Showing papers on "Value engineering published in 1992"

Value Engineering: A Blueprint

Abstract: The implementation of value engineering results in "more for less, " and it is fast becoming the favored method of planners and engineers to design parts, equipment, and products in a way that will provide the lowest cost without sacrificing reliability. In Value Engineering: A Blueprint, James Brown uses his vast experience to fully explain every aspect of the subject from its history to application. It takes the novice or experienced engineer through every phase of the process, step by step, and even explains how to write a VE report. Value engineering is so critical that Armed Services Procurement Regulations specify that all contracts over a stated dollar value must include either a VE program or incentive clause.

The Role of Purchasing in Cost Savings Analysis

Abstract: The Role of Purchasing in Cost Savings Analysis The current recession has stimulated many firms' desire to contain or reduce costs. This article discusses a study that explored the role of purchasing in analyzing cost savings projects. The author argues that it is important for purchasing to be involved in purchasing cost savings projects. Such projects may be strategic in nature, and they may affect purchasing's decision-making process and its supplier relationships. Results of the study indicate that most purchasing departments are involved in cost savings projects, and believe that they should be involved in such projects. The purchasing function also expects to play a greater role in cost reduction projects of all types in the future. To support growing involvement in such projects, the author concludes that purchasing professionals must educate themselves to a greater extent in the techniques used to analyze cost savings projects. Further, the purchasing function must assume a more aggressive, proactive role in becoming involved in purchasing cost savings projects, educating top management, and publicizing the results of such projects. BACKGROUND Most purchasing professionals are acutely aware of the large portion of the organization's resources used to purchase materials and services for operations. One recent estimate indicates that in the manufacturing sector purchased production materials alone account for approximately 56 percent of the average firm's sales dollar.[1] The value of purchased items is by far the greatest single cost category for most manufacturing firms. Until recent years, however, the potential contribution of the purchasing function to the profitability of a firm has received relatively little attention. Top management has focused on controlling labor costs, selling costs, and administrative expenses, while treating the cost of purchased goods and services as a largely uncontrollable item. As a result, efforts of individuals in the purchasing function who focused on improving the efficiency and effectiveness of purchasing frequently went unrewarded. The function itself often received only limited recognition and respect within the firm. In the late 1970s and early 1980s, an increased focus on quality by many firms increased the visibility and involvement of the purchasing function in key decisions. Top management began to recognize the importance of the quality of purchased inputs in producing high quality end-products. Thus, the purchasing function proceeded to concentrate more heavily on quality. Even though higher quality inputs may have had a higher purchase price, most companies were not concerned. Firms felt that "quality was free."[2] The higher purchase price they thought would be more than offset by savings resulting from reduced rejects, rework, returns, and so on, reducing the total product cost. With the recession in the early 1980s, many firms also began to focus on cutting costs. Demand was down, profit margins were being squeezed by intense competition, and inventory levels and interest rates were up. Firms began to question the high costs of quality. Enlightened firms began to further scrutinize the functionality of parts. Quality was important, but only to the extent that it served an important function. Thus, though not a new concept, value analysis or value engineering reemerged. Firms wanted a way to simultaneously improve quality and lower costs. OVERVIEW OF THE RESEARCH With the growing recognition and acceptance of value analysis, the purchasing function has an opportunity to achieve a more visible role in managing a firm's cost and profitability. The purpose of this research is to understand the role that purchasing plays in analyzing and justifying cost savings projects for various types of purchases. The study addresses the following questions: 1. Why should the purchasing function be interested and involved in justifying cost savings associated with purchased goods? …

Quality Value Banking: Effective Management Systems That Increase Earnings, Lower Costs, and Provide Competitive Customer Service

Abstract: The foundation of quality value banking the banker's world has changed quality improvement is the answer the quality value engineering approach getting organized how to implement quality value engineering value creation dialogues the Malcolm Baldridge National Quality Award.

An investigative study of value engineering in the United States of America and its relationship to United Kingdom cost control procedures

Abstract: The aim of this thesis is to make an investigative study of value engineering (VE) in the United States. The purpose is to establish if current United Kingdom cost control procedures could benefit from value engineering. The study examined the system of value engineering that exists in the US, along with the design procedures within which it prevails. The examination was based on a survey, analysis of fifty-five completed VE studies and attendance at four VE workshops. A comparison of VE practice in the US was made with UK procedures to establish whether VE is supplementary to UK cost control. Any supplementary components were analysed for effective integration into UK systems. This analysis was based on examination of existing UK cost control, coupled with the opinions, obtained by interview, of twenty British professionals with VE experience either in the UK or USA. The study produced the following conclusions, 1. Value engineering originally developed in manufacturing as a broad philosophy based on the technique of function analysis. Adapting value engineering for the construction industry in the USA distorted the technique of function analysis from its original principles. 2. Despite this, value engineering in the United States is effective in reducing construction cost by approximately 10%. However, this saving cannot be attributed to function analysis and is the result of other, broader, factors. 3. The practice of value engineering in the US offers only two components which do not exist in the UK cost planning system. First, VE is an autonomous approach and second it is carried out by an external team. 4. This autonomous approach by an external team is fraught with difficulties in the US. It is likely that these difficulties would also occur in the UK. In addition, British design procedures are not conducive to the application of US value engineering practice. Possibly as a result of this the majority of UK companies involved in VE have developed alternative systems. These systems appear to be based on an adaptation of American practice. 5. Function analysis could possibly be of benefit in the UK. The technique of function analysis however is largely a design orientated process that has no direct relationship to cost. The technique is not independent and it's successful implementation is influenced by other factors.

Benefit-Cost Ratios: Failures and Alternatives

Abstract: Despite decades of criticism, the benefit-cost ratio remains one of the most common measures of performance employed in economic evaluation of engineering projects. This paper reviews the problems inherent in this measure of economic performance and suggests alternative measures in its place. It is shown that there are many common circumstances in which the benefit-cost ratio is an unrealiable indicator of a design's economic desirability and comparative economic performance. These problems result largely from the economically arbitrary nature of most classifications of benefits and costs. The ratio measure should be dropped from all serious economic-evaluation manuals and protocols. Some alternative measures are discussed.

Rational spending on safety brings results

Abstract: The article reports on a survey of European rail safety. It recommends that the right way to improve rail's already low accident records is to apply value-for-money criteria to a rigorous analysis of failure probabilities, based on hard statistical analysis.

An Analysis of Project Performance for Partnering Projects in the U.S. Army Corps of Engineers

Abstract: : This thesis presents an analysis of project performance for partnering projects in the U.S. Army Corps of Engineers. Partnering in engineering and construction usually involves an agreement between an owner and contractor to work together for an extended period of time, over several consecutive contracts. Because of legal regulations, the Corps of Engineers is unable to establish long-term partnering relationships, but it has been successful in implementing partnering on a project-by-project basis. The Corps of Engineers has not yet attempted to measure quantitatively their success in this area. This thesis compares the project performance of a sample of partnering projects with a similar sample of non-partnering projects. The criteria used for comparison are cost, duration, change orders cost, claims cost, and value engineering savings. Conclusions and recommendations are presented based on the results of the analysis.

Civil Engineering Experience and Education

Abstract: The professional engineering experience cannot be taught in universities. Graduates spend a certain apprenticeship period during the early years of their career. This training should be carried out under supervision of experienced engineers necessary for the background formation to professional life of potential civil engineers, 10-15 hr of a civil engineering consultation course must be included in the last-semester curriculum of universities. Also, a total of six months summer practice training on a construction site will be very useful to students in understanding the theoretical knowledge given in various courses. The value of experienced engineering decision is assessed as a case study in the preliminary design of a small earth-fill dam. Costs of the dam calculated with assumed and calculated spillway design head values. The results are compared by excluding the possible tangible and intangible benefits. The closeness of calculated and assumed design head values for this small dam indicates the importance of experience in engineering.

Development of a Knowledge-Based System Approach for Decision Making in Construction Projects

Abstract: : The objective of this report is to develop a realistic cost estimate. A knowledge-based system is proposed and prototyped to enhance the construction planner's ability to clarify decisions and isolate the preferred course of design based on both engineering and cost decisions. The basic thesis of the model design is that techniques can be developed to relate construction project requirements to current cost data through accepted engineering practices in order to develop better cost estimates for initial budget and feasibility decisions--without detailed design documents. The modeling concept uses a knowledge-based system to integrate expert judgments, engineering criteria, safety codes, historical data, descriptive factors, and specific site conditions.