Value analysis

What is value?

In dealing with the technique of Value Analysis, it is important to understand the meaning of the term ‘value’ as used in this context. Value must not be confused with cost or price of a product. A particular material or component may be functionally more useful, ie. its use value may be higher than its procurement cost or price paid for it.

The value of an item is generally determined on the basis of the following two aspects : use value, and esteem value.

(a) The use value of a product is that amount of cost which is included in order to perform a function, or more precisely a basic function.

(b) The esteem value is the sum total of the elements that constitute the features which make people wish to have that product.

Value means different things to different people at different points of time. Today, a particular thing may be worth possessing because of its scarcity, but it may decline tomorrow through its easy availability. The value here is derived from the desire of its ownership.

As it often happens the esteem value of an item is market-oriented and is often much in excess of its use value.

A situation often arises when the cost of a function is disproportionately high as compared to others. A question is often asked, ‘Is it worth the money spent’? Whether it is at the component stage, assembly stage, or complete product stage, the answer to this question is very important, because at any level this can mean a difference between profit or loss of a concern. If a firm’s product is not worthwhile for its cost, it does not represent good value. Hence, the firm’s competitive position in the market will be difficult to maintain.

In most cases, a component has more than one function to perform. In some cases, one is more important than the other. These may be classified as primary function and secondary function.

(a)Primary function is the specific purpose for which the component was designed

(b) Secondary function is the supportive function to a basic function needed to achieve the primary function.

c.In Value Analysis (VA), a function is analyzed and split into a number of elementary requirements. On the basis
of their relative importance, these are then given weightage

d.in order to evaluate them properly.
Function is an important concept. The analysis of a product is impossible until its functions are laid down in
clear-cut terms and each feature is identified.


The objective of VA is to decide what a product should do and then to analyze and improve upon its performance. The objective here is to reduce cost in order to get the best value for the money spent. In order to solve any problem, there is the need for a systemic approach to

1.identifying the problem,

2evaluating the function,

3.analyzing the cost, and

4.recommending the solution that offers optimum value at minimum cost.

When cost is reduced, profit is improved. Thus, VA any corresponding reduction in quality or performance of a is an attempt to produce at the lowest possible cost, without product.

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