Meaning of Value Analysis and Value Engineering

Any attempt at saving cost Cut back on cost without having to sacrifice quality or disturb the marketing situation.
One must give value for money & that the manufacturer must ensure that he is
in turn gets value for money at all the stages of his manufacturing operations.
Value engineering or value analysis means that everything you make or buy
serves a purpose.
Value Analysis – Cost saving device.
Value analysis or value engineering is an effective cost reduction technique.
An industrial buyer is competent to generate profits depends on his information,
analytical capacity & negotiating ability.
Value analysis is a part of purchasing activity.
Value analysis is typical of the systematic comparison & analytical approach
which enables a firm to get value for money with its purchases.
Value analysis ensures cost reduction through a careful study.
Value analysis seeks to cut down unnecessary material costs which are built
into manufactured articles or services.

Value Analysis & Value Engineering
Value engineering is considered as cost avoidance.
Value analysis as cost reduction.
Value engineering refers to what engineers do.
Value analysis is to what the purchasing department does.
Value engineering is reserved for cost prevention exercise. It’s the application
of the value analysis technique.

Objective of Value Analysis
To reduce cost by closely approximating all the features of the design making it
suitable to the needs of the product & the economy of the purchasing
manufacturing distribution cycle.
1) Modification of the design or material specification
2) New sources of supply
3) Elimination or combination of components
4) Use of more efficient processes
5) Standardization & rationalization of dimensional tolerances & finishes
The Use value Determined by the properties which, perform a particular service
or work.
The Esteem value By features of the article
The Cost value By the monetary sum of labor, materials, overheads & any other
source
The Exchangevalue
The price a purchaser offers for the product & total of the esteem
& use values Profit The difference between the cost value & exchange value is profit.
The Functional Value
This pertains to an evaluation of the specifications, qualification or
design of a resource against background of what is required to be
achieved through that particular resource.
The utilization value
This determines the extent to which an effective use is made of
the specified resources.

Steps in Conducting Value Analysis
1) Select the product to be analyzed.
2) Obtain the cost of the product.
3) Record the number of components.
4) Record all the functions.
5) Record the number of required components, currently & in the foreseeable
future.
6) Determine the primary function.