VALUE ANALYSIS

AND
VALUE
ENGINEERING

WHAT
IS
VALUE
ANALYSIS

Value Analysis
1.
2.
3.
4.
5.

Cost reduction technique.

Organised creative approach.
Main focuses.
Birth Second World War.
Recent years Value Engineering.
Molecular Engineering.
Vertical Thinking.

What is Value
The minimum
money which has
to be expended in
purchasing or
manufacturing a
product to create
the appropriate
use of esteem
factors.

Division Of Value
1.
2.
3.
4.

Use of functional Value.

Esteem Value.
Cost Value.
Exchange Value.

Advantages of Value Analysis

It leads to improvements in product design so that, most

appropriate products are produced .

High quality (value) is maintained.

All-round efficiency is achieved by eliminating waste of

various types.

Cost savings provide a measure for judging managerial

effectiveness.

New ideas are generated and incorporated.

Teams spirit and morale are improved.

Areas requiring attention and improvement are pin

Procedure of Value Analysis

There is no standard approach or procedure

Ascertaining the needs and wants of customers.
Specifying
the
function
of
products
and
components.
Determining the appropriate cost of desired
performance.
Identifying better alternatives in terms of works
procedures.

Implementation of Value Analysis

Identifying the function:Primary.
Secondary.

Evaluation of the function by

comparison : Basic question
does the function accomplish reliability at the best
cost

Develop Alternatives.

Value Analysis Steps

1.
2.
3.
4.
5.
6.
7.

Gather Information.
Measure Performance.
Analyse Functions.
Generate Ideas.
Evaluate and Rank Ideas.
Develop and Expand Ideas.
Present Ideas.

WHAT
IS
VALUE
ENGINEERING

Value Engineering

Value engineering is a total of

management which approaches the
question of saving cost from the point of
view of value.
Requires co-operation of all functional
departments.
In large organisations, there are value
engineering teams having full time jobs.

Value Engineering
Value and cost
Value = Function
Cost
Value: What the product is worth to the customer.
Function: Properties and qualities of product.
Cost: Money value of materials used, Labour &
indirect costs.

Value Engineering

Suggestion schemes
Suggestion scheme facilitates the work
of value engineering team.
The scheme helps in the changes of
value engineering and makes it
implementation easier.

Value Engineering

Requirement of a product
Use.
Esteem.

It is essential to be considered how much to be

added in order to sell the part.
The reasonable price of a product can be obtained
by comparing with a comparative product.

VALUE
ENGINEERING
APPROACH

Value Engineering Approach

No standard approach discuss with team
Subject
Basic
Analysis
Answer
members.
question
Function

What
functions are
performed?

Material

What is the
material
specification?
What quantity
of material
should be
used?

1) Is there any possibility of

elimination?
2) What alternative methods are
available?
1) Can alternative material be used?
2) Can the specification be
amended?
1) Is the size or weight of material
excessive?
2) Can the quality be reduced?
3) Will a cheaper material serve the
same purpose?
4) Is the cutting done economically
without waste?

Value Engineering Approach

Subject
Labour

Basic
question
Which are the
direct labour
costs?

Analysis

1)
2)
3)

Answer

Are all the operations necessary?

Will alternative operations be
cheaper?
Can certain assembly operations
be modified?

Process

Are the best

Processes being
used?

1)
2)
3)

Are all the operations necessary?

Will alternative operations be cheaper?
Can certain assembly operations be
modified?

Standardiza
tion

Are the
materials or
components
standard?

1)
2)

Can the materials be standardized?

Can a number of product use standard
(common) parts?
Can methods be standardized?

3)

Waste Control

Reasons for wastages in industry

Obsolescence
Surplus
Scrap
Role of Management in waste control
Proper inventory control
Materials management
Effective Co-ordination among departments

Input-Output Analysis

Systematic study of production

structure.
Predict total production of each year.
Production structure of all the industries
are to be grouped together.
Output material of 1 sector becomes
input raw-materials for the other.

VALUE
ANALYSIS
AND
VALUE ENGINEERING

VALUE ANALYSIS AND VALUE

ENGINEERING
Comparison :lue
Questions asked under va
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Saving
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6. PHASES OF VALUE ANALYSIS

EXERCISE

Original
Phase

Information
Phase

Innovation
Phase

Evaluation
Phase

Choice
Phase

Implementa
tion
Phase

Review
Phase

PRODUCT
DEVELOPMENT
AND
VALUE ENGINEERING

1. Product Design and Development

1.

Factors considered in product

design :. Customers requirement.
. Operators Convenience.
. Types of materials.
. Work methods and equipment.

1. Product Design and Development

2.
3.
4.
5.

Design.
Planning.
Specialized function.
Visible in long run.

2. Application of Value Engineering

Overall quality and performance.

Work together to reduce cost.
Latest developments.
Service function.
Desired objective.

3. Simplification of Product
1.
2.

Elimination of undesirable features.

The main purpose is to improve quality
and to reduce unit costs.

Reduce cost and prices.

. Reduction of undesirable materials.
.

3.

Benefits.