INTERNATIONAL JOURNAL OF MARKETING,

FINANCIAL SERVICES & MANAGEMENT RESEARCH

Online Available at indianresearchjournals.com

Vol.1 No. 3, March 2012, ISSN 2277 3622

IMPLEMENTATION OF VALUE ENGINEERING

- A CASE STUDY
AMIT SHARMA1, DR. R.M.BELOKAR2
1

PhD Research Scholar, PEC University of Technology, Chandigarh, India

Associate Professor, PEC University of Technology, Chandigarh, India

ABSTRACT
This paper presents the basics of Value Engineering and its different phases that can be
implemented to a product for its optimization. Value Engineering can improve the product cost by
reducing the unnecessary costs associated with the product. It explores each part of the Value engineering
job plan for the successful application of the technique. A case study has been discussed and an analysis has
been carried out by this process to achieve the product optimization. Various tools are used for the analysis
of the product while evaluating the product at different phases. At the end the results obtained after
implementation of this technique are discussed.
Keywords : Value Engineering (VE), Job Plan, Decision Matrix, VIP

I.

INTRODUCTION

II. VALUE ENGINEERING

Value Engineering is a technique for determining the

VE is an organized way of thinking or looking at an

manufacturing requirements of a product/service; it is

item or a process through a functional approach. It

concerned with its evaluation and finally the selection

involves an objective appraisal of functions performed

of less costly conditions. [1] VE is a process for

by parts, components, products, equipment,

achieving the optimal result in a way that quality, safety,

procedures, and services; and so on anything that costs

reliability and convertibility of every monetary unit are

money. Value methodology is commonly applied under

improved. [2] Value Engineering is usually applied in

the names Value Analysis (VA), Value Engineering

the analysis and design of a service/product. [3] In

(VE), and Value Management (VM). These terms can

fundamental terms, VE is an organized way of thinking

be used interchangeably with value methodology

or looking at an item or a process through a functional

throughout the places according to the need of the

approach. [4] Society of Japanese Value Engineering

situation. [6] Value Analysis is an effective tool for cost

defines VE as: A systematic approach to analyzing

reduction and the

functional requirements of products or services for the

purposes of achieving the essential functions at the

Results accomplished are far greater. It improves the

lowest total cost. [5] This paper outlines the basic

effectiveness of work that has been conventionally

frameworks of Value engineering and presents a

performed as it questions and probes into the very

case study showing the merits of VE in a Bath

purpose, design, method of manufacture, etc., of the

Fittings Manufacturing Industry.

product with a view to pinpointing unnecessary costs,

obvious and hidden which can be eliminated without
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AMIT SHARMA1, DR. R.M.BELOKAR2

adversely affecting quality, efficiency and other

customer features. [7]

IV. ROADBLOCKS TO COST

EFFECTIVENESS
The practice of VE doesn't imply that there may be

III. LIFE-CYCLE COSTING

intentional "gold plating," conscious neglect of

Life-cycle costing is a methodology used for facility

responsibility, or unjustifiable error or oversight by the

acquisitions that employs a comprehensive economic

design team. VE simply recognizes that social,

analysis of competing alternatives. The analysis

psychological, and economic conditions exist that may

compares initial investment options and identifies

inhibit good value. The following are some of the more

least-cost alternatives for a project or acquisition over

common reasons for poor value:

its serviceable or useful life span. Life-cycle costing

1. Lack of information, usually caused by a shortage

examines the associated ownership costs of competing

of time. Too many decisions are based on feelings

alternatives by discounting both the positive and

rather than facts.

negative cash flows throughout the facility's service life.

2. Wrong beliefs, insensitivity to public needs or

unfortunate experience with products or processes

[8]

used in unrelated prior applications.

3. Habitual thinking, rigid application of standards,
customs, and tradition without consideration of
changing function, technology, and value.
4. Risk of personal loss, the ease and safety
experienced in adherence to established procedures
and policy.
5. Reluctance to seek advice, failure to admit
ignorance of certain specialized aspects of project
Fig. 1: Life cycle costing

development.
6. Negative attitudes, failure to recognize creativity

The concept of economic analysis, which is used in life-

or innovativeness.

cycle costing, requires that comparisons be made

7. Over specifying, costs increase as close tolerances

between things similar in nature. In value engineering

and finer finishes are specified. Many of these are

all alternatives can be compared using life-cycle costing

unnecessary.

because the alternatives for each project component are

defined to satisfy the same basic function or set of

Poor human relations, lack of good communication,

functions. When the alternatives all satisfy the required

misunderstanding, jealousy, and normal friction

function, then the best value alternative can be

between people are usually a source of unnecessary

identified by comparing the first costs and life-cycle

cost. In complex projects, requiring the talents of many

costs of each alternative. For many projects there is a

people, costs may sometimes be duplicated and

viable sustainable development alternative. [9]

redundant functions may be provided.

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IMPLEMENTATION OF VALUE ENGINEERING A CASE STUDY

V. APPLICATION OF VALUE
ENGINEERING
Value Engineering can be applied universally, i.e., to
everything

The job plan is normally organized by a value team

leader. It is conducted in five sequential phases (which
may overlap in practice) as follows:

materials, methods, processes, services,

1. Information Phase: Further familiarization of the

etc., where it is intended to bring about economics.

project by the team; all team members participate in a

[10] One should naturally start with items where the

function analysis of the project as a whole, and then of

maximum annual saving can be achieved. This

its component parts, to determine the true needs of the

immediately suggests that items whose total annual

project. Areas of high cost or low worth are identified.

consumption in Rupees is high should receive top

2.

Creative Phase: The team lists creative ideas

priorities in the application of Value Analysis. In the

generated from its review of the project with the

same manner, scarce materials, imported materials, or

aim of obtaining a large number of ideas through

those difficult to obtain should also receive the

brainstorming and association of creative

attention of the value analyst. Bearing this in mind,

proposals.

Value Analysis can be systematically applied to

3. Judgment Phase: Creative ideas are analyzed, and

categories of items, such as those listed below in order

the team selects the best ideas for further

to bring about substantial cost reduction.

development.

i.

Capital goods plant, equipment, machinery, tools

and appliances.

ii. Raw and semi-processed material, including fuel;

iii. Sub-contracted parts, components, subassemblies, etc.;
iv. Purchased parts, components, sub-assemblies,
etc.,
v.

4. Development Phase: The team prepares alternative

designs with capital and/or life cycle cost
comparisons of original designs and proposed
a l t e r n a t i v e s . A l l re c o m m e n d a t i o n s a re
supplemented with written descriptions, sketches,
basic design concepts, technical information and
cost summaries.

Maintenance, repairs, and operational items;

vi. Finishing items such as paints, oils, varnishes, etc.

vii. Packing materials and packaging;
viii. Printing and Stationery items;
ix. Power, water supply, compressed air, steam and
other utilities (services)
x.

Materials handling and transportation costs. [11]

VI. VE JOB PLAN

Fig. 2: VE Job Plan

The VE methodology (referred to as the job plan)

can be applied to any subject or problem. It is a vehicle

5. Presentation Phase: The team presents an oral

to carry the project from inception to conclusion. By

summary of its findings to the owner and the

adhering to certain formalities, the VE job plan ensures

designer, explaining the basic ideas recommended

that consideration is given to all necessary facets of the

their cost saving implications and their attendant

problem.

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AMIT SHARMA1, DR. R.M.BELOKAR2

rationales.[12]
VII. CASE STUDY
In this paper we have discussed a part named FLUSH
VALVE (1.50) which is manufactured in SUMMIT
ENGINNERING PVT. LTD. It is producing a wide
range of bath fitting products, all conforming to
international standards. There are more than 800
products that are manufactured in this plant. This
company is ISO 9001:2000 certified for
manufacturing of taps in India.
Value Engineering Methodology is applied to the
Flush Valve. The steps used in the analysis are as
follows:a) Detailed information about the part is collected.
b) Functional Definition Worksheet is prepared.
c) Creative Worksheet is developed
d) Evaluation is done through Decision Matrix
e) Finding And Recommendation
f)

Result

1. Collection of Information
All the information regarding the part is given below:
Fig. 3: Sleeve design
i.

Material Brass

ii. Cost of the scrap is Rs.310/kg

2. Functional Analysis

iii. Pieces Produced in a month 1000

Part Name: Sleeve

Table I

iv. Process used Electric Induction Furnace

v.

Temperature of the furnace approx. 1000 C

Functional Definition Worksheet

vi. Total Present cost Rs.55/piece

Cost Breakdown of the product:
i.

Scrap Rs.310/kg

ii. Material cost Rs.45

iii. Machining cost Rs.6
iv. Plating cost Rs.4

3. Creative Worksheet

v.

Various ideas for the part under consideration are

listed below using brainstorming technique:

Total cost Rs.55

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IMPLEMENTATION OF VALUE ENGINEERING A CASE STUDY

Table III

Change the material to plastic

Use stainless steel pipe
Use a pipe of suitable gauge
Use ZAMAK
Change the design of the part
Change the specifications of the part
Use rubber

Performance Score

Note: In this matrix alternative "a" has the maximum score. So this

4.

A.
B.
C.
D.

is selected as the optimal solution for the investigation phase.

Decision Matrix
For judging the ideas, the following attributes
were considered:
Implementation
Maintenance
Quality
Safety

Table IV
Value Improvement Potential Index

Table II
Paired Comparison of Attributes

Fig. 5: Cost Regulation

Fig. 4: Graph between % weight and function

ALTERNATIVES:
Fig. 6: Performance

5.

Finding And Recommendation

From the Value Improvement Potential Index
table we see that the alternative "a" has the highest
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AMIT SHARMA1, DR. R.M.BELOKAR2

value score out of all the alternatives. It means that

Reduction of Components

if we implement the above alternative for the

Fewer Inventories

current part we will be able to get the same part but

Better Quality

with lesser cost and of the same value.

Increased Efficiency

It is

recommended that the Flush Valve Sleeve should

be made in the factory from ZAMAK (which is a

VIII. CONCLUSION & FUTURE SCOPE

combination of zinc and aluminium) which is

Value Engineering is the systematic application of

cheaper than brass and with the use of PDC

recognized techniques by a multi-disciplined team

(pressure die casting) process without making any

which identifies the function of a product or services;

change to the design of the part.

establishes a worth for that function; generates

alternatives through the use of creative thinking; and

Table V

provides the needed functions to accomplish the

Cost Evaluation

original intent of the project, reliably and at the lowest

life-cycle without sacrificing project requirements for
safety, quality, operations, maintenance and
environment.
In the Case Study discussed above we see how
the cost of a product is minimized by applying the Value
Engineering Methodology. Various worksheets are
developed and thorough analysis is done to attain a

6.

Result

concrete solution. In future we can make the changes in

The benefits after the implementation of value

the design so that the Value of the product can even be

engineering are given below:-

enhanced. Various other Industrial Engineering tools

like QFD with Value Engineering can be made use of

Table VI

for further improvement.

Cost Benefits

Cost Of Part Before Value Engineering Rs 55/Cost Part After Value Engineering

Rs 29/-

REFERENCES
[1] Son, Y., Wysk, R., and Jones, A., 2003,

Savings Per Part

Rs 16/-

Value Improvement

55 %

"Simulation Based Shop Floor Control: Formal

Expected Annual Savings

Rs 1,92,000/-

Model, Model Generation and Control Interface,"

IIE Transactions on Design and Manufacturing,

Other benefits:

Material Saving

35(1), 29-48.
[2] Son, Y., and Venkateswaran, J., 2006,

Reduced Labor Cost

Reduced Machining Time

for Integrated Analysis of Stability and

Simplified Process

Performance," International Journal of Simulation

Reduction in Production Time

and Process Modeling (in press).

"Hierarchical Supply Chain Planning Architecture

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IMPLEMENTATION OF VALUE ENGINEERING A CASE STUDY

[3] Venkateswaran, J., and Son, Y., 2005, Production

and Distribution Planning for Dynamic Supply
Chains Using Multi-resolution Hybrid Models,
Simulation (submitted).
[4] Access to success: Value Engineering, Mani Mala,
Advancements & Futuristic Trends In Mechanical
& Industrial Engineering, November, 2010
[5] Dod 4245.8-H Value Engineering March 1986
[6] Va l u e

Engineering

white

p a p e r,

www.kpitcummins.com
[7] Stuart D. Green, (1993) "Value Engineering
During Early Design", Facilities, Vol. 9 Iss: 9,
pp.10 - 13. R. Graeme Willersdorf, (1993)
"Adding Value through Logistics Management",
Logistics Information Management, Vol. 3 Iss: 4,
pp.6 - 8
[8] Veshosky, David and Nickerson, Robert L., "Lifecycle costs versus life-cycle performance," Better
Roads Magazine, Vol. 63, No. 5, May 1993.
[9] Keely, B.J. and J.W. Griffith, "Life Cycle CostBenefit Analysis: A Basic Course in Economic
Decision Making,"

R e p o r t

N .

HEW/OFEPM-75/06, Department of Health,

Education, and Welfare, Washington, D.C.,
1975.
[10] Sustainable Federal Facilities, Federal Facilities
Council Technical Report No.142, National
Academy Press, Washington, D.C. 2001
[11] Gage, W. L., (1967), 'Value Analysis', McGraw
Hill, London
[12] Younker, D.L.,Value Engineering: Analysis and
Methodology, New York, Marcel Dekker (2003).

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