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Procedure for cost allocation
VE General Knowledge

Procedure for cost allocation

  1. Split the product into components and service/system into activities.
  2. Define functions of components/activities.
  3. Divide the total cost of product/service/system into components/activities cost.
  4. Processes performed to achieve particular function; cost allocated to that function.
  5. Component provided to achieve particular function; cost allocated to that function.
  6. Component accomplishes more than one function; allocation should be based on weight, volume, surface area and length.
  7. Hold each function in isolation of the others to do this.

watch Anil Kumar, “Value Engineering Mastermind”

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