VALUE ENGINEERING

Concept of Value

Concept of Value Desirable

Concept of Value Undesirable

History of Value Engineering

Value engineering began at General Electric Co.

during World War II. Because of the war, there were shortages of skilled labour, raw materials, and component parts. Lawrence Miles and Harry Erlicher at G.E. looked for acceptable substitutes. They noticed that these substitutions often reduced costs, improved the product, or both. What started out as an accident of necessity was turned into a systematic process. They called their technique value analysis.

VE Timeline
VE adopted by NASA ofc of facilities. Larry Miles assigned to cost reduction at GE Navy adds VE incentive clause VE included in ASPR for military procurements

Larry Miles takes VE to Japan.

Larry Miles dies.

DOE Order 4010.1

1947

1952 1955 VE a success, training of employees and suppliers begins

1959 1962 1964 SAVE formed in Wash. DC on Oct.22, 1959 Army Corps of Engineers begins VE training Charles Bytheway invents FAST Modeling

1969 1970 First VE incentive clause published in Fed. Register, GSA staffs for VE.

1984 1985 1988 1990 Application of VE OMB introduced in circular ACPWD in 131 India published requiring all Federal Agencies to use VE to identify and reduce nonessential costs.

1993

Today

OMB circular A131 passes Sunset Review

Value Engineering the Forgotten Technique

Don't look now, but an old discipline (value analysis/value engineering) is on the comeback trail. Originally called merely VA by its inventor, Larry Miles, an engineer in GE's purchasing operation in 1947, VA/VE uses a value equation that says value is equal to function divided by cost. If, for example, the buyer wants to get more item value, he/she needs to either increase the item's functionality at the same time he/she is containing cost; or he/she needs to reduce cost while holding or improving its functionality. Either way, the result is more value for the customer (Excerpt from Purchasing Magazine "Value Analysis makes a comeback," Jim Morgan, November 20, 2003.").

Value Engineering the Forgotten Technique

Value Engineering is truly the "Forgotten Technique." However, over 50 years later, it has gained recognition in private industry and governmental agencies as an indispensable tool for cost reduction, improved product development and product re-engineering. It is also used to improve organizational performance and cost effectiveness as well.
The heart of VA/VE is function analysis and "Function Analysis Systems Technique" that sets it apart from other lean methodologies by opening the door to creative problem solving that capitalizes on an interdisciplinary teams creative juices to arrive at truly value added, cost effective solutions to problems ranging from design problems, quality and reliability problems, to organizational problems resulting in increased value and performance for the customer and the organization.
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What is Value Engineering?

Value

Engineering (VE) is an intensive, interdisciplinary problem solving activity that focuses on improving the value of the function that are required to accomplish the goal, or objective of any product, process, service or organization. Engineering is a creative, organized approach whose object is to optimize cost and/or performance of a facility or system.

Value

How and When is Value Engineering Applied?

How
n Interdisciplinary Team n Formal Job Plan n Trained Facilitators n Function Analysis/FAST n Documentation

When
n Problem Solving/Decision
Analysis n Strategic Planning n New Product Development n Re-engineering efforts

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When Value Engineering is Used

Value Engineering is used to determine the best

design alternatives for projects. Value engineering is used to reduce cost on existing Projects. Value Engineering is used to improve quality, increase reliability and availability and customer satisfaction. Value Engineering is also used to improve organizational performance. Value Engineering is used to improve schedule. Value Engineering is used to reduce risk. Value Engineering is a powerful tool used to identify problems and develop recommended solutions.

Potential Savings from VE

No engineering Change Revision Document Revision

Re-Test/Re-qualification Drawings Released

Net Savings from VE

Tooling Changes

Total Cost of VE Implementation

VE Implementation beyond this point results in a net loss.

Engineering &Production Release

Concept

Design

Production

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Potential Savings from VE

Why use Value Engineering?

Save Save Build Improve Satisfy Time Money Teamwork Quality
Customer

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