Value Engineering

from the Perspective of Competitive Advantage

Edwin B. Dean


[NASA Logo] Value engineering is also known as function analysis, value analysis, and value management. Value engineering is essentially a process which uses function cost analysis to reduce cost. Founded by Lawrence D. Miles (1961), it has a proud 40+ year history of success at reducing cost. Cook (1984) provides an excellent synopsis.

But times and needs have changed. Whitney (1988) notes that "Value engineering usually comes into play after the design is finished, but the thoroughness we seek in design can be achieved only when decisions are made early." Thus to be effective within the integrated product and process development process (IPPD), value engineering must move upstream and become an integral element of the design process. Monden (1992) shows how it has been effectively integrated into the Toyota cost management process.

The definition of value as used by value engineering in America is different from the definition of value in design for competitive advantage. In value engineering practice, value is largely equated with reduced cost (Shillito and De Marle, 1992). In design for competitive advantage, value is defined as the measure of customer choice. Value is a function of quality, as well as cost. Morup (1992) notes that "Value Engineering should be a natural part of any design project. However, the strong focus on cost reduction disqualifies Value Engineering as a general method for evaluating quality." Since value is a function of quality, this implies that value engineering, as practiced, must be disqualified as a general method for evaluating value.

As practiced today, value engineering largely ignores the fact that customer choice is usually based upon far more than minimum essential product function. Quality function deployment (QFD) extends value engineering in that it is not restricted to minimum essential product function (Shillito and De Marle, 1992). Although not regularly practiced, Snodgrass (1989) notes that customer focused value engineering (Fowler, 1983) is similar to QFD and has been around for some time. Actually, a similarity exists in that the derived product functions are those which felt by the team to relate to why the customer will buy the product, as opposed to being the technical functions of the parts. However, it does not complete the customer desire versus function matrix of Comprehensive QFD to assure that they really are the functions which the customer demands or which will go further and delight the customer. Lyman (1992) compares the use of functions within QFD and VE.

An interesting note is that, based upon the work of Meyer (1971), DeMarle (1971) contains an importance transformation which is very similar to those in QFD. It is also interesting that it was published around the same time frame that Dr. Akao added the analogous transformations to QFD (Akao, 1994). Fallon, C. (1980) also reports matrices in use which are vaguely similar to those in QFD.

Evidence is increasing that value engineering had strong influences on or parallels with the development of QFD. Evidence also indicates that value engineering and QFD have followed similar growth paths, the difference being that QFD has developed far more comprehensively and rapidly. It thus seems that the challenge for value engineering today is to become integrated within the IPPD process and to improve on the expanded function served by quality function deployment and then to move beyond it.

Until then, value engineering continues to be a powerful tool for cost reduction. Use it! Better yet, use it throughout the whole design process as Toyota does! Wixson (1987) provides an example of the use of value engineering within new product development. Although the value engineering content is minimal, Cooper and Slagmulder (1997) integrates value engineering within the very important target costing process. Finally, couple value engineering with comprehensive QFD to ensure that the customer obtains full value.




Guest Contribution

Value Analysis by Theodore C. Fowler



Value Engineering Bibliography



Society of American Value Engineers
Abstracts of SAVE Papers


Surfing the Web

Bureau of Reclamation Value Program
Value Management Research Unit (VAMRU)


Table of Contents | Cost Technologies | Use

Author Ed Dean | Curator Paul Scarbrough