Developing a good knowledge about cost engineering related techniques such as value analysis, engineering value analysis, and accounting procedures is the complement needed by the cost oriented engineer.

This knowledge will foster the communication and interface required to achieve the ultimate goal of keeping companies within profitable business.

This discussion will introduce the main concepts related to these techniques.

Value

Value may be defined as the rating or scaling of similar products or services, according to their usefulness, importance, general worth, and degree of excellence.

Four types of value may be identified for a product,

Exchange value: Rating according to the possibility of producing revenue.

Use value: Rating according to the characteristics needed to perform the designed task.

Cost value: Rating according to the resources needed to generate the product or a service.

Esteem value: Rating associated to the design features that make the product or a service more attractive to the consumer.

It may be said that good value is the combination of lowest exchange and cost value that provides the best use and esteem value.

Value Analysis

Value analysis is an implemented procedure utilized to eliminate unnecessary costs.

The key of the procedure is to follow a check list of common business pitfalls. It will provide ideas for cost reduction and control, by simply asking yourself if your product or service has an added cost due to one of the items mentioned on the list. It is pure common sense but it does not come to all of us unless we establish and implement the procedure.