Guide 01 of 10

The six steps of a VE study

This is the standard way to run a value engineering study, as set out by SAVE International. It has six steps that always run in the same order, with preparation before the workshop and follow-up afterwards to make sure the savings actually happen.

By Avinash Bhosale · Updated · 5 min read

Why it pays to start early

Most of a product’s cost is decided long before the money is actually spent, because early design choices lock it in. The gap between the two lines is where value engineering can make the biggest difference.

100%50%0% 70–80% decided Cost committedCost spent
  1. Concept
  2. Detailed design
  3. Production

About 70–80% of a product’s lifetime cost is already decided by the end of concept design, while less than 10% has been spent. That’s why VE work done during design pays back around ten times more than the same work after launch.

Phase 1 Information: get the facts first

Before anyone suggests an idea, gather everything you need to know. That means the scope and limits of the study, what customers and the market need, quality and warranty history, volumes, and a full cost breakdown of every part, down to material, process, labour and overhead. Go and see the production line and handle the parts. Then ask Lawrence Miles’ five questions: What is it? What does it do? What does it cost? What is it worth? What else could do the job?

Key activities

  • Project scoping & savings target setting
  • Cost breakdown & Pareto (top cost drivers)
  • Voice of Customer / QFD requirement capture
  • Site & supplier visits, sample collection
  • Competitive samples procured for teardown

Tools

  • Cost models & spend cubes
  • Pareto / ABC analysis
  • QFD & Kano model
  • Process flow mapping

Phase 2 Function Analysis: the core of VE

This is what makes VE different from ordinary cost-cutting. Describe each part of the product by what it does, in two words: a verb and a noun, such as “transmit torque”, “resist corrosion” or “convey esteem”. Decide whether each function is basic (the reason the product exists) or secondary (just how this design happens to work). Lay the functions out in a FAST diagram, where reading right answers “how?” and reading left answers “why?”. Then build a function–cost matrix that shares out every pound of cost across the functions it pays for.

Key activities

  • Random function identification (verb + noun)
  • Basic vs. secondary classification
  • FAST diagramming with scope lines
  • Function–cost & function–worth allocation
  • Value Index = Cost ÷ Worth per function

Tools

  • FAST diagram (Technical / Customer)
  • Function–cost matrix
  • Value mismatch ranking
  • Worth estimation (lowest cost to achieve function)
See the full FAST example and function–cost matrix →

Phase 3 Creative: more ideas means better ideas

Come up with as many ways as possible to deliver each target function, rather than small tweaks to the current design. Nobody judges ideas at this stage, and wild ideas are welcome because they open up new options. A good workshop produces 200–400 ideas using techniques such as brainstorming, brainwriting, TRIZ, SCAMPER and analogy. See all twelve techniques →.

Key activities

  • Function-by-function idea storms
  • Cross-industry analogy hunting
  • Supplier & shop-floor idea harvesting
  • Idea capture with owner & function tag

Ground rules

  • Defer all judgement
  • Quantity over quality
  • Build on others' ideas ("yes, and…")
  • Attack functions, not people or departments

Phase 4 Evaluation: pick the ideas worth pursuing

Cut hundreds of ideas down to a shortlist worth the engineering time. Start with a quick sort into go, grow or park. Then score the rest on savings, technical risk, investment, time to implement and effect on the customer. Group ideas that work well together into scenarios, and give each one a champion who will take it forward.

Key activities

  • Go / grow / park screening
  • Weighted criteria scoring
  • Pugh concept selection vs. datum design
  • Idea clustering into implementation scenarios
  • Effort–impact prioritisation matrix

Tools

  • Pugh matrix
  • Weighted evaluation matrix
  • Effort–impact (PICK) chart
  • Preliminary risk assessment (pre-FMEA)

Phase 5 Development: turn ideas into business cases

Each champion turns their idea into a proposal that can actually be implemented. That includes engineering checks (simulation and test plans), supplier quotes or should-cost estimates, tooling and investment, any quality or regulatory impact, and a before-and-after cost comparison. Every proposal should answer five questions: what changes, what it saves, what it costs to do, what could go wrong, and when it will happen.

Key activities

  • Technical feasibility & simulation
  • Should-cost & supplier quotation
  • Design FMEA & validation planning
  • Implementation cost & payback calculation
  • Change management assessment (PPAP, re-cert)

Tools

  • Cleansheet cost models
  • DFMEA / PFMEA
  • Business-case templates
  • Tolerance & CAE studies

Phase 6 Presentation: get the decision, then deliver

Present the proposals to the people who decide: the reasoning, the numbers, the risks and what you need from them. Get a clear yes or no on each one, plus the resources to do it, then hand over to implementation with named owners and milestones. The work only counts when the savings show up in the accounts, so check implemented ideas against the baseline, and feed what you learned back into your design rules and cost standards.

Key activities

  • Management presentation & decision log
  • Implementation roadmap with owners & dates
  • Savings funnel tracking (identified → implemented)
  • Post-implementation audit vs. baseline
  • Lessons learned → design guidelines update

Tools

  • Savings funnel dashboards
  • Stage-gate change process
  • Idea-to-P&L tracking IDs
Before the workshopChoose the team, collect data and samples, set the cost baseline, organise the logistics
The workshopUsually 3–5 full days, with people from engineering, purchasing, manufacturing, quality, finance and suppliers
After the workshopMake the changes, check the savings, record what you learned, plan the next round

Try it

VE Workshop Agenda

Learn it properly

Modules 3–8 · one module per phase

Free, narrated and interactive — with a Certificate of Completion.