-Bhabajit Baruah,

Assistant Professor,
Department of Mechanical Engineering,
GIMT-Guwahati

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 ORIGIN
• Value Analysis was developed after World War-II in USA at General
Electric (GE) in 1947. Because of WW-II, there were shortages of
skilled labor, raw materials, and component parts at GE.
• Lawrence D. Miles, Jerry Leftow, and Harry Erlicher at GE looked
for acceptable substitutes. They noticed that these substitutions
often reduced costs, improved product, or both. This led them to
the discovery of a systematic process for cost reduction without
compromising on the desired quality of products. They named their
process as “VALUE ANALYSIS”.
• Lawrence D. Miles, is known as the father of the Value Analysis /
Value Engineering concept.

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 WHAT IS VALUE ?
"Value is the lowest price you must pay to provide a function
or service."
-Lawrence D. Miles

Value Analysis is a systematic method to improve the

“Value" of goods or products and services by using an
examination of Function. Value is the ratio of Function to Cost.

Value of a product = Performance or the function / Cost

Value can therefore be increased by either improving the

Function or reducing the Cost.

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 Simple Example

Eraser

Metal band
Wooden Case
Paint

Graphite

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HOW TO INCREASE VALUE?
𝐅𝐮𝐧𝐜𝐭𝐢𝐨𝐧
Value =
𝐂𝐨𝐬𝐭

𝐅 𝐅 𝐅 𝐅
𝐂 𝐂 𝐂 𝐂

REDUCE INCREASE MAINTAIN

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 CLASSIFICATION OF VALUE
Value can be in terms of:
• Utility value (Use or functional value) – how useful / functional
the product is seen to be.
• Esteem value – the value that customer / user gives to product
attributes (properties, features or attractiveness), not directly
contributing to utility but more relating to aesthetic and subjective
value.
• Cost value – the sum of Labor, material and various other costs
required for producing a product.
• Exchange value – Its properties or qualities, which enable us to
exchange it for something else, we want.
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MEANING OF VALUE ANALYSIS AND
VALUE ENGINEERING

• Value Analysis and Value Engineering are systemic and

scientific approaches which emphasize on exploring various
alternatives regarding design process and materials to be used in
production process, so that the cost could be reduced without
affecting its suitability, functionality, reliability, quality and
performance.
• If this analysis is done before starting formal production, then it is
called Value Engineering.
• If this analysis is done after formal production, then it is called
Value Analysis.
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 WHAT IS VALUE ENGINEERING ?

• An organized study of FUNCTIONS to satisfy the USER’S

NEEDS with a QUALITY PRODUCT at the LOWEST LIFE
CYCLE COST through APPLIED CREATIVITY.

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 Difference between VA and VE
• Value Analysis (VA) is the application of creative
techniques for increasing the Value and Functions to an
already Existing Product / Services to minimize the
Cost of that Product. This is like a Post-mortem analysis,
done after the fact, so a Remedial Process.
• Value Engineering (VE) is the application of creative
techniques for increasing the Value and Functions for New
Products at the design stage itself, to minimize the Cost
of the Product. This is done before the fact at pre-
manufacturing stages such as concept development and
design, so a Preventive Process.
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What is not Value Engineering?
 Cost Cutting
 Design Review
 Project Elimination
 Scope Reduction
 Quality reduction
 Detailed Cost Estimating
 Redesign

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Scope of Value Analysis & Value
Engineering
• Value Added Cost: The cost if discontinued will affect the
products suitability, quality, reliability, durability and performance
for the customer.
• Non Value Added Cost: The cost if discontinued will not affect
the products suitability, quality, reliability, durability and
performance for the customer.

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OBJECTIVES OF VALUE ANALYSIS

• Identifying improved product design, improved production

process, improved raw material composition for increase of
the function of the product.
• Identify functions which are not needed by customer and if
they are removed, it will not affect the customer anyway.
• Identify unnecessary durability.

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MAJOR CONSIDERATIONS IN
VALUE ANALYSIS AND VALUE
ENGINEERING
• Identify and determine unnecessary functions from
production process: In this aspect we perform a detailed
analysis of all the functions which we perform for production
of our product and we identify those steps/functions which do
not add any value to the product.

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Contd…
• Identify duplicity of efforts: Unnecessary and duplicate
functions needs to be discontinued to save money without
affecting sustainability etc. of the product.
• Identify and eliminate unnecessary product durability and
reliability: Identify the useful life of the product and physical
life of the product. It should be understood that all the cost
incurred for creating durability and quality beyond its useful
life is waste. Therefore one should sacrifice the durability and
quality of the product to save cost, but at the same time the
product should not look of inferior quality in comparison to
competing products.
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Contd…
• Design Minimization: It means while designing the product
one must try to use less number of parts in the product by
using those parts having multiple functionality. This will make
the process of manufacturing and assembling quick and easy.
In this situation the number of supplier will also be less due to
which it will be easy to make a proper coordination and one
can also ask them to make customized parts to suit to one’s
production process.

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Contd…
• Product should be designed to unit to one’s
manufacturing process: It means one should design the
product in such a manner that the product takes a very less
time to manufacture and assemble. By designing of the
product, one can also achieve zero defectives by designing all
the components in such a manner that they can’t be
assembled in a wrong manner.
• Identify better ways: Search for the better ways of
performing functions. All the available options regarding
design, components and processes needs to be identified to
produce the product and select the better options in
comparison to the ones which are currently being used.
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Contd…
• Substitution of parts: Analysis should be carried out whether
one can substitute the component with another component
available at less cost but without affecting products
performance. Then those identified substitute components
should be used to achieve better performance at lower
amount of cost. This will necessitate substitution of
components.
• Combination of Steps: Detailed analysis about the steps
which can be eliminated and can be consolidated needs to be
identified. By this one would be able to reduce production time
and cost.
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Contd…
• Knowledge sharing with suppliers: The supplier and
manufacturer must exchange information about the product,
production process, technology etc. with each other, because
the supplier will definitely have more knowledge about the
components and its substitutes available and such knowledge
can be very helpful for the manufacturer. The manufacturer
must encourage the supplier to carry out value analysis and
value engineering in their own manufacturing process
because if the supplier is able to cut down some cost, then
the manufacturer will also get such component at a lower
price.
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VALUE ENGINEERING CYCLE

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 STEPS INVOLVED IN VALUE
ANALYSIS AND VALUE
ENGINEERING
Identify the problem

Analyze:
Raw Material
Components
Functions
Process
Delivery
Explore better
alteration for doing
the same and
implement

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ADVANTAGES OF VALUE ANALYSIS
Better Saving in
Company cost
Image
Advantages
of Value Quality
Analysis Promotion

New product and

product design Important
Substitution

Elimination of Maximization
un-necessary of the value of
processes product

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Examples of Value Engineering
 Russian liquid-fuel rocket motors are intentionally
designed to permit ugly (though leak-free) welding. This
reduces costs by eliminating grinding and finishing
operations that do not help the motor function better.

 Many vehicle manufacturers have active programs to

reduce the numbers and types of fasteners in their
product, to reduce inventory, tooling and assembly costs.

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Thank You

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