Value Engineering and Value Analysis
Overview • What is Value Engineering? • How is VE Applied? • When is it used? • What is Function Analysis and FAST?
Definitions Value Engineering is a technique applied to identifying optimum value solutions during new product development. Value analysis is a technique applied to improving existing products, processes or services. The objective is usually to reduce cost, but may equally or simultaneously be to improve performance or quality. -LD Miles
The Key Points of VA / VE • Applying formal work plans.
• A team approach. • Specific definition of functions.
• The simultaneous look at functions and costs. • Control of the analysis process.
• Quantifiable results
What is VALUE ? Value is the relationship between the defined function the customer requires and the costs incurred to provide that function. – Cost Value – Use Value – Esteem Value – Exchange Value
Value Engineering Value Engineering is • Reliability • Maintainability • Producibility • Human Factors • Parts Availability • Cycle Time • Quality • Weight Reduction
Why use Value Engineering? Save Save Build Improve Satisfy
Time Money Teamwork Quality Customer
When is VE used • Existing part/product cost is high • Existing technology is complex/old though simpler means are available • There is a need to release a cheaper product by cutting down some of the existing feature • The existing customer demands a minimal increment in product features that are in use • There is a need to cut down the manufacturing cycle time/cost
• • • •
•
When is VE used Value Engineering is used to determine the best design alternatives for Projects, Processes, Products, or Services Value Engineering is used to reduce cost on existing Projects, Processes, Products, or Services. 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 a powerful tool used to identify problems and develop recommended solutions.
Benefits of VE • • • • • • •
Decreasing costs Increasing profits Improving quality Expanding market share Saving time Solving problems Using resources more effectively
VE’s Weaknesses Successful VE results are dependent on the quality of information brought to the VE workshop for evaluation. VE is not time oriented, but, product oriented. Thus, improvements in production activities are not readily recognized. There are many misunderstandings and biases against VE that have been built up over time due to misuse of the methodology. “It cheapens the product without improving it.” “VE is only used for cost reduction.”
Value Engineering Research Questions and Check Sheet 1. Can it be eliminated without impairing function or reliability? 2. Does it cost more than its worth? 3. Does it do more than is required? Are there unnecessary features? 4. Is there something better with which to do the job?
Value Engineering Research Questions and Check Sheet 5.Can it be made by a less costly method? 6. Can a standard item or specialty product be used? 7. Could a less costly manufacturing technique be used? 8. Should different tooling be used?
9.Can someone else provide it at less cost without affecting dependability?
Potential Savings from VE No engineering Change Revision
Document Revision Re-Test/Re-qualification
Drawings Released
Tooling Changes
Net Savings from VE
Total Cost of VE Implementation
VE Implementation beyond this point results in a net loss.
Concept
Design
Engineering &Production Release
Production
What is value? VALUE = What we get out of something What we put into it
VALUE = Quality, reliability, appeal, etc = Benefits Cost, time, mass, energy, etc. Resources VALUE = Worth = Cost
Performance Cost
Delivery of necessary project functions while achieving best balance between project performance and project costs.
• Value =
Function Cost
To Increase Value
F
F
F
F
C
C
C
C
REDUCE
INCREASE
MAINTAIN
Competitive Advantage Quality is defined as “conformance to specification.” Value is defined as:
Function
Cost
You can’t have one without the other!
Competitive Advantage = Quality + Value
Unnecessary Cost • Any cost that can be removed without impairing the essential – Quality – Performance – Customer requirements – Reliability – Maintainability – Marketability – Schedule
Criteria for Evaluating Value • • • • •
COST Initial cost Operations Maintenance Return on Investment • Life cycle • Replacement • Cost of capital
• PERFORMANCE • Quality • Stakeholder requirements • Safety • Level of service • Environmental Impacts • Schedule Impacts • Operability • Reliability • Maintainability
Generalized Procedure for VA/VE Information Phase What is it? What does it do? What does it cost? Speculation Phase
Is the change better? Analysis Phase How much better? Why? Decision Phase Audit effectiveness Use experience Evaluation Phase Provide feedback
How else can the job be done? At what cost?
Review with depts and suppliers Select best alternative Get approval Prepare specifications
Six Step Value Engineering Job Plan Information Phase
Clearly identify the problem(s) to be solved, and gather information on the background, functions and requirements of the product, process, or system.
Creativity Phase
Brainstorm ideas on how to improve the high cost, broken, or inadequately performed key functions.
Evaluation Phase
Screen ideas for acceptance, score remaining ideas on a scale and group ideas into categories. Develop design scenarios, and selection criteria. Rate and rank ideas.
Planning Phase
Plan how to sell ideas to management, identify key recommendations, plan management presentation.
Reporting Phase
Give oral presentation to management, or develop written report.
Implementation Phase
Get management approval for go-ahead, make management plan, make assignments, implement, follow-up.
The Value Methodology Job Plan INFORMATION PHASE
Complete data package Modify scope
- What is the problem or opportunity? Why do you consider it a problem or opportunity? Why is a solution necessary?
What is the cost?
Develop a plan to gather project data Investigate the project
FUNCTION ANALYSIS PHASE
Identify functions Classify functions
CREATIVE PHASE
Create quantity of ideas by function
Develop function models Cost functions Establish value index Select functions for study
What is the task function?
What else can perform the function?
EVALUATION PHASE
Rank and rate alternative ideas Select ideas for development
Where else can the function be performed?
How must each idea work?
How else can the function be performed?
What is the feasibility of implementation?
What are the basic functions? What are the supporting functions?
DEVELOPMENT PHASE
What will be the cost? When will we breakeven? What is the best overall alternative?
Verify data
PRESENTATION PHASE
- Conduct benefit analysis
Present oral report
Complete technical data
Prepare written report
Create implementation Plan Prepare final proposals
How should the ideas be presented? How can disadvantages be overcome? Why is the new way better? Will it meet all the requirements without compromise of form, fit, or function? What are the annual savings?
PRESTUDY - Collect user/ customer attitudes
What is to be included in the study?
Complete data files
Who is best able to study the problem?
Determine evaluation factors Scope the study
What are the current and future requirements of the subject under study?
Build data models
What type of impediments will the team
Determine team composition
come against?
POSTSTUDY Verify accomplishments
Present results Advertise outcomes
Who should be sold?
What was the problem? What is the new way, savings, and benefits? How will it satisfy our customers? What is needed to implement the proposals?
Who is responsible for implementing the change?
How much did it cost/save?
- Complete/ implement changes
Did the change meet customer’s expectations?
- Monitor status
Did the new way work?
Property of OSC VE Office
Information Phase-Fact Finding
What do you need to know about the problem that you don’t know now?
What facts are known? What are the requirements of the system?
Are these facts, opinions, assumptions, or prejudices?
Where or how can information be obtained?
Function Analysis • Shifts the problem-solving focus away from the items toward the functions • Function need be defined by two words: an Active Verb and a Measurable Noun • The verb defines the required action; the noun tells what is being acted on • The more abstract the function definition, the greater the opportunities for finding creative alternatives
Function Analysis FAST (Function Analysis System Technique) - A logic diagram to describe how a system works. Examples of Verbs and Nouns: Active Verbs Transmit Irradiate Project Dissipate Generate Convert Receive Reflect Provide (passive!)
Nouns Signal Information Data Heat Radiation Current Light Image
Functions of a No. 2 Pencil Description Pencil Eraser Band
Body
Paint
Lead
Function Makes Marks Removes Marks Secure Eraser Improve Appearance Support Lead Transmit Force Accommodate Grip Display Information Protect Wood Improve Appearance Makes Marks
FAST Example Functional Analysis System Technique (FAST) Diagram 1. List Desired Outcome and Requirements of Customer in Verb Singular Noun Form Mouse Free Living Area = Eliminate Mice
FAST Diagram 2. List Products and Services that satisfy Desired Outcome (Q4). These Products or services answer WHAT is desired of the system. • Use Cat • Create Virus • Kill Mice • Eliminate Food
FAST Diagram • 3. List all functions in Verb Noun format and processes that would satisfy or produce each product or service in the previous step. • Generate all functions, basic, secondary, support without regard to relationship. Kill Mice • Trap Mice • Electrocute Mice • Shoot Mice • Gas Mice • Drown Mice • Use Snake • Poison Mice
FAST Diagram 4. Select each function from the previous step starting with what you believe to be the basic function. Ask HOW this basic function might be accomplished. HOW Eliminate Mice
Use Cat Create Virus Kill Mice Eliminate Food
KILL MICE
POISON MICE
Trap Mice Electrocute Mice Shoot Mice Gas Mice Drown Mice Use Snake Poison Mice
•Spray Poison •Inject Poison •Step on Poison •Eat Poison •Shoot Poison
FAST Diagram 5. Continue to answer the HOW and place the answer • directly to the right. • Related functions that are at the same level, stack above or below the CRITICAL PATH HOW Eliminate Mice
Use Cat Create Virus Kill Mice Eliminate Food
KILL MICE
POISON MICE
Trap Mice Electrocute Mice Shoot Mice Gas Mice Drown Mice Use Snake Poison Mice
•Spray Poison •Inject Poison •Step on Poison •Eat Poison •Shoot Poison
EAT POISON
•Eat Bait •Drink Bait •Smell Bait
FAST Diagram 6. Continue to answer the HOW and place the answer • directly to the right. • Related functions that are at the same level, stack above or below the CRITICAL PATH HOW KILL MICE Trap Mice Electrocute Mice Shoot Mice Gas Mice Drown Mice Use Snake Poison Mice
WHY POISON MICE
•Spray Poison •Inject Poison •Step on Poison •Eat Poison •Shoot Poison
EAT POISON •Eat Bait •Drink Bait •Smell Bait
EAT BAIT •Attract Mouse •Trap Mouse
ATTRACT MOUSE
FAST Questions • How do we perform the function? • Why do we perform the function? • When do we perform the function? • What is the Desired Outcome? • Where do we perform the function? • Who performs the function?
The Technical FAST Model HOW ?
WHY? INDEPENDENT FUNCTION (SUPPORTING)
OBJECTIVES OR SPECIFICATION S (concept)
OUTPU T MISSION, OBJECTIVE, OR HIGHER ORDER FUNCTION
BASIC FUNCTION
DEPENDEN T FUNCTION
(concept)
W H E N
DEPENDENT FUNCTION
MINOR CRITICAL PATH INDEPENDEN T FUNCTION
B
A
D
(AND)
C
ACTIVITY 1
MAJOR CRITICAL PATH SCOPE OF THE PROBLEM UNDER STUDY HIGHER ORDER FUNCTIONS
LOWER ORDER FUNCTIONS
E
ACTIVITY 2
INPUT
LOWEST ORDER FUNCTION
Critical Path HOW
F.A.S.T MODEL OVERHEAD PROJECTOR
WHY
(concept)
CONVEY Information
PROJECT IMAGE
GENERATE LIGHT (concept)
CONVERT ENERGY
RECEIVE CURRENT
TRANSMIT CURRENT
Supporting Functions F.A.S.T MODEL OVERHEAD PROJECTOR
WHY
HOW
(concept)
W H E N
CONVEY Information
PROJECT IMAGE
FOCUS IMAGE SUPPORT IMAGE
AMPLIFY IMAGE
GENERATE LIGHT
(concept)
CONVERT ENERGY GENERATE HEAT
DISSIPATE HEAT
GENERATE NOISE
RECEIVE CURRENT
TRANSMIT CURRENT
Objectives or Specifications HOW
F.A.S.T MODEL OVERHEAD PROJECTOR WHY FACILITATE PORTABILITY
OBJECTIVES OR SPECIFICATIONS ALLOW SAFETY (concept)
W H E N
CONVEY Information
PROJECT IMAGE
FOCUS IMAGE SUPPORT IMAGE
AMPLIFY IMAGE
GENERATE LIGHT
(concept)
CONVERT ENERGY GENERATE HEAT
DISSIPATE HEAT
GENERATE NOISE
RECEIVE CURRENT
TRANSMIT CURRENT
Add Scope Lines HOW
F.A.S.T MODEL OVERHEAD PROJECTOR
WHY
FACILITATE PORTABILITY OBJECTIVES OR SPECIFICATIONS
ALLOW SAFETY OUTPUT
W H E N
CONVEY Information
INPUT
(concept) PROJECT IMAGE
FOCUS IMAGE SUPPORT IMAGE
AMPLIFY IMAGE
GENERATE LIGHT
(concept)
CONVERT ENERGY GENERATE HEAT
DISSIPATE HEAT
GENERATE NOISE
RECEIVE CURRENT
TRANSMIT CURRENT
FAST Example - Overhead Projector HOW?
WHY?
F.A.S.T MODEL OVERHEAD PROJECTOR FACILITATE PORTABILITY OBJECTIVES OR SPECIFICATIONS
ALLOW SAFETY OUTPUT
W H E N
CONVEY Information
INPUT
(concept) PROJECT IMAGE
FOCUS IMAGE SUPPORT IMAGE
AMPLIFY IMAGE
GENERATE LIGHT
(concept)
CONVERT ENERGY GENERATE HEAT
DISSIPATE HEAT
GENERATE NOISE
RECEIVE CURRENT
TRANSMIT CURRENT
Creativity Techniques- Brainstorming Generate a large number of ideas - quantity, not quality. Free-wheeling is encouraged - Listen and improve on the ideas of others. Don’t criticize - No evaluation of ideas Encourage everyone to participate Record all ideas presented Time to let ideas “incubate” should be allowed. Select an appropriate meeting place
Function Analysis Function Analysis is the key to understanding the problem.
Brainstorm all possible functions
Next, build a FAST Model to help identify any missing functions.
Other tools that can work with VE Activity Based Costing (ABC) Cost Function Matrix Failure Modes and Effects Analysis (FMEA) Risk Analysis Tools Other traditional quality tools such as pareto analysis, ishakawa diagrams, scatter diagrams, etc. Function analysis is the key to understanding the system and what it does. Function analysis enables you to analyze the problem from a system perspective.
The Planning & Reporting Phases •
Planning What is recommended? Who has to approve it? What is the implementation plan? Are mockups or prototypes required to verify final decisions? What are the cost, schedule, and deliverables? ROI?
ACTION PLAN GUIDELINES “What needs to be done?” Identify the actions needed to “solidify” the proposals.
“Who should be assigned the action?” Assign a team member. Assign a completion date for the action.
“When should the task be completed?” Plan regular team status meetings. Anticipate 4-6 weeks to complete the actions.
Implementation Planning Ideas must be planned and managed to ensure implementation. Proposed actions should be managed like a project with specific end products, defined start and end dates, and funding limits.
The Planning & Reporting Phase
•
Reporting Give oral presentation. Support it with written executive brief. Be clear, concise, and positive. Anticipate roadblocks
Analysis of Each Component • Can any part be eliminated without impairing the operation of the complete unit? • Can the design of the part be simplified to reduce its basic cost? • Can the design of the part be changed to permit the use of simplified or less costly production methods? • Can less expensive but equally satisfactory materials be used in the part? • Design simplifications frequently are more apparent than is possible under the original design
The Value Engineering Checklist 1. Can the item be eliminated? 2. If the item is not standard, can a standard item be used? 3. If it is a standard item, does it completely fit the application, or is it a misfit? 4. Does the item have greater capacity than required? 5. Can the weight be reduced? 6. Is there a similar item in inventory that could be substituted? 7. Are closer tolerances specified than are necessary?
The Value Engineering Checklist 8. Can you make the item less expensively in your plant? If you are making it now, can you buy it for less? 9. Can cost of packaging be reduced? 10. Are suppliers contributing suggestions to reduce cost?
Concluding Remarks • The design stage provides the greatest opportunity to reduce costs
REMEMBER ! Value Analysis is a continuous process
