CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Value Analysis/Value Engineering is a systematic and organized procedural decision-making process. It has been used in almost any kind of application. It helps people creatively generate alternatives to secure essential functions at the greatest worth as opposed to costs. This is referred to as value. It is also known as Value Analysis, Value Management, Value Planning, and a host of other names.

As organization seeks to maximize profitability, they have utilized various business strategies and techniques to ensure that this objective is realized. With the current competitive and fast pace dynamic environment, every organization strive to maintain it customers based, and also gain competitive advantage over its competitors by providing goods that are of value to the customers. Value according to Miles (1989) is the lowest possible price that can be paid for to provide a reliable function or services.

Over the world, there is always a need to provide goods that are of values and also capture the attention of the customers, and Nigeria is not an exception. Organization can do this by revisiting the product designs of products offered to the market. So there is a need for value engineering as a management tool that aims at providing an improved product design that will not reduce the value derived by the customers.

According to West Virginia division of highway (2004), “Value engineering is the systematic application of recognized technique by multi- discipline team that identifies the function of a product or service, establishes a worth for that function; generates alternative through the use of creative thinking, and provides the needed functions, reliability at the lowest overall cost.” This approach requires that in the process of minimizing cost, the required quality and performance should not be sacrificed. Value engineering as a technique involves the identification of new alternatives to product design at a reduced cost. So organizational profitability has become the concern of researcher as there are quite a number of study on value engineering, but not much work has be done empirically on this topic in this part of the globe. So this study aims at empirically ascertain value analysis and value engineering impact on organizational profitability.

 Value Analysis and Value Engineering (VA/VE) has both primary and secondary functions.

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