ME 7213

INDUSTRIAL ENGINEERING
Value Engineering

Outline
Introduction
Value approach
Value analysis techniques
Value engineering
Value Control

Value Engineering

Value Engineering developed as a cost reduction

technique in USA in 1947.

Value differs from both price and cost in the sense

that, it is the cost proportionate to the function.

An organized study of functions to satisfy the users

needs with a quality product at the lowest life cycle
cost through applied creativity.

VALUE

Value

= Desired Function (F)

Overall Costs (C)

How we can improve the value?

 Value =

Function
Cost

To Increase Value

REDUCE

INCREASE

MAINTAIN

Function
What Is Function?
Categories
Primary Function
Secondary Function
Tertiary Function

Types of Values

Cost of Value
Use Value
Esteem Value
Exchange Value

Value Approach
It is an organized system dedicated to every effective means
of identifying and thus eliminating the unnecessary costs.
An unnecessary cost is one which neither adds to quality nor
to life or appearance.
Elements of Value Approach
Value Analysis
Value Engineering

Value Analysis
Introduction
Aims of Value Analysis
Simplify the product
Use new ,cheaper, better materials
Modify and improve the product design
Use efficient process
Reduce product cost
Increase the utility of the product by economical means
Save money or increase profit

Value Analysis Technique

Does it contribute value to the end product?
Is its cost proportionate to its function?
Can some of its features be combined or eliminated?
Would there be a better product?
Can a component be produced by less costly process?
Can one go for an available standard product/component?
Taking into account the quantity required, is the product being
made with proper tools?
Does the product has reasonable selling price?
Can the product/component be procured at less cost from else
where?
Is anybody purchasing the product/component at lower rates?

Value Analysis Procedure

Identify the product (1)

BLAST

Collect Relevant information (2)

Define different functions (3)

Create different alternatives(4)

CREATE
Critically evaluate the alternatives (5)

Develop the best alternative (6)

REFINE
Implement the alternative (7)

Function Analysis System Technique Diagram

(FAST)
FAST Diagrams are used to prioritize the objectives or
functions of the product. Once the objectives are prioritized we
can evaluate the options that would return the most value
based on predetermined value criteria

FAST Diagram
Desired Outcome: Creating a Mouse Free Living Area
Solution: Eliminate Mice
1. List Products and Services that satisfy Desired Outcome.
Create Virus
Use Cats
Kill Mice
Eliminate Food

FAST Diagram
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
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

Use Cat
Create Virus
Kill Mice
Eliminate Food

KILL MICE

Trap Mice
Electrocute Mice
Shoot Mice
Gas Mice
Drown Mice
Use Snake
Poison Mice

POISON MICE
Spray Poison
Inject Poison
Step on Poison
Eat Poison
Shoot Poison

FAST Diagram
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

Use Cat
Create
Virus
Kill Mice
Eliminate
Food

KILL MICE

POISON MICE

Trap Mice
Electrocute Mice
Shoot Mice
Gas Mice
Drown Mice
Use Snake
Poison Mice

Spray Poison
Inject Poison
Step on Poison
Eat Poison
Shoot Poison

EAT POISON
Eat Bait
Drink Bait
Smell Bait

FAST Diagram
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
KILL MICE
Trap Mice
Electrocute
Mice
Shoot Mice
Gas Mice
Drown Mice
Use Snake
Poison Mice

WHY
POISON
MICE

Spray Poison
Inject Poison
Step on Poison
Eat Poison
Shoot Poison

EAT
POISON

Eat Bait
Drink Bait
Smell Bait

EAT
BAIT
Attract Mouse
Trap Mouse

ATTRACT
MOUSE

FAST Diagram

HOW
ELLIMINATE
MICE

WHY
KILL MICE

POISON
MICE

EAT
POISON

EAT
BAIT

ATTRACT
MOUSE

18

Advantages
Faster cost reduction techniques
Requires little expenditure
Reduces production cost
Adds sales income of the product

Value Engineering
Application of the concept of value analysis at the design or
pre-manufacture stage of the component part with a view to
cut down the unnecessary costs with out impairing the
function or utility of the product.

Six Step Value Engineering Job Plan

Information
Phase

Clearly identify the problem(s) to be solved, and

gather information on the background, functions and
requirements of the product, process, or system.

Creativity
Phase

Brainstorm ideas on how to improve the high cost,

broken, or inadequately performed key functions.

Evaluation
Phase

Screen ideas for acceptance, score remaining ideas

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

Planning
Phase

Plan how to sell ideas to management, identify key

recommendations, plan management presentation.

Reporting
Phase

Give oral presentation to management, or develop

written report.

Implementation
Phase

Get management approval for go-ahead, make

management plan, make assignments, implement,
follow-up.

VALUE ANALYSIS vs. VALUE ENGINEERING

VALUE ANALYSIS

Indicates application on
the product that is into
manufacturing.
All factors come
together including
workers,
subcontractors,
engineers to make a
team with total
experience and
knowledge

VALUE
ENGINEERING

Indicates application
on the product at its
design stage.
It is always done by a
specific product design
(engineers) team.

VALUE ANALYSIS vs. VALUE ENGINEERING

VALUE ANALYSIS

It may change the

present stage of the
product or operation
It is worked out
mostly with help of
knowledge and
experience

VALUE
ENGINEERING

the changes are

executed at the initial
stages only.
It requires specific
technical knowledge.

Value Control
Controlling value of a. product, either by reducing
its cost for the given function or by increasing its
utility for the given cost