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  1. ETPC (Back Door method)
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  2. Net Income
    Gross Income - Operating Expenses
  3. Gross Income
    Potential Gross Income - Vacancy Loss
  4. Potential Gross Income
    Rentable Area x Rent/sf
  5. Rentable Area
    Gross Area x Efficiency Factor
  6. Vacancy Loss
    Potential Gross Income x Vacancy Ratio
  7. Operating Expenses
    Real Estate Tax + Non-tax expense
  8. Real Estate Tax
    Assessed Value x Real Estate Tax Rate
  9. Non-Tax Expense
    Rentable Area x Expense Ratio
  10. Adjusted Capitalization Rate (Cap. Rate)
    (1-LTVR)(D) + (LTVR)(UCR)
  11. UCR (Uniform Capital Recovery per $)
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  12. ETPC (Front Door method)
    Physical Value + Soft Costs
  13. Physical Value
    site + construction costs + hard costs
  14. Site
    Vacant Land + Retained Building Cost + Demolition Cost
  15. Construction Cost
    Site Improvements + remodel costs + new construction cost
  16. Site Improvements
    Site Area x Site Improvement Cost/SF
  17. Remodel Costs
    Remodel Area x Remodel Cost/SF
  18. New Construction Cost
    New Construction Area x Construction Cost/SF
  19. Hard Costs
    Construction Costs x (Professional Fees + Permit Fees + Contingencies %)
  20. Soft Costs
    Construction Loan Interest + Other Soft Costs
  21. Professional Fees
    Engineer's Fee + Architect's Fees
  22. What are the two elements of defining a function?
    • active verb
    • measurable noun
  23. What does MVO stand for?
    Managing Value Objectives
  24. What does SAVEI stand for?
    Society of American Value Engineers International
  25. What are the three MAJOR phases (efforts) of the Value Analysis process?
    • Preparation Effort
    • Workshop Effort
    • Post-Workshop Effort
  26. What are the 3 phases of the Preparation Effort?
    • 1. Coordinate Project
    • 2. Prepare for Workshop
    • 3. Construct Cost, LCC, Energy Models
  27. What is done during the Preparation Effort?
    • Gathering of all information that will be needed for the Value Engineering process.
    • Involves integral collaboration with the Design Team.
    • Must establish standards and benchmarks for comparison of the alternatives.
  28. What are the 6 phases of the Workshop Effort?
    • 1. Information Phase
    • 2. Function Analysis Phase
    • 3. Creative Phase
    • 4. Evaluation Phase
    • 5. Development Phase
    • 6. Presentation Phase
  29. What are the 2 phases of the Post-Workshop Effort?
    • 1. Implementation Phase
    • 2. Final Acceptance
  30. What is Value (as expressed by a formula)?
    Value = f (quality, function, cost)
  31. How is quality defined in VE?
    As a desired level of performance
  32. How is function defined in VE?
    As a specific purpose of something
  33. What is the objective of VE?
    To convert design criteria and specs into descriptions of project functions, then relate the functions to revenues and cost.

    Design criteria + specs --> Project Functions --> Relate function to revenues and costs
  34. What costs are included/analyzed?
    • Funding
    • designing
    • purchasing
    • constructing
    • operating
    • maintaining, etc.
  35. What is done at the Predesign Stage in VE?
    • Define project's functions
    • achieve consensus on project direction and approach
  36. What is done at the Schematic Design stage in VE?
    • Define or confirm project functions
    • verify technical and management approaches
    • analyze selection of equipment/materials
    • assess project's economical and technical feasibility
  37. What is done at the Pre-bid stage in VE?
    • Methods of construction
    • phasing of construction
    • procurement
  38. What is done during construction in VE?
    Analyze VACP (Value Analysis Change Proposals) of the contractor
  39. How many VA should be done in a project?
    Minimum of 2 VA studies, specially if complex or expensive.
  40. What are basic functions?
    Those essential to meet the user/owner needs and requirements
  41. What are secondary functions?
    Supporting functions that enhance user/owner needs and requirements.
  42. What are the reasons for the budget to be incorrect (from the start)?
    • Owner requirements not full considered
    • Poor planning/programming
    • Schedule not well defined
    • Owner predetermines project without an idea of the feasibility
  43. What are ther reasons for the budget to be incorrect (once project starts/budget creep)
    • Project scope misunderstood
    • Requirements not well defined
    • Design team not monitored
    • Changes in project/scope not controlled
    • Budget estimate was wrong
    • Schedule was incorrect
  44. Why is it so important to have an accurate project budget?
Card Set
Basic Concepts of Value Engineering
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