Function cost analysis
Encyclopedia
Function Cost Analysis (FСА) (sometimes named function value analysis (FVA)) is the a method
of technical and economic research of the systems for purpose to optimize a parity between system
's (as product
or service) consumer functions or properties (also known as value
) and expenses to achieve those functions or properties.
for continuous perfection of production, industrial technologies, organizational structure
s was developed by Juryj Sobolev (Соболев, Юрий Михайлович) (Russia
) in 1948 at the "Perm telephone factory" (Almost at the same time as L. D. Miles ).
Today in economically developed countries practically each enterprise or the company use methodology of the kind of functional-cost analysis as a practice of the quality management
, most full satisfying to principles of standards of series ISO 9000
.
s). Classical FCA has three English synonyms - Value Engineering
, Value Management, Value Analysis. It is not necessary to confuse method FСА as it takes place at some authors, to method Activity-based costing
(ABC)
Scientific method
Scientific method refers to a body of techniques for investigating phenomena, acquiring new knowledge, or correcting and integrating previous knowledge. To be termed scientific, a method of inquiry must be based on gathering empirical and measurable evidence subject to specific principles of...
of technical and economic research of the systems for purpose to optimize a parity between system
System
System is a set of interacting or interdependent components forming an integrated whole....
's (as product
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...
or service) consumer functions or properties (also known as value
Value (marketing)
The value of a product is the mental estimation a consumer makes of it. Formally it may be conceptualized as the relationship between the consumer's perceived benefits in relation to the perceived costs of receiving these benefits...
) and expenses to achieve those functions or properties.
History
This methodologyMethodology
Methodology is generally a guideline for solving a problem, with specificcomponents such as phases, tasks, methods, techniques and tools . It can be defined also as follows:...
for continuous perfection of production, industrial technologies, organizational structure
Organizational structure
An organizational structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims. It can also be considered as the viewing glass or perspective through which individuals see their organization and its...
s was developed by Juryj Sobolev (Соболев, Юрий Михайлович) (Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
) in 1948 at the "Perm telephone factory" (Almost at the same time as L. D. Miles ).
- 1948 Juryj Sobolev (Соболев, Юрий Михайлович) (RussiaRussiaRussia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
) - the first success in application of a method analysis at the "Perm telephone factory" (PermPermPerm is a city and the administrative center of Perm Krai, Russia, located on the banks of the Kama River, in the European part of Russia near the Ural Mountains. From 1940 to 1957 it was named Molotov ....
, RussiaRussiaRussia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
). - 1949 - the first application for the inventionInventionAn invention is a novel composition, device, or process. An invention may be derived from a pre-existing model or idea, or it could be independently conceived, in which case it may be a radical breakthrough. In addition, there is cultural invention, which is an innovative set of useful social...
as result of use of the new method.
Today in economically developed countries practically each enterprise or the company use methodology of the kind of functional-cost analysis as a practice of the quality management
Quality management
The term Quality management has a specific meaning within many business sectors. This specific definition, which does not aim to assure 'good quality' by the more general definition , can be considered to have four main components: quality planning, quality control, quality assurance and quality...
, most full satisfying to principles of standards of series ISO 9000
ISO 9000
The ISO 9000 family of standards relates to quality management systems and is designed to help organizations ensure they meet the needs of customers and other stakeholders . The standards are published by ISO, the International Organization for Standardization, and available through National...
.
Basic ideas
- Interest of consumerConsumerConsumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
not in productProduct (business)In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...
s itself, but the advantage which it will receive from its usage. - The consumerConsumerConsumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
aspires to reduce his expenses (costCostIn production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this...
or pricePrice-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...
of functionFunction (mathematics)In mathematics, a function associates one quantity, the argument of the function, also known as the input, with another quantity, the value of the function, also known as the output. A function assigns exactly one output to each input. The argument and the value may be real numbers, but they can...
s). - FunctionFunction (mathematics)In mathematics, a function associates one quantity, the argument of the function, also known as the input, with another quantity, the value of the function, also known as the output. A function assigns exactly one output to each input. The argument and the value may be real numbers, but they can...
s needed by consumer can be executed in the various ways, and, hence, with various efficiency and expenses. Among possible alternatives of realization of functions exist such in which the parity of quality and the pricePrice-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...
is the optimal for the consumer.
Method
The goal of FCA is achievement of the highest consumer satisfaction of production at simultaneous decrease in all kinds of industrial expenses (production costCost
In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this...
s). Classical FCA has three English synonyms - Value Engineering
Value engineering
Value engineering is a systematic method to improve the "value" of goods or products and services by using an examination of function. Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost...
, Value Management, Value Analysis. It is not necessary to confuse method FСА as it takes place at some authors, to method Activity-based costing
Activity-based costing
Activity-based costing is a special costing model that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each...
(ABC)
Basic terms
- Technical system - the set of material elements (components) intended for satisfaction of any need of the person (society) or technical system of higher hierarchical level, possessing even one property leaving for the sum of properties of elements (components) making it.
- FCA object - subjected to the analysis of the HARDWARE or its elements.
- subsystem - the system which is a part analyzed HARDWARE.
- supersystemSupersystemSupersystem was a band from Washington, D.C. described as a mix of rock, punk, pop and dance music. Originally El Guapo, the group changed their name because of potential legal issues, a new drummer, and general dislike of the original name...
- the system including analyzed HARDWARE. - Consumer property - ability of the HARDWARE to satisfy any need of the person (or societySocietyA society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations...
) or other HARDWARE. - Expenses for maintenance and achieve consumer properties - the cumulative resulted chargeFeeA fee is the price one pays as remuneration for services. Fees usually allow for overhead, wages, costs, and markup.Traditionally, professionals in Great Britain received a fee in contradistinction to a payment, salary, or wage, and would often use guineas rather than pounds as units of account...
s on technical system at all stages of its life cycle. - The cost analysis - definition of expenses for performance of functions and them