Value Engineering

Why it matters

Value Engineering (VE) is crucial in industrial engineering as it helps in optimizing the cost and functionality of products and processes. By systematically analyzing the functions of a product, VE ensures that the essential functions are achieved at the lowest possible cost without compromising quality.

Key ideas

• Function Analysis: Identifying and understanding the primary and secondary functions of a product or process.
• Cost Reduction: Achieving cost savings by eliminating unnecessary functions or finding more cost-effective ways to achieve necessary functions.
• Interdisciplinary Approach: Involves collaboration among various departments such as design, production, and marketing to ensure all aspects of the product are considered.
• Life Cycle Costing: Evaluating the total cost of ownership over the product's life cycle, including initial costs, operation, maintenance, and disposal.
• Creativity and Innovation: Encouraging creative thinking to find innovative solutions for cost reduction and function improvement.

Formulas

• Value = Function / Cost
  • Value: A chosen function-per-cost index (rating points per currency unit here).
  • Function: The performance or utility rating on a defined, consistent scale.
  • Cost: The total cost associated with the product (in INR or other currency).

Worked example

Given: A product has a function rating of 80 and a cost of ₹2000.

1. Calculate the Value using the formula:

   Value = Function / Cost

   Value = 80 / 2000

   Value = 0.04

2. Interpretation: The index is 0.04 rating points per rupee. Compare alternatives using the same rating scale and cost basis; it is not an absolute measure of worth.

Final Answer: 0.04 rating points/₹

A dimensionless relative index can be defined as (F/F_reference)/(C/C_reference). All alternatives must satisfy required safety, reliability and functional constraints before cost comparison.

Common mistakes

• Confusing function with features: Functions are the essential operations a product must perform, while features are additional attributes.
• Ignoring life cycle costs: Focusing only on initial costs can lead to higher expenses over the product's life.
• Lack of interdisciplinary collaboration: Not involving all relevant departments can result in overlooking critical aspects of the product.

For GATE ME

Questions on Value Engineering often involve calculating the value of a product or process, analyzing cost reduction strategies, and understanding the principles of function analysis. Practice problems that require evaluating the trade-offs between cost and function.

Quick check

1. What is the primary goal of Value Engineering?
2. How is the value of a product calculated?
3. Why is interdisciplinary collaboration important in Value Engineering?

Answers: 1. To optimize cost and functionality. 2. Value = Function / Cost. 3. To ensure all aspects of the product are considered.