Value engineering analysis is a process through which the value of goods and services is determined by assessing the particular functions of each. The value is gauged according to the cost of each function. Hence, the analysis sees how this value can be increased which can be done by improving the function or by reduction of the overall cost. It is important that the basic functions are all preserved in the process of analysis.

There are specific cost effective values in engineering processes which need to be established while assessing a specific project. This is basically an industry related process but is also used for various project management purposes as well. The primary objective is to assess the value of a system and optimize it so as to get similar output. The assessment gauges the performances in terms of production, cost and the risks associated with the particular project.  The value is to be increased according to the company and the customer requirements.

Sample Value Engineering Analysis

HYUU Co. was hired for the purpose of analyzing Project no. 122223 on behalf of VT SEA Ltd.

Project Name: Production plan for YU123 Water Heater.

Date: 12.5.2012


Aim: Assembling all elements to derive a cost effective production plan for the mentioned product before it is released into the market.

Required Processes to be integrated:

  • Identify production cost needs
  • Conceptual design must be introduced for systematic packaging of the product
  • Pre and post production improvement integration

Tools needed:

  • Analysis of Competition
  • Management of different requirements
  • Quality function development
  • Prioritization process wherein the steps of the production need to be arranged accordingly.

Cost of each production component:

  • Initial Capital: $3.4 million
  • Equipment: $230,0000
  • Handling and inventory: $300,000
  • Packaging and shipping: $555,000

Cost calculation denotes optimum cost of production and hence suitable for actual production.


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