Showing papers on "Value engineering published in 2004"

QFD‐ and VE‐enabled target costing: a fuzzy approach

Abstract: Globalization has provided excellent opportunities for the global manufacturing community together with a stringent barrier on cost control. Target costing has emerged as one of the main tools in aiding the manufacturers to be globally competitive. This paper analyses the effect of tools such as quality function deployment (QFD) and value engineering (VE) on target costing and explores the way in which these tools assist in achieving the target cost. The target costing model developed by Cooper and Slagmulder (Cooper, R. and Slagmulder, R., Target Costing and Value Engineering, Productivity Press, New York, NY, 1997) has been modified and tools such as QFD and VE have been incorporated in the model. Due to inherent uncertainties in the associated cost of various elements, the model has been further strengthened with the use of fuzzy logic. The theoretical model developed was implemented in an Indian auto component manufacturing company and the results were analysed. Target costing significantly relies upon QFD and VE for its effective implementation. Uncertainty in cost estimation plays a significant role in the target costing process since any variation in cost violates the cardinal rule of target costing, “the target cost should never be exceeded”. Fuzzy logic plays a vital role in accounting for uncertainty in the target costing process and gives a different perspective to arrive at the function cost. A functional approach (VE) combined with QFD backed by fuzzy approach appears to work effectively for a target costing process that is evidenced from the case study. It appears that the model developed will work satisfactorily for an industrial product and the validity of the model for fast moving consumer goods has to be ascertained.

Process and system innovation in the building and construction industry: Developing a model for integrated value chain and life cycle management of built objects

Abstract: The building and construction industry has a large contribution and impact on society, e.g. economical and environmental, involving a vast spectrum of stakeholders. However, the value delivering performance of the industry has often been criticized. The predictability of the value, price and costs of built objects has proven to be difficult, particularly over the life cycle. The characteristics of construction, such as fragmented value chains, complex projects and long lead times are basic causes, often leading to cost and time overruns, delivery of less value than agreed, and dissatisfied clients and users. In addition, it is difficult to assess all uncertainties and risks beforehand. Besides, fixing the price and demands beforehand makes it difficult to respond to changing demands and circumstances, and to deploy increasing knowledge during the process. In this paper a value-price-cost (VPC) leverage model is presented for the dynamic and integrated control of value, price and costs through the life cycle of built objects, and the value chain, i.e. the cascade of value demanding parties (demand chain), and value supplying parties (supply chain). The model is based on a paradigm shift from a discrete process of fixed prices on fixed contract moments between different phases in the life cycle (static control), towards a continuous process of establishing and monitoring the VPC balance through the life cycle, and acting in case of changing demands or circumstances (dynamic control). The ultimate objective is to optimise the total benefit of the built object through the life cycle. The total benefit is defined as the sum of the profit for value supplying parties (contractors, suppliers, etc.), and the added value for value demanding parties (clients, users, etc.). The model implies the formation of a life cycle alliance around the built object, involving both value demanding and supplying parties keeping the VPC balance and acting when fluctuations in the value or costs of the built object occur during the operation phase. In addition, the alliance is responsible for safeguarding and maintaining the functionality and serviceability of the built object through the life cycle. To conclude, directions for the further development of the model are being discussed

Combining capability assessment and value engineering: A BOOTSTRAP example

Abstract: Process improvement is a challenging task for software engineering. As Kuvaja [7]. has stated it: It is difficult to find a unique way to identify a common improvement path suitable to all kinds of organizations. The BOOTSTRAP method gives an assessor tools to evaluate processes. As a method it evaluates processes with low capability and a high effect on an organization's goals the most important, and with high capability and a low effect on the organization the least important. It takes into account the organization's needs and goals, capability profiles of its processes and industry as the main drivers of process improvement. Value Engineering (VE) is a systematic method to improve the value and optimize the life cycle cost of a function or a facility. VE generates cost improvements without sacrificing the capability levels needed. By combining these two processes, process improvement work can be tailored to take into consideration, not only the capabilities of software processes but also the values of the same processes. This article discusses how to enhance the BOOTSTRAP assessment method to include new value characteristics and phases. Same principles can be applied also in other capability based assessment methods (for example CMM, CMMI or SPICE).

Value Analysis Tear-Down: A New Process for Product Development and Innovation

Abstract: This book presents, for the first time, a new technology for improving products and innovating new and better products, first developed in Japan by Yoshihiko Sato. Value analysis tear-down combines traditional tear-down with the technologies of value analysis and value engineering. Within a few years of its public announcement in Japan, value analysis tear-down was adopted by all eleven Japanese automobile manufacturers, and many of the Japanese consumer electronics manufacturers. Jerry Kaufman, based in Houston, Texas, is a recognized authority and author on value engineering and value management, and has contributed much that is in these technologies to the process described in this book. The result of his collaboration with Mr. Sato is a process that helps engineers and managers reduce product cost, improve quality, continuously improve existing products, and discover opportunities for innovative change.The first "how-to-do-it" book in English, it is written specifically for professionals in product engineering, manufacturing engineering, and value engineering; and the managers of these professionals, including plant managers, production managers, manufacturing executives, and research and development executives. It will also be useful to manufacturing, marketing, and management people concerned with product improvement, innovation, and improving their company's competitive position. Value analysis tear-down can be applied in many service and other industries, as well as in manufacturing; wherever there are physical components to be improved or invented.

Risk Reduction as the Product of Model Assessed Reliability, Confidence, and Consequence

Abstract: This paper presents our methodology for verification and validation (V&V) of models, coupled to quantification of risk and risk reduction, and the use of risk, quantified as a dollar value, in the value-engineering and decision trade-off process. We begin by defining a simple measure of quantified risk, as the numerical product of three basic terms: the lower-bound model assessment of a product's reliability, multiplied by the confidence level used in the assessment, multiplied by the actuarial consequence value of the risk or risk reduction. We discuss our process for obtaining each of these three terms, and of other terms needed to complete the quantification process. An explosives impact test example is used to show the effects of model choice, data, and uncertainty methods on the resulting quantified risk reduction value. We then show how we use the quantified risk reduction value in a benefit/cost ranking method of value engineering. In this way, we can follow the simulation results from our explosiv...

Combining Capability Assessment and Value Engineering: A BOOTSTRAP Example

Abstract: Process improvement is a challenging task for software engineering. As Kuvaja [7]. has stated it: “It is difficult to find a unique way to identify a common improvement path suitable to all kinds of organizations.” The BOOTSTRAP method gives an assessor tools to evaluate processes. As a method it evaluates processes with low capability and a high effect on an organization’s goals the most important, and with high capability and a low effect on the organization the least important. It takes into account the organization’s needs and goals, capability profiles of its processes and industry as the main drivers of process improvement. Value Engineering (VE) is a systematic method to improve the value and optimize the life cycle cost of a function or a facility. VE generates cost improvements without sacrificing the capability levels needed. By combining these two processes, process improvement work can be tailored to take into consideration, not only the capabilities of software processes but also the values of the same processes. This article discusses how to enhance the BOOTSTRAP assessment method to include new value characteristics and phases. Same principles can be applied also in other capability based assessment methods (for example CMM, CMMI or SPICE).

Silk Flowers Are Just as Artificial as Plastic Ones: Value Engineering in the University Context.

Abstract: This paper moves beyond the competence focus of mainstream value engineering training (e.g. Miles 1989, Techniques of Value Engineering and Value Analysis; Kaufman 1990, Value Engineering for the Practitioner), such books achieve their training goal well but lack the pedagogic aim we argue in this paper. This paper achieves our aim by describing the philosophical linkage between value engineering, function analysis and innovation and the economic imperative businesses bring to modes of engineering consideration. This philosophical underpinning uses Heidegger's attack on Descartes' ‘I think therefore I am’ and the assumptions such logic brings to the central question of an individual existence among the existences of everything else. Rather than singularly focusing on ‘what’ or ‘that’, Heidegger calls upon us to consider ‘how and why’ as a product of ontological functioning. However, we do not seek to replace Cartesian rationalism with Heidegger's phenomenological methods, as the latter does have several a...

Finding value in the value engineering process

Abstract: The purpose of this article is to show how value engineering is clearly one feasible option for owners in dealing with funding projects in a constantly changing and volatile economy. In addition to providing the history and background on value engineering, the article will also outline the value engineering process. The reader will learn when is the best time to perform value engineering in the life of the project, the key to ensuring a successful value engineering study and why value engineering should be performed. Finally, the cost of applying this valuable tool is discussed in conjunction with data from real studies. The volatile economy has forced all parties, but especially owners, to seek every possible option to ensure that budgets are met and to justify funding for projects. Improvements in technology have allowed processes that were once burdensome and time-consuming to become more efficient.

Drilled shaft value engineering delivers success to wahoo, nebraska bridge

Abstract: This case history illustrates how a successful "Value Engineering" redesign with slurry-drilled shafts and an O-Cell TM test saved considerable costs and expedited early completion of a large bridge project for the Nebraska Department of Roads (NDOR). The paper first describes the original project and its geologic setting. It then relates the inception, development and verification of the redesign concept and its implementation via NDOR's "Value Engineering Proposal" (VEP) standard specification provisions. The comparative advantages of drilled shafts versus driven piles relative to the site geology, some benefits of using polymer drilling slurry and the practicality of foundation verification with an O-Cell TM test and cross-hole sonic logging (CSL) are discussed. The lack of redundancy in drilled shafts and the increased importance of having an experienced contractor using appropriate equipment and procedures under an effective quality control program are also emphasized. The paper concludes with a discussion of the overall impact of the VEP redesign on the project cost and schedule, as well as on NDOR's subsequent bridge design and construction practices.

Valuation of road infrastructure: what does it mean?

Abstract: The 1994 Austroads report “Capitalisation of Infrastructure” is the earliest Australian attempt at standardising the processes involved in estimating replacement value, depreciation, and written down value of road infrastructure assets in public ownership. While it established some practices on infrastructure valuation that have survived ten years of robust debate, its authors were unable to agree on a standard for depreciation. This paper draws on recent valuation information, and highlights the potential for estimates of the value of road infrastructure assets to improve the effectiveness of communication between road asset managers and funding providers, and as a tool for improved budgetary planning and asset management. (a) For the covering entry of this conference, please see ITRD abstract no. E212095.

Risk Management of Earthworks Using GeoQ

Abstract: Large budget overruns within infrastructure projects seem to become common practise over the last decades. In the Netherlands and also world-wide these overruns of public funds have become less and less acceptable. Within the construction industry awareness grows that failure costs have to be decreased significantly. Studies to assess failure costs conclude with figures of 4 to 9 billion Euro annually for a small country as the Netherlands only. Approximately 50% of these failure costs are directly or indirectly related to sub-surface conditions. The question was raised whether one should speak of a crises of the underground or of a managed risk. In answer to this question, GeoDelft has developed a general approach named GeoQ to deal with sub-surface risks and thus control total project costs. Very often, cost overruns during the construction of some large infrastructure project can be back traced to little or no attention for subsurface related risks in the early plan or design phase of the project. To enable a fair discussion on subsurface related risks in every phase of the project, the GeoQ approach strives to bring transparency in the many implicit decisions taken in a project. The first cornerstone of the GeoQ approach is a cyclic, risk based approach of design, and construction in every phase of a project. The second cornerstone is to mobilise all relevant information and knowledge to enable continuity of information between the various project phases. This will lead to an improvement of the total quality of the project and a related strong decrease of unexpected cost. Stimulated by a new, experimental contractual relation between client and contractor, construction of the Sliedrecht-Gorinchem section of the Betuweroute freight railway demonstrates that awareness of subsurface risk enables value engineering resulting in significant optimisations. In this project the GeoQ approach, supported with some state-ofthe-art design and monitoring tools, formed the basis for savings up to 10 % of the total project costs (e.g. 20 million Euro). This success was realised within a very tight contractual time frame, in an area known for its extremely soft soil conditions. For the covering abstract see ITRD E135448.

Reaching the Cost Target - Current Status in SMEs

Abstract: Progressive globalization combined with stronger competition, has lead to an increased need for products with an optimal cost-performance ratio. Target Costing is the most established method to support the development of competitive products in relation to the market price. With this method, a cost target is defined in the beginning of the development of a new product. Further on, from the beginning of conceptual design, every decision within the product development process has to be scrutinized with regard to meeting the cost target. Thus multiple conceptual and detail design alternatives for both the product and its manufacturing processes have to be considered. The employees in the product development process have to be provided with knowledge of future costs of possible design alternatives. This allows them to choose the most favourable option. The target costing process can work only if these requirements are complied to in a company. How does the value engineering process function in the companies? What is the current status of cost evaluation during the product development process in small and medium sized enterprises (SME)? What difficulties do engineers deal with in the value engineering process in different departments? The investigation of these questions led to the survey that is described in this contribution.

Integrating Value Engineering into the Quality Management Framework

Abstract: During the 1990s, the Ontario Transportation Ministry introduced value engineering on selected projects to test efficiency and cost effectiveness, maintain safety standards, and reduce costs. Although there were many early problems, the Ministry has dev..

The value of travel time savings in road traffic

Abstract: This report makes recommendations for up-dating the unit values of travel time savings used in Finnish road investment benefit-cost-analysis. These recommendations are based on recent international empirical evidence on the value of travel time savings, as well as values used in manuals in other countries. Updates are due by the revision of the valuation manual used by the Finnish National Road Administration in 2005. Recommendations are also made for developing standard methods for presenting the size and distribution of travel time savings induced by road improvements. Values of work time travel time savings for the drivers of passenger cars and commercial vehicles have to be updated according to the changes taken place in average labor costs borne by employers. It should also be considered, whether passengers of cars and buses can be assigned a lower value of travel time savings due to the possibility of working during trips. According to theory, the value of travel time savings concerning commuting, other non-work purpose trips and leasure trips should be defined according to subjective traveller preferences. The current labor cost based valuation method does not capture the subjective values attributed to e.g. trip purpose, point of time, the size of travel time savings with respect to trip length or duration, or the income level of the traveller. A change in valuation methods used, and estimation of new unit values accordingly, requires either implementating Finnish willingness-to-pay studies on non-work travel time savings, or transferring research results most preferably from other Nordic countries. According to empirical findings the values of travel time savings concerning commuting and leasure trips are not identical. As a consequence, the Finnish unit values should be differentiated to the degree either according to international research results, or by studying subjective values in the Finnish context. Weighting factors for assessing the value of travel time changes in the different phases of travel chains should be considered also in Finland. Other situations which need weighting factors are travel time saved or lost during congestion periods and incidents such as accidents and road works. Also walking and cycling should be assigned unit values for travel time savings. However, the unit values used for valuing travel time savings of motorised modes are applicable also for the non-motorized modes.

Benefit/Cost Ratio in Systems Engineering: Integrated Models, Tests, Design, and Production

Abstract: We have previously described our methodology for quantification of risk and risk reduction, and the use of risk, quantified as a dollar value, in the Value Engineering and decision tradeoff process. In this work we extend our example theme of the safety of reactive materials during accidental impacts. We have begun to place the validation of our impact safety model into a systems engineering context. In that sense, we have made connections between the data and the trends in the data, our models of the impact safety process, and the implications regarding confidence levels and reliability based on given impact safety requirements. We have folded this information into a quantitative risk assessment, and shown the assessed risk reduction value of developing an even better model, with more model work or more experimental data or both. Since there is a cost incurred for either model improvement or testing, we have used a Benefit / Cost Ratio metric to quantify this, where Benefit is our quantification of assessed risk reduction, and cost is the cost of the new test data, code development, and model validation. This has left us with further questions posed for our evolving system engineering representation for impact safety and its implications. We had concluded that the Benefit / Cost Ratio for more model validation was high, but such improvement could take several paths. We show our progress along two such paths; simple and high fidelity modeling of the impact safety process, and the implications of our knowledge and assumptions of the probability distribution functions involved. At the other end of the systems engineering scale, we discuss the implications of our linkage from model validation to risk on our production plant operations. Naturally, the nature of most such methodologies is still evolving, and this work represents the views of the authors and not necessarily the views of Lawrence Livermore National Laboratory.

Value Engineering Application in the Innovation of Product Line of Traditional Pressing Sesame Oil

Abstract: Applying the advanced management thought and technology of value engineering, the author of the thesis studies innovative problem of product line of traditional machine pressed sesame and found out a fire-new method of selecting machines to product line and then provides a scientific basis for correct decision-making of enterprise.

Value engineering analysis of selecting ERP software

Abstract: By using the method of value engineering, the selection of ERP software is analysed in the two aspects of function and cost. Then the criterion to evaluate ERP software is indicated. According to the thought of value engineering, a general method to select ERP software and its modules is also proposed.

How to Get the Highest Value for Water Transmission Projects

Abstract: Water transmission pipelines and pump stations are critical to the success of any water utility. Typically, water transmission systems must be operational 24/7 to maintain service to large segments of the distribution system. Additionally, water transmission systems often make up the largest capital, operational, and maintenance costs of the utility. Therefore, getting the highest value for the design and construction of water transmission projects is critical to the overall success of any utility. Value for the water transmission projects includes low capital costs, but not at the expense of system performance. Value for water transmission systems can be defined as follows: low capital cost, low operations and maintenance cost over the life of the system, high reliability of the system, flexibility of operations and expandability to meet future conditions, ease of system operations, and quality of the constructed project. This paper describes innovative value concepts used by the author on dozens of raw water and treated water transmission projects. This paper also compares projects that used the value concepts with other projects that did not. The comparison shows that the value concepts can save as much as 50% of the capital costs.

"Value Engineering...?" During Construction

Abstract: Construction contracts in the USA frequently contain a clause on "Value Engineering" which allows contractor-initiated design changes. Misleading is the interpretation of value engineering to imply cost savings shared with the owner, and its implementation, just before or during actual construction, is problematic. It is not surprising that such a clause would simply be ignored because it involves changes in design, often major changes in very short time; and change is feared, and moreover, vehemently resisted by all parties: owner, designer, and contractor. Major design changes were nevertheless successfully implemented in record speed on several very large projects in the metropolitan New York area. Four case histories spanning from 1998 to 2002 are presented in this paper. They include two Design/Build prjects: the redesign of large diameter drilled shafts for the Hudson-Bergen Light Rail Transit System; and the elimination of deep caissons in favor of spread footings for a new $90 million MTA bus depot in Manhattan. The other two case histories are conventional Design/Bid/Build projects: maintaining in lieu of removal of a 100-year old abutment of the $72 million Queens Boulevard Bridge Replacement; and the complete redesign of major retaining walls and actual use of the "Giken" tubular pressed-in pipe piles as very high cantilever retaining walls, for the $150 million expansion of the Long Island Expressway. The author describes how the changes in each case were unconventional, painful, and even comical at times.

“Value Engineering…?” – Changes During Construction

Abstract: “Value Engineering” is a frequently found clause in Construction contracts in the USA, allowing contractor-initiated design changes. Misleading is the interpretation of “value engineering” to imply cost savings shared with the owner, and its implementation during construction, is problematic. It is not surprising that such a clause would simply be ignored because it involves changes in design, often major changes in very short time; and change is feared and vehemently resisted by all parties, owner, designer, and contractor. The problem may lie in the divergence and separation of the designer/engineer and builder/contractor; their priorities and incentives are very different. The engineer spends years, even decades, in design and prepares contract documents often without a deep-seated understanding of construction methods, including geotechnical construction. Even worse, given extensive computational advancements, the designer submits exaggerated code-based designs with excessive safety factors. As for the contractor, he often builds without full appreciation of design principles or regard for design engineers. Owner budget and schedule constraints (not commensurate with his demands) and the ever-increasing litigious climate have exacerbated the situation. Adverse and hostile relationship between the various groups is often the norm with extended disputes and claims, not to mention the costs these entail. Redesign to apply a new technology or optimization of an inferior design just before construction becomes unthinkable. Four case histories are presented.

Results of a NASA Kennedy Space Center Earned Value Management Pilot Project

Abstract: The Earn Value Management Pilot provided a tremendous amount of data on the strengths and weaknesses of the new financial system, the ability to support EVM from many viewpoints, the lack of tools for small to medium projects implementing EVM, and the training and environment necessary to successfully deploy EVM to all projects. This data along with other pilots will prove invaluable. Deploying EVM should not be taken lightly - a full assessment of capabilities and supporting infrastructure should be done prior to any deployment, and some very basic questions should be asked. For instance, will sufficient training be provided? Can the project managers readily and easily obtain all the necessary data? If EVM is to thrive in all projects regardless of cost, the transition should be as seamless as possible, minimizing cost and effort, and with the end user in mind. In setting up an EVM implementation, the question, "How does the project manager benefit from this process?" must remain at the forefront. Further research in this area is needed to answer the question,"Is EVM cost effective in small projects?" The authors welcome knowledge sharing with other organizations that are striving to gain the benefits of EVM on small projects.