Value Engineering: Reducing Costs While Improving Quality

Learn about value engineering and how it can help you reduce costs while improving the quality of your products.

What is Value Engineering?

Value engineering is a process that involves identifying ways to enhance the value of a product or service. It aims to provide the best possible combination of function and cost. Value engineers work with stakeholders to identify a product’s or service’s essential functions while looking for ways to further improve it and possibly reduce costs.

Any stage of product development can benefit from value engineering—from initial concept to final production. Value engineering can help avoid expensive redesigns and rework when done early in development. Ultimately, value engineering provides customers with the best products and services while reducing costs.

History of Value Engineering

Value engineering dates back to the 1940s when General Electric Co. experienced a shortage of raw materials, parts, and skilled labor. To maintain continuity in the production process, Lawrence Miles, Harry Erlicher, Jerry Leftow, and other engineers sourced acceptable substitutes that would reduce the production costs without compromising the functionality of the products.

This technique was eventually named “value analysis” and enables companies to reduce production costs, improve products, and improve performance. Combining the two concepts formed what is now called VA/VE

3 Main Criterias in Value Engineering

A good value engineering team considers these three main criteria in value engineering:

Cost Reduction

Many value engineering processes are born from the idea of reducing costs. Your team will present suggestions for cheaper materials or systems that could work just as well on your project. It might be finding a similar but less costly fixture or removing an unnecessary feature altogether. Either way, these suggestions can save money and still deliver the same quality product. But, without the following criterion, value engineering would be another term for cost-cutting. By adding quality, we can ensure that the money saved does not come at the expense of project value.


When deciding on value engineering solutions, you should think about quality. Quality has various meanings. The quality of the environment you’re building. The quality of the goods that make up that environment. The quality of the team that will produce that environment.

Some equipment or design components may have a more significant price tag, but they may be deemed worthwhile due to their high quality. Higher-cost goods and components might allow you to charge more for your services. They could improve the efficiency or enjoyment of those using the area. A high-quality product that is also low in cost might have significantly more overall value than a low-cost product.

Life Cycle or Maintenance

Not only is quality important, but you must also consider the long-term ramifications of your value engineering choices. For example, at first, it might seem like cheaper flooring is the best route, but if you have to replace it twice as much as the more expensive option, it will cost more money overall. 

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Steps in Value Engineering

To have a successful value engineering project, you need an effective process. Below are 7 steps involved in value engineering:

1. Information Gathering

The information phase is gathering project data and changing the project’s goals. Data is gathered and analyzed, and the information obtained is used to complete the project’s priorities and areas for improvement.
The potential problems are broken down into smaller parts and sub-problems to address. This step also entails determining how the team will measure progress on the project.

2. Function Analysis

This stage entails identifying the project’s functions and attaching a verb or noun phrase to each element under evaluation. The term “function” refers to the goals achieved by executing an element or a group of elements.
Determine if any improvements or new functions are necessary for every function required by the project. As an example, one such process might be “disinfect water.” To allow multiple options that perform the same position, keep the language as non-specific as possible. For every identified function, also assign a cost.

3. Creative Brainstorming

Following the function analysis phase, the creative phase begins, in which team members brainstorm various methods to carry out the functions discovered in the previous stage. It allows team members to devise alternatives to current systems or techniques.
Brainstorming allows people to explore different ideas and come up with creative solutions. When you brainstorm, you should bring up all possible solutions to the problem at hand, even if they seem far-fetched. This way, you and your team can consider every option and choose the best one.

4. Evaluation

The team records the advantages and drawbacks of each alternative and solution proposed in the creative phase during this step. It’s essential to state each advantage and disadvantage in broad terms.
In cases where the drawbacks outweigh the benefits, other viable options are chosen. The team uses a weighted matrix analysis to arrange and prioritize the options before putting the most acceptable alternatives on hold.

5. Development 

It involves analyzing the cost and feasibility of each best alternative in detail during the development phase. Sketches, cost estimates, and other technical evaluations may all be necessary during this stage.
The team creates the project’s implementation plan, which includes a description of how to implement the final recommendations.

6. Presentation 

During the presentation phase, the team meets with management and other stakeholders to deliver their final report. They present findings using reports, flowcharts, and other visual aids to prove that the development phase’s conclusions are valid.

The report should contain a thorough description of each idea, including estimated costs and benefits and any challenges that might arise. In addition to documenting the team’s progress and findings, the final report can be a reference tool for company employees during future projects.

7. Implementation

After the management approves the team’s recommendations, implementation begins. Before the implementation begins, the plan should include any modifications requested by management or other decision-makers.

Aim to increase value during the execution of the project. Implementing the suggestions determines the project’s actual cost savings.


Rob Paredes
Article by
Rob Paredes
Rob Paredes is a content contributor for SafetyCulture. He is a content writer who also does copy for websites, sales pages, and landing pages. Rob worked as a financial advisor, a freelance copywriter, and a Network Engineer for more than a decade before joining SafetyCulture. He got interested in writing because of the influence of his friends; aside from writing, he has an interest in personal finance, dogs, and collecting Allen Iverson cards.