Value Engineering and Value Analysis

Overview
What is Value Engineering? How is VE Applied? When is it used? What is Function Analysis and FAST?

Definitions
Value Engineering is a technique applied to identifying optimum value solutions during new product development. Value analysis is a technique applied to improving existing products, processes or services. The objective is usually to reduce cost, but may equally or simultaneously be to improve performance or quality. -LD Miles

The Key Points of VA / VE

Applying formal work plans.

A team approach.
Specific definition of functions.

The simultaneous look at functions and costs.

Control of the analysis process.

Quantifiable results

What is VALUE ?
Value is the relationship between the defined function the customer requires and the costs incurred to provide that function. Cost Value Use Value Esteem Value Exchange Value

Value Engineering
Value Engineering is Reliability Maintainability Producibility Human Factors Parts Availability Cycle Time Quality Weight Reduction

Why use Value Engineering?

Save Save Build Improve Satisfy Time Money Teamwork Quality
Customer

When is VE used
Existing part/product cost is high Existing technology is complex/old though simpler means are available There is a need to release a cheaper product by cutting down some of the existing feature The existing customer demands a minimal increment in product features that are in use There is a need to cut down the manufacturing cycle time/cost

When is VE used
Value Engineering is used to determine the best design alternatives for Projects, Processes, Products, or Services
Value Engineering is used to reduce cost on existing Projects, Processes, Products, or Services. Value Engineering is used to improve quality, increase reliability and availability, and customer satisfaction . Value Engineering is also used to improve organizational performance. Value Engineering is a powerful tool used to identify problems and develop recommended solutions.

Benefits of VE
Decreasing costs Increasing profits Improving quality Expanding market share Saving time Solving problems Using resources more effectively

VEs Weaknesses
Successful VE results are dependent on the quality of information brought to the VE workshop for evaluation. VE is not time oriented, but, product oriented. Thus, improvements in production activities are not readily recognized. There are many misunderstandings and biases against VE that have been built up over time due to misuse of the methodology. It cheapens the product without improving it. VE is only used for cost reduction.

Value Engineering Research Questions and Check Sheet

1. Can it be eliminated without impairing function or reliability? 2. Does it cost more than its worth? 3. Does it do more than is required? Are there unnecessary features? 4. Is there something better with which to do the job?

Value Engineering Research Questions and Check Sheet

5.Can it be made by a less costly method? 6. Can a standard item or specialty product be used? 7. Could a less costly manufacturing technique be used? 8. Should different tooling be used?

9.Can someone else provide it at less cost without affecting dependability?

Potential Savings from VE

No engineering Change Revision
Document Revision
Re-Test/Re-qualification Tooling Changes

Drawings Released

Net Savings from VE

Total Cost of VE Implementation

VE Implementation beyond this point results in a net loss.

Engineering &Production Release

Concept

Design

Production

What is value?
VALUE = What we get out of something What we put into it

VALUE = Quality, reliability, appeal, etc = Benefits Cost, time, mass, energy, etc. Resources
VALUE = Worth = Cost Performance Cost

Delivery of necessary project functions while achieving best balance between project performance and project costs.

 Value =

Function Cost

To Increase Value

C
REDUCE

C
INCREASE

C
MAINTAIN

Competitive Advantage
Quality is defined as conformance to specification.
Value is defined as:
Function

Cost

You cant have one without the other!

Competitive Advantage = Quality + Value

Unnecessary Cost
Any cost that can be removed without impairing the essential Quality Performance Customer requirements Reliability Maintainability Marketability Schedule

Criteria for Evaluating Value

COST Initial cost Operations Maintenance Return on Investment Life cycle Replacement Cost of capital

PERFORMANCE Quality Stakeholder requirements Safety Level of service Environmental Impacts Schedule Impacts Operability Reliability Maintainability

Generalized Procedure for VA/VE

Information Phase What is it? What does it do? What does it cost? Speculation Phase

Is the change better? Analysis Phase How much better? Why? Decision Phase
Audit effectiveness Use experience Evaluation Phase Provide feedback

How else can the job be done? At what cost?

Review with depts and suppliers Select best alternative Get approval Prepare specifications

Six Step Value Engineering Job Plan

Information Phase Creativity Phase Evaluation Phase Clearly identify the problem(s) to be solved, and gather information on the background, functions and requirements of the product, process, or system. Brainstorm ideas on how to improve the high cost, broken, or inadequately performed key functions. 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 Reporting Phase

Implementation Phase

Plan how to sell ideas to management, identify key recommendations, plan management presentation.
Give oral presentation to management, or develop written report. Get management approval for go-ahead, make management plan, make assignments, implement, follow-up.

The Value Methodology Job Plan

INFORMATION PHASE FUNCTION ANALYSIS PHASE CREATIVE PHASE

EVALUATION PHASE

Complete data package Modify scope

DEVELOPMENT PHASE

Identify functions Classify functions Develop function models Cost functions Establish value index Select functions for study

Create quantity of ideas by function

PRESENTATION PHASE

- What is the problem or opportunity? Why do you consider it a problem or opportunity? Why is a solution necessary?

Rank and rate alternative ideas Select ideas for development

What else can perform the function? Where else can the function be performed? How else can the function be performed?

- Conduct benefit analysis Complete technical data Create implementation Plan Prepare final proposals

Present oral report Prepare written report

How must each idea work? What is the feasibility of implementation?

Who should be sold? How should the ideas be presented?

What is the cost?

What is the task function? What are the basic functions? What are the supporting functions?

What will be the cost?

When will we breakeven? What is the best overall alternative?

Develop a plan to gather project data Investigate the project Verify data

How can disadvantages be overcome? Why is the new way better? Will it meet all the requirements without compromise of form, fit, or function? What are the annual savings?

What was the problem?

What is the new way, savings, and benefits? How will it satisfy our customers? What is needed to implement the proposals?

PRESTUDY
- Collect user/ customer attitudes Complete data files Determine evaluation factors Scope the study Build data models Determine team composition What is to be included in the study? Who is best able to study the problem? What are the current and future requirements of the subject under study? What type of impediments will the team come against? Verify accomplishments

POSTSTUDY
Did the new way work? How much did it cost/save?

Who is responsible for implementing the change?

- Complete/ implement changes - Monitor status

Present results
Advertise outcomes

Did the change meet customers expectations?

Property of OSC VE Office

Information Phase-Fact Finding

What do you need to know about the problem

that you dont know now?

What facts are known? What are the requirements of the

system?

Are these facts, opinions,

assumptions, or prejudices?

Where or how can information be obtained?

Function Analysis
Shifts the problem-solving focus away from the items toward the functions Function need be defined by two words: an Active Verb and a Measurable Noun The verb defines the required action; the noun tells what is being acted on The more abstract the function definition, the greater the opportunities for finding creative alternatives

Function Analysis
FAST (Function Analysis System Technique) - A logic diagram to describe how a system works. Examples of Verbs and Nouns:
Active Verbs Transmit Irradiate Project Dissipate Generate Convert Receive Reflect Provide (passive!)
Nouns Signal Information Data Heat Radiation Current Light Image

Functions of a No. 2 Pencil

Description Pencil Eraser Band Function Makes Marks Removes Marks Secure Eraser Improve Appearance Support Lead Transmit Force Accommodate Grip Display Information Protect Wood Improve Appearance Makes Marks

Body

Paint

Lead

FAST Example
Functional Analysis System Technique (FAST) Diagram 1. List Desired Outcome and Requirements of Customer in Verb Singular Noun Form Mouse Free Living Area = Eliminate Mice

FAST Diagram
2. List Products and Services that satisfy Desired Outcome (Q4). These Products or services answer WHAT is desired of the system. Use Cat Create Virus Kill Mice Eliminate Food

FAST Diagram
3. 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
4. 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 KILL MICE Use Cat Create Virus Kill Mice Eliminate Food POISON MICE Spray Poison Inject Poison Step on Poison Eat Poison Shoot Poison

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

FAST Diagram
5. 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 KILL MICE Use Cat Create Virus Kill Mice Eliminate Food POISON MICE Spray Poison Inject Poison Step on Poison Eat Poison Shoot Poison EAT POISON

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

Eat Bait Drink Bait Smell Bait

FAST Diagram
6. 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 POISON MICE EAT POISON Eat Bait Drink Bait Smell Bait EAT BAIT Attract Mouse Trap Mouse

WHY
ATTRACT MOUSE

Spray Poison Inject Poison Step on Poison Eat Poison Shoot Poison

FAST Questions
How do we perform the function? Why do we perform the function? When do we perform the function? What is the Desired Outcome? Where do we perform the function? Who performs the function?

The Technical FAST Model

HOW ?
INDEPENDENT FUNCTION (SUPPORTING)

WHY?
DEPENDENT FUNCTION

OUTPU T
MISSION, OBJECTIVE, OR HIGHER ORDER FUNCTION
BASIC FUNCTION

OBJECTIVES OR SPECIFICATION S (concept)

MINOR CRITICAL PATH

B

INDEPENDEN T FUNCTION

INPUT

DEPENDEN T FUNCTION

(AND)

LOWEST ORDER FUNCTION

(concept)

ACTIVITY 1

ACTIVITY 2

W H E N

MAJOR CRITICAL PATH SCOPE OF THE PROBLEM UNDER STUDY HIGHER ORDER FUNCTIONS LOWER ORDER FUNCTIONS

Critical Path
HOW F.A.S.T MODEL OVERHEAD PROJECTOR WHY

(concept)

CONVEY Information

PROJECT IMAGE

GENERATE LIGHT
(concept)

CONVERT ENERGY

RECEIVE CURRENT

TRANSMIT CURRENT

Supporting Functions
F.A.S.T MODEL OVERHEAD PROJECTOR

HOW

WHY

(concept)

W H E N

CONVEY Information

PROJECT IMAGE

GENERATE LIGHT

CONVERT ENERGY GENERATE HEAT

RECEIVE CURRENT

TRANSMIT CURRENT

FOCUS IMAGE SUPPORT IMAGE

(concept)

DISSIPATE HEAT

AMPLIFY IMAGE

GENERATE NOISE

Objectives or Specifications
HOW

F.A.S.T MODEL OVERHEAD PROJECTOR

WHY
FACILITATE PORTABILITY

OBJECTIVES OR SPECIFICATIONS
ALLOW SAFETY (concept)

W H E N

CONVEY Information

PROJECT IMAGE

GENERATE LIGHT

CONVERT ENERGY GENERATE HEAT

RECEIVE CURRENT

TRANSMIT CURRENT

FOCUS IMAGE SUPPORT IMAGE

(concept)

DISSIPATE HEAT

AMPLIFY IMAGE

GENERATE NOISE

Add Scope Lines

HOW

F.A.S.T MODEL OVERHEAD PROJECTOR

WHY

FACILITATE PORTABILITY
OBJECTIVES OR SPECIFICATIONS

ALLOW SAFETY OUTPUT (concept) PROJECT IMAGE GENERATE LIGHT CONVERT ENERGY GENERATE HEAT RECEIVE CURRENT INPUT

W H E N

CONVEY Information

TRANSMIT CURRENT

FOCUS IMAGE SUPPORT IMAGE

(concept)

DISSIPATE HEAT

AMPLIFY IMAGE

GENERATE NOISE

FAST Example - Overhead Projector

HOW?

F.A.S.T MODEL OVERHEAD PROJECTOR

FACILITATE PORTABILITY
OBJECTIVES OR SPECIFICATIONS

WHY?

ALLOW SAFETY OUTPUT (concept) PROJECT IMAGE GENERATE LIGHT CONVERT ENERGY GENERATE HEAT RECEIVE CURRENT INPUT

W H E N

CONVEY Information

TRANSMIT CURRENT

FOCUS IMAGE SUPPORT IMAGE

(concept)

DISSIPATE HEAT

AMPLIFY IMAGE

GENERATE NOISE

Creativity Techniques- Brainstorming

Generate a large number of ideas - quantity, not quality. Free-wheeling is encouraged - Listen and improve on the ideas of others. Dont criticize - No evaluation of ideas Encourage everyone to participate Record all ideas presented Time to let ideas incubate should be allowed. Select an appropriate meeting place

Function Analysis
Function Analysis is the key to
understanding the problem.

Brainstorm all possible functions

Next, build a FAST Model to help

identify any missing functions.

Other tools that can work with VE

Activity Based Costing (ABC) Cost Function Matrix Failure Modes and Effects Analysis (FMEA) Risk Analysis Tools Other traditional quality tools such as pareto analysis, ishakawa diagrams, scatter diagrams, etc. Function analysis is the key to understanding the system and what it does. Function analysis enables you to analyze the problem from a system perspective.

The Planning & Reporting Phases

Planning What is recommended? Who has to approve it? What is the implementation plan? Are mockups or prototypes required to verify final decisions? What are the cost, schedule, and deliverables? ROI?

ACTION PLAN GUIDELINES

What needs to be done?
Identify the actions needed to solidify the proposals.

Who should be assigned the action?

Assign a team member. Assign a completion date for the action.

When should the task be completed?

Plan regular team status meetings. Anticipate 4-6 weeks to complete the actions.

Implementation Planning
Ideas must be planned and managed to ensure implementation. Proposed actions should be managed like a project with specific end products, defined start and end dates, and funding limits.

The Planning & Reporting Phase

Reporting Give oral presentation. Support it with written executive brief. Be clear, concise, and positive. Anticipate roadblocks

Analysis of Each Component

Can any part be eliminated without impairing the operation of the complete unit? Can the design of the part be simplified to reduce its basic cost? Can the design of the part be changed to permit the use of simplified or less costly production methods? Can less expensive but equally satisfactory materials be used in the part? Design simplifications frequently are more apparent than is possible under the original design

The Value Engineering Checklist

1. Can the item be eliminated? 2. If the item is not standard, can a standard item be used? 3. If it is a standard item, does it completely fit the application, or is it a misfit? 4. Does the item have greater capacity than required? 5. Can the weight be reduced? 6. Is there a similar item in inventory that could be substituted? 7. Are closer tolerances specified than are necessary?

The Value Engineering Checklist

8. Can you make the item less expensively in your plant? If you are making it now, can you buy it for less? 9. Can cost of packaging be reduced? 10. Are suppliers contributing suggestions to reduce cost?

Concluding Remarks
The design stage provides the greatest opportunity to reduce costs

REMEMBER !
Value Analysis is a continuous process