VALUE ENGINEERING

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AKHAND ANISHAVANEESH GAJENDRA HIMANSHU

Background• Lawrence Miles is credited with the evolution of the

concept of Value Engineering

• G. E. C wished to expand its production of turbo supercharger for B24 bombers from 50 to 1000 per week.

•Lawrence Miles is credited with the evolution of the concept of Value Engineering

• G. E. C wished to expand its production of turbo supercharger for B24 bombers from 50 to 1000 per week.

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What is value? VALUE = What we get out of something

What we put into it

VALUE = Quality, reliability, appeal, etc = Benefits

Cost, time, mass, energy, etc. Resources

VALUE = Worth = Performance

Cost Cost

Delivery of necessary project functions while achieving best balance between project performance and project costs.

To Increase Value

VALUE = What we get out of something

What we put into it

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REDUCE INCREASE MAINTAIN

What is value?(contd.)

Value Engineering Definition

Value Engineering can be defined as :

an organized approach to the identification and elimination of unnecessary cost.

Unnecessary cost is Cost which provides neither use, nor life, nor quality, nor appearance, nor customer features.

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Generalized Procedure for VE

Information Phase

Analysis Phase

Decision Phase

Speculation Phase

Evaluation Phase

What is it?What does it do?What does it cost? How else can the job

be done?At what cost?Is the change better?

How much better?Why?

Review with depts and suppliersSelect best alternativeGet approvalPrepare specifications

Audit effectivenessUse experienceProvide feedback

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CREATIVE PHASE

Create quantity of ideas by function

What else can perform the function?

Where else can the function be performed?

How else can the function be performed?

Phase III: Creativity/Creation

• Objective is to find a better way to do the main function.

• Finding a different material, or concept, or process, or design idea, that realizes the main function .

Brainstorming

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Objective• State the main function

clearly and shortly on paper or a blackboard

• The physical object or the specific process is purposively not mentioned

• Secondary or aggregate functions are not stated.

Moderate• Leader of the group

says "We begin now" and when the ideas do not flow so fast anymore (about 15 to 20 min.) The leader says "That's all".

• Allocate a specific time limit.

Idea generation• Members of the group

'think loud' about any potential solution to the problem.

• Should only let their imagination run wild and state ideas

Brainstorming (contd.)

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Stay focussed• It is very important that they do not

analyze their own thoughts or those of others.

• Should not criticize or speak with others

Record ideas• Moderator registers all ideas on paper

or a blackboard.• Any doubt what was meant by an

idea, the leader clarifies the idea with the help of members.

• Moderator does not analyze or discard any idea.

PHASE IV- ANALYSIS PHASE

The Analysis Phase selects and refines the best ideas from among all the ideas

Unlike Creative phase, here all the options are critically assessed

There are mainly 5 activities involved in the Analysis Phase:

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1- Elimination

Elimination of ideas that are not feasible, too hard, not promising or do not perform the basic function.

This can be done by classifying the ideas into three categoriesYes: Feasible ideas having relatively high success probabilityMaybe: Ideas which show potential but need additional

refinementNo: Ideas having little or no potential

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At this step eliminate only the NO category ideas.

2- Grouping

The remaining ideas are grouped into some theme related categories.

Refining of some ideas is also done if required.

Two or three ideas can also be merged with each other to develop a more innovative alternative.

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Each individual idea is allotted one Idea Champion.

3- Comparison

The advantages and disadvantages of each idea are listed, like time to implement, likelihood of success, meeting the requirements.

Cost- function analysis is also done to check the cost effectiveness of the ideas.

Alternatives for the disadvantages are given.

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Elimination of ideas is done on basis of disadvantages.

4- Ranking

The advantages and disadvantages listed above are used to rank the ideas.

No idea should be rejected and all should be evaluated objectively.

Special stress is laid on the higher ranked ideas to reduce their disadvantages and enhance advantages.

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Simplifies the selection of ideas for further development.

5- Selection

A cut-off point is determined based on the ranking done above.

If there is no such distinction, then the ideas are developed further.

Retaining at least one idea from each group is generally preferred.

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Ideas with greatest potential are selected for development.

PHASE V- Development Phase

It is used to refine the best ideas to be presented for final decision.

Detailed technical analysis is done for all the ideas to eliminate the weaker ones.

There are mainly 3 activities involved in the Development Phase:

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1- Life Cycle Cost Analysis

Ranks all remaining ideas on basis of their life cycle and cost reduction potential.

Cost estimates must be complete and accurate and should all old and new costs.

New tools or fixturesAdditional materialsChange in plant layoutRetraining of personalFeasibility tests

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Cost included should include all minor costs also.

2- Deciding the final ideas

Ranks all remaining ideas on basis of their life cycle and cost reduction potential.

Cost estimates must be complete and accurate and should all old and new costs.

New tools or fixturesAdditional materialsChange in plant layoutRetraining of personalFeasibility tests

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Cost included should include all minor costs also.

3- Developing action plans

The implementation plan must includeSchedule of the implementation stepsPersons responsibleResources requiredApproval process

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Cost included should include all minor costs also.

The teams must anticipate problems related to implementation and propose solutions

Testing and evaluation plans should also be made if needed.

VI Presentation Phase

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• To obtain a commitment ,to follow a course of action and initiate an alternative

Purpose

The VE team makes a presentation to decision maker

First step in approval process

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Components of presentation

• Objective and scope • Before and after

condition on each alternative

• Cost benefits ,advantage-disadvantage analysis and impact on each alternative

• Demonstrate validity of data source

• Suggest action plan and implementation schedule

Points to be considered

• Consider reviewer needs• Technical Review • Administrative

Review • Address Risk• Related benefits to

organizational objectives

• Show collateral benefits of the investment

VII Implementation PhaseThe purpose of implementation phase is to obtain

final approval of the proposal and facilities it implementation

Change in the existing process is being prone to challenges due to individual differences and human interpretation

This lead to active support to resistance To improve the process ,involvement of people

participating in change in the decision making process is recommended *

There are five activities involved in implementation phase

* R. A Fraser .”The value Manager as Change agent “ in SAVE International Annual 24 th Conference Proceedings

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1- Prepare a Written Report Oral presentation is helpful for the person making decision Written report normally demands and receives a written replyLike other report ,this final report should have

Satisfy question that decision maker likely to ask Provide assurance that approval would benefit the

organization Include sufficient documentation to warrant a favourable

decision with reasonable risk factor (both technical and economical )

Show how performance is not adversely affected

The final report summarizes the recommendation and action plan

It should be sent to all stake holder

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2- Enhance the probability of approval

Periodic updates to top management

Discuss the changes with decision maker or advisor before and after final submission

VE team member should act as liaison between decision maker and other stake holder

Once the decision is made ,some organization convene an implementation meeting with all stakeholder

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The implementation should monitored systematically To ensure that implementation is achieved

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4-Expedite Implementation

3-Monitor Progress

VE team should provide assistance ,clear up misconceptions

Resolve problem that may develop in the implementation process

When possible prepare draft for revise hand book ,the specification etc

5- Follow UpObtain copies of all completed implementation

actions Compare actual result with original expectation Submit cost and other benefit report to

management Submit technical and cross-feed reports to

management Conduct a lesson learned analysis of study Publish accomplishment Initiate recommendation for potential future VE

studies on ideas evolving from the study just completed

Reward and recognition

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Thank You