What value engineering is
Value engineering (VE) is a systematic way to get the functions a product or project needs at the lowest total cost, without lowering quality, safety or performance. A mixed team describes what the design has to do, puts a cost on each of those jobs, compares it with what the job should cost, and develops better ways to do the ones that are out of line.
The core idea fits in one line: value = function ÷ cost. You can raise value by doing the same job for less, by doing a better job for the same money, or both. Value engineering is applied during design, before the cost is locked in. The same method applied to a product already on sale is called value analysis, and together they're known as VAVE.
Why it beats ordinary cost-cutting
| Cost-cutting | Value engineering | |
|---|---|---|
| Starts from | The accounts: what's easy to remove | The functions: what the product must do |
| Who decides | Usually one department | A mixed team, with a sponsor who can approve changes |
| Typical result | A cheaper, often worse product | The same or better product, for less |
| When | Late, under pressure | Early, while the design can still change |
Timing matters most. About 70–80% of a product's cost is fixed by the time the design is finished, while little has been spent. The exact share is debated, so treat it as a rule of thumb, but it explains why VE done early saves far more than cuts made later.
A short history, and the standards
- 1947: Lawrence D. Miles at General Electric turns wartime material shortages into a method: buy functions, not parts.
- 1954: the US Navy's Bureau of Ships uses the method during design and calls it value engineering.
- 1959: the Society of American Value Engineers is founded, now SAVE International.
- 1961: Miles publishes Techniques of Value Analysis and Engineering.
- US law and policy: OMB Circular A-131 (1988, revised 1993) tells federal agencies to use VE. A 1996 law (41 U.S.C. §1711) made VE procedures mandatory for executive agencies, and large federal-aid highway projects must have a VE analysis.
- Europe: EN 12973 (2000, revised 2020) sets out value management, with its terms defined in EN 1325.
Today, SAVE International's Value Methodology Standard sets out the six-phase job plan used around the world.
How value engineering works
A VE study follows the job plan, always in this order:
- Information: fix the starting cost with finance, agree the scope and gather the facts.
- Function analysis: describe every function as a verb and a noun, draw a FAST diagram and find the functions that cost more than they're worth.
- Creative: generate many ideas for those functions, with no judging.
- Evaluation: screen out what fails a must-have, then score the rest.
- Development: turn the best ideas into costed proposals with payback and tests.
- Presentation: get a decision, an owner and a date for each idea.
The step that makes VE different is function analysis. Naming what a part does (contain water, conduct current) rather than what it is opens up ideas that a parts list never would.
Go deeper: the job plan, phase by phase and how to make a FAST diagram.
Value engineering examples
Highways
From 2002 to 2011, VE studies and contractor proposals on US federal-aid highways produced about $1.7 billion a year in approved savings.
Source: FHWA Value Engineering annual summary reports.
Printers
IBM's Proprinter was designed for easy assembly: 152 parts became 32 and assembly time fell by about 90%.
Source: Boothroyd Dewhurst Inc., DFMA case history.
Cars
Tesla replaced about 70 pressed and welded parts with one or two large castings. Reuters reported about 40% lower cost for the Shanghai rear casting.
Sources: Elon Musk, 2020; Reuters, September 2023.
More examples by sector, with where the cost sits in each: value engineering examples in 8 industries.
Value engineering in construction
In construction, VE reviews a building or infrastructure design to deliver the same functions, such as space, access, structure and services, at lower whole-life cost. It works best early, at concept and scheme design, when a change costs a drawing rather than a site variation.
The term is often misused. On many projects "value engineering" has come to mean swapping specified materials for cheaper ones late in the job. That is cost-cutting, not VE. Proper VE keeps every function the client and the regulations require, including fire safety, durability and maintenance, and checks whole-life cost, not just the build price.
In the US, federal rules (23 CFR Part 627) require a VE analysis on large federal-aid highway and bridge projects, and many public owners elsewhere ask for a VE workshop at fixed design stages.
Value engineering certification
- SAVE International: VMA (Value Methodology Associate, the entry level) and CVS (Certified Value Specialist, for leading studies).
- Institute of Value Management (UK): QVA and PVM, under the European scheme based on EN 12973.
- National societies, such as the Indian Value Engineering Society, award their own credentials.
The free VAVEhub courses give a certificate of completion that anyone can check online. It shows you finished the course and passed its exam; it is not a professional certification.
Everything on value engineering, in one place
Frequently asked questions
What is value engineering in simple words?
Working out what a product or project has to do, and finding the cheapest reliable way to do each of those jobs without making it worse.
What is the main goal of value engineering?
To deliver the functions the customer needs at the lowest total cost, keeping or improving quality, safety and performance.
When should value engineering be done?
As early as possible: at concept and early design, when most of the cost is still being decided and changes are cheap.
Who does value engineering?
A team of six to ten people from design, manufacturing, purchasing, quality and finance, often with key suppliers, led by a trained facilitator and backed by a sponsor.
Is value engineering the same as value analysis?
It uses the same method. Value engineering is applied during design; value analysis is applied to products already on sale.
Where can I learn value engineering for free?
The VAVEhub VE Academy is a free 13-module course with labs, a capstone study and a certificate of completion. VAVE for Leaders is a free one-hour overview for managers.