Value Engineering

Topics: Costs, Cost, Microeconomics Pages: 6 (1727 words) Published: March 4, 2013

A Type of Magic

The Value Engineering Approach (or simple VE) is a type of magic!
The “magic” acts which we have seen performed on stage over the years are not achieved through sorcery or miracles. Instead, these acts are based on the application of a systematic, planned approach to obtain a desired effect. In the case of the magician, the desired effect is illusion, or the seeming accomplishment of the impossible, the results of which are amusing and non-productive.

The Value Engineering Approach is likewise neither sorcery nor miracle. It, like the magician’s approach, involves the application of a systematic, planned procedure to obtain a desired effect. It is their desired effects, however, that the two approaches differ. The desired effect of the Value Engineering Approach is positive: its result is “the same or better performance at lower total costs.”

Value Analysis to Value Management

The fundamentals of the Systematic Approach were conceived and brought together in 1947, in the General Electric Company (GE). The approach was then called value analysis and was applied within the purchasing area of the industry.

As more was learned about the Systematic Approach, it was realized that it had a broader application. This broader application was in the engineering and manufacturing, areas that also generated and influenced the costs of a physical product.

With growing use and continual refinement and development, it has evolved to the point where it has been found to be applicable to all business areas, to anything that affects a product’s total cost.

Objective of Value Engineering

The objective of Value Engineering is to provide a means of total cost control anywhere within a product’s life cycle. It stresses only the reduction or elimination of cost. This is done while maintaining the required quality and reliability of the product to which the systematic approach is applied.

An implied objective is not to cheapen or degrade the product.

Definition of Value Engineering

“Value Engineering is the systematic application of recognized techniques which identify the function of a product or service, establish a monetary value for that function, and provide the necessary function at the lowest overall cost.” – Society of American Value Engineers

Note: The terms value analysis, value control, value assurance, value management, and all other similar terms are considered to be synonymous. They are so considered because they apply the same basic methodology and techniques and have the same basic objective. Purpose of Value Engineering

The application of the technology of this systematic approach provides a means of isolating the necessary from the unnecessary. This is accomplished in the areas of both function and cost.
The purpose of the Value Engineering Systematic Approach is well served when the user is able to define and segregate the necessary from the unnecessary and thereby develop alternate means of accomplishing the necessary at a lower total cost.

As can be determined from the discussions of the purpose and the objectives of this Systematic Approach, one of its major focal points is total cost.

Total Cost: The sum of all efforts and expenditures made in the development, production and application of the products.

Total cost as defined contains three basic areas of cost which must be analyzed and related to each other at all times; i.e., development cost, production cost, and application cost.
Starting with the latter, the producer of the item must constantly evaluate effects on quality, reliability and maintainability, because any effect on any of these will have a distinct effect on the user’s total cost.

The efforts and expenditures made in the development cost’s area also have a telling effect on the item’s total cost. Because they must be spread over every item produced, they further...
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