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(industrial engineering) The systematic application of recognized techniques which identify the function of a product or service, and provide the necessary function reliably at lowest overall cost. Also known as value analysis; value control.
A thinking system (also called value management or value analysis) used to develop decision criteria when it is important to secure as much as possible of what is wanted from each unit of the resource used. The resource may be money, time, material, labor, space, energy, and so on. The system is unique in that it effectively uses both knowledge and creativity, and provides step-by-step techniques for maximizing the benefits from both. It promotes development of alternatives suitable for the future as well as the present. This is accomplished by identifying and studying each function that is wanted by the customer or user, then applying knowledge and creativity to achieve the desired function. Resources are converted into costs to achieve direct, meaningful comparisons. By using the methods of value engineering, 15 to 40% reduction in the required resources often results.
Value engineering has applications in five broad areas: in design, purchase, and manufacture of products; in administrative groups, private or public, where the task is to achieve accomplishment through people; in all areas of social service work, such as hospitals, insurance services, or colleges; in architectural design and construction; and in development as well as research.
The system is used to improve value in either or both of two situations: (1) The product or service as used or as planned may provide 100% of the functions the user wants, but lower costs may be needed. The system then holds those functions but achieves them at lower cost. (2) The product or service may have deficiencies, that is, it does not perform the desired functions or lacks quality, and so also lacks good value. The system aims at correcting those deficiencies, providing the functions wanted, while at the same time holding the use of resources (costs) at a minimum. See also Industrial engineering; Methods engineering; Operations research; Optimization; Process engineering; Production engineering; Production planning.
Means of reaching targeted cost levels. It is a systematic approach to assessing all aspects of the value chain cost of reaching targeted cost levels and the value chain cost buildup for a product: R&D, design of products, design processes, production, marketing, distribution, and customer service. The purpose is to minimize costs without sacrificing customer satisfaction. Value engineering requires distinguishing between incurring costs and locked-in costs. Costs incurred are the actual use of resources, whereas locked-in (designed-in) costs will result in the use of resources in the future as a result of past decisions. Traditional cost accounting focuses on budget comparisons, but value engineering emphasizes controlling costs at the design stage, that is, before they are locked in.
A discipline of engineering that studies the relative monetary values of various materials and construction techniques, including
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(DOD) An organized effort directed at analyzing the function of Department of Defense systems, equipment, facilities, procedures, and supplies for the purpose of achieving the required function at the lowest total cost of effective ownership, consistent with requirements for performance, reliability, quality, and maintainability.
Value Engineering is a systematic method to improve the "Value" of goods 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. [1]
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 processes." [2]
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.
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 to test relationships, and Operations Research, which uses model building to identify predictive relationships.
Value Engineering is also referred to as "Value Methodology". One should remember VE is above all a rationale decision-making/thinking methodology, with a very specific uniqueness that of Functional thinking, understanding something so well that it can be described in two words, a verb & a noun, i.e. the function of a pencil is Make Marks, this then becomes an opportunity statement when 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.
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 and Harry Erlicher at G.E. looked for acceptable substitutes. They noticed that these substitutions often reduced costs, improved the product, or both. What started out as an accident of necessity was turned into a systematic process. They called their technique “value analysis”.
As others adopted the technique, the name gradually changed to Value Engineering. VA / VE has been rehashed over the years into various other programs like lean, TQM, TRIZ, and business process reengineering.
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:
Four basic steps in the Job Plan are:
VE follows a structured thought process to evaluate options.
Gather information
1. What is being done now?
Who is doing it?
What could it do?
What must not to 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
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