Value Analysis Technique In Strategic Cost Management

1. A PPT ON VALUE ANALYSIS AND
VALUE ENGINEERING
AND
IT’S ROLE IN COST CONTROL
SUBMITTED BY:
SUNIL RAJ P M
13SKCMN056
Strategic Cost Management

2. Main Idea:
 Maximizing the Value Of A Product:
 By adding,
 Modifying,
 Deleting,
Minimising the Cost Of the Product:
 By Avoiding
 Eliminating
 Preventing

3. Meaning of Value Analysis:
Systematic analysis that identifies and selects the best
value alternatives.
Functional value is well considered rather than the price of a
product.
Orderly and creative method to increase the value of
an item, also called as functional analysis was created by
L.D. Miles.
Value of an item = Functions of an item / Cost.

4. Job Plan of Value Analysis:
 Selection and Orientation
 Analysis
 Recording Ideas
 Speculation
 Investigation
 Recommendation
 Implementation

5. Value Analysis Application in cost control:
 Universal Applicability
 By prioritizing the requirements.
 Choosing the best out of best to substitute a
particular factor (of production included).
Capital goods, Purchased parts, Maintenance,
Printing and Stationery Items, Material Handling and
Transportation cost.

6. Value Engineering:
General Electric Co. with Lawrence Miles
It is the term applied to Value Analysis, generally
includes the design and stage of manufacturing of a
product.
Uses Intuitive Logic
Savings are more in case Value Analysis is done
at design stage.

7. Value Engineering Job Plan:
 Preparation
Information
Analysis
Creation
Evaluation
Development
Presentation and
Follow-up

8. Value Engineering:

9. Benefits of Value Analysis & Value Engineering:
 Decrease in the cost of a product without affecting
the efficiency or quality of product
 Selection of best alternatives
 Good outcome as it is a “Team Effort”
 Concentration on Low Performing sections
 Creation of Multi-Stage growth
 It tells something more than a product (includes
service, a equipment, a project, a tool, a machine or a
process).

10. Conclusion:
The Value Analysis and Value Engineering
provides a platform to increase the worth a product by
reducing the cost in a conscious manner.
Strategic Cost Management can use this well
tool to minimize the cost and maximizing the worth.
Appropriate measures should be taken while
implementing this strategy.