Though they are frequently used interchangeably, value analysis and value engineering are not the same things. Both of these procedures seek to increase the worth of a good or service by lowering prices, raising standards, or doing both. They differ in their goals, strategies, and methods nevertheless. Everybody involved in developing products or services, procurement, or management should be aware of the distinctions between value analysis and value engineering.
We shall examine the definitions, procedures, advantages, and distinctions between value analysis and value engineering in this post. We will also offer advice on which method to employ in various circumstances as well as instances of when each process is most appropriate.
Value Analysis (VA) vs. Value Engineering (VE)
To increase the worth of a product or service, two separate techniques called value analysis and value engineering are used:
Value Analysis is a methodical procedure that evaluates a product or service's functions and expenses to find areas where costs can be cut without degrading the product or service's performance or quality. It involves disassembling a good or service into its component elements, looking at its functionalities and the expenses connected with it, and then figuring out how to cut costs while keeping or enhancing the functionality of the good or service.
The goal of Value Engineering, on the other hand, is to discover and reduce excessive expenditures while enhancing the total value of a good or service. In order to uncover solutions to cut costs, boost performance, and increase customer happiness, a multidisciplinary team must study the product or service's design, materials, and manufacturing procedures. Further, it is employed to create new value out of existing resources.
Although improving the value of a good or service is the goal of both value analysis and value engineering, they differ in their objectives, methods, and applications. It's vital to understand how these two methods differ to choose the one that will work best depending on the context.
Difference Between Value Analysis & Value Engineering In Tabular Form
|Parameters of Comparison||Value Analysis||Value Engineering|
|Goal||To reveal spots where expenses can be cut without sacrificing quality or performance.||To find and reduce unnecessary expenditure while enhancing quality and value.|
|Focus||The focus here is on the features of the product or service and its price.||The focus here is on the design of the product or service and production procedure.|
|Strategy used||Examining the product or service to find areas for cost-savings.||Operating together as a multidisciplinary team to examine the production, materials, and design processes.|
|Techniques||Evaluating the functions and economics of a product's or service's individual components.||Generating ideas, comparing, and examining the production, material, and design processes.|
|Applications||Employed to enhance existing goods or services.||Beneficial for upgrading existing products and services or developing new ones.|
What is Value Analysis (VA)?
In this section, we’ll discuss in further detail what value analysis is with types and examples.
As previously discussed, value analysis is a deliberate, quantitative approach aimed at finding and removing unnecessary expenditures from an existing good or service while maintaining or enhancing its overall functioning and quality. Finding areas where costs can be cut without sacrificing performance or quality is the main goal of value analysis. This method involves examining a product or service's features and expenses to identify areas where money can be saved. After a product or service has been developed, VA is frequently used to improve the existing version. A cross-functional team is used to investigate every facet of a good or service, including design, components, manufacturing processes, and distribution, to find areas where costs can be minimized without compromising functionality or quality.
The following steps are generally a part of the value analysis process:
- Defining the issue or the area that needs work.
- Determining the elements or parts of the process, service, or product that require analysis.
- Collecting data on the pieces or components, such as their productivity, prices, and functions.
- Examining the data and locating areas that could use enhancement.
- Creating alternate solutions that can more economically fulfill the same or better standards.
- Choosing the best option after weighing all the options available and their merits.
Though there can be many types of value analysis depending on the scenario or product like product value analysis, service value analysis, functional value analysis, process value analysis, supplier value analysis, environmental value analysis, etc. For this article we’re going to be focusing on two main types of value analysis:
Functional Value Analysis
This kind of analysis concentrates on the functions served by the parts or components of the good, service, or operation. It seeks to determine which tasks are necessary and which are not and to evaluate each. Doing this helps to cut out unnecessary procedures and lower the price of the good, service, or process.
This, for instance, can be used by a car maker to assess each component of a car and determine which ones are necessary and which ones can be removed or replaced with less expensive alternatives without sacrificing the quality or durability of the final product.
Cost Value Analysis
As the name suggests, this analysis is associated with the expense involved in the parts that make up the final good or service. The process aims at ways to cut the cost involved while maintaining the quality of the product.
For example, cost value analysis can be used by a manufacturing business that manufactures refrigerators to assess the costs of different parts such as the compressor, condenser, and evaporator. Through this process, they can find that the compressor is the most expensive component after evaluating the expenditures. Then, in order to cut costs without sacrificing quality, they can look for other suppliers or consider the compressor's design. This helps the business maintain its competitiveness and give customers better value.
What is Value Engineering (VE)?
Value Engineering is a process for increasing the value of system, techniques while decreasing the cost involved. It is a procedure that focuses on achieving the required functionality at same or less cost. It will not disturb the final product and its quality. But will only make it better.
It is broadly classified as Functional Value Engineering (FVE) & Design Value Engineering (DVE):
- Functional Value Engineering (FVE): Functional value engineering is a technique that examines how a product or process works in order to find ways to implement cost- or efficiency-saving measures. This process aims at increasing the value of the product or technique while lowering its price.
- Design Value Engineering (DVE): It is a systematic process to evaluate the design of the product or process . It helps in optimizing by enhancing its design and simultaneously lowering its cost.
In the long run, though both approaches are used to maximize the value of a product or process, Functional Value Engineering concentrates on the function of the good or service, whereas Design Value Engineering concentrates on the design.
Value engineering is a six phase process to attain the intended value improvement with the least impact of negative effects on quality, efficiency, and other significant variables. These phases are as follows: Information phase, Function Analysis phase, Creative Phase, Evaluation phase, Development phase, and Presentation phase. Let us study about these phases now.
- Information Phase: During this stage, information regarding the system, method, or product that needs improvement is gathered and examined. The value engineering team gathers data about the product's quality, affordability, and other key aspects in its present state.
- Function Analysis Phase: In this phase, the system or product is deconstructed into its parts, and each part's functions are reviewed. The team defines the necessary tasks the system or product must complete and groups the optional tasks that can be removed or modified.
- Creative Phase: This stage comprises coming up with solutions for raising the value of the system or product. The group discusses and assesses room for improvements in cost-cutting, design streamlining, performance, and value addition.
- Evaluation Phase: The strongest proposals developed during the creative stage are evaluated and chosen during this step. Each suggestion is assessed by the team according to its viability, cost-effectiveness, and probable impact on efficiency, quality, and other aspects.
- Development phase: This step includes creating a systematic approach for putting the chosen concepts into practice. The group creates a budget estimate, a project schedule, and other essential parameters needed to implement the strategy.
- Presentation phase: Presenting the proposal to decision-makers and stakeholders for evaluation and consent is part of this phase. The strategy is presented by the team together with its pros and cons, and prospective effects on the system or product.
Main Differences Between Value Analysis & Value Engineering in Points
- Value analysis is usually done on a product that already exists while value engineering might be done for a new upcoming product (design phase) or to make an already existing one better using design modifications.
- Value engineering attempts to identify and eliminate unnecessary expenses while enhancing performance and value. Value analysis seeks to pinpoint areas where costs can be cut without compromising performance or quality.
- Whereas value engineering concentrates on the design, materials, and production processes of a product or service, value analysis concentrates on the features and costs of a product or service.
- Value engineering includes working in a multidisciplinary team to study the design, materials, and manufacturing techniques, as opposed to value analysis, which focuses on analyzing the product or service.
- Value engineering incorporates conceptualizing, benchmarking, and analysis of the design, materials, and production process whereas value analysis is deconstructing a good or service into its component elements and looking at their functions and costs.
- While value engineering focuses on both cost reduction and boosting value, whereas value analysis is primarily concerned with cost reduction.
- Value engineering needs a diverse team with members with different expertise, whereas value analysis may be completed by one person or a small team using data analysis software.
- Even though value engineering concentrates on particular parts or features, value analysis evaluates the complete product or service.
In conclusion, Value engineering (VE) and Value Analysis (VA) are both important techniques for businesses trying to reduce costs without compromising with the quality of their goods or services. These two approaches have similarities yet differ significantly in their own ways.
With the help of technology such as computer-aided design (CAD) software, data analysis, data mining, such processes are carried out much faster and more efficiently today.
Overall, businesses must always assess their goods and services continuously to remain in line with the trends in the market and need of the customer.