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  Standard Dictionary Terms

Presented for reference are portions of definitions of terms as normally given by standard dictionaries. Where use of these terms appear in our definitions, note the extent of meaning.

Benefit - ... anything contributing to an improvement in condition ...

Function - ... the intended operation of an item or service in its normally prescribed manner ...

Methodology - ... the division of pure logic that treats of the methods of direction the means of thinking to the end of dear and connected thinking ...

Product - ... anything produced or obtained as a result of some operation of work, as by generation, growth, labor, study or skill  [As used herein, product includes both goods and services; and goods and services include all areas of endeavor.]

Program - ... a public proclamation; official edict or decree; normally something planned, funded, conducted, monitored, and measured ...

Technique - ... working methods or manner of performance, as in art, science, etc ....

User - ... a person that uses ... [As used herein, user includes customer, buyer, owner, or maker; i.e. a maker uses product to advertise, warn, guarantee, identify maker and or source of repair.]

Value - ... a fair or proper equivalent in money, commodities, etc., esp. for something, sold or exchanged; fair price or return; the worth of a thing in money or goods at a certain time; market price; purchasing power; that quality of a thing according to which it is thought of as being more or less desirable, useful, estimable, important, etc.; worth or the degree of worth ...

worth - ... material value, esp. as expressed in terms of money or some other medium of exchange; that quality of a thing that lends, importance, value, merit, etc. and that is measurable by the esteem in which the thing is held; the amount or quantity of something that may be had for a given sum [a dime's worth of nuts]; equal in worth or value to [a book that is worth $50.00] ... (SYN) -worth and value are used interchangeably when applied to the desirability of something material as measured by its equivalence in money, goods, etc. [the worth or value of a used car], but in discrimination, "worth" implies an intrinsic excellence resulting as from superior qualities, and "value" suggests the excellence attributed to something with reference to its benefits

Value definitions

accounts, code of - 1. A set of numbers used to categorize major components of the whole product or components of general company overhead, 2. A set of numbers used in estimating to group costs, 3. In construction, a hierarchal set of numbers used to represent the whole project [e.g., the 16 Division CSI set or the 12 System UNIFORMAT set].

alternative, function - A different method or way [in terms of a product] to achieve the desired result.

analysis, function - 1. The study of product performance using two words, a verb and a noun, 2. The methodology of value analysis.

analysis, functional - A mathematical technique originated by Vito Volterra in 1887 involving the use of integro-differential equations.

analysis, future value - An economic technique to accumulate costs occurring at various points in time to their equivalent value at a specified future point in time.

analysis, life cycle cost - The comparison of acceptable alternatives on the basis of their contribution to life cycle costs using present value or annualized cost methodology.

analysis, present value - An economic technique to discount costs occurring in future years to their equivalent current value and total the values.

analysis, value - 1. A method for enhancing product value by improving the relationship of worth to cost through the study of function, 2. A methodology using an organized approach [job plan] with an organized effort [multidiscipline team] to provide required functions at lowest overall cost consistent with achieving required acceptance or performance, 3. The determination of the value of product functions as perceived by the user/customer in the marketplace.

analyst, value - One who uses value analysis methodology to study a product and search for value improvement.

assurance, value - See value analyst.

benefit, function - The life cycle advantages, income, or revenue attributable to provision of a function.

control, value - See value analyst.

cost, acquisition - The price paid to procure a product not produced in house.

cost, annualized - An economic technique to convert any defined set of present value costs to an equivalent uniform annual amount for a fixed period.

cost, application - See customer cost.

cost, breakeven - 1. The point, for a given quantity of product, where the cost to purchase the product is the same as the cost to manufacture it in-house, 2. The quantity at which two competing acquisition alternatives are equal in cost.

cost, conversion - The money expended to convert raw material, or an unfinished product, into the desired usable end product.

cost, customer - Product price of acquisition paid by a customer.

cost, development - 1. The amount spent on product research, design, models, pilot production, testing, and evaluation, 2. Cost normally considered product overhead and distributed as fixed cost over an estimated number of products to be produced.

cost, differential - The difference in the life cycle cost between two competing alternatives.

cost, direct - 1. Cost that is directly identifiable with and attributable to the production of one specified product, 2. Cost that cannot be allocated to more than one product.

cost, direct labor - The amount expended for salaries and wages to provide a product.

cost, essential - All cost necessary to provide basic function.

cost, factory - See manufacturing cost.

cost, fixed - 1. Cost incurred that are not dependent upon the quantity of products produced, 2. Cost that does not vary with the volume of business, such as property taxes, insurance, depreciation, security, and basic water and utility fees, 3. expenses for labor, material, equipment, and tools to produce the first product.

cost, general & administrative - A  special classification of overhead cost normally apportioned to products and includes salaries for executives, managers, administrative and clerical staff as well as general office supplies and, equipment, marketing and as specified, may include advanced design, research, and other administrative costs.

cost, incremental - 1. The difference in product cost between established incremental levels of product performance, 2. The add-on, alternative, accessory, or choice cost which takes into account the availability of existing resources when adding a new system, 3. Also referred to as variance cost.

cost, indirect - 1. See overhead cost, 2. Also called indirect burden.

cost, indirect labor - The amount expended for employee benefits, Le. retirement, health insurance, vacation, other time off, unemployment compensation, and bonuses.

cost, investment - The initial costs of product development, excluding sunk costs, which are assumed to occur as a lump sum in a base year.

cost, labor - The sum of direct labor cost and indirect labor cost.

cost, life cycle - 1. The sum of all acquisition, operation, maintenance, use and disposal costs for a product over a specified period of time, 2. The sum of all costs for the development, procurement, production, and installation of a product, as well as for its financing, taxes, operation, logistic support, maintenance, modification, repair, replacement, and disposal over the period of its useful life, 3. In manufacturing it is also referred to as the sum of development, production, and application cost, 4. The economic measure of value.

cost, logistic support - 1. The cost of spare and replacement parts and equipment with associated installation labor, 2. The cost of periodic maintenance and repair, 3. The cost for those activities necessary to plan for and provide support programs, such as logistics, and field engineering, publications, supply support, spares, training, administration of logistic functions, and repair coordination, 4. In the military, the cost for details embracing the transport, quartering, and supply of troops.

characteristics, essential - The minimal or necessary operational, maintenance, safety, performance, and reliability needs of the customer which must be fulfilled.

cost, function - 1. The proportion of product cost allocated to functions performed by the product, 2. All costs directly associated with the performance of a particular function, 3. Costs required for the realization of a function.

cost, lowest total - The lowest life cycle cost.

cost, manufacturing - The sum of the costs expended for direct material, direct labor, and factory overhead costs for a product.

cost, material - 1. The cost expended for raw or purchased materials needed to produce a product, 2. Normally includes the cost for packaging, inspection, shipping, and delivery of purchased materials.

cost, non-recurring - 1. Items of cost that represent one time expense at  predicted times in the future, 2. Normally includes the cost for packaging, inspection, shipping, and delivery of purchased materials.

cost, overhead - 1. Costs apportioned to products from overhead accounts, 2. Costs that cannot be specifically and directly charged to a single product as being solely incurred by that product such as development, supervision, tooling, maintenance, heat, power, light, buildings, taxes, and financing, 3. Usually fixed costs, 4. Also called indirect costs or burden.

cost, ownership - 1. The cost to acquire, operate, maintain, repair, and dispose of the product during its period of use, 2. The cost to possess the product including all finance charges, taxes, insurance, and loss of product use when it is out of service.

cost, product - 1. The sum of manufacturing, general and administrative, and selling costs, 2. The total expense to produce a product, 3. The transfer of money, labor, time, or other personal items to achieve an objective, 4. One component of price.

cost, production - See manufacturing cost.

cost, recurring - 1. Repetitive production costs that vary or occur with the quantity being produced, 2. Cost expressed in terms of a recurring direct unit cost of production of an item consisting of labor, direct burden, materials, purchased parts, expendable tooling, quality control, test, inspection, packaging, and shipping, 3. Costs which are repetitive throughout a product's useful life.

cost, relative - 1. Differential costs between various products of functions rather than actual or absolute costs, 2. Costs that show order of magnitude only and the order of expense from greatest to least.

cost, replacement - Future costs to replace a product or product component which is expected to occur during the product life.

cost, retrofit - The cost to incorporate a product improvement or necessary change into an older product.

cost, standard  - 1. Cost calculated on accepted productivity and material rates used as a norm against which to compare actual performance, 2. Costs accepted as the basis for budgeting or allocation of funds.

cost, supplier - The price a manufacturer pays for generally off­ the-shelf purchased parts, materials, and supplies as contrasted with "sub-contractor costs" who generally do some degree of product manufacturing.

cost, total - 1. All cost for someone to acquire, use, enjoy, maintain, and dispose of a product, plus the time, effort and risk of buying, 2. See life cycle cost.

cost, unnecessary - 1. Costs for functions not desired, 2. Cost for quality or performance above that needed by the user, 3. Any cost that does not contribute to value, 4. That portion of the cost of a product which does not contribute to essential functions, required performance, or marketability.

cost , variable - Direct or indirect costs which change directly with the quantity of, or conditions under which, products are produced, as distinguished from fixed costs.

cost , variance - See incremental cost. cost, vendor - See supplier cost.

dollars, constant - Economic value expressed in terms of the purchasing power of the dollar in the base year; i.e. both inflation of cost and the time value of money are reflected through use of a discount rate.

dollars, current - Economic value expressed in terms of actual prices each year, including inflation; i.e. present or future value of current dollars is determined by using the time value of money rather than a discount rate.

engineer, value - One who uses value engineering methodology to study a product and search for value improvement.

engineering, value - 1. The same as value analysis except with emphasis on application during product development and/or design, 2. The incorporation of functions onto products considered of value by the user.

estimate, cost - 1. A product representing the art and science of predicting cost or price, 2. The summation of unit quantities of labor and material multiplied by unit costs of labor, material, overhead and profit for providing a product under a specified set of conditions.

factor, discount - A multiplication number for converting cost and benefits occurring at different times to a common basis.

FAST, customer - The same as a technical FAST diagram except: the same four supporting functions [i.e. assure dependability, assure convenience, satisfy user, attract user] always appear immediately to the right of the left scope line.

FAST, technical - 1. A diagramming technique to graphically show the logical relationships of the functions of a product, 2. Product functions displayed horizontally in diagram form using the following rules; higher order functions appear to the left answering "why" a function occurs; lower order functions appear to the right answering "how" a function occurs; functions occurring at the same time appear vertically below one another; scope lines indicating the scope of the value study are placed vertically; and basic function of the product is defined as being immediately to the right of the left scope line.

function, aesthetic - 1. A function describing esteem value rather than use value, 2. A function attributable to pleasing user rather than contributing performance, 3. A function that indicates product features that exceed its technical utility or performance requirement, 4. Also referred to as esteem value.

function, basic - 1. That which is essential to the performance of a user function, 2. The function describing the primary utilitarian characteristic of a product to fulfill a user requirement, 3. Also called primary or essential function.

function, critical - A combination of the basic and selected required secondary or dependent functions defining the means used to achieve workability of the product.

function, critical path - One of the set of basic and dependent functions that meet the "how" and "why" logic on a FAST diagram forming a path of essential function without which the product would not perform.

function, dependent - 1. Lower order functions, to the right of each other on a FAST diagram, that are successively dependent on the one to its immediate left for its existence, 2. A function that depends on a higher order function for its existence, 3. A function that exists or is chosen in order to achieve a basic function.

function, essential - 1. A function describing a characteristic which is absolutely necessary to a product's ability to perform the user function, 2. Also called the necessary or required function.

function, esteem - See aesthetic function.

function, higher order - 1. A function that is a goal rather than an objective, or an objective rather than a task, 2. A function that is more abstract than specific [i.e. "feed people" is a higher order function than "distribute food stamps"].

function, independent - 1. A function that does not depend on another function or on the method selected to perform that function, 2. A function that occurs "all the time," [i.e. a part or assembly may have to "resist corrosion" regardless of what other basic or secondary function that part is performing].

function, unnecessary - 1. A function not contributing to the utility or desirability of the product, 2. Also referred to as a non-essential function.

function, unwanted - 1. A negative function caused by the method used to achieve the basic function, [ie.; such as heat generated from lighting which often must be cooled], 2. Also called an undesirable function.

function, work - 1. A function that is essential to make the product or service perform as intended, 2. A function that provides use value, 3. Also called use function.

mismatch, value - When function cost does not fit or match user/ customer function attitude for a given function.

model, cost - 1. A diagrammatic representation of cost based on a hierarchal structure [often work breakdown structure] of product components or functions, 2. A model that sums to the total cost of the product.

model, energy - 1. A diagrammatic representation, in a hierarchal structure, of the quantity of energy consumption caused by each of the product's components or functions, 2. A model that sums to the total energy used by a product.

function, lower order - The opposite of a higher order function [tasks rather than objectives, specific rather than abstract].

function, necessary - See essential function.

function, non-essential - See unnecessary function.

function, primary - See basic or essential function.

function, required - See essential function.

function, secondary - 1. The manner in which the basic function was implemented, 2. A function indicating quality, dependability, performance, convenience, attractiveness, and general satisfaction beyond that needed to satisfy minimum user needs, 3. Includes supporting unwanted, unnecessary, and required functions

functions, required secondary - A secondary function that is essential to support the performance of the basic function, 2. A function that may result from specified design criteria.

function, sell - 1. A function that provides primarily esteem value [such as "improve style" or "enhance decor"], 2. A function that may result from specified design criteria.

function, supporting - 1. A function required by the user to make a product sell, 2. A function that  increases acceptance, 3. A function to assure dependability, assure convenience, satisfy user, or attract user, 4. Also called a sell function.

function, task - See user function. function, use - See work function

function, user - 1. That function performed by a product that causes its purchase by a user, 2. The function performed by an employee for the company, 3. Also referred to as a task function.

improvement, value - The same as value analysis except with the emphasis on application to improve existing products.

index, values - 1. The monetary relationship of function worth to function cost [expressed as VI=FW/FC] where VI is never greater than unity, [e.g. VI=O.79], 2. The monetary relationship of function cost to function worth [expressed as VI=FC/FW] where VI is never less than unity, [e.g., VI=1.0 = good value).

investment, return on - In value analysis, the ratio of the dollars saved versus the cost of performing and implementing the study [normally expressed similar to the following: ROI=$8:1].

life, design - The period of time intended by the designer for product use; under expected levels of use, maintenance and repair, before product, disposal and/or replacement.

life, product - The period of time product is actually used, maintained and/or repaired before being taken out of service.

life, useful - The period of time of needed use by the customer for a product.

life, economic - 1. That period of time over which an investment is considered to be the lowest cost alternative for satisfying a specific need, 2. The period of time used to justify obtaining a product from a financial standpoint as reflected by a contract period, lease, mortgage, loan agreement, statutory limitation, warranty, depreciation, method, etc.

management, value - The same as value analysis except with emphasis on application as a management technique.

methodology, value - The study of the relationship of cost and worth to function for any product, in a prescribed manner, using the job plan.

model, LCC - 1. A diagrammatic representation, in a hierarchal structure, of the present worth or annualized expenditures relating to a product for a specified period of time, 2. A model that sums to the total life cycle cost for a product.

model, space - 1. A diagrammatic representation, in a hierarchal structure, of the square foot (or other unit of measure) of area or space allocated to each component of a facility, 2. A model that sums to the total amount of area or space in a building.

model, time - 1. A diagrammatic representation, in a linear form, of the duration to perform all tasks associated with obtaining a product, 2. A model which sums to the total length of time to obtain a product and accounts for overlapping time/s of concurrent effort [ie.; a PERT chart].

model, worth - 1. A second set of numbers, in the same units of measure, superimposed on the same format used for a cost model, energy model, LCC model, space model, or time model which represent the worth of that model element, 2. A model which sums to the total worth of a product for the resource measured.

objective, value - 1. The same or necessary performance or acceptance at lower cost, 2. Better performance at the same cost, or at a higher cost if a greater market share is thereby obtainable.

ownership, cost of - See life cycle cost. period, study - The same as life span.

plan, job - A sequential approach for conducting a value study, normally consisting of six steps or phases; information, function analysis, creative, evaluation, development and presentation, and optional implementation or follow up steps.

planning, value - The same as value analysis except with emphasis on application to strategic directions of new product development, organization strategic planning, or filling market niches.

prevention cost - The elimination of unnecessary cost during the development stages of design or operations.

price, customer - 1 The fixed sum of money or amount of service given or required to transfer ownership of products, 2. Normally the sum of product cost plus profit. 2. The difference between product price and cost where [price = cost + profit].

program, value - A stated plan or procedure that uses value methodology as its basis for optimizing total cost.

proposal, value change - 1. A change submitted by in-house personnel to improve the value of a product, 2. Also called a value engineering proposal (VEP).

proposal, value engineering - 1. The same as a value study proposal, 2. See also value change proposal.

proposal, value engineering change (VECP) - A change submitted by a contractor, pursuant to a contract provision, for the purpose of reducing the contract price or life cycle cost of the product under contract

proposal, value study - A recommendation, resulting from utilizing value methodology, to change a product so as to achieve greater value and/or reduce overall cost.

quality, required - The minimal level of product performance necessary to satisfy the customer (not to be confused with the word value).

rate, discount - The rate of interest reflecting inflation and the time value of money that is used in the discount formula to convert costs and benefits occurring at different times to a common time.

technology, value - 1. The term used in the science or art of applying value methodology, 2. The specific method or process of value analysis for handling a cost problem.

value, aesthetic - See esteem value.

value, annual - Past or future costs or benefits expressed as an equivalent uniform annual amount, taking into account the time value of money.

value, cost - Archaic, see use value.

value, economic - 1. The relationship of benefits (utility) to cost as seen by the user, 2. The life cycle benefits as related to the cost of ownership, use, and disposal of a product, 3. Its components are use value, esteem value, and exchange value.

value, esteem - 1. The monetary sum a user is willing to pay for functions providing prestige, appearance, and/or other non-quantifiable benefits, 2. The relative value a user places on the aesthetic functions provided by a product, 3. The monetary measure of the functions of a product that contribute to its desirability or salability but not its required functional performance, 4. The motivated desire to possess for the sake of possession, 5. Also referred to as aesthetic value.

value, exchange - 1. The monetary sum for which a product can be traded, 2. The market value of a product at a given point in time.

value, function - 1. The relationship of function worth to function cost, 2. See also value index.

value, future - The equivalent value at a specified time in the future of estimated recurring and replacement costs expected during the life of the product.

value, good - 1. That which occurs when a product has reasonable cost and desired performance as determined by the user, 2. The lowest life cycle cost to reliably accomplish a function, 3. A relative economic comparator as determined by the user and measured by profit and sales.

value, market - The sale price of a product under the voluntary conditions of a willing buyer and a willing seller.

value, maximum - The lowest life cycle cost to reliably accomplish the minimum required performance.

value, perceived - The user's view of benefits received and the price of acquiring the product.

value, poor - The condition that occurs when function cost exceeds function worth by a significant amount.

value, present - The economic procedure to account for the time equivalent value of past, present, or future costs at the beginning of a base period.

value, product - 1. The relationship of benefits to cost which conforms to a user's wants and resources in a given situation, 2. A specific combination of use, esteem, market, and exchange values.

value, salvage - 1. The residual value of a product, net of disposal costs, that may derive from removal or replacement of the product during the study period, 2. Also the residual value from the sale of the product during or after the study period.

value, use - 1. The monetary measure of the functional properties of a product which reliably accomplishes a user's needs, 2. The life cycle cost (worth to cost relationship) considering user function only.

visibility, cost - 1. The display of all costs for a product in one format at one time, 2. The breaking down and identification of costs hidden through aggregation, 3. Obtained through use of a cost model.

workshop, approved VE - A workshop approved by the Society of American Value Engineers for meeting the minimum training requirements to count as credit toward becoming a certified value specialist (CVS).

workshop, VE - A group meeting to carry on the work of conducting a value study of a product.

worth, function - 1. The lowest overall cost that is required to perform a function, 2. The least cost attainable through the use of a functional equivalent, 3. The cost of a function without regard to the consequences of failure, 4. Referred to as the value of a function in some texts [not a preferred usage].

worth, present - See value, present.

year, base - The year to which all future and past costs are converted when the present value method is used.

 


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