Monday, October 27, 2008

Condensate Polisher Savings of 23% Realized Through Value Engineering

The white paper, "Condensate Polisher Savings of 23% Realized Through Value Engineering", shows how a value engineering team comprised of personnel from a well-known university, Res-Kem Corp, and a mechanical contractor yielded the best system for the money.

These savings substantially improved the return on investment. This was accomplished without making any compromises on the installation costs, reliability of operation, or desired operating efficiency of the powerhouse.

The Problems:
All the qualified bids exceeded the set aside level of funding. During the time lag between project approval and initiation of the bidding process, a number of variables arose which collectively now jeopardized the project in its entirety.
  • The cost of stainless steel, while recognized to be escalating, continued
    to climb beyond all reasonable expectations.
  • The university’s internal cost of capital was adversely affected by a tightening of available funds within the credit market. Almost immediately, the university comptroller put the project on hold and demanded an even higher return on investment in order for the project to proceed.

    The Solution:
    In an attempt to move the project forward, it was decided the university utility manager would work directly with the condensate polisher manufacturer and the winning bid mechanical contractor to see how best to value engineer the product offering. The targeted goal of the value engineering team was to reduce the purchase price of the condensate polisher by a minimum of twenty percent. This together with some labor saving initiatives taken on by the mechanical contractor installing the system would hopefully rescue the project.

    Value Engineering Study Items and Savings

    Downsize Vessel Size -- 4% Savings

    Retain stainless steel vessel -- 0%

    Retain C-150 resin -- 0%

    Modify external piping -- 13% Savings

    Modify control valves -- 6% Savings

    Total Value Engineering Savings -- 23%

    As shown in the above summary, the benefits of joining together a team of
    knowledgeable and experienced individuals can be readily apparent. This is particularly true when the individuals come to the task with complementary but differing skill sets combined with a shared sense of purpose.
  • 1 comment:

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