Value Engineering - Introduction

Value Analysis and Value Engineering - Miles Way (L.D. Miles)

Value engineering has for its purpose the efficient identification and elimination of unnecessary cost. First article on the topic was written by L.D. Miles in 1949. Link available in this article.
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What is Value Engineering?

Value engineering has for its purpose the efficient identification of unnecessary cost, i.e., cost which provides neither quality nor use nor life nor appearance nor customer features. It focuses the attention of engineering, manufacturing, and purchasing on one objective – equivalent performance for lower cost. It results in the orderly utilization of low cost alternative materials, low cost alternative processes including new processes, and abilities of specialized suppliers to procure items at lower costs.
Lawrence D. Miles is the pioneer of this technique. He wrote the book - Techniques of Value Analysis and Engineering - in 1961. His designation at that time was Manager, Value Service, General Electric Company. He published the first article on value analysis in 1949 in American Machinist.

Functional design is not tampered:
Inherent in the philosophy of value engineering is the full retention for the customer of the usefulness and esteem features of the product. Miles argued emphatically right at the beginning of his book, “Techniques of Value Analysis and Engineering” that identifying and removing unnecessary cost, and thus improving the value, must be done without reducing in the slightest degree quality, safety, life, reliability, dependability, and the features and attractiveness that the customer wants.

What is Value?

Miles described  four types of value.

1. Use value: The properties and qualities which accomplish a use, work, or service.
2. Esteem value: The properties, features, or attractiveness which cause us to want to own it.
3. Cost value: The sum of labor, material, and various other costs required to produce it.
4. Exchange value: Its properties or qualities which enable us to exchange it for something else we want.

Even though Miles did not describe it that way, I feel value analysis or engineering is concerned with cost value without in anyway decreasing the use value, esteem value and exchange value
 

Value Analysis Techniques

Miles provided 13 ideas as value analysis techniques.
 
  1. Avoid generalities
  2. Get all available costs
  3. Use information from the best source
  4. Blast create and refine
  5. Use real creativity
  6. Identify and overcome roadblocks
  7. Use industry experts to extend specialized knowledge
  8. Get a dollar sign on key tolerances
  9. Utilize vendors’ available functional products
  10. Utilize and pay for vendors’ skills and knowledge
  11. Utilize specialty processes
  12. Utilize applicable standards
  13. Use the criterion, “would I spend my money this way?”
 
The Right Way to use the Techniques
 
Choose appropriate techniques to value engineer the specific product.
Arrange the techniques in best order for the particular job.
Use each technique imaginatively and effectively.
Use the techniques iteratively until useful information is developed to the extent that direction for decision and action is available.
To use the techniques an analyst requires special knowledge.
Value engineer is not a functional designer. He will have access to functional designers as needed in his value work. Hence his knowledge is not specialized to particular areas like mechanical engineering, electrical engineering, automobile engineering, or aerospace engineering. Knowledge required for high-grade value work is extremely broad.
 
The specialized knowledge required in value improvement work consists of information on materials, processes, functional products, sources of functional knowledge, approaches to function performance, and practical ideas for economical function performance.
 
It is important that the value engineer’s library of special knowledge contains a comprehensive volume of trade knowledge backed by efficient means for a quick recall of needed information. Value engineer also needs well-organized references to a maximum number of persons of special skills that may be consulted in connection with each problem.
 
Value engineers need develop a database having the association between properties of materials and costs apart from material and its cost. Similarly a database that shows the relationship between the properties of products produced by various processes and the cost of each process, including the material used is also valuable.

This topic will be discussed in more detail in a separate article 'Knowledge Required for Value Engineering'.
   
Job Plan for Value Engineering
 
Phase 1. Orientation: Understand the customers’ needs and wants. Understand the functions performed by the product and the contribution of each part and each feature of the part and the complete product to the functions to be performed by the product.
Value engineer has to make sure that he does not diminish the contribution of the product to the customers' needs and wants.
 
Phase 2. Information: Collection of information on quantities, vendors, drawings, materials, manufacturing methods, and costs.
Techniques to be used:

Get all available costs
Get a dollar sign on key tolerances


Phase 3. Speculation: Using all the techniques of value analysis to come out with alternative low cost materials and methods to produce components and the product. Creativity is to be employed here. Value engineer has to involve experts from various disciplines to help with ideas.
Techniques to be used:

Blast, create and refine

Blast
For each function to be performed by a product or a component, find alternative products, materials or processes that serve the function to a great extent but at a less cost. These alternative ideas do not satisfy the specified or required function completely but they do to a significant extent. Identify they function they perform and the cost involved,

During the blast activity use these techniques.
Utilize vendors’ available functional products



  • Utilize and pay for vendors’ skills and knowledge
  • Utilize specialty processes
  • Utilize applicable standards
  • Use the criterion, “would I spend my money this way?”

  • All the five techniques have the potential to suggest lower cost alternatives

    Create

    In create phase, the technique of "Use real creativity" needs to be employed to come out with ways by which the low cost alternatives identified during the blast stage can be modified to accomplish the specified function to a much greater extent with pertinent increase in cost. During this stage also the improvement in function and the increase in cost are to be clearly identified.

    Refine

    In this step, much more creativity is used and also the techniques "Use industry experts to extend specialized knowledge" and  "Utilize and pay for vendors’ skills and knowledge" are used to refine the ideas developed during the create step to come out with a refined alternative that fully accomplishes the specified function at a lower cost. During refine step, some more functionality is added as well as some additional cost.

     
    Phase 4. Analysis:  Technical and cost analysis of the alternative proposed.



    The techniques to keep in mind and use during this stage are:
    Avoid generalities
    Use information from the best source
    Identify and overcome roadblocks


     
    Phase 5. Program planning: Approach the specialists to further refine the selected alternatives. Inform the specialists the accepted suggestions and give mandate to them to take steps to implement the suggestions.
     
    Phase 6. Program execution: Pursue regularly the specialists and vendors to get their inputs on various tasks assigned to them. The output of this phase is a detailed design, successful trail  pilot  run of a manufacturing process or  a confirmed estimate from a vendor for supplying a component, material or sub assembly.
     
    Phase 7. Status summary and conclusion. The results of the value engineering study are to be presented to decision makers. The reports needs to have a summary sheet as well as the full supporting documentation.  The value engineering project is concluded when the product is manufactured and distributed at the lowered cost as per the value engineering study.


    Special Knowledge Required


    In practically all fields, the operator used special tools and special or field specific knowledge. Value analysis and engineering is no exception.

    Reach of knowlege: For value analysis, the knowledge required is extremely broad.
    Nature of knowledge: Information on materials, processes,  and functional products.
    Form and Constitution of Knowledge Fund: Handbooks, catalogues, charts, price lists, product and process descriptions, tables etc.
    Listing of specialized Competence: Value analysis requires consulting specialists and specialized sources. So a list of consultants as well as special publication is required for various materials, processes and components.
      


    Qualifications and Training for Value Analysts and Engineers


    Qualifications: Logic, creativity, ability to make rapid searches, recall, ability to quickly sort out useful information,  synthesis of solutions, selection of promising alternatives.

    Knowledge: Understanding of the properties of materials, and of manufacturing processes, their potentialities, and their limitations.

    Traits required: Imagination, initiative, self-organization, cooperative attitude,
    Attitude: belief in the importance of value

    Training: Three weeks class room followed by six months of practical work.
    Another round of three weeks class room followed six months of practical work
    Another round of three weeks.
     

    For further study:

    First article by L.D. Miles in 1949  http://minds.wisconsin.edu/handle/1793/3948 download the file 35.5 pdf from this page.
     

    Lawrence D. Miles, Techniques of Value Analysis and Engineering, McGraw-Hill Book Company, New York 1961.


    Note on Value Engineering
    Especially gives Juran's and Clawson's comments on value engineering

    Value Engineering - NPC, Chennai (77 page Document. Available online)
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    History of Value Engineering


    1.17 minutes

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    Originally posted at
    http://knol.google.com/k/value-engineering-introduction# - Knol Number 4
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