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Value Engineering (Functional-Cost Analysis)


Value Engineering (Value Management, Value Analysis) is a professionally applied, function-oriented, systematic team approach used to analyze and improve value in a product, facility design, system or service a powerful methodology for solving problems and reducing costs (or not increase) while improving performance/quality requirements. By enhancing value characteristics, Value Engineering increases customer satisfaction and adds value to your investment. Value Engineering can be applied to any business or economic sector, including industry, government, construction and service. Using Value Engineering is a very successful long-term business strategy. The main sense of VE can be described by the following formula:



where I(S) - ideality of the system (object of analysis); - sum of useful functions of the object; - sum of charges (weight, sizes, consumed energy, cost).

 How VE is necessary?

 In these days management environment is kaleidoscopically changing. Not only the efficiency but also the continued innovations are essential for corporate management. It is not possible to meet today's highly-advanced customers’ demands by just quantitatively producing low-priced merchandises. Corporate efforts must be focused on the innovation doing away with conventionality rather than the betterment of actuality, always keeping in mind what should we do, which functions should be achieved to enhance the value of products, services, etc. VE is the technique which is exactly for value improvement and is also a critical management technique for the leading companies of New Century.

How does the value methodology work?

VE methodology includes: User Attitude Surveys; Multi-disciplined Team Work; Function Analysis; Implementation; Financial Reporting; Life Cycle Cost; Human Behavior; Communication Techniques; and the Six-Step VE Job Plan. The value methodology works through a VM study that brings together a multidisciplinary team of people who own the problem and have the expertise to identify and solve it. A VM study team works under the direction of a facilitator who follows an established set of procedures - the VM job plan - to review the project, making sure the team understands customer requirements and develops a cost-effective solution. The VM job plan includes pre-study and post-study phases, as well as the value study itself, which is composed of six phases:

Step 1: Informational analysis (Informational stage)

Step 2: Analytical analysis (Analytical stage)

Step 3: Creative (Conceptual stage)

Step 4: Research

Step 5: Recommendation

Step 6: Implementation

As the first step of VE, information about object of analysis gathered. Next step, "Functions" of products or services which should be achieved are analyzed from a customer's standpoint, gathering a variety of information and ideas on the measures to accomplish such functions. Third step is to generate the ideas, sometime different ideas are combined or further-developed, and then these ideas are evaluated to finally choose the best one(s). It is called Team Design, a series of processes to realize the measure which securely attain Customer's needing functions at a lowest Life Cycle Cost.

Limits of VE application

VE is so widely applied ranging over a variety of fields such as the cost reduction on purchasing, cost cutting of products overall, and also at product development stages. It is now applied not only in the products but also in assembling and machinery processes, manufacturing processes such as packing, transportation, distribution, etc. VE can also be utilized not only in manufacturing industry but also in services and construction industries. In other words, anything that can produce cost is the subject of VE study.

VE achievements

VE can provide clients with comfort by its highly-value added products or services, and it can also contribute to the society for making good use of natural and industrial resources. Enterprises may enjoy and insure an adequate profit, smooth communication among people concerned, activation of organizations and creative corporate climates. People participated in a VE study will learn how to get along with other team members giving respect to each one's ideas, will gain creative thinking, achievement to a goal by systematic team approach and especially a target-oriented thinking method. These experiences are extremely valuable as they can practically be applied in any other social, official and private situations.




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