Value Engineering originated in the U.S. industrial community in the 1940s as a way to identify alternatives to materials that were in short supply due to the rationing during World War II. It has since evolved into a powerful tool for solving problems and improving value in terms of cost, quality and performance. It can be used for any item or activity in business and industry.
Value Engineering of our duct systems means you get more with SEMCO Duct & Acoustical Products, Inc. Our manifold and gasketed joint duct systems allow you to reduce the total cost of your project by reducing the amount of material handling and installation labor required, thus saving you money.
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- Benefits
- Use resources more effectively
- Increase revenue
- Reduce product development costs and lead time
- Reduce project construction costs
- Reduce operation and maintenance costs
- Simplify procedures and reduce paperwork
- Streamline processes and reduce waste
- Develop innovative solutions
- Increase procurement efficiency
- Improve quality
Example
The impact of value engineering can be seen in the following example.
Scenario 1 - Complete Fittings and Cut to Length Duct
Scenario 2 - Loose Erector Set
In the above two examples, Scenario 2 has nearly twice as many pieces to off-load (9 versus 5) and double the amount of field joints/cuts to perform (14 versus 7). The economic impact of these two different configurations is demonstrated in the following table. This comparison is based on a duct system with a total installed cost of $100,000.
Cost Comparison of Scenarios
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Scenario 1 |
Scenario 2 |
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Total Installed Cost |
$100,000 |
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$100,000 |
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Material Costs |
$34,500 |
34.5% |
$31,050 |
31.1% |
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Labor Costs |
$40,500 |
40.5% |
52,650 |
52.7% |
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Overhead & Profit |
$25,000 |
25.0% |
16,300 |
16.3% |
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Difference |
$8,700 |
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Although the above diagrams show an increase in total field joints and cuts to perform, we chose a more conservative 30% increase in installed labor for our calculations. An independent market survey commissioned by SMACNA states Overhead and Profit averages 25% and Installation Labor costs as 40.5% of the total job costs.
Even though material costs for Scenario 1 are 10% higher than Scenario 2, in reality, by ignoring the labor savings and overall installed value of Scenario 1, an overall loss of $8,700 ($25,000 - $16,300) to your profits would be realized. Cheapest is not always the best. |
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