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Value Engineering and Value

Analysis
Overview

What is Value Engineering?


How is VE Applied?
When is it used?
What is Function Analysis and FAST?
Definitions
Value Engineering is a technique applied to
identifying optimum value solutions during
new product development.

Value analysis is a technique applied to


improving existing products, processes or
services. The objective is usually to
reduce cost, but may equally or
simultaneously be to improve
performance or quality.
-LD Miles
The Key Points of VA / VE
Applying formal work plans.
A team approach.
Specific definition of functions.
The simultaneous look at functions and costs.
Control of the analysis process.
Quantifiable results
What is VALUE ?
Value is the relationship between the defined
function the customer requires and the costs
incurred to provide that function.
Cost Value
Use Value
Esteem Value
Exchange Value
Value Engineering
Value Engineering is
Reliability
Maintainability
Producibility
Human Factors
Parts Availability
Cycle Time
Quality
Weight Reduction
Why use Value Engineering?

Save Time
Save Money
Build Teamwork
Improve Quality
Satisfy Customer
When is VE used
Existing part/product cost is high
Existing technology is complex/old though
simpler means are available
There is a need to release a cheaper product
by cutting down some of the existing feature
The existing customer demands a minimal
increment in product features that are in use
There is a need to cut down the manufacturing
cycle time/cost
When is VE used
Value Engineering is used to determine the best
design alternatives for Projects, Processes,
Products, or Services
Value Engineering is used to reduce cost on existing
Projects, Processes, Products, or Services.
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 a powerful tool used to identify
problems and develop recommended solutions.
Benefits of VE
Decreasing costs
Increasing profits
Improving quality
Expanding market share
Saving time
Solving problems
Using resources more effectively
VEs Weaknesses
Successful VE results are dependent on the quality
of information brought to the VE workshop for
evaluation.
VE is not time oriented, but, product oriented. Thus,
improvements in production activities are not readily
recognized.
There are many misunderstandings and biases
against VE that have been built up over time due to
misuse of the methodology.
It cheapens the product without improving it.
VE is only used for cost reduction.
Value Engineering Research
Questions and Check Sheet
1. Can it be eliminated without impairing
function or reliability?
2. Does it cost more than its worth?
3. Does it do more than is required? Are there
unnecessary features?
4. Is there something better with which to do
the job?
Value Engineering Research
Questions and Check Sheet
5.Can it be made by a less costly method?
6. Can a standard item or specialty product be
used?
7. Could a less costly manufacturing technique
be used?
8. Should different tooling be used?
9.Can someone else provide it at less cost
without affecting dependability?
Potential Savings from VE
No engineering Document Revision
Change Revision
Re-Test/Re-qualification
Drawings Released Tooling Changes

Net Savings from VE

Total Cost of VE Implementation

VE Implementation
beyond this point
results in a net loss.
Engineering
&Production
Concept Design Release Production
What is value?
VALUE = What we get out of something
What we put into it

VALUE = Quality, reliability, appeal, etc = Benefits


Cost, time, mass, energy, etc. Resources

VALUE = Worth = Performance


Cost Cost

Delivery of necessary project functions while achieving


best balance between project performance and project
costs.
Value = Function
Cost

To Increase Value

F F F F
C C C C

REDUCE INCREASE MAINTAIN


Competitive Advantage

Quality is defined as conformance to


specification.
Function
Value is defined as:
Cost
You cant have one without the other!

Competitive Advantage = Quality + Value


Unnecessary Cost
Any cost that can be removed without
impairing the essential
Quality
Performance
Customer requirements
Reliability
Maintainability
Marketability
Schedule
Criteria for Evaluating Value
COST PERFORMANCE
Initial cost Quality
Operations Stakeholder
Maintenance requirements
Return on Safety
Investment Level of service
Life cycle Environmental
Replacement Impacts
Cost of capital Schedule Impacts
Operability
Reliability
Maintainability
Generalized Procedure for VA/VE

What is it? Information Phase


What does it do?
What does it cost? Speculation Phase How else can the job
be done?
Is the change better? At what cost?
How much better? Analysis Phase
Why?
Review with depts and
Decision Phase suppliers
Audit effectiveness Select best alternative
Use experience Get approval
Evaluation Phase
Provide feedback Prepare specifications
Six Step Value Engineering Job Plan
Information Clearly identify the problem(s) to be solved, and
Phase gather information on the background, functions and
requirements of the product, process, or system.

Creativity Brainstorm ideas on how to improve the high cost,


Phase broken, or inadequately performed key functions.

Screen ideas for acceptance, score remaining ideas


Evaluation on a scale and group ideas into categories. Develop
Phase design scenarios, and selection criteria. Rate and
rank ideas.

Planning Plan how to sell ideas to management, identify key


Phase recommendations, plan management presentation.

Reporting Give oral presentation to management, or develop


Phase written report.

Get management approval for go-ahead, make


Implementation
management plan, make assignments, implement,
Phase
follow-up.
The Value Methodology Job Plan
INFORMATION
PHASE FUNCTION
ANALYSIS PHASE CREATIVE
PHASE
EVALUATION
PHASE DEVELOPMENT
Complete data
package PHASE PRESENTATION
Identify functions PHASE
Modify scope Create quantity of
Classify functions ideas by function
Rank and rate
Develop function
alternative ideas
- What is the models - Conduct benefit
Select ideas for Present oral report
problem or Cost functions What else can analysis
opportunity? development
Establish value perform the Complete technical Prepare written
Why do you index function? data report
consider it a problem Where else can
Select functions for Create
or opportunity? the function be How must each idea implementation Plan
study
Why is a solution performed? work?
Prepare final Who should be
necessary? How else can the What is the proposals sold?
What is the cost? function be feasibility of
What is the task How should the
performed? implementation?
function? ideas be presented?
What will be the
What are the basic What was the
cost? How can
functions? problem?
Develop a plan to disadvantages be
When will we
gather project data What are the overcome? What is the new
breakeven?
supporting functions? way, savings, and
Investigate the Why is the new way
What is the best better? benefits?
project overall alternative?
Will it meet all the How will it satisfy
Verify data our customers?
requirements without
compromise of form, What is needed to
fit, or function? implement the
What are the annual proposals?
PRE-
savings? Who is
STUDY
POST- responsible for
implementing the
STUDY change?
- Collect user/ customer attitudes What is to be included in the study?
Complete data files Who is best able to study the problem?
Determine evaluation factors What are the current and future Verify Did the new way work? - Complete/
requirements of the subject under study? accomplishments implement
Scope the study How much did it
Present results cost/save? changes
Build data models What type of impediments will the team
Advertise outcomes Did the change meet - Monitor
Determine team composition come against?
customers expectations? status

Property of OSC VE Office


Information Phase-Fact Finding
What do you need to know about the problem
that you dont know now?
What facts are known?
What are the requirements of the
system?
Are these facts, opinions,
assumptions, or prejudices?

Where or how can information be obtained?


Function Analysis
Shifts the problem-solving focus away from the
items toward the functions

Function need be defined by two words: an Active


Verb and a Measurable Noun

The verb defines the required action; the noun


tells what is being acted on

The more abstract the function definition, the


greater the opportunities for finding creative
alternatives
Function Analysis
FAST (Function Analysis System Technique) - A
logic diagram to describe how a system works.
Examples of Verbs and Nouns:
Active Verbs Nouns
Transmit Signal
Irradiate Information
Project Data
Dissipate Heat
Generate Radiation
Convert Current
Receive Light
Reflect Image
Provide
(passive!)
Functions of a No. 2 Pencil
Description Function
Pencil Makes Marks
Eraser Removes Marks
Band Secure Eraser
Improve
Appearance
Body Support Lead
Transmit Force
Accommodate
Grip
Display
Information
Paint Protect Wood
Improve
Appearance
Lead Makes Marks
FAST Example
Functional Analysis System Technique
(FAST) Diagram
1. List Desired Outcome and Requirements
of Customer in Verb Singular Noun Form

Mouse Free Living Area = Eliminate Mice


FAST Diagram
2. List Products and Services that satisfy
Desired Outcome (Q4). These Products or
services answer WHAT is desired of the
system.
Use Cat
Create Virus
Kill Mice
Eliminate Food
FAST Diagram
3. List all functions in Verb Noun format and
processes that would satisfy or produce each
product or service in the previous step.
Generate all functions, basic, secondary,
support without regard to relationship.
Kill Mice
Trap Mice
Electrocute Mice
Shoot Mice
Gas Mice
Drown Mice
Use Snake
Poison Mice
FAST Diagram
4. Select each function from the previous step starting
with what you believe to be the basic function.
Ask HOW this basic function might be accomplished.

HOW
Eliminate
Mice
KILL MICE POISON MICE

Use Cat Trap Mice Spray Poison


Create Electrocute Mice Inject Poison
Virus Shoot Mice Step on Poison
Kill Mice Gas Mice Eat Poison
Eliminate Drown Mice Shoot Poison
Food Use Snake
Poison Mice
FAST Diagram
5. Continue to answer the HOW and place the answer
directly to the right.
Related functions that are at the same level, stack
above or below the CRITICAL PATH
HOW
Eliminate
Mice
KILL MICE POISON MICE EAT POISON

Use Cat Trap Mice Spray Poison Eat Bait


Create Electrocute Mice Inject Poison Drink Bait
Virus Shoot Mice Step on Poison Smell Bait
Kill Mice Gas Mice Eat Poison
Eliminate Drown Mice Shoot Poison
Food Use Snake
Poison Mice
FAST Diagram
6. Continue to answer the HOW and place the answer
directly to the right.
Related functions that are at the same level, stack
above or below the CRITICAL PATH
HOW WHY
POISON EAT EAT ATTRACT
KILL MICE MICE POISON BAIT MOUSE

Trap Mice Spray Poison Eat Bait Attract Mouse


Electrocute Inject Poison Drink Bait Trap Mouse
Smell Bait
Mice Step on Poison
Shoot Mice Eat Poison
Gas Mice
Shoot Poison
Drown Mice
Use Snake
Poison Mice
FAST Questions
How do we perform the function?
Why do we perform the function?
When do we perform the function?
What is the Desired Outcome?
Where do we perform the function?
Who performs the function?
The Technical FAST Model
HOW WHY?
?
INDEPENDENT
FUNCTION
DEPENDENT
(SUPPORTING) FUNCTION

OBJECTIVES MINOR CRITICAL PATH


OR INDEPENDEN
SPECIFICATION T FUNCTION INPUT
OUTPU S
B
(concept)
T
MISSION,
LOWEST
OBJECTIVE, D E
BASIC DEPENDEN A (AND) ORDER
OR HIGHER T FUNCTION FUNCTION
FUNCTION
ORDER
FUNCTION
(concept) ACTIVITY 1
C ACTIVITY
2

W MAJOR CRITICAL
H PATH
SCOPE OF THE PROBLEM UNDER STUDY
E LOWER ORDER
N HIGHER ORDER FUNCTIONS
FUNCTIONS
Critical Path
F.A.S.T MODEL
HOW OVERHEAD WHY
PROJECTOR

(concept)

CONVEY PROJECT GENERATE CONVERT RECEIVE TRANSMIT


Information IMAGE LIGHT ENERGY CURRENT CURRENT
(concept)
Supporting FunctionsF.A.S.T MODEL
OVERHEAD PROJECTOR

HOW WHY

(concept)

W PROJECT GENERATE CONVERT RECEIVE TRANSMIT


CONVEY
IMAGE LIGHT ENERGY CURRENT CURRENT
H Information
E GENERATE
N FOCUS (concept) HEAT
IMAGE

SUPPORT DISSIPATE
IMAGE HEAT

AMPLIFY
GENERATE
IMAGE
NOISE
Objectives or Specifications
F.A.S.T MODEL
OVERHEAD PROJECTOR
HOW WHY

FACILITATE
PORTABILITY
OBJECTIVES OR
SPECIFICATIONS
ALLOW
SAFETY

(concept)

W CONVEY PROJECT GENERATE CONVERT RECEIVE TRANSMIT


Information IMAGE LIGHT ENERGY CURRENT CURRENT
H
E GENERATE
N FOCUS (concept) HEAT
IMAGE

SUPPORT DISSIPATE
IMAGE HEAT

AMPLIFY
GENERATE
IMAGE
NOISE
Add Scope LinesF.A.S.T MODEL
HOW OVERHEAD PROJECTOR WHY

FACILITATE
PORTABILITY
OBJECTIVES OR
SPECIFICATIONS
ALLOW
SAFETY
OUTPUT INPUT
(concept)

W CONVEY PROJECT GENERATE CONVERT RECEIVE TRANSMIT


Information IMAGE LIGHT ENERGY CURRENT CURRENT
H
E GENERATE
N FOCUS (concept) HEAT
IMAGE

SUPPORT DISSIPATE
IMAGE HEAT

AMPLIFY
GENERATE
IMAGE
NOISE
FAST Example - Overhead Projector
HOW? WHY?
F.A.S.T MODEL
OVERHEAD PROJECTOR
FACILITATE
PORTABILITY
OBJECTIVES OR
SPECIFICATIONS
ALLOW
SAFETY
OUTPUT INPUT
(concept)

W CONVEY PROJECT GENERATE CONVERT RECEIVE TRANSMIT


Information IMAGE LIGHT ENERGY CURRENT CURRENT
H
E GENERATE
N FOCUS (concept) HEAT
IMAGE

SUPPORT DISSIPATE
IMAGE HEAT

AMPLIFY
GENERATE
IMAGE
NOISE
Creativity Techniques- Brainstorming
Generate a large number of ideas - quantity,
not quality.
Free-wheeling is encouraged - Listen and
improve on the ideas of others.
Dont criticize - No evaluation of ideas
Encourage everyone to participate
Record all ideas presented
Time to let ideas incubate should be allowed.
Select an appropriate meeting place
Function Analysis
Function Analysis is the key to
understanding the problem.

Brainstorm all possible functions

Next, build a FAST Model to help


identify any missing functions.
Other tools that can work with VE
Activity Based Costing (ABC)
Cost Function Matrix
Failure Modes and Effects Analysis (FMEA)
Risk Analysis Tools
Other traditional quality tools such as pareto
analysis, ishakawa diagrams, scatter diagrams,
etc.
Function analysis is the key to understanding
the system and what it does. Function analysis
enables you to analyze the problem from a
system perspective.
The Planning & Reporting Phases
Planning
What is recommended?
Who has to approve it?
What is the implementation plan?
Are mockups or prototypes required to verify
final decisions?
What are the cost, schedule, and deliverables?
ROI?
ACTION PLAN GUIDELINES
What needs to be done?
Identify the actions needed to solidify the
proposals.
Who should be assigned the action?
Assign a team member.
Assign a completion date for the action.
When should the task be completed?
Plan regular team status meetings.
Anticipate 4-6 weeks to complete the actions.
Implementation Planning
Ideas must be planned and managed to ensure
implementation.
Proposed actions should be managed like a
project with specific end products, defined start
and end dates, and funding limits.
The Planning & Reporting Phase
Reporting
Give oral presentation.
Support it with written executive brief.
Be clear, concise, and positive.
Anticipate roadblocks
Analysis of Each Component
Can any part be eliminated without impairing the
operation of the complete unit?
Can the design of the part be simplified to reduce
its basic cost?
Can the design of the part be changed to permit
the use of simplified or less costly production
methods?
Can less expensive but equally satisfactory
materials be used in the part?
Design simplifications frequently are more
apparent than is possible under the original
design
The Value Engineering Checklist
1. Can the item be eliminated?
2. If the item is not standard, can a standard item
be used?
3. If it is a standard item, does it completely fit the
application, or is it a misfit?
4. Does the item have greater capacity than
required?
5. Can the weight be reduced?
6. Is there a similar item in inventory that could be
substituted?
7. Are closer tolerances specified than are
necessary?
The Value Engineering Checklist
8. Can you make the item less expensively in
your plant? If you are making it now, can you
buy it for less?
9. Can cost of packaging be reduced?
10. Are suppliers contributing suggestions to
reduce cost?
Concluding Remarks
The design stage provides the greatest
opportunity to reduce costs
REMEMBER !
Value Analysis is a continuous process