Businesses have always been working to develop techniques to ascertain that no inessential cost is reinforced into their processes, products, and services. These techniques are based on the value and functionality of the underlying product or service and are based on the concept called Value Engineering. It is considered as a structured effort aimed at distinguishing the vital functions to be performed and achieving those functions at least cost within the fixed time. Value Engineering differs from other cost reduction techniques.
‘Having a second go’ or cost correction is an expensive process and hence businesses in the present world focus on managing their cost, performance, and reliability. It is a step by step review to increase the value of the product substantially with the help of professionals working to improve the product functionality and value. Specialists are one of the important aspects of value engineering as they study and find cost-effective ways to identify the essential functions of a product or service. Thereby, increasing the value or improving the design.
Value engineering acknowledges the economic, psychological, and social cues that may decrease the value of a product or service and rarely implies the working aspects like neglect of responsibility. Poor Product value can arise due to the following reasons.
- A negative attitude toward the product or service, Failure to fulfill the required innovativeness and
- Failure to accept or seek advice in need and unwillingness to admit a lack of knowledge or education on certain aspects of project
- A proclivity to emotion-based decisions rather than fact-based
- Rigid application of SOPs without adapting to change in technology and
- Insensitivity to customer or client
- Lack of good communication and poorer human-to-human
On the basis of performance parameters, a service or a product can be divided in two ways. First are the basic performance parameters such as expiry date, performance standards
which are clearly defined and can be improved. These performance parameters can be measured on the basis of a numeric value and can be altered so as to maintain the improvement. Changes on the basis of weight, speed, frequency, volume, etc. can affect the entire product performance. Second, are the operational performance parameters which are less defined and hardly taken care of. These are parameters like reliability, component life, maintainability. The idea of value engineering is generally not to achieve the lowest cost but to offer the best value alternative between frequent opposing requirements. And value engineers maintain it by eliminating unnecessary costs from our products.
Unnecessary costs involved in product design can be eliminated by following these three critical steps:
It is the process of superseding the active designs by options that will perform the job effectively at a lower cost. Cost correction involves both time and cost and sometimes is considered expensive. The process necessitates evaluating the product design by conforming to the advice of production and design departments of unneeded outlay. The complaints or feedback from the clients are highly valued and focussed on determining the unneeded expensive functional services maintained during the product design. The idea is to ascertain an expensive group of procedures in a reasonable budget fabrication.
Cost Avoidance: Determining the perfect choice during the design stage of the product or service is both crucial and difficult. The best value solution should be achieved before the additional cost is involved in the product or service. This can be done by assisting or advising the product designers to select the right design as per the cost implications of other solutions. The assistance should also be offered to accept the best procurement and manufacturing methods. This may involve preparing and producing a regular cost data manual which includes the cost of alternative materials.
Customers should be made aware of the decisions and their implications. It can be provided by frequent programs of knowledge in order to dissect the hurdles of custom and habit. These programs are important to provide an environment so that new design is acceptable
to the audience to offer the best value solution. These programs may include workshop seminars, training manuals, training lectures, and personnel on deputation.
Value engineering is one of the most important techniques known to distinguish and eliminate unnecessary costs in product design, operations, manufacturing, construction, maintenance, and procedures. The management should assure the full commitment of resources and support for the success of the value engineering program. Value engineering is advised to be performed by multidisciplinary specialists having prior knowledge of the technique on high cost and complex projects. It should be done as early as in the planning and design phase in order to maximize the potential improvements and cost savings. Many case studies show that the earlier value engineering is performed, greater its potential savings. Though it involves a certain amount of expense, the value engineering outlay of the product can be justified by potential cost savings.
Particular design criteria should be followed by the specialists to achieve the required performance function along with keeping with the required tolerances level. Care must be taken to improve the operating and storage life of the product by including special materials and processes in the product design.
The cost of the product or service is limited to the amount remaining after deducting from the proposed selling price, the profit, and other extra charges. To maximize the profit the value engineers make sure that they offer solutions to product profitability by understanding the cost geared to specific product performance and the ratio of time over quantity. There is a very thin line between the price, performance, quantity, and general outline of the product and value engineering offers the best solution to achieve that.
A value engineering approach to identify the design materials and processes is a proven tool for increasing value and reducing the cost of a product to the manufacturers and businesses. Engineers are working incessantly to work out the plans to perform their job in various sectors such as defense, infrastructure, corporations, etc. Though this concept is very old yet it offers tremendous results and businesses should accept and implement this approach with serious consideration.