VALUE ANALYSIS

AND
VALUE ENGINEERING

MS. MRINAL PHALLE

1

OBJECTIVES OF VA

The VA / VE objectives is to find and improve

on value mismatches in products, processes
and capital projects.
Find important functions define necessary
versus unnecessary functions
Find and improve on low performing functions.
Define and segregate the necessary functions
from the unnecessary functions and thereby
creatively develop alternative means of
accomplishing the necessary functions at lower
total cost.

INTRODUCTION

VALUE ANALYSIS- is a technique that

allows us to increase the value of a product
or service systematically ,eliminating all the
functions that do not add any value or
benefits to the product.

VALUE ANALYSIS

Value Analysis is defined as 'the professionally

applied, team based, function - oriented,
systematic application of recognized
techniques (function analysis) which

1.

Identify the "function of a product, process,

project, facility design, system or service,

2.

Establish a monetary value for that function,

FUNCTIONA

product or process exists to fulfill a need.

This need or set of need termed as function
,that the product or process satisfied.
Value analysis systematically categorizes all
these functions ,does a cost benefit analysis
and increases the value of the product or
process

3.Provide the desired function (defined by the

customer to meet his / her requirements),at an
overall minimum cost without affecting any of
existing parameters like Quality, Maintainability,
productivity ,Safety and other performance
characteristics,
4.thus Increases customer satisfaction and adds
value to the investment.
6

THE VALUE ANALYSIS TERMINOLOGY

Value is function of Desired Performance and
Cost
This can be express as
Value= Desired performance(P)/Overall cost(C)
Desired performance expresses in term Worth
Worth is defined as the lowest cost to achieve the
use(work)function and aesthetic (sell) function.

HOW IS VA DIFFERENT FROM VE ?

Traditionally Value Analysis (VA) is used to

describe the application of the 'techniques to an
existing product or services or after the fact.

Value Engineering (VE) has been used to refer to

the design stage or before the fact. Value
Engineering (VE) approach is used for new
products, and applies the same principles and
techniques to pre-manufacturing stages such as
concept development, design and prototyping.

HOW IS VA DIFFERENT FROM VE ?

Value Analysis and Value Engineering (VE) is a
powerful Change Management and Problem
Solving' tool with over a century of worldwide
application track record.
VE is used to create functional breakthroughs
by targeting value mismatches during product,
process, and project design.

Value Analysis

Value Engineering

It indicates application on
the product that is into
manufacturing
In value analysis all factors
come together including
workers, subcontractors,
engineers to make a team
with total experience &
knowledge
It may change the present
stage of product or process.
It is worked out with the
help of knowledge &
experience

It indicates application on the

product at its design stage
Value Engineering always
done by specific product
design (engineers) team.

The changes are executed at

the initial stages only.
It requires specific technical
knowledge
10

11

12

THE VALUE OF THE FUNCTION CAN INCREASED

BY

Decrease the cost while ensuring the same

level of performance
Enhance the performance at same cost
Decrease the cost increase the performance
Increase both performance & cost ensuring
that performance increases more than the
increment in the cost
13

THE VALUE EQUATION

Value analysis is evaluates a product utility,
esteem and market values, each of which are
defined below
Utility value how useful / functional the
product is seen to be.
Esteem value the value that customer / user
gives to product attributes, not directly
contributing to utility but more relating to
aesthetic and subjective value. Esteem issues
and functionality should not be overlooked or
compromised.

14

Market value what market is prepared to

pay for the product.
Market value = Utility value + Esteem value

15

CLASSIFICATION OF FUNCTIONS
Use

function and Aesthetic function

Primary function & secondary function
Higher order &lower order function

16

Type of function

Meaning

Use function

Performs some actions, express in

active tone

Aesthetic function

Please customer, express in passive

tone

Primary function

Basic purpose for which a product

exists

secondary function

Arises out of specific design chosen

to fulfill the Primary function

Higher order

Reason for satisfying basic function

Lower order function Means of achieving the basic

function

17

18

THE VA PROCESS (JOB PLAN)

The key component of VA process is its use of a
carefully crafted and thoroughly tested job plan.
Adherence to the job plan focuses efforts on its
specific decision process: that contains the right
kind of emphasis, timing and elements to secure
a high quality product.
The job plan and its sub-elements do this by
highlighting and focusing everyone on the
involved issues, essential needs, criteria,
problems, objectives and concerns.

19

JOB PLAN SPECIFIC PHASES IN VE/VA

N
o
.
1

Phase

Orientation To creates awareness & learn the

methodology of tool
Training sessions for all supervisory &
managerial staff on VA & VE
Exposure to the techniques like ABC for
selection of project
Formation of team consisting of experts
from various functions.
2
Information To collect all the information pertaining to
the project(product)
Work can be divided among the team
20
members

JOB PLAN SPECIFIC PHASES IN VE/VA

No Phase
.
3 Function

To develop FAST diagram

Start from basic function & probe
further with WHY ?& HOW?
List down the all the functions for all the
parts
Creation
To develop alternate means to achieve
these functions
Brainstorming session to generate
ideas.
Evaluation To do cost benefit analysis & arrive at
21
optimum choice

PRINCIPLES OF THE VALUE METHODOLOGY

For a pencil, for instance:

What is it? (a pencil)
What is it for? (make permanent marks)
What is the main function? (make marks, write lines)
What is the method, material or procedure that was used to realize the main
function? (a graphite stick and wood)
What are the corresponding secondary functions?
("transfer graphite to paper and "facilitate holding the graphite"
What does the item cost and how can we distribute the cost of realizing the
main function into each secondary function?
Comparing these costs to an item of a similar function, how much should each
function and the total cost?
(This example, the pencil, is already a high value item

22

JOB PLAN SPECIFIC PHASES IN VE/VA

No. Phase
6

Recommendation To submit the details about the

proposed changes with the
financial implications
Report includes proposed
changes, reason for changing
,new investments and annual
savings
Implementation
To execute propose ?accepted
changes
List down all the activities & fix
up the time frame for each.
23
Make the entire team

JOB PLAN SPECIFIC PHASES IN VE/VA

No. Phase
8

Audit /Follow up

To compare the actual results

with that of expected
Can be done only after complete
execution of the project
Responsibility of top
management alone

24

BENEFITS OF VALUE ANALYSIS APPROACH

A reduction in costs but not in quality
Improving product quality and attracting more
customers
Increased sales might lead to economies of scale
and either increase profits or reduce selling prices
The company may decide to increase selling
prices if the quality has improved

25

The three most important messages for

companies providing products or services are:
Do not produce a product/service that the
customer does not want
Do not include features that are not required
Do not produce in the hope that someone will buy.

26

APPLICATIONS OF VALUE ANALYSIS

Value Analysis has been successful in several domains

and its application is only limited by the users creativity.

Some application areas are - Defense; Automotive;

Aeronautical; Software development; Water treatment;

Civil engineering; systems and procedures, venture
analysis, forecasting, resource allocation, marketing,
Client services; Work processes; Documentation;
Organizational development; etc.
27

CUSTOMER SATISFACTION AND VALUE PERCEPTION

The most common application of Value Analysis is

what many have called the customer satisfaction
and value perception study.
Here are some of the ways the study pays off for
clients:
They need to be competitive on the "Basics" (high
satisfaction/low value) not allowing any
weaknesses in, but not investing more than
necessary in them.
28

They need to dominate the "Value" Issues (high

satisfaction/high value). .

They need to know the Value "Opportunity" Issues

(low satisfaction/high value) to know what to
invest in for future growth.

They need to know the "Irritations" (low

satisfaction/low value) to know where to innovate.

29

IDENTIFYING AT RISK CUSTOMERS

A big issue today is the so-called "At Risk"

customer (those likely to defect).
Value Analysis findings help to determine why
a company's customers are At Risk.
And, firms can learn why major competitors'
customers are At Risk so they can be targeted.

30

INCREASING EMPLOYEE LOYALTY

Value Analysis studies are conducted among

employees to identify things they expect from
any company they work for (The Basics), things
they value, things that irritate them

31

APPLICATIONS OF VALUE ANALYSIS

New Product / Service Development - Every marketer has

been involved in a study where consumers "say" they are
"very interested in trying a new product which
subsequently fails in the marketplace.
Failure is often considered the consumer's fault whereas
it really results from asking the wrong question.
People don't buy what they are "interested" in, they buy
what they value.

32

The reason most new products fail is that they

don't provide enough "new value" to
consumers.
Value Analysis will show which tangible and
intangible aspects of a new product consumers
value and which they do not care about

33