VALUE METHODOLOGYSTANDARDMay, 1997Revised May, 1998Revised October, 1998SAVE International gratefully acknowledges John W. Bryant, CVS, FSAVE, and the Paul Revere Chapter for their contributions to thedevelopment of this Standard.
Table of ContentsPage METHODOLOGY APPLICABILITY1VALUE STUDY TEAM2THE VALUE METHODOLOGY JOB PLAN3PRE-STUDY4VALUE STUDY5POST-STUDY8VALUE PROFESSIONAL PROFILE9CERTIFIED VALUE SPECIALIST10BODY OF KNOWLEDGE10TYPICAL DUTIES OF A VALUE PROGRAM UNIT13GLOSSARY14APPENDIX17
VALUE METHODOLOGY STANDARDFOREWORDSince 1947 the methods, technology and application of the Value Methodology (VM) has greatly increased andexpanded. VM includes the processes known as Value Analysis, Value Engineering, and Value Management. It issometimes also referred to as Value Control, Value Improvement or Value Assurance. This Standard defines commonterminology, offers a standardized Job Plan - while allowing the great diversity of individual practices that have beensuccessfully developed - and is offered to reduce confusion to those being introduced to VM. The Standard includesthe approved Job Plan, the Body of Knowledge as developed by the SAVE International professional CertificationBoard, typical profiles of the Value Specialist and Value Manager, duties of a Value Organization, a glossary, and anappendix of METHODOLOGY APPLICABILITYA. The Value Methodology can be applied wherever cost and/or performance improvement is desired. Thatimprovement 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 ofhuman endeavorB. The Value Methodology is applicable to hardware, building or other construction projects, and to “soft” areas suchas manufacturing and construction processes, health care and environment services, programming, managementsystems and organization structure. The pre-study efforts for these “soft” types of projects utilizes standardindustrial engineering techniques such as flow charting, yield analysis, and value added task analysis to gatheressential . For civil, commercial and military engineering works such as buildings, highways, factory construction, andwater/sewage treatment plants, which tend to be one time applications, VM is applied on a project to project these are one-time capital projects, VM must be applied as early in the design cycle as feasible to achievemaximum benefits. Changes or redirection of design can be accomplished without extensive redesign, largeimplementation cost, and schedule impacts. Typically for large construction projects, specific value studies areconducted during the schematic stage and then again at the design development (up to 45%) stage. Additionalvalue studies may be conducted during the construction or build . For large or unique products and systems such as military electronics or specially designed capital equipment, VMis applied during the design cycle to assure meeting of goals and objectives. Typically a formalized value study isperformed after preliminary design approval but before release to the build/manufacture cycle. VM may also beapplied during the build/manufacture cycle to assure that the latest materials and technology are . VM can also be applied during planning stages, and for project/program management control by developingfunction models with assigned cost and performance parameters. If specific functions show trends toward beyondcontrol limits, value studies are performed to assure the function’s performance remains within the control
VALUE STUDY TEAMA key to the successful application of a value study is the skills and experience of those applying the the methodology can, and often is, used by individuals, for significant projects it has been proven that a wellorganized team obtains the best value for effort Team Leader performs a key role and is a significant factor in the degree of success. The Team Leader musthave thorough training in both the Value Methodology and team facilitation. The requirements include strong leadership,communication skills, and experience working with users/ size and composition of the team is project dependent. The members should represent a diverse background andexperience that incorporates all the knowledge required to fully cover the issues and objectives of the project. Typicallythese include cost, estimating, procurement/materials, and those technical disciplines unique to the project such asdesign, manufacturing, construction, environmental, and is most advantageous for the team leader, or a team member, to implement the approved value proposals at based primarily upon one technical discipline will often have significant effects on other disciplines within theproject. In addition to being technically competent, team member selection should include individuals who represent therange of disciplines and end users the study results will impact. They must be individuals who generate positiveattitudes and are willing to investigate new ideas and then rationally evaluate
THE VALUE METHODOLOGY JOB PLANThe Value Methodology uses a systematic Job Plan (figure 1). The Job Plan outlines specific steps to effectivelyanalyze a product or service in order to develop the maximum number of alternatives to achieve the product’s orservice’s required functions. Adherence to the Job Plan will better assure maximum benefits while offering -STUDYCollect User/Customer AttitudesComplete Data FileDetermine Evaluation FactorsScope the StudyBuild Data ModelsDetermine Team CompositionVALUE STUDYInformation PhaseComplete Data PackageModify ScopeFunction Analysis PhaseIdentify FunctionsClassify FunctionsDevelop Function ModelsEstablish Function WorthCost FunctionsEstablish Value IndexSelect Functions for StudyCreative PhaseCreate Quantity of Ideas by FunctionEvaluation PhaseRank and Rate Alternative IdeasSelect Ideas for DevelopmentDevelopment PhaseConduct Benefit AnalysisComplete Technical Data PackageCreate Implementation PlanPrepare Final ProposalsPresentation PhasePresent Oral ReportPrepare Written ReportObtain Commitments for ImplementationPOST-STUDYComplete ChangesImplement ChangesMonitor Status3
Figure 1: The VM Job PlanThe VM Job Plan covers three major periods of activity: Pre-Study, the Value Study, and Post-Study. All phases andsteps are performed sequentially. As a value study progresses new data and information may cause the study team toreturn to earlier phases or steps within a phase on an iterative basis. Conversely, phases or steps within phases are . PRE-STUDYPreparation tasks involve six areas: Collecting/defining User/Customer wants and needs, gathering a complete datafile of the project, determining evaluation factors, scoping the specific study, building appropriate models anddetermining the team . Collect User/Customer AttitudesThe User/Customer attitudes are compiled via an in-house focus group and/or external market surveys. Theobjectives 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 first time projects such as a new product or new construction, the analysis may be tied to project goals results of this task will be used to establish value mismatches in the Information a Complete Data FileThere are both Primary and Secondary sources of information. Primary sources are of two varieties: peopleand documentation. People sources include marketing (or the user), original designer, architect, cost orestimating group, maintenance or field service, the builders (manufacturing, constructors, or systemsdesigners), and consultants. Documentation sources include drawings, project specifications, bid documentsand project 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 data is secondary source is a site visitation by the value study team. “Site” includes actual constructionlocation, 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 Evaluation FactorsThe team, as an important step in the process, determines what will be the criteria for evaluation of ideas andthe relative importance of each criteria to final recommendations and decisions for change. These criteria andtheir importance are discussed with the user/customer and management and concurrence obtained4
the StudyThe team develops the scope statement for the specific study. This statement defines the limits of the studybased on the data-gathering tasks. The limits are the starting point and the completion point of the study. Justas important, the scope statement defines what is not included in the study. The scope statement must beverified by the study ModelsBased on the completion and agreement of the scope statement, the team may compile models for furtherunderstanding of the study. These include such models as Cost, Time, Energy, Flow Charts, and Distribution,as appropriate for each Team Composition, Wrap-UpThe Value Study Team Leader confirms the actual study schedule, location and need for any supportpersonnel. The study team composition is reviewed to assure all necessary customer, technical, andmanagement areas are represented. The Team Leader assigns data gathering tasks to team members so allpertinent data will be available for the VALUE STUDYThe value study is where the primary Value Methodology is applied. The effort is composed of six phases:Information, Function Analysis, Creativity, Evaluation, Development, and PhaseThe objective of the Information Phase is to complete the value study data package started in the Pre-Studywork. If not done during the Pre-Study activities, the project sponsor and/or designer brief the value studyteam, providing an opportunity for the team to ask questions based on their data research. If a “site” visitationwas not possible during Pre-Study, it should be completed during this study team agrees to the most appropriate targets for improvement such as value, cost, performance, andschedule factors. These are reviewed with appropriate management, such as the project manager, value studysponsor, and designer, to obtain , the scope statement is reviewed for any adjustments due to additional information gathered during theInformation Analysis PhaseFunction definition and analysis is the heart of Value Methodology. It is the primary activity that separatesValue Methodology from all other “improvement” practices. The objective of this phase is to develop the mostbeneficial 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 usingactive verbs and measurable nouns. This is often referred to as Random Function . Classify the functions as basic or secondary3. Expand the functions identified in step 1 (optional)4. Build a function Model - Function Hierarchy/Logic or Function Analysis System Technique (FAST)
5. Assign cost and/or other measurement criteria to functions6. Establish worth of functions by assigning the previously established user/customer attitudes to thefunctions7. Compare cost to worth of functions to establish the best opportunities for improvement8. Assess functions for performance/schedule considerations9. Select functions for continued analysis10 .Refine study PhaseThe objective of the Creative Phase (sometimes referred to as Speculation Phase) is to develop a largequantity of ideas for performing each function selected for study. This is a creative type of effort, totallyunconstrained by habit, tradition, negative attitudes, assumed restrictions, and specific criteria. No judgment ordiscussion occurs during this activity. The quality of each idea will be developed in the next phase, from thequantity generated in this are two keys to successful speculation: first, the purpose of this phase is not to conceive of ways todesign a product or service, but to develop ways to fpunecrtfiornms stehlec ted for study. Secondly,creativity is a mental process in which past experience is combined and recombined to form newcombinations. The purpose is to create new combinations which will perform the desired function at less totalcost and improved performance than was previously are numerous well accepted idea generation techniques. The guiding principle in all of them is thatjudgment/evaluation is suspended. Free flow of thoughts and ideas - without criticism - is PhaseThe objectives of the Evaluation Phase are to synthesize ideas and concepts generated in the Creative Phaseand to select feasible ideas for development into specific value the evaluation criteria established during the Pre-Study effort, ideas are sorted and rated as to how wellthey meet those criteria. The process typically involves several steps:1. Eliminate nonsense or “thought-provoker” . Group similar ideas by category within long term and short term implications. Examples of groupings areelectrical, mechanical, structural, materials, special processes, . Have one team member agree to “champion” each idea during further discussions and evaluations. If noteam member so volunteers, the idea or concept is . List the advantages and disadvantages of each . Rank the ideas within each category according to the prioritized evaluation criteria using such techniquesas indexing, numerical evaluation, and team . If competing combinations still exist, use matrix analysis to rank mutually exclusive ideas satisfying thesame
7. Select ideas for development of value none of the final combinations appear to satisfactorily meet the criteria, the value study team returns to theCreative PehasThe objective of the Development Phase is to select and prepare the “best” alternative(s) for improving 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 initialassessment concerning their feasibility for implementation. The following steps are included:1. Beginning with the highest ranked value alternatives, develop a benefit analysis and implementationrequirements, including estimated initial costs, life cycle costs, and implementation costs taking intoaccount risk and . Conduct performance benefit . 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 proposedalternative(s)d. any technical back-up data such as information sources, calculations, and literaturee. schedule an implementation Plan, including proposed schedule of all implementation activities, teamassignments and management recommendations including aen cyo nudniqtiuons to the project under study such as emergingtechnology, political concerns, impact on other ongoing projects, marketing plans, PhaseThe objective of the Presentation Phase is to obtain concurrence and a commitment from the designer, projectsponsor, and other management to proceed with implementation of the recommendations. This involves aninitial oral presentation followed by a complete written the last task within a value study, the VM study team presents its recommendations to the decision makingbody. Through the presentation and its interactive discussions, the team obtains either approval to proceedwith implementation, or direction for additional information written report documents the alternatives proposed with supporting data, and confirms the implementationplan accepted by management. Specific organization of the report is unique to each study and STUDY7
The objective during Post-Study activities is to assure the implementation of the approved value study changerecommendations. Assignments are made either to individuals within the VM study team, or by management toother individuals, to complete the tasks associated with the approved implementation the VM Team Leader may track the progress of implementation, in all cases the design professional isresponsible for the implementation. Each alternative must be independently designed and confirmed, includingcontractual 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 verifyto management the full benefits resulting from the value methodology study. Further, it is recommended thatappropriate financial departments (accounting, auditing, etc.) conduct a post audit to verify to management the fullbenefits resulting from the value
VALUE PROFESSIONAL PROFILEVALUE PROGRAM MANAGERReports to:General Manager or member of Executive StaffEducation:4-year college degree or 5 years relevant experienceModule I Value Methodology Workshop or equivalentModule II Advanced SeminarExperience:5 year s(minimum) in specialized industry or government2 years in Value MethodologyQualifications:Technical AptitudeTeam Leadership SkillsEffective CommunicatorUnderstands Manufacturing, Procurement, Contracts, CostsTraining ApttuidePersonality:LeaderResourcefulCommunicatorVALUE PRACTITIONERReports to:Value Program ManagerEducation:4-year college degree or 5 years relevant experienceModule I Value Methodology Workshop or equivalentExperience:3 years (minimum) in specialized industry or governmentQualifications:Technical AptitudeCreativeEffective CommunicatorUnderstanding of Manufacturing/Construction, Procurement,Subcontracting, and CostsPersonality:Team OerintedNot Easily DiscouragedResourcefulRespected within Organization9
CERTIFIED VALUE SPECIALISTSAVE International maintains a professional certification program, the function of which is to recognize individuals whouse the value methodology in their principal career and who have met the approved education and experiencestandards. Those standards include:1. Completion of Module I and Module II approved training . A minimum of two years full time work experience in the VM . Demonstration of required performance in value . Demonstration of continued growth through learning, teaching, presentations/writing, and contributions to the . Submission of an original paper concerning any value related . Successful completion of the Value Theory and Practice assist certification candidates, the Certification Board has issued a Body of Knowledge listing topical areas withwhich any qualified Value Specialist should be OF KNOWLEDGEI. Fundamental Value ConceptsA. VM History and Characteristics1. Historical development of the Value Methodology2. Types of value3. Relation of quality and value4. Primary VM questions (six): What is it? What does it do? . Fundamental value principles and methods6. Differentiating the Value Methodology from other methodsB. Job Plans1. Three major stages and individual Job Plan phases2. Objectives of each stage and Job Plan phase3. Variations of Job Plans4. What the VM team does during each phase of the Job PlanC. Function Analysis Basics1. Defining functions2. Classifying functions3. Types of function modelsD. Function/Cost1. Purpose2. Allocating costs to functions3. Pareto Analysis4. Cost models vs. function-cost model10
E. Function Worth1. Cost-value relationship2. Good and poor value functionsa) Value indexb) Customer inputc) High cost and low cost functions3. Establish worth of functionsF. Creativity and Creative Processes1. Creating by function2. Techniques to help generate ideasII. Concept ApplicationA. Defining Functions1. Verb-Noun language2. Higher orders of abstractionB. Classifying Functions1. Basic function2. Secondary or supporting function3. Higher order function4. Assumed functionC. Allocating Costs to FunctionsD. Determining the Value Index1. Relationships of Function Worth and Function Cost2. Good value and poor valueE. Function Modeling1. Basic typesa) Hierarchy modelsb) Function Analysis System Technique (FAST)(1) “Classic”(2) Customer/User(3) Technical2. Characteristics and Construction of FAST Diagramsa) Scope linesb) How? - Why? logicc) Elements of a FAST diagramd) Good relational logic paths of functionse) Critical path of functions where applicable11
f) Placement of design objectives where applicable3. Allocating costs and other measures on function modelsF. Financial Analysis1. Cost estimating/control systemsa) Direct and indirect costsb) Fixed and variable costsc) Financial impact of VM proposalsd) VM’s relationship to and use of financial systemse) Contracting for Value services(1) VM team(2) Designers, architects, etc.(3) Support personnel2. Contracting for Value Methodologya) Calculating net savingsb) Sharing incentivesc) Types of clauses/contracts used in public and private sectors3. Break-Even Analysis4. Life Cycle Cost Analysis5. Value Studiesa) Net and gross costsb) Return of study costc) Implementation and programmed costsd) Hurdle ratesIII. Management of ValueA. Organizing and implementing VM programsB. Management’s roleC. Value team compositionD. Team leader skillsE. Managing VM teams and studiesIV. Value Analysis EducationA. Basic Value Analysis Education1. Module I training workshop content2. Module II seminar contentB. Related Programs12
TYPICAL DUTIES OF A VALUE PROGRAM UNITA. Maintain up-to-date knowledge of the “State of the Art” Value Methodology theory and . Select specific projects for VM study and get them approved by management/customer and secure team membersto perform the . Lead and coordinate all VM studiesD. Assist management in setting annual goals. Report monthly on progress on ongoing projects, projects completedand projects scheduled. Reports should demonstrate expenditures vs. benefits, line item status of each project,educational program status and return-on-expenditure . Plan and conduct VM training courses to assure a cadre of basic trained personnel for . Conduct management orientations and briefings as appropriate. Be available for similar briefings in VM forcustomers and . Work with the procurement organization to involve vendors, suppliers and subcontractors in the VM methods of inviting their suggestions for value improvements and a sharing arrangement for thosesuggestions. Support procurement in any VM oriented change proposal . Monitor the implementation of accepted VM proposals to assure maximization of potential . Represent the organization in the community concerning value improvement. Contribute to the VM profession’sgrowth through participation in technical conferences, lecturing at colleges,
GLOSSARYCOSTThe expenditure necessary to produce a product, service, process or , DESIGN TOA procedure which establishes an estimated cost objective for each project, then designs to that cost objective toproduce a reliable product or , LIFE CYCLEThe sum of all acquisition, production, operation, maintenance, use and disposal costs for a product or projectover a specified period of MODELA diagramming technique used to illustrate the total cost of families of systems or parts within a total complexsystem or RATIOThe ratio used to determine the maximum opportunity for value natural or characteristic action performed by a product or , BASICThe primary purpose or most important action performed by a product or service. The basic function mustalways exist, although methods or designs to achieve it may , SECONDARYA function that supports the basic function and results from the specific design approach to achieve the basicfunction. As methods or design approaches to achieve the basic function are changed, secondary functions mayalso change. There are four kinds of secondary functions:1. Require d- A secondary function that is essential to support the performance of the basic function under thecurrent design . Aesthet i-c A secondary function describing esteem . Unwante d- A negative function caused by the method used to achieve the basic function such as the heatgenerated from lighting which must be . Sel l- A function that provides primarily esteem value. For marketing studies it may be the basic MODELSA graphical depiction of the relationships of the functions within a project. There are two commonly used styles:1. Hierarch y- A vertical “tree” chart of functions. Recent practice has been to include within one branchuser oriented functions such as assure convenience, assure dependability, assure safety, and attract practitioners prefer to lay out this model horizontally and refer to it as “user FAST.”2. Function Analysis System Technique (- FA ShTo)rizontal chart depicting functions within a project, withthe following rules:a. The sequence of functions on the critical path proceeding from left to right answer the questions “Howis the function to its immediate left performed?”b. The sequence of functions on the critical path proceeding from right to left answer the question “Why isthe next function performed?”14
c. Functions occurring at the same time or caused by functions on the critical path appear vertically belowthe critical path . The basic function of the study is always farthest to the left of the diagram of all functions within thescope of the . Two other functions are classified:1) Highest Order - The reason or purpose that the basic function exists. It answers the “why”question of the basic function, and is depicted immediately outside the study scope to the ) Lowest Order - The function that is required to initiate the project and is depicted farthest to theright, outside the study scope. For example, if the value study concerns an electrical device, the“supply power” function at the electrical connection would be the lowest order PLANA structured discipline to carry out a value physical characteristics required to meet the users needs. Factors such as reliability, maintainability, qualityand appearance are fixed sum of money expended by the user/customer to purchase the product under the purposes of value studies, a product is the subject of the study. It may be a physical product such as amanufactured item, or a structure, system, procedure, or an portion of the overall project that is selected for the value study. The analysis accepts everything within thedefined scope in order to focus attention on the functions within those lowest cost to reliably provide the required functions at the desired time and place with the essential qualityand other performance factors to meet user , MONETARYThere are four classes of monetary value:1. Use Value - The monetary measure of the functional properties of the product or service which reliablyaccomplish a user’s . Esteem Value - The monetary measure of the properties of a product or service which contribute to itsdesirability or salability. Commonly answers the “How much do I want something?” . Cost Value - The monetary sum of labor, material, burden, and other elements of cost required to produce aproduct or . Exchange Value - The monetary sum at which a product or service can be freely traded in the METHODOLOGYThe systematic application of recognized techniques which identify the functions of the product or service,establish the worth of those functions, and provide the necessary functions to meet the required performance atthe lowest overall METHODOLOGY PROPOSAL15
A proposal by the value study team to its management to provide one or more functions for financial and/orperformance improvements and is within the current terms and conditions of the STUDYThe application of the value methodology using the VM Job Plan, and people previously trained in METHODOLOGY TRAININGThere are two levels of SAVE International approved training specifically designed to provide the minimumknowledge of VM practice. It is expected that VM professionals, as in all professional fields, will continue tokeep themselves current through seminars, conferences, and associated educational . Value Methodology Workshop - The objective is to provide Value Methodology education to the degree thatparticipants will be able to successfully participate in future value studies under the guidance of a qualifiedValue Specialist with minimum additional training. This is called the Module I . Value Methodology Advanced Seminar - The objective of this seminar is to extend the knowledge base ofthose wishing to become professionals in the value methodology field. Topics include both advancedmethodology and areas of management. This seminar is referred to as the Module II seminar requires a minimum of 24 class hours. Module I is a prerequisite, and it is expected attendeeswill have enough practical experience in VM to contribute to the ANALYSTSynonymous with Value ENGINEERSynonymous with Value ENGINEERING CHANGE PROPOSAL (VECP)A formal proposal submitted to the customer/user which requires their approval before implementing the VAchange. The result will be a modification to the submitter’s SPECIALISTOne who applies the value methodology to study and search for value lowest overall cost to perform a function without regard to criteria or
APPENDIXReference MaterialsPublications Catalog, SAVE InternationalDescribes textbooks and educational materials on the Value Methodology and related programs. Includesvideotapes and information on Value World, SAVE International’s technical Conference Proceedings, SAVE InternationalIncludes all presentations given at each annual conference. Also available is a VM Bibliography, a compilationof all presentations since 1980, and articles from Value World. Each presentation shows Title, Author,Abstract, and Source. Papers can be individually ordered from SAVE International.“Standard Practice for Performing Value Analysis (VA) of Buildings and Building Systems”, American Society forTesting and Materials, Publication Methodology Certification Manuals, SAVE InternationalCertification ManualRecertification ManualSeminar/Workshop ManualCertification Examination Study GuideSAVE International Internet Web Site: D. Miles Value Foundation Internet Web Site:
