Concept of Value Analysis
Scope of Value Analysis
Concept of Value Engineering
When is it used?
Some Thoughts on VE
Steps in Value Engineering
Benefits of value engineering
How and when is VE applied?
3. Value analysis originated from second world war due to the
shortage of essential material.
Lawrence D Miles was the first to develop the technique and
Value analysis is defined as an organized creative approach
which has , as its objective, the efficient identification of
unnecessary cost (cost which provides neither quality nor
use nor appearance nor attention).
Value can be in terms of -
Use or Functional Value: The properties and qualities which
accomplish a use, work or service.
Esteem Value: The properties, features or attractiveness which
causes us to want to own it.
Cost Value: The sum of labour, material and various other costs
required to produce it.
Exchange Value: Its properties or qualities which enable us to
exchange it for something else we want.
-: Value Analysis :-
4. Based on these classifications, value is defined as "the minimum money which
has to be expended in purchasing or manufacturing a product to create the
appropriate use or esteem factors".
We could now define value analysis as "an organized creative approach which
has as its objective—the achievement of the value of the product". Value
analysis aims at reducing the cost value to the value of the product.
It should be borne in mind that:
Value is not inherent in a product, it is a relative term, and value can change
with time and place.
It can be measured only by comparison with other products which perform
the same function.
Value is the relationship between what someone wants and what he is
willing to pay for it.
In fact, the heart of value analysis technique is the functional approach. It
relates to cost of function whereas others relate cost to product.
5. SCOPE OF VALUE ANALYSIS
1. Organized cost reduction analysis by which accountants
analyze costs in products or procedure, the ranking of their
elements in a descending order of magnitude and in informed
challenge to each, starting with the most important.
2. Development as practiced in many firms where it follows
the realization of a design and combining through the
specifications to remove costs by substituting standards and
relaxing tolerances and finishes.
3. Purchasing analysis which systematically searches for
cheaper bought-out components or services, probably by
seeking alternatives or a fresh basis for price negotiation.
4. Method study - The part of work study that studies and
analyses work of any kind in a disciplined manner that leads to
improvement in. methods.
6. Value Engineering (VE) is an intensive, interdisciplinary
problem solving activity that focuses on improving the
value of the functions that are required to accomplish the
goal, or objective of any product, process, service, or
“The systematic application of recognized techniques
which identify the functions of the product or service,
establish the worth of those functions, and provide the
necessary functions to meet the required performance at
the lowest overall cost.”
CONCEPT OF Value Engineering
7. Value engineering is the process by which a
company analyses the individual components
of cost within a product or service in order to
determine whether it can re-engineer the
product's cost base in order to improve the
value to the customer.
The start point for value engineering is to
understand the relationship between each
individual cost component and the value to
the customer associated with each individual
component of cost.
8. It is a systematic method to improve the "value" of
goods or products and services by using an
examination of function.
Value = ----------------
Value analysis is all about commitment, discipline
and focus and finding lower cost alternatives to what
you are doing now! If you are missing even one of
these success components you can’t and won’t have
consistent, sustainable and substantial savings
9. WHEN IS VE USED ?
Value Engineering is used to determine the best
design alternatives for Projects, Processes, Products,
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 satisfaction .
Value Engineering is also used to improve
Value Engineering is a powerful tool used to identify
problems and develop recommended solutions.
10. SOME THOUGHTS ON VE
VE uses a interdisciplinary approach to problem
VE takes a systems approach to problem
identification and problem solving.
VE uses function analysis to improve
communication among team members
The function analysis systems technique
(FAST) promotes a synergistic approach to
problem solving that develops solutions far
beyond that which only an individual could
11. COMPETITIVE ADVANTAGE
Quality is defined as “conformance
Value is defined as: FunctionCost
You can’t have one without the
Competitive Advantage = Quality +
12. SIX STEPS IN VALUE ENGINEERING
Clearly identify the problem(s) to be solved, and gather
information on the background, functions and
requirements of the product, process, or system.
Brainstorm ideas on how to improve the high cost,
broken, or inadequately performed key functions.
Screen ideas for acceptance, score remaining ideas on
a scale and group ideas into categories. Develop
design scenarios, and selection criteria. Rate and rank
Plan how to sell ideas to management, identify key
recommendations, plan management presentation.
Give oral presentation to management, or develop
Get management approval, make management plan,
make assignments, implement, follow-up.
13. BENEFITS OF VALUE ENGINEERING
Cost Problematic situation
Value Attitude In Staff
Successfully In Market
Save Time & Money
14. HOW AND WHEN IS VALUE ENGINEERING
☺Formal Job Plan