TABLE OF CONTENTS For any service product, customer value and satisfaction can be improved by increasing customer benefits and reducing cost. Among the customer benefits, functional benefits are of key importance. People pay for functions, not for hardware, not for paperwork. For example, people go to a fast-food restaurant to buy such functions as relieving hunger, getting nutrition, and getting taste. People go to hospitals, not to buy doctor's time, surgery, or hospital beds, but to buy such functions as curing a disease and relieving symptoms. Value engineering is a systematic, team-oriented, creative approach that seeks to deliver customer-desired functions with lower cost.
The Society of American Value Engineers (SAVE) defines the term value engineering as follows:
Value engineering is the systematic application of recognized techniques which identify the functions of a product or service, establish a monetary value for that function and provide the function at the lowest cost.
However, value engineering is not merely a cost-cutting program; it only cuts unnecessary cost. Unnecessary cost is the cost that can be removed without affecting the functional performance of the product or service. In the value-engineering approach, it is important to maintain a high level of functional performance while cutting cost. That is, the new design coming out of a value-engineering project should have the same or better functional performance than the old design. It has been estimated that 30 percent of the cost of an average product or service is unnecessary. This unintentional cost is the result of...
