Value Management

PRINCIPLES, PROCESSES, AND PRODUCTS

2.1 PRINCIPLES

2.1.1 What is Value Management?

Definition. The statutory and regulatory definitions encompass analysis of functions

performed by a team of qualified personnel directed at improving performance,

reliability, quality, safety, and life cycle costs of products, systems or procedures. The

study of functions helps to achieve “best value” for resources involved by improving

the relationship of worth or utility to monetary cost. The best value is associated with

an item that has the ability of performing its function at an optimum level of quality,

reliability, maintainability, and life-cycle cost. This analysis reduces processes,

equipment, facilities, services, supplies, or products to their most basic functional

elements and then looks for cost-efficient alternatives.

At minimum, proper value management practice will include all of following items:

 identified initiatives

 invested resources

 implementable recommendations

 identifiable return on investment

A summary view of value management is the systematic search for an undiscovered

answer through the collective efforts of a team composed of experienced and highly

qualified professionals. The goal of the VE analysis is to ensure that the owner, user,

and other stakeholders, receive a product that provides the greatest “value,” or return

on their collective investment. Value management processes and practices emphasize

the return on investment aspect in terms of life cycle costs to maintain or improve on

desired levels of capability and performance during planning, acquisition, execution

and procurement activities.

Integrated Product Team (IPT) approach. The reliance on a proper integrated

product-oriented team to achieve valuable results cannot be overemphasized in any

discussion of the definition of value management. Multiple teams may be assigned to

review an identified item in a highly structured VE study session or workshop. Teams

are comprised of knowledgeable staff representing many technical and operational

disciplines, including someone well-versed in value management practices, as well as

the client, user and other cognizant stakeholders.

Value Management GPG-FM-011

September 1997 3

Other Names. Terms such as function analysis, alternatives analysis, value analysis,

value control, value improvement, value engineering and value management are

synonymous, as long as the same industry-recognized techniques and principles are

applied.

Related Methodologies. Value management may be used alone, or in conjunction

with other management and productivity techniques and methodologies, such as: total

quality management, business process reengineering, partnering, bench marking, and

integrated product teams.

Related Good Practice Guides that include tools and practices closely allied with

value management include: GPG-FM-03, Engineering Trade Studies; GPG-FM-007,

Risk Analysis and Management; GPG-FM-10 Systems Engineering; and Utilities

Option Study.

2.1.3 What Value Management is not

Value Engineering is not what good planners and designers do as a matter of routine,

its not part of the typical design development process. A VE analysis is more rigorous

than the typical project review. Each VE effort brings together an impartial team of

professionals with a common purpose, improving the project design. The format and

structure of the value management methodology serves to aid both the owner and

designer with achieving their objectives.

Similarly, a VE analysis is not a traditional cost reduction approach. In a VE analysis,

cost reduction is achieved by making a design more efficient without reducing

essential performance, reliability, or maintainability. Conversely, traditional cost

reduction efforts will concentrate on material substitutions, and reducing or

eliminating specific elements. This approach frequently results with reduced quality,

or diminished performance.

Performing a VE analysis is not the same as a typical Quality Assurance (QA) review.

The traditional QA review will answer