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Value Engineering

This presentation is about Value Engineering and contains: 1.History of VE 2.Value Concept 3.What is Value Engineering? 4.Implementation of VE in our project 5.Principle and Purpose of VE 6.Case Study 7.Conclusion

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Value Engineering 
Created by: 
Farzad Vasheghani Farahani 
Fall 2014 / Amir Kabir University of Technology
 History 
 Value Concept 
 What is Value Engineering? 
 Implementation of VE in our project 
 Principle and Purpose of VE 
 Case Study 
 Conclusion 
Outline
Lawrence D.Miles 
1904 - 1985 
History 
• Shortage of materials during world war II 
• General Electric company found that many of the substitutes 
have better or equal performance at less cost. 
• Lawrence De Miles Launched an effort to make the concept 
systematic 
• Establishment of Society of American Value Engineers “SAVE” 
in 1959
What is Value? 
• Value is the lowest price you must pay to provide a reliable 
function or service (L. D. Miles) 
• “The ratio of Function to Cost” 
Value = 
Worth 
Cost 
= 
Function(Utility) 
Cost
Waste Cost 
Why do Projects have “Unnecessary” Costs? 
1. Low Time for Designing 
2. Lack of information 
3. Lack of Ideas 
4. Negative Prejudice 
5. Lack Of Experience 
6. Weaknesses in human relations 
7. Multi Concept 
…
What is Value Engineering?

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Value Engineering

  • 1. Value Engineering Created by: Farzad Vasheghani Farahani Fall 2014 / Amir Kabir University of Technology
  • 2.  History  Value Concept  What is Value Engineering?  Implementation of VE in our project  Principle and Purpose of VE  Case Study  Conclusion Outline
  • 3. Lawrence D.Miles 1904 - 1985 History • Shortage of materials during world war II • General Electric company found that many of the substitutes have better or equal performance at less cost. • Lawrence De Miles Launched an effort to make the concept systematic • Establishment of Society of American Value Engineers “SAVE” in 1959
  • 4. What is Value? • Value is the lowest price you must pay to provide a reliable function or service (L. D. Miles) • “The ratio of Function to Cost” Value = Worth Cost = Function(Utility) Cost
  • 5. Waste Cost Why do Projects have “Unnecessary” Costs? 1. Low Time for Designing 2. Lack of information 3. Lack of Ideas 4. Negative Prejudice 5. Lack Of Experience 6. Weaknesses in human relations 7. Multi Concept …
  • 6. What is Value Engineering?
  • 7. What is Value Engineering? • Value Engineering (VE, or Value Analysis) is a management technique that seeks the best functional balance between cost , reliability and performance of a product, project, process or service.
  • 8. Implementation • How is a Value Engineering Study Conducted?
  • 9. The Job Plan Value engineering is often done by systematically following a multi-stage job plan. Larry Miles' original system was a six-step procedure which he called the "value analysis job plan."
  • 10. The Job Plan The modern version has the following eight steps: 1. Orientation 2. Information 3. Functional 4. Creative 5. Evaluation 6. Development 7. Presentation 8. Implementation and Follow-up
  • 11. The Job Plan 1. Orientation Phase  Identify issues  Prioritize Issues  Drafts scopes and objective  Establish evaluation factors  Determine Study Team  Collect Data  Prepare for value study  ...
  • 12. The Job Plan 2. Information Phase  Further familiarization of the project by the team; all team members participate in determine the true needs of the project.  Areas of high cost or low worth are identified.
  • 13. The Job Plan 3. Functional Phase  Functional analysis outlines the basic function of a product using a verb and a noun such as ‘boil water’ as in the case of our kettle. What is the Function? “ Boil Water ” Verb Noun
  • 14. The Job Plan 4. Creative Phase  This step requires a certain amount of creative thinking by the team. A technique that is useful for this type of analysis is brainstorming. This stage is concerned with developing alternative.
  • 15. The Job Plan 5. Evaluation Phase  In this phase of the workshop, the VA team judges the ideas developed during the creative phase.  The VA team ranks the ideas.  Ideas found to be irrelevant or not worthy of additional study are disregarded.  Those ideas that represent the greatest potential for cost savings and improvements are selected for development.
  • 16. The Job Plan 6. Development Phase  The team develops the selected ideas into alternatives (or proposals) with a sufficient level of documentation to allow decision makers to determine if the alternative should be implemented.
  • 17. The Job Plan 7. Presentation Phase 1. The presentation phase is actually presenting the best alternative (or alternatives) to those who have the authority to implement the proposed solutions that are acceptable.
  • 18. The Job Plan 8. Implementation And Follow Up 1. Develop an implementation plan 2. Execute the plan 3. Monitor the plan to completion Objective: During the implementation and follow-up phase, management must assure that approved recommendations are converted into actions.
  • 19. Purpose 1. Determine the best design alternatives 2. Reduce cost 3. Improve quality 4. Increase reliability and availability 5. Enhance customer satisfaction 6. Improve organizational performance 7. Identify problems 8. Develop recommended solutions
  • 20. Potential Saving From VE Early changes are naturally less expensive than later ones, as shown in the diagram below.
  • 21. Principles Value Engineering principles: Systematic method for evaluating product performance and value The use of multi-functional teams Focus on a simplified product 1 2 3
  • 22. Case Study Focus Adjustment Knob for Slit Lamp
  • 23. Case Study Introduce the Product • In this presentation we have considered a medical instrument manufacturing company, Aadarsh Instruments, located in Ambala. • This firm is producing different types of microscopes which they export to various countries around the globe. • One of their model SL250 have a component named Focus Adjustment Knob for Slit Lamp in microscope. This microscope has found application in the field of eye inspection.
  • 24. Case Study The steps used for this purpose are as follows: 1. Product selection plan 2. Gather information of product 3. Functional analysis 4. Creativity Worksheet 5. Evaluation sheet 6. Cost analysis 7. Result
  • 25. Case Study 1. Plan For Product Selection • This Product is used to adjust the focus of lens for magnification purpose. • The present specifications of this part and its material used are costlier than the average industry cost. • Value of this product can be increased by maintaining its functions and reducing its cost or keeping the cost constant and increasing the functionality of the product.
  • 26. 2. Obtain Product Information i. Material – Aluminum Bronze Alloy ii. Diameter of base plate –30 mm iii. Thickness of plate--3 mm iv. Cost of the scrap is – 293 rupee/Kg v. Pieces Produced annually – 8000 vi. Process used – C.N.C. indexing milling vii. Cycle time—2.5 min viii. Anodizing—2/min ix. Material cost—65 gm x. Total Present cost – 29.99 rupee /piece *{1$=56 rupee}* Case Study
  • 27. Case Study 3. Functional Analysis of Present Functions
  • 28. Case Study 4. Develop Alternate Design Or Methods During brainstorming these ideas were listed: i. Change design ii. Change material iii. Use plastic iv. Make it lighter v. Change the production process vi. Use nylon indexing unit
  • 29. Case Study 5. Evaluation Phase For judging the ideas, the following designs were considered: A. Function B. Cost C. Maintainability D. Quality E. Space each of the above criteria was compared with others , and depending on their relative importance, three categories were formed, major, medium, and minor.
  • 30. Case Study Comparing this criteria according to relative importance :
  • 31. Case Study  From the paired comparison we get the following result:  The above ideas were discussed and the best feasible ideas were separated which were: a) Change the material to steel b) Use Nylon unit c) Use existing material
  • 32. Case Study 6. Cost Analysis
  • 33. 7. Result The total savings after the implementation of value engineering are given below: • Cost before analysis – 29.99 rupee • Total Cost of nylon knob – 18.40 rupee • Saving per product – 11.59 rupee • Percentage saving per product – 38.64 % • Annual Demand of the product – 8000 • Total Annual Saving – 92,720 rupee • Value Improvement - 62.98 % Case Study
  • 34. Conclusion Three goals that we're looking at value engineering: 1. Identify additional functions that aren’t attractive to customers. 2. Add attractive functions for customers. 3. Saving because of the elimination of redundant functions.