VALUE MEHODOLOGY STANDARD
VM includes the processes known as Value Analysis, Value Engineering, and Value Management. It is sometimes also referred to as Value Control, Value Improvement or Value Assurance. This Standard defines common terminology, offers a standardized 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 VM
The Value Methodology can be applied wherever cost and/or performance improvement 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. VM can beneficially be applied to virtually all areas of human endeavor
PRE-STUDY
Preparation tasks involve six 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.
A. Collect User/Customer Attitudes
The User/Customer attitudes are compiled via an in-house focus group and/or external market surveys. The objectives are to:
1. Determine the prime buying influence;
2. Define and rate the importance of features and characteristics of the product or project;
3. Determine and rate the seriousness of user-perceived faults and complaints of the product or project;
4. Compare the product or project with competition or through direct analogy with similar products or projects.
For first time projects such as a new product or new construction, the analysis may be tied to project goals and objectives.
The results of this task will be used to establish value mismatches in the Information Phase.
B. Gather a Complete Data FileThere are both Primary and Secondary sources of information. Primary sources are of two varieties: people and documentation. People sources include marketing (or the user), original designer, architect, cost or estimating group, maintenance or field service, the builders (manufacturing, constructors, or systems 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, and trade journals. Another major source is like or similar projects. Quantitative data is desired.
Another secondary source is a site visitation by the value study team. "Site" includes actual construction location, manufacturing line, or office location for a new/improved system. If the actual "site" is not available, facilities with comparable functions and activities may prove to be a valuable source of usable information.
C. Determine Evaluation FactorsThe team, as an important step in the process, determines what will be the criteria for evaluation of ideas and the relative importance of each criterion to final recommendations and decisions for change. These criteria and their importance are discussed with the user/customer and management and concurrence obtained
D. Scope the StudyThe team develops the scope statement for the specific 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.
E. Build ModelsBased on the completion and agreement of the scope statement, the team may compile models for further understanding of the study. These include such models as Cost, Time, Energy, Flow Charts, and Distribution, as appropriate for each study.
F. Determine Team Composition, Wrap-UpThe 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.
THE VALUE STUDY
The value study is where the primary Value Methodology is applied. The effort is composed of six phases: Information, Function Analysis, Creativity, Evaluation, Development, and Presentation.
A. Information PhaseThe objective of the Information Phase is to complete the value study data package started in the Pre-Study work. If not done during the Pre-Study activities, the project sponsor and/or designer brief the value study team, providing an opportunity for the team to ask questions based on their data research. If a "site" visitation was not possible during Pre-Study, it should be completed during this phase.
The study team agrees to the most appropriate targets for improvement such as value, cost, performance, and schedule factors. These are reviewed with appropriate management, such as the project manager, value study sponsor, and designer, to obtain concurrence.
Finally, the scope statement is reviewed for any adjustments due to additional information gathered during the Information Phase.
B. Function Analysis PhaseFunction definition and analysis is the heart of Value Methodology. It is the primary activity that separates Value Methodology from all other "improvement" practices. The objective of this phase is to develop the most beneficial areas for continuing study. The team performs the following steps:
1. Identify and define both work and sell functions of the product, project, or process under study using active verbs and measurable nouns. This is often referred to as Random Function Definition.
2. Classify the functions as basic or secondary
3. Expand the functions identified in step 1 (optional)
4. Build a function Model - Function Hierarchy/Logic or Function Analysis System Technique (FAST) diagram.
5. Assign cost and/or other measurement criteria to functions
6. Establish worth of functions by assigning the previously established user/customer attitudes to the functions
7. Compare cost to worth of functions to establish the best opportunities for improvement
8. Assess functions for performance/schedule considerations
9. Select functions for continued analysis
10. Refine study scope
C. Creative PhaseThe objective of the Creative Phase (sometimes referred to as Speculation Phase) is to develop a large quantity of ideas for performing each function selected for study. This is a creative type of effort, totally unconstrained by habit, tradition, negative attitudes, assumed restrictions, and specific criteria. No judgment or discussion occurs during this activity. The quality of each idea will be developed in the next phase, from the quantity generated in this phase.
There are two keys to successful speculation: first, the purpose of this phase is not to conceive of ways to design a product or service, but to develop ways to perform the functions selected for study. Secondly, creativity is a mental process in which past experiences are combined and recombined to form new combinations. The purpose is to create new combinations which will perform the desired function at less total cost and improved performance than was previously attainable.
There are numerous well accepted idea generation techniques. The guiding principle in all of them is that judgment/evaluation is suspended. Free flow of thoughts and ideas - without criticism - is required.
D. Evaluation PhaseThe objectives of the Evaluation Phase are to synthesize ideas and concepts generated in the Creative Phase and to select feasible ideas for development into specific value improvement.
Using the evaluation criteria established during the Pre-Study effort, ideas are sorted and rated as to how well they meet those criteria. The process typically involves several steps:
1. Eliminate nonsense or "thought-provoker" ideas.
2. Group similar ideas by category within long term and short term implications. Examples of groupings are electrical, mechanical, structural, materials, special processes, etc.
3. Have one team member agree to "champion" each idea during further discussions and evaluations. If no team member so volunteers, the idea or concept is dropped.
4. List the advantages and disadvantages of each idea.
5. Rank the ideas within each category according to the prioritized evaluation criteria using such techniques as indexing, numerical evaluation, and team consensus.
6. If competing combinations still exist, use matrix analysis to rank mutually exclusive ideas satisfying the same function.
7. Select ideas for development of value improvement.
E. Development PhaseThe objective of the Development Phase is to select and prepare the "best" alternative(s) for improving value. The data package prepared by the champion of each of the alternatives should provide as much technical, cost, and schedule information as practical so the designer and project sponsor(s) may make an initial assessment concerning their feasibility for implementation. The following steps are included:
1. Beginning with the highest ranked value alternatives, develop a benefit analysis and implementation requirements, including estimated initial costs, life cycle costs, and implementation costs taking into account risk and uncertainty.
2. Conduct performance benefit analysis.
3. Compile technical data package for each proposed alternative:
a. written descriptions of original design and proposed alternative(s)
b. sketches of original design and proposed alternative(s)
c. cost and performance data, clearly showing the differences between the original design and proposed alternative(s)
d. any technical back-up data such as information sources, calculations, and literature
e. schedule impact
4. Prepare an implementation Plan, including proposed schedule of all implementation activities, team assignments and management requirements.
5. 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.
F. Presentation PhaseThe objective of the Presentation Phase is to obtain concurrence and a commitment from the designer, project sponsor, and other management to proceed with implementation of the recommendations. This involves an initial oral presentation followed by a complete written report.
As the last task within a value study, the VM study team presents its recommendations to the decision making body. Through the presentation and its interactive discussions, the team obtains either approval to proceed with implementation, or direction for additional information needed.
The written report documents the alternatives proposed with supporting data, and confirms the implementation plan accepted by management. Specific organization of the report is unique to each study and organization requirements.
POST STUDYThe objective during Post-Study activities is to assure the implementation of the approved value study change recommendations. Assignments are made either to individuals within the VM study team, or by management to other individuals, to complete the tasks associated with the approved implementation plan.
While the VM Team Leader may track the progress of implementation, in all cases the design professional is responsible for the implementation. Each alternative must be independently designed and confirmed, including contractual changes if required, before its implementation into the product, project, process or procedure. Further, it is recommended that appropriate financial departments (accounting, auditing, etc.) conduct a post audit to verify to management the full benefits resulting from the value methodology study. Further, it is recommended that appropriate financial departments (accounting, auditing, etc.) conduct a post audit to verify to management the full benefits resulting from the value methodology study.
The Value Methodology can be applied wherever cost and/or performance improvement 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. VM can beneficially be applied to virtually all areas of human endeavor
PRE-STUDY
Preparation tasks involve six 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.
A. Collect User/Customer Attitudes
The User/Customer attitudes are compiled via an in-house focus group and/or external market surveys. The objectives are to:
1. Determine the prime buying influence;
2. Define and rate the importance of features and characteristics of the product or project;
3. Determine and rate the seriousness of user-perceived faults and complaints of the product or project;
4. Compare the product or project with competition or through direct analogy with similar products or projects.
For first time projects such as a new product or new construction, the analysis may be tied to project goals and objectives.
The results of this task will be used to establish value mismatches in the Information Phase.
B. Gather a Complete Data FileThere are both Primary and Secondary sources of information. Primary sources are of two varieties: people and documentation. People sources include marketing (or the user), original designer, architect, cost or estimating group, maintenance or field service, the builders (manufacturing, constructors, or systems 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, and trade journals. Another major source is like or similar projects. Quantitative data is desired.
Another secondary source is a site visitation by the value study team. "Site" includes actual construction location, manufacturing line, or office location for a new/improved system. If the actual "site" is not available, facilities with comparable functions and activities may prove to be a valuable source of usable information.
C. Determine Evaluation FactorsThe team, as an important step in the process, determines what will be the criteria for evaluation of ideas and the relative importance of each criterion to final recommendations and decisions for change. These criteria and their importance are discussed with the user/customer and management and concurrence obtained
D. Scope the StudyThe team develops the scope statement for the specific 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.
E. Build ModelsBased on the completion and agreement of the scope statement, the team may compile models for further understanding of the study. These include such models as Cost, Time, Energy, Flow Charts, and Distribution, as appropriate for each study.
F. Determine Team Composition, Wrap-UpThe 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.
THE VALUE STUDY
The value study is where the primary Value Methodology is applied. The effort is composed of six phases: Information, Function Analysis, Creativity, Evaluation, Development, and Presentation.
A. Information PhaseThe objective of the Information Phase is to complete the value study data package started in the Pre-Study work. If not done during the Pre-Study activities, the project sponsor and/or designer brief the value study team, providing an opportunity for the team to ask questions based on their data research. If a "site" visitation was not possible during Pre-Study, it should be completed during this phase.
The study team agrees to the most appropriate targets for improvement such as value, cost, performance, and schedule factors. These are reviewed with appropriate management, such as the project manager, value study sponsor, and designer, to obtain concurrence.
Finally, the scope statement is reviewed for any adjustments due to additional information gathered during the Information Phase.
B. Function Analysis PhaseFunction definition and analysis is the heart of Value Methodology. It is the primary activity that separates Value Methodology from all other "improvement" practices. The objective of this phase is to develop the most beneficial areas for continuing study. The team performs the following steps:
1. Identify and define both work and sell functions of the product, project, or process under study using active verbs and measurable nouns. This is often referred to as Random Function Definition.
2. Classify the functions as basic or secondary
3. Expand the functions identified in step 1 (optional)
4. Build a function Model - Function Hierarchy/Logic or Function Analysis System Technique (FAST) diagram.
5. Assign cost and/or other measurement criteria to functions
6. Establish worth of functions by assigning the previously established user/customer attitudes to the functions
7. Compare cost to worth of functions to establish the best opportunities for improvement
8. Assess functions for performance/schedule considerations
9. Select functions for continued analysis
10. Refine study scope
C. Creative PhaseThe objective of the Creative Phase (sometimes referred to as Speculation Phase) is to develop a large quantity of ideas for performing each function selected for study. This is a creative type of effort, totally unconstrained by habit, tradition, negative attitudes, assumed restrictions, and specific criteria. No judgment or discussion occurs during this activity. The quality of each idea will be developed in the next phase, from the quantity generated in this phase.
There are two keys to successful speculation: first, the purpose of this phase is not to conceive of ways to design a product or service, but to develop ways to perform the functions selected for study. Secondly, creativity is a mental process in which past experiences are combined and recombined to form new combinations. The purpose is to create new combinations which will perform the desired function at less total cost and improved performance than was previously attainable.
There are numerous well accepted idea generation techniques. The guiding principle in all of them is that judgment/evaluation is suspended. Free flow of thoughts and ideas - without criticism - is required.
D. Evaluation PhaseThe objectives of the Evaluation Phase are to synthesize ideas and concepts generated in the Creative Phase and to select feasible ideas for development into specific value improvement.
Using the evaluation criteria established during the Pre-Study effort, ideas are sorted and rated as to how well they meet those criteria. The process typically involves several steps:
1. Eliminate nonsense or "thought-provoker" ideas.
2. Group similar ideas by category within long term and short term implications. Examples of groupings are electrical, mechanical, structural, materials, special processes, etc.
3. Have one team member agree to "champion" each idea during further discussions and evaluations. If no team member so volunteers, the idea or concept is dropped.
4. List the advantages and disadvantages of each idea.
5. Rank the ideas within each category according to the prioritized evaluation criteria using such techniques as indexing, numerical evaluation, and team consensus.
6. If competing combinations still exist, use matrix analysis to rank mutually exclusive ideas satisfying the same function.
7. Select ideas for development of value improvement.
E. Development PhaseThe objective of the Development Phase is to select and prepare the "best" alternative(s) for improving value. The data package prepared by the champion of each of the alternatives should provide as much technical, cost, and schedule information as practical so the designer and project sponsor(s) may make an initial assessment concerning their feasibility for implementation. The following steps are included:
1. Beginning with the highest ranked value alternatives, develop a benefit analysis and implementation requirements, including estimated initial costs, life cycle costs, and implementation costs taking into account risk and uncertainty.
2. Conduct performance benefit analysis.
3. Compile technical data package for each proposed alternative:
a. written descriptions of original design and proposed alternative(s)
b. sketches of original design and proposed alternative(s)
c. cost and performance data, clearly showing the differences between the original design and proposed alternative(s)
d. any technical back-up data such as information sources, calculations, and literature
e. schedule impact
4. Prepare an implementation Plan, including proposed schedule of all implementation activities, team assignments and management requirements.
5. 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.
F. Presentation PhaseThe objective of the Presentation Phase is to obtain concurrence and a commitment from the designer, project sponsor, and other management to proceed with implementation of the recommendations. This involves an initial oral presentation followed by a complete written report.
As the last task within a value study, the VM study team presents its recommendations to the decision making body. Through the presentation and its interactive discussions, the team obtains either approval to proceed with implementation, or direction for additional information needed.
The written report documents the alternatives proposed with supporting data, and confirms the implementation plan accepted by management. Specific organization of the report is unique to each study and organization requirements.
POST STUDYThe objective during Post-Study activities is to assure the implementation of the approved value study change recommendations. Assignments are made either to individuals within the VM study team, or by management to other individuals, to complete the tasks associated with the approved implementation plan.
While the VM Team Leader may track the progress of implementation, in all cases the design professional is responsible for the implementation. Each alternative must be independently designed and confirmed, including contractual changes if required, before its implementation into the product, project, process or procedure. Further, it is recommended that appropriate financial departments (accounting, auditing, etc.) conduct a post audit to verify to management the full benefits resulting from the value methodology study. Further, it is recommended that appropriate financial departments (accounting, auditing, etc.) conduct a post audit to verify to management the full benefits resulting from the value methodology study.
