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Value Engineering

Posted on October 18, 2025October 20, 2025 by user

Key takeaways

  • Value engineering (VE) is a systematic approach to maximize a product’s function while minimizing its cost without degrading quality.
  • VE focuses on what a product or process must do (its functions) rather than on physical attributes.
  • A common formula: Product value = Function / Cost.
  • VE typically follows six phases: gather information, generate ideas, evaluate, develop, present, and implement.
  • Common tools include FAST, life‑cycle cost analysis, value stream mapping, and Pareto analysis.

What is value engineering?

Value engineering is an organized method for improving a product, system, or process by preserving or enhancing its required functions at the lowest life‑cycle cost. It seeks substitutions in materials, design, or methods that reduce cost or increase performance without sacrificing quality or intended use. When applied during design it’s usually called value engineering; when applied to existing products it’s often called value analysis.

Origins

Value engineering originated at General Electric in the 1940s when engineers, led by Lawrence Miles, substituted scarce materials during World War II and discovered lower‑cost alternatives that maintained or improved performance. The practice has since evolved into a formal, multidisciplinary methodology used across industries.

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The value formula

Value is commonly expressed as:
Product value = Function / Cost

This means value can be raised by increasing function (what the product does) or by reducing total cost (including production, maintenance, and replacement over the product’s life).

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Typical VE phases

Although terminology varies, VE is commonly executed in six phases:

  1. Gather information
  2. Define product purpose, life cycle, costs, constraints, and performance requirements.
  3. Break down processes and quantify cost drivers.

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  4. Think creatively (idea generation)

  5. Brainstorm alternatives for materials, designs, processes, and sequences.
  6. Encourage open, nonjudgmental ideation to find novel solutions.

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  7. Evaluate ideas

  8. Assess feasibility, benefits, trade‑offs, regulatory impacts, and unintended consequences.
  9. Prioritize ideas based on net value improvement.

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  10. Develop and analyze

  11. Produce detailed plans, cost projections, prototypes or drawings, and risk assessments.
  12. Consider schedule impacts and breakeven implications.

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  13. Present findings

  14. Deliver clear comparisons of alternatives, including costs, timelines, and risks, for decision makers.

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  15. Implement changes

  16. Move from recommendations to execution with assigned responsibilities, monitoring, and documentation.

Many organizations perform a preliminary function analysis step between information gathering and idea generation to clarify what must be achieved.

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Guiding principles

  • Function‑oriented: Start by defining essential functions rather than fixing on components.
  • Cost‑worth analysis: Compare the cost of each function to its value; eliminate non‑worthwhile functions.
  • Multidisciplinary teams: Combine engineering, manufacturing, design, procurement, finance, and user input.
  • Client/user focus: Align changes with customer needs and perceptions of value.
  • Documentation and feedback: Record decisions and results for future learning.

Types of value considered

VE typically evaluates several value dimensions:
* Use value — the product’s functional utility.
* Cost value — production, operation, maintenance, and disposal costs.
* Esteem value — brand, status, or perceived quality that influences willingness to pay.
* Exchange value — ease of distribution, purchase, and resale.

Common VE tools and techniques

  • Function Analysis System Technique (FAST) — maps relationships among functions.
  • Brainstorming — broad idea generation.
  • Benchmarking — compare against industry best practices.
  • Life‑Cycle Cost Analysis (LCCA) — evaluates total ownership cost.
  • Value Stream Mapping (VSM) — identifies value‑added vs non‑value activities.
  • Design of Experiments (DOE) — tests factors systematically.
  • Pareto analysis — focuses effort on the most impactful issues.
  • Function‑cost matrix — compares cost contributions of functions.

Value engineering vs. value analysis

  • Value engineering: proactive, applied during design/development to prevent unnecessary cost or lost value.
  • Value analysis: reactive, applied to existing products or processes to remove inefficiencies or defects.
    Both share methods and goals but differ in timing and emphasis.

Limitations and risks

  • Resource intensive: requires time, data, and cross‑functional participation.
  • Short‑term focus risk: may favor upfront cost cuts that increase long‑term costs or reduce performance.
  • Over‑simplification or over‑engineering: risk of removing features customers value or creating unnecessarily complex solutions.
  • Not always applicable: regulatory constraints, strict specifications, or limited internal expertise can restrict options.

Example: Golden Gate Bridge

During construction in the Great Depression, engineers reexamined essential functions (safety, durability, transport) and used value engineering principles: simplified design, material substitutions (high‑strength steel), prefabrication, and construction innovations. These changes reduced cost dramatically while meeting functional requirements.

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Conclusion

Value engineering is a disciplined, function‑focused approach to improving product and process economics while safeguarding required performance. When applied thoughtfully and with a long‑term perspective, VE can reduce costs, improve functionality, and increase customer value.

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