Value Analysis & Value Engineering
Download as PPTX, PDF24 likes10,316 views
Value analysis and value engineering aim to reduce unnecessary costs through a systematic, creative approach. Value analysis focuses on identifying value as the relationship between function and cost, while value engineering takes a problem-solving perspective to improve value. The value methodology involves analyzing functions, determining functional worth, and providing necessary functions at lowest cost. Value engineering is applied through interdisciplinary teams using techniques like function analysis to develop cost-saving solutions.
Value Analysis & Value Engineering
- 2. OVERVIEW ď˘ Concept of Value Analysis ď˘ Scope of Value Analysis ď˘ Concept of Value Engineering ď˘ When is it used? ď˘ Some Thoughts on VE ď˘ Competitive Advantage ď˘ Steps in Value Engineering ď˘ Benefits of value engineering ď˘ How and when is VE applied? (ValueEngineering) 2
- 3. Value analysis originated from second world war due to the shortage of essential material. Lawrence D Miles was the first to develop the technique and name it. Value analysis is defined as an organized creative approach which has , as its objective, the efficient identification of unnecessary cost (cost which provides neither quality nor use nor appearance nor attention). Value can be in terms of - ďś Use or Functional Value: The properties and qualities which accomplish a use, work or service. ďś Esteem Value: The properties, features or attractiveness which causes us to want to own it. ďś Cost Value: The sum of labour, material and various other costs required to produce it. ďś Exchange Value: Its properties or qualities which enable us to exchange it for something else we want. 3 -: Value Analysis :- CONCEPT
- 4. Based on these classifications, value is defined as "the minimum money which has to be expended in purchasing or manufacturing a product to create the appropriate use or esteem factors". We could now define value analysis as "an organized creative approach which has as its objectiveâthe achievement of the value of the product". Value analysis aims at reducing the cost value to the value of the product. It should be borne in mind that: ďś Value is not inherent in a product, it is a relative term, and value can change with time and place. ďś It can be measured only by comparison with other products which perform the same function. ďś Value is the relationship between what someone wants and what he is willing to pay for it. ďś In fact, the heart of value analysis technique is the functional approach. It relates to cost of function whereas others relate cost to product. Function Value= âââââ Cost 4
- 5. SCOPE OF VALUE ANALYSIS 1. Organized cost reduction analysis by which accountants analyze costs in products or procedure, the ranking of their elements in a descending order of magnitude and in informed challenge to each, starting with the most important. 2. Development as practiced in many firms where it follows the realization of a design and combining through the specifications to remove costs by substituting standards and relaxing tolerances and finishes. 3. Purchasing analysis which systematically searches for cheaper bought-out components or services, probably by seeking alternatives or a fresh basis for price negotiation. 4. Method study - The part of work study that studies and analyses work of any kind in a disciplined manner that leads to improvement in. methods. 5
- 6. 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. ďś VALUE METHODOLOGY âThe 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.â CONCEPT OF Value Engineering (ValueEngineering) 6
- 7. ď˘ Value engineering is the process by which a company analyses the individual components of cost within a product or service in order to determine whether it can re-engineer the product's cost base in order to improve the value to the customer. ď˘ The start point for value engineering is to understand the relationship between each individual cost component and the value to the customer associated with each individual component of cost. 7 (ValueEngineering)
- 8. ď˘ It is a systematic method to improve the "value" of goods or products and services by using an examination of function. Function Value = ---------------- Cost ď˘ Value analysis is all about commitment, discipline and focus and finding lower cost alternatives to what you are doing now! If you are missing even one of these success components you canât and wonât have consistent, sustainable and substantial savings results. 8 (ValueEngineering)
- 9. WHEN IS VE USED ? ď˘ Value Engineering is used to determine the best design alternatives for Projects, Processes, Products, or Services ď˘ Value Engineering is used to reduce cost on existing Projects, Processes, Products, or Services. ď˘ Value Engineering is used to improve quality, increase reliability and availability, and customer satisfaction . ď˘ Value Engineering is also used to improve organizational performance. ď˘ Value Engineering is a powerful tool used to identify problems and develop recommended solutions. (ValueEngineering) 9
- 10. SOME THOUGHTS ON VE ďą VE uses a interdisciplinary approach to problem solving. ďą VE takes a systems approach to problem identification and problem solving. ďą VE uses function analysis to improve communication among team members ďą The function analysis systems technique (FAST) promotes a synergistic approach to problem solving that develops solutions far beyond that which only an individual could produce. (ValueEngineering) 10
- 11. COMPETITIVE ADVANTAGE ď Quality is defined as âconformance to specification.â ď Value is defined as: FunctionCost ď You canât have one without the other! ď Competitive Advantage = Quality + Value (ValueEngineering) 11
- 12. SIX STEPS IN VALUE ENGINEERING Information Phase Creativity Phase Evaluation Phase Planning Phase Reporting Phase Implementation Phase Clearly identify the problem(s) to be solved, and gather information on the background, functions and requirements of the product, process, or system. Brainstorm ideas on how to improve the high cost, broken, or inadequately performed key functions. Screen ideas for acceptance, score remaining ideas on a scale and group ideas into categories. Develop design scenarios, and selection criteria. Rate and rank ideas. Plan how to sell ideas to management, identify key recommendations, plan management presentation. Give oral presentation to management, or develop written report. Get management approval, make management plan, make assignments, implement, follow-up. 12
- 13. BENEFITS OF VALUE ENGINEERING Lowering OM Cost Improving Quality Management Improving Resource Efficiency Simplifying Procedure Minimizing Paperwork Lowering Staff Cost Problematic situation Capture Opportunities Value Attitude In Staff Competing More Successfully In Market Satisfy Customer Build Teamwork Save Time & Money
- 14. HOW AND WHEN IS VALUE ENGINEERING APPLIED? âşInterdisciplinary Team âşFormal Job Plan âşTrained Facilitators âşFunction Analysis/FAST âşDocumentation âşProblem Solving/Decision Analysis âşStrategic Planning âşNew Product Development âşRe-engineering efforts How When (ValueEngineering) 14
- 15. WEBLIOGRAPHY ď˘ neoppt.com ď˘ strategicvalueanalysis.com ď˘ apps.develebridge.net ď˘ ignou.com (ValueEngineering) 15