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Value engineering benefits

The main reason for VE is that it results in many benefits to a project, the following provides a very brief of such benefits:-

• Identifies project constrains, issues and problems which might not other wise have been identified.
• Deals with life cycle , not just initial , costs.
• Usually results in remedying project deficiencies and omissions and superfluous items.
• Identifies and removes unnecessary costs
• Provides a means to identify and incorporate project enhancements
• Crystallizes an organization's brief or project priorities.
• Provides management with the information it needs to make informed decisions
• Permits a large return on a minimal investment.

(Brain R.Norton and William c.McElligott,1995)

Definitions of Value Engineering

Value engineering is an organized creative approach which aims to pinpoint inessential expenditures precisely. These are the charges whose spending does enhance none of the qualitative, functional, customer-orientated or apparent aspects. The methodology of a system value determines the pertinent schemes, products, components for setting the worth of each one of them. Value engineering scrutinizes the scheme obligations to determine the realization of the actual value. Thus it seeks the fruition of the indispensable functions with the slightest expenses.  (Lida Haghnegahdar, and Ezzatollah Asgharizadeh , 2008)

VE is an effective technique for reducing costs, increasing productivity, and improving quality. It can be applied to hardware and software; development, production, and manufacturing; specifications, standards, contract requirements, and other acquisition program documentation; facilities design and construction. It may be successfully introduced at any point in the life-cycle of products, systems, or procedures. VE is a technique directed toward analyzing the functions of an item or process to determine "best value," or the best relationship between worth and cost. In other words, "best value" is represented by an item or process that consistently performs the required basic function and has the lowest total cost. In this context, the application of VE in facilities construction can yield a better value when construction is approached in a manner that incorporates environmentally-sound and energy-efficient practices and materials.(http://www.whitehouse.gov/omb/rewrite/circulars/a131/a131.html)

 

Today, VE is not only recognized but also acclaimed as one of the best Value Improving Practices that management can employ. Its successful application to strategic planning, quality improvement, management studies, manufacturing, and construction has demonstrated both its versatility and its durability as a management practice.

 

Value Engineering  is a systematic and organized procedural decision-making process. It has been used in almost any kind of application. It helps people creatively generate alternatives to secure essential functions at the greatest worth as opposed to costs. This is referred to as value. It is usually applied in a team setting, but that is not a requirement. It uses a job plan, is function based, and requires a product be generated as a result of the study (success only). It is also known as Value Analysis, Value Management, Value Planning, and a host of other names. With all its names, it almost has an identity crisis.)

One of the most unique features of Value Engineering is its use of functions and a function-logic process to describe needs, purposes, and ramifications. In addition to its many other benefits, the use of function-logic removes people from many of their preconceived biases. This, and a common understanding, are obtained through the use of two word functions (active verb, measurable-noun descriptors) and placing those functions in a decision-logic diagram. This powerful combination helps remove people from the "I want" position to the basic needs involved. 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, AKA potential value opportunities. (http://www.vetoday.com/value-engineering.php

Value Engineering’s History in Construction

Value Engineering within construction was pioneered by Mr. Alphonse Dell’Isola in the 1960s. He focused on the same goals as Miles and Erlicher in developing a value analysis process for construction. The Federal Government Construction Value Engineering Law (Public Law 104-106) can be credited to Mr. Dell’Isola. During his career, he conducted more than 1,000 VE workshops for various organizations that resulted in savings of $2.5 billion (AIA,2004) .

History of Value engineering

Value Analysis was conceived in the early 1940s by Lawrence D. Miles while he was employed by General Electric, a major defense contractor which was facing the scarcity of strategic materials needed to produce their products during World War II.

Mr. Miles realized that if value and related innovation improvements could be systematically “managed,” then General Electric would have a competitive advantage in the marketplace. With that in mind, Mr. Miles accepted the challenge and devised the function analysis concept, which he integrated into an innovative process he later termed value analysis.

Mr. Miles understood that products are purchased for what they can do—either through the work they perform or the pleasing aesthetic qualities they provide.

Using this as his foundational information, he focused on understanding the function of the component being manufactured. He questioned whether the design could be improved or if a different material or concept could achieve the function.

To focus on the function itself, he used an active verb and a measurable noun in combination to characterize the benefit that a part’s function provides. He then searched for other ways or methods to achieve the benefit of that intended function. From this research, function analysis, the key foundation of value methodologies, was developed and has become a tool to help individuals and teams manage the way a concept is understood.

These specialized teams typically address project-related issues such as increased sales revenue, improved product performance, and reduced resource usage.

The U.S. Army and Navy, and other companies, soon realized the success of Larry Miles’ methods. As the application of value analysis expanded, there was also a change in context—from review of existing parts to improving conceptual designs. This was one of two factors that marked the emergence of value engineering. The other was a desire by the U.S. Navy to use the Value Analysis techniques for project improvement in the early 1950s when there was a moratorium on hiring “analysts.” Since engineering positions were available, individuals practicing this new discipline were employed as “Value Engineers.”

As the value methodology gained in popularity, a group of practitioners formed a learning society to share insights and advance their innovative capabilities. Thus, in 1959, the “Society of American Value Engineers” was incorporated in Washington, DC.

Soon, the value methodology was used to improve the value of projects in government, the private sector, and the manufacturing the construction industries and value concepts spread worldwide.

Concurrent with this growth, a number of other value improving tools, techniques, and processes emerged, many of which were complementary to and were integrated with the value concepts. In an effort to attract the developers and practitioners of these emerging methods to our membership, the name of the society was changed to “SAVE International” in 1996.  ( SAVE International , 2007 )

ABSTRACT

Market globalization has in effect led to increased competition, not just between companies , but also on a macro level between individual countries , keeping cost low with traditional cost management has been a commonly applied measure to improve competitiveness.

Value Engineering (VE) is a practice whose goal is, always, to achieve value for money. VE found its first applications in U.S. manufacturing at the end of World War II. Its introduction to construction in the early 1960s was fueled by the U.S. military and expanded throughout the U.S. government. Subsequently, its use has spread globally.

The report goes beyond merely describing the theory of VE in order to explain how the methodology can be productively used in practice . it is hoped that the practice advice contained in its chapter will assist engineers , who are involved with establishing VE activities within their organization , it also aimed at assisting all those who may become involved with VE to participate more productivity by giving them greater appreciation of the basics of VE , and how it relates to other construction activities.

By applying VE job plan on case study (1) a factory for ready made garments in New Borg El Arab Industrial Zone, VE team saved a 8.9% of total cost of the project.

And saving 4.15% of total cost by applying it on the skeleton and bricks only for case of study (2) , it is for a residential, commercial building (Cleopatra Plaza) located at Al Azarita – Alexandria.

Selecting the project at the appropriate stage of development (the timing of the study) is very important to the success of the VE study. Value can be added by performing a VE study at any time during project development