Scribd
Upload
127 views28 pages

Value Analysis: Presented By: Radhika Swarup Jeevitha Reddy Mba Ii Sem

Value analysis and value engineering are systematic approaches to reducing costs and improving value and performance. Value is defined as desired performance divided by overall costs. The methodology involves analyzing the functions of a product or service, generating alternative ways to achieve those functions at a lower overall cost, and selecting and implementing the most promising alternatives. The process includes phases for orientation, information gathering, functional analysis, idea creation and evaluation, recommendation, implementation, and audit or follow up. Benefits include cost savings, improved quality and customer satisfaction, increased profits and competitiveness. Challenges include avoiding generalizations and ensuring all costs are considered.

Uploaded by

jasmine2589
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
127 views28 pages

Value Analysis: Presented By: Radhika Swarup Jeevitha Reddy Mba Ii Sem

Value analysis and value engineering are systematic approaches to reducing costs and improving value and performance. Value is defined as desired performance divided by overall costs. The methodology involves analyzing the functions of a product or service, generating alternative ways to achieve those functions at a lower overall cost, and selecting and implementing the most promising alternatives. The process includes phases for orientation, information gathering, functional analysis, idea creation and evaluation, recommendation, implementation, and audit or follow up. Benefits include cost savings, improved quality and customer satisfaction, increased profits and competitiveness. Challenges include avoiding generalizations and ensuring all costs are considered.

Uploaded by

jasmine2589
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 28

VALUE ANALYSIS

Presented By:
Radhika Swarup
Jeevitha Reddy
MBA II sem
VALUE

Value = Desired performance (P)

Overall Costs (C)

 Value can be increased by either improving the


Performance or reducing the cost.
VALUE METHODOLOGY

• Value Methodology (also called Value


Engineering, Value Analysis or Value
Management) is a powerful problem-solving tool
that can reduce costs while maintaining or
improving performance and quality
requirements.

• It is a function-oriented, systematic team


approach to providing value in a product or
service.
Continued….

• The value methodology helps organizations compete


more effectively in local, national and international
markets by:

- Decreasing costs
- Increasing profits
- Improving quality
- Expanding market share
- Saving time
- Solving problems
– Using resources more effectively
Value Analysis
VA is an step by step approach to
identify the functions of a product,
process, system or service; to establish a
monetary value for that function and then
provide the desired function at an overall
minimum cost without affecting any of the
existing parameters like Quality,
Maintainability, Productivity, Safety and
other Performance characteristics.
Value Engineering
• Value Engineering is where the value
of all the components used in the
construction of a product from design
to final delivery stage are completely
analyzed and pursued.
Origin
• Value Engineering began at General Electric Co. during World
War II. Because of the war, there were shortages of skilled labor,
raw materials, and component parts. Lawrence Miles and Harry
Erlicher at G.E. looked for acceptable substitutes. They noticed
that these substitutions often reduced costs, improved the
product, or both. What started out as an accident of necessity
was turned into a systematic process. They called their
technique as “Value Analysis”.

• In the year 1954, US Navy Bureau of ships adopted same


technique in their effort at ‘cost avoidance’ during the design
stage and saved millions of dollars. They named it as “Value
Engineering”. VE follows thought process that is based
exclusively on “function”, i.e. what something ‘does’ not what it
is.
DIFFERNCE BETWEEN VALUE ANALYSIS
AND VALUE ENGINEERING

VALUE ANALYSIS VALUE


• Indicates application on ENGINEERING
the product that is into • Indicates application
manufacturing. on the product at its
• All factors come design stage.
together including • It is always done by a
workers, specific product design
subcontractors, (engineers) team.
engineers to make a
team with total
experience and
knowledge
DIFFERNCE BETWEEN VALUE ANALYSIS
AND VALUE ENGINEERING

VALUE ANALYSIS VALUE


• It may change the ENGINEERING
present stage of the • the changes are
product or executed at the
operation initial stages only.
• It is worked out • It requires specific
mostly with help of technical
knowledge and knowledge.
experience
WHAT IS THE MEANING
OF OVERALL COSTS?
• Overall costs means different to different people.
• For a producer overall cost is the summation of all
the elements of the cost required to produce a
product or service such as labour, material,
overhead, etc.
• For a consumer overall cost is the monetary sum
(price) for which the products or services are
purchased in the market.
FUNCTION OF VA/VE

FUNCTION HERE MEANS NEED


THE VARIOUS TYPES OF
FUNCTION ARE AS FOLLOWS:

• Use function and Aesthetic function

• Primary function and secondary function

• Higher order and secondary function


USE FUNCTION AND
AESTHETIC FUNCTION

• Use function-Performs some action, expresses in active tone

• Aesthetic function-Pleases customer, expressed in passive or


non-measurable tone
Primary function and
secondary function
• Primary function - Basic purpose for which a
product exists

• Secondary function - Arises out of specific design


chosen to fulfill the primary function
Higher order and secondary
function

• Higher order function - Reason of


satisfying the basic function

• Lower order function - Means of achieving


the basic function
EXAMPLE
FUNCTION OF A TORCH

WHY? HOW ?

GIVE LIGHT FACILITATE VIEWING LIGHT THE BULB

HOW ? HOW ?

SUPPLY CURRENT INSERT BATTERY


Job Plan with Specific Phases
Orientation

Information

Function

Creation

Evaluation

Recommendation

Implementation

Audit/Follow up
ORIENTATION:

To creat awareness and learn the methodology of


tools

Training sessions for all supervisory and


managerial staff on VA & VE

Exposure to techniques like ABC, Pareto etc. for


selection of project

Formation of team of experts from various


functions
INFORMATION:

To collect all the information pertaining to


the project (product)

Work can be divided among team members


FUNCTION:

To develop FAST diagram

Start from basic function and probe further


with WHY? And HOW?

List down all the functions for all the parts


CREATION:

To develop alternate means to achieve these


functions

Brainstorming sessions to generate ideas


EVALUATION PHASE:

The objective of this is to select for further analysis of the


most promising of the ideas generated during the
creative phase and to subject the ideas to a preliminary
screening to identify those which satisfy the following
criteria.

Will it work?
Is it less costlier than the present design?
 Is it feasible to implement?
There are four techniques associated
with this phase:

 Refine and combine ideas: The ideas must be practicable an


to make them so we may have to refine an idea or combine two
or more than two ideas
 Estabilish cost on all ideas: calculating potential costs of
implementing the ideas.
 Develop function alternatives: Mould the individual
functional solutions into total solutions.
 Evaluate by comparison: Once the rough total solutions and
their related estimates of costs have been established, they are
compared to determine which one will provide the greatest
value advantage.
RECOMMENDATION PHASE:
 To submit the details about the proposed changes with
financial implications. Report includes proposed changes,
reasons of changing, new investments and annual
savings.

IMPLEMENTATION:
 To execute the proposed/ accepted changes list down
all the activities and fix up the time frame for each. Make
the entire team responsible for all the activities.
8. AUDIT / FOLLOW UP:

 To compare the actual results with that of expected. It


can be done only after complete execution of the project.
This is the responsibility of top management alone.
Advantages
• Some of the major advantages are:

 A high customer orientation, focusing on those aspects of the


product/services that better satisfy customer needs
 Cost reduction by eliminating functions that do not supply specific
advantages to satisfy customers requirements/needs.
 New ideas that arise from the creativity/innovation phase and may
add radical changes and therefore competitive advantages that will
be regarded by the market.
 A new systematic mentality to be taken into account for next
designs of new products or to systematically improve the existing
ones.
DISADVANTAGES
• The problems that may arise during the application of value
analyses can be of different nature. In order to arrive at a
successful completion of the process, one has to bear in mind
the following ‘rules’:

 Avoid making generalizations and superficial statements-it is


important to be precise at very moment.
 Collect, determine and examine all costs involved –only when
one is cost conscious will it be possible to determine the value
of the thing being assessed.
 Make use of informations from the best possible sources

You might also like