Value Engineering

VALUE ENGINEERING
Prof. Madhavan . P T2W Consultants

Bangalore Sep.’09
VALUE ENGINEERING
VALUE ENGINEERING
A
I
M
S
A
T
VALUE TO CUSTOMERS
Bangalore Sep.’09
VALUE ENGINEERING
Which one is high in value ?
1 Kg. Gold 1 Plate meal Fame
Luxury Car House Education

Bangalore Sep.’09
VALUE ENGINEERING
Efficiency Life Wt./Vol. Mft. Cost Business Turnover

Plan
Utility Cost
VALUE
Esteem Time Place
Beauty Publicity Prestige

Bangalore Sep.’09
VALUE ENGINEERING
Value increases
with Respect
to needs both
Explicit Implicit
- Styling
- Travel (5 persons)with right - Colour
power, speed, milage, - Size
manovarability etc., - Interiors, AC, Stereo
To suit to status etc.,

Bangalore Sep.’09
VALUE ENGINEERING
Value Engineering
is
Stepwise, organised,
to to
creative team work
Eliminate or minimise Add value in
factors contributing relation to cost
poor value
due to In order to In order to
- Poor flow of information
- over/under specification - Provide value to the
- over specialisation customer
- compartmentalisation - Catch up the market
Bangalore Sep.’09
VALUE ENGINEERING
Success
VE CAR .
Driver
Value Engineering Success

Driven by users / beneficiaries

Bangalore Sep.’09
Value Engineering
Cost Distribution ( Indicative )
25%
Matl.
43%
Engg.
Process
Others
18%
14%

Bangalore Sep.’09
Value Engineering
Value / Function
Value = Function @ lowest Cost.
Function = Performance + Reliability
Performance = Utility + Esteem + Exchange
Reliablity = Perform @ desired place & time without failure.
Lowest Cost = Lowest life cycle cost
Life cycle cost = Cost ( Initial + Install + consumable + maintenance )

Bangalore Sep.’09
Value Engineering
FAST ( Function Analysis System Technique )

Bangalore Sep.’09
Value Engineering
Value analysis

Bangalore Sep.’09
Value engineering
Reason for Poor Value
1. Lack of Information
2. Poor Communication
3. Lack of Ideas.
4. Time Pressure
5. Temporary Circumstances
6. Wrong Beliefs
7. Habits & Attitudes
8. Lack of perception at higher levels

Bangalore Sep.’09
Value engineering
Cost Analysis
Cost to Customer = Sale price + taxes + installation
Sale Price = Total Cost + Profit
Total Cost = Manufacturing cost + Marketing cost
Manufacturing cost = Factory cost = Product cost
= Material + Labour + Over heads
= Function costs + Other costs
Does Customer want to pay for the product ?

Or for the functions in the product ?

Bangalore Sep.’09
Value engineering
What you want & For what you pay
Does Customer want the product ?

Or the functions in the product ?
Is Customer willing to pay for the product ?

Or pay for the functions in the product ?
Do you pay for the sugar ?

Or for the sweetness in the sugar ?

Bangalore Sep.’09
Value engineering
Determine Cost
-Manufacturing cost
-Break up of cost elements ( material + labour + overheads )
-Each component / process cost
-Each subassembly , assembly , calibration cost
-Each function / functional group cost
-Proposed changes cost & savings
-Pay back period / rate of return
-Analyse cost per size/weight/time

Bangalore Sep.’09
Value engineering
Cost is the Objective
Function is the Key .
Value is the Customer.

Bangalore Sep.’09
Value Engineering
APPROACH
1. TEAM FORMATION
2. 5 PHASES OF VE - INFORMATION - What it is / What it does / Cost
- CREATION
- EVALUATION What other simple ways it

can be done ?
- INVESTIGATION How much will it cost ?
- RECOMMENDATION
3. IMPLEMENTATION

Bangalore Sep.’09
BRAIN STORMING
Creation
Intensification
Information
Intensification
VALUE
Industrialization
Agriculturization
TIME
Bangalore Sep.’09
BRAIN STORMING
What is Brain Storming ?
Ú Storming takes place when there is a
sudden release of pressure that is built-up.
Ú This release of pressure releases
Sound & Light.
Ú This is what happened to Archimedes
when he shouted ‘Eureka’.
Ú Storming drives a person to various possible
solutions when the right one is found, there
is a big release of pressure.
Ú This is one of the Ideas Generation Technique.
Bangalore Sep.’09
BRAIN STORMING
Why Brain Storming ?
Ú The world is changing rapidly.
Ú One must adapt to this changes and
keep pace with Competition, Technology,
Quality & Customers whims & fancies.
Ú This requires knowledge, attitude and
approach. More than that it require ideas,
ideas & ideas to be a winner in changing world.
Ú Ideas Galore.
Ú For this we depend on Brain Storming as one of the
Technique for Generation of Ideas.

Bangalore Sep.’09
BRAIN STORMING
How to Storm the Brain ?
Rules :
Ú Do not judge
Ú Be wild
Ú Give plenty
Ú Combine & Improve

Bangalore Sep.’09
BRAIN STORMING
Conditions :
Ú Committed Group
Ú Diverse Skills in the Group
Ú Moderate pressure play.

Bangalore Sep.’09
BRAIN STORMING
Free Gather
Value No Criticism Thoughts Ideas
1+1= 3
Prepare clear Combine
objective & Improve
Brain Storming
Cost Rules

Bangalore Sep.’09
BRAIN STORMING
8 Principles of Creativity
1. Every one is creative.
2. Creativity brings in many opportunities & reduces risks
3. 4 faces of creativity - Socialiser
- Neat Organiser
- Finance figures
- Jack of all
4. One does not leave by data alone (Mix feelings, emotions)
5. One picture is worth more than 1000 words.
6. There are no impossible dreams or problems (only limited
dreamers and problem solvers.
7. The sub-conscious is a full partner in creative process.
8. Creative Thinking brings win / win situations.
Bangalore Sep.’09
BRAIN STORMING
4 Basic Skills for Creativity Thinking
1. Divergent Thinking - The Kid and the Judge
2. Forcing relationships - Connecting unrelated ideas

Wheels + Chair = Wheel Chair
3. Become the Angle’s advocate - Looking at the good

points in bad situation.
4. Dissecting Ideas - Generate ideas within ideas.

Bangalore Sep.’09
BRAIN STORMING
Soft - Kid Hard - Judge
Metaphor Logic
Dream Reason
Humour Precision
Ambiguity Consistency
Play Work
Approximate Exact
Fantasy Reality
Paradox Direct
Diffuse Focused
Hunch Analysis
Generalization Specific
Child Adult

Bangalore Sep.’09
BRAIN STORMING
Methods :
Ú Set the stage and ambiance of acceptance.
Ú Ensure Clarity of goal.
Ú Allow free flow of thinking.
Ú Mind Map to trigger Ideas.
Ú Use flexible thinking.
Ú Start collection of Ideas individually & in sub groups.
Ú Assign Quotas for Ideas.
Ú Call for funniest, stupidest, silliest Ideas.
Ú Have humour but no personal criticism.
Ú Try Brain writing.
Bangalore Sep.’09
BRAIN STORMING
IDEAS, IDEAS, IDEAS
IDEA
One idea can be a stimulus to generate many ideas.

Hence, the Brain Storming is done in a group.

Bangalore Sep.’09
COST REDUCTION
PURPOSE
N
WHAT ?
ME
O
A
RS
NS
PE
WHO ? HOW ?
RECORD
SE
WHEN ? WHERE ?
QU
CE
PLA
E
NC
WHY ?
E
REASON

Bangalore Sep.’09
COST REDUCTION
M
O
WHO ? HOW ?
EA
RS
NS
WHY HE ? WHY THAT WAY ?
PE
WHO ELSE ? HOW ELSE ?
EXAMINE
WHEN ? WHERE ?
WHY THEN ? WHY THERE ?

SE
WHEN ELSE ? WHERE ELSE ?
E
Q
AC
UE
PL
N
CE

Bangalore Sep.’09
BRAIN STORMING
Cheaper
Part be Part be Spec. Matl.
eliminated ? Combined be used ?
Function be Other matl.

eliminated ? be used ?
Can any
Developing
Alternatives
Waste matl. Can any Finish be

Be reduced ? reduced ?
Waste matl. Dimn. be Limit to Finish be

be used ? reduced ? relaxed ? cheaper ?

Bangalore Sep.’09
BRAIN STORMING
Std. Spec.
matl. replace Other supplier
any spl. spec. supply the part Other process
Standard part cheaper ?
any spl. part ? matl. be cheaper ?
Std. inferior matl. Can any Cheaper matl/part

replace std. be indigenised/
Developing imported ?
superior matl. ?
Alternatives
Can any
Other execution Tapping be
be cheaper ? replaced by
other fastening ?
Change in make/
Curves/bends
buy decision result
be eliminated ?
in cost redn. ?

Bangalore Sep.’09
BRAIN STORMING
Constructive Internal
Dis-satisfaction Experience
Urge
Understanding
Active Techniques for the problems
Knowledge Creativity at their roots

Bangalore Sep.’09
BRAIN STORMING
THINKING
Specific Use Basic types of Thinking
Focus Achievement
Challenge Thinking (reach)
Alternatives Improvement Thinking (change)
Random Input Green field Thinking (start)
Structure Organised Thinking (arrange)

Bangalore Sep.’09
BRAIN STORMING
THINKING
Wear 6 different Thinking Hats of Edward De Bano
White : For collecting Information
Black : Be a critical Judge
Red : Spontaneous opinion / feeling
Yellow : Look for benefits
Green : Think ideas / alternatives
Blue : Think process - conclusion

Bangalore Sep.’09
BRAIN STORMING
Five figures are shown below. Select the one that is
different form all the others.

Bangalore Sep.’09
BRAIN STORMING
Brain Storming Preparations
1. Number of people in the group - 6 to 8
< 6 Limits variety
> 6 Not enough air time
Disturb inter-personal
Power balance.
2. Select forceful imaginative participants - Power people

divergent view people
The idea users
Free flexible Thinkers
Positive tangential
Thinkers
PAC, HRM, RC.., CLP

Bangalore Sep.’09
BRAIN STORMING
3. Preparation
- Create a stage / attitude, hunger for ideas
- Invite individually and tell them why their participation
is valuable and provide them support data in advance.
- Give alternative dates to choose and fix it personally
(Personal touch is very important than the office track).
- Check physical environment.
(Quite place, no telephones)
- Fresh air atmosphere.
- Large room.
- Coffee / Tea, Biscuits availability.
- Semi-circle meetings.
- Use of Metaplan boards, templates and flip charts.

Bangalore Sep.’09
BRAIN STORMING
4. Methodology
- Brain Storming
Intuitive, associative, unpredictable, spontaneous, like a
games play, generating plenty of ideas.
- Card Method
Pull out a card or set of cards from the bunch and use the
pictures in them to trigger ideas.
- Method 635
6 participants write 3 ideas in 5 minutes and continue the
game.
- Delphi Method
Listening to the views of groups and then working
independently of each other generating ideas.
- Synetics
Deliberate stimulation of creative process which goes on
un-consciously.
Bangalore Sep.’09
BRAIN STORMING
- Bionics
Examines solutions of nature and their convertibility to the
set of problems.
- SCAMPER Technique.
Substitute, Combine, Adapt, Modify, Put to other users,
Eleminate Reverse.
5. Rules for Group Work

- Clear definition of problem / objectives.
- No criticism in the stage of ideas collection.
- Free unfolding of ideas.
- One idea can generate many ideas.
- Combine and improve ideas.
- Do not conclude on ideas, even if it is the best one.

Bangalore Sep.’09
BRAIN STORMING
6. Watch out obstacle for creativity and neutralize them
- Perception blocks due to operating blindness, thinking

habits and specialization.
- Cultural blocks due to style of working, guidelines and

procedures
And adopting to superiors culture.
- Emotional blocks due to fear, mis-trust and antipathy

Bangalore Sep.’09
BRAIN STORMING
THANKING YOU
&
GOOD DAY
Contact :
Prof. Madhavan .P
# 55, 8th B main, 4th C block
Koramangala
Bangalore – 560 034
Ph: 080 - 5531595

Bangalore Sep.’09

Value Engineering

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VALUE ENGINEERING

Prof. Madhavan . P T2W Consultants

1 Kg. Gold 1 Plate meal Fame

Luxury Car House Education

Efficiency Life Wt./Vol. Mft. Cost Business Turnover

Esteem Time Place

Beauty Publicity Prestige

Prof. Madhavan . P T2W Consultants

Prof. Madhavan . P T2W Consultants