Value Analysis &

Value Engineering (VA-

VE)
- A short introduction
Agenda
• Introduction to VA VE
• Evolution
• Fundamentals of VA VE
• Concepts in VA VE
• A Simple Case Study
• Career path for VA VE
• Q&A
Let’s Understand our basics
• What do we mean by COST ?
• Simple! it’s the sum of money that’s associated with the production of a
product or services – For Seller
• Amount that will purchase a definite quantity, weight, or other measure
of a product or services – For Buyer

Necessary Cost & Unnecessary Cost

Cost is considered Necessary until another means is known to keep the

desired performance factors with out them, they became Unnecessary.
History & Origin
• Concept started during the World War II.
• Conceptualised by Lawrence D Miles of General Electric –US.
1947
• Triggered when there was a need for material substitutes, for the
flooring of godowns. (Asbestos crisis)

Lawrence Delos Miles (L D Miles), the creator…

An Engineer, Educator and a Professional
who originated Value Analysis approach
What is VA-VE
• Value Analysis (VA), a review of existing established products,
processes or services to improve functions while reducing the
cost.

• Value Engineering (VE), a review of products, processes or

services while they are in early development (design) prior to
built or production to improve the function while minimising the
cost (Cost Avoidance)
Value Engineering (VE)
• VE is a step by step approach aimed at desired functions of
product at minimum cost and giving a maximum value by
maintaining the factors
• Performance
• Quality
• Reliability
• Safety
• Statutory requirements
VE Objectives
• Extend use of resources, material, time and people
• Create change on purpose
• Develop new skills to individuals

Concept

VE gains more at Design

Savings Potential

Design

Build
stage
Maintenance

Time
VA-VE
• VA is a framework based approach to make improvement on a product
value through idea generation and implementing engineering change.

• VE is an approach, applying techniques to maximize the product

feature during its development stage keeping a goal on improving the
value by locate, identify and eliminate unnecessary costs.

• Value Methodology (VM) is the systematic process used by a

multidisciplinary team to improve the product value through the
analysis of functions.
What is Value
Measurement of an item on how well it fulfils its won function
considering the performance and cost.

Value = f(Function & Cost)

= Performance of reqd function / Cost to acquire function

Cost may be overall cost or life cycle cost for any given product/
process.
Value
Reasons for Poor Value

• Few examples for Poor Value

• Lack of Information
• Wrong Beliefs
• Reluctance to seek advice
• Negative Attitudes
• Shortage of time
• Changing technology
• Risk of personal loss
• Strict adherence to REQUIREMENTS
• Poor Human Relations
Value
How to improve?

Value can be improved in multiple ways

• Increase Performance, Reduce Cost

• Increase Performance, Maintain Cost
• Maintain Performance, Reduce Cost
• Reduce Performance, Reduce Cost
Value
Classifications

• ECONOMIC VE always concern with

• POLITICAL ECONOMIC VALUE
• SOCIAL
• ASTHETICAL
• ETHICAL
• JUDICIAL
• RELIGIOUS
Economic Value
Components
• COST VALUE. A price that customer pays to own a product

• EXCHANGE VALUE. Customer gets in exchange of money

• USE VALUE. Amount that requires to accomplish customer’s NEED

• ESTEEM VALUE. Attracts Customer WANT

Cost Value should fulfil Customers NEED and WANT

Is VM a Cost Reduction?
• VM is not all about Cost Reduction.

• VM surpasses traditional cost reduction program by

• Employing detailed Functional Analysis
• Using a dedicated Cross-Functional teams
• Focusing on improving customer value
• Utilizing competitive Benchmarking
• Following an organised methodology
VM Thinking
• Value methodology follows a Creative Thinking Mindset. It focus
on
What is the product, process or service?
What does it do and what must it do?
What does it cost and what should it cost?
How else could the function be performed better?
How does the competition do it?
What are the costs of its alternatives?
What are the Pros, Cons and Risks?
Based upon what we see so far, IS THIS VALUE
ENGINEERING?
A boat before and after Value Engineering

WHY ? or WHY NOT?

Lets get-in to it.
Value Methodology
• Three Stages
• Pre-Workshop : Pre study activities
• VM Workshop : Exercise
• Post Workshop : Implementation

• VM Workshop
• Information phase
• Function Analysis phase
• Creative phase
• Evaluation phase
• Development phase
• Presentation phase
INFORMATION PHASE
• To acquire the knowledge of the product, process or service to
be studied.
• Get all the facts and data
• Ask for product, process, cost, accomplishments etc.
• Collect data like drawings, samples
• Find the cost drivers, cycle time, tools used, overheads etc.
• Record key parameters
• Avoid assumptions, verify data from authentic sources.
FUNCTION ANALYSIS PHASE
• Most important phase in the VM Plan
• To assess its major functions, cost and relative worth and to
determine functions
• Generate Random functions
• Classify functions into types
• Performing function modelling (FAST)
• Prioritize functions
• Analyse Cost/Worth relationships
• Complete Cost/Function Worksheet
What is a FUNCTION?
• Describes what a product, process or service does.
• Function enables us to focus on required performance rather
than on components

• A two word performance description using an ACTIVE VERB and

a MEASURABLE NOUN.
• Eg. Function of a DOOR is to PROVIDE ACCESS
CREATIVE PHASE
• Brainstorm the functions of highest cost elements and generate
alternatives to each
• Ability to produce altogether new thoughts
• Required to discover alternative designs, methods and
procedures
• Tend to increase the creative ability than we assume
• OUT OF THE BOX thinking
 CREATIVE PHASE
• Cross-functional team using their collective thinking power to create
ideas.
• Objective is to generate as long a list of ideas as possible.
Pre-Requisite Guidelines
• Relaxed Atmosphere • Freewheeling
• Advance notice • Cross Fertilization
• No Observer
• Outsider as a Participant
• Encouragement
EVALUATION PHASE
• Analyse the results of CREATIVE phase and thorough view of
alternatives, and select the best ideas for further study.

• Rank the analysis on matrix to understand

• Prepare the ranking from highest order in terms of ideas

DEVELOPMENT PHASE
• Select the best idea from the ranking for deep study

• Consult SMEs to perform detailed analysis for the

feasibility with benefits and justifications

• Prepare the development reports with all studies for the

management decision.
PRESENTATION PHASE
• Make recommendations with all supportive ideas and plans to
implement the proposals

• Benefits, Implementation Plans, and factual data to present to

the project team for approvals and agreements

• Conclude the Plan and Charter for the follow up on

implementation.
A Simple Case Study
Automotive Vehicle Seat
Need for improvement when the organisation see an
opportunity on the commercial vehicle seats.

Performed a VA Study focussing on design, process etc.

with a cross-functional team
Executed the VA approach, by collecting the facts and
prepared for analysis
Developed Ideas on various aspect and evaluated for
management approvals.

Outcome of the exercise result in realizing a cost savings of

400 million INR and a 15% Material reduction
VA VE
Application Coverage
• PRODUCTION : More Availability, MTBF, More Throughput

• QUALITY: Less Rework, Defect and Reduce Waste

• COST: More Yield, Less Consumption

• DELIVERY: Lead Time Reduction, MTTR

• SAFETY: Less Incident, Accident, More Sustainability

MORALE: Create VE Attitude

WRAP-UP
• VA VE is all about a concept that helps to improve Product
Value
• VA – applies to existing products
• VE – applied for product development

• A Systematic Step by Step approach driven by tools and

techniques

• Helps business to sustain and extend the product life cycle,

improves growth
CAREER PATH & OPPORTUNITIES
• Applicable for all domains across industries
• Highly recognised Professionals within organisations
globally

• ENHANCING IDEAS & ENHANCING CAREERS

• Undergo learning on diff levels and experience for
more benefits

VA VE is a CONCEPT, which last until a PRODUCT gets

End of Life.
 Tools \

Areas 
Application

Target Costing
QFD
MBO
Kaizen
JIT
FMEA
DFA
Organization Planning and Development

 
 
 
 
 
 

5
Boxes

 
 
 
 

4
4
5
Teamwork Development

 
 
 
 
 

3
4
Operation Simplification

Organization & Operations Cost Improvement

 
 
 
 

5
4
4

 
 

5
4
3
4
5
Product Cost Improvement

 
 
 
 
 
 
4
Budget Control

 
 
 
 
 
 

5
Product Improvement

 
 
 
 
 

4
5
New Idea Generation

 
 
 
 
 
 
 
Creativity Development

 
 
 
 
 

4
4
Product Quality Improvement

Manufacturing Operations Improvement

 

4
3
5
5
5
5

Administrative Operations Improvement

 

4
3
5
4
5
5

 
 
 
 
 
 

Problem Solving
 
 
 
 
 
 

Information Development
 
 
 
 
 
 
5

Product Reliability Improvement

 
 
 
 
 
 
 

Software Available
 
 
 

5
4
4
5

Structured Process
 

5
5
5
5
5
5

Activity Based Process

 
 
 
 
 
 
 

Function Based Process

attributes.
VA –VE: an Overview among major Tool

covers most of the

attributes than others.
the tool has on various
Matrix shows the effect,

On a scale of 5 points, VE
Q&A
THANK U !