Essay on value engineering

Term Paper

VALUE ENGINEERING

Date: 11th Oct. 2012.

VALUE ENGINEERING

Abstract:
Value engineering is to design a new process, product or service which gives the highest level of performance and quality by identifying the worth for the function at the lowest overall cost. This paper gives a detailed description about value engineering technique. It also explains the methodology to implement value engineering. Further a relationship is developed between value engineering and the economy of the company. Value engineering in the long run helps in profit maximization and therefore helps in building the economy of the company.
Keywords: Value Engineering, Lowest overall cost, Profit Maximization.

HISTORY OF VALUE ENGINEERING:
‘Necessity is the mother of the invention’ is an old saying which during the World War II served as the genesis of the concept of value engineering. This initiative emerged from industrial community. During the World War industries were on their toes for higher and higher production. During the Second World War, a company named General Electric Company (GEC) of USA was manufacturing turbo-superchargers and armaments. They were asked to increase the production of superchargers from 50 per week to 1000 per week which for them was practically impossible. At the same time, there was also increase in the production of armaments. [Mukhopadhyaya, 2009]
Lawrance miles was working in American General Electric Company as an design engineer who was assigned a project to improve the product value by finding the most effective way to do the particular task. While doing this project, he became increasingly aware of the limitations of traditional cost reduction techniques. As a design engineer involved in cost reduction techniques, he was able to distinguish between what is good value and bad value and realized that very few people had the grasp of it. He evolved certain tests which were applied to the products which were being produced or were projected. The result was encouraging and since then this was called as value analysis.
In 1954 Bureau of ships within the department of Defense adopted a technique and changed its name from value analysis to value engineering. Over the time the definition was regularized by saying that ‘value analysis’ is a term used when this technique is applied to an existing product and the term ‘value engineering’ is used when technique is applied to a product in the design stage.
This technique soon spread over American companies and later to Europe. It is now a powerful management tool accepted by the management to ensure that unnecessary costs are not built into the product.
INTRODUCTION:
Unnecessary cost associated with a product, process and system was present yesterday, is prevalent today and will also be present tomorrow. Value Engineering is the answer to identifying these unnecessary costs. The principle behind value engineering is that it is a functionally oriented method for improving product value by relating the various elements of product worth to their corresponding elements of the cost. Thus value engineering helps to produce a product in minimum cost.
Value Engineering is a team approach. A team of people drawn from various specialist areas is founded to be the best way to handle value engineering projects. To apply the principles of value analysis effectively it is also better that it is performed in a systematic and rigorous approach so that no step is eliminated. Thus Value Analysis is a system, a complete set of techniques, properly arranged for the sole purpose of effectively identifying unnecessary costs before, during or after manufacturing of the product. [Telsang, 2011]
Anything manufactured or produced whether a product, process or any system is done to satisfy the customer needs and to serve a certain function. So the manufacturer has to see to it that the needs of the customer are satisfied and the function is

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