Value Engineering and Profitability of Public Limited Companies in Nigeria

Abstract

In view to reduce cost and increase profitability, without sacrificing the value derived, this study empirically examines the impact of value engineering on profitability of selected public limited manufacturing firms in Rivers state. Profitability can be attained by increasing per unit revenue, decreasing unit cost or a mix of both. So there is a need for value engineering as a management tool, which aims at providing an improved product design that will not reduce the value derived by the customers. This means that Value engineering as a technique involves the identification of new alternatives to product design at a reduced cost. The research design utilized was quasi-experimental research design (survey). The sampling method used was the purposive sampling technique. Spearman’s rank correlation coefficient, simple regressions was used to test the postulated hypothesis at 0.05 level of significance computed within the SPSS software. The study reveals that there is significant impact of product design on earnings per share. Based on the findings, the following recommendation were raised: that Manufacturing companies should endeavour to identifying improved product designs that reduces the product’s cost without sacrificing functionality so as to be profitable and finally, Value engineering should be inculcate in the organization culture of companies so as enable them effectively put value engineering job plan into use for improved profitability without sacrificing the value to be derived by the customers.

Keywords: Value Engineering, profitability, product design, function analyses and Value