Maloya: Metal Fabrication & Manufacturing Blog

Value Engineering: It Starts From The Beginning

Written by Reto Hug | August 24, 2020

What is Value Engineering?

Wikipedia defines value engineering as: 

“Value engineering is sometimes taught within the project management, industrial engineering or architecture body of knowledge as a technique in which the value of a system’s outputs is optimized by crafting a mix of performance (function) and costs. It is based on an analysis investigating systems, equipment, facilities, services, and supplies for providing necessary functions at the lowest life cycle cost while meeting the required targets in performance, reliability, quality, and safety. In most cases this practice identifies and removes unnecessary expenditures, thereby increasing the value for the manufacturer and/or their customers.” 

Simply put, value engineering is a method used to improve the value of a product or service during project planning.

Determining Value of Your Project or Service





Function
What is the purpose? How will this be implemented? Who are the stakeholders?

Performance
How long do I need it? What is my maintenance cycle? Will it be a safe and quality product? 

Cost
What quality level do I need? What budget can be accepted? When do I need this?


Commercial products (process machinery, transportation,  general mechanical)

The value of the project or service is increased when either the function is increased or the cost is decreased, or both. If both the function and cost increase or decrease, as long as the cost becomes correspondingly less to function, the value increases. How does this translate to planning and implementing your project?




Value Engineering in Project Management

As new ideas go through a process of development, the largest cost savings are realized in the beginning. As the project matures, the ability to reduce cost becomes more challenging. At some point you just want an efficient process that gets a quality job done which is delivered on time so you can stay on budget. In the construction phase it becomes important to mitigate your losses. A company with a proven planning process can ensure the project stays within the budget, quality and delivery expectations. Late or incorrect components cost you more through work stoppage at the construction site or the assembly line. You have to reschedule and you also may not meet your customers' delivery. You now have to use your resources to fix a problem instead of finding new work.

The process of value engineering has many avenues. As we get to the construction phase many of these items have been resolved. Shop drawings reflect a way to build the project based on the information in the construction documents. Depending on the level of detail, this is where some VE can be performed. Shop drawings provide the platform to the most efficient way to build something. The shop drawings need to go through an approval process. That takes time. Done at the beginning of the project, a good plan (shop drawings) makes the fabrication and installation go smoothly. You stay on budget and deliver on time with a quality project. You move on to the next project.

Saving Time and Costs 

During the quoting and fabrication period the project goes through many avenues. You should look at the cost drivers of the project. Typical cost drivers include:

  1. Number of machine setups
  2. Lot size selection and how it effects material yield
  3. Dimensional tolerances that can be relaxed
  4. Eliminating a process that can be combined in another process such as adding flanges in a bending process instead of welding.
  5. Reducing the parts in an assembly without reducing function.
  6. Mechanical assembly vs welded assembly

to name a few. Discussion on cost drivers can possibly find other methods to save time and cost. Also focus on the planning and engineering (3D model and shop drawings) to see the issues better when fabricating assemblies. Bill of Materials should be purchased so they are in stock at fabrication time. Work orders (instructions) that include quality planning that guide the fabrication to delivery.

Results of Value Engineering

In the end, the scope of work along with the schedule and budget must properly balance with the resources, quality, and risk. When this is done within an efficient process that is planned from the start the customer expectations can be met.



You met the proper delivery date. The components fit at the jobsite of the assembly line. When this plan comes together there is no work stoppage and you move on to the next job. You look back at our initial budget and you realize you made a profit.

Plan for Success with Maloya Laser

 

The Maloya team has helped many of our clients deliver successful projects and increase the value of their products or services. Our experienced team can lead your project from the initial concept phase all the way to assembly and delivery. Are you ready to start a new metal fabrication project? Contact us today to schedule a no-risk consultation.