Value Engineering

Presentation by:Shubhodeep Guha Roy

Atrayee DuttaPuja KumariJemi Tigga

Eshity Bhengra

Definition

• Value engineering (VE) is a systematic and organized approach to provide the necessary functions in a project at the lowest cost.

• It promotes the substitution of materials and methods with less expensive alternatives, without sacrificing functionality.

• It is focused solely on the functions of various components and materials, rather than their physical attributes.

• Also called value analysis.

The Job Plan

• Value engineering is often done by systematically following a multi-stage job plan.

• Depending on the application, there may be four, five, six, or more stages.

Four basic steps in the job plan are:

• Information gathering - This asks what the requirements are for the object. Function analysis, an important technique in value engineering, is usually done in this initial stage. It tries to determine what functions or performance characteristics are important. It asks questions like;

What does the object do? What must it do?What should it do? What could it do?What must it not do?

• Alternative generation (creation) - In this stage value engineers ask;

What are the various alternative ways of meeting requirements?

What else will perform the desired function?

• Evaluation - In this stage all the alternatives are assessed by evaluating how well they meet the required functions and how great the cost savings will be.

• Presentation - In the final stage, the best alternative will be chosen and presented to the client for final decision.

How it works

VE follows a structured thought process to evaluate options as follows.

Gather information• What is being done now?• Who is doing it?• What could it do?• What must it not do?Measure• How will the alternatives be measured?• What are the alternate ways of meeting requirements?• What else can perform the desired function?

Analyze• What must be done?• What does it cost?Generate• What else will do the job?Evaluate• Which Ideas are the best?Develop and expand ideas• What are the impacts? • What is the cost? • What is the performance?Present ideas• Sell alternatives

Diagram showing Value Engineering

If a value analysis approach is followed the company should reap huge benefits

including:

A reduction in costs but not in quality

Improving product quality and attracting more customers

Increased sales might lead to economies of scale and either increase profits or reduce selling prices

The company may decide to increase selling prices if the quality has improved

Thus it can be concluded that...

• Value analysis is not an exact science, and there is no one approach that fits all situations.

• Companies operate in a dynamic environment and need to be able to accommodate the emergence of new products, new competitors, and changing economic circumstances.

• Value analysis is simply one of the many tools available to companies when balancing costs, price and profit.