Value Engineering Ss son aoe Aa By Dr. KarunanayaikeS Potential Savings from Value Engineering Time when Value Engineering Is Performed ————>History ] Lawrence [Link] 1904 - 1985 + Shortage of materials during world war Il + General Electric company found that many of the substitutes have better or equal performance at less cost. + Lawrence De Miles Launched an effort to make the concept systematic + Establishment of Society of American Value Engineers *SAVE™ in 1959 + Value is the lowest price you must pay to provide a reliable function or service (L. D. Miles) + “The ratio of Function to Cost” Worth Function(Utility) Value = Cost Cost regentWhy do Projects have 1. Low Time for Designing 2. Lack of information 3. Lack of Ideas 4, Negative Prejudice 5. Lack Of Experience 6. Weaknesses in human relations 7. Multi Concept What is Value Engineering? + Value Engineering (VE, or Value Analysis) is a management technique that seeks the best functional balance between cost , reliability and performance of a product, project, process or service.How is a Value Engineering Study Conducted? 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." What's the plan?a The modern version has the following eight steps: Orientation Information Functional 92. Creative Evaluation Development Presentation ersaee Implementation and Follow-up 1. Orientation Phase Identify issues Prioritize Issues (Drafts scopes and objecti (Establish evaluation factors 1D Determine Study Team OF Collect Data Prepare for value study2. Information Phase 1D Further familiarization of the project by the team; all team ‘members participate in determine the true needs of the project. O Areas of high cost or low worth are identified. 3. Functional Phase C Functional analysis outlines the basic function of a product using a verb and a noun such as ‘boil water’ as in the case of our kettle, What is the Function? * Boil Water” Verb Noun4. Creative Phase O This step requires a certain amount of creative thinking by the team. A technique that is useful for this type of analysis is, brainstorming. This stage is concerned with developing alternative. 5. Evaluation Phase Om this phase of the workshop, the VA team judges the ideas developed during the creative Ww phase. w& Ci The VA team ranks the ideas. o Ci Ideas found to be irrelevant or not worthy of additional study are disregarded 1 Those ideas that represent the greatest potential for cost savings and improvements are selected for development.6. Development Phase O The team develops the selected ideas into alternatives (or proposals) with a sufficient 9 level of documentation to allow decision makers to determine if the alternative should — be implemented. 7. Presentation Phase 1. The presentation phase is actually presenting the best altemative (or alternatives) to those who have the authority to implement the proposed solutions that are acceptable, .8. Implementation And Follow Up 1. Develop an implementation plan 2. Execute the plan 3. Monitor the plan to completion il ? Objective: During the implementation and follow-up phase, management must assure that approved recommendations are converted into actions. Purpose 1. Determine the best design alternatives Reduce cost Improve quality Increase reliability and availability 5S. Enhance customer satisfaction 6. Improve organizational performance 7. Identify problems 8. Develop recommended solutionsSystematic method for evaluating product performance and value The use of multi-functional teams Focus on a simplified productIntroduce the Product In this presentation we have considered a medical instrument ‘manufacturing company, Aadarsh Instruments, located in Ambala + This firm is producing different types of microscopes which they export to various countries around the globe One of their model SL250 have a component named Focus Adjustment Knob for Slit Lamp in microscope. This microscope has found application in the field of eye inspection. Case Study The steps used for this purpose are as follows: 4. Product selection plan Gather information of product a Functional analysis ire Creativity Worksheet Ly = Evaluation sheet Cost analysis N2e>orRwn Result1. Plan For Product Selection + This Product is used to adjust the focus of lens for magni purpose, + ‘The present specifications of this part and its material used are costlier than the average industry cost. + Value of this product can be increased by maintaining its functions and reducing its eost or keeping the cost constant and inerea the functionality of the produet. Case Study 2. Obtain Product Information i, Material ~ Aluminum Bronze Alloy ii, Diameter of | ase plate -30 mm iii, Thickness of plate-3 mm iv. Cost of the serap is ~ 293 rupoe/Kg, ¥, Pieces Produced annually ~ 8000 vi, Process used ~ C:N.C. indexing milling vii, Cycle time—2.5 min viii, Anodizing —2/min ix. Material cost—65 gm x. Total Present cost — 29,99 rupee /piece *{18=56 rupee} *ae 3. Functional Analysis of Present Functions FUNCTIONAL ANALYSIS Basic | Basic [Secondary Secondary Function | Function Function Verb | Noun Noun Focus Index| Lens Gear tooth Adjustment Knob__| Case Study 5. Evaluation Phase For judging the ideas, the following designs were considered: A. Funetion B. Cost C. Maintainability D. Quality E. Space cach of the above criteria was compared with others , and depending on their relative importance, three categories were formed, major, medium, and minor.aalsis_|_ Pans Comparing this criteria according to relative importance PAIRFD COMPARISON c D AZ| Al Bi D2 D C From the paired comparison we get the following result: Symbol | Atiibute | Seore A Function 6 B Cost 8 c Maintainabiliy [2 D Quality 3 E ‘Space 0 CO The above ideas were discussed and the best feasible ideas were separated which were: a) Change the material to steel : b) Use Nylon unit A.B Score | Ranll ©) Use existing material Weas [6 [8 a | 16 | 216 UL b [318] 316 T [16 [216 u7. Result The total savings after the implementation of value engineering are given below: » G+ Cost before analysis — 29.99 rupee Ne f BF + Total Cost of nylon knob ~ 38.40 rupee ea, id + Saving per product — 11.59 rupee PR 2 — - Pevgentage er product — 38.64% J & enpentage saving per produet ~ 38.64 % ee iy + Annual Demand of the product — 8000 Sy + Total Annual Saving ~ 92,720 rupee s + Value Improvement - 62.98 % ais Three goals that we're looking at value engineering: 1. Identify additional functions that aren't attractive to customers. 2. Add attractive functions for customers. 3. Saving because of the elimination of redundant Functions,VALUE ENGINEERING & VALUE Met’n By Dr. Karunanayake S cea sns/ McA) Mos BEng/MENUMIPHO Value Engineering Value Engineering is a function oriented, systematic team approach and study to provide value in a product, system or service. Often, this improvement is focused on cost reduction; however other important areas such as customer perceived quality and performance are also of paramount Importance in the value equation. Its techniques can be applied to any product process procedure system or service in any kind of business or economic activity including health care, governance, construction, industry and in the service sector. Value Engineering focuses on those value characteristics which are deemed most important from the customer point of view. So, Value Engineering is a powerful methodology for solving problems and/or reducing costs while maintaining or improving performance and quality requirements. It can achieve impressive savings, much greater than what Is possible through conventional cost reduction exercise even when cost reduction is the objective of the task.Value Engineering (VE) VE is a method used to eliminate any unnecessary costs, in order to achieve value for money on a project. VE methods and techniques can be used throughout the life cycle of a project, from strategic definition (very early design) to handover and close out. Itis best utilized as a team approach to provide the optimum value on a project. This means that the whole project team should be involved, from the client right through to the supply chain. ‘An example of this could be when installing an additional CCTV system. Don't just go like-for-like, ook at similar models that do the same job, if not better, for a more cost-effective solution. Picture quality could be improved and it could cost less to run (use less electricity). VE can also be associated with maximizing value, not just reducing costs. It can also be associated with maximizing value, not just reducing costs (cutting upfront project costs is not VE!). VE examines key solutions to extract any unwanted waste, such as water, energy, time, maintenance etc, and reduce life cycle costs whilst providing better function, quality and sustainability. Although costs are heavily investigated, VE is not just a method to reduce costs, in fact it can bring additional benefits, such as a better understanding of a brief, highlight different design solutions, identify different construction methods to employee empowerment. How Value Engineering helps : + Lowering Operation & Maintenance costs + Improving quality management + Improving resource efficiency + Simplifying procedures + Minimizing paperwork + Lowering staff costs + Increasing procedural efficiency + Optimizing construction expenditures + Developing value attitudes in staff + Competing more successfully in marketplaceValue Engineering helps you to learn how to : + Improve your career skills + Separate "Symptoms" from "problems" + Solve “root cause” problems and capture opportunities = Become more competitive by improving "bench-marking” process + Take command of a powerful problem solving methodology to use in any situation Value Engineering Procedure ‘The technique of Value Engineering is governed by a structured decision making process to assess the value of procedures or services. Whenever unsatisfactory value is found, a Value Management Job plan ‘can be followed. This procedure involves the following 8 phases : Orientation Information Function Creativity Recommendation 1 2. 3, 4 5. Evaluation 6. 7. Implementation 8. AuditValue Management (VM) VM is a method of highlighting possible opportunities to create value within a project and subsequently managing those solutions to ensure value is continuously delivered. It encompasses the whole life cycle of a project, from design to completion and beyond. The process is undertaken in collaboration with the project team, understanding and managing the balance between cost, time and performance. Prior to value being clear and understood, it is important for the project team to understand cost, time and the needs and wants of stakeholders (function) as explained like; Costs, as in whole life costs, and in particular, sizeable or increased initial costs, can be justified and explained if it reduces future maintenance costs. This is therefore decreasing disruption in the future because of the reduced need for maintenance. Time or programme issues can often be a major problem on a scheme. It could cause funding problems and in fact increase overall scheme costs. Function (performance) is the wants and needs of stakeholders (all interested parties within a scheme). Some of these needs and wants will be ‘must haves’ and essential for the scheme to be built, but some will be less important. All options must be considered in an effort to ensure true VM. ‘The main benefit of VM is that it gives each and every project a clear path to create value through the understanding of client objectives as well as the needs and wants of the stakeholders. The route to delivery Is agreed and developed with the full project team, with the understanding that solutions to achieve the objectives are reliable and cost-effective, The main benefit of that, it gives each and every project a clear path to create value through the understanding of client objectives as well as the needs and wants of the stakeholders. In addition, VM encourages creativeness within the project team; it nurtures an environment from which innovation can be developed and imaginative solutions can be implemented. The key to this is successful team building, empowering project participants to think differently about creating value. This can be done through a number of workshops which allows the freedom of the project team to give opinion and present new ideas in which the whole scheme benefits.Early changes are naturally less expensive than later ones, as shown in the diagram below. <——— TIME WHEN VE IS PERFORMED———> In Summary ‘The value benefit curve decreases over the duration of a project. The biggest impact therefore can be achieved through VM and VE decisions being made and implemented at the earliest possible stage of a construction project. ‘The two methods ultimately have the same goal and are usually encompassed under the same umbrella, that is; to ensure that the project is successful, not only by looking at the bigger picture in terms of managing and understanding VM but using the skills of the project team to utlize VE.