Value engineering analysis is a systematic process which organizations use every time they want to conduct a study of the product’s function. The method seeks to know if the function of the product provides the value that the organization intends to give to its consumers. The objective of this method is to improve the value of the end product. This is a very effective method in improving the quality prerequisites and performance while at the same time minimizing costs and giving a solution to the problem.
A value of a product is the proportion of purpose to expenditure. Having this relation, the use of VEA will give solutions that will improve the product or minimize expenditure. It is also advised that organizations should establish and continue expenditure-effective value engineering analysis and processes.
The methodology was first introduced by the General Electric Company during the era of World War II. The situation back then brought shortages of resources on both factors – manpower and raw materials. General Electric executives, Jerry Leftow, Harry Erlicher, and Lawrence Miles, introduced a different process and noticed that the procedure either improved the product or reduced their expenditures. Later on they called the method “value analysis”. The technique determines and abolishes unnecessary cost, thereby enhancing the product value which benefits both the organization and its consumers.
VEA uses a well-planned idea where the basis of the study is the function of the product. VEA always describes the product function in two ways: the various uses of the product and what the product is actually used for.
The method gives value engineering the “function analysis” definition. Another question that gives VEA its rational logic are the questions “why” and “how”. The questions determine the function-cost relationship that has an increasing value. More of a quantitative method than a scientific process, the method’s focal point is on the theory-conclusion approach to procedure research and examine relationships.
The methodology is also identified as VM, which stands for Value Management and VA, which means Value Analysis. VEA is therefore a well-planned problem solving method which is based on function analysis. The use of the methodology gives several advantages.
Implementation of the process promotes excellent performance and reduces defects in design and manufacturing process by getting rid of wasteful actions. VEA also simplifies and enhances functional dependability and organization’s productivity. Aside from reducing the overall production and operation cycle cost of processes and projects, VEA is also capable of determining the possible risks and come up with solutions that will lessen the risks.
VEA can bring about several advantages if planned and executed well. The process also has some limitations and disadvantages. Since the method requires several stages, it is dependent on group work and numerous creative concepts. Also, given that the process aims to lessen the cost, its study and implementation should start before the distribution of funds. This method is best used during the design phase of a Six Sigma process.
VEA can be used in several product or process improvement plans. In a manufacturing industry, the process can be used for tool proposal and production, and material management. In sales, VEA can also be handy if a company experiences slow growth and non-sellable products. Value engineering analysis is also an effective tool for optimizing manpower schedule, forms and documentation processing, imitation or duplication services, expenditure analysis, studying product life cycle, surplus usage, maximizing labor resources, and creation of new procedures.
The VEA process consists of multiple phases. Everything will depend on the application. The original process which Larry Miles used incorporates six phases. He called the process the “VA Job Plan”. In a modern setting most organizations utilize eight phases. This includes preparation of the plan, gathering of information, data analysis, design creation, design evaluation, plan development, solution presentation, and follow through. The phases vary depending on the problem and project objective. There are four basic phases that are always present regardless of stated problem and project goal. The four basic phases in the VEA process are:
- Information stage – the phase involves several activities such as creating the definition of the problem, gathering of information that is relevant to the problem, apportioning necessary resources and manpower to conduct the study. This phase answers the questions – What is the current status of the product? What should the product do? What should the product not do? Who will conduct the study?
- Speculative stage – this stage aims to create alternative practices of giving required purpose with minimal cost. Developed by the Function Analysis Systems Technique also known as FAST, this purposeful study shows the logical connection amongst the system, the purpose of building, and the component. Using the FAST table, the VEA group will begin generating numerous ideas. Brainstorming activity provides several alternative solutions. The activity optimizes the resolution of product enhancement problem and choosing the best probable solution to the problem. The activity answers the questions – What are the possible alternatives or options that will meet the requirement? How will the options or alternatives be calculated? What other alternatives can perform the same purpose?
- Analytic stage – the stage aims to compare cost of different alternatives and define the ultimate alternative. The LCC, known as the Life Cycle Costing is commonly used to evaluate the least cost of the last chosen alternatives. The stage identifies the quality and cost effective alternative. The phase answers the questions – Which is the best alternative? What is/are the possible performance and impact to the business of each alternative? What should be done? How much does it cost? What other will perform the job?
- Proposal stage – the stage presents the result of the value engineering analysis study to the client and seeks for their approval. The stage also establishes the commitment from the project sponsor, designer, and other executives to be able to implement and monitor the proposed plan.
The purpose of using value engineering analysis should not be limited for reducing cost alone or for product or process improvement alone. The study requires the definition of the relation between cost and function, thus the focal point of the analysis should be on improving both aspects. The success of the study depends on the capability of all team members to analyze given problem using available set of data, come up with all possible solutions, weigh all alternatives, and select the most effective and least expensive alternative.