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Value Engineering

Value Engineering

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Published by Neha Jain

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Published by: Neha Jain on Feb 16, 2012
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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 ³Each 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 system¶s 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 :
y y y

Lowering O & M costs Improving quality management Improving resource efficiecy
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Presentation Four basic steps in the job plan are:  Information gathering . Creation 5. an important technique in value engineering. It asks questions like. Depending on the application." Others have varied the job plan to fit their constraints. Evaluation 6. General Phase 2.y y y y y y y 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 : y y y y y 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. six. What are the various alternative ways of meeting requirements? What else will perform the desired function? 2 . is usually done in this initial stage. It tries to determine what functions or performance characteristics are important. five.In this stage value engineers ask. 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) . Larry Miles' original system was a six-step procedure which he called the "value analysis job plan. there may be four. One modern version has the following eight steps: 1. or more stages. Analysis 4. Information 3.This asks what the requirements are for the object. Concept Development 7. Function analysis.

design constraints. The facilitator asks each team participant in turn to numerically evaluate each alternative against a specific criterion. Presentation . The resistance to change is to be overcome. The VE team came to a conclusion diametrically opposed to the chief engineer¶s 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. He insisted on his right to make management decisions in the VE workshop and to control the course of discussion. The estimated cost and contingency cost of the project are also described. Scores may vary from 1 to 5.   GENERAL PHASE It is the most demanding phase of a VA job plan. Evaluation . They are usually too close to the project to be objective. 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. including project objectives. specifications. they should be a small minority of the group. In this phase . Conversely a score of 5 indicates that the alternative is a very good way to comply with or meet the objectives of the criterion. 3 . or is a poor way to meet the objectives inherent in the criterion. and they should at all costs avoid being defensive. rather than on generalities. 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. drawings. the best alternative will be chosen and presented to the client for final decision. and special conditions that are integral to the project.  INFORMATION PHASE A member of the design team usually makes a presentation to explain the main concepts of the design. A score of 1 indicates that the participant considers the alternative is in poor compliance with the criterion. emphasis is placed on human interaction to seek co-operation of the team ton implement VA.In the final stage. If members of the design team are included in the VE workshop. and too defensive about what they have done to easily entertain new ideas that the essence of successful VE workshop. It creates the right environment for successful VA.  ANALYSIS Analyzing alternatives involves comparing them to the criteria. A good rule is that those who present the information should not take part in the VE workshop. they should seek to enter the spirit of free enquiry.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. Work done on specifics.

I like to conclude deliberations and discussion at about 11 a. the better. Sketches may be prepared or a narrative report compiled. which should follow rather than precede a formal presentation. I ask each team member to give me one advantage and one disadvantage. When discussion is closed. At the end of the sanity check. Concept development may require as little as four hours or as much as three weeks. I prefer a presentation on the afternoon of the final day of the VE workshop. VE recommendations are presented to the client. those in the minority or whose scores differ most from the average are asked to explain their scores. the concept selected by the VE team is organized and refined before presentation to the owner. The presentation should be set for about 3 pm and last no longer than one hour. It is multiplied by the criterion weighting. Cost estimates may be refined.The facilitator lists all team participants¶ scores for a specific alternative. then it is not concept development but alternative design evaluation.m. Again. When I am the facilitator. the average score is computed and entered into the table. and so the shorter the concept development time. The project manager decides whether the VE recommendations should be incorporated into remedial action. One or more team participants should make the presentation. or project manager who is sponsoring the project. a sanity check must be made. Team members are free to change scores at any time during the discussion. If more time is needed. The final score for each alternative is the weighted sum of the average scores. The presentation should not be made by the facilitator. owner. I write this on the flipchart and let discussion ensue.  CONCEPT DEVELOPMENT During the concept development phase. the team considers whether the alternative rankings from numerical comparisons should be changed. The best way to do this is to let a team member present advantages and disadvantages of each alternative.  PRESENTATION In the presentation/implementation phase. and through a working lunch arrange and do a dry run of a presentation. Who should present always seems to be obvious. for it will illuminate and disseminate aspects or issues not generally considered. A presentation more than a few days after the value engineering workshop loses the punch of the new. 4 . The discussion that ensues should be encouraged. Once the alternatives are scored and ranked.

Decision-matrix can be set-up to evaluate on basis of various criteria. ideas are further refined or combined together. 5 . EVALUATION PHASE Creative ideas generated during the Creation phase are screened for their feasibility.  CREATION PHASE Most of use want previously tried out materials. Cost of all ideas and savings resulting from their implementation are studied. designs processes and procedures. These days to give a fillip to creative ideas. To nurture creativity. cost effectiveness and practicability at this stage. Creative ideas are also developed by a number of check-lists and idea-stimulators. We jump at the first ideas that work and usually do not bother to find out if better methods are possible. brainstorming technique are used. For this purpose. positive thinking is established.

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