What Is Value Engineering?

Ratio of Function to Cost

In value engineering, Value = Function / Cost, where
Function = the specific task the item was designed to perform
Cost = the cost of the item

Here, the goal is to maximize the value of a product either by optimizing its function or deducting the cost.

Steps in Value Engineering

• Gather Information

Before kickstarting a project, it is important to conduct research and collect information regarding the materials, procedures, and product to analyze the data from the start till the product is manufactured and marketed. The team finalizes the future course of action in this stage.

• Think Creatively

This stage involves exploring and brainstorming different ideas and mechanisms that can be tried. It allows team members to put on their creative hats and bring new views to the table. This allows examining new approaches, leveraging technology, and taking risks to design the product in a new way. 

• Evaluate Ideas

After the ideas are presented, every idea is weighed, examining the pros and cons. When the advantages outweigh the disadvantages, then the project and solution are considered for the next phase. 

• Develop and Analyze

In the development phase, the solutions are analyzed in depth to determine their implementation and installation costs. Designs, sketches, cost estimation charts, and technical analysis are done in this phase. Several other factors, like finance, time, labour, etc., are also taken into account to arrive at a suitable model.

• Present Discoveries

Once the plan is finalized, the next step is to present the ideas before the stakeholders for feedback and approval. Usually, 3-4 ideas are pitched, giving the window to compare alternatives. Each solution is provided with advantages and disadvantages to give an overview. 

• Implement Changes

In case, the board or upper management recommends changes that benefit the company and enhance the value and the making process, the proposed changes are accepted and implemented by the value engineers.

Types of Value

In value engineering, different types of values are considered, namely:

• Use Value

The use value is the primary aspect of a product. It includes the uses of the product in fulfilling its intended purpose. The customers have to be aware of the product usage to derive maximum benefits. This way, the company can improve the sales of the product.

• Cost Value

This refers to the cost of the product or service. The company must assess and charge the optimum price to gain profits and also make the products affordable. If they are overpriced or underpriced, it will affect the balance sheet and also burn the pockets of customers.

• Esteem Value

Sometimes, the value goes beyond the appearance and benefit of the product because of the brand recognition and perception of the consumers. This can either swing negatively or positively. For example, people willingly buy Adidas shoes at a premium price because of the brand image.

• Exchange Value

Exchange value is relatively a small component and refers to the exchange value that the product can make. The products whose exchange value is high can be easily traded and are in high demand.

Limitations of Value Engineering

The drawbacks of value engineering include:

• Excessive focus on cost reduction can lead to quality compromise.
• The entire process can be time-consuming, which delays the project implementation.
• Overlooking other important factors, like customer satisfaction, maintenance costs, etc.
• Financial or time constraints can restrict exploring different methods.

What is the Role of Value Engineering?

A value engineer is responsible for enhancing the value of the project by minimizing the costs. Keeping the quality in mind, they design methods or find ways to achieve this goal. It often involves exploring new approaches, finding substitutes or alternatives, brainstorming several ideas, and comparing their pros and cons for further implementation of the project. They usually work in teams, requiring strong collaboration and communication skills.

When Should Value Engineering Take Place?

• Value Engineering during Project Planning

During project planning, value engineering is applied to recognize alternatives or substitutes, think about different processes, reduce unnecessary costs, improve efficiency, and allocate resources.

• Value Engineering during the Design Phase

Value engineering during the design phase is used to optimize the functionality, improve the quality, and reduce the time of the project since the planning is already done. The value engineer draws sketches, refines designs, and analyses the future implementation.

• Value Engineering during the Construction Phase

Usually, value engineering is effective during the planning and design phases. But sometimes, in the construction phase, VE is applied to implement cost-effective construction methods. The VE makes sure that the project is completed within the specified time and budget allocation.

How to Become a Value Engineer?

To become a value engineer,

• Complete a bachelor’s program in engineering, finance, or related fields.
• Gain 3-4 years of experience in areas like design, analysis, architecture, etc.
• Develop necessary technical and interpersonal skills like communication, teamwork, leadership, etc.
• After a good amount of exposure to on-site training, you can start working independently.

Value Engineering Career Paths

Here is a list of career paths for value engineers:

With experience, engineers can elevate to senior positions in management or quality control roles.

Conclusion 

Value engineering is a way to optimize the functionality of the project coupled with opting for economical processes to deliver a product or service. By implementing value engineering, the companies assess and make profitable yet affordable products. Value engineers research, bring creative ideas, examine benefits, and design cost-friendly solutions. Therefore, it is the best way to maintain the same quality with reduced costs.
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