Value engineering

1
A Seminar Report
On
Value Engineering
By
Hardik Mehta
11BIE037
Under the Guidance of
Ms. Mallika Taneja
Lecturer,
Departmentof IndustrialEngineering
School of Technology,
PDPU
Submitted to
Department of Industrial Engineering,
School of Technology,
Pandit Deendayal Petroleum University
2014

2
CERTIFICATE
T his is to c ertify that the s eminar rep o rt entitled
“ Value Engineering” is p rep ared and s ub mitted b y Ha rdik
M e hta and has b een c arried o ut und er o ur s up ervis io n fo r
the p artial fulfillment o f the req uirement fo r the award o f
the d egree o f “ B a c he lo r o f e ng ine e ring in Indus tria l
e ng ine e ring de pa rtme nt” o f P and it Deend ayal P etro leum
Univers ity, G and hinagar and to o ur kno wled ge it has no t
b een s ub mitted els ewhere fo r a d egree
Ms. Mallika Taneja Prof. Aneesh Chinubhai
Lecturer Head of department
Industrial Eng. Dept. Industrial Eng. Dept.
PDPU PDPU

3
Acknowledgement
I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and organizations. I would like to extend my sincere
thanks to all of them.
I am highly indebted to Ms. Mallika Taneja for her guidance and constant supervision as well
as for providing necessary information regarding the seminar and also for her support in
completing the seminar.
I would like to express my gratitude towards my parents & member of PDPU for their kind
co-operation and encouragement which help me in completion of this project.
My thanks and appreciations also go to my friends in developing the project and people who
have willingly helped me out with their abilities.
Hardik Mehta,
11BIE037

4
Abstract
In this seminar report, I have discussed the concept of Value Engineering, its job plan and
the effective implementation of it through two case studies. Efforts have been put into the
articulation of the report to make it coherent which can be easily perceivable. Through the
application of Value Engineering profits are maximized without hindering the reliability of
the product. With the effective utilization of the technique the final outcomes comes out to
be a successful showcase of value engineering.
The value engineering approach is selected as a communication platform between industrial
designers and engineers. Value engineering is based on function analysis to optimize
function and cost ratio in particular situations. Value Engineering is an effective problem
solving technique. Value engineering is essentially a process which uses function analysis,
teamwork and creativity to improve Value [1]. Value Engineering is not just "good
engineering." It is not a suggestion program and it is not routine project or plan review. It is
not typical cost reduction in that it doesn't "cheapen" the product or service, nor does it "cut
corners."
Value Engineering simply answers the question "what else will accomplish the purpose of
the product, service, or process we are studying?". VE technique is applicable to all type of
sectors. Initially, VE technique was introduced in manufacturing industries. This technique
is then expanded to all type of business or economic sector, which includes construction,
service, government, agriculture, education and healthcare [2].

5
Table of Contents
1 Introduction to Value Engineering……………………………………………………..9
1.1 UNDERSTANDING VALUE ENGINEERING:............................................................................................................................9
1.2 HISTORICAL BACKGROUND:............................................................................................................................................10
1.3 OBJECTIVES OF VALUE ENGINEERING:.............................................................................................................................11
1.4 Working of Value Engineering:.............................................................................................................................12
2. Methodology of Value Engineering……………………………………………………13
2.1 THEPHASES OF VALUE ENGINEERING:...........................................................................................................................13
2.2 IMPACTOF EIGHTPHASES WITH COSTCYCLE:.................................................................................................................16
3. Case Studies......................................................................................................................17
3.1 CASESTUDYON A MEDICAL INSTRUMENT:....................................................................................................................17
3.2 CASESTUDYON A FLUSH VALVE:..................................................................................................................................21
4. FUTURE SCOPE AND CONCLUSIONS…………………………………………………..25

6
List of Tables:
1. Table: 1…………………………………………………………………18
2. Table: 2…………………………………………………………………19
3. Table: 3…………………………………………………………………19
4. Table: 4…………………………………………………………………19
5. Table: 5…………………………………………………………………20
6. Table: 6…………………………………………………………………20
7. Table: 7…………………………………………………………………21
8. Table: 8…………………………………………………………………22
9. Table: 9…………………………………………………………………23
10. Table: 10……………………………………………………………….24

7
List of Figures:
1. Figure 1………………………………………………………………12
2. Figure 2………………………………………………………………12
3. Figure 3………………………………………………………………13
4. Figure 4………………………………………………………………16
5. Figure 5………………………………………………………………21
6. Figure 6………………………………………………………………2

8
Abbreviations and Nomenclature:
VE: Value Engineering.
PDC: Pressure Die Casting.
CNC: Computer Numeric Control.
MM: Millimeters.
MIN: Minutes.
GM: Grams.
KG: Kilograms.
CFV: Conical Flush Valve.

9
1. INTRODUCTIONTO VALUE ENGINEERING
1.1. Understanding Value Engineering:
Value analysis is "A Systematic and objective evaluation of the value of a goods or
service, focusing on analysis of function relative to the cost of manufacturing or providing
the items or service". Value analysis refers to the analysis of an existing product, service or
administrative process.
Value engineering is "Value analysis conducted at the design engineering stage of the
product development process." Value engineering refers to the same analysis applied to the
products, services or administrative processes that are under design and have not been. [3]
Value Engineering is not just "good engineering." It is not a suggestion program and it is
not routine project or plan review. It is not typical cost reduction in that it doesn't
"cheapen" the product or service, nor does it "cut corners." Value Engineering simply
answers the question "what else will accomplish the purpose of the product, service, or
process we are studying?" It stands to reason that any technique so useful should be
applied to every product, and at each stage of the normal day-to-day development of a
highway product.

10
1.2 Historical Background:
During World War II, many manufacturers were forced to use substitute materials and
designs as a result of critical material shortages. When the General Electric Company
found that many of the substitutes were providing equal or better performance at less
cost, it launched an effort (in 1947) to improve product efficiency by intentionally and
systematically developing less costly alternatives. Lawrence D. Miles, a staff engineer
for General Electric, led this effort. Miles combined a number of ideas and techniques to
develop a successful methodological approach for ensuring value in a product.
The concept quickly spread through private industry as the possibilities for large returns
from relatively modest investments were recognized. This methodology was originally
termed value analysis or value control. In 1957, the Navy’s Bureau of Ships became the
first Department of Defense organization to establish a formal VE program. Miles and
another General Electric employee, Raymond Fountain, set up the Bureau of Ships
program to help reduce the cost of ship construction, which had nearly doubled since the
end of World War II. The Bureau of Ships asked that the technique be called “Value
Engineering” and staffed the office with people under the general engineer position
description. [4]
The mandatory VE provisions in most Department of Defense contracts encourage
contractor participation and thereby realize the full benefits from cost reduction
opportunities and innovations. These contract provisions provide the basis for the
contractor to obtain a share of the savings that result from an approved VE effort. Before
this development, submitting a cost-reduction change led to a commensurate decrease in
the size of the contract and usually reduced profit by a proportional amount. The VE
provisions changed this paradigm by providing the contractor with an incentive to submit
proposals to reduce cost.

11
1.3 Objectives of Value Engineering:
The main objective of VE is to improve value, and VE techniques can overcome many of
the roadblocks to achieving good value. They can save money; reduce time; and improve
quality, reliability, maintainability, and performance. It can also make contributions to
improve human factors, such as attitudes, creativity, and teamwork.
Value engineering can also extend the use of financial, manpower, and material resources
by eliminating unnecessary or excessive costs without sacrificing quality or performance.
Decision making can be improved by using the team approach.
Mathematical Representation of VE:
Three basic elements provide a measure of value to the user: function, quality, and cost.
These elements can be interpreted by the following relationship:
Where:
Function = the specific work that a design/item must perform.
Quality = the owner’s or user’s needs, desires, and expectations.
Cost = the life cycle cost of the product.

12
1.4 Working of Value Engineering:
The following figure shows the flowchart of working procedure of VE.
Figure 1: Working of Value Engineering.
The procedure shown above is revised several times based upon magnitude of the project.
Generally, most projects require four iterations. After each revision or iteration the value of
the process increases, the figure below shows the importance and function of these iterations:
Figure 2: Importance of four iterations of VE.

13
2. METHODOLOGYOF VALUE ENGINEERING.
2.1 The Phases of Value Engineering:
There are eight phases in value implementation of VE, as shown in below figure:
Figure 3: Sequential Phases of VE.

14
Detailed explanation of eight phases of VE:
1. Orientation Phase:
In the orientation phase, the project is selected and those who are going to work the problem
are familiarized with it.
2. Information Phase:
The team is made familiar with the present state of the project. All team members
participated in a functional analysis of the project as a whole, and then of its component parts,
to determine the true needs of the project. Areas of high cost or low worth are identified.
3. Functional Phase:
‘Function’ can be defined, as the use demanded of a part of a product and the esteem value
that it provides. These functions therefore make the product work effectively or contribute to
the ‘salability’ of the product. 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.
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, more cost effective ways of achieving the basic function. All rules of
brainstorming are allowed, and criticism needs to be avoided as it could cease the flow of
ideas. Simply list down all ideas, not regarding whether they sound apparently ridiculous.

15
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. A weighted evaluation is applied in some cases
to account for project impacts other than costs (both capital and life cycle). Ideally, the VA
team would like to evaluate all attractive ideas but time constraints often limit the number of
ideas that can be developed during the workshop. As a result, the team focuses on the higher.
This phase is designed so that the most significant ideas are isolated and prioritized.
6. Development Phase:
In the development phase, final recommendations are developed from the alternatives
selected during the analysis phase. Detailed technical and economic testing is conducted and
the probability of successful implementation is assessed.
7. Presentation Phase:
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. It includes
preparing a formal VECP or value engineering proposal (VEP) that contains the information
needed to reach a decision and implement the proposal.
8. Implementation and Follow Up:
During the implementation and follow-up phase, management must assure that approved
recommendations are converted into actions. Until this is done, savings to offset the cost of
the study will not be realized.

16
2.2Impact of eight phases with cost cycle:
In the cost cycle, the resistance line (represents savings) gradually increases with the
implantation of VE. The line representing costs that is acceptance line, decreases with
implementation.
The below figure shows the position of the lines after each and every phase:
Figure 4: Potential savings from VE.

17
3. CASE STUDIES:
3.1 Case Studyon a Medical Instrument:
In this paper we have considered a medical instrument manufacturing company, Aadarsh
Instruments, located in Ambala, for analysis which runs export business of medical
microscope. This firm is producing different types of microscopes which they export to
various countries around the globe. All of the products manufactured here are conforming to
the international standards. It is an ISO certified company. [5]
One of their models SL250 has a component named Focus Adjustment Knob for Slit Lamp in
microscope. This microscope has found application in the field of eye inspection. Value
Engineering is applied to the Focus Adjustment Knob.
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
Steps followed during the analysis are given below:
1. Plan for Product Selection
Product selected is Focus Adjustment Knob for Slit Lamp in microscope which 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.

18
2. Obtain Product Information:
Product specifications are:
Material – Aluminum Bronze Alloy
Diameter of base plate –30 mm
Thickness of plate--3 mm
Cost of the scrap is - 293/Kg
Pieces Produced annually – 8000
Process used – C.N.C. indexing milling
Cycle time—2.5 min
Anodizing—2/min
Material cost—65 gm
Total Present cost – ` 29.99/piece
3. Functional Analysis of Present Functions:
Name Basic Function
Verb
Basic Function
Noun
Secondary Function
Noun
Focus Adjustment
Knob
Index Lens Fix
Table 1: Function Analysis.
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
5. Evaluation Phase
For judging the ideas, the following designs were considered:
A. Function
B. Cost
C. Maintainability
D. Quality

19
Each of these design criteria was given a weight age factor. This was carried out as follows:
each of the above criteria was compared with others, and depending on their relative
importance, three categories were formed, viz. major, medium, and minor. A score of 3, 2
and 1 respectively was assigned to each of the levels. The details are as given in the
Table 2 and Table 3:
Weight age analysis Points
Major difference 3
Medium difference 2
Minor difference 1
Table 2: Weight Assignment.
Table 3: Paired Comparisons.
From the above paired comparison we get the following result:
Table 4: Attributes.

20
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
Table 5: Feasibility Ranking
Table 6: Cost Evaluation.
7. Result:
The total savings after the implementation of value engineering are given below:
 Cost before analysis – ` 29.99/-
 Total Cost of nylon knob –` 18.40/-
 Saving per product – ` 11.59/-
 Percentage saving per product – 38.64 %
 Annual Demand of the product – 8000
 Total Annual Saving – ` 92,720/-
 Value Improvement - 62.98 %

21
3.2 Case Studyon a Flush Valve:
We are discussing a Bath Fitting product named CONC. FLUSH VALVE manufactured in
LIDER. A flush valve is an important part inside the tank of the toilet that moves the water
into the bowl. Its manufacturing is difficult as its design is very intricate. [6]
Figure 5: Conical Flush Valve.
1. Functional Analysis Worksheet:
Table 7: Functional Analysis

22
2. Functional Evaluation:
Table 8: Functional Evaluation.
3. Weight Evaluation:
Figure 6: Weight of each part.

23
4. Creativity Worksheet:
I. Change the material to Aluminum.
II. Change the material to Aluminum alloy.
III. Change the material to Plastic.
IV. Change the material to Polypropylene.
V. Make it through Forging.
VI. Make the design simpler.
VII. Make it in wood.
VIII. Make threads on the inner side.
5. Decision Matrix:
Objectives are:
B1=Cost
B2=Reliability
B3=Performance
Alternatives are:
C1= Use Zamak (Aluminum Alloy)
C2= Use Plastic
C3= Use Polypropylene
Objective B1 B2 B3
Weightage 0.5 0.25 0.25 Value
C1 42.84 21.5 21.25 84.75
C2 45.90 18.25 17.75 81
C3 44.86 19.25 18.25 81.5
Table 9: Decision Matrix.

24
6. Finding and Recommendation:
Push Button is a manufactured item. At present it is made from brass. The material is costly
and hence the cost of the part made out from it is also costly. It is recommended that the
Push Button should be made in the factory without changing the design of it through
pressure die casting process. The proposed Push Button is to be made from Zamak (an
aluminum alloy) which is cheaper than brass and with the use of PDC process; the excessive
cost of machining is also eliminated.
Calculation of saving:
Table 10: Cost Evaluation.
7. Result:
The total saving which can be incurred per annum by the implementation of above
recommendation is Rs. 2, 80,000/-.

25
4. FUTURE SCOPE AND CONCLUSIONS:
VE can frequently offer substantial benefits, particularly when one or more of the following
applies:
 High cost;
 Deficiencies in performance, reliability, or productivity;
 Multiple product applications; or
 Executive management interest.
VE can also be used to measure the merit and the risk of a new or changed process (before a
problem is identified) as well as:
 Eliminating or controlling potential process failures;
 Identifying process parameters that need additional or improved controls to prevent
failures in process;
 Confirming which elements of a process are robust; and
 Improving product safety, quality, cost, and schedule.
Value engineering methodology is a powerful tool for resolving system failures and
designing improvements in performance of any process, product, service or organization. Its
application results in significant improvements to quality and reliability by focusing the
team’s attention on the functions that are contributing most to the problems, and the most
likely causes of these problems. Then, the team develops ways to improve these root causes
of the problems, and ways to fix the problems that have occurred along with means to prevent
their reoccurrence.
The Value Engineering process and procedures are generally well defined and well-
understood at all levels in the industry. VE is recognized as an effective way to improve the
performance of a product with reduction in cost. The quality (qualifications and experience)
of the team leader and specialists is a key ingredient to the success of the VE program. It is
more effective and influential on the performance, quality, and cost of a product when done
relatively early in the production schedule.

26
In the first case study discussed above we have used the concept of Value Engineering to
analysis the focus adjustment knob of microscope and with the critical evaluation of it we
were able to increase the value of the product by substituting another material in place of the
one that is currently in use. The various advantages have been observed in terms of cost
reduction, increase in overall production, reduction in manpower, and reduction in scrap. In
future we can alter the design of the product and integrate this technique with various other
prevailing industrial engineering tools which will bring down the cost by substantial margin
and thereby increasing the value of the product.
In the other case study, discussed we have seen how the VE is used for the cost reduction
without the change in the product design & its value. A proper decision matrix is prepared for
choosing the appropriate alternative from the feasible choices available.
In Future we can make the changes in the design so that the Value of the product can even be
enhanced. Various other Industrial Engineering tools can be even made use in further
improvement.

27
References
1. Miles, L.D., Techniques Of Value Analysis And Engineering, Mcgraw-
Hill,1972.
2. Value Management: Surviving In The Millennium Via Diligence Rewarded
Management Accounting, Mcdowell, T. 1996.
3. Adapted from information in Army Pamphlet 11-3, “Value Engineering” , and
DoD Handbook 4245.8-H, “Value Engineering,” March 1986.
4. Cooper, R. and Slagmulder, R., Target Costing and Value Engineering Productivity
Press, Portland, or, USA (1997).
5. Function-Oriented Creative Group Problem Solving. Creativity and Innovation
Management. Fong, P. S. W. 1999.
6. Younker, D.L, Value Engineering: Analysis and Methodology, New York, Marcel
Dekker (2003).
7. Title 41 USC, Section 432, “Value Engineering” (available online at Cornell
University Law School’s Legal Information Institute). W. F. Kilmer, 2002.

Value engineering

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (19)

Similaire à Value engineering

Similaire à Value engineering (20)

Dernier

Dernier (20)

Value engineering