Definition: Value Analysis, also known as Value Engineering, is a systematic approach used to identify and eliminate unnecessary costs while maintaining or improving the quality, reliability, and functionality of a product, service, or process. It focuses on finding the most cost-effective ways to achieve the desired performance or function. 


Cost vs. Value: Value Analysis emphasizes the distinction between cost and value. While cost refers to the monetary expenditure, value is the perceived benefit or worth that a product or service provides to the customer. Value Analysis aims to maximize value by minimizing costs without compromising on quality or functionality.  

Cross-functional Approach: Value Analysis involves a cross-functional team with members from different disciplines, such as engineering, manufacturing, procurement, marketing, and finance. This team collaboratively analyzes the product or process to identify areas where cost can be reduced or value can be enhanced.  

Function-Based Analysis: Value Analysis focuses on the functions or features of a product or process that provide value to the customer. It involves identifying the essential functions that must be performed and evaluating alternative ways to achieve those functions at the lowest cost. 

Click here to download the presentation on Top Ten Facts on Business Analysis Techniques - Value Analysis.

Creativity and Innovation: Value Analysis encourages creative and innovative thinking to generate new ideas and solutions. It involves brainstorming, idea generation, and evaluation of alternative approaches to find more cost-effective ways of achieving the desired performance or function.  

Cost-Benefit Analysis: Value Analysis uses cost-benefit analysis to evaluate the costs associated with different options and compare them with the benefits gained. This helps in making informed decisions about which alternatives to implement and prioritize for cost reduction or value enhancement.  

Life-Cycle Perspective: Value Analysis takes a holistic view of the entire life cycle of a product or process, from design and development to production, use, and disposal. It considers the costs and value associated with each stage and identifies opportunities for cost reduction or value enhancement throughout the life cycle.  

Documentation and Analysis: Value Analysis involves documenting and analyzing the functions, costs, and alternatives to systematically evaluate and prioritize cost reduction or value enhancement opportunities. This helps in making data-driven decisions and tracking the results of implemented changes.  

Supplier Involvement: Value Analysis may involve collaboration with suppliers to identify cost reduction or value enhancement opportunities. Suppliers can provide valuable insights and expertise in identifying alternative materials, components, or manufacturing processes that can lead to cost savings or increased value.  

Continuous Improvement: Value Analysis is a continuous improvement process that can be applied to existing products or processes as well as new ones. It promotes a culture of continuous improvement and encourages ongoing evaluation and refinement of products or processes to achieve higher levels of value.  

Note: Value Analysis is a systematic approach that focuses on cost reduction and value enhancement while maintaining or improving product quality and functionality. It involves a cross-functional team, function-based analysis, creativity and innovation, cost-benefit analysis, and a life-cycle perspective. It encourages supplier involvement and promotes a culture of continuous improvement. 

Fhyzics Business Consultants specializes in business analysis consulting, training and certification. For more details please speak to our business consultant at +91-7200439865 or email at MalathiD@fhyzics.net. 

Fhyzics is an EEP of IIBA, Canada and REP of BCS, UK offering the following business analysis certifications:
Certified Business Analysis Professional (CBAP)
Certification of Capability in Business Analysis (CCBA)
Entry Certificate in Business Analysis (ECBA)
Certified Enterprise Business Analyst (CEBA)
Foundation Certificate in Business Analysis
PMI Professional in Business Analysis (PMI-PBA®)
Certified Professional for Requirements Engineering (CPRE-AL)
Certified Professional for Requirements Engineering (CPRE-EL)
Certified Professional for Requirements Engineering (CPRE-FL)