VAVE: value analysis and value engineering, explained

What VAVE means

VAVE stands for value analysis and value engineering. They are two uses of the same method: study what a product has to do, put a cost on each of those jobs, and find a cheaper or better way to do the ones that cost more than they're worth.

• Value analysis (VA) is used on products that are already on sale. You take them apart, question every part and redesign what doesn't earn its cost.
• Value engineering (VE) is used during design, before the cost is locked in. Because most of a product's cost is fixed by the time the design is finished, this is when the method saves the most.

Companies say "VAVE" when they run both: VE on new products and VA on the ones already in production. You'll also hear value management, which in Europe means the wider set of habits (EN 12973) that keeps the method going across a business, and value methodology, SAVE International's name for the method itself.

The method began at General Electric in 1947. Lawrence D. Miles was asked to make a method out of what GE had learned during the war, when materials ran short and buyers had to find other ways to do the same job. His insight was to buy functions, not parts. His 1961 book, Techniques of Value Analysis and Engineering, is still the main text on the subject.

Value analysis vs value engineering

The steps are the same. What changes is when you use them, and therefore what you're still free to change.

Most companies start with VA, because the costs are known and the savings are easy to prove. The real prize is moving the same thinking earlier, into VE, where a change costs a sketch rather than a new tool.

Value = function ÷ cost

VAVE judges a product by what it does for what it costs. Two kettles that boil water equally well are not equal value if one costs £9.80 to make and the other £12.40. The cheaper one does the same job for less.

The team describes each job in two words, a verb and a noun: heat water, contain water, indicate status, convey esteem. Then it compares what each function costs with what it is worth, meaning the lowest cost of doing that job reliably. Where the cost is far above the worth, there's money to find. In the course's kettle example, a status light costing 60p could be done for 15p, and a premium finish costing £2.10 is worth about 70p on a basic kettle.

Thinking in functions also opens up ideas that thinking in parts never reaches. A car doesn't need a spare wheel. It needs a way to get moving after a puncture, which is why many cars now carry a repair kit instead.

Go deeper: how to make a FAST diagram, with a worked example.

How a VAVE study runs

A study follows the six-phase job plan in SAVE International's Value Methodology Standard, always in this order:

1. Information. Fix the starting cost with finance, agree the scope and gather the facts: costed parts list, customer needs, warranty data, a teardown.
2. Function analysis. Name every function, draw the FAST diagram and find the functions that cost more than they're worth.
3. Creative. Generate as many ideas as possible for those functions, with no judging yet.
4. Evaluation. Screen out what fails a must-have (safety, standards), then score the rest against agreed criteria.
5. Development. Turn the best ideas into costed proposals: saving per unit, one-time costs, payback, risks and tests.
6. Presentation. Present to the people who can say yes, and get a decision, an owner and a date for each idea.

Preparation usually takes two to four weeks and the workshop three to five days. Implementation then runs for weeks or months, and savings only count once a change is in production and finance has checked it against the starting cost.

Go deeper: the value engineering job plan, phase by phase.

What VAVE delivers

• Lower cost without a worse product. Practitioners commonly report that a first proper round on a product that has never had one finds 8–15% of its cost, and that programmes which keep going save 3–5% a year after that. These are experience figures, not a published statistic; your own results depend on the product.
• Simpler products. Fewer parts means fewer suppliers, less assembly time and fewer things to go wrong.
• Better quality, often. Removing a joint, a fastener or a supplier also removes a way to fail.
• A strong return on effort. US highway VE programmes report returns well above 10:1. Studies are cheap compared with savings that repeat on every unit made.

It's different from cost-cutting. Cost-cutting starts from the accounts and removes whatever is easiest, often something the customer valued. VAVE starts from what the product must do, so the functions customers pay for are kept or improved.

Three documented examples

Who takes part

A study team is usually six to ten people from design, manufacturing, purchasing, quality, finance and service, plus key suppliers who know their own costs. A trained facilitator runs the method but doesn't supply the answers. A team from one department tends to produce one kind of idea, so the mix matters more than the seniority.

The sponsor matters most of all. Studies that fail rarely fail in the workshop. They fail because nobody with authority protected the team's time, paid for the tests or made the decisions on time.

For managers: VAVE for Leaders, a free one-hour course on what only leaders can do.

How to start

1. Pick one product. High volume, a few years of sales left, design you're allowed to change, and a costed parts list you can trust.
2. Fix the starting cost with finance and name a sponsor who can approve changes.
3. Run one study, end to end, with a mixed team, and track every idea until it's in production.

Free templates for each step: the workshop agenda, the FAST worksheet, the should-cost build-up and the savings funnel tracker. See all 15 templates.

Frequently asked questions