Value Analysis & Value Engineering

Value Engineering (VE) is systematic method to improve the "value" of goods or products and services.

Value = Function/Cost

Value can therefore be increased by either improving the function or reducing the cost. According to SAVE, the Society of American Value Engineers

Function is what the product or service is supposed to do (and my comment is it needs some way of measuring it)

Cost is the expenditure needed to create it (and my comment is you need to decide what to include in the costs, e.g. just material cost, just piece cost including labour, assembly cost, tooling cost, development and marketing costs?)

It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvements


Value engineering began at General Electric Co. during World War II. Because of the war, there were shortages of skilled labour, raw materials (e.g. chrome & vanadium for alloy steels), and component parts. Harry Erlicher (VP of Purchasing at G.E.) looked for acceptable substitutes. They noticed that these substitutions often reduced costs, improved the product, or both and were not replaced after the war ended. What started out as an accident of necessity was turned into a systematic process by Lawrence Miles in 1947 which he called "value analysis".

How to do it

The key to VA/VE is functional analysis, i.e. analysing what something "does" not what it is and then trying to make one part do as many functions as possible.

Value Analysis v Value Engineering

Value Analysis is the analysis of an existing product or service with a view to improving it

Value Engineering is applying the same process to a product or service in the design phase


A criticism of value analysis is that it sometimes seems to seeks to replace 'quality' parts with parts of lesser quality that will fail sooner, thus introducing planned obsolescence and potentially also lack of robustness.

Given that one of the inevitable results is a reduction in parts count, you will notice similarities with DFMA, but you may also wonder whether there is a conflict with Platform Engineering and Modular Design, and what to do about it.

Legal Requirements

In the United States, it is mandatory to use value engineering in public contracts, as specified in Title 41 of the US Code, section 1711 (41 U.S.C. 1711), which states,

1711. Value engineering

Each executive agency shall establish and maintain cost-effective procedures and processes for analyzing the functions of a program, project, system, product, item of equipment, building, facility, service, or supply of the agency. The analysis shall be—
(1) performed by qualified agency or contractor personnel; and
(2) directed at improving performance, reliability, quality, safety, and life cycle costs.

More detail about how this should be done is given in Circular No. A-131 (Revised), published by the President's Office of Management and Budget on 26 Dec, 2013. This states that it must be used for projects costing over $5m, and possibly for cheaper ones as well

If you want to know more about Value Analysis and Value Engineering, please contact us.


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