Distributed Control / PLCs & PACs

Value Engineering Finds Millions of Dollars for DCS Projects

Now's the Time to Embrace Value Engineering

By Paul Studebaker

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It's a common problem: You've done a great design, but your control system modernization program turns out to be too expensive. Your vendor says your existing system is obsolete, and they're dropping support; operations says the system is failing, and they need new functionality, but "playing the obsolescence card doesn't work with management anymore," said Jan de Rijke, engineering manager, Momentive Specialty Chemicals B.V., in a Tuesday morning presentation this week at the Emerson Global Users Exchange.  "Management says if it's working this year, it will work next year. Or, you have to halve the cost."

Now's the time to embrace Value Engineering. "Value Engineering is a multi-disciplined, systematic process consisting of the application of analytical, creative and evaluation techniques to identify changes to a project, product or process in order to achieve the desired functions while minimizing the cost," said Rijke.

Rijke does it in one day by bringing 10 to 15 qualified people together in an intensive meeting to review every aspect of the project with a mandate to reduce cost and raise ROI. The end product is a set of practical cost reductions and proposed operational improvements to meet required cost-reduction goals. "Set a specific and challenging target," Rijke said, for example, $2.5 million in cost reduction for one of his former Shell Oil Co. epoxy plants. "People will think they can't do it in one day, but they will be surprised by the results."

The group must represent all the stakeholders who will deal with the new system, as well as the management who will have to sign off on the final project.

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Start by choosing a facilitator and a scribe, people who "must be fit," Rijke said, "because they will work all day without a break." You also must prepare for the meeting by performing a functional breakdown of the system and allocation of costs, which should be presented in posted pie charts that add up to the total cost. "Break down costs by activity, main functions, company, building, engineering discipline—any cost split you can make to help people understand where the costs are going and where to focus their creativity," Rijke said.

Creativity? Yes, because value engineering is essentially a creative process. Each pie chart is presented in a brainstorming session where individuals are encouraged to offer ideas for how to reduce the cost or improve the payback. "Challenge them to come up with unconventional solutions and write them all down without judgment," Rijke said, "This will encourage everyone to submit unconventional, even controversial, ideas." Use Post-It notes to record ideas and attach them to the charts. Accept written as well as spoken ideas. "This will encourage the quiet people and prevent the loud ones from dominating the session." Expect 100 to 150 ideas.

While the rest of the group takes a break, the facilitator and scribe must enter all the ideas into the register for group discussion. After the break, discuss each idea as a group. Note who is supporting it and who is not; i.e., operations versus management, and group similar ideas into common scenarios or solutions. Hold all ideas for improved productivity for later economic analysis, but quickly rate them for technical confidence, potential value improvement and impact on the project schedule. "Look for ideas with significant potential value, say, a minimum of $50,000," Rijke said. The technical confidence rating is a way to sidestep controversy. "By keeping an idea, but rating it low on confidence, you can avoid arguments and move on to the next idea."

At this point, you'll have what you need to revise the project. "I've done five of these workshops and each achieved its target," Rijke said. "Four one-day events in the United States created millions of dollars in value.

"Value engineering can solve cost vs. functionality dilemmas for DCS projects," he concluded. "It is essential for obtaining management approval for otherwise hard-to-justify DCS modernization projects."