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Value Analysis: Capturing Total Cost of Ownership reduction opportunities in E&P projects

Published online by Cambridge University Press:  01 April 2016

E. van der Schans ,
J.W.N. van Lijssel  and
P. van Steenderen
E. van der Schans*
Affiliation:
Stork Engineers and Contractors B.V., Radarweg 60, NL 1043 NT Amsterdam
J.W.N. van Lijssel
Affiliation:
Stork Engineers and Contractors B.V., Radarweg 60, NL 1043 NT Amsterdam
P. van Steenderen
Affiliation:
Stork Engineers and Contractors B.V., Radarweg 60, NL 1043 NT Amsterdam
*
1Corresponding author; e-mail: e.van.der.schans@e-c.storkgroup.com
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Abstract

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Value Analysis is a powerful tool to increase the value of a capital investment project and to capture cost saving opportunities. It is a method conceived during WorldWar II and frequently used on infrastructure projects, especially in the USA.

The Value Analysis process typically consists of a well prepared 3 to 5 day workshop with focus on generating ideas to improve the current engineering concept. Emphasis is on screening all proposals in order to identify the most promising ideas. The workshop results in a number of proposals to modify the existing engineering concept.

Stork Engineers & Contractors have used the Value Analysis method on several projects as well as in proposals for Engineering, Procurement and Construction (EPC) projects in the Exploration and Production (EP) industry.

Typical results of Value Analysis led to a decrease of Total Cost of Ownership by some 10 to 30%. A well facilitated Value Analysis workshop also leads to mutual trust and understanding between the parties involved.

A key element in a Value Analysis is (re)definition of the proposed functionality of a project. This is done through challenging the existing technical concept by increasing this functionality or by meeting this functionality at a lower cost.

Keywords

value analysisvalue managementtotal cost of ownershipfunction analysis system techniquecost reduction
Type
Conference papers
Information
Netherlands Journal of Geosciences , Volume 80 , Issue 1 , April 2001 , pp. 107 - 111
Copyright
Copyright © Stichting Netherlands Journal of Geosciences 2001

References

Miles, L.D., 1961. Techniques of Value Analysis and Engineering - McGraw-Hill Book Company New York.Google Scholar
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Palmer, A., 1996. A comparative analysis of value management systems in the UK, USA and Japan, CIB Beijing international conference.Google Scholar