What is Value Engineering?
Implementation of VE in our project
Principle and Purpose of VE
3. Lawrence D.Miles
1904 - 1985
• 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
• Establishment of Society of American Value Engineers “SAVE”
4. What is Value?
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”
5. Why doProjects 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
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
8. The Key Points of VA / VE
• Applying formal work plans.
• A team approach.
• Specific definition of functions.
• The simultaneous look at functions and costs.
• Control of the analysis process.
• Quantifiable results
9. What is VALUE ?
Value is the relationship between the defined
function the customer requires and the costs
incurred to provide that function.
– Cost Value
– Use Value
– Esteem Value
– Exchange Value
11. Why use Value Engineering?
12. When is VE used
• Existing part/product cost is high
• Existing technology is complex/old though
simpler means are available
• There is a need to release a cheaper product
by cutting down some of the existing feature
• The existing customer demands a minimal
increment in product features that are in use
• There is a need to cut down the manufacturing
13. • Value Engineering is used to determine the best
design alternatives for Projects, Processes,
Products, or Services
• Value Engineering is used to reduce cost on existing
Projects, Processes, Products, or Services.
• Value Engineering is used to improve quality,
increase reliability and availability, and customer
• Value Engineering is also used to improve
• Value Engineering is a powerful tool used to identify
problems and develop recommended solutions.
When is VE
14. Benefits of VE
• Decreasing costs
• Increasing profits
• Improving quality
• Expanding market share
• Saving time
• Solving problems
• Using resources more effectively
15. VE’s Weaknesses
⮞ Successful VE results are dependent on the quality
of information brought to the VE workshop for
⮞ VE is not time oriented, but, product oriented. Thus,
improvements in production activities are not readily
⮞ There are many misunderstandings and biases
against VE that have been built up over time due to
misuse of the methodology.
“It cheapens the product without improving it.”
“VE is only used for cost reduction.”
16. Value Engineering Research Questions
and Check Sheet
1.Can it be eliminated without impairing
function or reliability?
2. Does it cost more than its worth?
3.Does it do more than is required? Are there
4.Is there something better with which to do
17. Value Engineering Research Questions
and Check Sheet
5.Can it be made by a less costly method?
6.Can a standard item or specialty product be
7.Could a less costly manufacturing technique
8. Should different tooling be used?
9.Can someone else provide it at less cost
without affecting dependability?
18. Potential Savings from VE
Drawings Released Tooling Changes
Net Savings from VE
Total Cost of VE Implementation
beyond this point
results in a net loss.
19. What is value?
VALUE = What we get out of something
What we put into it
VALUE = Quality, reliability, appeal, etc =
Cost, time, mass, energy, etc.
VALUE = Worth =
Delivery of necessary project functions while achieving
best balance between project performance and project
24. 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
25. The modern version has the following eight steps:
8. Implementation and Follow-up
The Job Plan
26. 1. Orientation Phase
Drafts scopes and objective
Establish evaluation factors
Determine Study Team
Prepare for value study
The Job Plan
27. 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.
The Job Plan
28. Information Phase Checklist
What is the item? How does it work?
What does it do or accomplish?
Why does it work?
What must it do or accomplish?
How does it relate to other systems, units, or components?
Has it been determined why it is needed?
Have the specifications and requirements been reviewed?
Are the specifications realistic? (That is, are all specified characteristics both necessary and
Can specification requirements be modified or eliminated?
Will a modification of the specification simplify design and construction?
Are the specifications required, or are they guidelines only?
What is it we really want?
Are all performance and environmental requirements necessary and sufficient?
Have the specifications been interpreted correctly by the planner and the designer?
What are the desirable characteristics in respect to width, thickness, appearance, durability,
installation, maintenance, testing, safety, etc.?
Is a severe environmental issue involved?
What special performance or operating characteristics are required?
Have State and Federal policies, procedures and regulations been reviewed?
29. Information Phase Checklist
Engineering and Design
Has the background history been collected?
Who designed it? When?
Who determined the requirements?
Who must review a change?
Who must approve a change?
Who must approve implementation funding?
Who must implement the change?
Is the change procedure known?
Does the design do more than required?
What alternates were considered during design?
Why were alternates rejected?
Are any changes to the design planned?
Do drawings reflect latest state-of-the art?
How long is it designed to last with normal use (design life)?
What is its normal use?
What is the measure of life (time, cycles)?
What are the life cycle costs?
Methods and Processes
Can functions be combined, simplified, or eliminated?
Are any nonfunctional or “nice to have”-only items required?
How is construction performed?
Why is it performed that way?
Are there high direct labor costs?
Are high-cost areas or items identified?
What is the schedule?
30. Information Phase Checklist
Materials and Procurement
Are special, hard-to-get, or costly materials specified?
What alternate materials were considered? Why were they rejected?
Are the materials used hazardous or difficult to handle?
When was the material specified? Have new materials been developed that would
perform the function for less cost?
Have the present suppliers been interviewed to ascertain any problems which
contribute to high costs?
Have there been any delivery or quality problems?
Is this a single source item?
Has the item been observed in use?
Have the people who use or maintain it been solicited for ideas?
What is normal maintenance?
What is frequency of maintenance?
What is level of maintenance?
Can the asset be easily accessed for maintenance activities?
31. 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
The Job Plan
What is the Function?
32. Function Analysis
• Shifts the problem-solving focus away from the
items toward the functions
• Function need be defined by two words: an Active
Verb and a Measurable Noun
• The verb defines the required action; the noun
tells what is being acted on
• The more abstract the function definition, the
greater the opportunities for finding creative
33. Function Analysis
FAST (Function Analysis System Technique) - A
logic diagram to describe how a system works.
Examples of Verbs and Nouns:
34. ALL COST IS FOR
The customer wants a function!
Wants something done – enclosed, held, moved,
cleaned, heated, cooled, etc.
Wants someone (perhaps himself) pleased
• Shape, color, aroma, sound, texture, “precious”
Entail some action that he wants performed
Please the user/owner
35. WHAT IS
“Aproduct or process must do to make it work and sell,”
It is the original intent or purpose that a product, process
or service is expected to perform.
In FAST Diagrams, the description of a function is
restricted to a two word format –
an Active Verb+ Measurable Noun.
Ex. :- Carry Load; Transmit Light; Project Image.
Products may require use functions, aesthetic
functions or both
Refrigerator, automobile, clothing, etc. require both
use and aesthetic functions
Concealed wire in a building, oil in an engine, etc.
require only use functions
Perfumes, artistic paintings, etc. have aesthetic
37. ANALYSIS OF
State the function in exact sentences
Is that exactly what it does for the customer?
Is that exactly what the customer wants it to do?
Is that exactly what the customer believes he’s paying
Improve and clarify sentences until they say what
the function exactly is
Name the function with a verb-noun combination
E.g. support contact, enclose housing, radiate heat, etc.
38. DEFINING FUNCTION
All functions can be defined in Two words:
An Active Verb and a Measurable Noun
Examples of function foe various types of Studies:
40. By constraining the description to just two words, it
forces participants to clearly and concisely capture
WHAT task needs to be performed, not HOW it is
This eliminates the physical constraints of the product
from our thinking and allows us to explore alternatives
more easily. It is a way of overcoming “functional
fixedness” which is what Charles Bytheway was trying
Fast diagrams provide a graphical representation of how
functions are linked or work together in a system to
deliver the intended goods or services.
Functions may be performed by the process, product or
system, into a How?/why? relationship.
The FAST diagram presents the whole technical system
with the inter-relationship of its various functions.
43. Use of a FAST diagram based on the Why-How-When
Leads back to the higher level function
Leads ahead to the specific function that must be
performed in order to
Which functions must be performed simultaneously
and sequential relationship with others.
44. BASIC STEP
Prepare a list of all the functions by assembly or
system using the verb and noun technique of
identification of function
Write each function on a small card.
Select a card with the function that you consider to be
the basic function. Determine the position of the next
higher and lower function cards by specifically
answering the questions:
48. You will note in the figure that there are several different
classifications of functions.
The two major categories are:
1. Basic Function
2. secondary Functions
Basic Functions: describe the characteristics or task which is the
primary reason for the existence of an item.
It is what the product or process was actually designed to.
Secondary Functions: are those designed-in functions which are
required to cause or allow the basic function to occur.
It is any function that directly contributes to accomplishing the basic
It can be further divided into several other categories which are
known as sub-groups.
49. Dependent Function
Afunction that depends on another function for its existence.
Comes in to existence when a specific method is selected.
Does not depend upon one other functions for its existence or
on the method selected to perform those functions.
Afunction, which assists a critical function in doing its job
so that it may be done in a reliable and acceptable manner.
50. Critical Path Functions
Any functions which describe specifically how or why
another functions are performed.
Higher Order Functions
Higher order functions are reasons for the lower order
functions to exist.
In the FAST diagram they appear in the left-hand portion
of the diagram
Lower Order functions
Lower order Functions serve the higher order functions.
Their existence depends on the relevance of higher order
In the FAST diagram they appear in the right-hand
portion of the diagram.
51. Afew things that to be pointed out about FAST
--- There is no single “correct” FAST Diagram for a
product, process, service or system. They can very
Focus of the analysis.
Technology or customer focused;
Objectives of the study in which it is used – cost
reduction, process improvement or technical problem
54. We can see that there is a logical How/Why
connection across the critical path, as well as the
In addition to this left-right logic path, there is
the “When?” logical connection moving from
top to bottom.
“When” the projector “Generate Light” it also
must “Minimize Heat” generate.
58. ADVANTAGES OF FAST
Easy to analyze.
All functions under one flow chart/ diagram.
Helps to figure out critical path.
Helps to find function for where we can optimize the
59. 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
The Job Plan
60. Job Plan
Creative Phase Checklist
Have creative thinking techniques been used?
Has an atmosphere been provided that encourages and welcomes new ideas?
Has there been cross-inspiration?
Have all members of the team participated?
Has an output goal been set?
Have all the ideas been recorded?
Have negative responses been discouraged?
Has the team reached for a large quantity of ideas?
Have ideas been generated without all the constraints of specifications and system
Has a thorough search been conducted for other items which are similar in at least one
significant characteristic to the study item?
Have all basic functions been identified for this project?
Is a separate Creative Phase worksheet available to be filled out for each basic function
Have you dismissed from your thoughts the present way the basic function is
For group brainstorming, have the techniques, method of approach, and "ground rules"
been explained before proceeding?
Have you provided for a sufficient incubation period to permit later addition of more
Have you made provisions for a later follow-up session to evaluate and refine the ideas?
Have all of the basic functions of the project team been subjected to the complete Creative
61. 5. Evaluation Phase
In this phase of the workshop, the VA team
judges the ideas developed during the creative
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
The Job Plan
Paired Comparison Analysis
Follow these steps to use the technique:
List the options you will compare. Assign a letter to each option.
Mark the options as row and column headings on the worksheet.
Note that the cells on the table where you will be comparing an option with itself have been
blocked out - there will never be a difference in these cells
The cells on the table where you will be duplicating a comparison are also blocked out.
Within the remaining cells compare the option in the row with the one in the column. i.e where “A”
and “B” intersect.
For each intersect cell, decide which of the two options is more important. Write down the letter
of the more important option in the cell. Finally, consolidate the results by adding up the total of
all the values for each of the options. You will convert these values into a percentage of the total
score. (all scores totaled should equal 100%
In the example below, an entrepreneur is looking at ways in which they can expand their business.
They have limited resources, and have determined a set of the best options:
A- Expand in International market
B- Expand in Domestic market
C- Improve customer service
D- Improve Quality
Then they compare these options, In the intersect cell, the letter of the
most important option between the 2 is entered, Once all options
have been evaluated and scored for importance, a total and percent
of overall performance is calculated.
An example is shown in the figure below.
A B C D Total Adj Total Weightage
Expand in International
A A C A 2 3 30%
Expand in Domestic Market B C B 1 2 20%
Improve Customer service C C 3 4 40%
Improve Quality D 0 1 10%
In this example, it is most important to improve customer service (C) and then to tackle Overseas markets (A).
Quality is not a high priority - perhaps it is good already.
Paired Comparison Analysis is a good way of weighing up the relative importance of different courses of
action. It is useful where priorities are not clear, or are competing in importance. The tool provides a framework
for comparing each course of action against all others, and helps to show the difference in importance
64. 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
The Job Plan
65. 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.
The Job Plan
66. 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.
The Job Plan
71. 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.
72. 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
73. 1. Plan For Product Selection
• This Product is used to adjust the focus of lens for magnification
• 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.
74. 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 material is – 293 rupee/Kg
v. Pieces Produced annually – 8000
vi. Process used – C.N.C. indexing milling
vii. Cycle time—2.5 min
ix. Material wt—65 gm
x. Total Present cost – 29.99 rupee /piece
76. 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
77. 5. Evaluation Phase
For judging the ideas, the following designs wereconsidered:
each of the above criteria was compared with others , and depending on
their relative importance, three categories were formed, major, medium,
79. 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
81. 7. Result
The total savings after the implementation of value engineering
are given below:
• Cost before analysis –
• Total Cost of nylon knob –
• Saving per product –
• Percentage saving per product –
• Annual Demand of the product –
• Total Annual Saving –
• Value Improvement - 62.98 %
82. 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