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Value for Europe Improved cost efficiency and effectiveness Value Engineering

High Level Meeting on the Future of Cohesion Policy 31 March – 1 April 2011, Budapest, Hungary. Value for Europe Improved cost efficiency and effectiveness Value Engineering. Árpád Fodor C ertified Value Specialist-Life, Professional in Value Management. Goals of Presentation. 1.

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Value for Europe Improved cost efficiency and effectiveness Value Engineering

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  1. High Level Meeting on the Future of Cohesion Policy 31 March – 1 April 2011, Budapest, Hungary Value for EuropeImproved cost efficiency and effectivenessValue Engineering Árpád Fodor Certified Value Specialist-Life,Professional in Value Management

  2. Goals of Presentation 1 Highlight the Importance of Value Engineering 2 Regulation of Value Engineering 3 Prevent Unnecessary Expenditures of € Billions / Years

  3. Agenda 1 Value Engineering ApproachThrough Examples and Results 2 Value Engineering in Hungary and Europe 3 Next Steps

  4. Agenda 1 Value Engineering ApproachThrough Examples and Results 2 Value Engineering in Hungary and Europe 3 Next Steps 4

  5. ‘Functional Thinking’ Focus on the function and not on existing solution

  6. We capitalise the functions!

  7. Paks Nuclear Power Plant – Water Recuperation power plant

  8. Paks Nuclear Power Plant – Water Recuperation power plant

  9. Paks NPP - Water Recuperation power plant – Original idea €24 million

  10. Paks NPP - Value Engineering proposal

  11. Paks NPP - Value Engineering proposal (cont)

  12. Paks NPP - Visualisation – November 2009 Result of Value Engineering:Cost savings of €3.5 millionand the projecthas commenced

  13. The visit of Pope John Paul II in Hungary – Gyõr, 1996 Parameters: 150-200,000 believers, 15,000 cars,3,000 buses, 1 night and a half day Originalcost (before VE): €1.6 million

  14. The visit of Pope John Paul II in Hungary – Gyõr, 1996 What are the functions? Provide area – €0.4 millionParking (bus, car)Provide podium – €0.1 million Illuminate area – €0.3 million …. …. Coordinate traffic 12 VE Proposal –Total cost savings: €1.4million (87%)

  15. Motorway - Planning permission Dual 2-lane motorway + emergency lane 60 km, €357 million

  16. Motorway - Planning permission K11 Canal Track – Original Idea

  17. Motorway - Planning permission K11 Canal Track –crossroads object Parameters of the object • Length: 13.2 metre • Width: 33.83 metre • Surface: 447 m² • Net unit cost €1,830 / m² Cost estimate: €0.85 million

  18. 1 m Motorway - Planning permission K11 Canal Track (continued) Is there room for increasing efficiency?

  19. 1 m Motorway - Planning permission K11 Canal Track (continued) What is the function? • From perspective of the designer: ‘to cross waterway’ • Interpretation of VE team: ‘to ensure water supply of thearea’

  20. Motorway - Planning permission VE Proposal – Modification of K11 Canal Track €125,000 Cost saving of €725,000

  21. Motorway - Planning permission Dirt Road Flyover

  22. Motorway - Planning permission Dirt Road Flyover 60km - 12 dirt road objects Track width of the objects: 7.5m; Track structure size: 8.63m

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

  24. Motorway - Planning permission Munich Ring, North(E52) - Dirt Road Flyover Width of dirt road 3.5m Existing asphalt road 4m Width of track structures4.5m

  25. Motorway - Planning permission Dirt Road Flyover VE proposal:Modify the width of the objects Impact of Value Engineering Proposal …only 60-km motorway track!

  26. Motorway - Planning permission Original cost estimate: €357 million Result of Value Engineering Study (20 proposals):Cost savings of €43 million (12%)

  27. Agenda 1 Value Engineering ApproachThrough Examples and Results 2 Value Engineering in Hungary and Europe 3 Next Steps 27

  28. Value Engineering in Hungary Public Procurement Act – from 1996 In the invitation to tender, the company or the government body can require the tendererto apply Value Engineering methodology

  29. Value Engineering in Hungary

  30. …and not only for Investment Projects • Strategies • National Autism Strategy – Preparation of Government Decree • Drafting Laws, Professional documents • Sign Language Interpreter Service • Employment Act • Projects • Public Procurement action plan (National Development Agency) • Balance of Payments – preparation of computer software(Hungarian National Bank) • Process Management System (Paks Nuclear Power Plant)Original version: 155 Processes; VE Proposal: 57 Processes • etc.

  31. Results of VE Studies in Motorway Investments, Hungary Since 1999VE review of 85Motorway Investment plansin Hungary Total Estimated Construction Costs: €2.9 billion Cost Savings: €393 million (13%) Additional Costs: €39 million (1%) … and at higher quality!

  32. European Data European Transportation Market in 2007-2013: • Ten-T: €9 billion; • Structural and Cohesion Funds: €43 billion; • The Member States from their own Budget: €196 billion; • European Investment Bank: €65 billion loan. „The available funds of €300 billion will not cover all necessary investments.” Zoltán Kalocsai: Through the common prosperityRoads and Transportation, XX. 1. Issue Februar 2011

  33. Would I spend my money this way? 10% cost efficiency Return of Investment at least 100:1

  34. How can the European Union gain from the application of Value Engineering? More projects from the same budget Investments and projects at higher quality 1 2 Higher standard of living in Europe 3 Quicker developments and reduced risk of delays 4 5 6 Reduction of risk management in decision making Increased efficiency andcompetitiveness of the European Union

  35. Agenda 1 Value Engineering ApproachThrough Examples and Results 2 Value Engineering in Hungary and Europe 3 Next Steps 35

  36. Next steps • Analyze development methodologies(i.e. Value Engineering) • Provide training and promote ‘functional thinking’ • Develop pilot scheme • Mainstream implementation

  37. Thank you for your attention!

  38. Contact DetailsÁrpád Fodor Certified Value Specialist-Life, Professional in Value Management Phone / Fax: +36-1-2838630 Mobile: +36-20-9682938 www.microva.hu microva@microva.hu

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