Introduction to value engineering and value analysis
Value Engineering and Value Analysis
Made By:- Prathamesh Kadam
Introduction to value Engineering and Value Analysis
What is Value?
Value can be defined as the combination of quality ,efficiency, price
And service which ensures the ultimate economy and satisfaction of the
Value can be expressed in mathematical way,
Value=[Function(or utility)/cost]=[Worth to you/Price you pay]
Types of values
• It is the cost of manufacturing a product or component. It is sum of all
Costs such as raw material cost, labour cost, tool cost to produce the
What is Use Value?
It means the work done ,performed or service rendered by a product.
It is the measure of properties, qualities and features which make the
Product to accomplish a use, work, or service.
ch increases sales appeal, or which attracts person and creates desire
to posses the product.
Exchange Value: A product is seemed to posses exchange value if the
same can be exchanged for another product or money.
• Value Analysis is organized procedure for efficient identification of
unnecessary cost associated with material, part, component, system,
or senice by analysis of function and efficiently eliminating them(i.e.
unnecessary cost) without impairing the quality, functional capacity
or its reliability
Value Analysis contributes to improve profitability; hence it can be
applied at any time in the stage of product life cycle.
• Value Engineering is a systematic effort to improve the valueof a
product,project or system and optimize the life cycle cost.
• It is a process that identifies opportunities to remove unnecessary
cost while assuring that quality ,performance, and other critical
factors meet the customer expectations.
Importance of value engineering and value
• Value engineering
• Value Engineering (VE) is concerned with new products. It is applied
during product development. The focus is on reducing costs,
improving function or both, by way of teamwork-based product
evaluation and analysis. This takes place before any capital is invested
in tooling, plant or equipment.
• This is very significant, because according to many reports, up to 80% of a
product’s costs (throughout the rest of its life-cycle), are locked in at the
design development stage. This is understandable when you consider the
design of any product determines many factors, such as tooling, plant and
equipment, labour and skills, training costs, materials, shipping, installation,
maintenance, as well as decommissioning and recycle costs.
• Therefore value engineering should be considered a crucial activity late on in
the product development process and is certainly a wise commercial
investment, with regard to the time it takes. It is strongly recommended you
build value engineering into your new product development process, to make
it more robust and for sound commercial reasons.
• Value Analysis (VA) is concerned with existing products. It involves a
current product being analysed and evaluated by a team, to reduce costs,
improve product function or both. Value Analysis exercises use a plan
which step-by-step, methodically evaluates the product in a range of areas.
These include costs, function, alternative components and design aspects
such as ease of manufacture and assembly.
• A significant part of VA is a technique called Functional Analysis, where the
product is broken down and reviewed as a number of assemblies. Here, the
function is identified and defined for each product assembly. Costs are also
assigned to each one. This is assisted by designing and viewing products as
assemblies (or modules). As with VE, VA is a group activity that involves
brainstorming improvements and alternatives to improve the value of the
product, particular to the customer.
Difference between value analysis ane Value
Value Analysis Value Engineering
Value analysis is the application of set of techniques
to an existing product with a view to improve its
Value Engineering is the application of same set of
techniques to a new product at the design stage-
project concept or preliminary design when no
Value Analysis is thus a remedial process Value Engineering is thus a preventive process
Value Analysis is done after the birth of the product Value Engineering is an early stage process
Value Analysis is done to have better optimized
Value Engineering provides better engineering
Steps for value analysis
• 1: orientation/preparation
• Identify what is to be analysed. This will typically be one of:
• A manufactured item. This can be anything from a screw to an engine, although a more complex
item is likely to result in a more complex and time-consuming analysis.
• A process or service. Again, all levels can be analysed, from a hand assembly process to a
complete customer service organisation.
• 2: information
• Identify and prioritise the customers of the item from step 1. This may include external
customers, such as 'auto suppliers' and internal customers, such as 'finance manager'.
• Note that external customers are usually more important than internal customers, and that
seniority does not necessarily equate with priority. A customer's preference for a product feature
should be more important than the opinion of a senior designer.
• 3: analysis
• In this phase the functions of the product are analysed by Functional Analysis, which is aimed at
identifying functions given by a product or part of it. Functions have an importance (weight) and a cost.
These costs are quantified and this leads to a list of functions ordered by their importance and value.
This means that there is an analysis of how each function satisfies customer needs, and then, an
analysis of what the cost of those functions is.
• This phase of Value Analysis may be considered as the key one of the whole methodology as it
represents the translation of needs to functions (see the specific technique).
• 4: innovation/creativity
• For this phase it is necessary to use creative techniques that generate alternatives. Starting from the
analysis of functions and costs, there is a search for means that allow elimination, change or
improvement of components and functions.
• It is important to look for different ways of satisfying the basic functions, even if it means rejecting the
current approach and starting again with a clean drawing board. This requires the product or process to
be 'mentally destroyed' and then rebuild a new one.
• It represents a confrontation of ideas, a collection of information about the feasibility and cost of those ideas, and measures the value of the best
• This analysis or evaluation uses the same techniques of value measurement that have been used in previous steps. At this point an examination is
done about the grade of functional accomplishment and the economical analysis of those alternatives that offer the higher value. Some of the
techniques are well-known such as Cash-flow analysis and break-even point.
• The team involved in Value Analysis needs an objective analysis of the ideas generated through the innovation phase. The evaluation phase is
carried out in two main steps:
• A qualitative analysis of value regarding objectives in design, cost, implementation facilities, etc.
• A quantitative analysis using numerical techniques of value measurement that leads to a few alternatives of high value that will be analysed in
• This process usually involves determining the cost and select those ideas that can be practically implemented. This may include work to develop
and refine promising ideas into practical and optimum solutions.
• 6: implementation and monitoring
• In this phase it is necessary to prepare a report that summarizes the work that has been done, including conclusions and specific proposals. It will be also
necessary to describe actions plans for implementation, in which project management techniques would be useful.
• Finally a plan should be included for monitoring of the actions. This should be based in the accomplishment of objectives.
• The application of Value Analysis only needs to make use of Basic Techniques such as matrixes, pareto chart, pert and gantt diagrams, etc., in most of the
Value Analysis steps.
Steps for value engineering
• Information gathering - This asks what the requirements are for the object.
Function analysis, an important technique in value engineering, is usually done in
this initial stage. It tries to determine what functions or performance
characteristics are important. It asks questions like; What does the object do?
What must it do? What should it do? What could it do? What must it not do?
• Alternative generation (creation) - In this stage value engineers ask; What are the
various alternative ways of meeting requirements? What else will perform the
• Evaluation - In this stage all the alternatives are assessed by evaluating how well
they meet the required functions and how great the cost savings will be.
• Presentation - In the final stage, the best alternative will be chosen and presented
to the client for final decision.
Techniques of value engineering and value
• Obtain all available cost
• Evaluate function by comparision
• Seek information from the best or the most authentic source
• Avoid generalities/work in specifies
• Get all the facts
• Discuss with specialist and utilize their ideas
• Use standard part wherever possible.
• Consult you supplier for new ideas
• Think creatively
• A checklist is a type of informational job aid used to reduce failure by
compensating for potential limits of human memory and attention. It
helps to ensure consistency and completeness in carrying out a task. A
basic example is the "to do list." A more advanced checklist would be a
schedule, which lays out tasks to be done according to time of day or
other factors. A primary task in checklist is documentation of the task
and auditing against the documentation.
• The following list of issues should be considered during this stage:
• A. Material Specification and Content
• 1. What material is used
• 2. Why is this material used
• 3. Can the materials be substituted with another, material
• 4. Can the dimensions be reduced
• 5. Oversize by calculation
• B. Material & Manufacturing
• 1. How much of the basic material is wasted in conversion
• 2. What are the causes of the waste
• 3. Can the waste be reduced
• 4. Can alternative methods
• 5. Can the materials be provided in a different format
• 6. Can parts be made for many products
• C. Standardization
• 1. Is the component made from the standard raw material
• 2. Is the component standard
• 3. Can the special parts be replaced with standard parts
• D. Direct Labour Costs
• 1. What are the labour operations involved
• 2. What are the direct labour costs
• E. Tolerances & Finishes
• 1. What tolerances have been specified and why were they specified as
• 2. What are the critical limits
• 3. Are all specified tolerances relaxed to ease manufacture, to allow an
alternative method of manufacture or
• permit a lower purchase costs
• F. Costs of material
• 1. What parts are bought-out?
• Reduce cost of product
• Most suitable products are manufactured
• It helps emplooyess in better understanding of their jobs.
• The constant search for improvement leads to greater all round
• It helps to generate new concepts and ideas for the R&d work
• It also creates cost and consciousness among the employees.