Abstract:

Enhance value is essential for the companies to identify areas of potential improvisation that provide a platform for sustainable and profitable growth. Successful organizations either generate sufficient capital internally to meet their investment needs, or attract the capital they need from the markets, through their proactive approach using right tools. Value engineering is a proven methodology to get that competitive advantage.

Introduction:

Organizations are often overwhelmed developing the many strategies for profit improvement; creating new products & services; and marketing & sales strategies demonstrating strengths in technical expertise. It is equally important to have a Value Creation Strategy. Focusing on value creation, particularly design and innovation which need to be nurtured in an organized manner, reinforces the link between the performance of the organization and its valuation in the markets.

The need for Value enhancement

Value is created in a business when the return on the invested capital is increased. The following flow diagram in line with a FAST diagram shows the need for value enhancement.

Different Areas of Value Creation:

The above flow diagram suggests different areas of value creation namely strategy, planning, design, procedures adopted in project execution and process. The opportunities to be discovered in those areas are the ways to optimize value by achieving a balance between meeting customer expectations of the product, service or facility in its performance and the costs to provide the same. In other words, value creation is an attempt to achieve value for money using innovation, technology and managing customer and employee relations.

Initiating Value enhancement

Flow Diagram

Value Engineering is the right methodology that addresses all the above aspects of value creation.

Value Creation – the VM advantage

VM has the following advantages while used for value creation:

• Communication tool: VM is an effective communication tool that gets everyone on the same page to precisely understand what is to be accomplished and what is the acceptable resource expenditure to do it.
• Understanding / Defining the problem: Often the problem addressed may be the symptom of it. VM make sure the right problem is being solved.
• Early addressing of Value mismatch: The design or the finding solution of a problem is carried out traditionally, confirming to the predetermined parameters. The VE study gives a fresh look to the design in a systematic way, revisiting constrains, client inputs, and perceptions.
• Decision making tool: For decision making, employees usually depend on their own or somebody else’s experience which may end up in some painful lessons for them and the organization. The Value Method is a valuable decision-making process that comprises of many of the techniques and thought process used by successful people to make good decisions. VM promotes consistency in application and helps assure results.
• Increases Accountability: The results are measured against goals during the audit phase of VM ensuring implementation of the proposal.
• Promote Innovations: VE is function oriented and promotes an effective approach that supports innovative solutions in a variety of situations, including product/item design, packaging, industrial and logistical processes etc.
• Integrated effort: Conventional methods of value creation are usually individual efforts done in different areas and are costly inefficient and incomplete because of the lack the overall view of the situation. Different methods can be used in the appropriate phase of VE.

Improving effectiveness in VM

The effectiveness in using VM can be improved by the active support of the management and the passionate efforts of a dedicated team. The following aspects ensure it.

1. Identifying the communication style of the team members helps in team building. The main styles are:
   • Instigating &suggesting
   • Explaining & exchanging
   • Responding & evaluating
2. While using value creation tools, different approaches can be employed by the team members for creative solutions, which address different aspects of the project criteria. Understanding these ensures the right mix of innovation traits in the team. The four main approaches are:
   • Envision and imagining the ideal future visioning long term goals for maximizing future potential
   • Explore and find out new possibilities using ideas from other areas
   • Experiment by combining & testing new combinations
   • Modify by refining and optimizing the existing to build on the proven idea.
3. Deploy VE teams a diverse team that encapsulates all the necessary qualities of working on a portfolio of innovation projects in the areas of process improvements, execution, new products and services, business solutions and R&D.
4. VE team should be given clearly defined goals and objectives to conduct VE study that will improve business productivity and customer satisfaction deals and reduce cost of delivery. When a dedicated team is given a task, a deadline, adequate resources, and uses good sound principles, the result is a high-quality product. A measurable goal and a methodology to measure results will bring success stories of decisions that increased a project’s value.
5. Encourage more ideas; provide the right technical and business expertise to make value creation an organizational effort. There are no short cuts for ensuring value. Concentrate and develop talent where growth is most likely to create value. It may be impossible to teach technical VE methods to all employees; but possible for a motivated employee to practice VE. Industry- academy interaction brings value addition in employees.
6. Organizations need to focus on gathering more consumer requirements and industry foresights to provide quality information to the VE team because successful VE results are dependent on the information brought to the VE workshop for evaluation.
7. All ideas put forward through sources like suggestion scheme etc. to be routed through VE team.
8. The traditional system of cost reduction in overheads and labour ignores the major share of the problem. Often responsibility of choosing the material is left only with design team. VE team will be able to bring cost effectiveness in choosing the right material.

Advantages of Value Creation

The advantages of value creation for the different stakeholders are as follows:

Customers:

• Increased value for the money spent
• Better facilities
• Appealing aesthetics
• Better satisfaction
• Increased esteem

Organization:

• Better ROI
• Reduction in construction cost without compromising quality
• The value addition communicated effectively to the clients increases sales
• Process improvement & quality enhancement in the specific areas of study
• Methodology for enhancing Innovations
• Increased monitoring and management of Quality and Cost
• Develops team spirit in the organization
• Increased interdepartmental Interactions

Individuals:

• Increased technical know-how
• Better job satisfaction
• More achievements for yearly performance analysis
• A platform for addressing innovative ideas

Society:

• Proper utilization of resources
• Addressing environmental issues

Conclusion

A value study is a search for value creation opportunity in products manufactured, services offered or facilities designed and executed. Value Engineering is not only beneficial, but essential because it assures that the best value to be obtained over the life of the product.

About Author:

Mr. Md Yousef Alsulaiman is a VMA and pursuing CVS qualification. He is Project Manager with over 18 years of extensive experience in leading complex airport projects for prestigious organizations, including Dammam Airports Company and the General Authority of Civil Aviation in KSA. His proven track record includes the successful management of a portfolio of multi-million SAR projects, guiding them from initial conception to flawless execution, consistently meeting deadlines, adhering to budgets, and surpassing rigorous quality standards. He has certifications in project management, engineering, sustainability and many other relevant areas.