VALUE ENGINEERING

Concept of Value

Concept of Value Desirable

Concept of Value Undesirable

History of Value Engineering

• Value engineering began at General Electric Co. during World War II. Because of the war, there were shortages of skilled labour, raw materials, and component parts. Lawrence Miles and Harry Erlicher at G.E. looked for acceptable substitutes. They noticed that these substitutions often reduced costs, improved the product, or both. What started out as an accident of necessity was turned into a systematic process. They called their technique “value analysis”.

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VE Timeline

Larry Miles assigned to cost reduction at GE

VE a success, training of employees and suppliers begins

Navy adds VE incentive clause

SAVE formed in Wash. DC on Oct.22, 1959

Army Corps of Engineers begins VE training

VE included in ASPR for military procurements

First VE incentive clause published in Fed. Register, GSA staffs for VE.

Larry Miles takes VE to Japan.

DOE Order 4010.1

19701947 1952 1955 1959 1962 1964 1969 1988 1990 1993 Today1985

Larry Miles dies.

VE adopted by NASA ofc of facilities.

OMB circular A-131 published requiring all Federal Agencies to use VE to identify and reduce non-essential costs.

OMB circular A-131 passes “Sunset Review”

Charles Bytheway invents FAST Modeling

1984

Application of VE introduced in CPWD in India

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Value Engineering the Forgotten Technique

Don't look now, but an old discipline (value analysis/value engineering) is on the comeback trail. Originally called merely VA by its inventor, Larry Miles, an engineer in GE's purchasing operation in 1947, VA/VE uses a value equation that says value is equal to function divided by cost. If, for example, the buyer wants to get more item value, he/she needs to either increase the item's functionality at the same time he/she is containing cost; or he/she needs to reduce cost while holding or improving its functionality. Either way, the result is more value for the customer (Excerpt from Purchasing Magazine - "Value Analysis makes a comeback," Jim Morgan, November 20, 2003.").

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Value Engineering the Forgotten Technique

Value Engineering is truly the "Forgotten Technique." However, over 50 years later, it has gained recognition in private industry and governmental agencies as an indispensable tool for cost reduction, improved product development and product re-engineering. It is also used to improve organizational performance and cost effectiveness as well.

The heart of VA/VE is function analysis and "Function Analysis Systems Technique" that sets it apart from other lean methodologies by opening the door to creative problem solving that capitalizes on an interdisciplinary teams creative juices to arrive at truly value added, cost effective solutions to problems ranging from design problems, quality and reliability problems, to organizational problems resulting in increased value and performance for the customer and the organization.

What is Value Engineering?

Value Engineering (VE) is an intensive, interdisciplinary problem solving activity that focuses on improving the value of the function that are required to accomplish the goal, or objective of any product, process, service or organization.

Value Engineering is a creative, organized approach whose object is to optimize cost and/or performance of a facility or system.

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How and When is Value Engineering Applied?

Interdisciplinary Team

Formal Job PlanTrained FacilitatorsFunction

Analysis/FASTDocumentation

Problem Solving/Decision Analysis

Strategic Planning New Product Development Re-engineering efforts

How When

When Value Engineering is Used

• Value Engineering is used to determine the best design alternatives for projects.

• Value engineering is used to reduce cost on existing Projects.

• 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 used to improve schedule.• Value Engineering is used to reduce risk.• Value Engineering is a powerful tool used to identify

problems and develop recommended solutions.

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Potential Savings from VE

Net Savings from VE

Total Cost of VE Implementation

Concept Design

Engineering &Production

Release Production

Drawings Released Tooling Changes

Re-Test/Re-qualification

No engineeringChange Revision

Document Revision

VE Implementation beyond this point results in a net loss.

Potential Savings from VE

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Why use Value Engineering?

Save TimeSave Money

Build TeamworkImprove Quality

Satisfy Customer