Value Methodology Glossary of Terms Value Methodology Glossary of Terms Activity – A specific task, action, or operation that Consultant – One who gives professional advice or describes how a function is performed. For example, services. the activity "pour coffee" describes how the function "dispense liquid" is performed. Activities are the Convergent thinking – A mental process that focuses means leading to the attainment of a function. on coming up with the single, well-established answer to a problem. It is synonymous with the term Annuity – A series of payments made at equal "critical" thinking. intervals. Examples of annuities used in the Development Phase and relative to life-cycle cost Cost-benefit analysis (CBA) – A method used to analysis include yearly insurance premiums, monthly ascertain the soundness of any investment mortgage payments, annual energy costs, insurance, opportunity and provide a basis for making licenses, etc. comparisons with other such proposals. All the positives and negatives of the VM study subject are Balanced scorecard – A technique used to document first quantified in monetary terms and then adjusted and communicate the objectives, related key for their time-value to obtain correct estimates for performance indicators and targets, and conducting a CBA. anticipated outcomes of an organization (and/or its projects, products, and services). Cost, initial – The expenditure of all the resources needed to design, deliver, produce, or establish a Break-even point – The sales amount—in either unit project, product, process, service, or organization. (quantity) or revenue (sales) terms—that is required Cost has different dimensions that can be measured to cover total costs, consisting of both fixed and by factors such as materials, labor, equipment, time, variable costs to the organization. risk, etc. and be quantified in currency. Cost should not be confused with "price," which is the amount of Change management – A collective term for all money exchanged or set as consideration for the approaches to prepare and support individuals, sale of something. Initial cost is also frequently teams, and organizations in implementing change. referred to as "capital cost." The most common change drivers include: technological evolution, process reviews, crises, Cost, life-cycle (LCC) – The sum of all recurring and changes in consumer habits, pressure from new one-time (non-recurring) costs over the full lifespan business entrants, acquisitions, mergers, and or a specified period of a project, product, process, organizational restructuring. It includes methods that service, or organization. It includes the initial costs, redirect or redefine the use of resources, business operating costs, maintenance and upgrade costs, processes, budget allocations, or other modes of and remaining (residual or salvage) value at the end operation that significantly change a company or of ownership or its useful life, including salvage or organization. decommissioning costs. Constraints – The state of being checked, restricted, or Cost model – A resource model used to graphically compelled to avoid or to perform some action. For depict the relationship of elements relative to their most VM studies, there are restrictions on some cost. For example, a cost model of a building might parameters of a solution (e.g., laws, standards, show the relative cost of each of the major systems market demand, policies, resources, commitments (foundation, superstructure, exterior enclosure, etc.), made, etc.). These restrictions are called constraints sorted from high to low, on a bar chart. Cost models and can be real or perceived. VM may be an are often augmented with a Pareto distribution (see effective tool for turning perceived constraints into Pareto model below). opportunities for value improvement. Copyright 2020 SAVE International® The Value Methodology Glossary of Terms was extracted from Appendix A of the VM Guide® All rights reserved (Rev. 9/25/2020) Value Methodology Glossary of Terms Creativity – A phenomenon whereby something new the context of VM, one who leads the group through and somehow valuable is formed. It is the ability to the VM Job Plan. produce original and unique ideas or to make something new or imaginative. Creativity can be FAST – The Function Analysis System Technique (FAST) supported and enhanced by the utilization of is a group process that creates a diagrammatic creativity methods and techniques. Creativity in VM representation of the HOW-WHY logic of functions, leverages divergent thinking with a focus on and their interrelationships, of a project, product, functions. process, service, or organization under study. Creativity techniques – Methods that promote Freewheeling – A state of unrestrained, divergent creativity and the generation of new ideas for thinking not bound by formal rules, procedures, or developing visions or to solve problems. guidelines. Criteria – Standards for evaluation upon which a Function – A non-specific, two-word abstraction, decision or a judgment is based. consisting of a verb and noun, that describes what an element of a project, product, process, service, or Customer – A person or an organization that purchases organization does. a product or service. The customer plays a critical role, if not the most important in determining value. Function, all-the-time – Functions that happen In some cases, the customer may also be a user. continuously or occur on a repetitive, ongoing basis, relative to the project, product, process, service, or Divergent thinking – A process or method used to organization. generate ideas by exploring many possible solutions. Divergent thinking typically occurs in a Function analysis – A detailed examination of a spontaneous, freely flowing, "non-linear" manner, project, process, product, service, or organization to such that many ideas are generated in an emergent, identify, classify, and organize its functions; allocate cognitive fashion. Divergent thinking requires a performance and resources; and prioritize functions judgment-free environment and aims to elicit ideas for value improvement. that may be unconventional. Function, basic – The essential function(s) that fulfill the Efficiency – The ratio of useful output to total input. purpose or intent for which a project, product, Efficiency refers to very different inputs and outputs process, service, or organization exists and answers depending on specific fields and industries. the question, "What must it do?" There can be more than one basic function. Escalation – Changes in the cost or price of specific goods or services in a given economy over a period. Function, higher-order – The specific goals or needs This is similar to the concept of inflation, except that that the basic function(s) fulfills and are beyond the escalation is specific to an item or class of items (not scope of the VM study subject. as general in nature). Changes in the money supply Function logic path – All functions on a FAST diagram do not usually drive changes in cost, and escalation that are connected to each other in the HOW-WHY tends to be less sustained. Note that escalation is logic direction. different than inflation. Function, lower-order – Functions that are not part of Evaluation – To determine the significance, value, or the scope of the VM study and are inputs for a condition through careful appraisal and study. project, product, process, service, or organization. Expected value – A quantitative measure of value Function, one-time – A function that occurs only once expressed by multiplying an anticipated outcome relative to the project, product, process, service, or by the probability of its occurrence. organization. Facilitator – One who is substantively neutral, has no Function performance specification (FPS) matrix – A significant decision-making authority, enables a technique whereby the quality or performance group to improve how it identifies and solves criteria related to the subject functions are problems, and increases the group's effectiveness. In correlated along with related specification units of measure, parameters, targets, and flexibility. Copyright 2020 SAVE International® The Value Methodology Glossary of Terms was extracted from Appendix A of the VM Guide® All rights reserved (Rev. 9/25/2020) Value Methodology Glossary of Terms Function resource matrix – A technique whereby the Implementation meeting – A key activity of the functions of a project, product, process, service, or Implementation Phase, also called a resolution organization are correlated to its attributes, such as meeting. The purpose of this meeting is to resolve space, weight, cost, time, performance, risk, etc. The the disposition (usually acceptance or rejection) of purpose of a function resource matrix is to develop the VM proposals developed and presented in the insight into how functions contribute to value and to previous two phases of the VM Job Plan. aid in prioritizing which functions offer the greatest potential for value improvement. Implementation plan – An overall schedule for all activities necessary to implement the results of the Function, secondary – A function that supports the VM study. It typically contains detailed action plans, basic function(s) and results from the approach to including schedules, milestones, tasks, resources, and achieve the purpose or intent of a project, product, level of effort required, and identification of the process, service, or organization. parties responsible for completion of