Value Analysis and Value Engineering

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Value Analysis and Value Engineering Value Analysis Introduction Value Analysis is a cost reduction technique. It aims at cost reduction from the point of view of value. It aims at increasing value of the product & reducing cost. It aims at reducing cost by maintaining quality & reliability. It is a planned & scientific approach to cost reduction. Value Analysis & Value Engineering can be used interchangeably but there is slight difference in its application. Value Analysis can be applied to any kind of cost but Value Engineering can be applied to direct cost only. Value Engineering is used in design & development stage but VA is applied to products that are already in the market. Relation of value with function & cost Value= FunctionCost The Cost: Although the term Value is used very commonly as a synonym to Cost or Price, but in the context of VAVE it is an entirely different word. To highlight the difference between the three terms, we must consider the total system. For the purpose of this chapter our system would comprise only two elements viz. the Manufacturer at one end and the User at the other end. In this system, the manufacturer produces a certain item by consuming some material, use of machinery and labor, power and by carrying certain overheads as a necessary (subject to question) part of the set up. For all these items we give a generic name viz. The INPUTS. For the inputs are available only against a payment made or promise to pay, it becomes a commitment of the manufacturer, which sooner or later he has to pay. As this amount has got no relevance whether the product is sold or not, it is independent of the market, and this remains a fact. This part would form (and is called) the COST of the product or service. The Price: Once the item has been produced, the MANUFACTURER adds a certain amount of profits (in some cases even

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