

Natural resources are saved by 360 MT, which otherwise would have been used in fresh paints

Incinerator load reduction by 85%

Energy savings : 87000KWH/ annum

Fuel savings: 42000 Liter/annum

A net value generated of Rs.1.35 Cr. /annum in terms of direct material and not operating the incinerator.

Similarly components being scrapped at various nodes of the manufacturer-customer-supply chain are also being recycled and reused. Some of them are listed below:

Recycling of covers for transit to avoid dust entry.Recycling of components complying CMVR regulations later modified by customers. For example, canopy recycling at Tata Motors Ltd. Jamshedpur. All the cowl vehicles are fi�ed with a canopy shown (Figure 10, above). The canopies are collected back from all the distribution centers and are returned to the plant through a contractor. The company saves around Rs 1000 per vehicle in this process which, for an average produc-tion of 20,000 cowl vehicles, turns out to be around Rs 2 Crore per annum.Figure 11 (right) depicts the overall performance trend of recycling activity at Tata Motors Ltd.

Figure 10. Canopy (to be recycled)

Figure 11. Recycled material per vehicle


3.4.2 Internal Inputs

A) Fostering Innovation through Inter/Intra Company Competition: In order to recognize inno-vation and incorporate best of best ideas in product design to deliver be�er value, Tata Motors organizes various competitions. Few design themes are as fol-lows:

Concept competition: window winding unit — Vista/Manza

Concept Competition - clutch operating system — Vista/Manza

The ideas are collated, evaluated by expert team and suggestors are recognized through award mech-anism.

B) Creation of Internal Trainer Pool: The amount of knowledge and experience an organization has acquired over a period of time requires to be trans-ferred from one generation to next generation and even the horizontal sharing in the same generation level. Tata Motors HR has created a pool of internal

Figure 12. Capturing Ideas

Capturing ideas across the value chainSystematic processes to capture ideas

Processes to capitalize on diverse ideas, cultures and thinking

Examples of ideas captured and implemented

From employeesTeam structures, Suggestion scheme, share café, idea generations, Job rotations, Systematic employee movement within domestic and international business, etc.

NPI, Material cost movement for model LPT2515/48TC through employee CFTs, EDP programme

From customersVOC, Customer clinic, Dealer/Distributor meets, key accounts by leaders, Naka visits, Auto Expo, CRM, etc.

Improvements in rear axel. Strong chassis frame. Load body & clutch plate.

From suppliersSupplier meets, Technology day, SRM availability, etc. Advanced Break System, Hydro forming.

From communityDevelopment of volunteers, Community centres, Periodic group meetings, Government liaison, Student community, etc.

Soak pits, Bunds, Alternate energy, anti pollution drives, Nirmal Gram plans

From international business related customers/employeesProduct/Country managers and regional managers along with focus team from distributors capturing customers’ requirements, etc.

Engine heating system in extreme cold conditions, Reducing Engine wear in extreme hot conditions

3.4 HR-Fostering Innovation at TML

HR Department has a very important role to play in creating an environment conducive to innova-tion and at the same time keeping the employee (the brain) motivated enough to be receptive and respon-sive to the changes occurring around and effectively manage the blend of knowledge acquired through internal and external sources.

3.4.1 External inputs

A) Creating Knowledge Pool through Lateral Recruitments: Lateral recruits at all levels of compe-tition bring in their best practices and critical third party views and inputs for system improvement.

B) Acquiring Knowledge through Domain Ex-perts: HRD, apart from incorporating group policy for employee management and motivation also involves external consultants to upgrade itself are the subject and know the global best practices for higher employee motivation and talent management to en-sure the effective management of the acquired blend of internal and external knowledge /resources.


trainers for such sharing and keeps on increasing the pool strength.

Efforts are continuously on to upgrade, enlarge and motivate this internal training resource through HR initiatives like iteach. This ensures an atmosphere congenial to improving value to the customer at all levels.

4. ConclusionThe most common issue that is plaguing the

companies is to manage the proper utilization of input materials while designing new products com-mensurate to its use value, complete exploitation and enhancement of the use value of the already used products. The concept of open innovation with a blend of systematic approach of value engineering has strengthened us in managing the above points thereby providing be�er value to the customer and benefits to all stake holders including nature.

Tata Motors is saving considerable amount of steel, Aluminum and various consumables being used in manufacturing and accounting the remark-able benefits in terms of handsome money ( more than Rs. 600 Crore every year) through management of such blend as a byproduct. Open innovation mod-el is helping us harness the knowledge and expertise available with all our external channel partners and Tata Motors is able to produce and deliver the right

Internal Suppliers

Experts Competitors

Data analytics

Internal cross-functional workshops

Internal benchmarking across models

Ideas from other platforms (e.g., Ace, LCVs)

Industry experts with prior experience with OEMs/suppliers

A.T. Kearney Subject Matter Experts (SMEs)

Applicable ideas from A.T. Kearney Idea database

Supplier discussion and visits

Organized supplier workshops with teardowns

Joint programs for critical suppliers (e.g., Cummins)

Feature and specification comparisons

Idea workshops using competitor teardowns

Figure 13. Open Innovation at Tata Motors Ltd. — a bird’s eye view

product at right time to its target customer at over all lowest cost and hence, be�er value over their compe-tition. This is why the organization is leading its seg-ment with a market share of 67 to 70 percent. Figure 12 (next page, top) shows the various processes/av-enues to capture ideas from all stake holders across the value chain.

The essence of open innovation lies in taking inputs from of all the stakeholders of the value chain for the process of value engineering and subsequent cost reduction, which for Tata Motors, can be depict-ed as following.

References:Embracing Open Innovation: A new approach to cre-

ating sustainable value by British Telecom

Mahesh Natarajan (Solution Architect), Ragavendra Prabhakar (Design Analyst), “VALUE CRE-ATION THROUGH OPEN INNOVATION”.

Navi Radjou “Innovation Networks”

Henry Chesbrough, “Open Business Models: How to Thrive in the New Innovation Landscape”, Bos-ton: Harvard Business School Press, 2006


Are Your Questions Sabotaging Your Relationships?

Most people don’t put much thought into the questions they ask—a mistake that can cause relationships to deteriorate and misunderstandings to abound. Geoffrey Tumlin shares seven tips to help you become a better questioner—and as a result, build better, more productive relationships at work and at home.

New York, NY (April 2014)—It’s usually not hard to pin-point the moment when a conversation goes south. Often, that downward spiral begins with a question. Maybe you ask a colleague, “Why did you format the report like this?” Or you ask your spouse, “Are your parents coming to dinner again?” Or you ask a stranger on the bus, “Could you move over?” These questions—and many others—may have seemed innocent when they were coming out of your mouth. But fail to provide context, emphasize the wrong word, or just forget to add “please,” and you’re suddenly in hot water.

Yes, questions can be tricky territory. The colleague in the scenario above gets defensive, the spouse assumes you hate her parents, and the stranger hears, “You’re taking up too much space, fatso!” Communication consultant Geof-frey Tumlin says abrupt questions and the unanticipated responses they trigger are a peril of the times we live in.

“Consider the ease with which we can turn to the Internet to answer virtually any question,” says Tumlin, author of the new book Stop Talking, Start Communicating: Counterintuitive Secrets to Success in Business and in Life (McGraw-Hill, August 2013, ISBN: 978-0-0718130-4-4, $20.00, www.tumlin.com). “It lulls us into thinking that questions are simple and that answers exist to meet our needs.

“Plus, it’s not always easy to divine another person’s in-tent behind a face-to-face query—and the task is that much harder in the digital age, where we so often lack visual cues and the ability to gather immediate feedback,” he adds. “And the frantic pace of life today just isn’t conducive to thoughtfulness or deliberation, which are two prerequisites of effective questioning.”

Tumlin says questioning is a higher-order communi-cation skill that we haven’t taken seriously for centuries. The days of Socrates masterfully using questions to lead a conversation are long past. Yet even in 2014 we can make an effort to improve our questioning skills—and the first step is to curb our tendency to ask faulty questions.

“In general, faulty questions are those we ask to indulge our personal, ‘I-based’ cravings to get an answer, to hammer home a point, or to satisfy a narrow, personal curi-osity,” Tumlin explains. “Whether they’re critical, tactless, unwanted, offensive, embarrassing, intrusive, or loaded, these types of questions are likely to stifle dialogue and can cause relationships to deteriorate.”

Instead, he says, focus on what you can learn from or about another person. This “we-based” perspective, which reflects a broad curiosity about the person or topic you’re discussing, will fuel more meaningful conversations and develop richer relationships.

Here, Tumlin shares seven specific tips to help you improve your questions:

Clarify your intent. The inimitable Yogi Berra once said, “You’ve got to be very careful if you don’t know where you

Continued on page 46

C.K. Prahalad and M.S. Krishnan, ”The New Age of Innovation: Driving Cocreated Value Through Global Networks”, McGraw-Hill, 2008

Venky Rao , “INSIGHTS, White paper on Innovation Networks: Harnessing the Power of Ecosystems to Transform Organizations”.

About the AuthorMr. G. V. Srirama Kumar has been employed by Tata

Motors since 1981, and has 31 year of technical and mana-gerial experience. He has as M.Tech degree in foundry technology-metallurgy from IIT Kharagpur. Presently he is head of purchases and supply chain at Tata Motors, Jamshedpur. He is an Associate Value Specialist, chairman of the Eastern Zonal Council of the Indian Value Engineer-ing Society (INVEST), and vice chairman of the Indian Institute of Materials Management, Jamshedpur, and secretary of INSSAN, EIC.


Improving Feasibility of Mega Infrastructure Project Development Using Value

Engineering MethodMohammed Ali Berawi, Bambang Susantono, Suyono Dikun, Tommy Ilyas, Herawati Zetha, Abdur Rohim Boy Berawi, Teuku Yuri Zagloel,

Perdana Miraj, Jade Sjafrecia Petroceany

AbstractAccording to RPJMN 2010 – 2014, the Govern-

ment of Indonesia stated that the priority of infra-structure development was an increase of 10 – 14 percent in transportation sector. Railway transporta-tion provides a significant role in national economic development with investment required about 41.20% from the total investment in transportation sector. Soekarno- Ha�a International Airport Railway Link (SHIARL), as one of mega infrastructure projects, is expected to provide accessibility and mobility for people and goods from and to the airport. Currently, the project realization by using PPP scheme is not able to a�ract private investors. Incomplete PPP proj-ect proposal preparations are argued to be the major obstacles which causes lack of quality in the feasibil-ity study.

Therefore, it is required an alternative approach to obtain values added to the project feasibility us-ing value engineering (VE) method. VE is used to identify additional functions, to provide creative and innovative ideas and to produce the best options for the project development. This research is aimed to improve the quality of SHIARL feasibility study by implementing value engineering method in the plan-ning stage.

The research methodology is conducted by a combination of qualitative and quantitative ap-proaches through questionnaire surveys, action researches and focus group discussions. The result of VE study indicates that Soekarno-Ha�a Interna-tional Airport Rail Link (SHIARL) is an innovative conceptual design to overcome congestion and flood through the integration of airport rail link and MRT

line in one tunnel called Public Railway and Storm-water Infrastructure (PRASTI) Tunnel.

KeywordsInnovation; Mega Infrastructure; Airport Railway;

Mass Transportation; Value Engineering

1. IntroductionPriority of the infrastructure development in

Indonesia is an increase in transportation sector of 10–14 percent with investment projection up to US$64 billion or 44.8 percent of the total infrastruc-ture investment in 2010 – 2014. Railway infrastruc-ture will play a significant role in national economic development by contributing 41.20 percent from the transportation sector investment (Dikun, 2010). Private sector is expected to contribute about 51.20 percent from the total railway project financial.

Soekarno – Ha�a Airport Rail Link (SHIARL) is one of mega infrastructures in Indonesia railway transportation. As one of the busiest airport in the world, Soekarno – Ha�a airport has significant growth of passengers around 14% per year and serves 44 million passengers per year. Access to the airport depends mainly on the intercity roads and Sediyatmo highways, which naturally causes conges-tion and travel time uncertainty while in peak hours. On the other hand, flooded highways near the airport duringrainy season are worsening the accessibility and potentially reducing the transportation sector performance. In such condition, alternative mode of transportation through railway construction is


required in order to provide high mobility of pas-sengers and goods from and to the airport. Therefore, SHIARL project is expected to increase punctuality and to provide a be�er mass transportation for the public.

SHIARL feasibility project was first employed in 2002 by PT.RAILINK and offered to the investors in Infrastructure Summit in the period of 2005 and 2006. Due to failure in its financial feasibility, the project was re-developed to a�ract private investors. Cur-rently, SHIARL project downgrades its status from ready-to-offer project into priority project. Major gap between the initial cost and the return on invest-ment to the private investors is argued to be the main reason why SHIARL is lacking of interest from the private investors. Therefore, alternative approaches are required by creating added values to improve the feasibility study of the project.

This paper aims to improve the quality of the fea-sibility study of Soekarno Ha�a International Airport Railway Links (SHIARL) by applying value engineer-ing (VE).VE has been applied in various projects, particularly in mega infrastructure projects. VE is a proven systematical method in analyzing functions of a system in order to provide optimum outcome for a project in term of quality (Sik-wah Fong and Shen, 2000; Woodhead and Berawi, 2007), technol-ogy breakthrough (Berawi,2013; Yang, et al., 2012), efficiency (Berawi andWoodhead,2005; Abdul-Rah-man, et al., 2008) and innovation (Berawi and Wood-head, 2008; Chen, et al., 2010) Application of VE at the initial and conceptual stages of an infrastructure project will increase efficiency and effectiveness of the project. VE approach in SHIARL project is started by seeking additional functions that can be integrated into the project. The result is expected to provide an innovative conceptual design to address problems in Jakarta.

2. MethodologyThis research employed a combination of quanti-

tative and qualitative approaches (Green & Caracelli, 1997). Quantitative approaches are characterized by the use of control variables and objectivity that are conducted through questionnaire survey and Life Cycle Cost (LCC) analysis. Qualitative approaches (Creswell, 1998) are conducted by using a participa-tory action research (participative action) which criti-cizing the assumptions and allowing for the learn-ing process (Carr & Kemmis, 1986) and “grounded

theory” (Strauss & Corbin, 1998) through focus group discussions.

The questionnaires were distributed by way of online (soft copy) and offline (mail/hard copy) sur-veys and aimed to identify the stakeholders’ per-ception on the ideas generation produced by value engineering process. The respondents for offline questionnaires were government and private compa-nies related to infrastructure development, including PT Kereta Api Indonesia (KAI), PT Railink, PT INKA, Ministry of Transportation, Ministry of Public Works, PT Jasa Marga, PT Wijaya Karya, Bappenas, PT IIGF (Indonesia Infrastructure Guarantee Fund), PT Sara-na Multi Infrastructure (SMI), Special Commi�ee for the Acceleration of Infrastructure Indonesia, and the Investment Coordinating Board. While online survey questionnaires were sent to the respondents via e-mail to six mailing groups of construction industries and value engineering practitioners in Indonesia. The data collected from the questionnaire surveys was then analyzed by using inferential statistics, Cron-cbach’s Alpha and one sample T-test to determine the respondents’ proportion and the reliability of the responses to the questionnaires based on a 95 percent confidence level.

3. Results and DiscussionThe process of questionnaire surveys took a

month (30 days) from August 1st, 2012, to August 30th, 2012, with 32 returned questionnaires. Once the analysis of questionnaire survey was completed, the next stage, focus group discussions (FGDs) com-menced. FGDs were conducted as a validation and verification in order to gain more inputs from various stakeholders of SHIARL project on the findings.

3.1. Questionnaire Survey

Most of the respondents work for private compa-nies with a coefficient of 43 percent and the second largest part of the respondents work for government agencies. Meanwhile, more than 50 percent of the respondents are post graduate holders and 26 per-cent of them hold managerial and general director positions.

According to the respondents’ answers, most of them agreed that punctuality was the major factor in selecting public transportation, particularly when us-ing railway transport. Additional functions that could be integrated into SHIARL project were residential,


business centers and city check–in. Extra cost from these additional functions to SHIARL project can be tolerate up to 30 percent from the previous SHIARL total investment. Questionnaire results also showed that private sectors were expected to be much more involved in financial support with proportion of 40 percent government and 60 percent private sectors. Focus group discussions (FGDs) also confirmed that the questionnaire results on flood mitigation, fiber optic and transit-oriented development (TOD) as potential additional functions to the project.

3.2. Value Creation

Valuable data gained from the questionnaire surveys and focus group discussions was used to cre-ate ideas by seeking additional functions that can be integrated into the project through a FAST diagram. Innovative ideas for SHIARL project are generated from various problems found in Jakarta region, tar-geted development set by the government in a period

of 20 years and potential transportation development to be integrated in the project.

One of the problems in Jakarta is devastating an-nual flood in rainy season and periodically disturbed accessibility of users to the airport which depends largely on the intercity roads and Sediyatmo high-

Table 1. Innovative Ideas for SHIARL

Reference Innovative IdeasLimited land Underground infrastructure

Lack of public transportation

Mass rapid transit (MRT) integra-tion

Flood Flood tunnel integration

Needs in communication

Fiber optic integration

Renewable energy

Utilizing natural resources (solar, kinetic energies)

Increase region-al economy

Developing commercial areas (residences, business centers)

Figure 1. FAST Diagram for Kereta API Bandara (Soekarno Hatta Airport Railway Link [SHIAARL])

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Figure 2. Route of PRASTI Tunnel

ways. This dependency also leads to congestion and travel time uncertainty during peak hours while com-muters struggling to access or leave their office. The increasing number of commuters using their private vehicles is considered as a result of the poor public transportation and the limited land availability in Jakarta to serve the city functions and people activi-ties makes the people moves to the city perimeters. On the other hand, the development of roads which are used for the commuter’s vehicles accessibility is nearly below 1 percent per year and compared to over 1,000 new vehicles sold every day, the roads are predicted to be stuck in 2020. Rail–based project de-velopment is argued as the best solution to solve the transportation problems in Jakarta region. Potential railway project, particularly for urban development, is mass rapid transit (MRT) Jakarta planned along 110.8 km line, which is divided into north and south corridors. (See Table 1, previous page, top.)

Various problems that occurred in Jakarta and the potency of development provoke innovative ideas for the project. Underground infrastructure is proposed as a solution for the limited land in Jakarta by inte-grating MRT line and flood tunnel that will be used to solve Jakarta’s lack of public transportation and annual flood. Economic aspect is also considered by proposing commercial area and fiber optic integra-tion to generate regional income. In the meantime,

the application of natural resources to the project is expected to increase ef-ficiency and quality of the environment. These ideas lead to the development of FAST diagram as shown in Figure 1 (previous page, bo�om).

3.3. Public Railway and Stormwater Infrastructure (PRASTI) Tunnel

Public Railway and Stormwater Infrastructure (PRASTI) Tunnel is a con-ceptual design of multi–function tunnel generated from function analysis stage of value engineer-ing method. It is aimed to

overcome congestion, reduce flood in Jabodetabek area and increase accessibility from and to Soekarno – Ha�a airport by integrating three main functions, namely MRT, airport railway, and flood control, in one tunnel development. The proposed diameter of the tunnel is 19 meter, about25 – 40 meter under-ground and span along 9 kilometer from Dukuh Atas station to Pluit. (See Figure 2, above.)

The tunnel is divided into three (3) levels; the first level is served as flood control, the second level is

Figure 3. Cross-Section View of PRASTI Tunnel


train and MRT, telecommunication, and commercial area development. Although the construction cost for tunnel around the world vary depends on numer-ous factors, the initial cost for PRASTI Tunnel will be determined through benchmarking tunnel projects with similar diameter and functions. Comparisons for unit prices for the tunnel projects were gathered from benchmarking various tunnels in the world, from SMART Tunnel in Malaysia to Channel Tunnel in UK. Since PRASTI Tunnel diameter (19 m) is much larger compared to SMART Tunnel (13.2 m), interpo-lation approach is then used for calculating PRASTI Tunnel’s initial cost. On the other hand, operational and maintenance costs for the tunnel are assumed 0.5 percent from the initial cost (Baumgartner, 2001) or equals to US$78,554,192.63 increasing with annual inflation per year.

Initial cost for the function of transportation comprises of airport train and MRT. Both have similar components consisting of tracks, electricity for 18 km as well as signal and telecommunication for 9 km, and additional two units of sub-stations are added for the airport train. Therefore, the initial cost for transportation function is estimated about US$93,217,500.00 with US$622,575.00 per year for operational and maintenance cost in airport train sec-tion and US$720,450.00 per year for operational and maintenance cost in MRT section.

Considering the fiber optic construction cost proposed by PT Telkom, an Indonesia’s state owned enterprise for telecommunication, which is about US$15,933.33/km, the 9 km-long fiber optic construc-tion in PRASTI Tunnel will cost about US$143,400.00. Meanwhile, operational and maintenance cost for fiber optic of PRASTI Tunnel will require about US$10,687.50 and increasing with annual inflation every year. Furthermore, there is a 5,600 square meters, commercial area located underground and divided into six MRT underground stations and Du-

Table 2. Summary of PRASTI Tunnel Cost

PRASTI Tunnel Function Initial Cost Annual Operational and Maintenance Cost

Flood Function 1,636,545,679.70 78,554,192.63

Transportation Function

a. Airport Train 44,161,875.00 622,575.00

b. MRT 49,055,625.00 720,450.00

Telecommunication Function 143,400.00 10,687.50

Commercial Area Development Function 382,678,365.83 7,653,567.32

Total Initial Cost 2,112,584,945.53 87,561,472.45

served as airport accessibility through SHIARL and the third level is expected to increase public transport through MRT line. The cross-section visualization of PRASTI Tunnel concept is shown in Figures 3 (previ-ous page, bo�om) and Figure 4 (above).

As the result, a total route of about 38.5 kilo-meters connects Halim airport in Eastern Jakarta with Soekarno – Ha�a airport in Western Jakarta by using median road of the intercity toll road. This route is divided into three sections; the first section is from Halim airport to Dukuh Atas with elevated lane along 12 kilometers, the second section is from Dukuh Atas to Sedyatmo Toll Road near Pluit, which will be built by using PRASTI Tunnel along nine kilometers, and the third section from Sedyatmo Toll Road near Pluit to Soekarno – Ha�a airport with elevated lane along 17.5 kilometers.

3.4. Construction, Operational and Maintenance Cost of PRASTI Tunnel

The construction cost for PRASTI tun-nel will be divided into four functions, namely Flood, Trans-portation which consists of airport

Figure 4. Diameter Analysis of PRASTI Tunnel


4) commercial area development function. Initial cost for multi–function tunnel is US$2,112,584,945.53 with operational and maintenance costs about US$87,561,472.45, increasing with annual inflation every year.

AcknowledgementThis research was fully supported by the Univer-

sity of Indonesia Research Grant and the Ministry of Education, Republic of Indonesia.

ReferencesAbdul-Rahman, H., Yahya I.A., Berawi M.A., WaiWah

L. (2008), A Conceptual Model for Mitigating Delay in Construction Projects Using a Project Learning Approach, Construction Management and Economics.

Baumgartner, J.P. (2008), Prices and costs in the rail-way sector. Institut des transports et de planifica-tion.

Berawi, M.A., Susantono, B. (2013), Developing Con-ceptual Design of Mega Infrastructure Project: Cre-ating Innovation and Added Value, Value World, Vol. 35, Numver: 1, pp. 12-20, SAVE Press, USA.

Berawi, M.A.,Woodhead, R.M. (2005), Application of Knowledge Management in Production Manage-ment, Human Factors and Ergonomics in Manu-facturing, Vol. 15, No. 3, pp.249 – 257, Wiley and Son.

Berawi, M.A.,Woodhead, R.M. (2008), Stimulating In-novation Using Function Models: Adding Product Value, Value World, Volume: 31, Number: 2, pp. 4-7, SAVE Press, USA.

Carr, W.,Kemmis, S. (1986), Becoming Critical: Edu-cation, Knowledge and Action Research,Falmer Press.

Chen, W.T., Chang, P.-Y., Huang, Y.-H., (2010), Assess-ing the overall performance of value engineering workshops for construction projects. International Journal of Project Management, 28, 514-527.

Creswell, J. (1998), Qualitative Inquiry and Research Design; Choosing Among Five Traditions, Sage Publications, London.

Dikun, S, (2010), The Interface Report: Substances to Support the National Railway Master Plan.Jakarta

kuh Atas station. Construction cost for the commer-cial area is estimated about US$14,000,000.00. While six MRT and Dukuh Atas stations will cost about US$368,678,365.80. On the other hand, operations and maintenance costs are assumed 2 percent from the initial cost, which will cost about US$7,653,567.32.The overall calculation for the identified functions is summarized in Table 2 (previous page, bo�om).

Currently, separate projects of related func-tions in PRASTI Tunnel have been proposed to be developed in Jakarta area. Firstly, the MRT project proposed by the Indonesian government to reduce congestion in Jakarta requires about US$3,388.8 mil-lion for 23.3 km from Lebak Bulus in South Jakarta to Kampung Banda in North Jakarta. Meanwhile, according to the Ministry of Development Planning (2013), airport train construction from Halim air-port in Eastern Jakarta to Soekarno – Ha�a airport in Western Jakarta along 38.5 km requires about US$2,580 million and will be built with three main stations. Lastly, a flood control system is proposed with a cost of about US$1,700 million to reduce annual heavy flooding that caused a loss of about US$2,000 in 2013. Compared to US$7,668.8 million of separate projects that have been proposed before, US$2,112.58 million of PRASTI Tunnel investment, which integrates all the functions, is an effective way to overcome various problems in Jakarta and an in-novative solution to obtain financial feasibility of the project.

On top of that, the revenue estimation gener-ated from transportation, commercial areas, utilities and benefits from flood control have shown that the feasibility of PRASTI Tunnel is increased with Public Private Partnership (PPP) financial scheme.

4. ConclusionValue engineering (VE) has been widely applied

to produce optimum result for projects development through the fulfillment of the required quality, ap-plication of advanced technology and achievement of innovative ideas. VE application for mega infrastruc-ture, particularly in SHIARL, has produced added value to the project. This method improves the exist-ing conceptual design of SHIARL project by creating innovation through the development of Public Rail-way and Stormwater Infrastructure (PRASTI) Tunnel that combined the following functions: 1) transpor-tation function through airport train and MRT; 2); flood function 3) telecommunication tunction, and


Greene, J. C.,Caracelli, V. J. (1997), Defining and describing the paradigm issue in mixed-method evaluation, in J. C. Greene and V. J. Caracelli (eds.), Advances in mixed-method evaluation: The chal-lenges and benefits of integrating diverse para-digms, New Directions for Program Evaluation, No. 74., pp. 5-18, San Francisco.

Ministry of Development Planning. (2013), Public Pri-vate Partnership (PPP) Infrastructure Project Plan in Indonesia. Jakarta.

Sik-wah Fong, Shen, Q. P. (2000), Is the Hong Kong construction industry ready for value manage-ment? International Journal of Project Manage-ment, 18, 317-326.

Statistics Indonesia (2013), Statistical Yearbook of In-donesia, Jakarta, Statistics Indonesia.

Strauss, A., & Corbin, J. (1998),Basics of qualitative re-search: Techniques and procedures for developing grounded theory (2nd Ed.). Thousand Oaks, CA: Sage Publications.

Woodhead, R.M.,Berawi, M.A. (2007), An Alternative Theory to Idea Generation, International Journal of Management Practice, Volume 3,No. 1, pp.1-19.

Yang, L.R., Chen, J.H., Wang, H.W. (2012), Assess-ing impacts of information technology on project success through knowledge management practice. Automation in Construction, 22, 182-191.

About the Authors Dr. Mohammed Ali Berawi received his Ph.D. in in-

novation management from Oxford Brookes University at Oxford, UK. He currently researches value engineering/ value management and innovation in the context of in-frastructure, construction and manufacturing industries. He has authored and co-authored more than 50 scientific publications. Dr Berawi has also been involved in many national and international research collaboration and consultancy works. He is currently the Head of Integrated Design and Technology (IDTech) Research Group, Faculty of Engineering, University of Indonesia.

Dr. Susantono holds a Ph.D. in infrastructure plan-ning from the University of California at Berkeley. He is the Head of Infrastructure Management Graduate Program, Faculty of Engineering, University of Indone-sia. He has authored and co-authored numerous books, articles and scientific publications. Besides teaching in the university, Dr. Susantono has been appointed in various positions both in the public and private institutions. He

is currently the President of Intelligent Transportation System (ITS) of Indonesia, and serves as the Vice Minister of Ministry of Transportation, Republic of Indonesia.

Dr. Suyono Dikun received his PhD in Transporta-tion System Planning from the University of Wisconsin-Madison, USA. Dr. Dikun is a professor in infrastructure management at the University of Indonesia and has more than 30 years professional experience in infrastructure and regional development policy and planning for the National Development Planning Board (Bappenas). He is also a member of many national and international professional organizations in transport science and project manage-ment.

Dr. Tommy Ilyas is a professor in geotechnical engi-neering at the University of Indonesia. He holds a PhD in Geotechnic from Sheffield University (UK). His research interests are in Engineering Mechanics, Soil Mechanics and Infrastructure Management.

Dr. Abdur Rohim Boy Berawi holds a PhD in High Speed Train management from MIT Portugal. He cur-rently researches value management and innovation in infrastructure and transportation industries and has pub-lished many scientific articles in international journal and conferences. Besides teaching in the university, Dr. Boy Berawi is also served as AUSAID’s Advisor to the Minis-try of Transport (MOT), Republic of Indonesia.

Dr. T. Yuri M. Zagloel is a professor in Industrial Engineering Department, University of Indonesia. Prof. Yuri’s research interests area in Quality Management and production system field. He is currently served as the Head of Production System Laboratory.

Herawati Zetha Rahman is a Ph.D. candidate at the Department of Civil Engineering, University of Indonesia. Her doctoral research focuses on the improvement feasibil-ity study on Public Partnership Project. She is a senior researcher at IDTech research group, University of Indone-sia since 2008.

Perdana Miraj is a senior researcher at IDTech re-search group and involved in mega infrastructure project research. He holds master degree in project management and has worked for a design and consultant company before joining IDTech research group.

Jade Petroceany is serving as teaching faculty in Civil Engineering Department, University of Indonesia and researcher at IDTech. She earned her master degree in Infrastructure Management from Queensland University of Technology, Brisbane, Australia.


Do You VEERP?Value Engineering for Ecosystem Restoration Projects

Arnecia Williams, AVS

AbstractThe objective of this paper is to explain the value

engineering process—managing the methodology objectives, study approaches and a�ributes, and bar-riers of ecosystem restoration projects. Additionally, it will discuss encouring the VE team to pursue tools that can enhance the traditional techniques. This technical paper verifies the ability to enhance creative decision-making capability available in value engi-neering studies by explaining how environmental and new techniques can enhance the study results.

This paper will discuss water quality, habitat im-provements and connectivity, sustainability, public acceptability, and team management. Improving the function of a project includes employing qualitative proposals. This paper will be intertwined with a real case study situation. As always for value engineering, this paper will introduce ways to create and main-tain professional standards for ecosystem restoration projects by optimizing and performing any engineer-ing-related activities through the most cost-effective methods.

IntroductionWhat are ecosystem restoration projects? Are

they recreation projects? Are they vegetation plant-ing projects? Are they both? The goal of an ecosystem restoration projects is to restore a damanged ecologi-cal system to a more stable and sustainable state by returning the ecosystem to its original intent, restor-ing the operation of natural biogeochemical cycles. This could include water purification, erosion pre-vention, habitat connectivity, and addition of com-munity structures or recreation facilities.

Ecosystem restoration is growing across the country. More agencies are producting projects that provide ecological benefits now than in the last 30 years. Virtually all of Earth’s ecosystems have been significantly transformed transformed through hu-

man actions. The growing demand for ecosystem services and other increased pressures on ecosys-tems, begins upon the development and diffusion of technologies designed to increase resources used to reduce impacts to the environment. The performance a�ributes for ecosystem restoration projects include habitat improvements, sustainability, water quality improvements, and public acceptability.

This paper will answer some of the lingering questions: What has caused ecosystem changes? How have these changes affected human well-being? How might ecosystems change in the future and what are the implications for human well-being? What options exist to enhance the conservation of ecosystems and their contribution to human well-being? You will learn what value engineering opportunities unfold within ecosystem restoration projects and the specif-ics for tailoring the study for these project types.

Value Integrated ApproachesThe Ecosystem

The structure of the world’s ecosystem has changed more rapidly in the second half of the twen-tieth century than at any time in recorded human history (Reid 2005). Although the most rapid changes in ecosystems are now taking place in developing countries, industrial countries have historically expe-rienced comparable rates of change. With the increas-ing number of large reservoirs and dams, the amount of water stored behind or in these areas has caused a loss in mangroves, coral reefs, and native vegetation. The use of these systems is understandable due to the growing population. The world’s population has increased from about 200 million in 1900 to 2.9 billion in 2000. Overall the nation is an urban system with high human density with built environments; howev-er, more urban systems are located on the East Coast.

Another characteristic of the world’s ecosystem is a dryland system, which is generally in the west-


ern portion of the nation. Drylands are lands where plant productivity is limited by water availability. Fresh water availability in drylands is projected to be further reduced from the previous average of 1,300 cubic meters per person per year in 2000, which is already below the threshold of 2,000 cubic meters required for minimum human well-being and sus-tainable development. Approximately 10–20 percent of the world’s drylands are degraded (medium cer-tainty) (2005). Lastly, the polar system is a high lati-tude system frozen for most of the year. See Figure 1 (above) for characteristic of urban systems, dryland systems, and polar system.

Humans are fully dependent on the Earth’s eco-systems and the services that they provide, such as food, clean water, disease regulation, climate regula-tion, spiritual fulfillment, and aesthetic enjoyment. Human well-being depends on ecosystem services but also on the supply and quality of social capital, technology, and institutions. For these reasons, there is a need for ecosystem restoration projects. Can the Value Methodology improve these types of projects? Yes, it can.

Managing Value Methodology Objectives

Developing a value engineering team for a spe-cific task is difficult. The team has many challenges during their short time together. The team prepares a plan and work according to the plan. The team’s plan includes improving project understanding (information phase), taking steps to achieve the intended functions (function analysis phase), de-

veloping a Function Analysis Systems Technique (FAST) diagram, brainstorming new ideas based on the intended functions through positive thinking (creative phase),evaluating the feasibility of incorpo-ration of the ideas into the project (evaluation phase), documenting the ideas in the form of proposals that will improve the value of the project (development phase), and determining life cycle cost, all in a very compressed period of time.

When developing the multidiscipline team one must consider the project details and what disciplines have expert opinions on that specific project. For an ecosystem restoration project, the expertise includes:

Geotechnical engineeringHydraulics engineeringEnvironmental/biologistCivil engineeringCost engineering

Representatives from the sponsor, operations and maintenance (O&M) groups, and end users are always welcomed and preferred. These individuals can discuss the current issues and the future O&M requirements based on the creative ideas.

Study Approach

Most U.S. Army Corps of Engineers (USACE) ecosystem restoration projects require a study dur-ing the planning and design phases of the project. A typical value engineering study following the Value Methodology has the team to identify the function(s) of the project and construct a FAST diagram through

Figure 1. Characteristics of the World’s Ecological Systems


utilization of a num-ber of creative pro-cesses.

One of the main reasons the Value Methodology is different than other value based or cost reduction processes is that it focuses on the functions of the project. So, what is a function? A func-tion is the natural or characteristic ac-tion performed by a product or service (SAVE International, 2013). The function is expressed by using an active verb and a measurable noun. One must first under-stand that everything has function, e.g., a light bulb, chair, and stapler. When beginning to think of improving a project such as an ecosystem restoration project, we need to break down the project into characteristic functions. Whenever these functions are described in the Value Methodology study it becomes evident where the team should focus their efforts to make potential im-provements. See the Sample Ecosystem Restorations Project Functions listed in Table 1 above.

As the facilitator of the team, time management is very important. For approaching Ecosystem Resto-ration project, a facilitator may divide the team into subgroups to obtain maximum breadth and diversity of ideas within a relatively short period of time. Each work group will focus on the delineation of project objectives (also known as a�ributes) and specific measures to optimize the a�ainment of those objec-tives (Degenhardt, 2011). The workgroups will be assembled into separate areas and brainstorm objec-tives and the means to accomplish those objectives separately. If the team is a fairly small group, the facilitator can pair the team members or remain in a single group.

The ground rules for the FAST diagram vary based on the projects techniques and type. Clas-

sifying functions in the FAST diagram are limited to basic and secondary functions. The FAST model (Figure 2, next page, top) further contain subsets such as higher and lower order functions unique to the specific technique. A Basic function is the pri-mary purpose(s) for which the project or service was designed or created. Secondary functions support the basic functions. These functions result from a specific design approach to achieve the basic function.

The project site visit is essential to the value en-gineering study. The team must see the site in order to appreciate the current condition and to view any constraints. If time is limited, a Google earth flyover is beneficial, but may cause additional questions due to uncertainties. Conducting a site visit dur-ing the information phase greatly improves project understanding. After a site visit, the facilitator should inquire about the team specifics about the project site to ensure a common understanding. Such questions may include:

What features were interesting about the project?What are the existing undesirable conditions?

1.2.

Table 1. Ecosystem Restoration Function Characteristics

Action Verb Measurable Noun Action Verb Measurable NounRestore Ecosystem Restore Aquatic Habitat

Restore Riparian Habitat Establish Aquatic Habitat

Establish Riparian Habitat Restore Hydrologic Processes

Reduce Flood Risk Restore Hydraulic Processes

Maintain Flows Maintain Interior Drainage

Stabilize Bank Restore Channel

Protect Trails Prevent Erosion

Maintain Safety Control Seepage

Enhance Recreation Minimize O&M

Restore Impacted Habitat Obtain Rights-of-Way

Maintain Wildlife Connectivity Maintain Baseline Riparian Habitat

Maintain Public Access Divert Flows

Meet Customer Requirements Protect Property

Ensure Safety Protect Freeway

Enhance Public Use Protect Infrastructure

Improve Water Quality Maintain Aquatic Habitat

Install Vegetation Minimize Habitat Disturbance

Inform Public Terrace Banks

Lower Elevations Improve Infiltration

Create Geomorphology Construct Weirs

Construct Project


What are the driving factors regarding the project?What are possible constraints with the project?

Once the team has common knowledge of the project and the proj-ect objectives/a�ributes are identified, the team will brainstorm measures to optimize and accom-plish each objective or a�ribute.

Study Attributes

Ecosystems oper-ate from day-to-day by exchanging energy. The energy exchanged within an ecosystem is recycled between the physical and biological components. The plants within an ecosystem convert the sun’s energy into plant food, the plants are in turn grazed upon by animals, and animals are then consumed by predators. Microor-ganisms within an ecosystem, such as fungi and bac-teria, also exchange energy within the ecosystem by breaking down waste material to substances that can be used by plants for food. In this way, each element within the ecosystem depends upon the others for survival (Anderson, 2000). The objectives or perfor-mance a�ributes for ecosystem restoration projects include, but are not limited to, habitat improvements and connectivity, sustainability, water quality im-provements, and public acceptability.

Habitat Improvement involves the improvement of all existing aquatic and non-aquatic habitat within watershed or nearby tributaries. A watershed is an area of land over which water flows to reach a com-mon body of water. This can be accomplished by adding additional habitat areas or by improving ex-isting habitat. Areas in which habitat improvements could be implemented include the lakes within the system, the li�oral zone and the bank zone. For non-aquatic habitat we refer to habitat connectivity. Habi-tat connectivity between significant ecological areas is critical for certain regions. Connectivity involves

3.

4.

creating wildlife corridors from specific mountain areas to the rivers.

Sustainability is a critical component of the planning objectives. The 1980s restoration outputs worked well for about 20 years, but gradually the ecosystem has declined again. The objectives are to learn from previous restoration efforts to develop a more sustainable restoration plan.

Water Quality Improvement: Water quality is a term used to describe the chemical, biological, and physical characteristics of water. Water quality is not simply “good” or “bad,” but usually is applied to its purpose (Anderson 2000). For example, water that is suitable for washing a car may not be suitable for drinking. For most purposes water quality refers to water for drinking, swimming, and fishing. This ob-jective refers to the improvement of the water quality within the study area, including phosphorus, salinity and dissolved oxygen levels, as well as mean water column temperatures. See Figure 3 (next page). As the population increases so does development, which creates greater potential for harmful substances to enter our water supplies.

Public Acceptability: To appropriately satisfy the projects objectives, public concerns must be ad-dressed. The public is composed of the local sponsors

Figure 2. FAST Diagram Model

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and residents, as well as local groups that utilize the proposed area on a regular basis. These concerns can be determined through interaction, such as meetings and/or surveys.

Overcoming Barriers

Unfortunately for most ecosystem restoration projects, there are only conceptual levels engineer-ing designs directly associated with the ecosystem improvements. More designs can be associated with recreation construction. Nevertheless, you want to ensure the agency that ecosystem restoration is the primary focus. Additional roadblocks could include land owner(s) and real estate concerns.

Coordination with the people and organizations that may be affected by the project can help build the support needed to get the project moving and ensure long-term protection of the restored area. In most ecosystem restoration studies there are more project constraints then opportunities. Ways to reach the goal of the value engineering study is to discuss the constraints, opportunities and risk prior to the study’s Function phase. The risk can help identify if the constraints are truly constraints. Additionally, the team may explore alternative solutions. This al-lows for utilizing those ecological theories during the creative phase of the job plan. The goal is to produce a sustainable ecosystem that satisfies the needs of nature and society.

What’s in It for the Public?

Changes in ecosystem services affect people liv-ing in urban ecosystems both directly and indirectly. Likewise, urban populations have strong impacts on ecosystem services both in the local vicinity and at

considerable distances from urban centers. Under-standing the relationship is important because the ecosystems (living and non-living things) depend upon and impact each other. Early coordination with the public is important. The team must understand and ensure that the developed ideas consider public opinion.

Implementing the Study AttributesParticularly in the planning stage of a study, it

is critical to focus on whether the proposed restora-tion activity is feasible. Public support for a project is needed to ensure its long-term viability. An ecosystem with integrity is a resilient and self-sustaining natural system able to accommodate stress and change (EPA 2012). In an environmental restoration project, one must understand the functions of the project. Addi-tionally one must define the type of restoration.

For the purpose of tracking net gains in wetland acres, restoration is divided into re-establishment and rehabilitation. See below (EPA 2012).

Re-establishment: the manipulation of the physi-cal, chemical, or biological characteristics of a site with the goal of returning natural/historic functions to a former wetland. Re-establishment results in rebuilding a former wetland and results in a gain in wetland acres.Rehabilitation: the manipulation of the physi-cal, chemical, or biological characteristics of a site with the goal of repairing natural/historic functions of degraded wetland. Rehabilitation results in a gain in wetland function, but does not result in a gain in wetland acres.

Each restoration project the team sets goals for measuring the success of the project, this increases study efficiency and strategy for moving forward. For these types of projects, it is valuable to keep the team focused on the overall project which includes O&M recommendations, habitat establishment recommen-dations, and water quality recommendations.

Case Study (Los Angeles River Ecosystem Restoration VE Studies)

The Los Angeles River Ecosystem Restoration Project was one of the first value engineering studies to use similar approaches at the Los Angeles District. During the information phase, the VE study team

Figure 3. Pollution Sources Affecting Water Quality


discussed the purpose and primary a�ributes of the project. One of the primary a�ributes of this project was to provide habitat connectivity by establish-ing wildlife corridors. This project wanted to bring multiple wildlife species such as the Canadian goose, coyote, great blue heron, bobcat and red-tail hawk to the restored area. The team discussed the areas where these wildlife species would migrate from to provide the most opportunity. In order to restore connections to the adjacent Santa Monica Mountains, nodal connections must be provided to the Verdugo Hills, and connectivity through the nearby watershed to the San Gabriel Mountains.

Secondly, the team discussed the sustainability of the project. This project proposed to increase the ri-parian and marsh habitat. The team briefly discussed maintenance of these areas but more importantly establishing native species which will help with self-sustainability and longevity. The project will have to ensure that maintenance includes monitoring inva-sive species that could affect the ecosystem’s growth.

The LA River is listed as “impaired” according to the Clean Act Section 303 due to pollutants such as metals, ammonia, algae, and pesticides. Addition-ally, the water quality is significantly affected by the storm water runoff. Keeping this in mind, the team discussed the current flood control system to learn the history and anticipate the future changes.

After completing the initial information phase, which continues throughout the workshop, the team evaluated the functions and current estimated cost for the project. The team determined the higher-or-der, basic, and secondary functions. While reviewing the cost model, the team assigned cost to the various functions, then eliminated unnecessary functions and combined functions when necessary. The VE study team moved into the creative phase and brain-storm on the determined functions. Using the posi-tive thinking approach, the facilitator listed all ideas and encouraged “out-of-the-box” ideas. The study team evaluated all ideas in the evaluation phase and selected the most feasible ideas to move forward. A handful of these ideas were combined and others were refined to develop in the developmental phase. The team documented advantages and disadvantages for the proposed ideas as well as included sketches, cost and justifications.

The outcome from this value engineering study was remarkable. The team came up with over 71 creative ideas and developed eight solid combined proposals. During the preparation phase, the study team discussed the FAST diagram, presented the find-

ings, and potential cost avoidance. The project deliv-ery team was able to identify the project function and understand how the project would flow. It allowed the project team to see what actions needed to take place.

Integrating New Ideas and Technology

Establishing a planting area prior to the start of construction can assist with the cost of the project and provide quality vegetation. Most of the District’s projects are completed in phases over several years, and there is a significant amount of vegetation and trees that will be planted. Therefore to add value and save cost, the team considered having an initial phase of the project include establishing a nursery or plant farm that will be used through the rest of the project. For example, if one proposed area is restored right away with tree plantings that will be needed in another 7-10 years at another location, then the cost of purchasing mature trees in 10 years is eliminated or reduced and replaced with the cost of nurturing the trees, which may be lower. This offers significant aesthetic and ecosystem benefits as well by establish-ing mature plants in the restoration area.

Another idea is to use bioengineering techniques where possible. Bioengineering is a method of con-struction which combines live plants with dead plants or inorganic materials to produce living, func-tioning systems to prevent erosion, control sediment and other pollutants, and to provide habitat. Bioengi-neering techniques can often be successful for ero-sion control and bank stabilization, flood mitigation, and even water treatment. Specific projects can range from the creation of wetland systems for the treat-ment of storm water, to the restoration of vegetation on river banks to enhance natural decontamination of runoff before it enters the river (EPA 2012).

ConclusionThe idea of restoring the land dates back centu-

ries, but modern restoration ecology and its practice began in the early 1900s. Ecological research on res-toration has largely focused on community ecology and ecosystem ecology, with particular a�ention to plants. However, animal reintroduction, a common element of conservation biology, is also essentially restoration. When conducting a value engineering study on ecosystem restoration projects, the team should evaluate performance a�ributes that include habitat improvements and connectivity, sustainabil-ity, water quality improvements, and public accept-


ability. The team should understand the history of the area and if the project is a re-establishment or rehabilitation project. Despite this uncertainty, ecological restoration is a rapidly growing fi eld that represents a foundational change in our relationship to the natural world.

ReferencesReid, W. V., Mooney, H. A., Cropper, A. Millennium

Ecosystem Assessment, 2005. Ecosystem and Hu-man Well-Being: Synthesis. Island Press, Wash-ington, DC.

Anderson, Paul A., University of South Florida. Proj-ect Oceanography. Neighborhood Water Quality. h� p://www.marine.usf.edu/pjocean/packets/f00/nwq1.pdf

United States Environmental Protection Agency. 2012. Washington, DC. h� p://water.epa.gov/type/wetlands/restore/

SAVE International 2013. Dayton, OH. h� p://www.value-eng.org/value_engineering.php

Degenhardt, E. Clarence Cannon National Wildlife Refuge Value Engineering study. 2011. USACE St. Louis District.

CVS Certification Technical PaperArnecia Williams

creation of wetland systems for the treatment of storm water, to the restoration of vegetation on river banks to enhance natural decontamination of runoff before it enters the river (EPA 2012).

Conclusion

The idea of restoring the land dates back centuries, but modern restoration ecology and its practice began in the early 1900s. Ecological research on restoration has largely focused on community ecology and ecosystem ecology, with particular attention to plants. However, animal reintroduction, a common element of conservation biology, is also essentially restoration. When conducting a Value Engineering study on Ecosystem Restoration projects, the team should evaluate performance attributes that include habitat improvements and connectivity, sustainability, water quality improvements, and public acceptability. The team shouldunderstand the history of the area and if the project is a re-establishment or rehabilitation project. Despite this uncertainty, ecological restoration is a rapidly growing field that represents a foundational change in our relationship to the natural world.

AppendixDefinitions

Bioengineering- application of concepts and methods of biology using engineering analytical and syn-thetic methodologies.

Dissolved oxygen- is a relative measure of the amount of oxygen that is dissolved or carried in a given medium. It can be measured with a dis-solved oxygen probe such as an oxygen sensor or an optode in liquid media, usually water.

Ecology - the study of how living things relate to the environment

Ecosystem – a natural unit of living and non-living parts that interact to produce a stable system

Exotic Plant – A plant that is transported from its place of origin and introduced into a new envi-ronment

Native Plant – A plant that lives and thrives in its place of origin

Phosphorus – is a chemical element of atomic num-ber 15, a highly reactive, poisonous, nonmetallic element occurring naturally in phosphates

Phosphates- Phosphorous can come from natural sources such as phosphate- containing rocks and human sources such as fertilizers, pesticides, detergents, and industrial wastes

pH- is pH is a measure of the hydrogen ion concen-tration; is a measure of a sample’s acidity and is the most commonly used water quality test.

Restoration- the manipulation of the physical, chemi-cal, or biological characteristics of a site with the goal of returning natural/historic functions to former or degraded wetland.

Re-establishment- the manipulation of the physical, chemical, or biological characteristics of a site with the goal of returning natural/historic func-tions to a former wetland.

Rehabilitation- the manipulation of the physical, chemical, or biological characteristics of a site with the goal of repairing natural/historic func-tions of degraded wetland.

Salinity- is the mass of the dissolved salts in a sample of water.


are going because you might not get there.” Once you untangle that quote, you’ll have to admit that Yogi was right. It’s especially important to know where you’re going before you ask a question, because opening your mouth thoughtlessly can put distance between you and the other person. Think about what you’re trying to learn, as well as your motives and the pos-sible effects of your question, before you ask it. Remember, I-based questions are often better left unasked.

“The perception of a meaningful underlying intent is vital to effective ques-tioning,” confirms Tumlin. “If you believe you’re asking a good question but still sense uncertainty in your conversational partner, clear it up by saying something like, ‘I’m trying to figure out how we might improve our future client pitches,’ or, ‘I’d like to know more about the way you work so our collaboration can be more effec-tive,’ or, ‘I want to learn how the Smithfield presentation went off track so we can try to win them back.’”

Get and give permission. No one likes to have their personal space invaded. When you’re asking questions, remember that personal space isn’t just physical. It can extend to others’ memories, beliefs, identities, motives, etc. Before entering these territories conversationally, don’t overlook the simple idea of asking permis-sion: “May I ask you a question?”

“You can also tell the other person he doesn’t have to answer,” comments Tumlin. “For instance, you might say, ‘Can I ask you some questions about the Smith-field account? You don’t have to answer them if you don’t want to.’ Giving people a sense of control in the conversation and a choice about answering often helps them feel like the conversational ground is safe for responding.”

Ask open questions whenever pos-sible… If you are trying to gather informa-tion and expand your understanding, you’ll want to encourage the other person to talk more, not less. That’s why open ques-tions, which are designed to be answered in paragraphs, not in a few words, are so helpful. They give the other person freedom to respond and help you to avoid unintentionally shutting off helpful informa-tion.

“Asking, ‘Did you feel like the Acme presentation went well?’ is structured to produce a yes-or-no response,” explains Tumlin. “Even if the respondent tells you more, the question focuses attention on the success of the past presentation, when what you really need to talk about may be something the presenter heard the client say to a colleague or perhaps a funny feeling the presenter has about the client’s new marketing director. These

things might come out in response to a closed question about the presentation, but the responder would have to make an effort to swim against the tide of the closed question.

“Remember, people are busy, so when we ask questions that can be answered in a few words—when we give them the ability to take a shortcut as opposed to a more extended response—they’ll often take it,” he adds.

Here, according to Tumlin, are some of the most versatile open questions:

• What do you think?• How do you feel about this?• What else should I know?• What questions can I answer?“Additionally, you can readily con-

struct open questions by using the phrases how did, how was, please describe, please explain, please discuss, and please tell me more,” Tumlin adds. “For example: ‘Please tell me more about your idea.’ ‘How did you feel about that?’ ‘Please discuss the Ga-torville account proposal.’ ‘Please explain your conclusion in more detail.’”

…and use closed questions prudently. Despite Tumlin’s warning not to use closed questions too frequently, he admits they can be helpful in the right circumstances. Closed questions (in other words, those that can be answered in a handful of words) are easy to spot because they often start with words like who, when, where, is, or do: “Who can help us get this done?” “When is the project due?” “Where do I get more information?” “Is this the job you want?” “Do you like your boss?”

“Closed questions are useful for simple informational queries (‘When is the meeting?’ ‘Is Sally still our HR contact?’), for limiting the range of potential re-sponses, or for expediting a conversation,” he shares. “But be very careful not to slip into the habit of closing off your questions when you are trying to establish dialogue and encourage conversational participa-tion.”

Be polite. You’ll notice that please occurs frequently in many examples and phrases above. This is pragmatic etiquette. (Yes, your mother was on the right track when she insisted that you use “please” and “thank you.”) Remember the stranger on the bus? When you asked, “Could you move over?” you got an icy glare in response and then suffered through an uncomfortable 20-minute ride. What if instead you said, “I’m sorry, could I please trouble you to move over just a bit? Thank you so much!”

“It’s very simple—so simple, in fact, that you may be tempted to overlook it—but making a point to be polite when

asking questions can greatly change the outcome,” says Tumlin. “Adding a please to your questions helps to signal your posi-tive intent, can foster trust, and can reduce reflexive resistance.”

Let people talk. In a world filled with constant chatter—both spoken and digi-tal—silence is a rarity, and it often makes us uncomfortable. When there’s a pause in conversation, your first impulse may be to jump into the breach and fill it with whatever words first come to mind. But especially when you’re asking important questions, do your best to tame that im-pulse and hold your tongue.

“People require some space to absorb information, formulate their responses, and deliver them effectively,” shares Tumlin. “So sit back and let your good questions work their magic. Don’t sabotage your questions by being afraid of silence. A pause following a good question usually signals contemplation, not consternation. If you jump in too quickly, you shortchange the process.”

Use nudges liberally. Nudges are stand-alone phrases like tell me more, I see, and go on, which are often used fol-lowing an open question to maintain the smooth flow of information.

“Nudges are a simple but effective way to keep a line of inquiry active,” com-ments Tumlin. “They’re also a good way to let the speaker know that you are paying attention. People will almost always be willing to share more if they believe that you are receptive and interested.”

“Without a doubt, learning to ask better questions will improve your relation-ships at work and at home,” concludes Tumlin. “You’ll avoid some conflicts and you’ll insert less confusion and anxiety into your conversations. Better question-ing skills will reduce resistance to your queries and will help you establish more productive and meaningful dialogue.”

About the AuthorGeoffrey Tumlin is the author of Stop

Talking, Start Communicating: Counterintu-itive Secrets to Success in Business and in Life. He is the founder and CEO of Mouth-peace Consulting LLC, a communication consulting company; president of On-De-mand Leadership, a leadership develop-ment company; and founder and board chair of Critical Skills Nonprofit, a 501(c)(3) public charity dedicated to providing com-munication and leadership skills training to chronically underserved populations. His writing on communication and leader-ship has appeared in Discourse Studies, the International Leadership Journal, the Encyclopedia of Leadership, the Austin American-Statesman, and five editions of Professional Communication Skills.

Questions continued from page 31


AbstractIn this paper, the author shows methods for

analysis and evaluation of Esteem Function and its incorporation into VE job plans. The author has de-veloped a new evaluation method for esteem functions by building on the existing “Sense VE” which has been practiced widely in Japan. So far, the author has found it difficult to deal with esteem functions: Un-like use functions, esteem functions cannot be quanti-fied. The author has introduced original graphs as vital tools for familiarizing various industries with VE. The graphs shown in this paper will go a long way to applying VE to such fields as medicine and service, which commonly deal with esteem function.

KeywordsEsteem Function, Sense VE, Medical Services,

Dentistry, Classification

IntroductionThe objective of VE is to study problems with

products or services from a customer’s viewpoint and increase their value. The Society of Japanese Value Engineering (SJVE) defines VE as “concerted efforts for studying certain products or services to definitely achieve their required functions at the min-imum life-cycle costs.” In other words, VE’s purpose is to increase values for certain products or services by representing their value in the relations between their function and cost. Its formula is:

Value = Function/Cost

Wherein, generally, there are two functions: the use function and the esteem function. Each of their per-formance is evaluated from a customer’s viewpoint. The use function is a function related to the intended purpose of certain products or services, whereas the

esteem function is a function related to users’ senses such as preciousness or satisfaction when they own products or receive services. In Japan, VE has been applied mostly to the manufacturing industry and is relatively unknown to other industries. It was during 1960s when VE was first introduced in Japan. Some manufacturers began to use VE for cost reduction. To choose lower-cost materials, its use spread from these companies’ material departments to planning, design, and manufacturing departments. Recently, VE has been applied to the non-manufacturing industries. However, VE has yet to be applied to the service sector. To let VE crack the confinement of manufacturing and get stages in medicine and ser-vice sectors, it is essential to establish steady study, standardization, and evaluation methods for esteem function. This paper presents how I devised “Sense VE” and its on-site use in medicine and the service sector.

Value Engineering in Japanese Medical Services

In Japan, dental practitioners are currently under a tough climate with more dentists or dental clinics than necessary, resulting in cu�hroat competitions among themselves. There are 68,000 of them, top-ping the number of ubiquitous convenience stores by 20,000, which is said to be “many.” In the Tokyo metropolitan area for example, one clinic per a day goes out of business. The ailment is a�ributed in part to the difficulty in drawing patients. In the sphere of Japan’s medical services, most people still think dental clinics to be places for “pain relief” rather than “health maintenance” or “preventive care”. As a freelance dental hygienist, I have participated in the start-ups and reforms of dental clinics, and conduct-ed drawing-in activities for them throughout Japan. The vast majority of dental hygienists in Japan work full-time; freelancers such as I account for not more

Numerical Value Analysis and Evaluation Techniques of the Esteem Function

Kayo Uchida


than 5 percent of the total. While there are various improvement methods in the dental service industry, VE is not among them. This competition-stricken industry wanting something to change the current situation is the one that benefits the most from VE introduction. It seems that the inadequate evaluation of esteem function has rendered VE underutilized. What it takes to raise its awareness is prominence of the fact “VE works,” that is, “It boosts values.” Since any new methods need to be not only effective but also efficient, I have newly developed techniques to analyze senses by adding two novel analysis meth-ods such as introduction of original graphs to exist-ing Sense VE.

Sense Value Analysis (by existing VE)Sensibility Value Analysis

VE and One’s SenseSense VE

Medical and service industries are highly depen-dent on one’s senses. In Japan, there is a VE called Sense VE, purpose of which is to apply VE to one’s senses. The greatest advantage of using Sense VE is that it enables us to evaluate esteem functions. The major problem with esteem functions lays in the fact that they are difficult to embody before they are quantified and evaluated. When employing Sense VE, we have a questionnaire as follows:

Use questionnaire sheets;Conduct in open- ended answer styles

The following are the advantages of adopting questionnaires:

Understand users’ demand directly from them;Know what users think are the advantages and disadvantages of things of interest;Know users’ comfort and discomfort;Measure users’ interest levels.In making FAST diagrams by conventional VE,

“Esteem Functions” are represented in the lump as “Keep Beauty”’ or “Give Comfort.” On the other hand, this formula of “Transitive Verb + Object” is represented in more detail by Sense VE as “I like or dislike it because XX (sense item) of its YY (part) is ZZ (status description),” and it is reflected in making FAST diagrams.

1.2.

Quantification of VE

The application of Sense VE enables us to en-hance repeatability of requirement for esteem func-tions, but there are still some shortcomings in its quantification and evaluation. The use of the exist-ing Sense VE was nothing more than a platform for improvement. It is difficult to evaluate unquantifiable esteem function whereas use function can be described by using quantifiable objects. Development of meth-ods for quantification and/or evaluation of esteem function is called for.

Sense Value AnalysisOutline of Sense Value Analysis

Merits of this method are as follows:

Analysis of the questionnaire gives clear pictures of what problems users have and what improve-ments they call for;Organizing and visualizing users’ latent demand on an interest tree chart facilitates comprehen-sion;User’s interest level can be quantified.

Procedure

Conduct a questionnaire by VE;Draw up an interest tree chart;Work out measures to improve favorability;Draw up an improvement check list.

Actual cases

To identify what to improve about dental clinics in general, instead of a particular one, I conducted a questionnaire as follows:

I like/dislike dental clinics because is/are .

I picked men and women in their twenties through sixties as questioners by random sampling. Seventy percent of them were ones invited over the internet, and the rest thirty percent were patients at dental clinics: To minimize the response bias by clinic-going patients, who likely have good opin-ions of clinics, I made questioners from the internet the majority. Table 1 (next page, top left) shows the results.

1.2.3.4.


Three hundred open-ended comments were ob-tained from 111 questionees. Based on this research, results were broken into the following five categories.

Personnel (staff, dentists, dental hygienists);Building (clinic equipment);Objects of five senses (sound, smell);Duration, number of treatments;Treatment.

It has caught the eye that the highest interest is then the issues on “five senses.” A lot of users feel a sense of displeasure on “smell and sound” and is very strong on that. Interest is higher in “amount of time, number of visits and reservation.” Visits to dental clinic bind your time for a long time or take a number of times. It is found as a requirement to end in a short time or in a short period of times and is higher in a sense of displeasure than of likability.

Using Sense VE, we can learn of invisible “lik-ability and displeasure.” Dental clinics are originally the place to receive medical treatment. However, we can find that the users are interested in many things other than the treatment.

Based on the findings above, the author reorga-nized the FAST diagram as below (Figure 2, bo�om). I drew up an interest tree chart (Figure 1, top right) by categorizing the comments extracting sense items

1.2.3.4.5.

from them, and listed measures to take at clinics to improve favorability in Figure 3 (next page). Based on these items, I drew up the check list (Figure 4, next page) available at clinics for reviewing the status of clinics. By completing the list, they can raise users’ satisfaction. This check list can be used universally

Sense Item Status Like Dislike

BuildingNeat and cleanNot hospitallike

11 2

DentistsDental Hygenists

Polite, Nice, Crude, Skilled, Pretty, Beautiful, Handsom

53 17

SoundSmell

Offensive, Scary, Peculiar

2 36

AppointmentFlexible, Troublesome

2 11

TimeTying, Keeping You Waiting, Lenghty

1 25

FeeExpensive, Rea-sonable, Not Cov-ered by Insurance

2 9

Treatment

Frightening, Pain-ful, Not Painful, Preventive, Re-freshing, Uncom-municative, Well-streamlined

65 64

Table 1. Like/Dislike Dental Clinics

Figure 1. Interest Tree Chart

Dental Clinic

Facilities

Human

Five Senses

Amount of Time, Number of Visits

Medical Treatment

Dentist

Dental Hygienist

Sound

Smell

Reservation

Time

Contents of Treatment

Cost

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Figure 2. FAST Diagram


Keep the clinic interior clean

The less hospital-like, the better

Staff and practitioners should be polite

The prettier the dental hygienists, the better (constant smiles make you look pretty)

Treatment noise should be inaudible to anyone by the undergoing patient

Do not use distinctively smelling chemicals

Make use of aroma

Brief patients on treatment fees

Give patients as less pain as possible

District patients from pain

Use silent equipment

Figure 3. Favorability Improvement Check List

1) Building Keep the interior of the clinic “looking

clean” (Give patients visibility of cleanli-ness. Messy places do not look clean even if they are.)

Minimize hospital-like atmosphere about the building and its interior

Play soothing BGM Treatment noise should be inaudible to

anyone but the undergoing patient Do not use distinctively smelling chemicals

such as form cresol Handle distinctively smelling chemicals

with care Pay attention to management and storage

of distinctively smelling chemicals Use indoor aroma

2) Staff Be polite to patients Be nice to patients Female staff must keep their beauty (Note

that “beauty” does not mean only “facial beauty.” Wearing a smile all the time makes you look beautiful.)

3) Treatment Do not use ultrasonic scalers (maybe unre-

alistic, though) When treating decay, use triple-speed cut-

ting tools instead of high-speed ones Be considerate of patients, especially when

using noise-making equipment Practice pain-free treatment

Figure 4. Improvement Check List

at various places and by different staff. Each clinic can make more use of this list by conducting cus-tomized survey with questionnaires on senses to come up with more specific measures. The measures to be taken include “givens”, which, however, at times tend to be overlooked. Looking at the check list means reviewing daily routines, which leads to service improvement resulting in increased patient draw and adoption rates.

Sensibility Value AnalysisOutline

I found that “Users’ Sense can be measured if we know its range.” There is a difference in people’s senses and its range. Senses such as users experience and feel are considered relative and they vary from user to user. For example, “five minutes” is a fixed period of time at any place on the globe, but people have different senses of “five minutes,” depending on how they spend it or where they are. Evaluation in “Sense Value Analysis” is made feasible by quan-tifying esteem function. To this end, I have defined “Sensitivity Range” as the difference between the maximum tolerable value and the minimum tolerable value of parameters for each sense item. Thus, esteem function can be quantified.

Procedure

Draw users’ interest by Sense VE (See procedure in Sense Value Analysis);Specify items to improve;Questionnaire;Graph analysis;Analysis

Case Analysis

In the following case, I chose dental check-up and cleaning as the subject to study. Shown below is the question I asked.

Assume that you are here for a dental check-up and cleaning for every three months. Cleaning could be very comfortable with no pain. Within how many minutes do you feel it is short for cleaning? Over how many minutes do you feel it is long for clean-ing?

1.

2.3.4.5.


Figure 5. Cleaning Time

From this questionnaire, I drew the following two parameters:

Minimum tolerable time (minimum value);Maximum tolerable time (maximum value)To analyze variability and relationships among

each sense datum obtained from the above question-naire, I drew up the graph (Figure 5, below), where the horizontal axis denotes sample values (cleaning time), and the vertical axis is shared by the percent-age of questioners who expressed their satisfaction (shown by the bars) and that of those who gave each of maximum value (the solid line) and minimum value (the do� ed line). Take 22 minutes’ cleaning time for example: 37 percent of the questioners felt it to be too short, and 10 percent of them, too long. The intersection of the two lines gives the following information.

To analyze variability and relationships among each sense datum obtained from the above question-naire, I drew up the graph (Figure 5), where the hori-zontal axis denotes sample values (cleaning time), and the vertical axis is shared by the percentage of questioners who expressed their satisfaction (shown by the bars) and that of those who gave each of maximum value (the solid line) and minimum balue

Figure 6. Satisfactory Type Figure 7. Average Type Figure 8. Unsatisfactory Type

(the do� ed line). Take 22 minutes’ cleaning time for example, 37 percent of the questioners felt it to be too short, and 10 percent of them, too long. The intersec-tion of the two lines gives the following information.

Sample values that have high satisfaction ratingsVariability of satisfaction ratingsThe range of sample values with high satisfac-

tion ratings is obtained from the horizontal axis, and the variability of satisfaction ratings from the vertical axis. For example, the range of cleaning time with which 50 percent or more of the questioners are satis-fi ed is from 22 minutes to 29 minutes, in which range the satisfaction ratings assume various values. The samples, 23 and 24 minutes have the mode, which has only a 63 percent satisfaction rating.

The graphs for this application can be categorized into the following three types:

Satisfactory Type: Graphs having no intersection of lines (Figure 6, below);Average Type: Graphs with the intersection sit-ting below the 30% line (Figure 7, below);Unsatisfactory Type: Graphs with the intersection si� ing above the 30% line (Figure 8, below).

I have found the following tendencies:

The lower the intersection is, the less dispersion of parameter values there is.The higher the lines are, the more dispersion of parameter values there is.

I have found the following two facts by compar-ing these three types of graphs:

The longer the bars are, the be� er.The fewer the bars are, the be� er.

The average type satisfi es the both; the unsatisfac-tory type needs improvement. By this method, I have successfully quantifi ed esteem function, which was

1.2.


so far an abstract concept. In this case of “Time for Dental Check-up and Cleaning,” I evaluated esteem function “sensory time.” Its graph shows that the intersection appears below the 30 percent line, which means it is “Average Type”. Thus, it can be concluded that the cleaning time cited for this case satisfies roughly half of all people.

Application of Sense VEIncorporation of Sense VE into VE Procedures

I propose that VE be incorporated into existing VE procedures. The flow varies with the methods of analysis. Sence value analysis can use Step1 (informa-tion collection on VE objects) and Step 5 (evaluation of function).

Sensibility value analysis can use Step 1 (informa-tion collection on VE objects) and Step 4 (cost analy-sis by function).

Future Outlook

The analysis method that I have developed can help improve value by quantifying and evaluating esteem functions. We can use this method to under-stand things relatively and can apply it to other VE studies.

ConclusionIn this paper, I have described the following:

An analysis method for esteem functions and its flow;An evaluation method for quantifying esteem functions which are sensitive to human feeling and atmosphere and are considered difficult to quantify;VE that was first introduced to the Japanese den-tal industry;Findings of a way to correct the shortcoming of the existing Sense VE;A new VE method applicable to other VE studies.I have developed an unprecedented method to

quantify esteem functions. I hope that this method will be introduced to many other industries such as the service sector. Indeed, VE has changed my own work a�itude. With the use of VE, I have found it

much easier for me to work. My next mission is to in-troduce VE in the Japanese medical services, to begin with, where very few people know what VE is. They can benefit greatly from VE application.

ReferencesMitsuo Nagamachi,1989, Sense Engineering, Kai-

bundo, Japan

Hiroshi Kobayashi, 1990, Introduction to Sense Study, Sanno University Press, Japan

Koji Yamamoto, 1997, Target Cost Management and Value Engineering for Sensitivity, Osaka Prefec-ture University Economics Study, Japan

Hirohiko Asano, 2001, The Practical Guide to Prefer-ence-based Design, Kaibundo, Japan

Ichirou Ueno, 2007, VE Handbook, SJVE, Japan

Hisaya Yokota, 2008, One-up Problem Solver: An In-vitation to the Functional Approach for Switching Your Gear, Discover Twenty-One, Japan

Hisaya Yokota, 2010, Functional Approach Introduc-tory Book for Problem Solving, Discover Twenty-One, Japan

Hisaya Yokota, 2012, Functional Approach Chief Re-searcher Course Textbook, Functional Approach Institute, Japan

About the AuthorKayo Uchida holds a

Bachelor of Dental Science from Tokyo Medical and Dental University. She currently works as a dental hygienist and smile trainer. As a smile trainer, she has conducted numerous lec-tures and seminars throughout Japan, including the one for the Miss Universe Japan. She has also made many appearances on TV programs and in magazines. Meanwhile, as a freelance dental

hygienist, she has provided consultations for dental clinics throughout Japan. At Functional Approach Institute Co., Ltd., Miss Uchida serve as a functional approach trainer, applying VE to the dental industry for its improvement.

Value World Editorial PolicyValue World is published by SAVE International® and is distributed internationally. Value World welcomes articles on value engineering and related disciplines. Reprints or abstracts from other journals and periodicals are acceptable, provided that prior permission is obtained from the copyright holder(s). Value World’s policy is to provide a medium for contributors to express themselves professionally on advanced in the state of the art. The views expressed in Value World are neither approved nor disapproved by SAVE International®.

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©2013 SAVE International®

ISSN 1553-8508 (print)ISSN 2326-0327 (online)

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SAVE INTERNATIONAL®136 SOUTH KEOWEE STREETDAYTON, OHIO 45402 USA

IN THIS ISSUE:1 Editor’s Message: Achieving Effi ciency by Unlocking

Innovation in System Design and EngineeringMohammed A. Berawi, Ph.D.

3 Value Engineering Advisory System in Construction Projects (VEAS)I. Albalushi, F. Usman, and A. Alnuaimi

21 Business Sustenance through Open Innovation at Tata Motors LimitedG. V. Srirama Kumar

32 Improving Feasibility of Mega Infrastructure Project Development Using Value Engineering MethodMohammed Ali Berawi, Bambang Susantono, Suyono Dikun, Tommy Ilyas, Herawati Zetha, Abdur Rohim Boy Berawi, Teuku Yuri Zagloel, Perdana Miraj, and Jade Sjafrecia Petroceany

32 Do Your VEERP?Arnecia Williams, AVS

47 Numerical Value Analysis and Evaluaton Techniques of the Esteem FunctionKayo Uchida

VOL. 37 | NO. 1 | SPRING 2014The Journal of SAVE International®

© 2014 SAVE International®

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