“Value Methodology Standard” by SAVE International
"The Value Society", May 1997, Revised May 1998 & Oct. 1998.
Edited some by M. Pilat
for CEE 440 Course.
Oct. 9, 2003
Foreword
I. Value Methodology Applicability
II. Value Study Team
III. Value Methodology Job Plan
A. Pre-Study
B. Value
Study
C. Post-Study
IV. Value Professional Profile
V. Certified Value Specialist
VI. Body of Knowledge
VII. Typical Duties of Value Program Unit
VIII.
Glossary
IX Appendix
Foreword
Since 1947, the methods,
technology, and application of Value Methodology (VM) has greatly increased and
expanded. Value Methodology includes the
processes known as Value Analysis, Value Engineering, and Value
Management. It is sometimes referred to
as Value Control, Value Improvement, or Value Assurance. This Standard defines common terminology,
offers a standard Job Plan - while allowing the great diversity of individual
practices that have been successfully developed - and is offered to reduce
confusion to those being introduced to Value Methodology. The Standard includes this approved Job Plan,
the Body of Knowledge as developed by the SAVE International professional
Certification Board, typical profiles of the Value Specialist and Value
Manager, duties of a Value Organization, a glossary, and an appendix of
references.
I. Value
Methodology Applicability
A. The Value Methodology can be applied wherever
cost and/or performance is desired. That
improvement can be measured in terms of monetary aspects and/or other critical
factors such as productivity, quality, time, energy, environmental impact, and
durability. Value Methodology can be beneficially applied to virtually all areas of
human endeavor.
B. The Value Methodology is applicable to
hardware, building or other construction projects, and to "soft"
areas such as manufacturing and construction processes, health care, and environmental services, programming, management
systems, and organization structure. The
pre-study efforts for these "soft" types of projects utilizes
standard industrial engineering techniques such as flow charting, yield
analysis, and value added task analysis to gather essential data.
C. For civil, commercial, and military
engineering works such as buildings, highways, factory construction, and
water/sewage treatment plants, which tend to be one time applications, Value
Methodology is applied on a project to project basis. Because these are one-time capital projects,
Value Methodology must be applied early in the design cycle as feasible to
achieve maximum benefits. Changes or
redirection of design can be accomplished without extensive redesign, large
implementation costs,, and schedule impacts. Typically for large construction projects,
specific value studies are conducted during the schematic stage and then again
at the design development (up to 45%) stage.
Additional value studies may be conducted during the construction or
build phase.
D. For large or unique products and systems such
as military electronics or specially designed capital equipment, Value
Methodology is applied during the design cycle to assure meeting the goals and
objectives. Typically a formalized value
study is performed during the preliminary design approval but before release to
the build/manufacture cycle. Value
Methodology may also be applied during the build/manufacture cycle to assure that
the latest materials and technology are utilized.
E. Value Methodology can also be applied during
the planning stages and for project/program management control by developing
function models with assigned cost and performance standards. If specific functions show trends toward
beyond control limits, value studies are performed to assure the function's
performance remains within the control limits.
II.
Value Study Team
A key to the successful
application of a value study is the skills and experience of those applying the
methodology. While the methodology can,
and often is, used by individuals, for significant projects it has been proven
that a well organized team obtains the best value for effort performed.
The Team Leader performs the
key role and is a significant factor in the degree of success. The Team Leader must have thorough training
(education) in both the Value Methodology and team facilitation. The requirements include strong leadership,
communication skills, and experience working with users/clients.
The size and composition of
the team is project dependent. The
members should represent a diverse background and experience that incorporates
all the knowledge required to fully cover the issues and objectives of the
project. Typically, these include cost,
estimating, procurement/materials, and those technical disciplines unique to
the project such as design, manufacturing, construction, environmental, and
marketing.
It is most advantageous for
the team leader, or a team member, to implement the approved value proposals
(value engineering report) at study completion.
Decisions based primarily
upon one technical discipline will often have significant effects on other
disciplines within the project. In
addition to being technically competent, team member selection should include
individuals who represent the range of disciplines and end users the study
results will impact. They must be
individuals who generate positive attitudes and are willing to investigate new
ideas and then rationally evaluate them.
III.
Value Methodology Job Plan
The Value Methodology uses a
systematic Job Plan. The Job Plan
outlines the specific steps to effectively analyze a product or service in
order to develop the maximum number of alternatives to achieve a product's or
service's required functions. Adhererences to the Job Plan will better assure maximum
benefits while offering greater flexibility.
The Value Methodology Plan covers 3 major periods of work activity. The Pre-Study, the Value
Study, and the Post-Study. All
phases and steps are performed sequentially.
As a value study progresses, new data and information may cause the
study team to return to earlier phases or steps within a phase on an iterative
basis. Conversely, phases or steps
within phases are not skipped.
A. Prestudy
The Value Study
reparation tasks involve 6 areas:
Collecting/defining User/Customer wants and needs, gathering a complete
data file of the project, determining evaluation factors, scoping
the specific study, building appropriate models, and determining the team
composition.
1. Collect
User/Customer Attitudes
The User/Customer attitudes are compiled via an
in-house focus group and/or external market surveys.
2 Gather a Complete
Data File
There are both Primary and
Secondary information sources. Primary
sources include people and documentation.
People sources include user, marketing, original designer, architect,
cost estimating group, maintenance service, builders (manufacturing,
constructors, or system designers), and consultants. Documentation sources include drawings,
project specifications, bid documents, and project plans. Secondary sources
include suppliers of similar products, literature such as engineering and
design standards, regulations, test results, failure reports, trade journals,
similar projects, and site visit by value study team.
3. Determine Evaluation
Factors
The team determines what will
be the criteria for evaluation of ideas and the relative importance of each criteria to final recommendations and decisions for
change. These criteria and the
importance are discussed with the user/customer and management and concurrence
obtained.
4. Scope the Study
The team develops the scope
statement for the specific value study.
This statement defines the limits of the study based on the
data-gathering tasks. The limits are the
starting point and the completion point of the study. Just as important, the scope statement
defines what is not included in the study.
The scope statement must be verified by the study sponsor (who also usually pays the costs of the
study).
5. Build Data Models
Models such
as Cost, Time, Energy, Flow Charts, and Distribution as appropriate for each
study.
6. Determine Value
Study Team Composition
The Value Study Team Leader
confirms the actual study schedule, location, and need for any support
personnel. The study team composition is
reviewed to assure all necessary customer, technical,
and management areas are represented.
The Team Leader assigns data gathering tasks to team members so all
pertinent data will be available for the study.
B. Value Study
The value study is where the primary Value Methodology
is applied. The effort is composed of 6
phases: Information, Function Analysis,
Creativity, Evaluation, Development, and Presentation.
1. Information
Phase
Complete the value study data package
started during the Pre-Study work. The
value study team agrees as to the most appropriate targets for improvement such
as value, cost, performance, and schedule factors. These targets are reviewed with the
appropriate management, such as project manager, value study sponsor, and
designer to obtain agreement and concurrence.
The study scope statement is reviewed for any adjustments due to
additional information gathered during this Information Phase.
2. Function
Analysis Phase
The most beneficial areas for continuing
study are developed in this phase.
Function definition and analysis is the heart of Value Methodology. The team performs the following steps:
a. Identify Functions and define both work and
sell functions of the product, project, or process under the value study using
active verbs and measurable nouns. This
is often referred to as "Random Function Definition"
b. Classify Functions as basic or secondary
c. Develop Function Models
d. Assign cost and/or other measurement
criteria to functions.
e. Identify Function Worth by assigning the
previously established user/customer attitudes to the functions.
f. Cost Functions. Compare cost to worth of functions to
establish the best opportunities for improvement.
g. Establish Value Index. Assess functions for performance/schedule
considerations.
h. Select functions for Value Study
i. Redefine study
scope
3.
Creative Phase
Create Quantity (numerous) of Ideas by
Function. During the Creative Phase (or
Speculation Phase), ideas for performing each function are developed. This is a creative effort, totally unconstrained
by habit, tradition, negative attitudes, assumed restrictions, and specific
criteria. No judgment as to how good the
idea is occurs during this activity. The
quality of each "Creative Phase" idea will be developed in the next
phase (Evaluation Phase).
4.
Evaluation Phase
Rank and rate Alternative Ideas. Select Ideas for Development
The ideas are sorted and rated using as to
how well they meet the criteria or evaluation factors developed during the
Pre-Study. The feasible ideas which will
provide specific value improvements are selected.
The
evaluation process typically involves:
a)
Group similar ideas by categories such as electrical, mechanical,
structural, materials, processes, etc.
b)
Have one study team member agree to "champion" each idea
during further discussions and evaluations.
If not team member volunteers to do this, this idea is deleted.
c). List the advantages and disadvantages
of each idea.
d) Rank the ideas within each category
according to the prioritized evaluation criteria using techniques as indexing,
numerical evaluation, and team consensus.
If none of the ideas appear to satisfy the
criteria or evaluation factors, the study team returns to the Creative Phase to
generate new ideas.
5. Development Phase
The best alternatives for improving value
are selected and prepared. The steps
include:
a)
Develop a benefit analysis and implementation requirements including
estimated initial costs, life cycle costs, and implementation costs taking into
account risk and uncertainty.
b) conduct
performance benefit analysis
c) Compile Technical Data Package for each
proposed alternative
written
descriptions of original design and proposed alternatives
sketches of
original design and proposed alternatives
cost and
performance data clearly showing the differences between the original design
and proposed alternatives
any
technical backup data such as information sources, calculations, and literature
impact of
changes on schedule
d)
Create Implementation Plan.
Prepare an implementation plan including
proposed schedule, team assignments, & management.
e)
Prepare Final Proposals
Complete recommendations including any
unique conditions to the project under study such as emerging technology,
political concerns, impact on other ongoing projects, marketing plans, etc.
6. Presentation Phase
Present Oral Report of Findings Prepare Written Report
C. Post
Study
Complete Changes Implement
Changes Monitor Status
The Post-Study assures implementation of the approved value
study change recommendations.
IV. Value
Professional Profile
A. Value Program
Manager
1. Education
4 year college degree or 5 years relevant
experience
Module I Value Methodology Workshop &
Module II Advanced Seminar
2. Experience
5 years in professional area, 2 years in Value
Methodology
B. Value Practitioner
1. Education
4 year college degree or 5 years relevant
experience
Module I Value Methodology Workshop
2. 3 years in
specialized professional area
V. Certified
Value Specialist
SAVE International maintains
a professional certification program, the function of which is to recognize
individuals who use the value methodology in their principal career and who
have met the approved education and experience standards. Those standards include:
Completion of Module I Workshop and Module
II Advanced Seminar training courses.
Minimum of 2 years full time work experience in the Value
Methodology field
Demonstration of required performance in
value studies.
Demonstration of continued professional
growth via learning, teaching, contributions to VM profession.
Submission of an original paper concerning any value related
subject
Successful completion of Value Theory and
Practice Examinations.
To assist certification
candidates, the Certification Board has issued a Body of Knowledge listing
topical areas with which any qualified Value Specialist should be familiar.
VII. Typical
Duties of Value Program Unit (engineering
consulting firm, value engineering company, etc.)
A. Maintain up-to-date
knowledge of Value Methodology "State of the Art".
B. Select specific
projects for Value Methodology study and get them approved by
management/customer and secure team members for the study.
C. Lead and coordinate
Value Methodology studies.
D. Assist management is
setting annual goals.
E. Plan and conduct
Value Methodology training courses to assure a cadre of basic trained personnel
for studies.
F. Contribute to the
Value Methodology profession's growth through participation in technical
conferences, lecturing at colleges, etc.
VIII. Glossary of Terms
Cost - The
expenditure necessary to produce a product, service, process, or structure.
Cost, Design to
- A procedure which establishes an estimated cost objective for each project,, then designs to that cost objective to produce a reliable
product or service.
Cost, Life Cycle - The sum or all acquisition, production, operation, maintenance, use,
and disposal costs for a product or project over a specified time period.
Cost Model -
A diagramming technique used to illustrate the total cost of families of
systems or parts within a total complex
system or structure.
Cost/Worth ratio - The ration used to identify the maximum opportunity for value
improvement.
Function -
The natural or characteristic action performed by a product or service.
Function, Basic
- The primary purpose or most important action performed by a product or
service. The basic function must always
exist, although methods or designs to achieve it may vary.
Function, Secondary - A function that supports the basic function and results from the
specific design approach to achieve the basic function. As methods or design approaches to achieve
the basic function are changed,
secondary functions may also change.
There are 4 kinds of secondary functions:
1. Required - A
secondary function that is essential to support the performance of the basic
function under the current design approach.
2. Aesthetic- A
secondary function describing esteem value.
3. Unwanted - A
negative function caused by the method used to achieve the basic function such
as the light bulb generated heat (and this heat may require cooling of the
living or work space).
4. Sell - A function
that provides primary esteem value. For
marketing value studies, this may be the basic function.
Function Models
A graphical
depiction of the relationships of the function within a project. There are 2
commonly used styles:
1.
Hierarchy - A vertical "tree" chart of functions. Recent practice has been to include within
one branch user oriented function such as assure convenience, assure
dependability, assure safety, and attract user.
Some value practitioners
prefer to layout this
model horizontally and refer to it as "FAST".
2.
Function Analysis System Techniques (FAST) - A horizontal chart depicting
functions within a project with the following rules.
a. The sequence of
functions on the critical path proceeding from left to right answer the
questions "How is the function to its immediate left performed?"
b.
The sequence of function on the critical path proceeding from
right to left answer the question: "Why is the next function performed?"
c.
Functions occurring at the same time or caused by functions on
the critical path appear vertically below the critical path function.
d.
The basic function of the study is always farthest to the left of
the diagram of the functions within the scope of the study.
e.
Two other functions are classified:
1) Highest order - the reason or purpose that the
basic function exists. It answers the
"why" question of
the basic function, and is depicted immediately outside the study
scope to the left.
2) Lowest order - The function that is required to
initiate the project and is depicted farthest to the right, outside the study
scope. For example, if the value study
concerns an electrical device, the "supply power" function at the
electrical connection would be the lowest order function.
Job Plan - A
structural discipline to carry out a value study.
Performance
- The physical characteristics required to meet the users
needs. Factors such as reliability, maintainability, quality, and appearance are
typical.
Price - A
fixed sum of money expended by the user/customer to purchase the product under
study.
Product -
For the purposes of value studies, a product is the subject of this study. It may be a physical product such as a
manufactured item, or a structure, system, procedure, or an organization.
Scope - The
portion of the overall project that is selected for the value study. The analysis accepts everything within the defined scope in order to focus
attention on the functions within those limits.
Value - The
lowest cost to reliably provide the required functions at the desired time and
place with the essential quality and other performance factors to meet user
requirements.
Value Monetary -
There are 4 classes of monetary value.
1. Use Value The monetary
measure of the functional properties of the product or service which reliably accomplish
a user's needs.
2. Esteem Value The monetary measure of the properties of a
product or service which contribute to its desirability
or salability. Commonly answers the
"How much do I want something?" question.
3. Cost Value - The
monetary sum of the labor, material, burden, and other elements of cost
required to produce a product or service.
4. Exchange Value - The
monetary sum at which a product or service can be freely traded in the marketplace.
Value Methodology - The systematic application of recognized techniques which identify
the functions of the product or service,
establish the worth of those functions, and provide the necessary functions to
meet the required performance at the lowest overall cost.
Value Methodology Proposal - A proposal by the value study team to its management
to provide one or more functions for financial and/or performance improvements
and is within the current terms and conditions of the contract.
Value Study
- The application of the value methodology using the value methodology Job
Plan, and people previously trained (educated) in Value Methodology workshops.
Value Methodology Training - There are 2 levels of SAVE International approved
training specifically to provide the minimum knowledge of Value Methodology
practice. It is expected that Value
Methodology professionals, as in all professional fields, will continue to keep
themselves current through seminars, conferences, and associated educational
opportunities.
1. Value Methodology
Workshop - Module I program. The objective is to
provide Value Methodology education to the degree that participants will be
able to successfully participate in future value studies under the guidance of
a qualified Value Specialist with minimum additional training.
2. Value Methodology
Advanced Seminar -
Module II program. The
objective of this seminar is to extend the knowledge base of those wishing to
become professionals in the value methodology field. Topics include both advanced methodology and
areas of management. The seminar requires
a minimum of 24 class hours. Module I is
a prerequisite.
Value Analyst
- Synonymous with Value Specialist
Value Engineer
- Synonymous with Value Specialist
Value Engineering Change Proposal (VECP) - A formal proposal submitted to customer/user which
requires their approval before implementing the Value Analysis change.
Value Specialist - One who applies the value methodology to study and search for value improvement.
Worth - The
lowest overall cost to perform a function without regard to criteria or codes.
IX Appendix
Reference Materials
1. Publications Catalog, SAVE International
2. Annual Conference Proceedings, SAVE
International
3. "Standard Practices for Performing Value
Analysis of Buildings and Building Systems", American Society for Testing
and Materials, Publication E-1699-95
4. Value Methodology Certification Manuals, SAVE
International
Certification Manual
Recertification Manual
Seminar Workshop Manual
Certification Examination Study Guide
5. Lawrence D. Miles Value Foundation Internet
Web Site http://www.valuefoundation.org