The Value Method was originally developed by Larry Mills (General Electric) in 1943. It has been highly refined and honed by many over the years. It's designed to use highly efficient procedures that are consistent with sound management techniques and is tuned to achieve maximum performance, in the minimum amount of time required. As a complete and mature process with more than 50-years of a successful application, it has been used in almost any endeavour contemplated.
Several characteristics differentiate the Value Method from other techniques. These help ensure that the customer obtains the kind of product they need and want.
• Value-based decision process
• Uses functional approach
• Follows a very systematic and organised "job plan"
• Directs efforts towards maximum possible alternatives through creativity techniques
• Comparisons of worth as opposed to life-cycle costs (defined as value).
• It is Success Oriented
Good results are produced by taking the appropriate action at the appropriate time. Unfortunately, the appropriate action and timing are rarely sufficiently clear. Also, there are natural organisational and human limitations that must be contended with by everyone. The Value Method takes human and organisational limitations into account in the key characteristic of its processes. When the fundamental "requirements" of the Value Method are adhered to by those making use of it, success is virtually guaranteed.
Doing a "good job"
In general, all organisations and people want to do a good job. They want to meet the needs of their customers. When an organisation or person consistently fails to meet the needs of the customers well, they eventually fail few plan to fail. Unfortunately, the best direction is not always clear. The limitations of time, money, expertise, and other resources require us to take shortcuts or make decisions that may not be based as well as we would like.
Each person must also contend with our own human limitations such as how many items we can keep in the forefront of our mind at the same time, the number of times it takes us to develop understanding and comfort in any new item, and the limited experiences that we have been exposed to in our lifetime.
When people decide they want to do something optimally, the results are astonishing. To decide to do something better is the first step. To use good techniques to do it is the second step. The third step is acquiring those skills. As people acquire those skills, they and their employer benefit. Whether applied by the individual, team, or organizationally, the Value Method is one of those skills that produces great benefits without having to endure hard lessons through the "school of hard knocks."
You may have heard of it.
Applications of the Value Method are known by several common names. Value Engineering (VE), Value Analysis (VA), Value Management (VM), and Value Planning (VP) are some of the most common names used. These names describe small variations in the general Value Method process related to the timing, selection, type of activity, or other specific application. Application of the Method is usually referred to as value studies. Each year companies save billions of dollars in expenditures; improve quality, service while improving customer satisfaction; and increasing revenue, market share, and profits.
Systematic and organised
The Value Method process uses tested and successful procedures that are directed toward achieving success in meeting the purposes of the "project" by all involved. The process instals "common understanding", generates high production and high performing team activities, reduces the time necessary to obtain a product, and focuses the efforts on the purposes behind the project or activity being studied. A standard "job plan" is used to guide the entire process.
The Value Method generates, examines, and refines creative alternatives toward the concept of producing an end product that produces high customer acceptance. The process endeavours to widen the number and scope of the available alternatives. This is done to increase the potential for enhanced satisfaction, and take advantage of the added expertise brought into the studied activity through the value study process.
One of the most unique and useful qualities of the Value Method is its use of functions to describe the activity or product being studied. The value study breaks the "project" into components so as to avoid misunderstanding of the planned intents for the project. Then a Functional Analysis is conducted on each component. In the Value Method process, functions are limited to the shortest sentence possible. Just two words are usually allowed: a verb (active preferred) and a noun (measurable preferred). The main functional purpose for the component being studied is the primary function. Of course, things often happen as a result of the choice of a component, or something must be done to make the selected component work as needed. These functions are called supporting or secondary functions. The results of the functional analysis are placed into a function-logic diagram called a FAST (a short term for Functional Analysis System Technique).
The true value of an activity or product is its relationship to its perceived worth as opposed to its life-cycle costs. In Value Method terms: Value = Worth / Cost. When an item has a Value greater than 1.0, the item is perceived to be a fair or good value. When an item has a Value is less than 1.0, the item is perceived to be a poor value or bad value. When the perceived worth far exceeds the life-cycle cost, we usually consider purchasing the item.
The worth of a product involves many features. The most commonly cited are benefits received, services obtained, the satisfaction of the product performance, quality, safety, and convenience. The worth of the product is a measure of what is in it for the customers involved. It is a measure of how well the end product meets the involved essential needs and the added desires of those that have a voice in the product selection or its use. An end product must always supply the essential need, or its worth will be poor
The true cost of an item is not just the amount of money that you pay when you buy it. Much more is involved. When you buy something, you also buy its long-term effects. The initial costs plus these long-term costs are called life-cycle costs. This includes things like the time involved to get the project done, the people needed (number, expertise and so on), the degree of difficulty involved, availability of money or other resources, the amount of maintenance needed, and the money that must be expended and kept in reserve.