What Is Value Engineering?

Value Engineering (VE), also known as Value Analysis, is a systematic and

function-based approach to improving the value of products, projects, or processes.

VE involves a team of people following a structured process. The process helps

team members communicate across boundaries, understand different perspectives,
innovate, and analyze.

What is value?
Value is a personal perspective of your willingness to pay for the performance
delivered by a product, process or project.

Good value is achieved when the required performance can be accurately defined
and delivered at the lowest life cycle cost.

What does Value Engineering do?

Value Engineering improves value. On highway projects, improvements to value
might include reducing the life cycle cost of an interchange, enhancing safety in a
design, or reducing impacts to the public by shortening the duration of a
construction project.

VE focuses on delivering the product or

Value Engineering uses a
service at the best price by incorporating
combination of creative
those value characteristics deemed most
and analytical
important by the customer.
techniques to identify
alternative ways to
achieve objectives.
How does Function Analysis
The use of Function work?
Analysis differentiates
Value Engineering from In Function Analysis, an active verb and a
other problem solving measurable noun describe a function. As
approaches. an example, the function of this website is
to "inform reader".

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How does VE work?
VE follows a structured thought process to evaluate options. Every VE session goes
through a number of steps:

1. Gather information
o What is being done now?
2. Measure Performance
o How will the alternatives be measured?
3. Analyse Functions
o What must be done?
o What does it Cost?
4. Generate Ideas (Brainstorming)
o What else will do the job?
5. Evaluate and Rank Ideas
o Which Ideas are the best?
6. Develop and Expand Ideas
o What are the impacts?
o What is the cost?
o What is the
performance?
7. Present Ideas
o Sell
Alternatives

What are the benefits of VE?

Value Engineering is a tool that will improve your ability to manage projects, solve
problems, innovate, and communicate.

A VE program in your organization will provide your staff with a definitive tool to
improve value in any product, project or process.

Cost savings, risk reduction, schedule improvements, improved designs and better
collaboration have been the outcomes of some of MTO's VE studies.

A typical VE study involves a multi-disciplinary team at a workshop lasting 3 to 5

days. The payback from the investment in VE normally exceeds 10:1.

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What is Value Analysis?
It is an orderly and creative method to increase the value of an item. This " item" 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, also called Functional Analysis was created by
L.D. Miles.

The value of an item is how well the item does its function divided by the cost of the item
(In value analysis value is not just another word for cost):

value of an item = performance of its function / cost

An item, that does its function better than another, has more value. Between two items
that perform their function equally well, the one that costs less, is more valuable.
The "performance of its function" could include that it is beautiful (where needed).
Do not be surprised if as a result of value analysis the cost of an item is less that half of
its previous cost.

Select the item to be studied and form a study group

To make a value analysis we form a study group of 4 to 6 persons, preferably each with
different knowledge, with different backgrounds. They meet in a room free from
interruptions.

Then we select the item to be studied. The item should be one that gives the impression
that its cost is too high or that it does not do its function well.

Value Analysis
The value analyst should always be aware of functions, not of products, shapes, or
processes. The main function is what the item does, is that which somebody wanted to
archive by creating the item. Express this function (if possible) with just two words, a
verb and a noun.

If the item is composed of various parts, it is useful to ask for the function of each part,
and how they contribute to the main function of the item.

Do not be distracted by mere aggregate functions such as the rubber on a pencil's end or
the ice producing part of a refrigerator. These were functions added since it was
economical or easy to do so. They have no relationship with the main function.

Gather information
Find the main function and the secondary functions of an item. Get the cost of realizing
each function.
The attitude of a value analyst should be critical, aggressive, nonconformist, never
satisfied with what she/he receives for the money given.
The first action of the group should be to gather all the information about the item. Ask
the best specialist of the field, not the person most accessible. Get a detail of costs.

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Collect drawings, specifications, all the written data on the item. Don't be satisfied with
verbal information.

For a pencil, for instance:

• What is it? (a pencil)

• What is it for? (make permanent marks)
• What is the main function? (make marks, write lines)
• What is the method, material or procedure that was used to realize the main
function? (a graphite stick and 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 and the total cost?

(This example, the pencil, is already a high value item).

Center the attention of the value analysis group on the main function, because, during the
analysis, the secondary functions may change. The group may choose different secondary
functions to realize the main function.

It is not important that the individual costs assigned are imprecise. Because even an
imprecise numerical value is much better than an expression such as "very costly" or "of
low cost".

Measure the value of the way each secondary function is realized, is materialized:

• Does it contribute value? (Is there something that does not contribute value?)
• Is the cost in proportion to the function realized.
• Does it need all its parts, elements, procedures?
• Is there something better to do the same function?
• Is there a standard part that can do the function?

Investigate the cost of a function. Put a dollar sign on tolerances and strict specifications.
See what's thought to be necessary and which somebody put in, just to be on the safe
side. Remember: All that does not contribute to the main function is waste and should be
eliminated.

Creativity (the brainstorming session)

The objective is to find a better way to do the main function. We try to find a different
material, or concept, or process, or design idea, that realizes the main function.
People looked for conditions under which the human mind produces really original ideas,
a method that helped creativity. These conditions and procedures are stated below and
need strict adherence:

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1- State the main function clearly and shortly on paper or a blackboard (verb and noun),
so that the group can fix their attention on it. State it without mentioning the physical
object or the specific process. (Do not state secondary or aggregate functions).

2- The leader of the group says "We begin now" and when the ideas do not flow so fast
anymore (about 15 to 20 min.) The leader says "That's all".

3- Members of the group state loudly any solution to the problem they can think of. It is
very important that they do not analyze their own thoughts or those of others. They
should not smile or react when exotic, improbable or senseless ideas are stated. They
should not criticize or speak with others. They should only let their imagination run wild
and state ideas. An idea can be inspired by a previous idea. (If no rare ideas are stated,
then the members are analyzing, not making a brain storm).

4- The leader registers all ideas on paper or a blackboard.

5- When the session has finalized, if there is any doubt what was meant by an idea, the
leader clarifies the idea with the help of members. He does not analyze or discard any
idea.

This finalizes the brainstorm.

Evaluation
The evaluation should be done after an interval, at best about two days after the
brainstorm, to allow the group to gain perspective.

Now the group analyzes each idea. They group similar ideas. When evaluating, do not
think why the idea would not work, why it is not possible. Develop each idea, making it
more practical, making it function better. Estimate a very approximate cost for each idea
and investigate carefully ideas with an apparently low cost. When an idea is canceled,
that should be based on facts, not opinions.

Identify barriers and eliminate them tactfully.

Barriers are excuses or preconceived ideas that cannot be substantiated with numbers,
facts, detailed and precise information or experimental evidence. Barriers can be honest
beliefs. Normally there is gold behind a barrier. Now select the two to four ideas having
the lowest cost.
Obtain information for analyzing and developing an idea. Do not work in isolation. Once
the group has advanced as far as it can on its own, make contact with specialists. This
may be necessary in the selection and also during the development of ideas. The value
analyst is a coordinator of specialists, of groups of experts in other companies (Pay them
for their contribution in some manner).
Obtain information from the best source, not the nearest or most accessible one. Do not
take into account an answer by a person or specialist that lies outside his field of
expertise. The use of specialists is a powerful way of tearing down barriers. Avoid
generalizations. Do not accept second hand information. Ask for copies of documents.

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Development of the two to four ideas selected.
Make a real effort to develop the ideas of lowest cost that do the main function. Make
tests, prototypes, get quotes of cost. Estimate costs of short term alternatives, of long term
alternatives and of any new ideas produced during the evaluation.

At the end of this process, the idea of least cost should have been identified. Ask yourself:
Would I spend my own money on this solution? If not, modify it.

Recommendation
If you work in an organization or enterprise, be sure that the person really interested in
applying the solution gets to see it. Present the final solution in writing, on a single sheet
of paper, to the person that should implement it. Give a copy to his boss. This sheet
should state the savings, costs and a detailed plan for implementing the idea. It should
have all the information needed so that a person that does not know this subject can
understand it and do it.
The value analysis group should not itself implement the idea, if this is outside its normal
area of work.

Implementation and Follow Up

Value analysis is not a method of controlling the work of others or of investigating errors.
Normally the amount of work to implement an idea is greater than the amount of work
needed to produce the idea. Therefore it is a good procedure to let the people that
implement the idea get most of the praise and merit. That produces excellent relations.
Obtain that the group that implements the idea informs of the savings produced and, if
possible, benefits from these savings. If needed, help them to establish the way the
implementation will be checked and the savings calculated.

The Primary Questions

The questioning sequence used follows a well-established pattern which examines-

• the PURPOSE for which the activities are undertaken

• the PLACE at which the activities are undertaken
• the SEQUENCE in which the activities are undertaken
• the PERSON by whom the activities are undertaken
• the MEANS by which the activities are undertaken

with a view to activity

• ELIMINATING
• COMBINING
• REARRANGING
• SIMPLIFYING

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In the first stage of the questioning technique, the Purpose, Place, Sequence, Person,
Mean of every activity recorded is systematically queried, and a reason for each reply is
sought.

PURPOSE:PURPOSE:
• What is actually done?
• Why is the activity necessary at all?

in order to ELIMINATE unnecessary parts of the job.

PLACE:
• Where is it being done?
• Why is ti done at that particular place?

SEQUENCE:
• When is it done?
• Why is it done at that particular time?

PERSON:
• Who is doing it?
• Why is it done by that particular person?

in order to COMBINE wherever possible or REARRANGE the sequence of operations

for more effective results.

MEANS:
• How is it being done?
• Why is it being done in that particular way.

in order to SIMPLIFYoperation.

The Secondary Questions

The secondary questions cover the second stage of the questioning technique, during
which the answers to the primary questions are subjected to further query to determine

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whether possible alternatives of place, sequence, persons and/or means are practicable
and preferable as a means of improvement over the existing method.

Thus, during this second stage of questioning, having asked already, about every activity
recorded, what is done and shy is it done, the method study man goes on to inquire what
else might be done? And, hence: What should be done? In the same way, the answers
already obtained on place, sequence, person and means are subjected to further inquiry.

Combining the two primary questions with the two secondary questions under each of the
head: purpose, place, etc., yields the following list, which sets out the questioning
technique in full:

PURPOSE:
• What is done?
• Why is it done?
• What else might be done?
• What should be done?

PLACE:
• Where is it done?
• Why is it done there?
• Where else might it be done?
• Where should it be done?

SEQUENCE:
• When is it done?
• Why is it done then?
• When might it be done?
• When should it be done?

PERSON:
Who does it? Why does that person do it? Who else might do it? Who should do it?

MEANS:
How is it done? Why is it done that way? How else might it be done? How should it be
done?

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Checklist
A check-list of questions which may be of use in applying the questioning sequence in
method study.

Most of the questions listed below apply generally to method study investigations. The
questions are listed under the following headings:

• Operations
• Design
• Inspection Requirements
• Materials Handling
• Process Analysis
• Material
• Workplace Layout
• Tools and Equipment
• Working Conditions

Operations
1. What is the purpose of the operation?
2. Is the result obtained by the operation necessary? If so, what makes it necessary?
3. Is the operation necessary because the previous operation was not
4. performed correctly?
5. Is the operation instituted to correct a condition that has now been corrected
otherwise?
6. If the operation is being carried out to improve appearance, does the additional
cost give extra saleability?
7. Can the purpose of the operation be obtained in another way?
8. Can the material supplier perform the operation more economically?
9. Is the operation being performed to satisfy the requirements of all users of the
product, or is ti made necessary by the requirement so one or two customers only?
10. Does a subsequent operation eliminate the necessity for this operation?
11. Is the operation being performed as a result as a result of habit?
12. Was the operation established to reduce the cost of a previous operation, or a
subsequent operation?
13. Was the operation added by the sales department as a special feature?
14. Can the part be purchased at a lower cost?
15. Would adding a further operation make other operations easier to perform?
16. Is there another way to perform the operation and still maintain the same results?
17. If the operation has been established to correct a subsequent difficulty, is it
possible that the corrective operation is more costly than the difficulty itself?
18. Have conditions changed since the operation was added to the process?

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Design
1. Can the design be changed to simplify or eliminate the operation?
2. Is the design of the part suitable for good manufacturing practice?
3. Can equivalent results be obtained by changing the design and thus reducing cost?
4. Can a standard part be substituted?
5. Would a change in design mean increased saleability, an increased market?
6. Can a standard part be converted to do the job?
7. Is it possible to improve the appearance of the article without interfering with its
utility?
8. Would an additional cost caused by improved appearance and greater utility be
offset by increased business?
9. Has the article the best possible appearance and utility on the market at the price?

Inspection Requirements
1. What are the inspection requirements for this operation?
2. Does everybody involved know exactly what the requirements are?
3. What are the inspection details of the previous and following operations?
4. Will changing the requirements of this operation make it easier to perform?
5. Will changing the requirements of the previous operation make this operation
easier?
6. Are tolerance, allowance, finish and other standards really necessary?
7. Can standards be raised to improve quality without unnecessary cost?
8. Will lowering standards reduce cost considerably?
9. Can the finished quality of the product be improved in any way above the present
standard?
10. How do standards for this operation/product compare with standards for similar
items?
11. Can the quality be improved by using new processes?
12. Are the same standards necessary for all customers?
13. Will a change in standards and inspection requirements increase of decrease the
defective work and expense in the operation, shop or field?
14. Are the tolerances used in actual practice the same as those used on the drawing?
15. Has an agreement been reached by all concerned as to what constitutes acceptable
quality?
16. What are the main causes of rejections for this part?
17. Is the quality standard definitely fixed, or is it a matter of individual judgement?

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Materials Handling
1. Is the time spent in bringing material to the work station and in removing it large
in proportion to the time used to handle it at the work station?
2. If not, could material handling be done by the operators to provide a rest through
change of occupation?
3. Should hand, electric or fork-lift trucks be used?
4. Should special racks, containers or pallets be designed to permit the handling of
material with ease and without damage?
5. Where should incoming and outgoing materials be located in the work area?
6. Is a conveyor justified, and if so, shat type would best be suited for the job?
7. Can the work stations for progressive steps of the operation be moved closer
together and the material handling problem overcome by gravity chutes?
8. Can material be pushed from operator to operator along the bench?
9. Can material be dispatched from a central point by means of a conveyor?
10. Is the size of the container suitable for the amount of material transported?
11. Can material be brought to a central inspection point by means of a conveyor?
12. Can a container be designed to make material more accessible?
13. Could a container be placed at the work station without removing the material?
14. Can an electric or air hoist or any other lifting device be used with advantage?
15. If an overhead travelling crane is used, is the service prompt and accurate?
16. Can a tractor-trailer train be used? Could this or an industrial railway replace a
conveyor?
17. Can gravity be utilised by starting the first operation at a higher level?
18. Can chutes by used to catch material and convey it to containers?
19. Would flow process charts assist in solving the flow and handling problem?
20. Is the store efficiently located?
21. Are truck loading and unloading stations located centrally?
22. Can conveyors be used for floor-to-floor transportation?
23. Can waist-high portable material containers be used at the work stations?
24. Can a finished part be easily disposed of?
25. Would a turntable eliminate walking?
26. Can incoming raw material be delivered at the first work station to save double
handling?
27. Could operations be combined at one work station to save double handling?
28. Would a container of standard size eliminate weighing?
29. Would a hydraulic lift eliminate a crane service?
30. Could the operator deliver parts to the next work station when he dispose of
them?
31. Are containers uniform to permit stacking and eliminate excessive use of floor
space?
32. Could material be bought in a more convenient size for handling?
33. Would signals, i.e. lights, bells etc., notifying men that more material is required,
save delay?
34. Would better scheduling eliminate bottlenecks?
35. Would better planning eliminate crane bottlenecks?

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 36. Can the location of stores and stockpiles be altered to reduce handling and
transportation?

Process Analysis
1. Can the operation being analysed be combined with another operation? Can it be
eliminated?
2. Can it be broken up and the various parts of the operation added to other
operations?
3. Can a part of the operation being performed be completed more effectively as a
separate operation?
4. Is the sequence of operations the best possible, or would changing the sequence
improve the operation?
5. Could the operation be done in another department to save the cost of handling?
6. Should a concise study of the operation be made by means of a flow process
chart?
7. If the operation is changed, what effect will it have on the other operations? on the
finished product?
8. If a different method of producing the part can be used, will it justify all the work
and activity involved?
9. Can the operation and inspection be combined?
10. Is the job inspected at its most critical point, or when it is completed?
11. Will a patrol form of inspection eliminate waste, scrap and expense?

Material
1. Is the material being used really suitable for the job?
2. Could a less expensive material be substituted and still do the job/
3. Could a lighter-gauge material be used?
4. Is the material purchased in a condition suitable for use?
5. Could the supplier perform additional work on the material that would improve
usage and decrease waste?
6. Is the material sufficiently clean?
7. Is the material bought in amounts and sizes that give the greatest utilisation and
limit scrap, off cuts and short ends?
8. Is the material used to the best possible advantage during cutting, processing?
9. Are materials used in connection with the process-oils, water, acids,paint, gas,
compressed air, electricity-suitable, and is their use controlled and economised?
10. How does the cost of material compare with the cost of labour?
11. Can the deign be changed to eliminate excessive loss and scrap material?
12. Can the number of materials used be reduced by standardisation?

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13. Could the part be made from scrap material?
14. Can newly developed materials-plastics, hardboard, etc.-be used?
15. Is the supplier of the material performing operations on it which are not necessary
for the process?
16. Can extruded materials be used
17. If the material was of a more consistent grade, could better control of the process
be established?
18. Can a fabricated part be substituted instead of a casting to save pattern costs?
19. Is the activity low enough to warrant this?
20. Is the material free from sharp edges and burrs?
21. What effect does storage have on material?
22. Could a more careful inspection of incoming materials decrease difficulties now
being encountered in the shop?

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