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Handbook of Project Management

Handbook of Project Management

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Published by G
Useful book on Project Management and its application, with incisive illustrations and practical examples.
Useful book on Project Management and its application, with incisive illustrations and practical examples.

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Published by: G on Sep 17, 2009
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Value analysis began in the United States after World War II as a result of experiences by members of the
War Production Board on their major project management task: winning the war. After the successful
conclusion of the war, the members of the War Production Board returned to their previous positions in
industry. During debriefing, members who returned to the General Electric Company reported the following
observation: Quite often, in order to maintain the flow of materials and parts needed in the war effort,
substitutions had to be made for items in short supply or delayed; more often than not, the substitutions
worked just as well, but cost less. The reasons were not understood by the observers or the investigators.

At General Electric, a study was undertaken to understand the phenomenon and perhaps to be able to obtain
the benefits of reduced costs on purpose, instead of by accident. The study resulted in the realization that what
had been required in the instance of the specification of the part or material was the “function” of the part or
material, and not necessarily the specific part or material ordered. The study found that if in a design or other
requirement, function was determined initially, and a search was made for alternative ways to accomplish the
function, then less expensive items could be selected to accomplish the function. Lawrence D. Miles, a GE
engineer assigned to the purchasing department for the study, published the results in Techniques of Value
Engineering Analysis
(McGraw-Hill, 1956). In the book, he also developed the concept of orders of functions
(basic and supporting secondary) and of how to identify unnecessary functions. From this original effort, the
discipline of VA/VE developed and has proved to be a significant methodology for eliminating unnecessary
costs in existing products, processes, and procedures and during design and planning phases of all forms of
efforts, while maintaining the specified function.

The function-oriented discipline of VA/VE was coupled with structured problem solving to develop the
methodology that is now called by various names, including analysis, value engineering, value management,
value control, and value assurance. For most individuals in the field, the terms are synonymous. In this
chapter, the acronym VA/VE is used.

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AMA Handbook of Project Management, The

by Paul C. Dinsmore

AMACOM Books
ISBN: 0814401066 Pub Date: 01/01/93

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