Professional Documents
Culture Documents
Use
Performance
Quality
Timeliness
ITEM VALUE
Benefits
Facility
Serviceability
Satisfaction
ITEM
VALUE =
MONEY
= USE ESTEEM
PRICE
= {USE FUNCTION + ESTEEM FUNCTION } ⁄ COST
= {BASIC FUNCTION + SECONDARY FUNCTION } ⁄ COST
= {NECESSARY FUNCTION + UNNECESSARY FUNCTION } ⁄ COST
Another way to express value mathematically is like
Needed performance is obviously decided by the customer and it would be the job of
every concerned executive to determine this as accurately as possible. The more clearly it
is spelt out the better it is. More than half the battle is won if we can find out what the
customer wants. Computing the over all cost would include cost of design, development,
manufacture (including labour, power, material, machines, etc), installation, maintenance,
any consultation fees or royalty paid for that particular equipment, custom duty, taxes
paid, & so on. In short, it would include all cost incurred during the entire life of the
product or service required to fulfill the needed functions. This is also called the life cycle
cost of the product. From the mathematical formula it is obvious that values can be
increased by several means, like
P→
V↑=
C
↓
ii) Enhancing performance at same cost:
P↑
V↑=
C→
iii) Decreasing costs and increasing performance:
P↑
V↑=
C↓
iv) Increasing performance and increasing costs also in such a way that performance
increases faster than costs:
P
V↑=
↑
C↑
MEHODOLOGY
There are various approaches available for VE. Some of the important ones are
MISS: Modify, substitute or subdivide or exchange/eliminate to help change.
M od
I fy
S ubstitute
S ubdivide
D ata Collection
A nalysis
R ecord Ideas
S peculate
I nnovate
R eview
I mplement
General Phase or
Orientation Phase
Information Phase
Function Phase
Creation Phase
Evaluation Phase
Investigation and
Evaluation Phase
Implementation
Phase
Audit Phase
4. Allows one to evaluate and quantify intangibles and to compare apples with
oranges.