Value Analysis/ Value Engineering 1. What is value? Value is what the product/ service is worth to the custom er or user.

A customer pays the assigned price for the product/ service because he considers the expected level of satisfaction derived from its use/possession worth that price. Value may be in terms of (i) functional or utility (ii) presti ge in possession & (iii) exchange transactions. 2. Distinction between Cost and Value: In the manufacturing/distribution chain of industrial/consumer products, a set o f costs is incurred to create a set of Values. Costs & Values bear input/output relationship. Value is dependent on what the product does, while the cost is dependent on what the product is. Cost is a measure of scarce resources used in the manufacturin g process. The price of a product in the market is a measure of its perceived va lue in the assessment of a customer.