The value is a function of cost. Therefore, it can be increased either by improving the function or reducing cost. The maximum value is achieved when the function performs reliably at the lowest cost. A key principle of value engineering that basic functions be preserved and not reduced as a result of improvements in value. Thus Value Engineering (VE) is a systematic method to improve the "value" of goods, products or services through an examination of the function.
Value engineering concepts can be applied to business as well as technical situations and consequently lead management to informed, result oriented decisions. "Value engineering has to be treated as future investment for gaining technology leadership in the industry".
Value engineering is a fantastic process that triggers a complete overhaul of the system alternate design, alternate material, design verification for strength, durability and safety, manufacturing process and testing.
What is Value Engineering?
Value Engineering is an organized effort directed at analyzing the functions of equipment, facilities, systems, methods, procedures, paperwork, services, and supplies for the purpose of achieving the required function(s) at the lowest total cost of effective ownership, consistent with requirements for performance and essential criteria, such as quality, aesthetics, reliability, maintainability, safety, etc.
In other words, value engineering is a systematic approach aimed at achieving the desired functions of a product, a process, a system or a service at minimum overall cost, without in any way affecting the quality, reliability, performance and safety. It is neither a glorified suggestion program nor a means of cheapening an item, process, or procedure. It does, however, seek to eliminate unnecessary costs.
Time to Consider Value Engineering Proposal
The success of each Value engineering program depends mainly on the quality of the team ie., their qualification experience and relationship with the management. It is effective and influential if it is performed early in the development of the project schedule.
Main Points of Value Engineering
Following points are to be applied when an activity or function decide to do the value engineering:
- Value Engineering determines the basic function of an item.
- Value Engineering evaluating high cost areas and systematically reducing those costs.
- Value Engineering analyzes a problem area and developing alternative ways of resolving the problem.
- Value Engineering selects the best possible alternative to perform the basic function at the lowest cost.
- Value Engineering presents and promotes a proposal.
- Value Engineering also simplifies, resulting in increased reliability and ease of maintenance.
- Value Engineering extends financial, manpower, and material resources.
Value Engineering By Project Team (Owner, Consultant and Contractor)
An experienced Value Engineering Consultant make thorough study of the proposed project design then suggest alternative designs and cost variation. If such variation expects in a project, the scope of work of the tender document should include value engineering proposals from consultants and contractors to the proposed project. In this way contractors can also propose different suggestions to client for either reducing the cost or increase the value of the project by implementing their way.
Value Engineering By Project Contractor
Throughout project lifecycle, value engineering should be a formal activity, more importantly contractor can propose important variations that leads cost savings wherein functionality remain same or upgraded. If the proposal is accepted, the over all cost savings to be shared both owner and contractor. This has to be included in the contract agreement so that contractor may encourage to develop, prepare and submit value engineering change proposals.