VALUE ENGINEERING

MODULE 3
 Questions,Questions…

You’re probably thinking:

Why use Value Engineering?
Don’t we do it all the time?
How can it help me? Really?
What’s it all about?
What Value Engineering Is Not!

• Cost Cutting
• Design Review
• Project Elimination
• Scope Reduction
• Quality Reduction
• Detailed Cost Estimating
• Redesign
What Value Engineering Is!

An organized study of FUNCTIONS to satisfy the

USER’S NEEDS with a QUALITY PRODUCT at the
LOWEST LIFE CYCLE COST through APPLIED
CREATIVITY
Value Engineering (VE): History, Concept and
Definitions
Profit can be increased by three different approaches:
• Increasing the selling price,
• increasing the quantity of sales as well as volume of sales
• reduction in the total cost
Value Engineering (VE): History, Concept and
Definitions

value engineering : to
focus on a large number of
alternatives, and try to select the best alternative,
which solves problem with desired function , at a
relatively overall lower cost.
Best Alternative : cost reduction
 ValueEngineeringis:

– Astructuredand
systematicproblem
solvingmethodology
– Aprocessdesignedto find
creativealternative solutions
– Appliedinaworkshop
environment bya
Multidisciplinaryteam
Three sides of any product.
• Design
• Processing
• Materials .
ValueEngineeringis:(continued)

– Concerned with life cycle

costs
– Aflexible set of techniques
– Function oriented
– Focussed on
How Can We Improve
Value?”
 WhatVEIsNot:

• Not just good engineering

• Not a suggestion program
• Not a routine project or plan
review
• Not a cost reduction exercise
Value Engineering is also knownas:
– ValueAnalysis,
– Value Planning,
– Value Management
 HistoryofVE

• LarryMiles,apurchasingengineerfor General
Electric,developedVE conceptsduringWW2.
• Hisproblemwashecouldnot get strategic
materialstoproducethe turbo-supercharger for
theB-17andP- 47.
• Larrydevelopedaprocessthat didnot solvethe
problem(lackof aparticular material), it
solvedthefunction!
 TheFirstVEStudy

• Larry and his team determined the

function of each part in the
turbocharger.
• Found more cost effective materials
to achieve the necessary functions.
• Pratt&Whitney Canada still have a VE
program for development of engines.
• a society was set up or Society of
American Value Engineers which is
famously known as SAVE in 1959
 Definition of Value Engineering
Terms used to describe “Value Engineering”

• Value Methodology
• This is the “official” term used by SAVE International. It describes the overall
body of knowledge.

• Value Analysis
• This was the first term used when the process was originally developed for
manufacturing

• Value Engineering
• The term “engineering” was used to identify the process as it is applied to
design and construction

• Value Management
• This less commonly used term refers to its application to business processes
 Definition of Value Engineering

The value of a function is defined as the relationship of cost to

performance

Performancemax
Valuemax =
Costmin
Range of Application

• VE applies to everything because every project or process has a

function
• VE can be applied at any point of the design or process
• VE is a problem solving technique
• VE can be used as a technique for developing design criteria
 Reasons for Poor Value…

▪ Lack of and/or poor coordination among designers

▪ Failure to network with customer – poor definition of needs and wants
▪ Design based on habitual thinking or mistaken beliefs
▪ Not enough time for project formulation and/or design
▪ Failure to utilize latest technologies
▪ Negative attitudes
More Reasons for Poor Value…

• Poor communication in developing project scope

• Lack of consensus among project stakeholders with regard to
project scope
• Outdated or inappropriate design standards
• Incorrect assumptions based on poor information
• Fixation with previous design concepts
• Honest wrong beliefs
Common Misconceptions

• “VE is something we do all the time.”

• No it isn’t. VE requires the application of a specialized body of
knowledge at the right time with the right people.
• “VE degrades project performance.”
• If applied properly, its should maintain or improve project
performance.
• “VE is just another management fad.”
• VE was developed in 1943. It is required by federal and many state
laws. It has a professional society and maintains professional
standards and accreditation.
• “VE is really just cost cutting.”
• No
VE vs. Cost Cutting
 VE vs. Cost Cutting/Reduction
• VE seeks to maintain or improve e • Cost reduction seeks to cut INITIAL
performance while reducing TOTAL costs, often at the expense of
costs. project quality.
• VE is a pre-planned allocation of e • Cost reduction is usually a reaction
time and effort. to budget overruns.
• VE is a highly structured process e Cost reduction is an informal
process.
using a formal methodology.
• VE utilizes an objective, multi- • Cost reduction generally involves
disciplined team and a trained e only a few management personnel.
facilitator.
• VE provides an organized follow- • Cost reduction does not.
up, implementation and reporting e
program.
Timing the VE Effort
Potential Value Engineering Cost Savings

Potential
Savings

$
Cost to
Change

Design Final Design /

Planning Construction
Development Bid Documents

Project Life Cycle

Value Engineering Cycle
 Creative Thinking
creative thinking?

Creative thinking is, it is a product of the

imagination. where a new combination of
thoughts and things are brought together

combination word can be a combination of

various materials, systems, processes and
techniques to accomplish a required function.
 Prime thesis behind the creativity is that the
individual must believe that it can be done. The
individual must believe that it can be done,
believing that it can be done is often half the battle
in finding the solution. -by David J; The Magic of
Thinking Big.

Characteristics • Motivation
of Creative
• Flexibility in thinking.
people
• sensitive to the problem
• Originality
• Persistence
• Open to change
• Ability to abstract
• Tolerance of ambiguity
Creativity
Brainstorming Rules & Objectives…

• Criticism/evaluation is prohibited (at this time)

• Free-wheeling is welcomed and encouraged – be uninhibited and
think as a child
• Be spontaneous – rapid fire ‘gut feels’
• Quantity is desired over quality – cover the walls
• Combine and add to ideas
• Build upon another person’s ideas
• How do others solve similar problems
• Record all ideas
There Are No Dumb Ideas!
Creativity Is a team work

when developing a product, it has to be a multi disciplinary approach,

there have to be experts from different departments who will gel
together to bring about a new product in the market

During the creative thinking session, the team members must separate
the creative portion of the mind from the judgment portion. Two
important point creative portion are :

Generating large number of ideas during our teamwork

Too judgmental in scrutinizing or screening the ideas

creative problem solving techniques.

Gorden Checklists
Brainstorming
technique technique

Morphological Attribute
analysis listing
Value Engineering Job Plan

DEFINE 5 W’S WHO ? WHAT? WHEN?

WHERE? WHY?
Value Engineering Job Plan

orientation information functional creative

analysis

Evaluation Development presentation implementation.

Functional Analysis System Technique (FAST)

• Charles Bytheway developed the FAST diagrams in 1964

• FAST diagrams are function oriented and not time oriented

• FAST permits people with dissimilar technical background or from

diverse technical backgrounds to effectively communicate and
resolve the issues

• FAST builds up the value analysis by linking the simply expressed

this already you know verb noun definition. one example those
who are listening to this session , conduct current. conduct is
verb, conduct is a verb and current is a noun.

• FAST is not an end product or result, but rather a beginning.

 FunctionAnalysis

The Two-Word Definition

• Verb - Specification
• Noun- Defines the object
• Example: An electric cable has function of conducting
current

• functional analysis is a technique used to identify and

understand the needs of the project, product or service.
 FAST Diagram
Function Analysis System Technique

How Why

Verb-Noun Verb-Noun Verb-Noun Verb-Noun

Function Function Function Function

Generating a Function Picture

Scope Line Scope Line
 FAST Diagrams
HOW? WHY?
Design “All The Time”
Objective Function

Higher Order Primary Secondary Secondary Assume

Function Function Function Function d WHEN?
Function
Required
Secondary
Function
Air force F 22 advanced tactical fighter system
 Function

• what is the function?

• Why the product has been bought?
• What does it cost?
• What is its worth?
• what alternative would do the same job?
• what alternative would do the same job and?
 Types of Product Function

Primary Function Secondary Function

 PencilExample
⚫ What is the function of a pencil?

What does it do?

What must it do?
 FunctionAnalysisExample

Pencil: Makes Marks

Band: Secure Eraser

Barrel: Support Lead,
Accommodate Grip,
Transmit Force
Eraser: Remove Marks

Paint: Protect Wood,

Improve Appearance
Graphite: Make Marks
 PencilExample
Pencil make marks
•eraser S remove marks
•band S hold eraser
•barrel S hold graphite
•paint S protect wood/add beauty
•markings S identify product
•graphite B make marks
B – Basic Function
S – Secondary/Supporting Function
Cost Functional Relationship
Component Function B S Cost(Rs) %cost Total

Lead Make mark B .50 10

wood Protect lead S 1 20

Metal cap Hold Eraser S .25 5

Eraser Remove marks S .75 15

Shaping of Provide Grip S .5 10

wood

Printing Display S .5 10
Information

Price of Pencil= Rs 5 Profit =1.50

Total 5.00/-
Types of Functions

• use function: A use function entails some action this may be the
function that the customer wants to be performed and aesthetic
functions please him or someone, customer wants to have pleased.
Ex: Refrigerator, Automobiles etc (requires aesthetic functions in
varying ratio)

Quality Functions: Allows and promote appropriate cost for the

specified function
Ex: conduct current, transmit torque

Esteem Function
Case study 1