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VALUE ENGINEERING:
Value engineering is an approach to productivity improvement that attempts
to increase the value obtained by a customer of a product by offering the same
level of functionality at a lower cost.
Value engineering is sometimes used to apply to this process of cost reduction
prior to manufacture, while "value analysis" applies the process to
products currently being manufactured.
Both attempt to eliminate costs that do not contribute to the value and performance
of the product (or service, but the approach is more common in manufacturing).
VE originated in General Electric (under Lawrence Miles) during the Second
World War. They were seeking ways to make the most efficient use of war-limited
funds and raw materials. They found in most cases alternative materials and
processes performed at least as well and often better in terms of both specification
and cost. This led them to formalise the approach and devise a team-oriented
technique that determines the 'value' of each part and each product.
Value engineering, thus, critically examines the contribution made to product
value by each feature of a design. It then looks to deliver the same contribution
at lower cost.
Different types of value are recognised by the approach :
Use value relates to the attributes of a product which enable it to perform
its function.
Cost value is the total cost of producing the product.
Esteem value is the additional premium price which a product can attract because
of its intrinsic attractiveness to purchasers.
Exchange value is the sum of the attributes which enable the product to be
exchanged or sold.
Although the relative magnitude of these different types of value will vary
between products, and perhaps over the life of a product, VE attempts to identify
the contribution of each feature to each type of value through systematic analysis
and structured creativity enhancing techniques.
Value engineering programs are best delivered by multi-skilled teams consisting
of designers, purchasing specialists, operations personnel, and financial analysts.
Pareto analysis is often used to prioritise those parts of the total design
that are most worthy of attention. These are then subject to rigorous scrutiny.
The team analyses the function and cost of those elements and tries to find
any similar components that could do the same job at lower cost.
Common results are a reduction in the number of components, the use of cheaper
materials, or a simplification of the process.
See Lawrence Miles Value Engineering Reference Center
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