Value management

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Value analysis - value management - value analysis - is an organized and creative approach that uses a function-oriented and economic design process with the aim of increasing the value of a value management project or value analysis object. Value Management (VM) is a management style that emerged from precursor methods based on the value and function approach. The pioneer of value analysis was Lawrence D. Miles, who developed the value analysis (WA) technique as a method of improving the value of existing products in the 1940s and 1950s. It is now manifested in EN 12973.

Areas of application

WA was initially used to identify and eliminate unnecessary costs. WA is equally successful in improving function performance and resources other than cost. Over time, the WA application areas expanded from products to services, projects and administrative processes. At the same time, other methods and management techniques based on the value and function concept emerged . The EN 12973 - a further development of previous WA standards - is aimed at three user groups:

  • Executives who want to increase the organizational value and satisfaction of their customers on the basis of the value and function concept,
  • People who are involved in the application of VM methods within specific projects,
  • People who do VM development or VM training.

Accompanying standards

EN 12973 was developed to ensure a common understanding of common terminology at a high level of expertise when used effectively across Europe. It integrates the pre-standardization work, which was funded by the European Commission , with the standardization work of CEN / TC 279 and relates in particular to the standard EN 1325 “Value Management, Value Analysis, Function Analysis Dictionary”. Various standards form the basis for VM. These were drawn up by the Technical Committee (TC) 279 of CEN, the European Committee for Standardization .

  • EN 1325-1 - Part 1: Value analysis and function analysis (1996) - Dictionary part 1.
  • EN 1325-2 - Part 2: Value Management (2001) - Dictionary Part 2.
  • EN 12973 - Value Management (2001).

EN 12973 initially describes the scope and the principles for management. It continues by applying the principles and framework of VM. At the end of the standard, the methods and tools that can be used in the context of the VM are described.


Value management is a cross-sectional approach, a generally applied way of dealing with different management concepts in individual company areas (such as human behavior, technologies, costs, etc.). It puts the concept of value at the center to confirm operational goals and define specific strategies. At the same time, it is based on principles that management should apply.


Value management brings certain properties into effect at the same time and combines the following elements in one system:

  • Management style,
  • positive human behaviors,
  • Consideration of external and internal environmental factors,
  • effective use of methods and tools.


The goal setting and goal attainment (goal management) lie in the management or project responsibility of an organization. Achieving the goals is the task of the team within the VM approach. Successful goal management requires three goal hierarchies:

  • strategic level: definition of value-related long-term goals, specification of medium-term goals for the tactical level.
  • Tactical level: Clear and logical specification of medium-term realistic detailed goals: extent of the satisfaction of needs, the consumption of resources, etc. Specification of value goals and measured variables.
  • operational level: formulation of short-term detailed goals with implementation and feedback to the tactical level. Pursuit of value targets through metrics.

Frame structure

The above key principles are summarized in the management framework. The following elements are included and help build the value culture in the organization:

  • a policy
  • a program,
  • the training,
  • specific studies.

Mindset and expertise

Value management means the involvement and commitment of every member of the organization. Changes in behavior may be necessary. All members of an organization must:

  • accept that there is room for improvement in every aspect of the organization,
  • give their active support to the introduction of VM,
  • accept specifications caused by VM and apply its principles,
  • actively apply the concepts and the VM approach to their management tasks.

All members of an organization should know appropriate value concepts for their responsibilities and tasks:

  • Top managers should know the terms and concepts of VM, so that a value policy can be defined and the corresponding management style can be promoted,
  • trained and experienced middle managers should understand how to manage VM programs,
  • all other members of the organization must know the methods and should develop a general awareness and understanding of what value means in the organization,
  • Specialists (who may be members of the organization or external consultants) should have sufficient knowledge and experience in the use of relevant methods and tools and be able to develop and train other people in their use.

These conditions can be achieved by creating a frame structure that defines how and by whom the VM policy together with the training of personnel is inserted into the appropriate knowledge and skills.

Value concept

In accordance with the definition of the term “value” in EN 1325-1, value in connection with VM can be described as the relationship between the satisfaction of needs and the resources that are used for this satisfaction, the so-called value concept.

Satisfaction of needs
value = --------------------------------------------
Use of resources

The value is relative and can be viewed differently by different participants. External customer value means the extent to which the offering meets their expectations in relation to the amount they have to spend to acquire and use the product or service . For the supplier, the less resources need to be expended to satisfy the external customer, the higher the value. In general, a "good" value requires weighing a number of conflicting parameters. Within an organization, value improvement can be represented by changing the way processes are carried out, e.g. B. by minimizing lead times or resources for an order.

VM approach

VM as a structured approach requires that management adopt an attitude based on value and adapted to the organization:

  • Commitment of the top management level to the value and function concept in accordance with their goals (see key principles),
  • Existence of a value policy that is in line with the organizational goals,
  • Definition of value targets,
  • Establishing a framework that defines how and by whom VM policy is implemented
  • Integration and development of a culture of values ​​that includes all members of the organization and includes training activities,
  • Recognition that management responsibility spans two areas:
- the daily management tasks in which the VM principles are applied intuitively,
- specific management projects in which the VM methods are to be used formally,
  • Definition of a project program in which value-adding methods are used,
  • Feedback of the results for continuous improvement.


In order to be able to apply the elements - management style, human dynamics, environmental factors as well as methods and tools - effectively and uniformly, a VM framework structure must be provided, which is described below. It is the link between the key principles and practical application.

Management style

The management style is divided into the following five sub-items:

  • Application of the value concept: The value of a result is measured by the relationship between the achievement of the goals (or satisfaction of needs) and target values ​​as well as the resources used. The management goal is to achieve the greatest value for the various activities within your organization in accordance with the required satisfaction of the customer.
  • Application of the functional concept: Defining measurable or estimable results and setting goals before the search for resources begins, as well as the description of the results and the resources that have to be met by products or services.
  • Creativity: Abstract description of the functions to bring about creativity and innovative solutions. Encouraging creativity through positive human dynamics and using creative methods.
  • Customer orientation : The focus is on recognizing and satisfying the actual needs of the organization's customers - internal and external. The needs of stakeholders should also be addressed.
  • Quantitative evaluation: definition of measurement and evaluation methods and setting of quantified goals in absolute or relative terms. Measurement of results and comparison with objectives as a means of objective evaluation.

Environmental factors

The environment of an organization must be taken into account in every management activity. VM takes into account the wider environment, such as B. Customers and suppliers of the organizations, legal and administrative requirements, ecological considerations. Examples of external environmental factors:

  • Laws and regulations, local, national or international,
  • National and international customs, customs , social and economic behavior, etc.
  • Market conditions, competitors and suppliers,
  • Physical boundaries and infrastructure,
  • Limited availability of resources,
  • Ecological environment.

Examples of internal environmental factors:

  • Internal policy and organizational rules,
  • Knowledge, experience and skills of the staff,
  • Culture of organization and relationships between people,
  • Existing organization and business processes,
  • Financial limits.

In both groups, the perception of the opportunities and requirements is probably outside the scope of VM studies, but the environmental conditions must be observed.

VM policy

The implementation of VM requires an established VM policy that addresses all VM aspects in the organization. VM policy is based on organizational goals on the strategic, tactical and operational level. All activities are derived from the goals. Top management must consider the outward-looking policy in order to meet the expectations of stakeholders, external customers and financial analysts. Middle management focuses on internal issues and provides supportive results for top management. Both policy directions must be reflected in VM policy. The VM policy should be decided at the level of the top management, responsibility for this should be given to a manager or a steering committee.

VM program

VM programs are planned and structured activities that express the way in which a sustainable VM policy is introduced, developed and maintained. The task of planning, developing and introducing a VM program should be transferred to the responsibility of a value manager. The value manager reports directly to the highest management levels and can chair a steering committee. His duties include:

  • Collection and definition of suitable objects for VM studies,
  • Definition of the scope of study,
  • Estimation of the targeted benefit,
  • Formation of suitable teams and determination of team moderators ,
  • Organization of the necessary training,
  • Monitoring the progress of the study and providing necessary assistance,
  • Ensuring that the study is carried out efficiently by people with the appropriate skills.

In small and medium-sized organizations, a member of the staff or the owner can also assume several of the roles that have been assigned to different people in larger organizations. The groups involved in VM studies can be small, but multidisciplinary teams should be used and human dynamics should be used. Internal know-how can be supplemented by using external persons through practice studies and / or training.

The VM program includes:

  • Integration of VM in the organization and development of processes,
  • quantified goals, degrees of fulfillment and other means of evaluating results,
  • VM studies,
  • adequate resources, teams, schedules and budgets,
  • Plan for the appropriate use of resources,
  • Training and awareness raising for members of the organization,
  • Support of non-VM studies,
  • Management activity plan to implement the results of VM studies,
  • Mechanisms for feedback on results and continuous improvement.

Historical development of the value management method

year designation source Remarks
1947 Value engineering Lawrence D. Miles Developed the method (USA), aim: cost reduction options for bulk purchases [MIL67].
NN Value engineering MD Barrows (Miles employee) Developed the first work plan with process phases and thus rounded off the method.
1953 Value engineering example Method was adopted by the US Navy
1959 Value analysis Oehm, O .: Basic seminar on value analysis Method is now also used by the US defense sector.
1961 Value analysis Oehm, O .: Basic seminar on value analysis Introduction in the German-speaking area, especially for companies in the automotive and electrical industries
1967 Value analysis Oehm, O .: Basic seminar on value analysis Foundation of the VDI joint committee for value analysis
1973 Method value analysis DIN 69910 1st edition [DIN73] Developed for cost reduction measures with individual cost character in the economy
1983 Method value analysis DIN 69910 part 3 [DIN73] Extension for value analyzes in business and administration with individual and overhead costs
1987 System value analysis DIN 69910 replacement for 1973 [DIN87] Designed for value analyzes in the fields of economy, science and administration with individual and overhead costs
1993 System value analysis DIN 69910 replacement for 1973 WA is integrated by the VDI in the field of technology and science in the technical structure and the field of competence: system development and project design (GSP)
1995 Value management Wert-Management-Handbuch, Report-EUR 16096 Value analysis matures into value management and is integrated in a European context
1997 System value analysis VDI 2800 [VDI97] Replacement for DIN 69910 due to EN standard. Customer needs are given greater consideration
1997 Value management EN 12973 This European standard is - since 1992 - a further development of previous value analysis standards
from 2000 Value management Value Management, European Standard Implementation of the European standard

Possible work plans for value management or value analysis

If a VM / WA project is started, the valid work plans must be followed. If this is not done, such an approach cannot be called a VM / WA project.

A VM / WA project must be processed in accordance with the work plan in accordance with EN 12973 or ÖNORM A6760. The work plan is subdivided into further sub-steps, which are processed iteratively. For the procedure specified in the VM / WA work plan, it is basically irrelevant whether the selected VM project or WA object is still in the planning, development, construction ( "development-accompanying (s) value management / value analysis" ) or . ( "Value creation" ), or whether it is an already finished VM project or manufactured object ( "Value improvement" ). The type of VM project or WA object is also irrelevant. These can be administrative processes in administration, manufacturing processes for products or individual products or services. For example, a VM project can be based on a value-oriented approach (value-oriented corporate management) or a value analysis object can also be a key figure system, a balance sheet and the associated profit and loss account.

During the implementation, it is essential to adhere to the sequence of steps in the work plan (EN 12973 or ÖNORM A6760). The processing depth in the basic or sub-steps must be based on the given quantified goal, e.g. B. the cost target, sales target, the ROI , the liquidity targets, etc. If it turns out that the goal cannot be achieved with the selected processing intensity, the task itself may be reconsidered, checked or the VM or WA must be repeated from the basic step that appears appropriate in relation to the goal ( Feedback).

See also