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Value Engineering is a phrase tossed around lightly in our industry. It is an approach taken to analyse and affect a system or a project so as to provide the necessary function that it is intended to produce at the lowest cost. Since this activity has direct commercial impact, it is requested very often during the engagement of our advisory services. However, this is done without paying much attention towards what it truly implies or towards the environment needed to achieve it. The gap in understanding of this concep#2f2c2c;">t is also evident during workshops on Value Engineering. This brief note is an attempt to bring into focus some common questions and misconceptions related to this practice.
- What is the difference between Value Engineering and cost reduction?
Ans:Cost reduction is concerned with cost, which is only one amongst many objectives of VE. Value of a product or service is the ratio of function to cost. Value can be enhanced by enhancing functionality while keeping the cost same or reducing the cost or allowing the cost to increase but at a lower rate than increase in the functionality. Thus VE need not necessarily result in cost reduction, as long as the ratio of functionality to cost goes up.
- How well is Value Engineering received in Indian Construction Industry?
Ans:There is really no straight answer to this. Like most industries, construction industry also comprises of organizations and engineers with widely varying mindset and attitudes towards VE. There are many developers in the real estate sector who have implemented a process of VE within their organizations. Many owners now seek VE inputs from consultants. In the final analysis, acceptance of VE can be examined at two levels; (1) acceptance of VE as a concept and (2) acceptance of a specific VE proposal. VE as a concept is widely accepted whereas acceptance of specific VE proposal depends on the merit of the proposal. However, we have also come across cases where seemingly sound VE proposals were rejected not on the merit of the case, but due to the fear that acceptance of VE will be taken as failure or mistake of the person who accepted the initial scheme.
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