CHAPTER 13

Value Engineering

13.1 WHAT IS VALUE ENGINEERING OR VALUE ANALYSIS?

The concept of value engineering (VE) or value analysis (VA) is a management technique that seeks the best functional balance between cost, reliability and performance of a product, project, process or service. In other words, the VE or VA is considered to be a process, as opposed to a simple technique, because it is an organized approach to improving the profitability of product applications and it also utilizes many different techniques in order to achieve this objective. The VE or VA approach is almost universal and can be used to analyse existing products or services offered by manufacturing companies and service providers alike. The VE or VA approach applies the same principles for every new product, and many of the VE or VA techniques to pre-manufacturing stages such as concept development, design and prototyping.

At the heart of the VE or VA process review is a concern to identify and eliminate product and service features that add no true value to the customer or the product but incur cost to the process of manufacturing or provision of the service. As such, the VE or VA process is used to offer a higher performing product or service to the customer at a minimal cost as opposed to substituting an existing product with an inferior solution. This basic principle, of offering value at the lowest optimal cost of production, is never compromised. It is the principle that guides all actions within the VE or VA process and allows any improvement ideas to be translated into commercial gains for the company and its customers. The VE or VA process is, therefore, one of the key features of a business that understands and seeks to achieve total quality management (TQM) in all that it does to satisfy customers.

The VE or VA technique was developed after the World War-II in United States of America at General Electric during the late 1940s. Since this time the basic VE or VA approach has evolved and been supplemented with new techniques that have become available and have been integrated with the formal VE or VA process. Presently, the VE or VA is enjoying a renewed popularity as competitive pressures are forcing companies to re-examine their product ranges in an attempt to offer higher levels of customization without incurring high cost penalties. In parallel, many major corporations are using the VE or VA process with their suppliers to extend the benefits of the approach throughout the supply chain. Irrespective of the size of the businesses, big or small, all would therefore be benefited from understanding and applying the VE or VA process. It is likely that those companies that do not take the time to develop such capability would face an uncertain future as the lessons and problems of the past are redesigned into the products of the future.

13.1.1 Definition of VE or VA

The VE or VA can be defined as a process of systematic review that is applied to existing product design in order to compare the function of the product required by a customer to meet their requirements at the lowest cost, consistent with the specified performance and reliability needed. This is a rather complicated definition and it is worth reducing the definition to key points and elements: ‘the VE or VA is a systematic, formal and organized process of analysis and evaluation. It is not haphazard or informal and it is a management activity that requires planning, control and coordination’. The analysis concerns the function of a product to meet the demands or application needed by a customer. To meet this functional requirement, the review process must include an understanding of the purpose to which the product is used. In understanding the use of a product, it implies that the specifications can be established to assess the level of fit between the product and the value derived by the customer or consumer.

13.1.2 Defining Cost and Value

The value of a product must consider two elements for the improvement: the use of the product (known as use value); and the source of value which comes from ownership (known as esteem value). It can be shown as the difference between luxury goods and normal goods that each has the same utility. Primarily, there are three key costs of a product:

• Cost of the parts purchased, which are costs associated with the supply of parts and materials.
• Cost of direct labour used to convert products.
• Cost of factory overheads that recover the expenses of production.

Although there are three elements of total cost accumulation, it is traditionally the case that cost reduction activities have focused on the labour element of a product. Activities such as work-study, incentive payments and automation have compressed labour costs, and as a result there is little to be gained, for most companies, in attempting to reduce this further. Instead, comparatively greater gains and opportunities lie in the redesign and review of the products themselves to remove unnecessary materials and overhead costs. This approach to the ‘total costs’ of a product involves taking a much broader look at the way costs in the factory accumulate, and the relationship between costs and value generation. These new sources of costs and evaluations would therefore include such sources as:

• Cost of manufacture
• Cost of assembly
• Cost of poor quality
• Cost of warranty.

A detailed understanding of how costs are rapidly accumulated throughout the process of design to the dispatch of the product is a key to exploiting the process of VE or VA. All VE or VA activities are aimed at the reduction of avoidable and unnecessary costs, without compromising customer value, and therefore the VE or VA process should target the largest sources of potential cost reduction rather being and indiscriminate or unsystematic process such as focusing on labour alone. It is therefore preferable to take the holistic approach to understanding costs and losses in the entire system of design and conversion of value in order to determine how to achieve customer service functionality at a minimal cost per unit.

13.2 NATURE AND MEASUREMENT OF VALUE

Value can be perceived as the ratio of the sum of the positive and negative aspects of an object. The following equation depicts this simplistic interpretation.

 

 

The above equation seems to be more complex, since we are dealing with many variables of different magnitude. A more descriptive equation is

 

 

The above equations are both general and can be used to measure the value of items and alternatives. The field of psychophysics have provided us the means to measure the parameters of the equations (13.1) and (13.2). The quantification of these parameters allows the value, as expressed in the equations (13.1) and (13.2) to be measured.

After completing the function analysis of the product, one should determine: the cost of the functions, determine their worth or importance, derive a figure of merit (FOM), and post these measures to the respective functions listed on the FAST diagram if one is used. Cost may consist of actual, or hard, costs, such as materials and labour when real costs are not available. However, for occasions when they are not available, estimates can be derived by the cost appraisal methods that produce subjective figures. Percentages are used in order to standardize ratings across different raters if there is more than one participant. Normalized cost show individual costs as a proportion of the total overall cost of the product or system. It can also be used to derive target costs or goals for various components and tasks of projects and missions at the outset of a VE or VA project. Equation (13.3) provides the denominator for the value ratio expressed in equations (13.1) and (13.2)

where,

 

 

= Average relative importance of an item or component

C_i = Individual participants’ estimates of importance, where i = 1to n

n = total number of individual rating importance

The functions are also studied for worth or importance. The worth or importance of functions, like cost, is determined indirectly by deriving the worth and importance of the items or components that collectively provide those functions. Worth is established by a technique of external cost comparison and is defined as the lowest cost that will reliably achieve the required function. It is determined by creatively comparing the cost of the function of the item or part to the cost of the function of analogous external items that can also reliably perform the same function. Importance on the other hand is established by an internal comparison of the items or components by comparing and rating each, relative to the others. Equation (13.4) below represents the derivation of percentage importance and provides the numerator for the value ration expressed

 

 

where,

= Average relative importance of an item or component

I_i = Individual participants’ estimates of importance, where i = 1ton

n = Total number of individual rating.

Both worth and importance may also be posted to their respective functions on the FAST diagram. It is important to emphasize that function comparison, whether it would be for worth, importance, or cost, be performed at the same hierarchical level.

Once cost and importance are derived and posted for each function, they are used to compute in the numerator; whichever is used is situational. Similarly, the denominator may consist of actual hard costs, relative hard costs, or subjective estimated soft costs, although the former are preferred.

 

 

The index is a dimensionless number that allows one to array a system of functions in order of perceived value. Generally, value index greater than 1.0 represents good value; an index less than l.0 can indicate a function or component that needs attention and improvement.

Value measurement techniques of paired comparison and direct magnitude estimation (DME) is the most useful and descriptive. This process employs a comparison of items wherein an individual chooses from a pair of functions or items of some specific characteristic by iterating the procedure over all possible pairs, and subsequently summing the numbers associated with each function or item. This process can be cumbersome and impractical if there are large number items to evaluate, for this case DME is recommended.

DME is a method in which people assign numbers to items in direct proportion to the magnitude of characteristic that the items possess. DME also allows one to express the magnitude of differences between items which is effectively used in less than 30 items.

The value measurement phase culminates in the quantification of functions and components according to value, importance and cost. These parameters are used to select likely candidates for redesign, improvement, or elimination. Value for all the functions was individually computed from importance and cost summation at any point in the diagram.

13.3 HOW IS A VE OR VA STUDY CONDUCTED?

The VE or VA methodology is based on the three specific phases. First, the pre-study preparation phase which often commences with a meeting between the owner, designer and VE or VA team leader to promote a common level of understanding on the objectives of the study, to confirm the schedule of events of the study and to review the required information. Project data provided by the owner and designer are distributed to the team for review prior to a formal workshop in order to develop relevant questions. Models of appropriate capital costs, energy costs and life cycle costs are prepared by the team leader. Second, the project study workshop phase is conducted at a location convenient to the owner and designer, frequently at the owner’s premises near the project site. It lasts for a minimum of three days to a maximum of five, with an agenda for the first meeting including: introduction, briefing on value engineering or value analysis, presentation of project design by project designer, outline of project constraints, and questions by VE or VA team members for the designer. After the designer’s oral presentation with question-and-answer period, it is desirable for the owner and designer to escort the VE or VA team on a brief site visit. The team then proceeds with the following basic job plan, common to all VE or VA studies:

• Information Phase: Further familiarization of the project by the team; In this phase, the team is made to get familiarize with the project. All team members participate in a function analysis of the project as a whole, and then of its component parts, to determine the true needs of the project. Areas of high cost or low worth are identified.
• Creative Phase: The team lists creative ideas generated from its review of the project with the aim of obtaining a large number of ideas through brainstorming and association of creative proposals.
• Judgement Phase: Creative ideas are analysed, and the team selects the best ideas for further development.
• Development Phase: The team prepares alternative designs with capital and/or life cycle cost comparisons of original designs and proposed alternatives. All recommendations are supplemented with written descriptions, sketches, basic design concepts, technical information and cost summaries.
• Presentation Phase: The team presents an oral summary of its findings to the owner and the designer, explaining the recommended basic ideas, their cost-saving implications and their attendant rationales.

Third is the post workshop phase, wherein the team prepares a report for the owner, completed and submitted in a timely manner, such that the design process may continue. The owner and designer consider the VE or VA recommendations, and jointly decide which items have merit for implementation in a revised design.

13.4 THE VE OR VA PROCESS

The VE or VA process is a rational and structured process which uses an interdisciplinary team to:

• Select the proper project or product for analysis in terms of time invested in the study.
• Display and measure the current (State1) value of a product or its components in terms of functions that fulfill a user’s needs, goals or objectives.
• Develop and evaluate new alternatives to eliminate or improve component area of low value
• Match the new alternatives with the best way of accomplishing them.

The process begins with the origination phase, wherein a VE or VA study team is formed and a project is selected and defined. The product and all its components are examined in detail in order to obtain a thorough understanding of their nature.

The familiarization leads to the information phase, where the function(s) of the product and / or its components are documented by function analysis techniques. Constraints that dictate an original design, material, components, or procedures are challenged for validity. The importance and cost of function are quantified by various value measurement techniques. The output of the information phase is an ordered list of functions or items, arrayed from highest to lowest relative value as they exist. The low-value items become candidates for value improvement.

The candidates are for the innovation phase, where various creative techniques are used to generate new alternatives for their replacement or improvement. The task then becomes to reduce the large list of alternatives for development and recommendation.

The objective of the evaluation phase is to prescreen the large list using various information reduction techniques. The highest valued alternatives that emerge from the analysis are numbered as 2 or 3 and they are further examined to ensure their economic and technical feasibility, to meet the desired accuracy, quality, reliability, safety, repairability and environmental friendliness.

During the implementation phase, a report is prepared to summarize the study, present conclusions, and pacify proposal for the decision-maker. Program and action plans are developed to produce and implement the alternatives that survey the analysis phase. Techniques used here are in the realm of the production and/or project management. The VE or VA change proposals are monitored and followed up in order to provide assistance, clarify any misconceptions, and ensure recommended actions are achieved.

13.5 TYPES OF VE OR VA

One of the best approaches to VE or VA is simply to select an existing product that is sold in relatively large volumes. This product, or product family, will tend to have a great deal of the basic information, and documented history, which can be used quickly as opposed to a newly introduced product where such a history is not available. An existing product unites all the different managers in a business, each with an opinion and list of complaints concerning the ability to convert the design into a ‘saleable’ product. Therefore, any team that is created for the purpose of VE or VA will understand their own problems but not necessarily the cause of these problems across the entire business. These opinions regarding poor performance and documented evidence of failures are vital to the discussions and understanding of how the product attracts costs as it is converted from a drawing to a finished product. These discussions therefore allow learning to take place and allow all managers to understand the limitations to the scope of product redesign and re-engineering activities. These issues include:

• The inability to change existing product designs due to the need to redesign tooling and the expense of such an initiative.
• The project team may have a finite duration before the project is concluded, and therefore time will dictate what can be achieved.
• The high levels of purchased costs may imply a need to engage with suppliers in the VE or VA process. This initiative will be constrained by a number of issues such as timing of the project, availability of resources from the supplier, location of the suppliers and other constraints.

VA for New Products—Value Engineering: For new products, the team will need to modify the VA approach and will operate in an environment that is less certain and have poor levels of available information upon which to make decisions. In this case, the analysis and systematic process of review for new products is known as value engineering (VE). The VE approach is similar to that of value analysis but requires a much greater level of investment by the organization in terms of the skilled, experienced and proficient human resources, seconded to the group.

VA for Product Families—Horizontal Deployment: The final form of VA is results when there is scope for the horizontal deployment of the results of a VA exercise with a single product or family of products. Under conditions where the value analysis project team finds commonalties with many products manufactured by the company, then it is possible to extend the benefits to all these other products concurrently. In this manner, all affected products can be changed quickly to bring major commercial benefits and to introduce the improvement on a factory-wide basis. This is particularly the case when supplying companies offer improvements that affect all the products to which their materials or parts are used. The horizontal deployment activity has many advantages both in terms of financial savings and also the relatively short amount of time required to introduce the required changes to the product design.

Competitive VA: VA techniques are not simply the prerogative of the business that designed the product. Instead, VA is often used as a competitive weapon and applied to the analysis of competitors’ products in order to calculate the costs of other company’s products. This is often termed ‘strip down’ but is effectively the reverse value analysis. Here VA team is applied to understand the design and conversion costs of a competitor product. The results of the analysis is to understand how competitor products are made, what weaknesses exist, and at what costs of production together with an understanding of what innovations have been incorporated by the competitor company.

It is recommended that the best initial approach, for companies with no real experience of VA, is to select a single product that is currently in production and has a long life ahead. This approach offers the ability to gain experience, to learn as a team, and to test the tools and techniques with a product having known characteristics and failings. In the short term, it is most important to develop the skills of VA, including understanding the right questions to ask, and finally to develop a skeleton but formal process for all VA groups to follow and refine.

13.6 HOW TO USE VE OR VA

13.6.1 Keys to Success

There are many keys to the success of a VE or VA program, and it is wise to consider these issues before commencing the project. One of the most important initial steps in developing the VE or VA process is to create a formal team of individuals to conduct the exercise. These individuals must be drawn from different parts of the business that affect the costs associated with design, manufacturing, supply and other relevant functions. In addition, the team must be focussed on a product or product family in order to begin the exercise. Further key success factors include:

• Gain approval of senior management to conduct a value analysis exercise. Senior management support, endorsement and mandate for the VA project, provide legitimacy and importance to the project within the business. This approval process also removes many of the obstacles that can prevent progress from being made by the team.
• Enlist a senior manager as a champion of the project to report back directly to the board of directors and also to act as the program leader.
• Once a program team has been developed, it is important to select an operational leader to coordinate the efforts, monitor progress and to support the project champion. This leader will remain with the VA team throughout the life of the project and will be the central linking pin between the team and the senior management champion.
• Establish the reporting procedure for the team and the timing of the project. This project plan needs to be formal and displayed as a means of controlling and evaluating achievements against time.
• Present the VA concept and objectives of the team to all the middle and senior managers in the business. Widespread communication of the VA project is important so that other employees, particularly managers, who may not be involved directly with the process, understand the need to support the project either directly by assigning staff or indirectly through the provision of data.
• Maintain a list of those business functions that should receive a regular communication of progress even though they may not be directly involved with the project. This process allows other individuals in the business to be informed about the progress and findings of the group. This form of promotion is important as it maintains a momentum and communicates the findings of the team as widely as possible.
• Provide an office space and co-locate the team members where practical and possible to do so. The ability to locate a VA improvement group in one area of the business is important and assists the communication within the group. A convenient area can also be used to dismantle the product and also the walls of the area can be used to record, on paper charts, the issues that have been discovered by the team and the associated actions that must be undertaken.
• Select the product for the first study. Ideally, the existing product, or family of products will be one that is established, sells in volume and has a relatively long life expectancy. As such any improvement in the cost performance of the product will provide a large financial saving to the business.
• Write down the objectives of the project and the key project review points. Estimate the targets to be achieved by the project. These objectives provide a reference point and framework for the exercise. The objectives also focus attention on the outputs and achievements required by the company.
• Select and inform any personnel who will act in a part time or temporary role during the project. This process is used to schedule the availability of key specialist human resources to support the team throughout the duration of the project.
• Train the team in both the process of VA and also in basic team building activities. It is important that all members understand the nature of the project and its importance. The initial team building exercises are also a good way of understanding the attitude of all members to the project – especially those with reservations or a negative attitude to what can be achieved. As with most team exercises there is a requirement to allow the team to build and bond as a unit. It is often difficult for individuals, drawn from throughout the factory, to understand the language that is used throughout the business and also to understand the ‘design to market’ process when their own role impacts on a small section of this large and complex process.

An overview of the implementation stages as summarized in the diagram shown in Fig 13.1.

13.6.2 Origination Phase

The management support is important to the initiation and success of a VE or VA study. The following question should be addressed at the outset: What is the scope of the study? Who funds the study, and

 

 

Fig. 13.1 FAST diagram

 

how much funding is required? Who approves the study? Who is the requestor? What are the study’s start and completion dates? Who should be on the study team? Who are the intended users of the study results? What is the expected format: oral or written? What level of the organization should be involved? What geographic area? What are the expected time, manpower, and cost? Once the study parameter is reviewed, the endorsement must be gained from the management and the participants should be given appropriate time to participate.

Many VE or VA study arise from the necessity in the specific, well-defined area. Consequently, a predefined project may obviate the need for formal project selection. However the resources that can be allocated to a VE or VA study are limited. General criteria that a VE or VA should look into are to:

• Solve a problem
• Have a good probability of success and implementation
• Have objectives that are credible
• Be important to the people in the area being studied
• Have the commitment of the requestor and the team members
• Have receptivity.

A VE or VA team normally comprises seven members or preferably odd numbers to avoid split decision.

The following characteristics are very important when assembling a team:

• It should be interdisciplinary
• Members must be of equivalent levels in the organization hierarchy
• Appoint a decision maker
• It is necessary that one or more members be versed in the VE or VA process, VE process or external consultant to supply the VE or VA methodology
• One member should be an ‘expert’ on the product or subject studied

Once the VE or VA study has been selected and defined, the team is formed, and it becomes very helpful for the team to formulate a mission statement. The statement must be short, broad definition of what to be accomplished by the project or study and why. Although the statement may appear to be unreasonable or impossible, it does help to provide a challenge and engender a positive, creative attitude among the members.

The VE or VA team begins by collecting information on the subject being studied and defining the product and its components through a review of facts. All possible sources of information should be pursued. It is necessary to have sufficient factual data in order to minimize personal opinion and bias, which adversely affect the final results

13.6.3 Information Phase

The product and all its components are studied to determine their functions. Function analysis consists of definitional and structural techniques that employ a semantic clarification of function which provides the groundwork for deriving a quantitative analysis of value.

The method requires function to be described with only two words, a verb and a noun. The rules of function description are:

• Determine the user’s needs for a product or service
• Use only one verb and a noun to describe a function
• Avoid passive or indirect verbs
• Avoid goal-like words or phrases
• List a large number of two-word combinations and then select the best pair

Function description should be derived for the product and f/or all its components. Functions are frequently classified as either basic or secondary. A basic function is the prime reason for the existence of the product. Secondary functions, on the other hand, support the basic function(s) and allow them to occur.

A well-known and powerful; structural technique of function analysis used by VE practitioners today is Functional Analysis Systems (FAST) diagramming. The technique allows two-word function definitions to be ordered in a hierarchy based on cause and consequence. It expands upon the reason for the existence of the product, or the basic function. A FAST diagram is developed in the following manner:

• All the function performed by the product and its elements are defined by using two-word function description. Each function is returned on a separate small card to facilitate the construction of the diagram
• The card that best describes the basic function is selected among many cards.
• A branching tree structure should be created from the basic function by asking the question ‘How do I (verb) (noun)?’ A more depersonalized branching question would be, ‘How does (the product) do this?’ The ‘how’ question will result in branching and is repeated until branching has stopped and the function order is in a logical sequence.
• The logic structure is verified in the reverse direction by asking question ‘Why do I (verb) (noun)?’ for each function in the logic sequence. The how-why question are used to test the logic of the entire diagram. Answers to the how and why logic sequence questions must make sense in both directions; that is answers to how questions must logically flow from left to right, and answers to why questions must read logically from right to left.
• A ‘critical function path’ may result from the logic sequence of the basic and secondary functions. Any function not on this path is prime target for redesign, elimination, and cost reduction.
• The FAST diagrams are usually bounded on both ends by the scope lines, which delineate the limits of responsibility of the study.

A FAST diagram by itself is not very useful and appear confusing and formidable to those not involved in its construction. The main value of the diagram lies in the intensive questioning and penetrating analysis required for its development. The FAST diagram becomes even more valuable and useful in the value measurement phase if costs and importance are allocated and posted to functions on the diagram.

Constraint analysis is also helpful to challenge many constraint or reasons that dictate a particular component, material, design, or procedure that is currently being used. We define this procedure as ‘constraint analysis’. Too often, products become over designed because the original constraint that dictated the design is no longer valid or are misinterpreted. Question to answer are, ‘Why do we use what we use?’ and ‘Is this reason still valid?’ Once identified, costs due to invalid constraints should be derived and combined with function cost.

13.6.4 Innovation Phase

The innovation phase is the creative part of the VE process and a vital step in the redesign process. Activities in this phase are geared toward creating alternative ways of accomplishing functions. There are many ideas for collecting methods and one must decide what type to use. All criticism and evaluation are eliminated from the idea producing stage to allow maximum output by allowing everybody to participate. One may decide to use the traditional brainstorming or new nominal group technique technique (NGT). Nominal group involve individuals who work in the presence of others, but who do not interact verbally with one another. Various combination of function innovations produced several alternatives design, and were evaluated under evaluation phase to produce new design.

13.6.5 Evaluation Phase

The evaluation phase entails a selection process in which ideas produced in the innovation phase are examined and a small number of ideas are selected. Pre-screening is required to screen the ideas from the innovation phase. Two effective, simple and fast with high degree of discrimination screening are Pareto voting and Q-sort. Candidates for further VE study can be selected from the highest-valued items.

The select group of items that emerges from the prescreening is subjected to a more rigorous and discriminating evolution to arrive at two or three candidates for possible development. Here the most suitable discriminating technique often used is criteria analysis. Criteria analysis is a matrix scoring technique designed for evaluating alternatives by judging their individual merit against a set of criteria important to their end use. Criteria analysis has many advantages. The most important is that the process utilizes a common reference set of criteria. With paired comparison or DME, no common set of evaluation criteria is established. Criteria analysis also displays how each alternative satisfies each criterion. Decision rationale is documented and be repeated in light of new information or challenge.

13.6.6 Implementation Phase

This phase concerns the preparation of the VE team’s recommendations to management. A report is prepared that describes the proposal(s) and lists suggested action plan for implementation. To minimize rejection, careful consideration should be given in preparing the report. When a written document is given to the decision maker, a brief executive summary is also included to make it more effective. An oral presentation is often an excellent supplement to a written document.

Actual implementation of the recommendation is often carried out by VE team, but is often carried out by others. The study team provides the necessary input for the decision maker, and the team members, along with the detailed report, are available to assist the department or individuals responsible for implementation. Having the decision maker, the team member will ease the acceptance of the study. Planning and scheduling methods such as PERT are very useful in actually implementing VE recommendations.

13.7 SUMMARY

This chapter provides an overview and insight into the value engineering or value analysis process. No company can take ‘total quality management’ seriously without operating a formalized system of value analysis. No business that wishes to become lean will ever succeed if product designs remain unchanged, because no amount of continuous improvement in the manufacturing process can release the costs of a poor design or a design that has not changed for many years.

However, poor product reviews or an informal process, that is restricted only to a review of the design by the design department, will yield only limited success in eliminating ‘avoidable costs’. These efforts will miss many of the opportunities to make manufacturing and assembly easier, quicker, less complex and less costly. Thus margins will not be improved significantly because only a small part of the total process has been managed correctly. As such, this type of superficial activity will not generate increased profit, and the revenue stream that will be needed to finance new products and new investments in technology.

A properly managed and effective VE or VA process will easily repay the time invested by managers over the life of the product and a truly effective process will yield significant competitive advantage for companies that exploit it. For businesses that supply other organizations, the ability to design and redesign products opens the possibility of true, meaningful, profitable and long-term partnership with a customer. Each progressive step that secures a greater design responsibility for the supplier will, in parallel, make the supplier increasingly more important to the competitive advantage of the customer organization and will increase the benefits to both companies.

In an environment where budgets are often reduced, the market determines the selling price of a product and consumers demand a greater variety of products. VE or VA is one technique that companies cannot afford to ignore because for every day that the technique is not employed is money that will leave the business forever. Money that cannot be recovered once the product has been sold everyday that the technique is not employed which will leave the business forever. Money that cannot be recovered once the product has been sold everyday that the technique is not employed which will leave the business forever. Money that cannot be recovered once the product has been sold.

As a process, VE or VA is very robust and offers tangible, financial and people-based benefits. The process eliminates unnecessary weight, it removes unnecessary costs and importantly it allows people to understand products, processes and continuous improvement. Very few modern management techniques allow this form of participation and involvement and even fewer have such a profound impact on the bottom line of the business’s trading accounts.

PROBLEMS

1. What are the types of value functions? Explain them with examples.
2. Explain the steps of value engineering. Discuss the advantages and application areas of value engineering
3. Define the concept of value engineering. List out the aims and steps of value engineering.
4. What is the difference between value engineering and cost reduction techniques? Discuss the different areas of applications of value engineering.
5. Explain information phase, function phase, evaluation phase, recommendation phase and implementation phase.
6. What do you understand by value? How team approach helps in value analysis in an organisation? Discuss.
7. Write short notes on:
   • FAST diagram
   • Customer and value
   • Cause and effect diagram