Value Analysis (VA) involves the implementation of a set of techniques relating to cost reduction and cost prevention to the existing product to improve its value. On the other hand, Value Engineering (VE) is the implementation of a similar set of techniques relating to a new product at the time of its design.
These two are modern methods relating to product cost optimization. Many industries have adopted these techniques. These aim to improve the value provided to the customer. These mainly differ at the time of application of principles and techniques. This implies that the stage at which the ‘ value system’ is applied differentiates the two. When the application is at the commercial operations stage it is value analysis. But, if the application is at the design, drawings, and engineering stage, it is value engineering.
What is Value?
Value is nothing but fair return in exchange for goods, services or money. We can calculate the value of something by dividing its performance by cost.
In this post, you will get to know about the differences between value analysis and value engineering.
Content: Value Analysis Vs Value Engineering
|Basis for Comparison||Value Analysis||Value Engineering|
|Meaning||Value Analysis is a cost reduction technique applied to the existing product with the aim of enhancing its worth.||Value Engineering is a technique used before the product gets approval for fabrication.|
|Nature of Process||Remedial Process||Preventive Process|
|Applied when||After the product is introduced.||At the design stage|
|Objective||To get better optimized commercial output.||To get better engineering results.|
|Worked Out||With the help of knowledge and experience.||With the help of specific technical knowledge.|
|Ensures||Elimination of unnecessary cost||Prevention of unnecessary cost|
|Change||May change the existing stage of the product or operation||Changes made by value engineering are implemented at initial stages only.|
Definition of Value Analysis
Value Analysis is a scientific method as it involves the systematic application of well-known techniques. It aims to improve the value of a product or process by understanding its integral components and their related costs. Thereafter, it attempts to look for any improvements to the components by either reducing cost or increasing functional value.
In short, it is a planned creative approach regarding the reduction of cost. It examines the material composition of the product and production design. In this way, the implementation of necessary modifications and improvements takes place. But this does not involve a reduction in the value of the product.
It tends to identify unnecessary costs and eliminate them from the value system. But it should take place without compromising its functional utility and performance of output. So, we could say that the crux of value analysis rests on:
- Identifying the function of the product.
- Examining various alternatives to complete those functions.
- Selecting the best alternative which involves minimum cost.
Also, it decides monetary value for the function and provides relevant functions reliably at least cost. For this purpose, there is a need for the cooperation of various functional departments. The functional departments of the enterprise include:
- Market research
- Human Resource
- Production and so on.
In this way, value analysis may lead to the systematic use of alternative materials and newer processes.
Distinguishing Features of Value Analysis
- Encourages Innovation: Value Analysis is different from other cost reduction techniques because it encourages innovation and gives a more radical perspective. This is due to the fact that ideas for the reduction of costs are not restricted by the existing design of the product.
- Recognizes various types of value: Value Analysis identifies various types of value that are provided by the product or service. And then it analyzes this value. After that, it looks for various alternatives to enhance or maintain aspects of value, but at a reduced cost.
What is Unnecessary Cost?
Unnecessary costs refer to those costs which do not provide any of the following to the product or service:
Definition of Value Engineering
Value Engineering refers to the process of improving a product’s value at each stage of the product life cycle. If a product is appropriate in terms of performance and cost, the product is said to have good value. Its purpose is to assist in maintaining or increasing a firm’s profitability.
It is a creative approach. It aims to make certain that the functions of products and services are provided at the lowest cost. But again without compromising quality and reliability. In short, a rational analysis of the relationship between cost and value carried out before the final design of the product is value engineering. It is concerned with appraising the functions performed by parts, components, products, procedures and services, and so on, in an objective manner.
Also, the introduction of this methodology is to help individuals and firms that will allow them to make necessary changes to add to their processes and services.
Objective of Value Engineering
- Improve the value of the product by reducing its cost.
- Save money or increase the cost
- Use cost-efficient and better quality materials.
- Ensure standardization
- Timely availability of the product.
Applications of Value Engineering
Application of value engineering is at the time of:
- Introduction of new products.
- Rise in the overall production cost
- Reduction in the price of the competitors
- Reduction in sales
- Complaints of consumers regarding the performance of the product.
Key Differences Between Value Analysis and Value Engineering
The points given here will explain the difference between value analysis and value engineering in detail:
- Value Analysis is a cost reduction technique depending upon systematic examination of every cost item which involves the production of industrial products, in terms of customer satisfaction that it brings to the product. But, value engineering is the redesigning of a process, product or service so that value provided to the customer is improved while costs are reduced.
- While value analysis is a remedial process, value engineering is a preventive process.
- We apply value analysis at the time of production. As against, we apply value engineering at the time of the product is in the design stage. Further, its implementation is at each phase of the production process, which leads to a reduction in cost.
- We use the term value analysis with respect to the study of items of overheads and products that already exist. But, we use the term value engineering to study the design and systems before the issue of final production drawings.
- The objective of value analysis is to achieve better optimized commercial output. As against, attainment of better engineering results is the objective of value engineering.
- Value Analysis is possible when the team is having enough knowledge and experience. Conversely, implementation of value engineering is possible only when the team possesses specific technical knowledge.
- Value analysis facilitates the elimination of unnecessary costs that do not add any type of value to the product. Value Engineering facilitates prevention of unnecessary cost.
Therefore, the difference between value analysis and value engineering lies in the fact that the latter is concerned with improvement in the value of the product during product development process. On the other hand, the former takes place after the introduction of the product. Here one must take note that the process of product optimization is virtually same in both the cases.
In addition, the main objective of these techniques is to attain equivalent or better performance at a lower cost. But without sacrificing the functional or quality requirements.