VALUE ENGINEERING & VALUE ANALYSIS

GROUP MEMBERS :

Overview
What is Value Engineering? How Do we Apply VE? When is it used? Value Engineering Six Steps Plan? VE Case Studies

What is VALUE???
Use Value

Cost Value
Exchange Value Hummer.. $50,000+ Esteem Value Goodwill Feel good Value Tata Nano $2000 $50000 +

Both Nano and Jaguar are owned by TATA

WHAT IS VALUE ENGINEERING???

Value Engineering (VE) is an intensive, Interdisciplinary problem solving activity that focuses on improving the value of the functions that are required to accomplish the goal, or objective of any product, process, service, or organization.

VALUE METHODOLOGY The systematic application of recognized techniques which identify the functions of the product or service, establish the worth of those functions, and provide the necessary functions to meet the required performance at the lowest overall cost.

WHEN VALUE ENGINEERING IS USED??

Value Engineering is used to determine the best design alternatives for Projects. Value Engineering is used to reduce cost on existing Projects. Value Engineering is used to improve quality, increase reliability and availability, and customer satisfaction. Value Engineering is also used to improve organizational performance. Value Engineering is used to improve schedule Value Engineering is used to reduce risk Value Engineering is a powerful tool used to identify problems and develop recommended solutions.

Value Engineering (VE) was developed at General Electric Corp. during World War II and is widely used in industry and government, particularly in areas such as defense, transportation, construction, and healthcare.

Potential Saving from VE

Re-Test Feasibility Drawings Released Design Changes

Cost

Net Savings from VE Total Cost of VE Implementation

VE Implementation beyond this point results in a net loss.

Construction Dwgs Release

Concept

Design

Construction
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TIME

SIX STEPS VE PLAN

VALUE ENGINEERING PLAN FOLLOWING SIX STEPS: 1. GENERAL PHASE 2. INFORMATION PHASE 3. FUNCTION PHASE 4. CREATION PHASE 5. EVALUATION PHASE 6. RECOMMENDATION PHASE

General phase
It is the most demanding phase of a VE job plan. It

creates the right environment for successful VE. In this phase , emphasis is placed on human interaction to seek co-operation of the team to implement VE. Work done on specifics, rather than on generalities. The resistance to change is to be overcome.

Information phase :

Questions to be taken into consideration Project is studied in detail and all important facts are gathered Other factors like production sample to be kept in mind A relationship is established between cost and requirement.

Function phase:

Here the product is defined in term of its functions, Functions defined with only two words ---A verb and noun. It makes the definition pretty sharp.

Creation phase

Most of us want previously tried out materials, designs processes and procedures. We jump at the first ideas that work and usually do not bother to find out if better methods are possible. These days to give a boost to creative ideas, brainstorming technique are used. To nurture creativity, positive thinking is established. Creative ideas are also developed by a number of check-lists and idea-stimulators.

Evaluation phase: Creative ideas generated during the Creation phase are screened for their feasibility. ideas are further refined or combined together. Cost of all ideas from their implementation are studied. Decision-matrix can be set-up.

Recommendation phase:

It is the ultimate phase of VE. Finally selected value alternative here in presented for implementation on acceptance. Recommendations if any need to be incorporated.

Life Cycle Cost

Acquisition Cost

Operational Cost
Maintenance Cost Repair and Replacement Cost

Salvage Cost
Appreciation of Money

Assumptions
The alternative which will be compared through

life cycle cost should be equivalent to each other. Acquisition cost is in the first day of the calendar All other cost are presumed to happen in the last day of the calendar A discount rate is valid throughout the life cycle The cardinal rule is to use the same life span for all the alternative .

WHAT VE IS NOT
A SACRIFICE OF QUALITY A CRASH COST REDUCTION METHOD A ONE TIME GIMMICK A MONOPOLY OF ONE A CRITICISM OF EXISTING DESIGN, PROCESS, METHOD OR SYSTEM ROUTINE ACTIVITIES

HOW IS VALUE ENGINEERING APPLIED???

Value Engineering uses a combination of creative and analytical techniques to identify alternative ways to achieve objectives. The use of Function Analysis differentiates Value Engineering from other problem solving approaches.

Function Analysis Systems Technique

F A S T

FUNCTION ANALYSIS SYSTEM TECHNIQUE (FAST)

Function Analysis System Technique is an evolution of the value

analysis process. FAST permits people with dissimilar technical back grounds to effectively communicate and resolve issues that require multidisciplined considerations. FAST builds upon VA by linking the simply expressed, verb-noun functions to describe complex systems. FAST is not an end product or result, but rather a beginning. It describes the item or system under study and causes the team to think through the functions that the item or system performs, forming the basis for a wide variety of subsequent approaches and analysis techniques.

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FUNCTION ANALYSIS SYSTEM FAST contributes significantly to perhaps the most important TECHNIQUE (FAST)

phase of value engineering: function analysis. FAST is a creative stimulus to explore innovative avenues for performing functions. The FAST diagram or model is an excellent communications vehicle. Using the verbnoun rules in function analysis creates a common language, crossing all disciplines and technologies. It allows multi-disciplined team members to contribute equally and communicate with one another while addressing the problem objectively without bias or preconceived conclusions. With FAST, there are no right or wrong model or result.

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FUNCTION ANALYSIS SYSTEM TECHNIQUE (FAST)

The problem should be structured until the product development

team members are satisfied that the real problem is identified. After agreeing on the problem statement, the single most important output of the multi-disciplined team engaged in developing a FAST model is consensus. Since the team has been charged with the responsibility of resolving the assigned problem, it is their interpretation of the FAST model that reflects the problem statement that's important. The team members must discuss and reconfigure the FAST model until consensus is reached and all participating team members are satisfied that their concerns are expressed in the model. Once consensus has been achieved, the FAST model is complete and the team can move on to the next creative phase. FAST differs from value analysis in the use of intuitive logic to determine and test function dependencies and the graphical display of the system in a function dependency diagram or model . 23

FUNCTION ANALYSIS SYSTEM TECHNIQUE (FAST)

Another major difference is in analyzing a system as a complete unit, rather than analyzing the components of a system. When studying systems it becomes apparent that functions do not operate in a random or independent fashion. A system exists because functions form dependency links with other functions, just as components form a dependency link with other components to make the system work. The importance of the FAST approach is that it graphically displays function dependencies and creates a process to study function links while exploring options to develop improved systems. There are normally two types of FAST diagrams, the technical FAST diagram and the customer FAST diagram. A technical FAST diagram is used to understand the technical aspects of a specific portion of a total product. A customer FAST diagram focuses on the aspects of a product that the customer cares about and does not delve into the technicalities, mechanics or physics of the product. A customer FAST diagram is usually applied to a total product.

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FUNCTION ANALYSIS SYSTEM TECHNIQUE (FAST)

There is essential logic associated with the FAST HOW-WHY

directional orientation. First, when undertaking any task it is best to start with the goals of the task, then explore methods to achieve the goals. When addressing any function on the FAST model with the question WHY, the function to its left expresses the goal of that function. The question HOW, is answered by the function on the right, and is a method to perform that function being addressed. A systems diagram starts at the beginning of the system and ends with its goal. A FAST model, reading from left to right, starts with the goal, and ends at the beginning of the "system" that will achieve that goal.

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FUNCTION ANALYSIS SYSTEM TECHNIQUE - FAST

Second, changing a function on the HOW - WHY path affects all of

the functions to the right of that function. This is a domino effect that only goes one way, from left to right. Starting with any place on the FAST model, if a function is changed the goals are still valid (functions to the left), but the method to accomplish that function, and all other functions on the right, are affected. Finally, building the model in the HOW direction, or function justification, will focus the team's attention on each function element of the model. Whereas, reversing the FAST model and building it in its system orientation will cause the team to leap over individual functions and focus on the system, leaving function "gaps" in the system. A good rule to remember in constructing a FAST Model is to build in the HOW direction and test the logic in the WHY direction.

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FUNCTION ANALYSIS SYSTEM TECHNIQUE (FAST)

The vertical orientation of the FAST model is described as the WHEN direction. This is not part of the intuitive logic process, but it supplements intuitive thinking. WHEN is not a time orientation, but indicates cause and effect. Scope lines represent the boundaries of the study and are shown as two vertical lines on the FAST model. The scope lines bound the "scope of the study", or that aspect of the problem with which the study team is concerned. The left scope line determines the basic function(s) of the study. The basic functions will always be the first function(s) to the immediate right of the left scope line. The right scope line identifies the beginning of study and separates the input function(s) from the scope of the study . The objective or goal of the study is called the "Highest Order Function", located to left of the basic function(s) and outside of the left scope line. Any function to the left another function is a "higher order function", Functions to the right and outside of right scope line represent the input side that "turn on" or initiate the subject under study and are known as lowest order functions. Any function to the right of another function is a "lower order" function and represents a method selected to carry out the function being addressed.

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FUNCTION ANALYSIS SYSTEM TECHNIQUE FAST

As a general rule, it is best to create a "to be rather than an

"as is" FAST Model, even if the assignment is to improve an existing product. This approach will give the product development team members an opportunity compare the "ideal" to the "current" and help resolve how to implement the differences. Working from an "as is" model will restrict the team's attention to increment: improvement opportunities. An "as is" model is useful for tracing the symptoms of problem to its root cause, and exploring ways to resolve the problem, because of the dependent relationship of functions that form the FAST model.

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FUNCTION ANALYSIS SYSTEM TECHNIQUE

Any function on the HOW-WHY logic path is a logic path function. If the function along the WHY direction lead into the basic function(s), than they are located on the major logic path. If the WHY path does not lead directly to the basic function, it is a minor logic path. Changing a function on the major logic path will alter or destroy the way the basic function is performed. Changing a function on a minor logic path will disturb an independent (supporting) function that enhances the basic function. Supporting function are usually secondary and exist to achieve the performance levels specified in the objectives or specifications of the basic functions or because a particular approach was chosen to implement the basic function(s). Independent functions describe an enhancement or control of a function located on the logic path. They do not depend on another function or method selected to perform that function. Independent functions are located above the logic path function(s), and art considered secondary, with respect to the scope, nature, level of the problem, and its logic path.

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CASE STUDY
Welcome to the court of Emperor
Jalaluddin Muhammad Akbar

Noble men! There is a very important matter before the court today.

The raw material price is shooting up. The material cost of a sword has gone up by Rs.10 . And . We are adding 50,000 soldiers to our army this year.

I want to handle this situation without increasing the taxes. Please give your valuable suggestions as to how we should face this situation.

Why everyones quiet? Birbal! I am surprised that you too have become silent!! ??

!!
!?

Your Majesty, I have six ideas which can reduce the cost of a sword by atleast Rs.20 without compromising the functional requirements. !?

??

!!

??

!!
!?

Brilliant!. Tell us those ideas.

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Part Count Reduction

Presently, the hilt has 7 parts. The proposed design will have 4 . Existing Design New Idea

7 parts

4 parts

Part Commonisatio n For the new hilt, instead of designing exclusive rivets, we can use the rivets of daggers.

Benchmarking When the Shah of Persia was our Guest last month , I observed that the hilt in his sword does not have a curved portion. We can design similar hilts for our experienced soldiers. New Idea

Existing Design

Curved portion

The sheath which houses the blade is made of copper now. We can switch over to Alloy steel which is cheaper.

Alternate Material

Copper

Steel

Sheath Blade

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Since alloy steel is stronger than copper, we can reduce the thickness by 0.5 mm which will save material

Weight Reduction

2 mm

1.5 mm

Sheath Blade

The curved blade design is yielding only 2 pieces per die. If a straight blade is designed, we can extract 3 pieces per die.

Yield Improvement

2 Blades

3 Blades

Your majesty. The present design is being used since the time of Babur without any failure. We should not risk any design change.

Saheb, there is no doubt that the present sword designed by you for my Grandfathers army is superior. However, let us test this new design in our barracks.If they pass the tests, we will deploy them in the battle field.

If the ideas pass the test, we can save atleast Rs. Ten Lakhs this year, thus serving the purpose of cost reduction.
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There is an advantage also. I do not have to increase the tax.

Birbal! I wonder how you developed these ideas! Is there a systematic way by which others can also be trained to generate such ideas.

Yes, your Majesty. With the help of Functional Analysis System Technique(FAST) any body can generate such ideas. FAST is a powerful tool used in Value Engineering (VE) which is an extremely effective system to improve products and services for cost and productivity improvement.

If six ideas for the sword itself can save Rs. Ten lakhs , imagine how much money we can save on other weapons like spears, arrows and cannons etc.

Birbal! There are four divisions in my army Infantry, Cavalry,Artillery and Elephant brigade. I want you to teach the engineers in each of these divisions the application of Value Engineering (VE), especially the Functional Analysis System Technique(FAST). Each division should release Armoury Change Requests (ACRs) for the worth of Rs.25 lakh.

Yes, your Majesty.