CVS Value Measurement and Performance Metrics — Questions and Answers
Question 1: The Value Index (VI) in value engineering is calculated as:
- Total project cost divided by number of functions identified
- Function worth divided by function cost (Correct answer)
- Life cycle cost divided by initial capital cost
- Cost of unnecessary functions divided by total cost
Correct answer: Function worth divided by function cost
The Value Index (VI) = Worth / Cost. A VI of 1.0 indicates the function is worth exactly what it costs. VI < 1.0 signals poor value (costs more than it's worth), making it a prime target for VM improvement. VI > 1.0 is rare and suggests potential underinvestment.
Question 2: In VM terminology, what does 'worth' represent when applied to a function?
- The market price of the component performing the function
- The lowest cost at which the function could be reliably performed (Correct answer)
- The cost of the most expensive alternative that was evaluated
- The depreciated asset value of existing equipment
Correct answer: The lowest cost at which the function could be reliably performed
Worth is defined as the lowest cost to reliably perform the required function — essentially the theoretical minimum cost. It is an analytical benchmark, not a market price, and is determined by asking 'what is the cheapest way this function could be accomplished?'
Question 3: A component costs $450 and performs a function with an estimated worth of $180. What is the Value Index, and what does it indicate?
- VI = 2.5; the component delivers exceptional value
- VI = 0.4; the component is a strong VM improvement target (Correct answer)
- VI = 1.0; the component is exactly at par value
- VI = 0.4; the component is too cheap to warrant study
Correct answer: VI = 0.4; the component is a strong VM improvement target
VI = Worth / Cost = $180 / $450 = 0.4. A VI significantly below 1.0 means the component costs much more than the function is worth, making it a high-priority target for VM improvement. Low VI ≠ low cost — it signals a value gap.
Question 4: Which of the following BEST describes a 'performance measure' in a VM study?
- The number of team members attending the workshop
- A quantifiable indicator that verifies a function is being performed at the required level (Correct answer)
- The total dollar savings projected from all proposals
- The FAST diagram complexity score
Correct answer: A quantifiable indicator that verifies a function is being performed at the required level
Performance measures are objective, measurable standards that confirm a function is meeting requirements (e.g., 'transfer load: must support ≥ 500 kg'). They prevent value improvements from inadvertently degrading required performance levels.
Question 5: When a VM team identifies that a product has a 'cost-to-function imbalance,' which action is the MOST appropriate next step?
- Immediately eliminate the over-cost component without further analysis
- Target the highest-cost, lowest-worth functions for creative idea generation (Correct answer)
- Accept the imbalance as a design requirement and move to the next phase
- Reassign the function to a lower-rated team member for re-evaluation
Correct answer: Target the highest-cost, lowest-worth functions for creative idea generation
Identifying a cost-to-function imbalance is diagnostic, not prescriptive. The correct response is to focus creative effort on the functions where cost most exceeds worth — these are the highest-leverage targets for generating value improvement ideas.
Question 6: A VM study reports that removing unnecessary functions reduced product cost by 22% while maintaining all required functions at spec. What VM metric MOST directly captures this improvement?
- Life Cycle Cost reduction percentage
- Increase in the aggregate Value Index across targeted functions (Correct answer)
- Reduction in the number of FAST diagram nodes
- Decrease in team workshop hours
Correct answer: Increase in the aggregate Value Index across targeted functions
Removing unnecessary cost while preserving required function performance directly raises the Value Index (VI = Worth / Cost). The aggregate VI improvement is the most precise metric for capturing value enhancement achieved by a VM study.
CVS Value Measurement and Performance Metrics
The Value Index (VI) in value engineering is calculated as: