VALUE ENGINEERING

INTRODUCTIONAs the quality of life improves, demand for

better quality products and services also increases.

The customers all over the world and at all times demand that the services must meet their requirements at the most economical level.

An industry thus can survive only when it provides quality products on suitable rates according to customer’s economy.

This calls for some technique which will reduce the cost without impairing its value i.e utility.

What is Value Engineering?Value engineering is a discipline comprising a

series of techniques aimed at an organized, systematic effort directed.

Analyzing functions of items, products, equipment, processes

It is for the purpose of accomplishing all the required functions at the lowest total cost.

VALUE ANALYSISIt aims at a systematic identification and elimination

of unnecessary costs. It critically investigates and analyses the different

aspects of materials, purchase, design and production of each and every component of the product.

It examines the design, method of manufacturing, material used, function and cost of each and every component.

In order to produce it economically without decreasing utility, function or reliability.

Creative approach for systematic identification of unnecessary cost.

Such additional cost incurred in normal way in the project neither increases its efficiency or quality.

Thus it enables to produce the product with same performance, quality and efficiency with a less overall limit cost.

VALUEIt is the price we pay for a product, process,

material or service required to perform a specific function or service with the required quality and reliability.

It is the least cost that can accomplish an essential function or service with the required quality and reliability.

It can be defined as “the combination of quality, efficiency, price and service which ensures the ultimate economy and satisfaction of the purchaser”

TYPES OF VALUEMeaning of value changes person to person. It is the matter of time, need and situation. Different dept of the same company have

different opinion of the value of the product that their company manufactures.

Designer – With reliabilityPurchaser – with price paid for the itemProduction – What it costs to manufacturer

There are seven classes of Value : EconomicMoraleAestheticSocialPoliticalReligiousJudicial

CLASSIFICATION Economic classification of ValueCost ValueIt is the cost of manufacturing a product or a

component. It is the measure of sum of all costs incurred

in producing the product. The cost value = Raw material cost + tool

cost+ overheads

Use value : It can be called as functional value.It considers the work done, functions

performed by a product. It is the measure of properties, qualities and

features. Cost incurred in order to ensure that the

product performs its intended functions. Esteem ValueIt is the measure of properties and

appearance. It is the cost incurred beyond the use value.

Exchange Value : A product is said to possess exchange value if

the same can be exchanged for another product or money.

AIMS OF VALUE ANALYSISTo maintain the functional objectives of an

item to the desired level. Save money or increase profitTime considerationQuality promotionsStandardizationModify and improve product design

DIFFERENCE – VALUE ANALYSIS & VALUE ENGINEERINGThough the philosophy underlying the two

term is same i.e identification of unnecessary cost , yet they are different.

The difference lies in time and at the stage and type of technique.

VALUE ANALYSIS is the application of a set of techniques to an existing product with a view to improve its value.

It is thus a remedial process.

VALUE ENGINEERING is the application of exactly the same set of techniques to a new product at the design stage – project concept or preliminary design stage.

Value engineering is thus a preventive process.

Modification at design stage save huge amount of money which is required for modification of the product.

When to apply Value analysis?Value analysis contributes to improve

profitability. When new designs are being introduced. Rate of return on investment is reducingReduction in sales of the product

manufactured by company. Competitors’ products are sold at

comparatively cheaper rate. Complaints from the customers regarding

performance of the product.

VE Job PlanProject Selection : The entire process of VE study is

selected either on the basis of total TO, use or estimated value or on the basis of high potential for cost reduction or performance improvement.

Different PhasesInformation PhaseFunction PhaseCreative PhaseAnalytical PhaseEvaluation PhaseRecommendation PhaseImplementation PhaseReview PhaseExtension Phase

INFORMATION PHASEThe information to be collected :Technical dataDrawingsProcessesConstruction ElementsSite detailsTender scheduleAnnual maintenance costMaterial & process costsFlow chartsVendoe detailsDeisred life

FUNCTION PHASE

The function analysis takes the bulk of the time in a VE study ..

Identification of FunctionsCategorization as basic, secondary &

unnecessaryAssignment of costsFunction Inter relationshipsCost worth modelsSelection of high potential functions for

downstream study

CREATIVE PHASE It involves generating a large quantity of

ideas for alternative means of accomplishing the functions identified in function phase.

Maximum idea generation is attained by individual or by other techniques.

Every idea is to be recorded without judging its feasibility in this phase.

ANALYTICAL PHASEFrom here onwards, all the idea generated in the previous phase are subjected to thorough screening with respect to function performance and reliability.

The ideas may be combined, divided, modified, dropped or changed to arrive at final set of alternatives.

That will accomplish the function with the specifications.

If required, ideas can be subjected to practical trials.

EVALUATION PHASETo prepare estimated cost - available

alternatives – to arrive at a comparative evaluation.

The selected alternatives – arranged – considering all aspects – cost on a total life cycle basis.

RECOMMENDATION PHASE The selected alternatives are presented to

top management – with cost and technical ranking.

The major changes in design are described – sketches, drawings or models.

IMPLEMENTATION PHASEIf recommendations – accepted – alternative

design is put through for construction. The VE team maintains a watch on the

process of implementation and helps in process.

REVIEW PHASEThe results of implementation – regarding the

realization of expected cost & other benefits – audited by finance.

Feedback prepared & submitted to top management.

EXTENSION PHASE To extend the application of successful ideas

– other areas – to other effective areas. Benefits – wo any additional VE efforts.

EXAMPLE OF VE STUDYVE study applied for food container for Indian

army. Food container having following features : (Information Phase)

Main Container – Two walled aluminiumInsulating medium – Kapock ( a spl type of cotton)The four ‘Katoras’ – AluminiumInsulating rings & lid – Ebonite (hard rubber)Other components – SeveralWeight – 4.5 kgCapacity – 4.5 litresProduction cost – Rs.186Production/year – 18000 nos.

FUNCTION PHASEBasic functions of food container :

To hold the foodTo prevent heat flow

Secondary functions of food containerTo hold insulating mediumTo enable useTo facilitate openingTo withstand corrosionTo withstand force.

FUNCTION PHASEBasic functions of food container :

To hold the food Rs.19To prevent heat flow Rs. 50 - Rs. 2

(Kapock) + Rs.48 (Ebonite)

Secondary functions of food containerTo hold insulating medium (Kapock) – Rs. 99To enable useTo facilitate openingTo withstand corrosion Rs. 18 for

other thingsTo withstand force.

CREATIVE PHASEMain two functions for creative phaseHow to prevent heat flow?How to hold kapock or make it rigid?More than 200 ideas were produced for these

functions. Many good technical proposals were arrived. Finally developed by the R& D wing of the

defense ministy

IMPLEMENTATIO PHASEIdea was implementedThis used PUF ( Polyurethane foam ) between two

walls of a plastic (Polypropylene) and led to total elimination of aluminium.

Total components reduced from 23 to 6Weight – 1.5 kg ( Earlier 4.5 kg)Saving in weight for the soldier to carry – 3 kgThe reduction in weight could carry 3 kg more

food, medicines or small equipments. VE study was completed with considerable

reduction in cost, in weight. Resulted into superior quality food container.