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Overview«..Overview«..
Value Analysis (VA) is also known as VALUE EngineeringValue Analysis (VA) is also known as VALUE Engineering
(VE), Value Assur ance and VALUE Management (VM). It is(VE), Value Assur ance and VALUE Management (VM). It is
an appr oach for impr ovement in the per formance of thean appr oach for impr ovement in the per formance of the
pr oducts, systems or pr ocedures and reduction or pr oducts, systems or pr ocedures and reduction or
elimination of cost, without aff ecting the function.elimination of cost, without aff ecting the function.
Value analysis as an or ganization creative appr oach whichValue analysis as an or ganization creative appr oach which
has for its pur pose the eff icient identif ication of has for its pur pose the eff icient identif ication of
unnecessar y cost, i.e., cost which pr ovides neither unnecessar y cost, i.e., cost which pr ovides neither quality, nor use ,nor lif e, nor appear ance, nor customer quality, nor use ,nor lif e, nor appear ance, nor customer
f eatures. VA is normally used in the area like customer f eatures. VA is normally used in the area like customer
service plans in banks, slum developmentservice plans in banks, slum development..
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ValueValue
Value is the customer's subjective evaluation, adjusted for Value is the customer's subjective evaluation, adjusted for
cost, of how well a product meets or exceeds expectations.cost, of how well a product meets or exceeds expectations.
Right combination of Right combination of
Product qualityProduct quality
Fair priceFair price
GoodsGoods
ServicesServices
VALUE
PRICE
FLEXIBILIT Y
QUALITY
SPEED
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Characteristics:Characteristics:--
Value links the customer, firm and operationValue links the customer, firm and operation
management systemmanagement system
Customer specific, not market or product specificCustomer specific, not market or product specific
Combines 4 major attributesCombines 4 major attributes
Importance of attributes differ for different customersImportance of attributes differ for different customers Value today may not be tomorrow. Its dynamicValue today may not be tomorrow. Its dynamic
Value EquationValue Equation
Defines & expresses value as a comparison of what aDefines & expresses value as a comparison of what a
product can do for the customer against what it costs to him. product can do for the customer against what it costs to him.
Value = Performance / CostValue = Performance / Cost
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Importance of Value EquationImportance of Value Equation
It identif ies four major components of It identif ies four major components of
value i.e. cost,quality,speed and flexibilityvalue i.e. cost,quality,speed and flexibility
It identif ies in various ways f irm can create It identif ies in various ways f irm can create value for customer s and compete invalue for customer s and compete in
mar ketplacemar ketplace
Components of value equation canComponents of value equation can
change to enhance value for customer change to enhance value for customer
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Value driven competitionValue driven competition
Approaches«.Approaches«.TimeTime
PlacePlace
No matter No matter Mass customizationMass customization
Risk reductionRisk reduction
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O bjectives & Road blocksO bjectives & Road blocks
Value AnalysisValue Analysis
To provide better value to a product/serviceTo provide better value to a product/service
To improve company¶s competitive positionTo improve company¶s competitive position
To ensure that every element of cost(To ensure that every element of cost(labour labour, materials,, materials,
suppliers, service) contribute proportionately to thesuppliers, service) contribute proportionately to thefunction of the product.function of the product.
R OAD BLOCK SR OAD BLOCK S
We have done it this way for 15yrs.why change now?We have done it this way for 15yrs.why change now?
Our business is differentOur business is different
We don¶t do things that way in our firmWe don¶t do things that way in our firm
It is jolly goodIt is jolly good idea.Letsidea.Lets someone try firstsomeone try first
It has been tried beforeIt has been tried before--in fact we do it all times.in fact we do it all times.
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Applications«. Applications«.
Value analysis in Pr oductionValue analysis in Pr oduction
Value analysis in Pur chasingValue analysis in Pur chasing
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VALUE ENGINEERING PROCESS
THE JOB PLAN IN FOLLOWING SEVEN STEPS:
1. GENERAL PH ASE
2. INFORMATION PH ASE
3. FUNCTION PH ASE
4. CREATION PH ASE5. EVALUATION PH ASE
6. INVESTIGATIN PH ASE
7. RECOMMENDATION PH ASE
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General PhaseGeneral Phase
5 techniques associated in this phase:5 techniques associated in this phase:
Good human relationsGood human relations
Inspire team wor kInspire team wor kWor k on specif iesWor k on specif ies
Over come r oad blocksOver come r oad blocks
Apply good business judgments Apply good business judgments
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Lack of information:Lack of information:
Most people who design a pr oduct are quite often not tooMost people who design a pr oduct are quite often not toosure of the real needs of a user and usually over sure of the real needs of a user and usually over--designdesignthe pr oduct by pr oviding it with f eatures that the user justthe pr oduct by pr oviding it with f eatures that the user justdoes not use.does not use.
The wor ld is advancing exceedingly fast and new The wor ld is advancing exceedingly fast and new technology, new pr oducts, new materials and new technology, new pr oducts, new materials and new pr ocesses are coming up almost ever y day. They create pr ocesses are coming up almost ever y day. They create obsolescence in respect of the old pr ocesses. Costsobsolescence in respect of the old pr ocesses. Costswhich were considered satisfactor y yester day become which were considered satisfactor y yester day become
unnecessar y today. In the face of competition the r oyalunnecessar y today. In the face of competition the r oyalr oad to r uin is to adopt the methods of yester day to the r oad to r uin is to adopt the methods of yester day to the business of today.business of today.
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Information Phase An attempt is made to assess the potential of value impr ovement.
pr oject is studied in detail and all impor tant fact are gathered and
considered. in this phase, fact which are in the form of technical
specif ications or envir onmental specif ications down. development
are considered. also, the engineering dr awings, pr oductionsample, pr oduction data are all kept in mind. The cost data and
wor k specif ications are secured. consumer pref erences are jotted
and testing are studied. quantities and scr ap are taken in account.
a relationship is to be established between cost and specif ication
or requirements.
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Function PhaseFunction Phase
Here the pr oduct is def ined in term of its
functions, in term of its per formance
expectations. These functions are co-
related with cost and their wor th.
Most of the times, an attempt is
made to def ine functions with only two
wor ds --- A ver b and noun. It makes the def inition pretty shar p. It intr oduces an
element of r ationality into the exer cise, by
trimming the f rills.
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Some function Def initionsSome function Def initionsProduct Function
Tea cup Hold tea (liquid)
Light bulb Emit light
Gas lighter Provide ignition
Fan regulator Regulator speed
Match box Provide ignition
Mirror Reflect light
Brake Arrest motion
screwdriver Transfer torque
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Another technique which is used under this Another technique which is used under thisphase is to evaluate function relationship byphase is to evaluate function relationship by
r anking function in descending or der of r anking function in descending or der of impor tance. Simultaneously relative value of impor tance. Simultaneously relative value of their impor tance determined.their impor tance determined.
Paired comparison method is fair ly commonPaired comparison method is fair ly common
amongst resear cher s. it determines numericalamongst resear cher s. it determines numericalvalue of various functions. Here pair s of functionvalue of various functions. Here pair s of functionare compared to know their impor tance and toare compared to know their impor tance and toassess basic or secondar y. Gener ally aassess basic or secondar y. Gener ally a
pr oduct¶s basic function is one ,but it maypr oduct¶s basic function is one ,but it maypossess sever al secondar y functions. Basicpossess sever al secondar y functions. Basicfunction can be restated in more ways than one. function can be restated in more ways than one.
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Creation Phase
Lack of ideas
Most of use want previously tried out materials, designs
processes and procedures. We jump at the first ideas that work
and usually do not bother to find out if better methods are
possible. These days to give a fillip to creative ideas,
brainstorming technique are used. To nurture creativity, positive
thinking is established. Creative ideas are also developed by anumber of check-lists and idea-stimulators.
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Investigation PhaseIt is vir tual extinction of the previous phase. ideas
accepted are here conver ted into acceptable and
wor kable solution to per form the desired function
at the least cost. It may be necessar y tostandar dize, to consult vendor s and specialists,
and to use specialty pr oducts, pr ocesses and
pr ocedures.
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Recommendation Phase:Recommendation Phase:
It is the ultimate phase of VA. Finally selected value
alter native here in presented for implementation on
acceptance. Acceptance is the key to success of VA. Sometimes, acceptance is a result of presentation or a
combination of both. All the relevant data is kept before
management to enable it to take suitable decision.
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Benef its by Value Analysis(VA)Benef its by Value Analysis(VA)
Better pur chasing techniqueBetter pur chasing technique
Better supplier sBetter supplier s
Design reDesign re--evaluation & modif icationevaluation & modif icationBetter manufacturingBetter manufacturing
methods,packaging,material handlingmethods,packaging,material handling
Lower oper ating costs, maintenance costLower oper ating costs, maintenance cost& oper ating expenses& oper ating expenses
Standar dization & substitutionStandar dization & substitution
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Value Analysis TechniquesValue Analysis Techniques
Design analysis
Checklists
Brainstorming
Price analysis
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Alter natives of job plan: Alter natives of job plan:
Instead of the Recommendation phase Instead of the Recommendation phase method we can adopt FAST or DARSIRI,method we can adopt FAST or DARSIRI,which is an acr onym for data Collectionwhich is an acr onym for data Collection
(D), Analysis (A), Recor d of ideas (R),(D), Analysis (A), Recor d of ideas (R),Speculation (S), Investigation (I),Speculation (S), Investigation (I),Recommendation (R), and ImplementationRecommendation (R), and Implementation(I) .(I) .
FAST (Functional Analysis System FAST (Functional Analysis System Techniques)Techniques)
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Fast as VE Technique:Fast as VE Technique:This technique is developed by Charles WThis technique is developed by Charles W
Bytheway(1965), FAST is a visual representation of Bytheway(1965), FAST is a visual representation of functions and identifies the areas of greatestfunctions and identifies the areas of greatestimpact of these function on costs. It is animpact of these function on costs. It is aninteraction between function and cost.interaction between function and cost.
The following step are followed for constructionThe following step are followed for construction
FASTFAST1)1) Use verb and noun for describing functions.Use verb and noun for describing functions.
2)2) These functions are written on small cards.These functions are written on small cards.
3)3) First select the basic function card. :First select the basic function card. :
(i)(i) How is the function performed?How is the function performed?
(ii)(ii) Why is it performed?Why is it performed?(iii)(iii) When is it performed?When is it performed?The logical sequence of function (basic andThe logical sequence of function (basic andsecondary) generate a critical function path. Itsecondary) generate a critical function path. Itconsist of only critical functions.consist of only critical functions.
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Case studyCase study
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Data
collected
Function, cost current(450 amps) C\section, other
conductors and their costs, etc.
Function Conduct Electricity
Cost 52 units per cable.
Worth 17 Units (steel cable with increased cross section could also
conduct at cheaper cost).
Creative
phase
Ideas to use cast iron, steel, aluminum, Nicro-alloys, silver,
etc. generated.
Evaluation After analyzing different ideas aluminum was considered
best and investigated regarding its feasibility, economy and
related problems like bi-metallic corrosion between
aluminum and brass lugs ets.Recomme
ndation
Aluminum cable of 120mm2 *1.5meters with zinc alloy
sleeves and brass lungs recommended.
Saving 30 units per cable (57% cost difference between copper and
aluminum+ cost increase due to addition of zinc alloysleeves .=30*50,000; =15 lakh units er ear
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data collection=====function, cost
function============fur niturecost=========2000RS
wor th=======chipper than ir on just 450RS
creative phase========ideas to use f iber instead of ir on
evaluation===========after analyzing diff erent ideas f iber was considered best
recommendation=======f iber is polymer plastic recycle and
made in just cost of 450 RS
saving===============1550 RS
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Organizational Aspects of VA
VA required top management support top managementsupport. The VA also requires team work.
The VA function can be organization ±its size, operations, product-line etc.It can be administered by staff at the corporateoffice or it may be run on decentralized basis or a balancedcombination of both. A decentralized and local VA group isaccepted as a helpful service.
VA however is not as firmly entrenched as marketing, financeand other corporate functions. There are frequent resistance
problems to VA.
VA is also affected by the management level to which itreports- it must be wide enough to cover all areas affecting thevalidity of the study, high enough to communicate with decision-
making responsible for implementation, powerful enough tocommunication with decision-makers responsible for implementation, powerful enough to control and takeresponsibility for the administration and assignment of VAgroup.
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