Value Analysis

by Theodore C. Fowler

Dr. Fowler, a Fellow of the Society of Value Engineers, wrote this paper in response to a request from NASA. He has explicitly granted permission for its use by University Learning Institute.

This material was originally created to respond to a demand created when Value Analysis (VA) joined the CompuServe Information Service in late 1993. The question "What is VA?" was the subject of many LEAP Forum messages. Most of the questioners were engineers with no specific experience in VA. This document was placed in the General Section of the Library. It contains general answers to most of the questions.

Q: What is Value Analysis?

A: A team problem-solving system, developed at the General Electric Company in the late 1940s.

That seems pretty old hat. Nearly every one of the NEW WAVE systems, from Quality Circles to Grid Organization Development, Kepner-Tregoe, Brainstorming, Continuous Systematic Improvement and Total Quality Management call themselves team problem-solving systems.

Q: What is so special about VA?

A: Its special power is a technique called Function Analysis which dramatically shifts the viewpoint of the problem-solvers. When Lawrence D. Miles of General Electric conceived VA in the late 1940s, its only totally unique element and the source of its major breakthroughs was Function Analysis.

Q: Tell us about this Function Analysis.

A: The product or process under study is first converted into a number of word-pairs called Functions. The remainder of the study then concentrates on those word-pairs rather that on the concrete product or process.

The specific form used for these word-pairs is now called a Functive. Each pair comprises one verb and one noun. Each noun is ideally a parameter or measurable quantity. Each verb is ideally demonstrable on a non-verbal level. Those who recall their sentence diagramming from English 101 will realize that one verb and one noun make up one elemental sentence. Therefore, when the VA question, "What does it do?" is asked of a product or process, the answer becomes a series of two-word sentences. The total number of these sentences could run from forty or eighty for even a simple product or process. In sum, these two-word statements are a total description of the functions of the product or process. Value Analysts call this group of statements a Function Analysis. By concentrating all of their problem-solving effort on these two-word Functions, the team accomplishes several objectives:

They greatly minimize what Miles called "functional fixedness." For example, it is possible to be more creative when tackling a problem defined in terms of improving "Remove Polutants" than one defined in terms of "Make a better Calalytic Converter." Miles defined this creative focus of Function Analysis in terms of the technique he called "Create-by-Function."

In the Creative Phase team session, the focus is on Function. This Function-focus maintains the critical perspective of Function; the WHAT IT DOES for the customer, rather than the WHAT IT IS in the mechanical sense. Over the years, few practitioners of Value Analysis have truly understood and fully applied the concept of "Create-by-Function." The secret to great Value Analysis at this stage is to treat a Function in its semantic sense and to rigorously resist reverting to simply creating solutions to the problems of the product under study.

They capture the essence of a complex product or process on one page of unambiguous statements. This is called a Function Diagram or "FAST Diagram."

The costs of a product or a process are commonly presented in a hierarchical structure called the Costed Bill Of Materials. A Costed Bill Of Functions would be far more condusive to effective creative problem solving. To this end, a VA team allocates the costs to the Function Diagram, resulting in a hierarchical structure called a Costed FAST Diagram. The team now has a new viewpoint, that of Function-Cost, to replace its customary viewpoint of Hardware-Cost. Their solutions therefore typically reach far closer to the limits of the envelope of practicality.

It is also possible to add to the FAST Diagram carefully structured but unconstrained data on the attitude, needs and desires of the user/customer. This adds the dimension of Function-Worth to each of the Functions. With Function-Cost and Function-Worth, the team can identify and focus upon only those functions where there is a mismatch between the two parameters.

Q: Are there other key elements to the Value Analysis process?

A: Yes, there are several other essential components in a valid Value Analysis study, however, only Function Analysis is unique to the process. The eight key elements are:

  • FUNCTION ANALYSIS
  • FUNCTION-COST
  • FUNCTION-WORTH
  • CREATE BY FUNCTION
  • IMPLEMENTATION
  • THE JOB PLAN
  • THE TEAM
  • OWNERSHIP

The Function related items have been discussed above. What follows is a brief discussion of each of the other elements:

IMPLEMENTATION

In modern VA, Implementation is step one. This is in keeping with Leonardo daVinci's famous exhortation, "Think of the end before the beginning." The team prepares a list, before even starting the study, of all of the possible areas in which they might anticipate their results to fall. They then list all of the roadblocks which they might expect to strike in implementing those results, and they they then list all of the actions which they must consider during the study in order to circumvent those roadblocks. These lists are updated throughout the study. This commonly results in few surprises during the later effort to implement the results of the study. Implementation rates of a properly conducted VA study are typically very near 100%.

THE JOB PLAN

Miles' system followed a rigorous six-step procedure which he called the Value Analysis Job Plan. Others have varied the Job Plan to fit their peculiar constraints. A modern version has the following eight steps:

  • PREPARATION
  • INFORMATION
  • ANALYSIS
  • CREATION
  • SYNTHESIS
  • DEVELOPMENT
  • PRESENTATION
  • FOLLOW-UP

THE TEAM

The ideal VA team comprises five experts on the product under study, each from a different discipline. They must all be Decision-Makers whose assignment presently includes responsibilities on the product under study. The following capabilities must be included in the team:

DESIGN
Project Engineer, Chief Draftsman, Designer. Ideally the Engineer responsible for the product.
OPERATIONS
Factory Supervisor, Industrial Engineer, Manufacturing Engineer, Methods Engineer
COST
Cost Estimator, Industrial Engineer, Accountant
OUTREACH
Marketing, Sales, Field Service, Purchasing
CATALYST
A Constructive Troublemaker, possibly an Engineer, Product Manager, or Marketeer

OWNERSHIP

During the Synthesis Phase of the Job Plan, as ideas and concepts arise, the team leader asks team members which one of them will Champion the idea or concept. If no one raises a hand, the idea or concept is dropped. One who volunteers to become a Champion is charged with investigating the feasibility and economics of the idea or concept. This Champion Concept results in a series of solutions which are highly likely to be implemented.

Q: In the fifty years since VA was developed, has it changed?

A: This leading question has an obvious answer. Yes, it has changed mightily. Users have modified the process to fit their requirements. A version of the process is in heavy use in the US Government, where it is called "Value Engineering." The Construction industry has followed their lead. Their version is also called "Value Engineering." Some refer to the process as "Value Management." Your attention is directed to a number of generally available books which have been written on the process.

It is expected that readers of this summary may develop further curiosity about the Value Analysis process. Most of the answers can be found by contacting the Society of American Value Engineers.