Description
basic concepts in value engineering. It explains the approach to value engineering job plan.
Value Engineering
"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, 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 "The value analysis process has been integrated into our time-tomarket process, Xerox's product-delivery process. 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.
Basic Concepts in Value Engineering
What is Value Engineering
Value Engineering (VE) or Value Analysis (VA) is an important and powerful approach for improvements in the performance of products, systems and procedures and reduction in costs without jeopardising their function. ? 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. ? Value Engineering 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. ? Value Engineering is a powerful methodolgy for solving problems and/or reducing costs while maintaining or improving performance and quality requirements. L.D. Mile defined value engineering as “ An organised creative approach which has for its purpose the efficient identification of the unnecessary cost i.e ,cost which provides neither quality, nor use, nor life, nor appearance, nor customer features”
Let us see other definition “An organised systematic study of the function of a material, component, product or service, with the objective of yielding value improvement through the ability to accomplish the desired function at the lowest cost without degradation in quality”. What are the benefits of Value Engineering? The value methodology helps organizations compete more effectively in local, national and international markets by: ? Decreasing costs, Increasing profits, Improving quality, Expanding market share, Saving time, Solving problems, Using resources more effectively, Simplifying procedures, Developing value attitudes in staff, Competing more sucessfully in marketplace
Value Engineering helps us to learn how to: ? Improve career skills ? Separate "Symptoms" from "problems" ? Solve "root cause" problems and capture opportunities ? Become more competitive by improving "benchmarking" process ? Take command of a powerful problem solving methodology to use in any situation
Since its origins in the U.S. industrial community in the 1940s, the value methodology has reduced unnecessary costs while improving performance in the world's largest organizations. In the 1990s, international consulting firms such as Arthur Andersen discovered the value methodology and began recommending its use to clients. The following companies, which appear on Fortune magazine's "Global 500" list of the largest companies in the world, employ the value methodology: Boeing, DuPont Co., Fiat, General Electric, General Motors Corp., Hewlett-Packard, Lockheed Martin, Mitsubishi, Motorola, Nissan Motor, Toyota, Volkswagen, Xerox Corp. etc.
Functions and Value
Types of value: The term value is used in many different ways and is frequently confused with the monetary price or cost of an item. However, value is not synonymous with the cost. Value may be perceived as the ratio of sum of positive and negative aspects of an object. Thus value can be considered as a composite of quality and cost. It is more in terms of worth or utility. The term value can be decided into following types: ? Use Value: The properties or qualities, which accomplish useful purpose or service. ? Esteem Value: The properties, features or attractiveness, which cause us to want or own it. ? Cost Value: The sum of labour, material and various other costs required to produce it. ? Exchange value: The properties or qualities, which enable us to exchange it for something else, we want.
Types of Functions
VE. is a functional approach, a customer oriented approach. Identification of the functions therefore constitutes an important aspect of VE. The term `function’ is used to mean the purpose or use of a product. Functions can be of two types a)Basic Functions – The primary purpose of a product b)Secondary functions – Other purposes not directly accomplishing the primary purpose but supporting it or resulting from a specific design approach. Many a time, poor value may result in because the functions have not been precisely understood and redundant or unnecessary functions have been imposed.
Value Tests
VE is essentially a questioning attitude looking at the function and costs. L.D. Miles designed a set of value tests to ascertain whether there is a scope for value improvement. Some of the questions which can work as thought – starters for developing better value alternatives could be as follows: 1. Can the design be changed to eliminate the part? 2. Can we purchase it at a lower cost? 3. Does it need all its features? 4. Is there anything better for the intended use. 5. Can a usable part be made by a lower-cost method? 6. Can a standard part be used? 7. Are there any newly developed materials that can be used? 8. Can two or more parts be combined into one? Can any specification be changed to effect cost reduction?
Identification of Poor Value areas
By applying the value tests we may come across poor value areas which are responsible for unnecessary costs. Once we are able to identify areas of poor value, we can minimise unnecessary costs. In simple terms a soundly conducted value analysis programme should essentially provide answers to the following questions: 1. What is the item? 2. What does it do? 3. How much does it cost? 4. Can anything else do the same thing? 5. How much does that cost?
Value Engineering Job Plan
This is a formal approach to be adopted for VE. In one of the job plans, seven steps are as follows: 1. General Phase 2. Information Phase 3. Function Phase 4. Creation Phase 5. Evaluation Phase 6. Investigation phase 7.Recommendation Phase
1.General Phase:
Throughout the application of the entire job plan the techniques of this phase must be diligently applied to create the right environment for Value Engineering job plan to be effective. There are five techniques associated with this phase, a)Use Good Human Relations: b)Inspire TeamWork: c) Work On specifics: d)Overcome Roadblocks: e)Apply Good Business Judgement: Above techniques are the foundations for any group activity taken up in any industry.
2. Information Phase:
The objective of this phase is to gain an understanding of the project being studied and to obtain all the essential facts relating to the project as also to estimate the potential value improvement. This phase comprises of three techniques. a)Secure Facts:
? Technical Specifications – dimension, characteristics, features, grades, tolerance, qualtiy, appearance, material
? ? ? ? ? ? ? ? ? ? Environmental specifications – Impact, severity, pollution Engineering drawings Production Sample – actual or model Production Data – opeartions, speeds, rates, outputs and stock levels Cost data – material, labour, overhead costs Work specifications – work place layout, standard times Features preferred by customers Development, testing and service records Quantities involved Scrap rates
b)Determine Costs: C)Fix cost on specifications and Requirements
3. Function Phase:
The objective of this phase are to define the functions that a product actually performs and is required to perform as well as to relate these functions to the cost and the worth of providing them. The two techniques of this phase are: a)Define Function: The method of functional analysis requires functions to be described with only two words, a verb and a noun. ? Use only one verb and one noun. where possible noun should be measurable and verb should be action oriented. ? Avoid passive or indirect verbs ? Avoid goal like words or phrases, such as improve, maximise, minimise, optimise etc. ? List a large no. of two word pairs and then select the best pair. Product Mirror Brake Clutch Function Reflect Light Arrest Motion Transfer Power
Evaluate Function Relationship:
This technique attempts to determine relative importance of various functions. A paired comparison technique to determine the numerical value of various functions is very simple and effective to use. Suppose we are comparing A with B. Then A-3 will mean that A is more important than B and there is major difference in their importance. The evaluation process also helps to find out whether it is a Primary (Basic) function or a Secondary function. The primary function will have the highest core in the above evaluation process. Having defined the functions, the next step is to establish the worth of each function. The objective is to determine the poor value functions and to obtain a reference point from which the cost of alternatives can be compared. Function cost matrix is an effective technique of finding out the relative importance of a function and the percentage cost incurred in attaining that function. If the importance is low and cost is high then it reflects a poor value area.
4. Creation Phase:
The objective of this phase is to create ideas for value alternatives to accomplish the functions defined in the previous phase. This phase requires creativity to be focal point. Brainstorming is a very effective way of promoting creativity.
a) Establish positive thinking: Our mind is like a parachute, it works only when it’s open! b) Develop creative Ideas: ? Can the dimension be changed? ? Can the quantity be changed? ? Can the order be changed? ? Can the time element be changed? ? Can the cause or effect be changed? ? Can there be a change in the character? ? Can the form be changed? ? Can the motion be changed? ? Can the state or condition be changed? ? Can the use be adopted to a new market?.
0 0 0
0 0 0
0 0 0
Connect all nine circles with four straight lines without lifting the pen, crossing only one line and never retracing any line or portion of a line.
9 18
8 46
7 94
6
5
4
3
2
1
Complete the lower group of figures with six positive numbers
5. Evaluation Phase: The objective of this phase is to select for further analysis the most promising of the ideas generated during the creative phase and subject the ideas to a priliminary screening to identify those which satify the following criteria: ? Will it work? ? Is it less costly than the present design? ? Is it feasible to implement? There are four techniques associated with this phase: a)Refine or combine ideas: b)Establish cost on all ideas: c) Develop function alternatives: d)Evaluate by comparison: The decision matrix approach can be a very effective way of multi criteria evaluation. Here each criterion is assigned a relative importance and a normalized value score is allocated to each alternative on each attribute. The total weighted score is obtained for each alternative and the greatest score determines the preferred alternative.
6. Investigation Phase: ? Use company and industrial standards:
?
Consult vendors and specialists Use Specialty products, Processes and Procedures
?
7. Recommendation Phase: This is the final phase of the job plan in which the finally selected value alternative is recommended for acceptance and implementation. It is vital in the sense that the entire project of conducting VE would succeed only when the recommendation is accepted. Many a times the acceptance of the recommendation depends on the way it is presented.Two techniques associated with this phase are: a) Present facts
b)
Motivate positive action: the presentation of accurate, specific and detailed facts and costs will motivate positive action. This technique requires follow up to ensure that action is taken for idea implementation.
FAST DIAGRAM AS VALUE ENGINEERING TOOL:
Basic Methodology of Fast Diagram: FAST (Functional Analysis System Technique) was developed in 1965 by Charles W. Bytheway. It visually represents the relationship fo functions performed by a product, service or a system and identifies where the functions have greatest impact on the costs. It is useful in determining the functional inter-relationship in analyzing an entire system and gives a better understanding of the interaction of function and cost. FAST is like a network diagram.
Steps involved in constructing a FAST diagram are as follows: a) Prepare a list of all functions of the product using verb and noun technique of function analysis. b) Write each function on a small card. Select the card pertaining to basic function. Determine the position of next higher and lower unction by answering the following logical questions. ? How is this function accomplished? ? Why is this function performed? ? When is this function performed?
A critical function path may result from the logic sequence of the basic and secondary functions. It is composed of only those functions that must be performed to accomplish the functions. The FAST diagrams are usually bounded on both ends by the scope lines, which determine the limits of responsibility of study.
Behavioral and Organizational Aspects of Value Engineering
Basic foundation of VE is structured around the effective use of people working in teams. If teamwork is not properly harnessed it may not achieve the major cost reductions. Some problems usually encountered in the VE processes are 1)Individuals involved in VE have other jobs and are already busy. 2)Teams may be inherently conservative, non –coherent and may avoid decisions and waste time. 3) Individual members may have vested interests in resisting the changes.
The success of VE study is enhanced if the organizational and behavioral aspects are considered early in VE process. Hence the importance of General Phase of VE job plan. Organizing for VE is a very important task. Size, composition, level of participation and motivation of team members are some of the relevant issues that must be addressed. Team members must be adequately trained. Management must periodically monitor their progress. Of course, rewards should be associated for any good work done.
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0 0 0
doc_966293414.pptx
basic concepts in value engineering. It explains the approach to value engineering job plan.
Value Engineering
"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, 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 "The value analysis process has been integrated into our time-tomarket process, Xerox's product-delivery process. 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.
Basic Concepts in Value Engineering
What is Value Engineering
Value Engineering (VE) or Value Analysis (VA) is an important and powerful approach for improvements in the performance of products, systems and procedures and reduction in costs without jeopardising their function. ? 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. ? Value Engineering 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. ? Value Engineering is a powerful methodolgy for solving problems and/or reducing costs while maintaining or improving performance and quality requirements. L.D. Mile defined value engineering as “ An organised creative approach which has for its purpose the efficient identification of the unnecessary cost i.e ,cost which provides neither quality, nor use, nor life, nor appearance, nor customer features”
Let us see other definition “An organised systematic study of the function of a material, component, product or service, with the objective of yielding value improvement through the ability to accomplish the desired function at the lowest cost without degradation in quality”. What are the benefits of Value Engineering? The value methodology helps organizations compete more effectively in local, national and international markets by: ? Decreasing costs, Increasing profits, Improving quality, Expanding market share, Saving time, Solving problems, Using resources more effectively, Simplifying procedures, Developing value attitudes in staff, Competing more sucessfully in marketplace
Value Engineering helps us to learn how to: ? Improve career skills ? Separate "Symptoms" from "problems" ? Solve "root cause" problems and capture opportunities ? Become more competitive by improving "benchmarking" process ? Take command of a powerful problem solving methodology to use in any situation
Since its origins in the U.S. industrial community in the 1940s, the value methodology has reduced unnecessary costs while improving performance in the world's largest organizations. In the 1990s, international consulting firms such as Arthur Andersen discovered the value methodology and began recommending its use to clients. The following companies, which appear on Fortune magazine's "Global 500" list of the largest companies in the world, employ the value methodology: Boeing, DuPont Co., Fiat, General Electric, General Motors Corp., Hewlett-Packard, Lockheed Martin, Mitsubishi, Motorola, Nissan Motor, Toyota, Volkswagen, Xerox Corp. etc.
Functions and Value
Types of value: The term value is used in many different ways and is frequently confused with the monetary price or cost of an item. However, value is not synonymous with the cost. Value may be perceived as the ratio of sum of positive and negative aspects of an object. Thus value can be considered as a composite of quality and cost. It is more in terms of worth or utility. The term value can be decided into following types: ? Use Value: The properties or qualities, which accomplish useful purpose or service. ? Esteem Value: The properties, features or attractiveness, which cause us to want or own it. ? Cost Value: The sum of labour, material and various other costs required to produce it. ? Exchange value: The properties or qualities, which enable us to exchange it for something else, we want.
Types of Functions
VE. is a functional approach, a customer oriented approach. Identification of the functions therefore constitutes an important aspect of VE. The term `function’ is used to mean the purpose or use of a product. Functions can be of two types a)Basic Functions – The primary purpose of a product b)Secondary functions – Other purposes not directly accomplishing the primary purpose but supporting it or resulting from a specific design approach. Many a time, poor value may result in because the functions have not been precisely understood and redundant or unnecessary functions have been imposed.
Value Tests
VE is essentially a questioning attitude looking at the function and costs. L.D. Miles designed a set of value tests to ascertain whether there is a scope for value improvement. Some of the questions which can work as thought – starters for developing better value alternatives could be as follows: 1. Can the design be changed to eliminate the part? 2. Can we purchase it at a lower cost? 3. Does it need all its features? 4. Is there anything better for the intended use. 5. Can a usable part be made by a lower-cost method? 6. Can a standard part be used? 7. Are there any newly developed materials that can be used? 8. Can two or more parts be combined into one? Can any specification be changed to effect cost reduction?
Identification of Poor Value areas
By applying the value tests we may come across poor value areas which are responsible for unnecessary costs. Once we are able to identify areas of poor value, we can minimise unnecessary costs. In simple terms a soundly conducted value analysis programme should essentially provide answers to the following questions: 1. What is the item? 2. What does it do? 3. How much does it cost? 4. Can anything else do the same thing? 5. How much does that cost?
Value Engineering Job Plan
This is a formal approach to be adopted for VE. In one of the job plans, seven steps are as follows: 1. General Phase 2. Information Phase 3. Function Phase 4. Creation Phase 5. Evaluation Phase 6. Investigation phase 7.Recommendation Phase
1.General Phase:
Throughout the application of the entire job plan the techniques of this phase must be diligently applied to create the right environment for Value Engineering job plan to be effective. There are five techniques associated with this phase, a)Use Good Human Relations: b)Inspire TeamWork: c) Work On specifics: d)Overcome Roadblocks: e)Apply Good Business Judgement: Above techniques are the foundations for any group activity taken up in any industry.
2. Information Phase:
The objective of this phase is to gain an understanding of the project being studied and to obtain all the essential facts relating to the project as also to estimate the potential value improvement. This phase comprises of three techniques. a)Secure Facts:
? Technical Specifications – dimension, characteristics, features, grades, tolerance, qualtiy, appearance, material
? ? ? ? ? ? ? ? ? ? Environmental specifications – Impact, severity, pollution Engineering drawings Production Sample – actual or model Production Data – opeartions, speeds, rates, outputs and stock levels Cost data – material, labour, overhead costs Work specifications – work place layout, standard times Features preferred by customers Development, testing and service records Quantities involved Scrap rates
b)Determine Costs: C)Fix cost on specifications and Requirements
3. Function Phase:
The objective of this phase are to define the functions that a product actually performs and is required to perform as well as to relate these functions to the cost and the worth of providing them. The two techniques of this phase are: a)Define Function: The method of functional analysis requires functions to be described with only two words, a verb and a noun. ? Use only one verb and one noun. where possible noun should be measurable and verb should be action oriented. ? Avoid passive or indirect verbs ? Avoid goal like words or phrases, such as improve, maximise, minimise, optimise etc. ? List a large no. of two word pairs and then select the best pair. Product Mirror Brake Clutch Function Reflect Light Arrest Motion Transfer Power
Evaluate Function Relationship:
This technique attempts to determine relative importance of various functions. A paired comparison technique to determine the numerical value of various functions is very simple and effective to use. Suppose we are comparing A with B. Then A-3 will mean that A is more important than B and there is major difference in their importance. The evaluation process also helps to find out whether it is a Primary (Basic) function or a Secondary function. The primary function will have the highest core in the above evaluation process. Having defined the functions, the next step is to establish the worth of each function. The objective is to determine the poor value functions and to obtain a reference point from which the cost of alternatives can be compared. Function cost matrix is an effective technique of finding out the relative importance of a function and the percentage cost incurred in attaining that function. If the importance is low and cost is high then it reflects a poor value area.
4. Creation Phase:
The objective of this phase is to create ideas for value alternatives to accomplish the functions defined in the previous phase. This phase requires creativity to be focal point. Brainstorming is a very effective way of promoting creativity.
a) Establish positive thinking: Our mind is like a parachute, it works only when it’s open! b) Develop creative Ideas: ? Can the dimension be changed? ? Can the quantity be changed? ? Can the order be changed? ? Can the time element be changed? ? Can the cause or effect be changed? ? Can there be a change in the character? ? Can the form be changed? ? Can the motion be changed? ? Can the state or condition be changed? ? Can the use be adopted to a new market?.
0 0 0
0 0 0
0 0 0
Connect all nine circles with four straight lines without lifting the pen, crossing only one line and never retracing any line or portion of a line.
9 18
8 46
7 94
6
5
4
3
2
1
Complete the lower group of figures with six positive numbers
5. Evaluation Phase: The objective of this phase is to select for further analysis the most promising of the ideas generated during the creative phase and subject the ideas to a priliminary screening to identify those which satify the following criteria: ? Will it work? ? Is it less costly than the present design? ? Is it feasible to implement? There are four techniques associated with this phase: a)Refine or combine ideas: b)Establish cost on all ideas: c) Develop function alternatives: d)Evaluate by comparison: The decision matrix approach can be a very effective way of multi criteria evaluation. Here each criterion is assigned a relative importance and a normalized value score is allocated to each alternative on each attribute. The total weighted score is obtained for each alternative and the greatest score determines the preferred alternative.
6. Investigation Phase: ? Use company and industrial standards:
?
Consult vendors and specialists Use Specialty products, Processes and Procedures
?
7. Recommendation Phase: This is the final phase of the job plan in which the finally selected value alternative is recommended for acceptance and implementation. It is vital in the sense that the entire project of conducting VE would succeed only when the recommendation is accepted. Many a times the acceptance of the recommendation depends on the way it is presented.Two techniques associated with this phase are: a) Present facts
b)
Motivate positive action: the presentation of accurate, specific and detailed facts and costs will motivate positive action. This technique requires follow up to ensure that action is taken for idea implementation.
FAST DIAGRAM AS VALUE ENGINEERING TOOL:
Basic Methodology of Fast Diagram: FAST (Functional Analysis System Technique) was developed in 1965 by Charles W. Bytheway. It visually represents the relationship fo functions performed by a product, service or a system and identifies where the functions have greatest impact on the costs. It is useful in determining the functional inter-relationship in analyzing an entire system and gives a better understanding of the interaction of function and cost. FAST is like a network diagram.
Steps involved in constructing a FAST diagram are as follows: a) Prepare a list of all functions of the product using verb and noun technique of function analysis. b) Write each function on a small card. Select the card pertaining to basic function. Determine the position of next higher and lower unction by answering the following logical questions. ? How is this function accomplished? ? Why is this function performed? ? When is this function performed?
A critical function path may result from the logic sequence of the basic and secondary functions. It is composed of only those functions that must be performed to accomplish the functions. The FAST diagrams are usually bounded on both ends by the scope lines, which determine the limits of responsibility of study.
Behavioral and Organizational Aspects of Value Engineering
Basic foundation of VE is structured around the effective use of people working in teams. If teamwork is not properly harnessed it may not achieve the major cost reductions. Some problems usually encountered in the VE processes are 1)Individuals involved in VE have other jobs and are already busy. 2)Teams may be inherently conservative, non –coherent and may avoid decisions and waste time. 3) Individual members may have vested interests in resisting the changes.
The success of VE study is enhanced if the organizational and behavioral aspects are considered early in VE process. Hence the importance of General Phase of VE job plan. Organizing for VE is a very important task. Size, composition, level of participation and motivation of team members are some of the relevant issues that must be addressed. Team members must be adequately trained. Management must periodically monitor their progress. Of course, rewards should be associated for any good work done.
0 0 0
0 0 0
0 0 0
doc_966293414.pptx