Value Engineering and Value

Analysis
 Overview

• What is Value Engineering?

• How is VE Applied?
• When is it used?
• What is Function Analysis and FAST?
 Definitions
Value Engineering is a technique applied to
identifying optimum value solutions during
new product development.

Value analysis is a technique applied to

improving existing products, processes or
services. The objective is usually to
reduce cost, but may equally or
simultaneously be to improve
performance or quality.
-LD Miles
 The Key Points of VA / VE
• Applying formal work plans.
• A team approach.
• Specific definition of functions.
• The simultaneous look at functions and costs.
• Control of the analysis process.
• Quantifiable results
 What is VALUE ?
Value is the relationship between the defined
function the customer requires and the costs
incurred to provide that function.
– Cost Value
– Use Value
– Esteem Value
– Exchange Value
 Value Engineering
Value Engineering is
• Reliability
• Maintainability
• Producibility
• Human Factors
• Parts Availability
• Cycle Time
• Quality
• Weight Reduction
Why use Value Engineering?

Save Time
Save Money
Build Teamwork
Improve Quality
Satisfy Customer
 When is VE used
• Existing part/product cost is high
• Existing technology is complex/old though
simpler means are available
• There is a need to release a cheaper product
by cutting down some of the existing feature
• The existing customer demands a minimal
increment in product features that are in use
• There is a need to cut down the manufacturing
cycle time/cost
 When is VE used
• Value Engineering is used to determine the best
design alternatives for Projects, Processes,
Products, or Services
• Value Engineering is used to reduce cost on existing
Projects, Processes, Products, or Services.
• 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 a powerful tool used to identify
problems and develop recommended solutions.
 Benefits of VE
• Decreasing costs
• Increasing profits
• Improving quality
• Expanding market share
• Saving time
• Solving problems
• Using resources more effectively
 VE’s Weaknesses
Successful VE results are dependent on the quality
of information brought to the VE workshop for
evaluation.
VE is not time oriented, but, product oriented. Thus,
improvements in production activities are not readily
recognized.
There are many misunderstandings and biases
against VE that have been built up over time due to
misuse of the methodology.
“It cheapens the product without improving it.”
 “VE is only used for cost reduction.”
 Value Engineering Research
Questions and Check Sheet
1. Can it be eliminated without impairing
function or reliability?
2. Does it cost more than its worth?
3. Does it do more than is required? Are there
unnecessary features?
4. Is there something better with which to do
the job?
 Value Engineering Research
Questions and Check Sheet
5.Can it be made by a less costly method?
6. Can a standard item or specialty product be
used?
7. Could a less costly manufacturing technique
be used?
8. Should different tooling be used?
9.Can someone else provide it at less cost
without affecting dependability?
 Potential Savings from VE
No engineering Document Revision
Change Revision
Re-Test/Re-qualification
Drawings Released Tooling Changes

Net Savings from VE

Total Cost of VE Implementation

VE Implementation
beyond this point
results in a net loss.
Engineering
&Production
Concept Design Release Production
 What is value?
VALUE = What we get out of something
What we put into it

VALUE = Quality, reliability, appeal, etc = Benefits

Cost, time, mass, energy, etc. Resources

VALUE = Worth = Performance

Cost Cost

Delivery of necessary project functions while achieving

best balance between project performance and project
costs.
• Value = Function
Cost

To Increase Value

F F F F
C C C C

REDUCE INCREASE MAINTAIN

 Competitive Advantage

Quality is defined as “conformance to

specification.”
Function
Value is defined as:
Cost
You can’t have one without the other!

Competitive Advantage = Quality + Value

 Unnecessary Cost
• Any cost that can be removed without
impairing the essential
– Quality
– Performance
– Customer requirements
– Reliability
– Maintainability
– Marketability
– Schedule
 Criteria for Evaluating Value
• COST • PERFORMANCE
• Initial cost • Quality
• Operations • Stakeholder
• Maintenance requirements
• Return on • Safety
Investment • Level of service
• Life cycle • Environmental
• Replacement Impacts
• Cost of capital • Schedule Impacts
• Operability
• Reliability
• Maintainability
 Generalized Procedure for VA/VE

What is it? Information Phase

What does it do?
What does it cost? Speculation Phase How else can the job
be done?
Is the change better? At what cost?
How much better? Analysis Phase
Why?
Review with depts and
Decision Phase suppliers
Audit effectiveness Select best alternative
Use experience Get approval
Evaluation Phase
Provide feedback Prepare specifications
Six Step Value Engineering Job Plan
Information ☛ Clearly identify the problem(s) to be solved, and
Phase gather information on the background, functions and
requirements of the product, process, or system.

Creativity ☛ Brainstorm ideas on how to improve the high cost,

Phase broken, or inadequately performed key functions.

☛ Screen ideas for acceptance, score remaining ideas

Evaluation on a scale and group ideas into categories. Develop
Phase design scenarios, and selection criteria. Rate and
rank ideas.

Planning ☛ Plan how to sell ideas to management, identify key

Phase recommendations, plan management presentation.

Reporting ☛ Give oral presentation to management, or develop

Phase written report.

☛ Get management approval for go-ahead, make

Implementation
management plan, make assignments, implement,
Phase
follow-up.
 The Value Methodology Job Plan
INFORMATION
PHASE FUNCTION
ANALYSIS PHASE CREATIVE
PHASE EVALUATION
PHASE DEVELOPMENT
 Complete data
package PHASE PRESENTATION
 Identify functions
 Modify scope  Create quantity of PHASE
 Classify functions ideas by function
 Rank and rate
 Develop function
alternative ideas
- What is the models - Conduct benefit
 Select ideas for
problem or  Cost functions  What else can analysis  Present oral
opportunity? development report
 Establish value perform the  Complete technical
 Why do you function? data  Prepare written
index
consider it a problem  Where else can report
 Select functions for  Create
or opportunity? the function be  How must each idea
study implementation Plan
 Why is a solution performed? work?  Who should be
 Prepare final
necessary?  How else can the  What is the sold?
proposals
 What is the cost?  What is the task function be feasibility of  How should the
performed? implementation?
function? ideas be presented?
 What are the basic  What will be the
How can  What was the
functions? cost?
disadvantages be problem?
 Develop a plan to  When will we
gather project data  What are the overcome?  What is the new
breakeven?
supporting functions?  Why is the new way way, savings, and
 Investigate the  What is the best better? benefits?
project overall alternative?  How will it satisfy
 Verify data  Will it meet all the
requirements without our customers?
compromise of form,  What is needed to
fit, or function? implement the
 What are the annual proposals?
PRE-
savings?  Who is
STUDY
POST- responsible for
implementing the
STUDY change?
- Collect user/ customer attitudes What is to be included in the study?
Complete data files Who is best able to study the problem?
Determine evaluation factors What are the current and future Verify Did the new way work? - Complete/
requirements of the subject under study? accomplishments implement
Scope the study How much did it
Present results changes
cost/save?
Build data models What type of impediments will the team
Advertise outcomes Did the change meet - Monitor
Determine team composition come against? status
customer’s expectations?

Property of OSC VE Office

 Information Phase-Fact Finding
What do you need to know about the problem
that you don’t know now?
What facts are known?
What are the requirements of the
system?
Are these facts, opinions,
assumptions, or prejudices?

Where or how can information be obtained?

 Function Analysis
• Shifts the problem-solving focus away from the
items toward the functions

• Function need be defined by two words: an Active

Verb and a Measurable Noun

• The verb defines the required action; the noun

tells what is being acted on

• The more abstract the function definition, the

greater the opportunities for finding creative
alternatives
 Function Analysis
 FAST (Function Analysis System Technique) - A
logic diagram to describe how a system works.
 Examples of Verbs and Nouns:
Active Verbs Nouns
Transmit Signal
Irradiate Information
Project Data
Dissipate Heat
Generate Radiation
Convert Current
Receive Light
Reflect Image
Provide
(passive!)
Functions of a No. 2 Pencil
Description Function
Pencil Makes Marks
Eraser Removes Marks
Band Secure Eraser
Improve
Appearance
Body Support Lead
Transmit Force
Accommodate
Grip
Display
Information
Paint Protect Wood
Improve
Appearance
Lead Makes Marks
 FAST Example
Functional Analysis System Technique
(FAST) Diagram
1. List Desired Outcome and Requirements
of Customer in Verb Singular Noun Form

Mouse Free Living Area = Eliminate Mice

 FAST Diagram
2. List Products and Services that satisfy
Desired Outcome (Q4). These Products or
services answer WHAT is desired of the
system.
• Use Cat
• Create Virus
• Kill Mice
• Eliminate Food
 FAST Diagram
• 3. List all functions in Verb Noun format and
processes that would satisfy or produce each
product or service in the previous step.
• Generate all functions, basic, secondary,
support without regard to relationship.
Kill Mice
• Trap Mice
• Electrocute Mice
• Shoot Mice
• Gas Mice
• Drown Mice
• Use Snake
• Poison Mice
 FAST Diagram
4. Select each function from the previous step starting
with what you believe to be the basic function.
Ask HOW this basic function might be accomplished.

HOW
Eliminate
Mice
KILL MICE POISON MICE

Use Cat Trap Mice •Spray Poison

Create Electrocute Mice •Inject Poison
Virus Shoot Mice •Step on Poison
Kill Mice Gas Mice •Eat Poison
Eliminate Drown Mice •Shoot Poison
Food Use Snake
Poison Mice
 FAST Diagram
5. Continue to answer the HOW and place the answer
• directly to the right.
• Related functions that are at the same level, stack
above or below the CRITICAL PATH
HOW
Eliminate
Mice
KILL MICE POISON MICE EAT POISON

Use Cat Trap Mice •Spray Poison •Eat Bait

Create Electrocute Mice •Inject Poison •Drink Bait
Virus Shoot Mice •Step on Poison •Smell Bait
Kill Mice Gas Mice •Eat Poison
Eliminate Drown Mice •Shoot Poison
Food Use Snake
Poison Mice
 FAST Diagram
6. Continue to answer the HOW and place the answer
• directly to the right.
• Related functions that are at the same level, stack
above or below the CRITICAL PATH
HOW WHY
POISON EAT EAT ATTRACT
KILL MICE MICE POISON BAIT MOUSE

Trap Mice •Spray Poison •Eat Bait •Attract Mouse

Electrocute •Inject Poison •Drink Bait •Trap Mouse
Mice •Smell Bait
•Step on Poison
Shoot Mice •Eat Poison
Gas Mice •Shoot Poison
Drown Mice
Use Snake
Poison Mice
 FAST Questions
• How do we perform the function?
• Why do we perform the function?
• When do we perform the function?
• What is the Desired Outcome?
• Where do we perform the function?
• Who performs the function?
 The Technical FAST Model
H WHY?
OW?
INDEPENDENT
FUNCTION
DEPENDENT
(SUPPORTING) FUNCTION

OBJECTIVES MINOR CRITICAL PATH

OR INDEPENDEN
SPECIFICATIO T FUNCTION INPUT
OUTPU NS
B
(concept)
T
MISSION,
LOWEST
OBJECTIVE, D E
BASIC DEPENDEN A (AND) ORDER
OR HIGHER T FUNCTION FUNCTION
FUNCTION
ORDER
FUNCTION
(concept) ACTIVITY 1
C ACTIVITY
2

W MAJOR CRITICAL
H PATH
SCOPE OF THE PROBLEM UNDER STUDY
E LOWER ORDER
N HIGHER ORDER FUNCTIONS
FUNCTIONS
 Critical Path
F.A.S.T MODEL
HOW OVERHEAD WHY
PROJECTOR

(concept)

CONVEY PROJECT GENERATE CONVERT RECEIVE TRANSMIT

Information IMAGE LIGHT ENERGY CURRENT CURRENT
(concept)
 Supporting Functions
F.A.S.T MODEL
OVERHEAD PROJECTOR

HOW WHY

(concept)

W PROJECT GENERATE CONVERT RECEIVE TRANSMIT

CONVEY
IMAGE LIGHT ENERGY CURRENT CURRENT
H Information
E GENERATE
N FOCUS (concept) HEAT
IMAGE

SUPPORT DISSIPATE
IMAGE HEAT

AMPLIFY
GENERATE
IMAGE
NOISE
 Objectives or Specifications
F.A.S.T MODEL
OVERHEAD PROJECTOR
HOW WHY

FACILITATE
PORTABILITY
OBJECTIVES OR
SPECIFICATIONS
ALLOW
SAFETY

(concept)

W CONVEY PROJECT GENERATE CONVERT RECEIVE TRANSMIT

Information IMAGE LIGHT ENERGY CURRENT CURRENT
H
E GENERATE
N FOCUS (concept) HEAT
IMAGE

SUPPORT DISSIPATE
IMAGE HEAT

AMPLIFY
GENERATE
IMAGE
NOISE
 Add Scope Lines
F.A.S.T MODEL
HOW OVERHEAD PROJECTOR WHY

FACILITATE
PORTABILITY
OBJECTIVES OR
SPECIFICATIONS
ALLOW
SAFETY
OUTPUT INPUT
(concept)

W CONVEY PROJECT GENERATE CONVERT RECEIVE TRANSMIT

Information IMAGE LIGHT ENERGY CURRENT CURRENT
H
E GENERATE
N FOCUS (concept) HEAT
IMAGE

SUPPORT DISSIPATE
IMAGE HEAT

AMPLIFY
GENERATE
IMAGE
NOISE
FAST Example - Overhead Projector
HOW? WHY?
F.A.S.T MODEL
OVERHEAD PROJECTOR
FACILITATE
PORTABILITY
OBJECTIVES OR
SPECIFICATIONS
ALLOW
SAFETY
OUTPUT INPUT
(concept)

W CONVEY PROJECT GENERATE CONVERT RECEIVE TRANSMIT

Information IMAGE LIGHT ENERGY CURRENT CURRENT
H
E GENERATE
N FOCUS (concept) HEAT
IMAGE

SUPPORT DISSIPATE
IMAGE HEAT

AMPLIFY
GENERATE
IMAGE
NOISE
 Creativity Techniques- Brainstorming
 Generate a large number of ideas - quantity,
not quality.
 Free-wheeling is encouraged - Listen and
improve on the ideas of others.
 Don’t criticize - No evaluation of ideas
 Encourage everyone to participate
 Record all ideas presented
 Time to let ideas “incubate” should be allowed.
 Select an appropriate meeting place
 Function Analysis
 Function Analysis is the key to
understanding the problem.

 Brainstorm all possible functions

 Next, build a FAST Model to help

identify any missing functions.
 Other tools that can work with VE
 Activity Based Costing (ABC)
 Cost Function Matrix
 Failure Modes and Effects Analysis (FMEA)
 Risk Analysis Tools
 Other traditional quality tools such as pareto
analysis, ishakawa diagrams, scatter diagrams,
etc.
Function analysis is the key to understanding
the system and what it does. Function analysis
enables you to analyze the problem from a
system perspective.
 The Planning & Reporting Phases
• Planning
What is recommended?
Who has to approve it?
What is the implementation plan?
Are mockups or prototypes required to verify
final decisions?
What are the cost, schedule, and deliverables?
ROI?
 ACTION PLAN GUIDELINES
“What needs to be done?”
 Identify the actions needed to “solidify” the
proposals.
“Who should be assigned the action?”
 Assign a team member.
 Assign a completion date for the action.
“When should the task be completed?”
 Plan regular team status meetings.
 Anticipate 4-6 weeks to complete the actions.
 Implementation Planning
Ideas must be planned and managed to ensure
implementation.
Proposed actions should be managed like a
project with specific end products, defined start
and end dates, and funding limits.
 The Planning & Reporting Phase
• Reporting
Give oral presentation.
Support it with written executive brief.
Be clear, concise, and positive.
Anticipate roadblocks
 Analysis of Each Component
• Can any part be eliminated without impairing the
operation of the complete unit?
• Can the design of the part be simplified to reduce
its basic cost?
• Can the design of the part be changed to permit
the use of simplified or less costly production
methods?
• Can less expensive but equally satisfactory
materials be used in the part?
• Design simplifications frequently are more
apparent than is possible under the original
design
 The Value Engineering Checklist
1. Can the item be eliminated?
2. If the item is not standard, can a standard item
be used?
3. If it is a standard item, does it completely fit the
application, or is it a misfit?
4. Does the item have greater capacity than
required?
5. Can the weight be reduced?
6. Is there a similar item in inventory that could be
substituted?
7. Are closer tolerances specified than are
necessary?
 The Value Engineering Checklist
1. Can you make the item less expensively in
your plant? If you are making it now, can you
buy it for less?
2. Can cost of packaging be reduced?
3. Are suppliers contributing suggestions to
reduce cost?
 Concluding Remarks
• The design stage provides the greatest
opportunity to reduce costs
REMEMBER !
Value Analysis is a continuous process