Value engineering Short Over view ppt
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This document provides an overview of value engineering (VE), including its history, key concepts, methodology, and applications. It can be summarized as follows: 1. VE was developed in the 1940s at GE by Larry Miles as a systematic approach to reducing costs and increasing value through function-based analysis. It has since been widely adopted to improve design, processes, and projects. 2. VE follows a methodology involving defining the functions of a product/process, establishing their costs, and generating alternatives to deliver the necessary functions at lower life cycle cost while maintaining performance. 3. VE uses techniques like function analysis, idea generation, and evaluation to identify opportunities to reduce costs without compromising quality or usefulness. Its
Value engineering Short Over view ppt
- 1. A Short Overview on:
- 2. Introducing The Group Members Name Of the Members ID NO Kazi Mashfiq Uddin Ahmed 100306003 Kawsar Alam 100306035 Billal Hussan 100306012
- 3. • Value Engineering (VE) has been used to refer to the design stage or before the fact. Value Engineering (VE) approach is used for new products, and applies the same principles and techniques to pre-manufacturing stages such as concept development, design and prototyping. • Value Engineering (VE) is a powerful Change Management and Problem Solving' tool with over a century of worldwide application track record. • VE is used to create functional breakthroughs by targeting value mismatches during product, process, and project design. Introduction
- 4. HISTORICAL PERSPECTIVE OF VALUE Engineering • Larry Miles, an engineer by training, is known as the father of the VA / VE concept. He developed the technique at General Electric (GE) in the late 1940s. • Larry Miles moved from design engineering to purchasing for General Electric (GE) shortly before the United States entered World War II. • Later (about 1943), he was assigned to be the procurement officer for a GE manufacturing plant. • He developed a reputation of great enthusiasm for conceiving cost-effective operations and using unusual methods for problem solving. • Due to the competition for raw materials, products, personnel, and other resources in the time of war, Mr. Miles developed a procedure for procuring, designing, and using components and products. • This procedure used "functions" as its basis. • Mr. Miles found that he could more readily obtain what he needed if he used his new procedure, rather than specifying standard designed components., (For example: the required product to be provided must translate a rotational force into a lateral force. It must be able to withstand these stresses, fit within the area allowed, and connect to these other parts.) • This new "function" based procedure was so successful that it was possible to produce the goods with greater production and operational efficiency, and less expensively.
- 5. HISTORICAL PERSPECTIVE OF VALUE Engineering • The terms value engineering originated in the early days development of the techniques. • The first approach was rather than reduce costs, to increase values. • Hence the need to analyze value. • Soon after Miles developed this systematic methodology, his concepts were acknowledged as a powerful approach to problem solving through function - based techniques, and they found their way outside GE into areas such as industry, healthcare and government services. • Miles' techniques resulted into huge savings for design engineers, manufacturing engineers, purchasing agents, and service providers exhibiting to the users “ why so much unnecessary costs exists in everything we do and how to systematically identify, clarify, and demarcate costs which have no relationship to customers' needs or desires.” • The name Value Engineering has subsequently become most universally accepted name for the "function" based procedure. • Mr. Charles Bytheway , in 1960's , during his work for Sperry UNIVAC, created functional critical path analysis procedure that highlighted the logic of the activity under value study. • A diagramming procedure called the "Functional Analysis System Technique" (FAST) was later on adopted as a standard component of the Value Method.
- 6. HISTORICAL PERSPECTIVE OF VALUE Engineering • The terms value engineering originated in the early days development of the techniques. • The first approach was rather than reduce costs, to increase values. • Hence the need to analyze value. • Soon after Miles developed this systematic methodology, his concepts were acknowledged as a powerful approach to problem solving through function - based techniques, and they found their way outside GE into areas such as industry, healthcare and government services. • Miles' techniques resulted into huge savings for design engineers, manufacturing engineers, purchasing agents, and service providers exhibiting to the users “ why so much unnecessary costs exists in everything we do and how to systematically identify, clarify, and demarcate costs which have no relationship to customers' needs or desires.” • The name Value Engineering has subsequently become most universally accepted name for the "function" based procedure. • Mr. Charles Bytheway , in 1960's , during his work for Sperry UNIVAC, created functional critical path analysis procedure that highlighted the logic of the activity under value study. • A diagramming procedure called the "Functional Analysis System Technique" (FAST) was later on adopted as a standard component of the Value Method.
- 7. WHAT IS VALUE ENGINEERING? • VE and creative method to increase the value of an item. This "item" can be a product, a system, a process, a procedure, a plan, a machine is an orderly, equipment , tool, a service or a method of working. • Value Engineering is defined as 'the professionally applied, team based, function - oriented, systematic application of recognized techniques (function analysis) which - 1. Identify the "function of a product, process, project, facility design, system or service, 2. Establish a monetary value for that function, 3. Provide the necessary function (defined by the customer to meet his / her requirements), 4. Consistent with the specified performance and reliability needed at the lowest Iife cycle cost (cost over the expected life). 5. And thus Increases customer satisfaction and adds value to the investment.
- 8. THE VALUE EQUATION • Value Engineering evaluates a product utility, esteem and market values, each of which are defined below : • Utility value – how useful / functional the product is seen to be. • Esteem value – the value that customer / user gives to product attributes, not directly contributing to utility but more relating to aesthetic and subjective value. Esteem issues and functionality should not be overlooked or compromised. • Market value – what market is prepared to pay for the product. • Market value = Utility value + Esteem value
- 9. OBJECTIVES OF Value Engineering • The objectives of Value Engineering is to find and improve on value mismatches in products, processes and capital projects. • Find important functions – define necessary versus un - necessary functions • Find and improve on low performing functions. • Define and segregate the necessary functions from the unnecessary functions and thereby creatively develop alternative means of accomplishing the necessary functions at lower total (life cycle) cost.
- 10. THE VALUE Engineering TERMINOLOGY • In value method terms : • Value = Worth / Cost OR • Value of an item = Performance of its function / Cost OR • Value = Σ (+) / Σ (-) = Σ (Benefits) / Σ (Costs) 1. Value greater than 1.0, the item is perceived to be fair or having good value. 2. Value is less than 1.0, the item is perceived to be having poor value. 3. When an item has a perceived worth that far exceeds the life – cycle cost, we usually consider purchasing the item. 4. An item that does its function better than another, has more value. Between two items that perform their function equally well, the one that costs less is more valuable.
- 11. Role of Function in VALUE Engineering • Function: • The use of functions and a function - logic process to describe needs, purposes and consequences is at the heart of Value Engineering. • The use of function - logic helps people realize and overcome many of the preconceived biases. • Function allows definition of each task in a process or one of its activities in terms of end goals and not solutions. • Placing those functions in a decision - logic diagram helps reach a common understanding. • It also helps people see what parts of their decisions rely on critical features, and where decisions are requiring substantial support to maintain them (potential value-mismatches). • This assists in focusing upon a precise understanding of the value involved.
- 12. THE VALUE ENGINEERING TERMINOLOGY • Different customers will interpret the value of a product in different ways. • The “performance of its functions” could include that it is beautiful (where needed) or it lends an image to the user / possessor (where desired ) • Its common characteristic is a high level performance, capabilities, emotional appeal, style, etc. relative to its cost. • This can also be expressed as maximizing the function of product relative to its cost : • Value = (performance + capability / cost = Function / cost
- 13. Role of Function in VALUE Engineering • Function: • Value analysis defines a "basic function" as anything that makes the product work or sell. • A function that is defined as "basic" cannot change. • Secondary functions, also called "supporting functions", described the manner which the basic function's were implemented. • Secondary functions could be modified or eliminated to reduce product cost. • Value is not a matter of minimizing cost. • In some cases the value of a product can be increased by increasing its function (performance or capability) and cost as long as added function increases more than its added cost. • The concept of functional worth important. • Functional worth is the lowest cost to provide a given function. • However, there are less tangible "selling" functions involved in a product to make it of value to a customer.
- 14. APPLICATIONS OF VALUE ENGINEERING • From a generic point of view, VE 1. Enables people to pinpoint areas that need attention and improvement. 2. Provides a method of generating ideas and alternatives for possible solutions to concern. 3. Provides a means for evaluating alternatives. . 4. Allows one to evaluate and quantify intangibles and to compare apples with oranges. 5. Provides a vehicle for dialogue by allowing large amounts of data to be summarized in concise form, allowing new and better questions to be asked, and using numbers to communicate in an information- searching mode. 6. Documents the rationale behind recommendations and decisions. 7. Materially improves the value of goods and services.
- 15. APPLICATIONS OF VALUE ENGINEERING • Value Analysis has been successful in several domains and its application is only limited by the users creativity. • Some application areas are - Defense; Automotive; Aeronautical; Software development; Water treatment; Civil engineering; systems and procedures, venture analysis, forecasting, resource allocation, marketing, Client services; Work processes; Documentation; Organizational development; etc. • Customer satisfaction and value perception -- The most common application of Value Analysis is what many have called the "state – of – the – art " customer satisfaction and value perception study. • Here are some of the ways the study pays off for clients: • They need to be competitive on the "Basics" (high satisfaction/low value) – not allowing any weaknesses in, but not investing more than necessary in them. . • They need to dominate the "Value" Issues (high satisfaction/high value). . • They need to know the Value "Opportunity" Issues (low satisfaction/high value) to know what to invest in for future growth. • They need to know the "Irritations" (low satisfaction/low value) to know where to innovate. • Identifying At Risk Customers - A big issue today is the so-called "At Risk" customer (those likely to defect). • Value Analysis findings help to determine why a company's customers are At Risk. • And, firms can learn why major competitors' customers are At Risk so they can be targeted. • increasing Employee Loyalty - Value Analysis studies are conducted among employees to identify things they expect from any company they work for (The Basics), things they value, things that irritate them and things they don't care about.
- 16. APPLICATIONS OF VALUE ENGINEERING • New Product / Service Development - Every marketer has been involved in a study where consumers "say" they are "very interested in trying a new product which subsequently fails in the marketplace. • Failure is often considered the consumer's fault whereas it really results from asking the wrong question. • People don't buy what they are "interested" in, they buy what they value. • The reason most new products fail is that they don't provide enough "new value" to consumers. • Value Analysis will show which tangible and intangible aspects of a new product consumers value and which they do not care about
- 17. PRINCIPLES OF THE VALUE METHODOLOGY • The philosophy of VE is implemented through a systematic rational process consisting of a series of techniques, including; 1. Function analysis to define the reason for the existence of a product or its components, 2. Creative and speculative techniques for generating new alternatives, and 3. Measurement techniques for evaluating the value of present and future concepts. • Value Analysis is based on the fundamental principle that the customer is always looking for the best product. at the least cost. • Value is the connection between customer satisfaction and price. • Value, then, is an essential parameter for improving a process by reducing costs while always maintaining or increasing client satisfaction.
- 18. PRINCIPLES OF THE VALUE METHODOLOGY • This method analyses a process not as a collection of people or actions, which contribute to product realization, but as a collection of functions, which need to be satisfied, by a process with the goal of responding to the needs of the customers. • Phase I - Selection Phase: • To make a value analysis a study group of 4 to 6 persons is formed. • More number of members complicates matters, degenerates discussions, and delays decisions. • The team must be interdisciplinary, incorporating a balance of different backgrounds, viewpoints and departments. • The members should be from equivalent levels in the organizational hierarchy to minimize peer pressure and politics. • At times, it is helpful to have a decision maker on the team to gain commitment for the implementation of the VE results. • One or more members of the team must be well versed with the VE process, or else an outside facilitator can be inducted in the team. • One of the members should be an expert on the subject matter (product /service / process / etc.) of the VE process. • The team members must have an open mind and be result oriented.
- 19. PRINCIPLES OF THE VALUE METHODOLOGY • Then we select the item to be studied. The VE study should ; 1. The item should be one that gives the impression that its cost is too high or that it does not do its function well. 2. Solve a problem. The need should be real and be supported by the management. 3. The selected item should have a good probability of success and implementation. Complex, multi-component products may give the best returns (scope for simplification). Products with large usage offer greater savings overall. Old products may benefit from new technical developments. The team must target products, services and administrative procedures offering the largest potential savings. 4. Have credible objectives. 5. Be important to the people in the area being studied. 6. Have the commitment of the requestor and the VE team. 7. Have receptivity in the organization, for effective implementation the sponsor and / or decision maker must be receptive to change.
- 20. PRINCIPLES OF THE VALUE METHODOLOGY • Phase II - Information Phase: • In the information phase, the main function and the secondary functions of an item are studied. • The functions are classified into "basic" and "secondary" functions and the cost of realizing each function is ascertained. • Accurate marginal cost data is needed because VA aims to reduce costs. • However apportioning overheads is difficult generally these are excluded from the VA exercise (unless it is the overhead elements themselves that are being analyzed) • The first action of the group should be to gather all the information about the item. • Identify and define the components - understand them and their characteristics. • Ask the best specialist of the field, not the person most accessible. • Get a detail of costs. • Collect drawings, specifications, all the written data on the item. • Don't be satisfied with verbal information. • It is better to collect too much information than collect too little. • The attitude of a value analyst should be critical, aggressive, nonconformist, never satisfied with what she / he receives for the money given. • He must challenge traditional assumptions.
- 21. PRINCIPLES OF THE VALUE METHODOLOGY • The whole team should be involved in doing this. Use brainstorming to challenge assumptions. Identify functions that the customer may be looking for, not just those that the operations manager thinks are essential or non-essential. • A Cost Function Matrix or Value Analysis Matrix is prepared to identify the cost of providing each function by associating the function with a mechanism or component part of a product. • Product functions with a high cost-function ratio are identified as opportunities for further investigation and improvement which are then brainstormed" analyzed, and selected. • The objective of the Function Cost Matrix approach is to draw the attention ,of the analysts away from the cost of components and focus their attention on the cost contribution of the functions. • Detailed cost estimates become more. important following function analysis, when evaluating value improvement proposals. • The total cost and percent contribution of the functions of the item under study will guide the team, or analyst, in selecting which functions to select for value improvement analysis.
- 22. Value Engineering Methodology Function Cost Identify Function Criteria & Constraints Alternate Methods Ideas vs. Criteria Cost Reduction Obtain Costs Compare Costs Evaluate Cost Identify Opportunity Fact Finding Ideation Judgments & Selection Creative Problem Solving Development of Ideas Technical Review Team Review
- 23. VE At Job Plan • 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: » Preparation » Information » Analysis » Creation » Evaluation » Development » Presentation » Follow-up
- 24. Four basic steps in the job plan • Information gathering – • This asks what the requirements are for the object. Function analysis, an important technique in value engineering, is usually done in this initial stage. It tries to determine what functions or performance characteristics are important. It asks questions like; • What does the object do? • What must it do? • What should it do? • What could it do? • What must it not do?
- 25. Alternative generation (creation) • In this stage value engineers ask: • What are the various alternative ways of meeting requirements? • What else will perform the desired function?
- 26. Evaluation • In this stage all the alternatives are assessed by evaluating how well they meet the required functions and how great the cost savings will be.
- 27. Presentation • In the final stage, the best alternative will be chosen and presented to the client for final decision.
- 28. Thank you all For Patient Hearing