Value Analysis and Value Engineering

Topics: Cost, Industrial engineering, Investment Pages: 7 (1806 words) Published: July 24, 2013
Value Analysis is an effective tool for cost reduction and the results accomplished are far greater. It improves the effectiveness of work that has been conventionally performed as it questions and probes into the very purpose, design, method of manufacture, etc., of the product with a view to pinpointing unnecessary costs, obvious and hidden which can be eliminated without adversely affecting quality, efficiency, safety and other customer features.

Let us consider at this stage what is meant by “Value’. ‘Value’ is itself is some what difficult to define. It means different things to different people. Also, it is often confused with the cost and price of a product or service. One way of defining the value of an item is: Worth to you Value = -----------------Price you pay This means that if you feel that you have your money’s worth, then you have received 100 per cent value. Which indicates that ‘Value’ has a subjective aspect, for what is good value for one person need not necessarily be so far another. In general, if for any function or a product or a service, you feel you are paying too much, or it costs you more than you think it should, there is scope for improving its ‘value’ into it. This leads us on to another useful way of looking at ‘value’. Value is the least cost that can accomplish reliably a function or a service. This implies that in achieving reduced cost, the quality and performance of the item are maintained. It follows, therefore, that value analysis is a technique which builds “Value’ into an item. Value can also be defined as that combination of quality, efficiency price, and service which ensures the ultimate economy and satisfaction of the purchaser. Value Analysis can be understood as a technique which helps everyone to determine this combination. It can be seen, therefore, that several components make up ‘Value’. There is value arising from the function or end use of an item, and from its ability to perform a useful function reliable. There is the subjective aspect of value in terms of esteem or prestige value or artistic value; for example, the extra chrome 62

and styling used to sell automobiles, or the neck-tie or diamond ring you may wear. Again, there is the cost value made up of the material and labour costs, overheads and any other costs incurred in producing the item. However, in the popular mind, this is closely associated with esteem value, as there is a mistaken belief that because something costs more it is worth more. Finally, there is the resale or exchange value which may be taken as the ability to part with money for possessing a particular product. In addition we have place value with regard to the usefulness of a product at a particular place.

Several versions of the VA Job Plan can be found in different literature. Some give file, others six and yet many other seven phases. It is the systematic approach which is more important to achieve the desired objectives. The phases of VA Job Plan are as follows: SELECTION & ORIENTATION ANALYSIS RECORDING IDEAS SPECULATION INVESTIGATION RECOMMENDATION IMPLEMENTATION 1) SELECTION & ORIENTATION to select those problems areas where a potential for net higher Savings is expected use the common pareto’s ABC analysis general scope, restrictions and aims of the study is defined to examine the data at a coordinated syndicate meeting to appoint a secretary to record the minutes to apply the Tests for Value to propose further actions the secretary writes clearly the minutes of the analysis meeting and circulates them to syndicate members it includes the agenda for the next meeting to hold additional syndicate












meetings in order to discuss the ideas analysed and any new information obtained. to speculate upon practical measures for reducing costs and increasing...
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