Value management and its subset, value engineering, aim to maximize the performance of an organization from the board room to the shop floor. Value management is mainly concerned with the strategic question of ‘what’ should or could be done to improve performance, while value engineering concentrates more on the tactical issues of ‘how’ these changes should be done.

Value can be defined as a ratio of function/cost, so in its simplest terms, the aim is to increase the functionality or usefulness of a product while reducing its overall cost. It is the constant search for reducing costs across all the discipline and management structures of an organization without sacrificing quality or performance that makes value management and value engineering such an essential and rewarding requirement.

The first hurdle to overcome in encouraging a value-management culture is inertia. The inherent conservatism of ‘if it ain’t broke, don’t fix it’ must be replaced with ‘how can a good thing be made better?’. New materials, better techniques, faster machines, more sophisticated programs and more effective methods are constantly being developed, and in a competitive global economy, it is the organization that can harness these developments and adapt them to its own products or services that will survive.

The search and questioning must therefore start at the top. Once the strategy has been established, the process can be delegated. The implementation, which could cover every department and may include prototyping, modelling and testing, must then be monitored and checked to ensure that the exercise has indeed increased the function/cost ratio. This process is called value analysis.

The objectives should be one or more of the following: eliminating waste, saving fuel, reducing harmful emissions, reducing costs, speeding production, improving deliveries, improving performance, improving design, streamlining procedures, cutting overheads, increasing functionality and increasing marketability. All this requires is to ‘think value’ and challenge past practices, even if they were successful.

In an endeavour to discover what areas of the business should be subjected to value analysis, brainstorming sessions or regular review meetings can be organized, but while such meetings are fundamentally unstructured, they require a good facilitator to prevent them from straying too far off the intended route.

Value analysis can be carried out at any stage of the project as can be seen from the simplified life-cycle diagram of Fig. 35.1. For the first two phases, it is still at the ‘What’ stage and can be called value planning, while during the implementation phase it is now at the ‘How’ stage and is known as value engineering. The diagram has been drawn to show value management during the project phases, i.e., before handover. However, value management can be equally useful when carried out during the operation and demolition phases in order to reduce the cost or manufacturing time of a product, or simplify the dismantling operations, especially when, as with nuclear power stations, the decommissioning phase can be a huge project in its own right.

In addition to brainstorming, a number of techniques have been developed to systemize or structure the value-engineering process of which one of the best known ones is function analysis system technique (FAST). This technique has following defined stages:

Value management is not only meeting the established success criteria or key performance indexs but improving them by periodic reviews. Having previously carried out a stakeholder analysis and identifying their needs, it should be possible to meet these requirements even if the costs have been reduced. Indeed customer satisfaction may well be improved and environmental damage reduced, resulting in a win–win situation for all the parties.