IRJET- Overview of Value Engineering and Value Analysis

International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395-0056
Volume: 06 Issue: 04 | Apr 2019 www.irjet.net p-ISSN: 2395-0072
© 2018, IRJET | Impact Factor value: 7.211 | ISO 9001:2008 Certified Journal | Page 1245
Overview of Value Engineering and Value Analysis
Charudatta Ahire1, Tanmay Chaudhari2, Prabhu Kanjoor3, Aviraj Chavan4, Shital Patel5
1,2,3,4 Students, Department of Mechanical Engineering, Bharati Vidyapeeth College of Engineering,
Navi Mumbai, India
5Guide, Professor, Department of Mechanical Engineering, Bharati Vidyapeeth College of Engineering,
Navi Mumbai, India
---------------------------------------------------------------------***---------------------------------------------------------------------
Abstract - Though the two terms are used synonymously
and philosophy underlying is same unnecessary cost
elimination, there is a difference between the two. The
difference lies in time and the phase of product life-cycle at
which the technique is applied.
Value Analysis is applied to the existing product with aview to
improve its value. It is analysis after the fact and it is a
remedial procedure. Value engineeringisappliedtothedesign
stage and thus ensures prevention rather than elimination.
Key Words: Value Engineering, Value analysis
1. INTRODUCTION
1.1 Value Engineering
Value Engineering (VE) is concerned with new products.
It is applied during product development. The focus is on
reducing costs, improving function or both, by way of
teamwork-based product evaluationandanalysis.Thistakes
place before any capital is invested in tooling, plant or
equipment. Value engineeringshouldbeconsidereda crucial
activity late on in the product development process and is
certainly a wise commercial investment, with regard to the
time it takes. It is strongly recommended you build value
engineering into your new product development process,to
make it more robust and for sound commercial reasons.
1.2 Value Analysis
Value Analysis (VA) is concerned with existing products.
It involves a current product being analyzed and evaluated
by a team, to reduce costs, improve productfunctionorboth.
Value Analysis exercises use a plan which step-by-step,
methodically evaluates the productina rangeofareas.These
include costs, function, alternative components and design
aspects such as ease of manufacture and assembly. A
significant part of VA is a technique called Functional
Analysis, where the product is broken down and reviewed
as a number of assemblies. Here, the function is identified
and defined for each product assembly. Costs are also
assigned to each one. This is assisted by designing and
viewing products as assemblies (or modules). As with
VE, VA is a group activity that involves brainstorming
improvements and alternatives to improve the value of the
product, particular to the customer.
2. ORIGINS OF VALUE ENGINEERING
The technique of value engineering gained considerable
momentum during the Second World War. During the year
1947, Lawrence Miles, who was working for the American
General Electric Company (GEC) became increasinglyaware
of the limitations of traditional cost reductiontechniques. As
a design engineer involved in cost reduction activities, was
able to distinguish between whatisgoodvalueandbadvalue
and realized that very few people had a real grasp of good
and bad value. He established that this is because of
altogether a different approach. He evolveda setofteststhat
could be applied to any product either projected or being
currently produced. Then he persuaded the management to
try this technique which was already subjected to cost
reduction exercises many times. The resultwasencouraging
and soon the G. E. Company started using this to their
products.
The technique soon spread to other American companies
and later to Europe. It is now generally accepted by
management as a powerful tool to ensure that unnecessary
costs are not built into their products. The principle behind
value analysis is that it is a functionally oriented method for
improving product value by relating the various elements of
product worth to their corresponding elementsofcost.Thus
value analysis allows the requiredfunctionstobeperformed
at the minimum cost. To apply principles of value analysis
effectively it is recommended that a systematicandrigorous
approach is to be followed to ensure that no steps are
omitted. Value engineering is a team approach. A team of
people drawn from various specialistareasis foundto be the
best way to handle V. E. projects. The participating team
members are drawn from design, purchase, production,
accounts and marketing coordinated by an engineer
belonging to any one of the above departments.

3. USES OF VALUE ENGINEERING
1. It is a cost prevention as well as cost elimination
technique thus reducing cost of the product.
2. Helps employees for better understanding oftheirjobs
and oriented then towards creative thinking.
3. Balance the cost and performance.
4. Prevents over design of components.
5. Motivates employees to come out with creative ideas.
6. Increases the profits and deflates costs.
7. Helps to satisfy the customer withcompany'sproducts.
4. STEPS IN VALUE ANALYSIS
Figure -1: Steps in Value Analysis
5. WHEN TO APPLY VALUE ANALYSIS
One can expect very good results from application of value
analysis at the proper time and correct phase of product.
Life cycle. V. E. should be applied in case of the following
indications:
1. Company's products are losing in the market and
there is a decline in sales.
2. Company's products are priced higher than the
competitors.
3. New design of products being undertaken.
4. Symptoms of disproportionate increase in cost of
production.
5. Decreasing profitability and return on investment.
6. Company failing to meet its delivery commitment.
6. BENEFITS OF VALUE ANALYSIS
Value analysis is a methodical approach to sharpening the
efficiency and effectiveness of anyprocess.Often,businesses
apply it to the processes used in product creation or service
delivery. Paramount to the value analysis is the practice of
breaking down a process into each individual component
and considering ways to improve that component's value as
measured by cost and importance to the process. General
Electric developed value analysis during the late 1940s.
 Eliminating Costs
A critical advantage to using value analysis is its potential
for reducing costs, which is a benefit that permeates all
advantages of the system. Because value analysis breaks
down a product or service into components,itenablesyou to
analyze each component on its own, evaluating its
importance and efficiency. A value analysis correctly
implemented and applied allowsyoutoidentifycomponents
that are not worth the cost they require and that can be
eliminated or replaced with an alternative. In this manner,
the process for the product or service being analyzed is
refined to be done at less expense.
 Modernizing
The value analysis process often allows users to root out
practices that have grown out of date and can be replaced
with more modernapproaches.Thisisparticularlybeneficial
when something has been done the same way for an
extended period of time. Because theoldwayworksandwas
new when it was instituted, you have had little impetus to
make changes. However, a value analysis, which calls for
questioning every step of a process, can reveal newmethods
that are cheaper, more efficient and sometimes more
effective.
 Design Flaws
Value analysis can uncover design flaws that not only
operate inefficiently but also create problems. In the case of
a product, this could mean a high rate of malfunctioning
items, creating customer complaints and warranty claims
that put a strain on personnel and inventory. It also can lead
to bad publicity and damage to the product brand and the
company producing it. Similarly, in the case of a service,
value analysis can helppinpointdesignflawsinthecustomer
support system that causes service to fall short of customer
expectations.
 Customer Service
Value analysis is oriented to weigh costs and thebenefitto
customers of a product or service. It forces you to consider
every aspect of a process in the context of how it serves the
customer, which could be a consumer or another business.
This means that each step in the process is scrutinized and
questioned from the perspective of the benefit that it
provides the customer. If the benefit to thecustomerissmall
and the step is not necessary for the product or service as a

whole, it can be eliminated, allowing you to streamline your
operation and to reduce the use of resources.
7. TEN COMMANDMENTS OF VALUE ANALYSIS
1. Do not use a component or part that does not
contribute to the value of the product.
2. Do not use a component or part whose cost is not
proportional to its usefulness.
3. Do not provide any features to the component or
finished product that are not absolutely necessary.
4. Accept the change if part of the required quality can
be made out of cheaper and easily available material.
5. If the part of required quality is made by a process or
method costing less, then do use the alternative
process or method.
6. Use standard parts wherever possible.
7. Use proper toolingandmanufacturingmethodstaking
into consideration the quantities,
8. The cost of the component used should be
proportional to its use or function.
9. Use the material, part best suited for the purpose.
10. Purchase the part instead of manufacturing in house,
if suitable supplier can provide the part of good
quality at the reasonable price.
8. CONCLUSIONS
In conclusion, the completion of a functional analysis
exercise will result in a cost-effective design and will
ultimately result in an improved competitive advantage.
Value Engineering and Value Analysis is the systematic
application of recognized techniques by a multi-disciplined
team which identifies the function of a product or services;
establishes a worth for that function; generates alternatives
through the use of creative thinking; and provides the
needed functions to accomplish the original intent of the
project, reliably and at the lowest life-cycle without
sacrificing project requirements for safety, quality,
operations, maintenance and environment.
REFERENCES
[1] http://www.businessdictionary.com/definition/value-
analysis.html
[2] https://en.wikipedia.org/wiki/Value_engineering
[3] http://www.advice-manufacturing.com/Value-
Analysis.html
[4] https://smallbusiness.chron.com/benefits-value-
analysis-41686.html
[5] Industrial Engineering and Production Management by
Martand Telsang.
BIOGRAPHIES
Charudatta Ahire is an aspiring
Mechanical Engineer, currently
studying in Bharati Vidyapeeth
College of Engineering.Hisareasof
interest are Machine design and
Industrial Engineering.
Tanmay Chaudhari is pursuing
Mechanical Engineering from
Bharati Vidyapeeth College of
Engineering. His areas of interests
are Automobiles and Design of
Machines.
Prabhu Kanjoor is in final year of
Mechanical Engineering in Bharati
Vidyapeeth College of Engineering.
His strengths are Bussiness
Management and Mathematics.
Aviraj Chavan is a final year
Mechanical Engineering studentof
Bharati Vidyapeeth College of
Engineering. His areas of interest
are Operations research and
Theory of Machines.
2nd
Author
Photo
4th
Author
Photo
3rd
Author
Photo
1’st
Author
Photo

IRJET- Overview of Value Engineering and Value Analysis

More Related Content

What's hot (20)

Similar to IRJET- Overview of Value Engineering and Value Analysis (20)

More from IRJET Journal (20)

Recently uploaded (20)

IRJET- Overview of Value Engineering and Value Analysis