VALUE ENGINEERING

(6)
“ When You Always Do What You
Have Always Done- You Always
Get What You Have Always
Gotten”
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 Evaluation Phase
• Evaluation Phase:
- The purpose of the Evaluation phase is to
refine and select the best ideas for further
development into specific value improvement
recommendations.
- This phase is not the last chance to defer
ideas, detailed cost-benefit analysis
conducted in the development phase lead to
the final set of choices presented to the
decision maker.
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 Evaluation Phase
- Activities of the Evaluation Phase :
1 - Eliminate low potential ideas.
2 - Group similar ideas.
3 - Establish idea champions.
4 – List the advantages and disadvantages of
each idea.
5 – Rank the ideas.
6 – Select ideas for further development.

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 Evaluation Phase
1 – Eliminate Low Potential Ideas:
-Eliminate ideas that : deemed impractical, do not meet
requirements, beyond the capability of our present
technology, or not feasible.
-A useful approach is to classify ideas onto three
categories:
- Yes: Ideas appear to be feasible and have a
relatively high probability of success.
- Maybe: Ideas have potential but appear to need
refinement or work before they can become proposals.

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 Evaluation Phase
1 – Eliminate Low Potential Ideas:

- Not Now: Ideas have little or no potential at this

time.
- At this point, eliminate only the “not now” ideas.

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 Evaluation Phase
2 – Group Similar Ideas:
-Group the remaining ideas into several subject
related categories.
-Ideas can be combined and consolidated wherever
possible.
-The strong parts of two different ideas can be
developed into a winning ideas.
- Combining two ideas may help to discover new,
innovative alternative.

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 Evaluation Phase
3 – Establish Idea Champions:

-An idea champion is a study team member who will

serve as a proponent throughout the prioritization
process.
-If an idea has no champion, it should be eliminated
at this point.

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 Evaluation Phase
4- List the Advantages and Disadvantages of
Each Idea:
-Identify advantages and disadvantages of each
idea.
-At minimum include relative, ease of change, cost ,
potential saving, time to implement, degree to
which all requirements are met, and likelihood of
success.
- How to overcome disadvantages. Disadvantages
that cannot be overcome may lead to its rejection.
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 Evaluation Phase
5- Rank the Ideas:
-Develop a set of evaluation criteria (cost, technical
feasibility, likelihood of approval , time to
implement, and potential benefit).
-Rank the ideas according to the developed criteria.
No idea should be discarded.
-Rank can be done through: people judgment,
evaluation by comparison , or numerical evaluation.
- Finally, a short list of alternatives is developed,
each of which has met the evaluation standards.

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 Evaluation Phase
6 – Select Ideas for Further Development:
-A cutoff point can be established in case of quantitative
evaluation score.
-If only qualitative evaluation scores are used or quantitative
scores are very close, a more refined ranking scheme may
be used.
-If several alternatives are not decisively different, they
should all be developed further.
-Make sure that ideas with the greatest value potential will be
among those selected.
- It is also useful to select at least one idea from each of the
subject related categories.

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 Development Phase
• Development Phase:
- The purpose of the development phase is
to determine the best alternative(s) for
presentation to the decision –maker. This
will be through detailed technical analysis
for the remaining alternatives.

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 Development Phase
- Activities of the Development Phase :
1 – Conduct life cycle cost analysis.
2 – Determine the most beneficial
alternatives.
3 - Development implementation
plan.

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 Development Phase
1 – Life Cycle Cost
-Life cycle cost is the total cost from acquisition of
an item to the final disposal after the life of the item.
-The elements of Life Cycle Cost are:
1- Acquisition cost
2- Operating cost
3- Maintenance cost
4- Repair cost
5- Salvage value

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 Development Phase
1 – Limitation of the Life Cycle Cost
-Life of the item : Determine the life of an item is
difficult .
- Interest rate: The interest rate may not be the same
every year.
-Annual expenses: Annual operating and
maintenance costs are assumed to occur at the end
of the year.
- Quality/Reliability : Quality and reliability of the
item are not considered.

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 Development Phase
1 – Limitation of the Life Cycle Cost
-Aesthetic: Different Esteem values of the element
are not considered.
- Safety: Different alternatives may not provide the
same level of safety.

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 Development Phase
2 – Determine the Most Beneficial Alternatives
-Certain key questions should be answered:
- What are the life cycle savings?
- Do the benefits outweigh the cost?
- What are the major risks?
- How can the risks be mitigated?
- Are there outstanding technical issues?
-More than one alternatives can be recommended
-If they have a significant saving potential.

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 Development Phase
3 – Develop Implementation plan
-The implementation plan of each alternative include:
- Implementation steps.
- Who is to do?
- Resources requirements.
- The timing requirements.
- The coordination requirements.
- The documents needed.
- The anticipated problems.

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‫ماقيمة الناس اال فى مبادئهم‬
‫ال المال يبقى وال االلقاب‬
‫والرتب‬

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 THANK YOU
Prof. HOSSAM HOSNY

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