Value Engineering Definition

The US Department of Energy (DOE) has a good value engineering definition. It's comprehensive, yet broad enough to suggest how value engineering (VE) concepts can be applied to business as well as technical situations and, consequently, lead management to informed, results-oriented decisions.

Essence of Value Engineering

According to the DOE, value engineering is the systematic application of recognized techniques by a multi-disciplined team to:

• identify the function of a product or service,
• establish a worth for that function,
• generate alternatives through the use of creative thinking, and
• provide the needed functions to accomplish the original purpose of the project at the lowest life-cycle cost without sacrificing safety, necessary quality, and/or environmental attributes of the project.

VE Is Comprehensive

The DOE's value engineering definition further states that VE studies do all of the following:

• use an independent technically diverse team,
• follow a systematic job plan,
• identify and evaluate function, cost and worth,
• develop new and unusual alternatives for required functions,
• determine the best and lowest life-cycle cost alternatives,
• develop fully supported recommendations, and
• report to management within one week.

VE Produces Results

Within the DOE's value engineering definition, projects that have already experienced cost, schedule, or scope problems benefit from VE analysis. But the greatest potential for improvement is in technically and organizationally complex or unusually constrained projects in preliminary design, at 20-35% completion.

VE at this point produces maximum benefit because recommendations can be implemented without delaying progress or causing significant rework of completed designs.

While the average cost improvement from VE is 6%, cost reduction is not always the most significant benefit. Schedule reductions, environmental requirement modification, and operational procedures can all be improved through the functional cost evaluation used in all VE studies.

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