A Value Engineering Study: Abha Airport Project Post-Contract Stage

This case study details a value engineering (VE) study conducted for the Abha Regional Airport project in Saudi Arabia, undertaken by Dar Al Riyadh. The project involved a multi-disciplinary team tasked with optimizing costs during the post-contract stage. The study analyzes three scenarios: optimizing the existing design, adopting the 2009 master plan, and maximizing capacity for available land. The QS Head's role included cost analysis, BOQ review, and recommendations for cost-saving measures, with the goal of achieving a 30% cost optimization target set by the employer. The case study highlights the challenges of achieving these savings while maintaining project quality and outlines the VE approach, key issues, and proposed solutions, including detailed cost calculations and comparisons of the three scenarios, ultimately aiming to deliver the best value for money without compromising on time, improve quality and performance.

A Value Engineering Study of Modification and Optimization of Cost During the Post Contract Stage
Case Study
A Value Engineering Study for Design Modification
and Optimization of Cost During Post Contract
Stage
Date, the project or piece (s) of work, carried out: 25th Sep 2017
1. Introduction
1.1 Company Business
I worked in Dar Al Riyadh1 (“Company”) which is a leading consultant firm of Saudi
Arabia. It provides services to the client, Govt ministries, developer from conceptional to
handing over stage which mainly includes planning, designing, construction management
services and client support services and implementation of innovative solutions in the
environment.
1.2 Project Overview
The project currently provides services to numerous airports within the Gulf Region.
The development of Abha Regional Airport project (“Project”) is among those development
projects that represent the strategy of Kingdom in compliance with the Kingdom’s 2030
Vision.
The new airport (Abha Airport) consists of both airside and landside facilities. The
Airside facilities cover air navigation service, taxiways, aprons, air traffic control tower while
the Landside facilities include passenger terminal building that will accommodate five million
passengers annually; 20 passenger boarding bridges, a yard for planes to park and parallel
corridors to accommodate 26 planes simultaneously; multi-story car parking buildings that
can accommodate 2,800 cars; a mosque that can accommodate 1,000 worshipers. Bachelor
and Families Building villas, administration buildings, maintenance building, chiller plant
building, power house and substation buildings are also included.
1 http://www.daralriyadh.com/en/

A Value Engineering Study of Modification and Optimization of Cost During the Post Contract Stage
For convenient, I have outlined the detailed scope in Appendix B. I have also
attached the project location and site plan in Appendix C and Photo Graph in Appendix D
1.3 My Role & Responsibilities:
The current case study is related to my involvement in one complex and vital Value
Engineering (“VE”) instruction, where the multi-disciplinary team was assigned to review the
entire project design and drive out the optimized proposals and solutions to meet the
requirement of Employer as described in below subsection, 1.7 “The Instruction”.
I was a part of Charrette from the Engineer side which comprise of 28 member
stakeholders (including Employer, Engineer, Architect, designer and contractor
personals) focusing on objectives and concentrating on function before solutions. Being a
QS Head, I dealt with the cost elements and its calculations, like producing the cost
calculation (initial/capital, life cycling) and provide advice and recommendation about cost
saving based on the VE. I could finally propose options and solutions. I have established the
evidence and reasoned advise in below section “My Achievement” and for further
convenience I have made the considerable, detailed cost calculation in Appendix G. Mainly,
I carried out the following :
1. I critical reviewed the contract Bill of Quantities (“BOQ”). Refer to Appendix A & E
2. I produced and advised the Cost Breakdown Structure of overall project price
3. I reviewed, compared, and advised about the BOQ pricing rates, in elements that are
higher than or less than the market rate or benchmark rates.
4. I reviewed and advised about the front-loaded items, error, exaggerated rates
5. Made the brainstorming session about VE optimization cost techniques. Provided
presentations and recommendations to the team about cost outcome of chosen
approaches.
6. Produced and determined the initial and Life Cycling calculation of three VE outcome
Scenarios, including the Original Design and Proposed Design. Refer to Appendix G for
the detail cost calculation.
7. Comparison of three scenarios and advise, make the Cost Saving recommendation
report. Refer to section my Achievement.
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A Value Engineering Study of Modification and Optimization of Cost During the Post Contract Stage
(In the above process, I implemented several mandatory and technical competencies,
including but not limited to Commercial Management2, Design Economics and Cost
Planning3, Quantification, and Measurement4,Contract Administration5, Contract practice6,
Communication and negotiation7 including professional ethical standards8. I have illustrated
my professional practice competencies in Appendix-A.
1.4 Project Stakeholders
The General Authority of Civil Aviation (“Employer”) has signed the contract with
al Jaber Construction Company (the “Contractor”) for the construction and completion
of project within 36 months with the completion date 14 Feb 2019. The awarded value of
contract is 1.8 billion Saudi Riyals which comprises of buildings and infrastructure works.
I have demonstrated the project cost and breakdown in Appendix E:
The Employer also entered into a contract with my company to provide the
construction management service and act on his behalf as an “Engineer” role for this
ambitious and iconic project. The original completion date was 14th March 2019 and forecast
completion had been estimated to be 8th March 2020.
The architectural design was done by Rafael Vinoly Architects PC (RVA), New York,
U.S.A, the civil part was done by Pacer Consultants, Egypt, the Structural by Pacer
Consultants, Egypt, Roof Structural by Thornton Tomasetti, US, Mechanical by Pacer
Consultants, Egypt, and the Electrical part by Pacer Consultants, Egypt.
1.5 Project Procurement Strategy
Traditional with the re-measurable contract.
1.6 Form of Contract
Traditional, Contract, Public Works Contracts, Saudi Arabia,
1.7 Timeline
36 Months, contract award date is 12 December 2015, contract start date is 15
February 2016, completion date is 14 Feb 2019, a revised completion date is 8 Feb 2020.
2 RICS, Pathway Guide Quantity Surveying and Construction, August 2018, RICS, p22
3 lbid, p29
4 Ibid, p35
5 Ibid, p25
6 Ibid, p26
7 Ibid p11
8 RICS, Global Professional and Ethical Standards
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A Value Engineering Study of Modification and Optimization of Cost During the Post Contract Stage
1.8 The Instruction
Employer instructed to review and reconcile the current design and make the value
engineering with the objective to bring the wider benefit and drive out unnecessary costs.
This is done in order to ensure and deliver best value of money without compromising on
time, improve quality and performance and utilise such saving techniques on other projects
for the benefit of public.
Prior to instruction, the parties of the contract agreed to study the aspects of value
engineering for the existing design and optimize the project value without effecting the
standard and quality. However, parties also agreed that saving should be utilized on others
project by the same contractor. As a result of that, a Value Engineering (“VE”) exercise was
carried out where I have played a critical role to analyse, produce and advise the cost-saving
amount in accordance with the decisions made for the chosen scenarios.
2. My Approach
Key Issues
The Employer has set a target saving value of SAR 600 million for the whole
development, which stands on 30% level of cost optimization. Such percentage, even
though the project is in the Construction stage where contractor is fully mobilized and
progressing the works, is considered difficult to achieve without imposing changes on
the design. In addition to that Employer was seeking to achieve the following objective,
 Maximize passenger capacity on Employer land.
 Achieve Flexibility in operations.
 Maximize ROI9.
 Update Majority of infrastructure.
 Expedite schedule of completion for the new terminal building.
 Ability to achieve Employer and ICAO10 Certification.
 Consider Long Term (LCC11) Cost Savings where possible.
The pinch point is that the overall cost of the Passenger Terminal Building, which
stands at almost 50% of the development cost, was on the higher side. I have broken
down the project elements and presented in the pie chart in Appendix E. The structural
element (Metalwork, sub + Superstructure) consist of 47% of the building cost, due to
several reasons, mainly for the shape of the roof and what such shape is imposing on
9 Return of Investment: ration between net profit and cost of investment
10 International Civil Aviation Organization
11 Life cycling cost: total cost of ownership over the life of project.
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A Value Engineering Study of Modification and Optimization of Cost During the Post Contract Stage
the design high level of complication. The Pareto Cost Model12 reveals that the
metalwork consists of the highest percentage of the cost among all other project
components.
I have listed the pros and coins in Appendix F resulting from the critical review by the
VE team, impacting the time and cost of the project.
1.9 The Approaches Value of Engineering
Solution Proposed
The VE team made several brainstorming sessions and established several
proposals, but the final proposal grouped the following three scenarios which were chosen
to achieve the client object.
1. Optimizing Existing Design (Contractual Design)
2. Adopt 2009 Master Plan Design
3. Maximum Capacity for available land
1- Optimizing Existing Design:
This scenario is based on maintaining the location and the shape of the PTB 13
with the optimization of the cost. The main results are defined as:
 Maximizing passenger capacity to 5-6 million passengers/year.
 Cut off using available Employer lands for major future expansion.
 No multiple phased expansion is available.
 Creates limited flexibility for Operations.
 Anticipated ROI is low, simple payback duration is 25 years.
 Potential PTB savings with changes = SAR 225-300 million
 Potential other buildings savings with changes= SAR 100-150 million
 Construction scheduled to complete new PTB is estimated to be 4-5 years (2021)
12 Appendix E
13 Passenger Terminal Building, refer Appendix C
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A Value Engineering Study of Modification and Optimization of Cost During the Post Contract Stage
 Difficult ability to achieve EMPLOYER and ICAO Certification
 Allow the possibility to create temporary terminal facilities to relieve over
compaction
The idea of optimizing the existing design by further studying the possibility of
simplifying the shape and construction of the PTB maintaining the crescent shape and
location was elaborated. The results were not different and can be highlighted as below:
 Maximizing passenger capacity to 5-6 million passengers/year.
 Cut off using available Employer lands for major future expansion.
 No multiple phased expansion is available.
 Creates limited flexibility for Operations.
 Anticipated ROI is low, simple payback duration is 25 years.
 Potential PTB savings with changes = SAR 250-300 million
 Potential other buildings savings with changes= SAR 150-200 million
 Construction schedule to complete new PTB is estimated to be 3-4 years (2021)
 Reasonable ability to achieve Employer and ICAO Certification.
 Allow the possibility to create temporary terminal facilities to relieve over
compaction.
2- Adopting 2009 Master Plan Design
The scenario is based on a linear development of the PTB with maximum
utilization of the jetty (double-sided loading). The main results are outlined as:
 Maximize passenger capacity to 7-8 million passengers per year
 Offer some ability to use part of existing EMPLOYER land for future expansion.
 Can create one more phase for expansion and extending airport life of additional
8 years.
 Creates more flexibility of Operations (code C and E equipment)
 Anticipated ROI is better, simple payback duration is +/- 10-15 years
 Potential PTB savings with changes = SAR 300-370 million
 Potential other buildings savings with changes= SAR 150-200 million
 Construction scheduled to complete new PTB is estimated to be 3-4 years (2020)
 Reasonable ability to achieve EMPLOYER and ICAO Certification
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A Value Engineering Study of Modification and Optimization of Cost During the Post Contract Stage
 Allow the possibility to create temporary terminal facilities to relieve over
compaction
3- Maximum Capacity for Available Land
The scenario is based on the maximum utilization of available Employer land for
air side development with linear development of the PTB consisting of remote jetties
(double-sided loading). The main results are outlined as:
 Maximize passenger capacity to 13-14 million passengers per year
 Maximum capacity of 65-74 Code C aircraft, with the possibility of remote ones.
 Offer some ability to use part of existing EMPLOYER land for future expansion.
 Can create two more phases for expansion extending airport life to 25 years
 Creates maximum flexibility of Operations (code C and E equipment)
 Anticipated ROI is better, simple payback duration is +/- 10-15 years for phase 1
 Potential PTB savings with changes = SAR 300-370 million
 Potential other buildings savings with changes= SAR 150-200 million
 Construction scheduled to complete new PTB is estimated to be 3-4 years (2020)
 Better ability to achieve Employer and ICAO Certification.
 Allow the possibility to create temporary terminal facilities to relieve over
compaction
3. My Achievement
I have performed Value Methodology (VM), known as Value Engineering, Value
Analysis and Value Management. It is a benchmark based on the standards and procedures
of the Society of American Value Engineers14 (SAVE).
In the following diagram, I am illustrating the various ways how the value can be
attributed to a project, which I have applied for the calculation of whole proposal. For
example, I have indicated that arrows in the lower right corner indicate an idea which
maintains performance and reduces costs. The arrows in the center indicate an idea that
raises performance and lowers cost.
14 Save International
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A Value Engineering Study of Modification and Optimization of Cost During the Post Contract Stage
I have prepared the summary of the proposals developed for each design
discipline and the respective cost effect is provided at Appendix A where I have given
the VE recommendations. However, I determined that saving of these proposals cannot
be considered to be accumulative. As such, the savings are calculated based on the 3
scenarios proposed and according to the impact of each scenario on the project. The
detailed calculation is attached under Appendix G.
S # Scenario Saving Range
a Optimizing Existing Design Saving SAR 400-500m
b Adopt 2009 Master Plan Design Saving SAR 450-570m
c Maximum Capacity for available land SAR 450-570m
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A Value Engineering Study of Modification and Optimization of Cost During the Post Contract Stage
4. Conclusion:
I have demonstrated the significant approaches for the cost optimisation against
chosen benefited proposals. I have developed proposals according to each trade. To meet
the Employer strategic domain and objective for the 600 million saving, re-designing is
required and a new master plan is also required to be made. The recorded savings are
based on the following highlights which offer a road map which needs to be adopted.
1. An update of the master plan is urgently needed, focusing on maximizing the airport
capacity / airside area and utilization.
 Proposing a phasing strategy to respond to the expected growth of the
passengers
 Capacity and Designing of the PTB in accordance with the decisions made.
 Optimizing the development program to be in line with the feasibility and ROI
value.
2. Simplifying the shape of the Passenger Terminal Building structure and shape-wise,
as the unique building shape is not going to be viewed by customers from outside
due to the surrounding terrain levels.
3. Decentralize the MEP system of the PTB and utilize existing facilities as much as
possible.
4. Defer the construction of some building which are not considered of high importance
to the Airport function i.e. (Housing Units Metro / Clinic / Maintenance Building/
etc…)
Lesson Learn
I learnt what is the overall process of value engineering specially during post-
construction. Further, the fundamental objective of value Engineering study is, first to
develop and establish the understanding of the client requirement and in the second step, to
ensure that that understanding is shared between all members of the project team. If any
team member is not present then any such attempt would be meaningless, like Architecture
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A Value Engineering Study of Modification and Optimization of Cost During the Post Contract Stage
design was absent in the workshop which created vagueness in the fields of creative idea
and decision making.
Conclusion
Critical Analysis
In my report I revealed that the PTB consists of almost 48% of the development cost
alone, while the remaining buildings and project infrastructure included the rest.
Further analyzing the PTB cost elements, I noticed that the structure, especially the
steel roof cost value is SAR 278 460 252, which is about 30% of the PTB cost alone.
Adding to it is the concrete cost, the percentage increase to 50% of the PTB cost for
structure only, which is considered to be too high.
The reason behind such a high cost is the unique shape of the PTB (crescent
Shape) and the building section itself. No structural truss element is identical to another
which means each structural element has to be designed and manufactured separately.
What I did Differently.
Post Contract Value Engineering.
It was the first and unique project where I have conducted the VE for the whole
project design at the post-contract stage and in result of that, 80% of the original project
design has been changed. It is opposite to the normal industrial practice where mainly we
conduct such exercise at the initial stage of design development and before awarding the
project.
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