Part 1 of Value Engineering

1. Pankaj Nalwa

2. Profile of Trainer
 Industrial Experience of 16 years with well known organizations.
 Being from Engineering background and specialization in
Tooling, done many projects of Product Development.
 MBA in International Business, helped in dealing with
International clients according to norms and international law.
 Lead trainer for “A.P.Q.P”, “Value Engineering”, “P.P.A.P”,
“F.M.E.A”, “Product Development Practices”, “Tool Room
Management”, “Practices for Good Design”.
Pankaj Nalwa

3. Perspective
people processes View of Organization
products
results
View of Customer
outcomes benefits
Pankaj Nalwa

4. Who are our Customers?
Most Useful 1. End Users Least heard
Example: Consumer, Service User
2. Intermediate Customers
Example: Retailer, Distributor, OEM
3. Internal Customers
Least Useful Example: Manufacturing, In-plant User Most heard
Pankaj Nalwa

5. Capturing Voice of the Customer
Pankaj Nalwa

6. Obtaining Voice of the Customer
 Who is the customer?
 What should we measure?
 How do we measure?
 How do we use what we measure?
Pankaj Nalwa

7. What should we measure?
 Value mismatches
 Good performance and satisfactory perception
Technical people
Owner / User
 Faults & Complaints
 Similar completed projects
Pankaj Nalwa

8. How do we measure?
 Any structured information gathering mechanism
 Focus group(s) of stake holders
 Telephonic interviews
 Mail questionnaires
 Personal interviews
 User logs
Pankaj Nalwa

9. What is Value?
Value is a measure of “Cost Effectiveness”.
It is the relationship between functional need(s)
and the cost to meet that need.
Value = (Functional) Performance / (Unit) Cost
Pankaj Nalwa

10. What is Good Value?
Unnecessary performance even at very low cost is wasteful and
thus is a poor Value.
All functional performance costs money. But not all performance is
needed or even wanted.
Good Value is the lowest product cost required to achieve
high customer / user acceptance.
Pankaj Nalwa

11. Value Engineering
Value Engineering is the formal or informal attempt to assure
highest value by delivering all required functions at the lowest
overall cost.
It is a systematic review of a project, product or process to improve
performance, quality and / or life-cycle cost by an independent
muti-disciplinary team of specialists.
Value Engineering is not a cost cutting process that reduces
project life cycle time, scope or quality.
Pankaj Nalwa

12. When is VE / VA study performed?
 About at the 25% of design stage
 Preliminary line and grade inspection
 Preferred alternate stage
Pankaj Nalwa

13. Objectives of VE / VA
 Improve project quality
 Reduce project cost
 Foster innovation
 Eliminate unnecessary and costly design elements
 Ensure efficient investments
 Develop implementation procedures
Pankaj Nalwa

14. Life Cycle Costing (LCC)
 Economic assessment of completing design
alternatives
 Focuses on total costs
 Optimizes value and improves return on
investment (ROI) for a given project
Pankaj Nalwa

15. The Rule of Ten
Pankaj Nalwa

16. Reasons for unnecessary project costs
 Lack of information
 Lack of innovation / ideas
 Temporary circumstances
 Honest wrong beliefs
 Changes in ownership requirements
 Lack of communication and specifications
 Outdated standards and specifications
Pankaj Nalwa

17. Individual Efforts
Process Project
Designer Owner Engineers Users Manager
Problem
Team Effort
Solution
Pankaj Nalwa

18. Part – 2 includes Phases in VE / VA Process and
Implementation.
pankajnalwa@gmail.com Pankaj Nalwa