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 Save Build Improve Satisfy Time Money Teamwork Quality 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 .

Processes. or Services. Value Engineering is also used to improve organizational performance. Products. Products. Processes. increase reliability and availability.• • • • When is VE used Value Engineering is used to determine the best design alternatives for Projects. Value Engineering is used to improve quality. and customer satisfaction . or Services Value Engineering is used to reduce cost on existing Projects. • . 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 is not time oriented. improvements in production activities are not readily recognized. Thus. product oriented. “It cheapens the product without improving it.”  “VE is only used for cost reduction.  There are many misunderstandings and biases against VE that have been built up over time due to misuse of the methodology.VE’s Weaknesses  Successful VE results are dependent on the quality of information brought to the VE workshop for evaluation. but.” .

Does it do more than is required? Are there unnecessary features? 4.Value Engineering Research Questions and Check Sheet 1. Is there something better with which to do the job? . Can it be eliminated without impairing function or reliability? 2. Does it cost more than its worth? 3.

Can someone else provide it at less cost without affecting dependability? .Value Engineering Research Questions and Check Sheet 5. Could a less costly manufacturing technique be used? 8. Can a standard item or specialty product be used? 7. Should different tooling be used? 9.Can it be made by a less costly method? 6.

Engineering &Production Release Concept Design Production .Potential Savings from VE No engineering Change Revision Document Revision Re-Test/Re-qualification Tooling Changes Drawings Released Net Savings from VE Total Cost of VE Implementation VE Implementation beyond this point results in a net loss.

Resources VALUE = Worth = Cost Performance Cost Delivery of necessary project functions while achieving best balance between project performance and project costs. appeal. reliability. etc. etc = Benefits Cost. time.What is value? VALUE = What we get out of something What we put into it VALUE = Quality. . mass. energy.

• Value = Function Cost To Increase Value F F F F C REDUCE C INCREASE C C MAINTAIN .

” Value is defined as: Function Cost You can’t have one without the other! Competitive Advantage = Quality + Value .Competitive Advantage Quality is defined as “conformance to specification.

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 Initial cost Operations Maintenance Return on Investment • Life cycle • Replacement • Cost of capital • PERFORMANCE • Quality • Stakeholder requirements • Safety • Level of service • Environmental Impacts • Schedule Impacts • Operability • Reliability • Maintainability .

Generalized Procedure for VA/VE Information Phase What is it? What does it do? What does it cost? Speculation Phase Is the change better? Analysis Phase How much better? Why? Decision Phase Audit effectiveness Use experience Evaluation Phase Provide feedback How else can the job be done? At what cost? Review with depts and suppliers Select best alternative Get approval Prepare specifications .

score remaining ideas on a scale and group ideas into categories. Give oral presentation to management. implement. identify key recommendations. process. Planning Phase Reporting Phase Implementation Phase Plan how to sell ideas to management. plan management presentation. broken. or inadequately performed key functions. follow-up. . make management plan. and selection criteria. or develop written report. Brainstorm ideas on how to improve the high cost. functions and requirements of the product. Rate and rank ideas.Six Step Value Engineering Job Plan Information Phase Creativity Phase Evaluation Phase Clearly identify the problem(s) to be solved. and gather information on the background. Get management approval for go-ahead. or system. Develop design scenarios. make assignments. Screen ideas for acceptance.

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

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. or prejudices? Where or how can information be obtained? . assumptions.

the greater the opportunities for finding creative alternatives . the noun tells what is being acted on • The more abstract the function definition.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.

Function Analysis  FAST (Function Analysis System Technique) .A logic diagram to describe how a system works.  Examples of Verbs and Nouns: Active Verbs Transmit Irradiate Project Dissipate Generate Convert Receive Reflect Provide (passive!) Nouns Signal Information Data Heat Radiation Current Light Image .

Functions of a No. 2 Pencil Description Pencil Eraser Band Function Makes Marks Removes Marks Secure Eraser Improve Appearance Support Lead Transmit Force Accommodate Grip Display Information Protect Wood Improve Appearance Makes Marks Body Paint Lead .

List Desired Outcome and Requirements of Customer in Verb Singular Noun Form Mouse Free Living Area = Eliminate Mice .FAST Example Functional Analysis System Technique (FAST) Diagram 1.

FAST Diagram 2. These Products or services answer WHAT is desired of the system. • Use Cat • Create Virus • Kill Mice • Eliminate Food . List Products and Services that satisfy Desired Outcome (Q4).

• Generate all functions. support without regard to relationship. Kill Mice • Trap Mice • Electrocute Mice • Shoot Mice • Gas Mice • Drown Mice • Use Snake • Poison Mice . basic.FAST Diagram • 3. secondary. List all functions in Verb Noun format and processes that would satisfy or produce each product or service in the previous step.

HOW Eliminate Mice KILL MICE Use Cat Create Virus Kill Mice Eliminate Food POISON MICE •Spray Poison •Inject Poison •Step on Poison •Eat Poison •Shoot Poison Trap Mice Electrocute Mice Shoot Mice Gas Mice Drown Mice Use Snake Poison Mice .FAST Diagram 4. Ask HOW this basic function might be accomplished. Select each function from the previous step starting with what you believe to be the basic function.

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

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

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? .

OR HIGHER ORDER FUNCTION BASIC FUNCTION OBJECTIVES OR SPECIFICATION S (concept) MINOR CRITICAL PATH B INDEPENDEN T FUNCTION INPUT DEPENDEN T FUNCTION A (AND) D E LOWEST ORDER FUNCTION (concept) C ACTIVITY 1 ACTIVITY 2 W H E N MAJOR CRITICAL PATH SCOPE OF THE PROBLEM UNDER STUDY HIGHER ORDER FUNCTIONS LOWER ORDER FUNCTIONS . OBJECTIVE.The Technical FAST Model HOW ? INDEPENDENT FUNCTION (SUPPORTING) WHY? DEPENDENT FUNCTION OUTPU T MISSION.

S.T MODEL OVERHEAD PROJECTOR WHY (concept) CONVEY Information PROJECT IMAGE GENERATE LIGHT (concept) CONVERT ENERGY RECEIVE CURRENT TRANSMIT CURRENT .Critical Path HOW F.A.

Supporting Functions F.T MODEL OVERHEAD PROJECTOR HOW WHY (concept) W H E N CONVEY Information PROJECT IMAGE GENERATE LIGHT CONVERT ENERGY GENERATE HEAT RECEIVE CURRENT TRANSMIT CURRENT FOCUS IMAGE SUPPORT IMAGE (concept) DISSIPATE HEAT AMPLIFY IMAGE GENERATE NOISE .A.S.

T MODEL OVERHEAD PROJECTOR WHY FACILITATE PORTABILITY OBJECTIVES OR SPECIFICATIONS ALLOW SAFETY (concept) W H E N CONVEY Information PROJECT IMAGE GENERATE LIGHT CONVERT ENERGY GENERATE HEAT RECEIVE CURRENT TRANSMIT CURRENT FOCUS IMAGE SUPPORT IMAGE (concept) DISSIPATE HEAT AMPLIFY IMAGE GENERATE NOISE .S.Objectives or Specifications HOW F.A.

S.Add Scope Lines HOW F.A.T MODEL OVERHEAD PROJECTOR WHY FACILITATE PORTABILITY OBJECTIVES OR SPECIFICATIONS ALLOW SAFETY OUTPUT (concept) PROJECT IMAGE GENERATE LIGHT CONVERT ENERGY GENERATE HEAT RECEIVE CURRENT INPUT W H E N CONVEY Information TRANSMIT CURRENT FOCUS IMAGE SUPPORT IMAGE (concept) DISSIPATE HEAT AMPLIFY IMAGE GENERATE NOISE .

S.A.Overhead Projector HOW? F.FAST Example .T MODEL OVERHEAD PROJECTOR FACILITATE PORTABILITY OBJECTIVES OR SPECIFICATIONS WHY? ALLOW SAFETY OUTPUT (concept) PROJECT IMAGE GENERATE LIGHT CONVERT ENERGY GENERATE HEAT RECEIVE CURRENT INPUT W H E N CONVEY Information TRANSMIT CURRENT FOCUS IMAGE SUPPORT IMAGE (concept) DISSIPATE HEAT AMPLIFY IMAGE GENERATE NOISE .

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

.  Brainstorm all possible functions  Next.Function Analysis  Function Analysis is the key to understanding the problem. build a FAST Model to help identify any missing functions.

scatter diagrams. Function analysis enables you to analyze the problem from a system perspective.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. etc. Function analysis is the key to understanding the system and what it does. .

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. and deliverables? ROI? . schedule.

 Assign a completion date for the action. “Who should be assigned the action?”  Assign a team member.  Anticipate 4-6 weeks to complete the actions. “When should the task be completed?”  Plan regular team status meetings.ACTION PLAN GUIDELINES “What needs to be done?”  Identify the actions needed to “solidify” the proposals. .

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.

concise. Support it with written executive brief. and positive. Be clear. Anticipate roadblocks .The Planning & Reporting Phase • Reporting Give oral presentation.

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 .

Does the item have greater capacity than required? 5. Can the item be eliminated? 2. Can the weight be reduced? 6. If the item is not standard. If it is a standard item. can a standard item be used? 3. Are closer tolerances specified than are necessary? . Is there a similar item in inventory that could be substituted? 7. does it completely fit the application.The Value Engineering Checklist 1. or is it a misfit? 4.

Can cost of packaging be reduced? 10. can you buy it for less? 9.The Value Engineering Checklist 8. Are suppliers contributing suggestions to reduce cost? . Can you make the item less expensively in your plant? If you are making it now.

Concluding Remarks • The design stage provides the greatest opportunity to reduce costs .

REMEMBER ! Value Analysis is a continuous process .

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