Optimizing Engineering Value in Projects

RT-245 Topic Summary
RT 245

Overview

The primary purpose of this research is to clarify and raise the industry’s awareness of the broad range of issues and drivers that influence how engineering value on capital projects can be optimized. RT-245, Maximizing Engineering Value in Projects, is follow-on research to RT-233, Planning for, Facilitating and Evaluating Design Effectiveness.

Projects fail for a wide variety of reasons. In many instances, critical aspects of engineering and design are either poorly executed or overlooked altogether. Many such failures result in excessive costs to correct deficiencies, project completion delays, unexpectedly high operating costs, and in a few cases, even loss of life.

The value that engineering contributes to capital projects is rarely maximized for a wide variety of reasons. The engineering phase can be rushed; the design team can be under-resourced; owner’s requirements can be unclear; technology can change rapidly; organizational structures can be constraining; or project objective priorities can be unclear, to name a few. In today’s project environment, maximizing engineering value requires that many issues, opportunities, and challenges be identified and confronted early in the project planning process.

The effective delivery of engineering in the project cycle can be a prime determinant of overall cost and schedule performance. Design deviations (changes, errors, omissions) account for roughly 80% of the increased costs. For this reason, RT-245, Maximizing Engineering Value, examines a wide variety of strategies through which project value from engineering can be maximized. The Toolkits referenced here are intended to provide a comprehensive and easy-to-use resource for project teams to maximize engineering value.

Key Findings and Implementation Tools

1 : Timing and Impact of Implementation of Best Practices

Decisions made in the earliest phases of a project have the highest potential to exercise the greatest influence on a project as a whole. As depicted in the Cost-Influence curve below, influence starts to decrease rapidly after the Basic Engineering phase. 

Reference: (RR245-11)

2 : Fundamental Engineering Strategies

Sixty-four engineering strategies were identified and defined by Research Team 245, in collaboration with the strategies previously identified by Research Team 233. Sixteen are considered fundamental and should be implemented on most, if not all, projects. Below are 2 examples of these 16 fundamental engineering strategies. Detail explanations for each strategy is found in the research summary and research report. (RR245-11, p. 24): 


 

  • A 4 – Appropriate Allocation of Design-Related Risks & Rewards
  • A 14 – Integration of Lessons Learned into Design

The remaining optional engineering strategies have been categorized into 6 different groupings: 

  1. Alternative design delivery strategies
  2. Assistance to owner services
  3. Management of design interfaces
  4. Strategic design decisions
  5. Design approaches
  6. Opportunity capture/Design for X

A more detailed list of the optional engineering strategies is included in the research summary.

Engineering Strategy Tradeoff’s 
Although all engineering strategies are important, some can involve tradeoffs or negative impacts to one or more project value objectives (PVO). It is important that the engineering strategies selected be properly aligned with the Owner’s relative prioritization of project objectives. Schedule reduction, capital cost reduction, and design/construction quality are the objectives most frequently supported by the strategies, while capital cost reduction is also the most commonly sacrificed objective (or tradeoff) among the strategies. A complete tabular presentation of objectives supported by each strategy is presented in Appendix B of the Research Report. 

Reference: (RR245-11)

3 : Implementation of Engineering Strategies

Implementation for the 64 strategies will range from easy to difficult, depending on the resources and skills available as well as implementation history or experience. For example, Risk-Based Design, IT Integration with Key Vendors, and Building Information Modeling (BMI) are among the more difficult strategies to implement, requiring specialists. (RS245-1, p. 13)

Many of the engineering strategies create value by having an influence on phases prior to or subsequent to engineering, as depicted in the figure below. In all, 50 of the 64 strategies essentially represent linkages to other phases. This underscores the breadth of influence that engineering can have on the different project phases, along with the importance of the engineering manager’s role in understanding and promoting a broader view of engineering’s full potential. A complete tabular presentation showing the phase/phases supported by each strategy is presented in Appendix H of Research Report 245-11. 

Common Barriers to Engineering Value – the research included an industry survey to better understand the frequency and severity of barriers to engineering value. The 10 most severe and frequent barriers to engineering value are listed below. Strategies to prevent overcome these barriers are outlined on the research summary. 

  • Inaccurate understanding of owner project priorities and objective preferences
  • Suboptimal allocation of contract risks to contracting parties
  • Lack of detailed definition of project work scope
  • Lack of timely input to design process from all key stakeholders
  • Lack of knowledge of critical owner-fabricator-contractor driven design package completion need dates
  • Lack of knowledge of owner’s planned shutdown dates or of operations requirements near phased construction work
  • Insufficiently detailed Project Execution Plan that is not understood or committed to by design team
  • Insufficient resources that are not provided in a way to enable efficient deployment
  • Lack of awareness of or misapplication of relevant Lessons Learned from previous projects
  • Ineffective design QA/QC
Reference: (RS245-1)

4 : Engineering Strategy Selection Tool

The purpose of this selection tool is to provide guidance on which strategies will likely offer the most value for a project. Judgment from the project team is still required. The results are intended to initiate a team dialog regarding which strategies should be given serious consideration for implementation. Additional information and a detailed description of the Project Value Objectives involved for each strategy is included in Appendix G of Research Report 245-11. Included under Implementation Tools below as well. (RR245-11, p. 41)
Reference: (RR245-11)

5 : Implementation Tool #1

IR245-2, Maximizing Engineering Value and Design Effectiveness Toolkit

An implementation model for maximizing engineering value and design effectiveness, along with an engineering strategies catalog and a software tool for determining appropriate engineering strategies for individual projects.
Reference: (IR245-2)

6 : Implementation Tool #2

IR245-3, Design Effectiveness Evaluation Tool

A tool to evaluate design effectiveness and improve MEV/DE (Maximize Engineering Value/Design Effectiveness) implementation at both the project and corporate levels. Permits design evaluation from the perspective of the owner, the designer, the construction team, or any combination of these parties by means of weighted criteria and sub criteria.
Reference: (IR245-3)

7 : Implementation Tool #3

RR245-11, Engineering Strategy Selection Tool (Excel)

Developed to facilitate the selection of optional engineering strategies for implementation based on most value for your project. (RR 245-11, Appendix G – page 92)
Reference: (RR245-11)

Key Performance Indicators

Improved cost, Reduced change, Improved estimating, Improved quality

Research Publications

Maximizing Engineering Value and Design Effectiveness Toolkit - IR245-2

Publication Date: 10/2015 Type: Implementation Resource Pages: 177 Status: Tool

Design Effectiveness Evaluation Tool - IR245-3

Publication Date: 03/2015 Type: Implementation Resource Pages: 20 Status: Tool

Maximizing Engineering Value - RR245-11

Publication Date: 02/2009 Type: Research Report Pages: 201 Status: Tool

Maximizing Engineering Value - RS245-1

Publication Date: 01/2009 Type: Research Summary Pages: 33 Status: Supporting Product


Supporting Resources

Presentations (CII Annual Conference & Workshops)

Plenary Session - How to Maximize Engineering Value on Your Capital Project

Publication Date: 06/2008 Presenter: Number of Slides: 15 Event Code: AC08

Session - How to Maximize Engineering Value on Your Capital Project

Publication Date: Presenter: Number of Slides: 38 Event Code: PIW315


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