Value Analysis & Engineering

GECX204
 OBJECTIVES

• To get acquainted with value analysis and

engineering tool for productivity
improvement.

• To understand and analyze the theory and

methodology of Value Engineering.
• MODULE I VALUE ENGINEERING BASICS Origin of
Value Engineering, Meaning of value, Definition of Value
Engineering and Value analysis, Difference between Value
analysis and Value Engineering, Types of Value, function -
Basic and Secondary functions, concept of cost and worth,
creativity In Value Engineering.

• MODULE II VALUE ENGINEERING JOB PLAN AND

PROCESS Seven phases of job plan, FAST Diagram as
Value Engineering Tool, Behavioural and organizational
aspects of Value Engineering, Ten principles of Value
analysis, Benefits of Value Engineering.
• MODULE III ORIENTATION AND INFORMATION PHASES
Launching Value Engineering project work - Objectives and Targets -
VE Project work: a time-bound programme - Projects and Teams - Time
Schedule - Co-ordination - Consultant. Technical data - Marketing related
information - Competition profile - Cost data - Materials Management
related information - Quality related information - Manufacturing data.

• MODULE IV FUNCTION ANALYSIS AND CREATIVE PHASES Objectives -

Function definition - Classification of functions - Higher level functions –
Function – Cost – Function – Worth - Value Gap - Value index - How to
carry out Function Analysis? – Fast Diagraming - Cost Modelling. Creativity
- How to improve creativity of an individual? – How to promote creativity
in the organisation? - Obstacles to Creativity - Mental road blocks -
Creativity killer phrases. Positive thinking - Ideas stimulators - Creativity
techniques - Brainstorming.
• MODULE V EVALUATION, INVESTIGATION AND
RECOMMENDATION
Paired comparison and Evaluation Matrix techniques - Criteria
for selection of VE solutions. Design – Materials – Quality –
Marketing – Manufacturing - Preview session. The report -
presentation.
• MODULE VI IMPLEMENTATION PHASE AND CASE
STUDIES
Design department - Materials department - Production
Planning & Control - Quality Control – Manufacturing –
Marketing - Need for co-ordinated teams - The Action Plan.
Value Engineering case studies.
 Introduction
• What is value?

• Value has to do with how much something is

worth, either in terms of cash or importance.
 Value Engineering
• Value engineering is one of the most
commonly misunderstood processes in the
world of cost estimating.
• Some say it’s the same as cost-cutting,
budget-cutting, and scope reduction.
• Others add that quality loss, elimination, and
redesign are risks in the process.
• So, what exactly is it?
 History and origin
• It started at General Electric during World War II
in response to skilled labor shortages, a lack of raw
materials, and component parts.
• Because of the shortages, Lawrence Miles and Harry
Ehrlicher of GE ( General Electric Co)had to look for
substitutes. What they found was that some substitutions
not only reduced cost but offered a better final product and
even more value than before.
• What started as an accident turned into a systematic
process that not only reduced the cost of production but
also provided better final products or better performance.
The engineers named this technique “value analysis.”
 What is Value?
Value has to do with how much something is worth, either in terms of cash
or importance.
Types of values
• Exchange Value: Certain characteristics of a
product facilitate its exchange for something
else and what we get is the exchange value of
that product. It is equivalent to its sale value.

• Cost Value: the cost value of your product or

service is the amount you spend to produce
it. (5Ms).
• Use value: the value of a product or commodity as determined by
its utility to the individual/society in which it exists.
• Primary use value indicates the attributes of a product which are
essential for its performance as engine, steering wheel and axle in a
motor car without which car cannot run. Secondary use value refers
to such devices as bonnet or the mudguard or the windscreen
without which motor car can be driven but these are necessary for
the protection of engine and other parts.
• Auxiliary use value is essential for better control and operation as
speed meter, electric horn etc in motor car.

• Esteem Value: The functions of prestige, appearance and/or other

non-quantifiable benefits, such as purchasing something simply for
the sake of possession.
 Waste in Production Line
• Overproduction. Overproduction is the most
obvious form of manufacturing waste. ...
• Inventory. This is the waste that is associated with
unprocessed inventory. ...
• Defects. ...
• Motion. ...
• Over-processing. ...
• Waiting. ...
• Transportation
 Waste Cost (Reasons behind poor
value)
Why do Projects have “Unnecessary” Costs?
1. Low Time for Designing : Many designs
evolve over a period of years, and the lack of
time which persists in most engineering
organizations encourages these design
approaches to be perpetuated even if in
modified form.
Clearly, it is not practicable to question every
design, if those areas of significantly high cost
likely to be repeated in the future are not
regularly reviewed, the amount of unnecessary
cost contained in them will increase as the
design approach, materials and methods used,
become out f date.
2. Lack of information: Poor coordination
between designs and/or design department
and/or manufacturing department and/or
other concern departments.
3. Lack of Ideas: Lack of time also can lead to
lack of ideas and adoption of the first solution
Ideas which will satisfy technical
requirements, irrespective of its ultimate cost.
4. Negative Beliefs: In all aspects of life, mental
attitudes affect the speed at which change can take
place. Fear of failure resulting in a loss of status or
ridicule, and a subconscious reaction to change in favor
of well-established practices will restrain people from
thinking and from proposing or accepting new ideas.
These restraints in the creative ability latent within a
company control the rate of innovation, profitability
and sales.
5. Lack Of Experience
6. Weaknesses in human relations
7. Failure to utilize latest technologies
 For developing better value
alternatives
1 Can the design be changed to eliminate the part?
2 Can you purchase it at lower cost?
3 Does it need all its features?
4 Is there anything better for the intended use?
5 Can a usable part be made by a lower-cost method?
6 Can a standard part be used?
7 Is it made on proper tooling considering the quantities
involved?
8 Are there any newly developed materials that can be used?
9 Can two or more parts be combined into one?
10 Can any specifications be changed to effect cost reduction?
• 1. Value engineering is the • 1. Value analysis is the application of
application of exactly the same set of a set of techniques to an existing
techniques to a new product at the product with a view to improve its
design stage, project concept or value.
preliminary design when no • 2. In short, Value analysis is done
hardware exist. Its purpose is to after the birth of the product (to an
ensure that no bad features are existing product)
added in the product at the design • 3. Value analysis is thus a remedial
stage. process
• 2. In short, Value engineering is an early
stage process. • 4. Value analysis done to have better/
• 3. Value engineering is thus a preventive optimized commercial output.
process • 5. Value analysis is “A systematic and
• 4. Value engineering provides us better/ objective evaluation of the value of
optimized engineering results. goods or service, focusing on analysis
• 5.Value engineering is carried out during the of function relative to the cost of
new product development or engineering of
the product, but we analyze the value once it manufacturing or providing he items
has been engineered/ developed. or service”.
 Types of Functions

• VE discipline deals with the functions of

items, products, systems and procedures.
• It is a functional approach, a customer-
oriented approach.
• Identification of the functions, therefore,
constitutes an important aspect of VE.
• The term `function' is used to mean the
purpose or use of a product.
Functions can be of two types:
a) Basic functions-the primary purpose of a
product.
b) Secondary functions-other purposes not directly
accomplishing the primary purpose but
supporting it or resulting from a specific design
approach.
Many a time poor value may result in because the
functions have not been precisely understood
and redundant or unnecessary functions have
been imposed.
How to Achieve Function
 AREAS OF APPLICATION

Value Analysis has been successful in several domains:

o Defence
o Automotive
o Aeronautical
o Software development
o Water treatment
o Civil engineering
o Etc...
It has also proven very effective in "soft" areas such as:
o Client services
o Work processes
o Information Systems
o Organizational development
o Etc...
 CREATIVITY in VA/ VE

Brainstorming
Affinity Diagram
Synectics
Checklisting
The 5S + 1 for the Visual Workplace
Benchmarking
Function-Based Brainstorming is a useful technique to focus the
attention of a group on generating creative ideas in situations such as:
•Projects or problems with an impasse or when stuck on a problem.
•Where the same solution has always been used and something new
is needed. For example, when an existing solution has become
entrenched.
•Generating creative approaches to stakeholder consultation.
When working alone and there is a need to challenge your ideas.
•Problem solving.
•Identifying alternatives.
•Identifying ideas to reduce cost.
•Generating ideas to streamline a process.
Who is involved?
All Study Team members are involved. Everyone can contribute ideas,
no matter their background. Typically one person serves as the team
leader or facilitator. It is useful if participants have different
backgrounds and levels of experience.
 AFFINITY DIAGRAM
PURPOSES and BENEFITS
•Allows a team to creatively generate a large number of
ideas and then organize them into groupings based on
their natural relationships.
•Efficient tool for gathering and grouping of like ideas.

Encourages creativity.
•Breaks down long-standing communication barriers.
•Allows breakthroughs to emerge naturally.
•Encourages ownership of results that emerge because the
team creates both the detailed input and general results.
•Overcomes team paralysis brought on by an
overwhelming array of options and lack of consensus.
Synectics, a Greek word, means the joining together of different items

Synectics as a creativity technique means the

integration of diverse (heterogeneous) individuals
into a problem-stating and problem-solving group
that results in artistic or technical inventions
The synectics process involves making the strange
familiar and the familiar strange.
Making the strange familiar means understanding
the problem to be solved, converting its
strangeness into familiarity by using our favourite
VA/VE questions, like What is it? What does it do?
What does it cost?
 Personal Analogy
If I were the customer what would I buy?
Checklisting
A checklist is a “think list” to spur more creative ideas for using an item or to
serve as idea needlers or idea clues or leads. Various checklisting methods
are listed here.
Tests for Value (GE): A now classical checklist developed by General Electric
Does using the product contribute VALUE?
Is its cost proportionate to its usefulness?
Does it need all of its features?
Is there anything better for the intended use?
Can a usable part be made by a lower-cost method?
Can a standard part be found that will be usable?
Is it made on proper tooling, considering quantities used?
Do material, reasonable labor, and overhead total its cost?
Will another dependable supplier provide it for less?
Is anyone buying it for less?
Checklists Galore!
ELIMINATION: waste, duplication, spoilage
SUBSTITUTION
COMBINATION: forms, operations, functions
STANDARDIZATION
SIMPLIFICATION: work, products, methods
REDUCE, RECYCLE, REUSE: sustainability
CHANGE OF PLACE, SEQUENCE, PERSON
IMPROVE: quality, human factors, performance
INCREASE: safety, sales, productivity
SAVE: time, money, material
REDUCE: costs, scrap, weight
The 5S + 1 for the Visual Workplace*
A Japanese methodology for workplace organization developed
by Hiroyuki Hirano. Both the Japanese and English words begin
with s:
Sort (Seiri) = Remove all unnecessary materials and equipment.
Straighten (Seiton) = Arrange and place things so that they can
be easily reached and with the shortest path.
Shine (Seiso) = Clean and keep machines and working
environment clean, no debris or dirt in the workplace.
Standardize (Seiketsu) = The state of cleanliness or
organization—Maintain and monitor the first 3 S’s.
Sustain (Shitsuke) = Discipline, maintain the practice that has
been established in the above four steps.
Safety (often called “6S” or “5S + 1”) = Safety commitment.
Benchmarking
Benchmarking is a process of MEASURING your practices,
COMPARING them with best-in-class, and continuously IMPROVING
performance toward best-in-class status.
Benchmarking Steps:
1. Determine what to benchmark
2. Select benchmark team(s)
3. Evaluate internal performance
4. Select benchmark target organization(s)
5. Prepare site visit preparatory package
6. Complete preparation activities
7. Conduct interview-team training
8. Conduct benchmark visit
9. Debrief interview team as soon as possible after visit
10. Complete final deliverables