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Value Analysis and Value Engineering

Concept Procedure Application Role in the Productivity

Value Analysis aims at a systematic identification and elimination of unnecessary costs in the increases use of alternatives, less expensive design,material,process to provide same level of quality, efficiency and performance thereby reducing unit cost of an item and increases profit. Example -If a road is to be made in the Middle East A choice could be made between a Concrete or a Bituminous Concrete road is costly to make ,takes longer time, needs more manpower, requires concrete mix plants and concrete mixers But its abrasion resistance is good, coefficient of friction is more between tyres and the roads, less skidding ,less accidents, low maintenance cost

Less maintenance cost On the contrary the wear rate of tyres is very high and increases the repair cost of transport vehicles. The speed on concrete roads is relatively low. Takes longer time for repairing On the other hand the Bituminous roads can be made faster ,requires less labor and less time. These are very smooth and can handle fast traffic easily. Cost is lower than the concrete roads.

Tinted glass used in the office buildings is primarily used for covering the office space as was done by the Brick walls, the secondary purpose is the visibility of the object on the other side of the partition which helps to keep an eye on staff. Maintain discipline and high efficiency in office work. The tertiary purpose is aesthetic value. The glass walls are clean, neat and easy to maintain. More light in the work area. But in house is it convenient ? Difference between Ink Pen and Ball Pen !

Thus VA and VE consider various aspects which help in making a choice between various options. These aspects are Overall Cost Convenience Aesthetics Prestige Safety Ease in maintenance Durability

These are cost reduction techniques unlike Cost control techniques. The objective of VA and VE is to attack the cost itself and eliminate wherever it is possible. VA examines the functions performed by different components and looks for the cheapest way to have that function performed.

Other definitions Value analysis is an organized procedure for efficient identification of unnecessary cost

Value analysis is the relationship of design ,function and cost of any product, material or service with the object of reducing its cost through modification of design or material specification manufactured by a more efficient process, change in source of supply or possible elimination or incorporation in a related item.

Historical perspective During the second World War, the most difficulty faced by companies was shortages of materials This led to experimenting with the substitutes. It fetched surprising results in relative cost, functionality and efficiency After the war the VP of GE(USA)Mr.Harry Erlicher felt that this finding of substitute can be done more deliberate scientific approach rather than ad hoc approach. He entrusted this job to team of engineers headed by Lawrence Miles. In fact it was Miles who coined these techniques as Value analysis and Value Engineering.

The team under his stewardship pioneered this technique and perfected it which saved $200 million of the company in 17 years. Navy Bureau of ships was the first organization to use Value analysis in 1954. In 1959 Society for American value engineers (SAVE) was established. L.D.Miles the father of this concept wrote in 1961 a book Techniques of Value analysis and Engineering. After that US defense made it compulsory to apply VA for the contracts more than $1,00,000.Mr.Mcnamara of US defense declared that the Department saved $4.6 Billion by using Value engineering without any adverse effect on their strength and combat readiness After that many US,UK and Japanese companies started implementing VE Programmes In India , Indian Value Engineering Society (INVEST) started creating and propagating this approach

Value Engineering Value Engineering is where the value of all the components used in the construction of a product from design to final delivery stage are completely analyzed and pursued


VALUE ANALYSIS Indicates application on the product that is into manufacturing.

VALUE ENGINEERING Indicates application on the product at its design stage.

All factors come together including workers, subcontractors, engineers to make a team with total experience and knowledge

It is always done by a specific product design (engineers) team

VA It may change the present Stage of product or operation

VE The changes are executed at the initial Stage only It requires specific Technical knowledge

It is worked out with the Help of experience and Knowledge only

Value tests and Value areas 1.If the use of material ,part or a feature contribute to value ? 2.Whether the usefulness of the item commensurate with the cost of the material ? 3.Is there any option suited for the purpose ? 4.Whether all features of an item as specified are essential ? 5.Can the item be made by other low cost method ? 6.Is there any scope for using standard item in place of special item used ? 7.Whether the tools used are appropriate ?

8.Can there be another source of supply with better Quality and Price ?
9.Wheter the appropriate technology is used for producing the item ? 10.Does any other user buy the item at a lower cost ?

Organizing the work for value analysis Appointing a value analyst

Committee for Value analysis

Team for value analysis

VA process is called VA Job Plan 1.General Phase: The most demanding phase of the Job Plan.Creats right environment for successful VA.Empasises on Human interaction to seek cooperation of the team to implement VA.Work is done on specifics rather than generalities The resistance to change are overcome It wont work , Cost too much, The public wont touch it ,It is impracticable, Why change it ,it works"," That is not our responsibility"," There is no other source of supply"," The management will not accept it , Its company policy

2.Information Phase Attempt is made to asses potential of value improvement. The project is studied in details and all important facts are gathered and considered. Technical and environmental facts are considered. Engineering drawing, product sample, production data is kept in mind. The cost data and work specifications are secured. Quantities and scrap are taken in to account. A relationship is established between cost and requirements. Latest technology and obsolescence are considered.

3.Function Phase The product is defined in terms of its function and performance and expectation. Fan regulator-regulate speed Brake Arrests Motion Screwdriver Transfers torque Ranking functions in descending order. Relative value of their function is determined. Paired comparison method is adopted to know their importance and to asses their degree of variation major, medium and minor Functions are defined for the product as a whole and for all their components. The basic function and the secondary functions are defined. The basic function can be restated in more than one ways.

4.Creative Phase:Brainstorming,creative ideas are explored. These approach can be developed by Checklist and Idea stimulators 5.Evaluation Phase: Creative ideas generated are screened for their feasibility, effectiveness and practicability. For this purpose ideas are further refined and combined together.Decsion matrix is set to evaluate on the basis of various criteria. 6.Investigation Phase; The accepted ideas are converted into acceptable and workable solutions to perform the desired function at the least cost. Products and process are standardized and consulted with vendors and specialists.

7.Recommendation Phase It is an ultimate phase of VAT he selected value alternative is presented for implementation on acceptance. Acceptance is a result of presentation .All the relevant data is provided to the management to take suitable decision.

Uses of VA 1.Cost reduction of existing products or Systems 2.Prevention of unnecessary cost in the new products or systems. 3.Overall cost consciousness and general attitude change towards cost 4.Boost for import substitution 5.Wider use of Cost information 6.Greater ROI 7.Important for Contracts, Incentives 8.Involves all departments including vendors 9.Powerful tool for decision making

Application (Telco ,Jamshedpur) Battery cable was used in quantities of 50000 for connecting battery to the starter. The cable was made of 90 square mm X 1.5 meter. Copper with brass lugs on both ends. The cost was 52 units each. Function-Conduct Electricity Cost 52 units per cable Worth- 17 units Steel cable with increased Cross section could also conduct at cheaper cost) Value Index -52/17=3(More than 1,hence good potential for VE) Creative Phase-Ideas to use cast iron, steel, aluminum, Nicroalloys,Silver were generated

Evaluation-After analyzing different ideas aluminum was considered the best and investigated regarding its feasibility ,economy and the problems like bi-metallic corrosion between aluminum and Brass Lugs Recommendation-Aluminum cable of 120 square mm X 1.5 meters with zinc alloy sleeves and brass lugs recommended Savings-30 units per cable(57% cost difference between copper and aluminum + cost increase due to addition of zinc alloy sleeves) = 30 X 50000 =15 Lakh units per year