Source: https://sendpulse.

com/support/glossary/value-analysis

Value analysis is a set of techniques, knowledge, and skills used to improve the value of a product by
eliminating unnecessary costs or improving its functions without compromising its quality, reliability,
and performance. It involves understanding the components of a product and related costs.

Benefits of Value Analysis

As we’ve mentioned before, value analysis is crucial since it identifies possible problems and suggests
improvements that should be made in your company. This process helps:

 reduce costs;
 maintain high quality;
 provide an opportunity to use new technologies;
 eliminate waste;
 encourage new ideas;
 improve brand image;
 improve design.

Value Analysis vs. Value Engineering

It’s essential to understand the difference between these two processes since they play a great role in
your business. To start, let’s review value analysis.

Value analysis implies analyzing existing products and evaluating them to improve their functioning or
reduce cost. A step-by-step plan helps assess different aspects of a product, such as functions,
alternative components, design, and costs. Value analysis includes function analysis, during which a
product is broken down into components that are reviewed later.

Value engineering appears during the development of new goods. A company uses teamwork to
analyze and evaluate the product to improve its functions and reduce costs. This process is conducted
before any investments in tooling, equipment, or plant are made.

3 Value Analysis Techniques

Value analysis involves many various techniques that simplify the process. We’ve prepared the main
three for you to consider.

 Be specific. Companies often try different methods and then report that none of them works.
You should be specific and not make vague statements to prevent this situation. A careful
manufacturing process requires accurate examination before it starts.
 Obtain data from authentic sources. Different types of data should be received from reliable
sources. You can use a questionnaire to obtain accurate information on costs, methods of
 manufacturing, and packing. Prepare accurate and relevant questions on topics you find
relevant.
 Use creativity. If you aim to find the unnecessary costs, you need to develop new ideas. By doing
this, you can eliminate the previous problems and implement some valuable improvements.
Besides, it enables you to discover how to simplify the existing component of a product and
reduce costs.

5 Value Analysis Steps

We can distinguish the five main steps of value analysis. So, let’s jump in.

1. Gather information. During this step, the main aim of your team is to understand the
purpose of a project. Team members collect project data and concepts and try to
understand the project scope. They analyze budget, risks, costs, and other issues, visit sites,
and study various project documents.
2. Determine and analyze the function of a project. First of all, your team identifies the primary
and secondary functions of the project. Next, team members should determine value-
mismatched functions to improve them.
3. Generate new ideas for improvement. This step is for team members to create and develop
improvement ideas. They should find alternatives so that the project could perform the
same functions.
4. Evaluate these ideas and develop them. Team members discuss each idea in detail and
identify the costs. They review all the possible risks and choose the most relevant and
suitable ideas. Once ideas that make sense are identified, it’s time to work with them. Your
value engineering team develops the options and passes them back to the project team.
These ideas should be thoroughly explained so that project owners and stakeholders can
understand them.
5. Present improvements. At this stage, the ideas are presented to stakeholders. The best
salesperson is responsible for the presentation.

To understand how value analysis works, we need to proceed to an example.

Value Analysis Example

Let’s imagine that there’s a motor manufacturer that asks an engineer to conduct a value analysis on
the motor casing and all that is required to build it.

During this analysis, an engineer discovers that there should be three different sizes of nuts and
bolts and that it takes time to insert them. The specialist finds out that after a redesign of the casing,
it’s necessary to use only one size of the bolt with threaded bolt holes, and nuts aren’t needed. As a
result, the manufacturer can see clear savings in time and costs.

By doing a value analysis, companies can receive information about the out-of-date practices
businesses use and replace them with new approaches that will bring visible results. That’s why
many companies use this technique.