Engineering Focus : Value Engineering

An Alternative to Cost Cutting

Introduction

Value engineering is the structured application of proven techniques at various design phases with the primary aim of cost avoidance, without sacrificing scope and quality. The principle involves evaluating the function of the process and/or equipment and focusing on poor value items/functions. This approach requires extensive team interaction and creativity.

What is VALUE?

Value is the ratio of functionality to cost. The function is the specific task required to satisfy a customer need and the cost is the resource consumed in achieving the function.

Applications

• Used on new plants/revamps:
  clarifies scope
  encourages focus on poor value
  encourages alternatives
  basis for cost reduction

• Used on existing plants:
  highlights poor value operations
  encourages alternative operations
  compares costs of operation with benefits

Structured Steps for Value Engineering

The following steps are required to build and develop the value engineering exercise:

Information gathering
Function analysis
Creative phase
Evaluation
Development
Implementation

Summary

The main differences between value engineering and cost cutting are summarised as follows:

	Value Engineering	Cost Cutting
It is	Function based	Equipment/material based
Focus	Poor value functions	Big cost items
Results	Increased value	Scope reduction
Optimises	Overall design	Local design
Clarifies	Client requirements	Nothing

Value Engineering is a technique that is used to identify poor value functions and identify ideas for lower cost, higher value alternatives. It allows the creative generation of solutions to specific functionality problems, without reducing the scope of the process.

A case study from AVEC – adding value through innovation