WHAT IS VALUE ENGINEERING? – In construction, value engineering (VE), is a method your project team can employ to improve the value of your project by examining the function of each item or element and its associated cost. By weighing the cost/benefit ratio, your team can make suggestions for alternate construction methods, designs, or materials that improve the value of the project.

It’s important to note that improving the value of your project does not mean cutting costs. It means optimizing the elements of the project through an analysis of all factors–cost, upkeep, wear-and-tear, aesthetic value, etc. To truly provide advantageous value engineering, your construction and design team need to first understand the project as a whole and your vision and goals for the project.

Every project is different, as is every client’s definition of value.

What is the meaning of value engineering?

Key Takeaways –

Value engineering is a systematic and organized approach to providing the necessary functions in a project at the lowest cost.Value engineering promotes the substitution of materials and methods with less expensive alternatives, without sacrificing functionality.Value engineering is often broken into six steps or phases starting with generating ideas and ending with change implementation. Value engineering is primarily focused on the use, cost, esteem, and exchange values.The ultimate formula for value is often defined as function divided by cost, with value engineering striving to maximize function while minimizing cost.

What are the five phases in value engineering?

Conclusion – This article described the value methodology, explained how this methodology can be used in various development phases of a construction project, and identified the benefits of value studies in various stages of a construction project. It was explained that the construction process, is typically divided into the five essential development phases of planning, conceptual design, detailed design, construction, and close-out.

What is the main goal of value engineering?

Value Engineering is a systematic process using a team from a variety of disciplines to improve the value of a project through the analysis of its functions. The VE process incorporates, to the extent possible, the values of design; construction; maintenance; the contractor; state, local and federal approval agencies; other stakeholders; and the public.

The primary objective of a Value Engineering study is value improvement. The value improvements might relate to scope definition, functional design, constructibility, coordination (both internal and external), or the schedule for project development. Other possible value improvements are reduced environmental impacts, reduced public (traffic) inconvenience, or reduced project cost.

Value Engineering can be applied during any stage of a project’s development. Typically it is performed during the time of Plan-in-hand, however, it has been suggested that the greatest benefits and resource savings can be achieved early in development during the planning or scoping phases.

Provide maximum benefit by employing the VE process as early as possible without delaying project progression. Provide a significant ratio of savings to the cost of the VE study or substantial improvements in the program’s effectiveness.

What are the four fundamentals of value engineering?

Speculation (Creative) Phase. Evaluation (Analysis) Phase. Development Phase (Value Management Proposals) Presentation Phase (Report/Oral Presentation)

When should value engineering be done?

Value Engineering During Project Planning – In most cases, the planning stage of your project is the best time to value engineer. The cost to implement these changes will be the lowest, and it will have the least effect on the project’s schedule. At this stage, your value engineering team will take a close look at the facility and work with you to flush out your vision and objectives for the project.

What is value engineering formula?

Value Engineering Formula – Value Engineering = Value / Cost The process of value engineering is commonly used by manufacturers to optimize costs without sacrificing the intended functionality or purpose. Besides, the manufacturer generally uses cheaper alternatives to meet the rising costs and achieve the desired lifespan.

How value engineering is used in construction projects?

How Value Engineering is Used in Construction Projects – Value Engineering is used in construction projects to provide a clear and detailed analysis of how best to meet the goals of the construction project. Value Engineering, when used with cost estimating, allows for an independent review of the entire construction project.

This review process, typically completed within a Value Engineering workshop, is focused on one common goal: to provide the highest value at the lowest cost. However, this does not mean that Value Engineering is all about cost-cutting. Rather through an established set of industry guidelines and procedures, Value Engineering gives all parties involved the confidence that the maximum performance and highest value construction project can and will happen.

The ultimate goal of every construction project is to remain on scope, within budget, and on-time. This requires a concerted and professional independent review of every aspect of the construction project. The materials used, architectural design, budget, environmental factors, community and government standards/regulations, planning, and contingency plans.

• Cost cutting.
• Scope reduction.
• Loss of quality.
• Forced redesign.

Whether you’re responsible for materials purchase, architectural design, project management, or environmental assessment – Value Engineering can and will help you do your job better. Working with an independent review team, like PCS gives you the confidence that bias and influence are not part of the Value Engineering and cost estimating process.

How is value engineering applied?

Value Engineering: Created in a Crisis – Here is a quick history lesson: Lawrence Miles was responsible for purchasing raw materials for General Electric during World War II when manufacturing was at its peak. Sounds like a great gig, but the war caused extreme material shortages.

This left Miles searching for suitable alternatives that functioned similarly. He discovered that some substitutes weren’t only cost-effective, they were actually better. This realization was the origin of a new technique called “value analysis,” more commonly known today as value engineering. Since its inception, this technique of analyzing value has been widely adopted by many industries and evolved for uses Miles never imagined.

Value engineering is used to solve problems, identify and eliminate unwanted costs and improve function and quality. The set of disciplined steps in the value engineering process is meant to optimize initial and long-term investment, seeking the best possible value for the lowest cost.

What are value engineering tools?

The value methodology (also called value engineering, value analysis or value management) is a powerful problem-solving tool that can reduce costs while maintaining or improving performance and quality requirements. It is a function-oriented, systematic team approach to providing value in a product or service.

The value methodology helps organizations compete more effectively in local, national and international markets by: Benefits of using the value methodology: – Decreasing costs – Increasing profits – Improving quality – Expanding market share – Saving time – Solving problems – Using resources more effectively If applied judiciously Value methodology easily produces savings of 30 percent of the estimated cost for manufacturing a product, constructing a project or providing a service.

The return on investment that public and private organizations derive from implementing VM programs averages 10 to 1. That is, for every dollar invested in a VM study – including participants’ time and implementation costs – $10 in net savings results.

VM applications: Value methodology can increase customer satisfaction and add value to an organization’s investment in any business or economic setting. Value practitioners apply the value methodology to products and services in industries such as the following: corporations and manufacturing, construction, transportation, government, health care and environmental engineering.

Value methodology vs. other business processes: Since value methodology’s invention in the 1940s, several other management approaches have caught the eye of business leaders: total quality management, quality function deployment, project management, concurrent engineering, re-engineering, benchmarking.

The value methodology lends itself to use with other approaches, and its combined strengths – customer needs, teamwork, creativity and a rigorous system approach – rise above the strengths of other processes. How does the value methodology work? The value methodology works through a VM study that brings together a multidisciplinary team of people who own the problem and have the expertise to identify and solve it.

A VM study team works under the direction of a facilitator who follows an established set of procedures – the VM job plan – to review the project, making sure the team understands customer requirements and develops a cost-effective solution. The VM job plan includes pre-study and post-study phases, as well as the value study itself, which is composed of six phases: 1.Information 2.Function analysis 3.Creative 4.Evaluation 6.Recommendation 7.Implementation Value methodology delivers increased value and profits: Companies around the world have saved billions of dollars with the value methodology (also called value engineering, value analysis or value management).

Value methodology easily produces savings of 30 percent of the estimated cost for manufacturing a product or providing a service. What business managers have to say about Value Engineering: “I am continually amazed by the impressive array of value proposals and recommendations that are developed when value methodology is applied to any and all programs, processes or projects.

There is no limit to the utilization of the value methodology and no limit to the benefits that can be achieved.” Kurt Gernerd U.S. Department of the Interior SAVE International Vice President-Government “The first documented use of the value methodology in General Motors was in 1960.

• It is obvious that this technique has stood the test of time, but why not? One cannot argue that providing customer value and saving hundreds of millions of dollars at the same time is extremely worthwhile.” Jim Rains, General Motors Corp.
• SAVE International President “DuPont’s senior management is committed to VE, and so we’ve formally used VE on over 300 projects for improving our new and existing chemical processes.

VE has saved 10 percent to 12 percent of the investment for all these projects combined, and has elevated us to best in class for project cost, as measured in industry benchmarking analyses.” Michael Cook, DuPont Co. SAVE International Vice President-Education “The value analysis process has been integrated into our time-to-market process, Xerox’s product-delivery process.

1. VA enables Xerox product programs to meet or beat their customer requirements at the lowest total life cycle cost, and optimizes organizational and process productivity and effectiveness.” Harry Rosenfeld, Xerox Corp.
2. Arthur Andersen definitely sees that the use of VE as part of an overall target-costing process will be critical to suppliers to remain profitable under the pricing pressure and year-to-year cost reduction requires by the vehicle manufacturers.

If suppliers wait until production to begin cost reduction, they will not be able to achieve the required cost targets.” Eoin Comerford, Arthur Andersen Who Uses Value Engineering ? A wide spectrum of businesses and industries – from automakers to zipper manufacturers – employ the value methodology to yield a high return on investment while maintaining the quality and performance of products, processes or services.

1. The following companies, which appear on Fortune magazine’s “Global 500″ list of the largest companies in the world, employ the value methodology: Boeing BP Amoco DuPont Co.
2. Fiat General Electric General Motors Corp.
3. Hewlett-Packard Kmart Corp.
4. Lockheed Martin Mitsubishi Motorola Nissan Motor Northern Telecom Royal Dutch/Shell Group Toyota TRW United Technologies Corporation Volkswagen Xerox Corp.

Value Engineering is simple, yet effective.

What are the 4 types of values?

Value (marketing)

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Key concepts Promotional content Promotional media Research

Value in, also known as customer-perceived value, is the difference between a prospective customer’s evaluation of the benefits and costs of one when compared with others. Value may also be expressed as a straightforward between perceived benefits and perceived costs: Value = Benefits – Cost,

• The basic underlying concept of value in marketing is human needs,
• The basic human needs may include food, shelter, belonging, love, and self expression.
• Both culture and individual personality shape human needs in what is known as wants,
• When wants are backed by buying power, they become demands,
• With a consumers’ wants and resources (financial ability), they demand products and services with benefits that add up to the most value and satisfaction.

The four types of value include: functional value, monetary value, social value, and psychological value, The sources of value are not equally important to all consumers. How important a value is, depends on the consumer and the purchase. Values should always be defined through the “eyes” of the consumer:

Functional value : This type of value is what an offer does, it’s the solution an offer provides to the customer.

Monetary value : This is where the function of the price paid is relative to an offerings perceived worth. This value invites a trade-off between other values and monetary costs.

Social value : The extent to which owning a product or engaging in a service allows the consumer to connect with others.

Psychological value : The extent to which a product allows consumers to express themselves or feel better.

For a firm to deliver value to its customers, they must consider what is known as the “total market offering.” This includes the reputation of the organization, staff representation, product benefits, and technological characteristics as compared to competitors’ market offerings and prices.

Value can thus be defined as the relationship of a firm’s market offerings to those of its competitors. Value in marketing can be defined by both and measures. On the qualitative side, value is the perceived gain composed of individual’s emotional, mental and physical condition plus various social, economic, cultural and environmental factors.

On the quantitative side, value is the actual gain measured in terms of financial numbers, percentages, and, For an organization to deliver value, it has to improve its value : cost ratio. When an organization delivers high value at high price, the perceived value may be low.

When it delivers high value at low price, the perceived value may be high. The key to deliver high perceived value is attaching value to each of the individuals or organizations—making them believe that what you are offering is beyond expectation—helping them to solve a problem, offering a solution, giving results, and making them happy.

Value changes based on time, place and people in relation to changing environmental factors. It is a creative energy exchange between people and organizations in our marketplace. Very often managers conduct customer value analysis to reveal the company’s strengths and weaknesses compared to other competitors.

Identifying the major attributes and benefits that customers value for choosing a product and vendor. Assessment of the quantitative importance of the different attributes and benefits. Assessment of the company’s and competitors’ performance on each attribute and benefits. Examining how customer in the particular segment rated company against major competitor on each attribute. Monitoring customer perceived value over time.

What are the 3 value elements?

Explore the B2C Elements of Value – What do consumers value? Bain research has identified 30 Elements of Value in four categories. We have identified 30 “elements of value”—fundamental attributes in their most essential and discrete forms. These elements fall into four categories: functional, emotional, life changing, and social impact.

Some elements are more inwardly focused, primarily addressing consumers’ personal needs. For example, the life-changing element motivation is at the core of Fitbit’s exercise-tracking products. Others are outwardly focused, helping customers interact in or navigate the external world. The functional element organizes is central to The Container Store and Intuit’s TurboTax, because both help consumers deal with complexities in their world.

Read the full article on the Harvard Business Review website Eric Almquist is a partner with Bain & Company’s Customer Strategy & Marketing practice and the global head of consumer insights for Bain. John Senior is a partner with Bain & Company’s Customer Strategy & Marketing practice.

What is the scope of value engineering?

Importance of Value Engineering, its Key Benefits and Scope This article provides a clear-cut insight into how world-class organizations have achieved a competitive edge through, Value Engineering & Analysis has vast applications and after having worked with numerous customers on their value engineering requirements, this paper is articulated to provide a concise understanding of the methodologies and the holistic approach required to internalize Value Engineering into the organizational DNA to reap benefits across all product lines.

1. Is a process rather than a program.
2. It is a systematic process used by a multidisciplinary team to improve the value of a project through the analysis of its functions.
3. Value is defined as a fair return or equivalent in goods, services, or money for something exchanged.
4. Value methodologies can be applied during any stage of a project’s development cycle, although the greatest benefit and resource savings are typically achieved early in development during the conceptual stages.

Broadly, VE consists of four activities: VE concepts can be applied to business as well as technical situations and consequently help management take informed result-oriented decisions. Often, VE initiatives are reactive to market pressures. This means post product launch, VE is initiated as a reaction to field failures, market feedback, and competitive pressures.

For example, after you have launched your product, a competitor brings in a product at a lower cost or the same cost but with better features. Then it becomes almost essential to re-visit your product, to stay in the race. Projects that have already experienced benefits in cost, schedule or scope from VE analysis, but the star benefit of VE is in the R&D phase where it can potentially improve the efficiency of the process by 20%-35%.

VE at this point produces maximum benefit because recommendations can be implemented without delaying progress or causing significant rework of completed designs. R&D is hard-pressed on deadlines for product design. Mostly, this results in over-designed parts or products with a higher factor of safety than necessary.

1. This gives an independent team a lot of room for value engineering since R&D may have a bias towards the designs they’ve developed.
2. All organizations are at different maturity levels of VE initiatives.
3. VE begins as a response to market feedback which we call reactive VE.
4. Once the benefits become visible, VE is adopted as a tool for cost reduction and quality improvement.

Finally, organizations reach a proactive VE phase where VE results are fed into continuous improvement and product development. These many times result in product or technology innovation and give companies a leap forward in the market. Proactive VE can also feed in information from competitive teardown and benchmarking activities to R&D, which can help R&D develop more efficient designs for future product lines.

1. Significant improvements can occur if value engineering is done in the R&D phase of the product lifecycle.
2. Close to 75% of the product cost is frozen by the end of this phase.
3. However, there is no comparative cost, quality and performance data.
4. So, this becomes challenging as one needs to anticipate the issues that might occur during production or in the field after product launch.

Cost reduction, weight reduction, quality improvement, and feature enhancement are noticeable and expected results of VE initiatives. While the average cost improvement from VE is 6%, cost reduction is not always the most significant benefit. Many other outcomes accompany VE activities.

1. Often, VE results in breakthrough technology, new designs and IPs for the organizations and gives them a competitive edge.
2. Innovations for alternate materials have also come out of VE initiatives.
3. VE done for the manufacturing process can help in process streamlining and optimization as well as variant reduction.

Despite all the benefits that VE can bring to an organization, the fate of VE initiatives is not as rosy as it seems. Our experience with various automotive OEMs reveals that as many as 70% to 80% of VE programs perish when instant results do not occur because of budget constraints or lack of dedicated VE team.

Out of the rest, 60%- 70% fail to reach the implemented stage on a vehicle program because they do not meet expected gains. Internal teams face roadblocks selling VE initiatives to the top management. Not all new projects go for value engineering, only those that promise long-run savings or extend the active engineering life of the vehicle model are selected.

Management here plays a major role as they must take a call for implementation of VE results based on the total cost of change analysis, so they need to be convinced of the overall gains. Following factors emerge as differentiators when we dive deeper and try to analyze organizations who have achieved a competitive edge through VE from those who are struggling with their VE initiatives: The process also gives VE a systematic approach for problem-solving, a result-driven program management and schedule adherence. This means that VE projects reach the implementation stage and there is a buy-in from top management for the solution. To realize sustained benefits from value engineering sustained and focus efforts, a dedicated team and a fundamental strong process are very essential.

1. Successful organizations look at VE as an instrument to grow business.
2. Value Engineering & Analysis gives a breather to the design group for developing new product lines and platforms.
3. Leveraging VE for extending the Active Engineering Life (AEL) of a vehicle program is an art.
4. World-class OEMs have gained technology leadership through this.

Suneel Pandita is a Business Leader for Mechatronics Practice at KPIT Technologies. Suneel has over 2 decades of experience in the automotive industry and has lead and managed various engineering and technology developments. : Importance of Value Engineering, its Key Benefits and Scope

What are the major two disadvantages of value engineering?

Disadvantages –

Any builder considering OVE should be aware of the possible difficulties and disadvantages to the technique. Even though OVE frames can actually be stronger than traditional frames, some home buyers may see the house as being less sturdy due to the smaller amount of lumber. Some code enforcement officers may feel the same way if they are not familiar with OVE design concepts. In areas with earthquake or high wind problems, local building codes can include provisions that make it impossible to use OVE. Design costs can be higher, because OVE framing usually requires the services of engineers trained in the technique. Labor and materials costs can be higher than anticipated if employees need a lot of time to adapt to the new approach or if the OVE design makes it impossible to use standard sizes of materials.

What is true value engineering?

It is defined as average value of an infinite number of measured values when average deviation due to various contribution factor approaches to zero. It is not possible to determine the true value of the quantity by an experiment means.

What is value engineering formula?

Value Engineering Formula – Value Engineering = Value / Cost The process of value engineering is commonly used by manufacturers to optimize costs without sacrificing the intended functionality or purpose. Besides, the manufacturer generally uses cheaper alternatives to meet the rising costs and achieve the desired lifespan.

What is value analysis and value engineering?

Value Analysis (VA) involves the implementation of a set of techniques relating to cost reduction and cost prevention to the existing product to improve its value. On the other hand, Value Engineering (VE) is the implementation of a similar set of techniques relating to a new product at the time of its design.

1. These two are modern methods relating to product cost optimization.
2. Many industries have adopted these techniques.
3. These aim to improve the value provided to the customer.
4. These mainly differ at the time of application of principles and techniques.
5. This implies that the stage at which the ‘ value system’ is applied differentiates the two.

When the application is at the commercial operations stage it is value analysis. But, if the application is at the design, drawings, and engineering stage, it is value engineering.

What is quality value engineering?

Value engineering (VE) is a powerful tool, known primarily for its benefits in cost control, which can be applied successfully to QC to give you a quality, cost-effective design. By comparing common elements of QC and VE programs, we can develop an approach that brings the best attributes of both to our design process.