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Methods and


Tightening Budgets

Rising Inflation rates

Spiraling Costs

Still need to make a

“Engineering as a management technique using a
systematized approach to seek out the best functional
balance between the cost, reliability and performance of a
product or a project”

Value Engineering was developed in 1947 just after

World War II at the General Electric Company by
Lawrence Miles. He was asked to find ways to produce
products using fewer available materials and resources.
Simple Smart
Is the process of redesign to reduce part count either by
combining different parts of an assembly into one, or
combine the functions of several parts.

 New Method:
 Current Method: Investment Cast,
Machine Hog Out, Machined,
Gun Drilled, Ceramic Core for cooling
Welded Fabrication from channel
316L SST
Est Cost: $6,500
Current Cost: $10,700 Est Tooling: $50,000
Material Substitution
“For every material of a part, there can always be found a less
expensive substitute”.
• Metal with plastic
• Plastic with EPS
• ABS with Polycarbonate

$4.70 $1.75

$1.27 million
Supplier Change

Move from One supplier to another for a reduced cost.

e.g. Embraco to Danfoss, Samsung and LG

ECI Mexico to ECI

Price Compensation

Get quotes from suppliers and ask the current supplier

to reduce his cost to meet the quote.
Low Cost Country Suppliers

Move parts from high cost to low cost coutries

e.g., China, India, South Korea or Brazil

Long Term Contracts

Create a long term, EoS contract with supplier to bring down the price.
GE Appliance’s contract with SAABIC to sell HIPS is an example

Part Standardisation
Several parts made one.
Economies of Scale
Brain Storming: Sit in a room and throw ideas
to reduce the cost of a specific product

Teardown: Break a product down into

component parts and give ideas on each.

Like Grade Quality Comparison: Tear

several products down of the same price range
of your product and generate ideas based on
cost, material, and design.
Yield for a project is the cost reduced the project for that product in one

Investment is the amount of resources such as time, money and

manpower required to take the project from idea generation to its

Payback > 0.5

Benefits of Value Engineering

Value Engineering

•Reduces the total life cycle cost of the part or process,

•Optimises the Quality and Performance,

•Minimises the waste in manufacturing or design by reducing the

unnecessary parts or actions,

•Simplifies and Improves Reliability and System performance and

•Identifies potential risks and solutions.