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Value Engineering

Value engineering is a systematic approach to optimizing the value of a product by ensuring it meets its necessary functions at the lowest total cost. It analyzes the functions of a product and tries to find alternatives to reduce costs without compromising quality. There are several types of value - cost value, exchange value, use value, and esteem value. Value engineering applies techniques like functional analysis systems technique to understand a product's functions and relationships. It generates alternative solutions through brainstorming and evaluates them to find the best low-cost alternative to recommend for implementation. The principles of value engineering include not using unnecessary parts and using standard or low-cost materials where possible.

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482 views

Value Engineering

Value engineering is a systematic approach to optimizing the value of a product by ensuring it meets its necessary functions at the lowest total cost. It analyzes the functions of a product and tries to find alternatives to reduce costs without compromising quality. There are several types of value - cost value, exchange value, use value, and esteem value. Value engineering applies techniques like functional analysis systems technique to understand a product's functions and relationships. It generates alternative solutions through brainstorming and evaluates them to find the best low-cost alternative to recommend for implementation. The principles of value engineering include not using unnecessary parts and using standard or low-cost materials where possible.

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johnplaya1234
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© © All Rights Reserved
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VALUE ENGINEERING

INDUSTRIAL ENGINEERING

Value Engineering
What is value engineering?
Value Engineering (VE) is an organized effort directed
at optimizing a products relationship between its
functional need(s) and the cost(s) to meet that need
while meeting or exceeding quality requirements.
It is a formal attempt to assure the highest value of a
product by delivering all required functions at the
lowest overall cost

What do we mean by value in value engineering?


Value, as defined, is the ratio of function(eg. Quality) to
cost. Value can therefore be increased by either improving
the function(quality) or reducing the cost.

value = function/cost
In easy words, value is different things to different people.
Designer equates it to the reliability, purchaser to price of
the item, and production person to the cost of
manufacture.

Types of values:
Cost value- sum of all costs occurred in manufacturing
Exchange value- measure of all the properties, and
features of the product possible of trading with other
products
Use value- constitutes the amount of its cost included to
make the product work
Esteem value- amount of cost included into the product
to enhance its appeal
E.g.- a car bumper has less use value and high esteem
value ,however ,a gudgeon pin has high use value but
low esteem value.

Uses of value engineering


1. Cost prevention and cost elimination
2. Better understanding of job profile by the
employees by minimizing their valueless time and
efforts
3. Balancing cost and performance
4. Prevention from overdesigning
5. Motivation for creativity
6. Increases profits
7. Help in better customer satisfaction

When to apply value


engineering
New design being undertaken
Decreasing profitability and returns
If competitors product are priced less
Failure of meeting company annual production
commitment
If the accounts show symptoms of
disproportionate increase in the cost of production

Showing application of VE
(against SCRUM)

Scrum is a lightweight agile method for software development.


Scrum is named after the Scrum in rugby, which is a way to
restart the game after an accidental infringement. This entry
describes the software development part of Scrum. It means

Why to apply VE
(VE versus Other Cost Reduction Techniques)
Generally, traditional tech. are post-production oriented as
against VE which is applied at design stage
Other techniques try to reduce cost from existing processes
,whereas VE never considers any process as it is function
oriented
VE gives 30-40% cost reduction as against 10-15% by
other conventional methods
The cost reduction is cost based i.e. it tries to reduce cost in
any manner, but in VE function has to be maintained so
product is obtained at lowest cost without sacrificing its
quality and performance

Steps in Value analysis(for


VE)
Blast

Selection of product
(factors influencing selection and justification)

Market estimated product life


Expected variation in labor and material cost
Changes in trading conditions
Cost effect of increased inventory ,spares etc.
Overall costs and savings

Justification
There must not be any major changes in product or
item under study during study period
The proposed changes are likely to be implemented
Components are large in number(quantity or cost)

Functions in Value
engineering
Function is that part of value engineering which
has to be maintained while minimizing cost. So,
function provides us with constraints for VE.
There are two types :
Primary function-is the basic purpose for which
the product exists .i.e. the basic function of a pen is
to communicate the idea.
Secondary function-is the one that supports
primary function.

Functional Analysis Systems


Technique(FAST)
It is used to establish the relationship between
functions in the analysis of an entire system, process
or complicated assembly and gives a better
understanding of inter-relationships of function and
their cost
Basically it finds the answers to three questions about
each function performed by a product or service
i. How?
ii. Why?
iii. When?

Functional Analysis Systems


Technique (FAST) Chart

FAST diagram for a pencil

Alternative Solutions
1. Speculation
The objective here is to generate alternative ways of
achieving functions defined in the previous step
Done by the process of brain storming

2. Evaluation of alternatives
The various alternatives listed in speculation phase are
developed and examined for practicability and relative cost
In case of doubts, appropriate expert is to be consulted. The
detailed alternatives are to be developed taking into
consideration the investment in tooling, savings, etc.

3. Presentation of alternatives
At this stage one or possibly two alternatives will
remain. The outcome of the team findings is
presented to line management to decide the best
way to use line results of these exercises.

The presentation must be concise and complete


It must include comparison between the original
product and new proposals
It is preferable to have a standard format for
proposals(presentation) with drawings and
sketches if possible

Phase and Constituents of


VE
Orientation phase
Information phase
Functional analysis phase
Speculation phase
Evaluation phase
Development phase
Recommended phase
Implemenation phase
Follow up phase

Principles of VE
Do not use a part that does not contribute to the
value of the product
Do not chose a part whose cost is not proportional
to its usefulness
Accept the change only if the quality is maintained
Use standards wherever possible
Use the material part best suited for the purpose
Purchase must be done if necessary instead of inhouse manufacturing

Bibliography
Industrial engineering, by Martand Telsang
Chand publication )
Wikipedia.com
Youtube.com

( S.

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