Value Engineering Applications in Transportation (2005)

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43 This glossary of value engineering is adapted from SAVE International. Cost—The expenditure necessary to produce a product, ser- vice, process, or structure. Cost, Design to—A procedure that establishes an estimated cost objective for each project, then designs to that cost objective to produce a reliable product or service. Cost, Life-Cycle—The sum of all acquisition, production, operation, maintenance, use, and disposal costs for a prod- uct or project over a specified period of time. Cost Model—A diagramming technique used to illustrate the total cost of families of systems or parts within a total complex system or structure. Cost/Worth Ratio—The ratio used to determine the maxi- mum opportunity for value improvement. Function—The natural or characteristic action performed by a product or service. Function, Basic—The primary purpose or most important action performed by a product or service. The basic func- tion must always exist, although methods or designs to achieve it may vary. Function, Secondary—A function that supports the basic functions and results from the specific design approach to achieve the basic function. As methods or design approaches to achieve the basic function are changed, secondary functions may also change. There are four kinds of secondary functions: 1. Required—A secondary function that is essential to support the performance of the basic function under the current design approach. 2. Aesthetic—A secondary function describing esteem value. 3. Unwanted—A negative function caused by the method used to achieve the basic function such as the heat gen- erated from lighting, which must be cooled. 4. Sell—A function that provides primarily esteem value. For marketing studies it may be the basic function. Function Models—A graphical depiction of the relationships of the functions within a project. There are two commonly used styles: 1. Hierarchy—A vertical “tree” chart of functions. Recent practice has been to include within one branch user- oriented functions such as assure convenience, assure dependability, assure safety, and attract user. Some practitioners prefer to lay out this model horizontally and refer to it as “user FAST.” 2. Function Analysis System Technique (FAST)—A hor- izontal chart depicting functions within a project, with the following rules: a. The sequence of functions on the critical path pro- ceeding from left to right answer the question “How is the function to its immediate left per- formed?” b. The sequence of functions on the critical path pro- ceeding from right to left answer the question “Why is the next function performed?” c. Functions occurring at the same time or caused by functions on the critical path appear vertically below the critical path function. d. The basic functions of the study are always farthest to the left of the diagram of all functions within the scope of the study. e. Two other functions are classified: i. Highest order—The reason or purpose that the basic function exists. It answers the “why” ques- tion of the basic function, and is depicted imme- diately outside the study scope to the left. ii. Lowest order—The function that is required to initiate the project and is depicted farthest to the right, outside the study scope. For example, if the value study concerns an electrical device, the “supply power” function at the electrical con- nection would be the lowest order function. Job Plan—A structured discipline to carry out a value study. Performance—The physical characteristics required to meet the users needs. Factors such as reliability, maintainabil- ity, quality, and appearance are typical. Price—A fixed sum of money expended by the user/customer to purchase the product under study. Product—For the purposes of value studies, a product is the subject of the study. It may be a physical product such as a manufactured item, or a structure, system, procedure, or an organization. Scope—The portion of the overall project that is selected for the value study. The analysis accepts everything within the defined scope in order to focus attention on the func- tions within those limits. Value—The lowest cost to reliably provide the required func- tions at the desired time and place with the essential quality and other performance factors to meet user requirements. Value, Monetary—There are four classes of monetary value: 1. Use value—The monetary measure of the functional properties of the product or service that reliably accom- plish a user’s needs. 2. Esteem value—The monetary measure of the proper- ties of a product or service that contribute to its desir- ability or salability. Commonly answers the question “How much do I want something?” 3. Cost value—The monetary sum of labor, material, bur- den, and other elements of cost required to produce a product or service. 4. Exchange value—The monetary sum at which a prod- uct or service can be freely traded in the marketplace. GLOSSARY

44 Value Methodology (VM)—The systematic application of recognized techniques that identify the functions of the product or service, establish the worth of those functions, and provide the necessary functions to meet the required performance at the lowest overall cost. Value Methodology Proposal—A proposal by the value study team to its management to provide one or more functions for financial and/or performance improve- ments that is within the current terms and conditions of the contract. Value Methodology Training—There are two levels of SAVE International-approved training specifically designed to provide the minimum knowledge of VM practice. It is expected that VM professionals, as in all professional fields, will continue to keep themselves current through seminars, conferences, and associated educational opportunities. 1. Value methodology workshop—The objective is to provide VM education to the degree that participants will be able to successfully participate in future value studies under the guidance of a qualified Value Spe- cialist with minimum additional training. This is called the Module I program. 2. Value methodology advanced seminar—The objective of this seminar is to extend the knowledge base of those wishing to become professionals in the VM field. Topics include both advanced methodology and areas of management. This seminar is referred to as the Module II program. The seminar requires a minimum of 24 class hours. Module I is a prerequisite, and it is expected attendees will have enough practical experi- ence in VM to contribute to the seminar. Value Analyst—Synonymous with Value Specialist. Value Engineer—Synonymous with Value Specialist. Value Engineering Change Proposal (VECP)—A formal pro- posal submitted to the customer/user that requires their approval before implementing the Value Analysis change. The result will be a modification to the submitter’s contract. Value Specialist—One who applies the VM to study and search for value improvement. Value Study—The application of the value methodology using the VM Job Plan and people previously trained in VM workshops. Worth—The lowest overall cost to perform a function with- out regard to criteria or codes.