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 [1] 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 [2] 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 [3] 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 hypothesis-conclusion 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 [4] 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.
Contents
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1 Origins 2 The Job Plan 3 How it works 4 See also 5 References

6 Further reading 7 External links

[edit]Origins Value engineering began at General Electric Co. during World War II. Because of the war, there were shortages of skilled labour, raw materials, and component parts. Lawrence Miles, Jerry Leftow, and Harry Erlicher at G.E. looked for acceptable substitutes. They noticed that these substitutions often reduced costs, improved product, or both. What started out as an accident of necessity was turned into a systematic process. They called their technique value analysis. [edit]The

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. Preparation 2. Information 3. Analysis 4. Creation 5. Evaluation 6. Development 7. Presentation 8. Follow-up 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.

[edit]How

it works

VE follows a structured thought process to evaluate options as follows. Gather information 1.What is being done now?

Who is doing it? What could it do? What must it not do? Measure 2.How will the alternatives be measured? What are the alternate ways of meeting requirements? What else can perform the desired function? Analyze 3.What must be done? What does it cost? Generate 4.What else will do the job? Evaluate 5.Which Ideas are the best? 6. Develop and expand ideas What are the impacts? What is the cost? What is the performance? 7.Present ideas Sell alternatives

he Value Engineering Process at Flatworld Solutions

Gathering Information: This step determines the details of the project such as the requirements, functionality and constraints involved in the project. Alternative Generation: Once the details of the project are ascertained, a list of methods and possibilities of executing the project or providing value engineering services is generated. Evaluation: All the methods to meet the requirements of the project are evaluated and analyzed. Utmost care is taken to ensure that the best method is implemented that results in cost savings for Flatworld Solutions customers. Presentation: Finally, the most lucrative method is selected and presented to the customer for approval. Once approved by the customer, it is implemented.

Flatworld Solutions Value Engineering Workflow

Flatworld Solutions team members have a thorough knowledge of 3D model generation and Finite Element Analysis (FEA). To make your product designs simpler, so that they can be manufactured without too many complications, outsource value engineering services to Flatworld Solutions. By offering design optimization and value engineering services, Flatworld Solutions caters to companies in different industry verticals such as: Automobile Process Industries (Food Processing, Oil and Gas) Consumer Electronics and Hardware Plastics

List of Products that can be Value Engineered:

Products or machinery that have to be automated. Products, the configuration of which needs to undergo changes so that variants of the products can be produced. Products, the manufacturing process of which needs to be optimized.

Value Engineering
EPCONSULT applies Value Engineering as a tool and a process to optimize engineering solutions. Our Value

Engineering service is particularly powerful during Concept Selection. Value Engineering is one of the key elements in our Integrated Optimization Framework methodology. During the early phases of projects key issues and difficulties arise around a vast number of conflicting pressures regarding engineering, operations, cost, safety, schedule, reliability, environmental issues, etc. Both the IOF methodology and Value Engineering assist in managing and optimizing a project solution, taking into account these and many other project related elements.

Value Engineering workshops are hosted at an early stage of the project phase with the objective of stimulating creative thinking the 'blue-sky' approach. Our value engineering workshops address the following issues:

Functional Design Value Creation Risk Analysis Cost Estimation Options Screening

The initial functional design and value engineering workshops make use of a guided process to lead the team through the workshops with the objective of maximizing output. At EPCONSULT the benefit of value engineering comes from a proven methodology, experienced engineers and the combination of workshops and offline desktop analysis. The flow chart below presents a high-level overview of the activities involved in Value Engineering.

By spending a relatively short amount of time on value engineering, most conceivable concepts will have been considered and there will be an audit trail demonstrating how the preferred solution was derived and why other options were screened out.

Value Engineering

Revision: 11 July 2006 Author: Jack Caldwell http://technology.infomine.com

Table of Contents

Value Engineering Information Phase Function Analysis Speculation Alternative Comparison Analysis Concept Development Presentation and Implementation Report The Facilitator Participants

Value Engineering
Value Engineering (VE) is a means of evaluating the function, cost, and objectives of a design or construction project with the purpose of improving the value(function) of the design of its components, or reducing the project cost.

Here is a personal perspective of VE workshops culled from a report I wrote for a confidential client. There is a lot more on the web.

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.

Function Analysis
In the function analysis phase:

major project components are identified their functions are determined estimated cost of each component is assigned

A Function Analysis System Technique (FAST) diagram is prepared to help team members visualize the need for and role of each major component. In general, components are listed in functional order proceeding from what the design will do, on the left hand side of the diagram, to how objectives will be met, on the right hand side of the diagram. Project components that are found to make little or no difference to overall project objectives will become subjects for further investigation in the subsequent VE phases. Similarly, project components with a high cost are also subjects for subsequent VE evaluation.

In addition to a FAST diagram, the VE team may decide to compile a project flow chart. This may show in chronological sequence the steps or activities that are involved in executing the project. Alternatively, I have had great success compiling

fishbone diagrams. These diagrams are an attempt to list all the activities that are involved in or contribute to specific design components, or end results. The fishbone may, in additional, list alternatives for each activity.

A TYPICAL FISHBONE DIAGRAM

Some techniques common to the compilation of FAST diagrams, project flow charts, and fishbone diagrams are:

Use post-it notes They are easy to rearrange as ideas develop and different relationships and sequences are identified. Describe each activity with a verb-noun combination Examples are excavate soil or treat waste. Use of a verb focuses attention on doing something and precludes fuzzy wishes and objectives becoming activities. Use of a noun focuses attention on an object, a physical reality, on the facility or component that is to be changed or affected by the action of the verb.

When the FAST diagram or other activity/relationship interlinking charts are complete, the VE team must decide which activities or functions they will consider in greater detail. Generally it is not possible to take all activities or functions through all phases of value engineering. Only the key ones may or should be considered. For example, in the situation in this figure, you choose to VE only seats and space as a way to enhance comfort.

Criteria for selecting activities as key and hence subjecting them to continued value engineering scrutiny include:

The highest cost activities. Value engineering is an expensive exercise; it is best to concentrate the attention of the team on those parts, aspects, or activities that will cost the most and where improvements will yield the greatest possible cost reduction. Fulcrum Activities. These I define as activities that seminally affect downstream or subsequent activities. These are the activities which, if done in different ways, have a significant impact on the whole course of cleanup. For example, a decision to treat mercury contaminated equipment by thermal roasting or dipping it in an acid bath affects the way the equipment is removed and prepared for treatment, and also how treated equipment and treatment waste are disposed of. Politically sensitive activities. As the name implies, these are activities that make or break the project. These activities have the highest public and regulator visibility. The purpose of the VE workshop may well be to find alternative ways of cleaning up a site that are more acceptable to stakeholders. Cost reduction may not be a factor at all. In such a case, it may be vital to further value-engineer the highest profile issues, even though the cost implications are minor.

Speculation
During the speculation phase, the VE team considers each design component and suggests alternative means of accomplishing the function of the component. In this phase, team members are not allowed to criticize suggestions for alternative design components or approaches. This promotes creative thinking in the group. Brainstorming involves the free flow of ideas. The facilitator is responsible for writing down each and every idea that is suggested. Some VE teams get going at this point and spontaneously generate long lists of ideas. Some VE teams are more conservative and slow to generate ideas. In order to elicit ideas, I, as a facilitator, have asked each person in turn to suggest at least one idea. This first, forced statement of ideas usually get things going; but if it does not, then go around the table two or three times, as long as ideas are still being generated. Once a list of ideas or alternatives of acceptable length has been generated, the VE team sits back and, through common deliberation, tries to reduce the number of alternatives for further VE evaluation to about four or six. I find that fewer than four ideas is restrictive, but seven or more takes too long for general patience, and are most often repetitive. Reduction to four to six alternatives may be done either by eliminating the more outlandish or obviously impractical ideas or by combining overlapping alternatives into more encompassing alternatives. Remember: this is a serious institutional attempt to find new and better ways to do something. The silly idea may contain the germ of a new, better approach or detail. I like to carry forward at least one alternative that is deviant or radical. That way we reduce the danger of popular prejudice squashing a good idea before it has had time to germinate.

Alternative Comparison
To compare alternatives, we must define comparison criteria. I like to identify comparison criteria in the same way as we identify alternatives: by brainstorming. Initially the facilitator goes around the room asking each person in turn to suggest a criterion that may be used to compare the alternatives. Most often this gets the team going and a long list is generated by free flow of ideas. If

not, the facilitator keeps going around the room, soliciting criteria. The final list is once again reduced to four to six criteria by eliminating and/or combining. A detailed definition must be compiled for each criterion that is adopted. The definition is a good place to include distinct ideas that are not adopted as separate criteria. Compiling criteria definitions is a valuable opportunity to promote discussion and exchange ideas. It is vital than all VE team members agree on definitions, otherwise confusion and disagreement will continue to plague subsequent deliberations. The criteria are next weighted. This is one of the most entertaining and productive times of the VE workshop. Weighting involves comparing one criterion to each successive criterion. To illustrate the process: The first criterion is compared to the second criterion. Comparison is done by asking each VE team member to assign a preference score to either the first or second criterion. The facilitator asks each team member for a preferred comparison criterion: cost vs. long-term effectiveness. Team members assign a score to their preference. The scale goes from 1 for no preference to 5 for overwhelming preference. Once all the votes are recorded, the facilitator invites those in the minority or whose votes differ most from the average to explain their viewpoint. The discussion that ensues should be encouraged, for it focuses exchange of idea and perspectives, and frequently serves to efficiently disseminate information and perspectives. Team members may change their votes at any time during deliberations. It is up to the facilitator to bring closure to the discussion and prevent the discussion from drifting. Next the first criterion is compared to the third criterion and the voting and deliberation process is repeated. This continues with comparison of the first and the fourth criterion, the second to the third criterion, etc., throughout the list. Scores for each criterion are totaled and weights are assigned to the criteria. As a facilitator I have identified and weighted criteria both before and after identification of alternatives. I believe that it is better to establish criteria before identification of alternatives. If alternatives are identified first, there is an inevitable tension during the process of establishing the evaluation criteria, to create bias and consciously or unconsciously support preferences among the alternatives.

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.

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.

Presentation and Implementation

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.

Report
Depending on the budget, topic, and significance of the VE workshop, a formal report may be prepared. Generally the most cost-effective method is to have the flipcharts photo-reproduced, copied, collated, and distributed. This provides a full record of deliberations, scores, recommendations, etc. If budget is available, the

flipcharts may be typed and the sketches turned in to graphics. Sometimes a formal report is written. This should be ready for distribution no more than three weeks after the VE workshop.

The Facilitator
The facilitator should be chosen with care. Professional VE facilitator may be used; they need have no specific knowledge of the project or even of the technologies involved. In such a case their role is simply to act as a neutral presence and to make certain that the workshop is conducted in accordance with standard VE procedures. One o f the most productive VE workshops I attended was facilitated by a profession facilitator who knew the project, its setting, and politics, but was not an engineer. His skill lay in balancing the strong personalities of those in the VE team, making sure all sides of the argument were heard and recorded, and that we did not spend too much time on any one phase of the VE agenda. I have heard of VE workshops where the facilitator was the boss (the project manager, the chief design engineer, or the client). Those who told me of this also said that the sessions were a flop. This is as one would expect. The very presence of the boss will inhibit the free flow of ideas that is at the heart of a successful VE workshop. Participants will tailor their ideas and discussion to the agenda of the boss, and inevitably office or project politics and territoriality will interfere with

neutral evaluation of alternatives. The boss VE facilitator will guide the discussion to confirm and praise, not criticize or overturn current project approaches and details. I have facilitated a number of VE workshops. In some I knew nothing of the project until the VE workshop began. In other I have been familiar with the project and the specific technical details of the project activities or components being evaluated. I have never been the boss of the project for which the VE was done. In most of the VE workshops I have facilitated, most of the team were people I would describe as my peers. Some VE projects have included my clients (in the sense that they are paying me and all project bills). Only once was this an impediment to progress, and that was swiftly dealt with by reminding the client that they were paying to elicit new ideas, and at any rate had a right of absolute veto over any recommendation made by the VE team. I would like to believe that in at least two of the VE workshops I facilitated, my intimate knowledge of the project and the technology being evaluate contributed to the success of the VE workshops. When the conversation flagged or took unproductive turns, I was able to liven things up or to provoke new lines of inquiry by raising issues or suggesting alternatives that had escaped the VE participants. This confirms the value of a facilitator who knows the project, or is an expert in the primary technologies involved in the project. Sometimes a project participant is suited by temperament to the task of facilitator, and sometimes the personal interest is a benefit. The person sponsoring the workshop must decide on the basis of their knowledge of the project, its technologies, and the potential participants personalities whether to use a project person as facilitator, or to select a knowledgeable but disinterested facilitator, or to bring in a professional facilitator who may know nothing of the technologies, the people, or the project. Observations from facilitating VE workshops that might help if you are asked to do the same:

You will become the leader of the group by virtue of the simple human desire to let somebody else take the front and most vulnerable position; resist this, for your power as a facilitator is great enough without letting human dynamics cloud your fiduciary duty. You must protect the weakest participant and find creative ways to bring them into the discussion; they frequently have the best ideas, but are reticent to express them.

A little strength and power wielded over the dominant participant may be the only way to keep the proceedings on an even keel, and to prevent dictatorship from being established. Get everything that is said on paper; this demands that you listen continually and seek out the essence of what is being said; write it down and then interrupt the proceedings to ask the participants to review and approve what you have written down. Do not be afraid to synthesize. i.e., bring in ideas and issues together, to arrange and collate suggestions and issues, and to propose new ways yourself if the idea come to mind. Be prepared to alter the standard VE procedure; it works well most o f the time, but when it does not, it is best replaced quickly with other group deliberation techniques such as root cause analysis, roadmapping, and the compilation of charts and lists.

Participants
Never let the number of participants fall below five. Fewer than that and there is not enough energy in the room to keep things moving. Four people quickly tire of each other; boredom sets in, or worse, all agree and no new ideas are generated by the tensions that seem to be inherent in larger groups. Never let the number of participants rise above twelve. I read somewhere that twelve is the largest group where one-to-one communication is possible and where the camaraderie and spirit that makes for a successful team may develop. I have heard of VE sessions as large as thirty. They reportedly failed to achieve anything. I prefer a group of eight. There should be a balance of senior and mid-level experience. The majority should be well versed in the technology being examined. Good Luck.