'Value engineering' to help free up funds for other projects

MANILA, Philippines - Philippine infrastructure projects will soon implement value engineering (VE), a move that will “free up unnecessary costs so that these can be allotted to projects which have insufficient funding." Besides avoiding projects’ cost overruns, the use of value engineering allows “more projects to be accommodated within the target spending level," the National Economic and Development Authority (NEDA) said in a statement. “For ongoing projects, applying VE/VA studies offers a way where cost overruns, implementation delays, and changes in scope can be scrutinized and may be reduced or outright avoided," the agency added. The initiative forms part of NEDA strategies to strengthen the investment coordination committee’s (ICC) process in implementing infrastructure projects. The value engineering/value analysis was developed under a study funded by a grant under the Philippines-Australia Partnership for Economic Governance Reform (PEGR). Value engineering, a professionally applied and systematic team management approach, seeks to provide a balance of quality, performance and functionality in a project, the agency said in a statement. It is part of Reform Agenda (RA) 006-07, “Institution Strengthening of NEDA and Other Oversight Agencies on Value Engineering, Contract Preparation and Performance Monitoring of Infrastructure Projects," and is being undertaken by Castalia Strategic Advisors consultancy firm. The study involves three activities namely value analysis (VE/VA) including risk assessment/management; drafting/formulating standard bidding documents and contract preparation for private-public sector partnership (PPP) projects, and performance monitoring of PPP projects. NEDA staffmembers involved in the ICC project evaluation process and NEDA-Build Operate Transfer (BOT) Group staffmembers have been participating in the discussions, workshops, and meetings under the first activity. Also, consultations have been held with relevant implementing agencies (IAs) and have been invited to participate in some of the workshops. Currently, the consultants are incorporating some of NEDA's inputs in their final report on VA/VE and are preparing for the VE/VA training. Further discussions and review are ongoing regarding recommendations on strengthening the ICC approval process through integration of VA in various stages of the project development cycle. A trainor’s training program for selected state universities and colleges and government was conducted in 2005 as an initial step to roll-out the VE concept. The first use of the system was in 2006, when the Department of Public Works and Highways conducted a pilot testing activity applying VE to selected foreign-funded road projects. VE was also introduced into the procurement process by way of Government Procurement Policy Board Resolution No. 010-2006 on April 10, 2006. “NEDA recognized the need for VE/VA for ICC projects, hence the assistance to develop a framework for its institutionalization, which involves revision of ICC guidelines. Proposed changes to the guidelines are still for further discussion between the ICC Secretariat and the consultants," NEDA Assistant Director-General Ruben S. Reinoso, Jr. said. - GMANews.TV