1. Introduction:
Value engineering (VE) has been defined by various researchers, for example Connaughton and Green (1996) defined it as “a systematic approach to delivering the required functions at lowest cost without detriment to quality, performance and reliability” and Kelly and Male (1993) defined VE as ''The process of identifying and eliminating unnecessary cost during design and construction stages''
Going back to the history of VE, In1947 VE methodology was initially implemented as “value analysis” by Lawrence Delos Miles in order to make grounding material to increase product value. It was used to indicate to the study of the product during the design stage (WCL, 2014) and “uses a value equation that says value is equal to function divided by cost” (Elayache, 2010). This equation calculates the functionality of the project in relation to the total cost of the project (all construction cost plus running cost)
In any project, including civil, implementing VE may result in higher functionality or cost cutting. However, it is important to say that VE is not “cost cutting approach” (PM, 2012).
Figure 1 shows the process of VE which goes through seven stages (Nolan, 2014). Conducting such workshops needs more planning and involvement of stakeholders and team members to build a good understanding of VE and its main objectives (Mukhhopadhyaya, 2009). Then all brainstormed thoughts will be captured, and screened out and reviewed to make them clear and concise. These captured Ideas are analysed and evaluated to generate theoretical and applicable proposals. The selected views are developed and embedded in the project to be implemented and optimised for better improvement.
2. VE Advantage:
One of the main advantages of VE is that building an approved and confident work environment in which all parties and project team members are engaged in the project and working as the owner from initial stage of civil engineering projects. Also, VE is more focusing on value improvement and not just savings of cost. Additionally, Value engineering enhances the client’s satisfaction by knowing their exact needs and expectation (DBIA, 2010).Moreover, it strengths the collaboration between the client and the contractors therefore the contractor will participate by been proactive in any likelihood of risk by giving advice to mitigate risks.
Often, creativity phase plays critical role in providing good opportunity to familiarize the client with the team work. Moreover, they share potential ideas and proposals to reduce cost; without affecting quality or functionality negatively. Accordingly, there will be a base of ranked and classified ideas and views.
1985, Michael Porter indentified that – a value chain is a chain of value-creating activities in order to offer the customer the level of value that exceeds the cost of the activities, than competition, thereby resulting in a profit margin. Competitive advantage comes from carrying out these activities in a more cost-effective way than competitors.
V represents Value Added - interventions should increase the worth of the situation for the internal organization or external client.
The 'Standard' of the 'Standard'. Combination of project cost forecasts with earned value management. Journal of Construction Engineering & Management, 958-966. Sitnikov, C. (2012). The 'Standard'.
Lynch (2006) explained this as it is an association in between main values that adds tasks plus supporting tasks. In Audrestsch (1995) it is proposed that this is considered like a tactical valuation means which helps in diagnosis addition of values by the process of weaknesses plus strength. Below given image is proposed by value chain of Tesco.
...arations needed during implementation of the project while the final phase is meant for overall evaluation.
Value Chain Analysis is used to describe the activities that take place within the organization and relates them to an analysis of the competitive strength of the organization. Michael E. Porter (1991) stated that the activities of an organization could be divided into two groups: Primary Activities- Those that are directly concerned with creating and delivering a product and Support Activities- this group consist of those not directly involved in production, this group also add values to the organization because they help to increase effectiveness or efficiency (e.g. human resource management). Porter also stated that is not common for an organization to undertake all primary and support activities (Porter, 1991).
According to Pohlman (1995), the purpose of Value Driven Management is for employees to consider the implications, positive and negative if any, of how certain proposed actions or decisions will affect the respective organization over time. VDM was constructed as a more encompassing approach to building a successful organization. In this context, employees consist of all leadership, management, and staff because they all share those same responsibilities in a broad manner (Pohlman, 1995). ...
Value chains are essential elements of successful businesses, and how to gain a competitive advantage by analyzing them is the most important aspect. In Porter’s value-chain model, he points out that there are two types of business activities: primary activities, which include inbound logistics, operations, outbound logistics, marketing, sales and service; and support activities, which include procurement, technology development, human resources management, and firm infrastructure. In order to gain an edge, companies should focus on these activities to improve or create products that will satisfy their customers.
Value chain analyses a firm 's internal activities such as planning, production, and development, packaging and distribution so as to create value for clients. The function of the value chain is to identify the sources for cost reduction along with quality improvement. It means value chain is used to identify the strong and weak points, positive and negative points, the scope of improvement; in a nutshell, the advantages and disadvantages of the activities taking place in the system. The value chain is also called as a strategic analysis tool and it is a well-known concept in business management industry.
Scott Jardine, 2007, “Managing risk in construction projects – how to achieve a successful outcome – an article”, PricewaterhouseCoopers.
In manufacturing perspective, where the manufacturer "adds value" by taking a raw material of little use to the end user (for example, woods) and converting it into something that people are willing to pay money for such as paper. Firms or Companies can use inputs of time, knowledge, equipment, technology and systems to create services of real value to the
In conclusion, civil engineers have a responsibility to deal with current issues in a professional and ethical manner for the benefit of society. The topics discusses included: high energy consumption of buildings, the need for efficient water resources, transportation planning, poor infrastructures doomed to failure, the need to have higher standards to become a licensed professional engineer, how globalization has affected all engineers, and the need to have more professional use advance engineering informatics. All these subjects were pondered about how these challenges can be overcome are there effective methods that engineers can apply today. Unfortunately, not all problems are easy to handle.
I understand the term customer value to define how customers weigh the benefits of individual purchasing decision against the costs of these products.
2. What is the difference between a.. Explain how the company’s value chain activities can be better linked to create value for the company. A chain value is a diagram that a company uses to determine its activities and components such as its functions or management from top to bottom or vice versa.... ... middle of paper ...
During the project initiation stage the business problem or opportunity is outlined whilst simultaneously various TM techniques and tools can be adopted to enhance productivity and overall project success. Value engineering is a technique which can be adopted to seize the opportunity to add value in the early stages of the project. The value of a system’s outputs is optimized by crafting a mix of performance (function) and costs. Allocating time for this technique is crucial during the initiation phase, as it deals with the value process solely during the inception and conception of a new product.