Value Analysis-Introduction,Stages and Uses of Value Engineering

Value Analysis


Value Analysis is one of the major techniques of cost reduction and control. It is a disciplined approach which ensures the necessary functions for the minimum cost without diminishing quality, reliability, performance and appearance.

Before understanding the meaning of phrase “value analysis” it is important to know the meaning of  the word “Value”.

The value of a product will be interpreted in different ways by different customers. Its common characteristic is a high level of performance, capability, emotional appeal, style, etc. relative to its cost. This can also be expressed as maximizing the function of a product relative to its cost:

Value = (Performance + Capability)/Cost = Function/Cost

Value analysis is a study of a product’s design, manufacturing, and marketing for the purposes of more economical production.Following are few definitions of “Value Analysis”:

  • “Value analysis is an organised approach to identify unnecessary costs associated with any product, material, part, component, system or service by analysis of function and efficiently eliminating them without impairing the quality functional reliability or its capacity to give service.”
  • “Value analysis is the systematic application of recognised techniques which identify the function of a product or services establish a monetary value for the function and provide the necessary function reliability at that lowest overall cost.”
  • “Value analysis is the study of the relationship of design, function and cost of any material or service with an object of reducing its cost through modification of design or material specifications, manufacture by more efficient process, changes in sources of supply, elimination or incorporation into another item.”

Steps  in Value Analysis

1. Orientation/Preparation

Identify what is to be analysed. This will typically be one of:

  • A manufactured item

This can be anything from a screw to an engine, although a more complex item is likely to result in a more complex and time-consuming analysis.

  • A process or service

Again, all levels can be analysed, from a hand assembly process to a complete customer service organisation.

2.  Information phase

Efforts should be made to collect all the relevant information rather facts. For each element being studied complete and accurate cost must be obtained. Considerable importance should be given to the accuracy of these costs since these would form basis for value analysis.

3. Analysis

In this phase the functions of the product are analysed by Functional Analysis, which is aimed at identifying functions given by a product or part of it. Functions have an importance (weight) and a cost. These costs are quantified and this leads to a list of functions ordered by their importance and value. This means that there is an analysis of how each function satisfies customer needs, and then, an analysis of what the cost of those functions is.

This phase of Value Analysis may be considered as the key one of the whole methodology as it represents the translation of needs to functions.

(i) To decide the area of analysis and the functions that it actually performs because if the value of an item/product is to be determined it is essential to determine its use or function.

(ii) To relate these functions to the cost and worth of providing them since the term functions in “value Analysis” means that which makes the product work or sell.

From the definition of function two important relations can be determined. One is the relationship between value and function. In this definition the word work directly relates to use value and the word sell a relation between value and function reveals the importance of function.

(i) All the functions should be accomplished in two words-a-verb and a noun.

(ii) All the functions must be categorized into two levels of importance basis of primary and secondary etc.

4. Innovation/Creativity

For this phase it is necessary to use creative techniques that generate alternatives. Starting from the analysis of functions and costs, there is a search for means that allow elimination, change or improvement of components and functions.

It is important to look for different ways of satisfying the basic functions, even if it means rejecting the current approach and starting again with a clean drawing board. This requires the product or process to be ‘mentally destroyed’ and then rebuild a new one.

In value analysis as in method study a persistent critical examination of facts is extremely important. Creative phase objective is to produce ideas and to formulate alternative ways for accomplishing the essential functions and improving the value of the problem under consideration.

This effort starts as soon as enough information has been collected, reviewed and understood.

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