VALUE ENGINEERING

Value engineering (VE) is a systematic method to improve the "value" of goods or products and services by using an examination of function. Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost. It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvements. In the United States, value engineering is specifically spelled out in Public Law 104-106, which states Each executive agency shall establish and maintain cost-effective value engineering procedures and processes." Value engineering is sometimes taught within the project management or industrial engineering body of knowledge as a technique in which the value of a systems outputs is optimized by crafting a mix of performance (function) and costs. In most cases this practice identifies and removes unnecessary expenditures, thereby increasing the value for the manufacturer and/or their customers. VE follows a structured thought process that is based exclusively on "function", i.e. what something "does" not what it is. For example a screw driver that is being used to stir a can of paint has a "function" of mixing the contents of a paint can and not the original connotation of securing a screw into a screw-hole. In value engineering "functions" are always described in a two word abridgment consisting of an active verb and measurable noun (what is being done - the verb - and what it is being done to - the noun) and to do so in the most non-prescriptive way possible. In the screw driver and can of paint example, the most basic function would be "blend liquid" which is less prescriptive than "stir paint" which can be seen to limit the action (by stirring) and to limit the application (only considers paint.) This is the basis of what value engineering refers to as "function analysis". Value engineering uses rational logic (a unique "how" - "why" questioning technique) and the analysis of function to identify relationships that increase value. It is considered a quantitative method similar to the scientific method, which focuses on hypothesisconclusion approaches to test relationships, and operations research, which uses model building to identify predictive relationships. Value engineering is also referred to as "value management" or "value methodology" (VM), and "value analysis" (VA). VE is above all a structured problem solving process based on function analysis understanding something with such clarity that it can be described in two words, the active verb and measurable noun abridgement. For example, the function of a pencil is to "make marks". This then facilitates considering what else can make marks. From a spray can, lipstick, a diamond on glass to a stick in the sand, one can then clearly decide upon which alternative solution is most appropriate.

BENEFITS OF VALUE ENGINEERING

Value Engineering helps your organization in :
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Lowering O & M costs Improving quality management Improving resource efficiecy

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Simplifying procedures Minimizing paperwork Lowering staff costs Increasing procedural efficiency Optimizing construction expenditures Developing value attitudes in staff Competing more sucessfully in marketplace

Value Engineering helps you to learn how to :

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Improve your career skills Separate "Symptoms" from "problems" Solve "root cause" problems and capture opportunities Become more competitive by improving "benchmarking" process Take command of a powerful problem solving methodology to use in any situation

VALUE ENGINEERING JOB PLAN

Value engineering is often done by systematically following a multi-stage job plan. Larry Miles' original system was a six-step procedure which he called the "value analysis job plan." Others have varied the job plan to fit their constraints. Depending on the application, there may be four, five, six, or more stages. One modern version has the following eight steps: 1. General Phase 2. Information 3. Analysis 4. Creation 5. Evaluation 6. Concept Development 7. Presentation Four basic steps in the job plan are:


Information gathering - This asks what the requirements are for the object. Function analysis, an important technique in value engineering, is usually done in this initial stage. It tries to determine what functions or performance characteristics are important. It asks questions like; What does the object do? What must it do? What should it do? What could it do? What must it not do?

Alternative generation (creation) - In this stage value engineers ask; What are the various alternative ways of meeting requirements? What else will perform the desired function?

Evaluation - In this stage all the alternatives are assessed by evaluating how well they meet the required functions and how great will the cost savings be. Presentation - In the final stage, the best alternative will be chosen and presented to the client for final decision.

 GENERAL PHASE It is the most demanding phase of a VA job plan. It creates the right environment for successful VA. In this phase , emphasis is placed on human interaction to seek co-operation of the team ton implement VA. Work done on specifics, rather than on generalities. The resistance to change is to be overcome.

 INFORMATION PHASE A member of the design team usually makes a presentation to explain the main concepts of the design, including project objectives, design constraints, drawings, specifications, and special conditions that are integral to the project. The estimated cost and contingency cost of the project are also described. A good rule is that those who present the information should not take part in the VE workshop. They are usually too close to the project to be objective, and too defensive about what they have done to easily entertain new ideas that the essence of successful VE workshop. If members of the design team are included in the VE workshop, they should be a small minority of the group; they should seek to enter the spirit of free enquiry; and they should at all costs avoid being defensive. I had difficulty facilitating a VE session when the chief engineer of the design group insisted on presenting all the information and being part of the VE study. He insisted on his right to make management decisions in the VE workshop and to control the course of discussion. A quiet talk in the corridor outside the meeting room was necessary to persuade him to relinquish control and in fact withdraw from the VE workshop. The VE team came to a conclusion diametrically opposed to the chief engineers desires; but he was prudent enough to implement their recommendation and the success of the design played a significant role in his subsequent career success.

 ANALYSIS Analyzing alternatives involves comparing them to the criteria. The facilitator asks each team participant in turn to numerically evaluate each alternative against a specific criterion. Scores may vary from 1 to 5. A score of 1 indicates that the participant considers the alternative is in poor compliance with the criterion, or is a poor way to meet the objectives inherent in the criterion. Conversely a score of 5 indicates that the alternative is a very good way to comply with or meet the objectives of the criterion.

The facilitator lists all team participants scores for a specific alternative. Again, those in the minority or whose scores differ most from the average are asked to explain their scores. The discussion that ensues should be encouraged, for it will illuminate and disseminate aspects or issues not generally considered. Team members are free to change scores at any time during the discussion. When discussion is closed, the average score is computed and entered into the table. It is multiplied by the criterion weighting. The final score for each alternative is the weighted sum of the average scores. Once the alternatives are scored and ranked, a sanity check must be made. The best way to do this is to let a team member present advantages and disadvantages of each alternative. When I am the facilitator, I ask each team member to give me one advantage and one disadvantage. I write this on the flipchart and let discussion ensue. At the end of the sanity check, the team considers whether the alternative rankings from numerical comparisons should be changed.

 PRESENTATION In the presentation/implementation phase, VE recommendations are presented to the client, owner, or project manager who is sponsoring the project. The project manager decides whether the VE recommendations should be incorporated into remedial action. I prefer a presentation on the afternoon of the final day of the VE workshop. I like to conclude deliberations and discussion at about 11 a.m. and through a working lunch arrange and do a dry run of a presentation. The presentation should be set for about 3 pm and last no longer than one hour. The presentation should not be made by the facilitator. One or more team participants should make the presentation. Who should present always seems to be obvious.

 CONCEPT DEVELOPMENT During the concept development phase, the concept selected by the VE team is organized and refined before presentation to the owner. Sketches may be prepared or a narrative report compiled. Cost estimates may be refined. Concept development may require as little as four hours or as much as three weeks. A presentation more than a few days after the value engineering workshop loses the punch of the new, and so the shorter the concept development time, the better. If more time is needed, then it is not concept development but alternative design evaluation, which should follow rather than precede a formal presentation.

 EVALUATION PHASE Creative ideas generated during the Creation phase are screened for their feasibility, cost effectiveness and practicability at this stage. For this purpose, ideas are further refined or combined together. Cost of all ideas and savings resulting from their implementation are studied. Decision-matrix can be set-up to evaluate on basis of various criteria.

 CREATION PHASE Most of use want previously tried out materials, designs processes and procedures. We jump at the first ideas that work and usually do not bother to find out if better methods are possible. These days to give a fillip to creative ideas, brainstorming technique are used. To nurture creativity, positive thinking is established. Creative ideas are also developed by a number of check-lists and idea-stimulators.