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VM and other Methodologies > VA and Risk Analysis
Author : Ken Smith
Description : Why not give your project mangers something they really CRAVE. By combining a Cost Risk Assessment workshop with the Value Engineering workshop, you can focus you value analysis on reducing or avoiding risk. Project risk is much more than just threats to the project budget and schedule. Often times an opportunity from a cost risk assessment can be brought into the evaluation and development of the value analysis. Value engineering proposals are similar to any other project opportunity; if they are not tracked and managed they can become a missed opportunity. This interactive process uses a Monte Carlo simulation models including likelihood of implementation of individual Vale Engineering proposals.
Author : Doug MacRae, Ontario Ministry of Transportation; Ed Ellard, MMM
Description :
Author : Khalid Bekka
Description :

HDR has successfully combined Cost Risk Analysis with Value Engineering into an integrated process called “CRAVE”. CRAVE identifies and quantifies opportunities while accounting for risk. CRAVE augments risk analysis by assessing within the same framework all possible alternatives and solutions suggested or recommended by the value engineering team, providing a reality check on proposed innovations. The presentation will provide an overview of the process and how it's applied to various type of projects as well as discuss few case studies.

Author : Art Washuta, Dr. Hussien T. AL-Battaineh
Description :

The Edmonton North LRT is a $755 million, 3.3 km extension of Edmonton's current 21-km LRT system, involving tunnelling, street-level construction, and three new LRT stations. It is projected to add 13,200 weekday riders to the current 92,000 weekday ridership.ffordable, accessible, and environmentally friendly. During the detailed design phase for the North LRT, two major value engineering and risk analysis workshops were conducted. The first value engineering workshop was conducted at the start of the detailed design stage to confirm the preliminary design and search for new creative ideas, and the second workshop was conducted for the LRT track to select the highest value option.

This presentation showcases the benefits gained in applying the value engineering methodology. The workshop job plan, major findings, risk analysis and the current status of the project were discussed.

Author : Scott McClintock, Tammy Dow
Description : Case study outlines use of Value Analysis and Risk Based Estimating on a road rail grade separation in Windsor Ontario. Presentation shows how a VE study that involved 3 levels of government on a difficult project was planned and facilitated. Project won a Value Engineering award from the American Association of State Highway and Transportation Officials.
Author : Tom Bleasdale, Black & Vetch
Description :
Author : Roch Pilon
Description : Risk assessment can be a valuable tool in the selection of alternatives. How can risk assessments be used in this fashion? How can risk assessments be used in conjunction with value engineering in order to help select alternatives. What are the implications of using risk assessments prior to or following a VE study? This presentation will bring these questions forward in the context of highway planning for expansion projects.
Author : John Halpin, Pratt and Whitney Canada
Description :

Describes typical risk management approaches, Pratt and Whitney Canada's risk management in their product development process, describes how complexity assessments measure level of difficulty of a proposed project and how using this approach ensures risk assessments are not techno centric. Part of a project portfolio management system. 

Author : Dr. Hussien Al-Battaineh, Art Washuta
Description : The City of Edmonton Southeast and West Light Rail Transit (LRT) project isis 27 km and includes the construction of 29 stops, 5 transit centres, 5 bridges and two tunnels; the project budget is about $2.75 billion dollars (2010/2011). Connected Transit Partnership (CTP) led by AECOM was awarded the preliminary design on August 2011, and proposed an innovative Risk-Based Design approach for this project. A Value Engineering workshop was held in October 2011 to collect and evaluate creative ideas which can be used to increase the value of the Southeast and West Light Rail Transit Project. The workshop participants including comprehensive representation from several City of Edmonton departments – LRT Design and Construction, Urban Planning, Edmonton Transit, Parks, Transportation, and Drainage – as well as the Connected consulting team. International advisors representing 6 additional countries were also present (US, UK, Norway, Sweden, Finland, and Germany). A total of 509 ideas were generated at this workshop, 241 of which were recommended to be carried forward for further analysis and consideration. This presentation reviews how Risk-Based design was incorporated in the Job Plan, the integration of Risk Analysis and Value Engineering, the challenges of facilitating a workshop with a large number of participants, and the mitigation plan. It also discusses facilitating workshop with participation from the owner side and the consulting team.
Author : Will Willson, Davis Langdon
Description : Discusses approaches to combining risk with VE, highlights the similarities of the processes, shows how window of opportunity for risk analysis to impact the VE study declines during the workshop. Provides practical examples based on experience in a number of sectors of how risk based estimating was combined with VE in 40 hour workshops.
Author : Ken Smith, HDR
Description : Why not give your project mangers something they really CRAVE. By combining a Cost Risk Assessment workshop with the Value Engineering workshop, you can focus your value analysis on reducing or avoiding risk. Project risk is much more than just threats to the project budget and schedule. Often times an opportunity from a cost risk assessment can be brought into the evaluation and development of the value analysis. Value engineering proposals are similar to any other project opportunity; if they are not tracked and managed they can become a missed opportunity. This interactive process uses a Monte Carlo simulation models including likelihood of implementation of individual Value Engineering proposals. This presentation includes case studies of how the process was applied and the results achieved.
Author : Chris Jalkotzy
Description : Applying principles of ethics and transparency to Value Engineering Sessions lead to reduced risk to project timelines, costs and building performance. Buildings are designed to house people to complete a specific task. The salaries of employees in a building constitute 85% of the cost of the building over the 25 to 30 year half life of the building. How successful they are at performing their job depends heavily on how well the project team integrates their needs as well understands how they will contribute to operating a sustainable building.
Title : Function Driven Risk Management (PDF | 2012 | MEMBER-ONLY | #546)
Author : Greg Brink, CVS, PMI-RMP, PMP, CCE/A
Description : The effect of uncertainty on value can play a major role in decision making. Lack of data, incomplete information, and overly cautious designs are just a few examples of the many symptoms of delayed decision making. Often, when it is not immediately clear what the best value decision may be, these symptoms can manifest themselves in the form of project risks that need to be managed. Threats can just as surely erode project value, as can the overlooking plausible opportunities. The improvement and utilization of quantitative risk analysis and management techniques in recent years has brought greater attention to the role of risk in effectively evaluating and delivering projects of all scope and scale. Risk studies are becoming commonplace; however, there exist gaps in thinking that directly link to a lack of understanding of project functions. The exploration of relational dependencies of risk on project functionality can allow for uncertainty to be evaluated and managed in a more effective and proactive fashion. In addition, a developed understanding of project functionalities that drive risk affords proper management of the impacts of uncertainties involving threats and potential opportunities throughout the project lifecycle. This paper explores the application of the Function Driven Risk Management (FDRM) process to fully integrate value-based function analysis and risk response mechanisms into project and program risk management practices. The approximate $1.5 billion US-41 Highway Reconstruction Mega Project in the US state of Wisconsin will be used as a case study in which the FDRM techniques have been successfully applied for the management of risk in both design and construction. The case study will discuss the integration of value principles into risk management practices on a functional basis to bring focus to identifying project risks, aid in prioritizing risks, and focus critical thinking on the development of appropriate risk response strategies.
Author : Alexandre Debs & René Donais
Description :

The Ministère des Transports du Québec (MTQ) is currently planning to renovate the Louis-Hyppolite Lafontaine bridge-tunnel in Montréal. The purpose of the project is to upgrade the tunnel’s safety level in the event of a fire to allow people to be evacuated by means of an emergency exit that complies with the standards applicable to road tunnels with an acceptable risk level for such infrastructures. The Ministère would like to determine the acceptable risk level based on a rigorous methodological process.

The project is currently at the feasibility analysis stage.  The project team members have performed a value analysis to ensure that the project will meet the stated needs cost-effectively while improving the bridge’s functionalities and reducing the risks and consequences of any incidents.

The originality of the proposed approach stems from the fusion of two established and internationally recognized methodologies: Value analysis and Risk analysis (or Specific Hazard Investigation).

The risk analysis was inspired by the booklet 4 of the Guide to road tunnel safety documentation.

This guide is intended to give the players involved a common understanding of the way in which these structures work, their environment and their action required in order to ensure safety.

This European method was developed in connection with a joint research project of the Organization for Economic Co-Operation and Development (OECD) and l’Association internationale permanente des congrès de la route (AIPCR) also called World Road Association (PIARC) with financial participation from the European Union. This method considers the tunnel as being a global system made up of users, the infrastructure itself with its equipment and environment, the operator, in addition to the intervention and emergency services. A function model (cornerstone of VA) was developed by the team. A disaster scenario was simulated and the tunnel’s performance evaluated for each function. The analysis revealed functions that need to be improved and a brainstorming session provided innovative solutions to improve user safety. A comparative analysis of scenarios made it possible to recommend a best possible scenario, i.e., the one that was the most cost-effective in meeting the stated needs.

Author : Gregory Brink
Description : This paper explores challenges associated with estimation of projects when limited scope definition exists and how costs evolve over a project’s lifecycle. As a solution this paper will discuss the use of risk-based cost estimating that incorporates facets of uncertainty that explain why a deterministic number can be evil in the sense that such estimates often deceive project owners and project development teams by setting false expectations. Alternatively, this paper integrates Value Engineering principles through the use of value-driven, function based estimating that improves Decision Analysis, Project Delivery, and provides innovative ways to incorporate risk-based range estimating into considerations of project costs throughout the delivery lifecycle. This particular estimating technique can also be applied directly to VE studies when developing alternative concepts and risk response strategies. The attendees of this presentation will learn benefits of risk-based range estimating and how such techniques can be used to effectively communicate with program and project stakeholders.
Author : Will Willson
Description : This presentation challenges the ‘theory’ against the ‘practical’ application of risk management.  It is important to be conscious that the risk register should naturally capture the important issues but not be so comprehensive as to detail all project issues. Time is limited for identification of risks and even more limited in the future for reviewing and managing the risks. Presentation provides guidance on understanding the difference between an issue that will be addressed through project management and a risk or uncertainty that needs to be actively managed in a risk register. 
Author : Alain Leblanc
Description : The presentation introduces attendees to the different aspects of risk management process from risk identification, assessment to response plan. Risk assessment will be of a semi-quantitative approach estimating the risk impact in terms of recurring cost, schedule and other value criteria of the product or project.
Title : Stripping out Bias in Risk Estimating (PDF | 2011 | MEMBER-ONLY | #598)
Author : SteVE Holmes
Description : Risk based estimates in transportation projects are based on the subjective expertise of subject matter experts. All of us have bias. We draw on our personal experience and use judgment to estimate the likely cost or schedule for project elements. In the financial industry, risk is predicted through analysis of statistical information and as we saw in 2008, they still get it wrong. In a transportation cost risk assessment, teams will be biased. This presentation shows what to look for in ensuring that bias is stripped out of the estimate.
Author : Will Willson
Description : The Federal Transit Administration has been working diligently over the last 10 years in developing an effective risk management process to ensure applications for Federal New Start Funds are appropriately audited and reviewed as to their robustness in budget and schedule contingency provision. However, an Grantee’s compliant application in line with guidance at the time of an assessment by the FTA is of little benefit if there is no mechanism to manage and provide visibility to those responsible for oversight as the project progresses. The FTA has now implemented through its latest guidance a robust execution plan in the form of a Risk and Contingency Management Plan [RCMP]. We will outline the structure and input required to this RCMP and the benefits derived to both a funding Agency and the project as a whole in management and control of risk and contingency.
Author : Eric Delisle
Description :
Author : Renee Hoekstra
Description : This presentation defines the Constrcution Manager At Risk (CMAR) process and then discuss how risk analysis and value engineering should be applied. Currently, ADOT has been applying a formal Risk Analysis and Value Engineering process to the CMAR process that was developed by Renee Hoekstra. We will discuss the specifics and show the tools used during this 3-day workshop. We will discuss who should be in attendance and why. This process is an important step in the overall CMAR process as well as documenting the benefits of the entire team working together to focus on adding value to a project and the success of the CMAR as a process.
Author : Gregory Brink
Description : Comparison of the anticipated Value of a project, product, or process and the resulting Value of developed alternatives is often conducted with reference to the expected outcome or the “ideal” conditions. In a world where uncertainty is prevalent and the ideal conditions are often only statistically the most likely to materialize, it is important to acknowledge the multiple sets of outcomes that may occur. By introducing uncertainty, or risk, into facets of Performance (as a direct substitution for Function), Cost, and Time within the context of the Value equation, one can acknowledge the inherent uncertainty present within the dimensions of the Value equation.
Author : Storer Boone
Description :

Probabilistic analyses are becoming more commonly used in the mining industry to assist with decision-making. Complex systems with a significant number of variable input and output conditions make traditional approaches to selection of design and management approaches more difficult. Examples of such complex systems optimization include balancing water uses and discharges as related to ore processing and tailings management on mine sites. Additionally, Failure Modes and Effects Analyses (FMEA), a structured, qualitative approach for the analysis of risks, have been undertaken to examine categories of consequences such as health and safety, environmental, financial, and reputation.

Risk of failure analyses have examined issues such as major ground falls, water inflows into mine shafts, uncontrolled discharges from mine tailing sites, and risks associated with development of carbon sequestration facilities. These approaches have been used for resource mining, carbon sequestration, nuclear waste repositories, and other major underground facilities. This presentation summarizes some of the applied probability methods being used to assist with developing priorities for risk management activities with the goal of improving overall safety, production, operation, and financial performance of mines and mining-related facilities.

Author : Siri Fernando, Holly Parkis, Dr. Hussien Al-Battaineh
Description : This presentation highlights an integrated methodology of Value Engineering and Risk Analysis for Tunnelling Projects, which are considered high risk operations due to the high uncertainty associated with the available information required for construction. This methodology couples value engineering based on SAVE International standards and a structured risk analysis process, and utilizes sensitivity analysis for life cycle cost. The proposed methodology differs from current practice in each of its three steps: risk analysis, criteria evaluation, and sensitivity analysis. In the proposed methodology, firstly, risk analysis is a quantitative analysis in which risk factors are evaluated for each of the options and the expected cost of risk is evaluated for each option which is later added to the options cost. Secondly, criteria evaluation is done using the analytical hierarchy process (AHP) which accounts for consistency. Thirdly, the value calculation has a direct relationship with life cycle cost, which can vary based on assumptions for the financial parameters (interest rate and inflation rate); sensitivity analysis is used to explore the assumptions’ sensitivities and account for those variations. The presentation showcases successful tunnelling projects in Alberta.
Author : Scot McClintock & Paul Lewis
Description : Both Risk Assessment and Value Analysis are important tools in the quest for the delivery of excellent projects within today’s ever tightening budgets. Some clients require a separate workshop for each tool while others embrace the concept of performing them together in a single workshop. In the first half of 2012, the co-presenters had the opportunity to apply both approaches for the Ministry of Transportation, Ontario (MTO) and Stantec on two very similar highway route planning study projects in Northern Ontario, using essentially the same team members. From this “laboratory” of case studies, the advantages and disadvantages of each approach are discussed and opinions expressed on which approach is preferred.
Author : Michael Wright, GHD
Description : This presentation outlines the challenges, key results and lessons learned in developing and executing an effective Asset Management Program and how Value Engineering and Risk are integrated into Asset Management. A function diagram of the asset management plan development is shown. This includes developing a risk framework to increase understanding of critical assets and how they support service levels, and the long-term funding requirements for sustaining service delivery. The development of an asset management plan (AM Plan) provides a structure to understand the function and value of a municipality’s diverse services and departments. The development of an AM Plan provides the impetus to move from understanding municipal service functions to applying asset management principles, obtaining feedback, and continuously improving toward the goal of providing reliable services, at the lowest lifecycle cost.
Author : George Hunter, Greg Brink
Description : This presentation shows how Road Safety Analysis tools, techniques and benefits can be applied and integrated into VE studies. It highlighted the use of risk management techniques as they relate to road safety analysis, to be incorporated into VE studies. Project performance measurement / analytical hierarchy process (AHP) techniques and processes were integrated with risk-based road safety analyses. 
Title : Managing your way to good procurement decisions with risk analysis (Adobe Acrobat - ".pdf" | 2009 | MEMBER-ONLY | #307)
Author : John Parker
Description :

Three examples of risk analysis at different stages of the procurement will be discussed.

  • Deciding on how to procure – Airport – design-bid-build or alternate delivery
  • Structuring the RFP – Toll bridge – public private partnership
  • Evaluating bids – Power plant – Best and final offers for refurbishment
Author : Mike Pearsall, Stephen Holmes
Description : Presentation discusses VE and Risk Analysis, a job plan to combine risk and VE, qualitative and quantitative risk analysis and suggestions on which process to use.
Author : Alain LeBlanc
Description :
Title : Building a Risk Reserve Program at Washington State DOT (Adobe Acrobat - ".pdf" | 2009 | MEMBER-ONLY | #285)
Author : Terry Berends
Description :

This presentation will cover how WSDOT changed the project management culture, from getting their project managers to just try using risk based estimating, into it being a common way of managing projects. Risk based estimating is a tool that supports risk management, without effective risk management you lose much of the benefits of risk based estimating. How to overcome the feeling that risk based estimating is just a flavor of the month. Lessons learned and best practices will be presented to prevent others from learning the hard way. What is needed to build a risk program within an organization and how do you keep it from being just another thing for project managers to do? Top ten reasons why to implement a risk program within your organization.

Programme: Building a Risk Reserve Program at Washington State DOT

Author : steVE Holmes
Description :
The Ontario Ministry of Transportation (MTO) leads Canadian agencies in the use of VA/VE/VM.  This presentation highlights why and how VE and Risk Analysis has been used on Ontario’s largest ever infrastructure projects. 
It is difficult for infrastructure owners to know if they have achieved value in large, technically complex (Mega) projects. Mega projects often have aggressive schedules and many constraints. Ontario has turned to using VE and Risk Analysis to systematically challenge the project assumptions and provide decision makers with the opportunity to consider alternatives to the proposed solution. The VE and Risk Analysis process results in Subject Matter Experts developing alternative designs that reflect the true constraints and project risks.

download full report here
Author : Vince Thomson and Arman Oduncuoglu
Description : The ever changing trends in current markets, along with customers’ rising demands for quality, require many companies to make frequent changes to create new products. Due to the challenges in product modification, many companies have adopted a strategy of adaptive design to create new designs by incrementally improving the existing ones.

The proposed model is a specialized calculator which integrates House of Quality (HOQ), Functional Analysis System Technique (FAST), risk assessment, and product complexity analysis to provide an overview of the design process from product attributes and design risk to cost and effort.

The presented tool aims to assist managers with their decision making in new product development project selections, so that the option (solution) which minimizes the detrimental effects and risks of frequent design modifications can be identified and selected.

The proposed tool shows how the risks inherent in product development projects can be monetized by using a functional breakdown of the design and cost structure of a product and displaying these in an easy-to-follow format. It starts with the construction of a FAST diagram which integrates information from House of Quality (HOQ) with techniques from Functional Performance Specification (FPS). Then, it performs a risk assessment at the functional level, and estimates the uncertainty in the profitability of the product. These analyses are repeated for each of the proposed alternative solutions resulting from engineering change. Finally, the monetized risks and profitability of alternative solutions are compared with those from the basic design, and the most effective alternative solution is selected.

In this presentation, the details of the proposed decision support tool are described and illustrated with a simple example of a thermoflask.
Author : Rob Kivi, MMM Group Limited
Description :

The Garden City Skyway is one of the largest structures in MTO’s bridge inventory, with 48 spans and a total length of 2.2 km.  The structure is located on the Queen Elizabeth Way (QEW), a vital economic corridor carrying significant commercial and tourist traffic between the Greater Toronto Area (GTA), Niagara Region and the USA.   The existing bridge deck is nearing the end of is service life and it is anticipated to require replacement by 2025.  A preliminary design study was initiated to determine a long term strategy to address the structural, traffic, safety and operational needs of this important structure.  Integrated Value Engineering and Schedule/Cost Risk studies were undertaken to review the short listed preliminary design concepts and support decision making to select a preferred solution.  The studies engaged a wide range of design and construction expertise, as well as key project stakeholders to identify a best value solution based on 100 year risk-based life-cycle costs.

Author : Dan Preley, P.Eng., AVS, Senior Project Engineer, MTO
Description :

The Ministry of Transportation, Ontario (MTO) undertook a Value Analysis study for the proposed twining of the Trans-Canada Highway 11/17 east of Thunder Bay. The base case involved major electrical transmission line conflicts and challenging foundation conditions.  The Value Analysis study identified risks and mitigation measures along with providing costs for various alignment alternatives.  By involving the electrical utility as active participants during the workshop, both MTO and the utility were able to share their concerns and objectives, while working toward a solution that offered benefits to both parties.

Author : SteVE Holmes
Description :

Link to presentation


 Better decisions can be made by thinking differently and using a risk informed process. There is no easy or “right answer” to selecting the best value solution but there is a “right process”. The right process is to combine Value Analysis with Risk Analysis to identify and select risk informed solutions. Value Analysis combined with Risk Analysis is a structured approach that combines creative and analytical steps to generate risk informed creative solutions. This presentation will focus on how to integrate Risk Analysis into the VA process. Both qualitative and quantitative risk analysis and integration into the VA work plan will outlined

Why risk is a key consideration for value proposals. How to integrate qualitative risk analysis into the VA job plan.