Value Engineering works best when there are incentives given to people to provide more value. As a result, many organizations have Value Engineering Programs that motivate people to practice Value Engineering. To understand the need for such program, let’s take an example.
Suppose a contractor has won a tender to construct a road. The tender is worth, say $100 million. As a contractor, you would want the
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tender amount to be higher so that profits are higher. In this case, the contractors will not practice Value Engineering, simply because it is detrimental to their bottom line. However, if you tweak this scenario by adding a Value Engineering clause in the tender that states, “figure out a way to reduce cost without sacrificing on the product and
you will be rewarded X dollars.” In this case, the contractor has an incentive to practice Value Engineering and ultimately the
Life Cycle Costs of the project will reduce. This leads to a Win-Win situation and to continuous improvement.
After you have the incentives in-place, you can then apply Value Engineering. The phases in Value Engineering are:
- Determine Requirements
- Conduct Workshop
- Perform Evaluation
