Value Analysis

A presentation by

Ahmad Tariq Bhatti

FCMA, FPA, MA (Economics), BSc
Dubai, United Arab Emirates
 Value Cost
Analysis, reduction
How??? without
compromising
on quality???

Let us explore, how it works???

Value Analysis 2
 Origin
Value Analysis was developed after WW-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”.
Value Analysis 3
 VA… How???
Techniques of Value Analysis and Engineering tells
you why so much unnecessary cost exists in
everything we do. . . how to identify, clarify, and
separate costs which bear no relationship to
customers' needs or desires. . . how to place a
dollars-and-cents value on different customer
functions. . . how to divide a problem into "mind-
sized" steps, each one of which is solvable and the
sum of which solves the major problem.
- Lawrence D. Miles
[An excerpt from his book
Value Analysis and Engineering 3/e, 1989]

Value Analysis 4
 Key Concepts
Value: The ratio between a function for customer satisfaction and
the cost of that function. It is the least cost that can achieve
reliably a function or a service.
Value of a product = Performance of the function / Cost
Need: Something that is necessary or desired by a customer
Function: The effect produced by a product or by one of its
elements, in order to satisfy customer needs.
Value Analysis: A systematic process that is used to increase the
value of an object that is achieved by providing required functions
of a product at lowest overall cost consistent with achieving the
required quality, performance and market acceptance.
VA team refers to a team/group/committee of cross-functional
technicians who follow a stated workplan to accomplish VA
objectives.
The object can be a product, a system, a process, a procedure, a
plan, a machine, equipment, tool , a service or a method of
working.
Value Analysis 5
 Key Concepts
The aim of VE is to obtain target cost without compromising
on the quality of a product by:
Identifying improved product designs that reduce
product’s cost
Eliminating unnecessary functions that increase the
product’s costs
VE requires the use of Functional Analysis (FA). FA is
an analysis of the relationships between product
functions, their perceived value to the customer and
their cost of provision. The process involves
decomposing the product into its many elements or
attributes.
For instance, in the case of automobiles, functions might
be consist of style, comfort, operability, reliability,
quality and attractiveness etc., etc.
Value Analysis 6
 An Illustrative Model
What is it? (a pencil)
What is it used for? (writing and making marks)
What is the main function of this product? (making marks, writing)
What is the method, material or procedure that was used to
realize the main function? (a graphite stick & wood)
What are the corresponding secondary functions? (transfer
graphite to paper and facilitate holding the graphite)
What does the item cost and how can we distribute the cost of
realizing the main function into each secondary function?
Comparing these costs to an item of a similar function, how
much should each function cost and what must be the total
cost?
Important Note
Focus your VA on the main function, because, during the analysis,
the secondary functions may change. The group/committee/team
may choose different secondary functions to realize the main
function.
Value Analysis 7
 Interesting, right?
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