Value Engineering Methods

Understanding Value Engineering: A Strategic Approach to Product Development

In today's competitive manufacturing landscape, engineering firms across Atlantic Canada face mounting pressure to deliver products that meet stringent performance requirements while remaining cost-effective. Value engineering (VE) has emerged as one of the most powerful methodologies for achieving this delicate balance, enabling companies throughout Nova Scotia and the Maritime provinces to optimise their product development processes without compromising quality or functionality.

Value engineering is a systematic, organised approach to providing necessary functions in a project at the lowest cost. Originally developed by Lawrence Miles at General Electric during World War II, this methodology has evolved into a sophisticated discipline that combines creative thinking with rigorous analysis. For engineering firms operating in the Atlantic Canadian market, where resource efficiency and competitive positioning are paramount, mastering value engineering methods can mean the difference between project success and costly overruns.

The Five-Phase Value Engineering Job Plan

The foundation of effective value engineering lies in the structured application of the VE Job Plan, a systematic approach that guides teams through the analysis and optimisation process. This methodology, recognised by the Society of American Value Engineers (SAVE International), consists of five distinct phases that ensure comprehensive evaluation of all product components and functions.

Information Phase

The information phase establishes the groundwork for all subsequent analysis. During this stage, engineering teams gather comprehensive data about the product, including:

• Current design specifications and performance requirements

• Manufacturing costs broken down by component and process

• Customer requirements and market expectations

• Regulatory compliance standards applicable in Canada

• Supply chain constraints specific to Maritime logistics

For projects in Atlantic Canada, this phase often involves analysing transportation costs associated with material sourcing from central Canadian suppliers or international sources through Halifax Port. Understanding these regional logistics factors can reveal significant optimisation opportunities that might be overlooked in a generic analysis.

Function Analysis Phase

Function analysis represents the heart of value engineering methodology. This phase requires teams to identify and classify every function that a product or component performs, using a verb-noun format that strips away preconceptions about how functions should be accomplished. Functions are categorised as either basic (the primary purpose for which the product exists) or secondary (supporting functions that enable the basic function).

A typical function analysis might reveal that 60-70% of product costs are associated with secondary functions, presenting substantial opportunities for cost reduction without affecting core performance. Engineering teams use Function Analysis System Technique (FAST) diagrams to visualise the relationships between functions and identify areas where value improvements are most achievable.

Creative Phase

The creative phase employs structured brainstorming techniques to generate alternative approaches for accomplishing required functions. Effective value engineering teams typically generate between 50-200 ideas during this phase, using techniques such as:

• Morphological analysis to systematically explore solution combinations

• TRIZ methodology for resolving technical contradictions

• Benchmarking against industry leaders and cross-industry innovations

• Reverse engineering of competitor products

The key principle during this phase is the suspension of judgement—all ideas are recorded without evaluation to maximise creative output. Teams operating in the Atlantic Canadian engineering sector often benefit from diverse perspectives, drawing on expertise from marine, aerospace, and industrial sectors that characterise the regional economy.

Evaluation Phase

During evaluation, the multitude of ideas generated in the creative phase undergo systematic assessment against weighted criteria. Common evaluation factors include:

• Technical feasibility and risk assessment

• Cost reduction potential (typically seeking 15-30% improvements)

• Implementation timeline and resource requirements

• Impact on product quality and reliability

• Alignment with Canadian regulatory standards and certifications

Quantitative scoring matrices help teams objectively compare alternatives, with the most promising concepts advancing to detailed development. Statistical analysis and simulation tools enable engineering teams to model potential outcomes before committing resources to implementation.

Development Phase

The development phase transforms selected concepts into actionable recommendations supported by detailed technical analysis and business case documentation. Deliverables typically include revised specifications, cost-benefit analyses, implementation schedules, and risk mitigation strategies. For engineering projects in Nova Scotia, this phase often incorporates considerations for local manufacturing capabilities and workforce skills availability.

Function Cost Analysis: Quantifying Value Opportunities

Function cost analysis (FCA) provides the quantitative foundation for value engineering decisions by allocating costs to specific product functions. This technique enables engineering teams to identify functions where costs are disproportionate to their importance, revealing prime targets for value improvement.

The process begins with developing a detailed cost model that traces expenses to individual components and manufacturing processes. These costs are then distributed across functions based on the contribution each component makes to accomplishing specific functions. The resulting function-cost matrix often reveals surprising insights—components that appear expensive in absolute terms may actually deliver exceptional value, while seemingly modest costs may be associated with low-priority functions.

A practical example from industrial equipment development illustrates this principle. A hydraulic system component costing $450 CAD might contribute to three functions: provide force (40% allocation), control direction (35% allocation), and maintain position (25% allocation). If the "maintain position" function is determined to be of minimal importance to the customer, the $112.50 allocated to this function represents a potential cost reduction target.

Value index calculations compare the importance of each function (typically determined through customer research or engineering judgement) against its cost allocation. Functions with value indices below 1.0 indicate areas where cost exceeds importance—prime candidates for value engineering attention. Industry benchmarks suggest that well-executed function cost analysis typically identifies 20-40% of product cost as potential improvement opportunities.

Design for Manufacturing and Assembly (DFMA) Integration

Value engineering achieves maximum effectiveness when integrated with Design for Manufacturing and Assembly (DFMA) principles. This combined approach addresses both the functional efficiency of designs and their manufacturability, creating synergies that amplify cost reduction potential.

Part Count Reduction Strategies

Research consistently demonstrates that part count reduction delivers multiplicative benefits across the product lifecycle. Each eliminated part removes not only its direct material cost but also associated expenses for procurement, inventory management, quality inspection, and assembly labour. Studies indicate that eliminating a single part can reduce total product cost by $500-$3,000 CAD depending on production volume and complexity.

Effective part count reduction strategies include:

• Functional consolidation through multi-functional component design

• Elimination of separate fasteners through snap-fit or integral attachment features

• Standardisation of components across product families

• Application of additive manufacturing for complex geometry consolidation

For manufacturers in the Maritime provinces, part count reduction offers particular advantages by simplifying supply chains and reducing dependency on distant suppliers. Consolidated designs with fewer unique components are more amenable to local sourcing and manufacturing.

Material Selection Optimisation

Value engineering methodology provides a structured framework for material selection that balances performance requirements against cost, availability, and sustainability considerations. The approach evaluates materials based on their contribution to required functions rather than traditional specifications that may over-specify requirements.

Atlantic Canadian engineering projects increasingly incorporate sustainability criteria into material selection, reflecting both environmental responsibility and practical considerations around material availability. Local sourcing of materials such as steel from recycled sources, timber from sustainably managed Maritime forests, or composites manufactured in regional facilities can reduce both costs and environmental impact while supporting the provincial economy.

Life Cycle Costing in Value Engineering

Sophisticated value engineering extends beyond initial product cost to consider total life cycle expenses. This perspective often reveals that investments in higher-quality components or more robust designs deliver superior value over the product's operational lifetime.

Life cycle cost analysis incorporates:

• Acquisition costs including design, manufacturing, and distribution

• Operating costs encompassing energy consumption, consumables, and labour

• Maintenance and repair expenses throughout the service life

• Disposal or decommissioning costs at end of life

For industrial equipment operating in Nova Scotia's demanding climate—where temperature extremes, marine environments, and seasonal variations stress mechanical systems—life cycle considerations are particularly relevant. A component that costs 30% more initially but delivers twice the service life in corrosive marine environments represents genuine value improvement.

Net present value (NPV) calculations enable meaningful comparison of alternatives with different cost profiles over time. Using discount rates appropriate for Canadian business conditions (typically 8-12% for industrial applications), engineering teams can quantify the true value of design alternatives and make defensible recommendations to stakeholders.

Implementing Value Engineering in Product Development Teams

Successful value engineering implementation requires more than technical methodology—it demands appropriate organisational structures, skilled personnel, and supportive management systems. Engineering firms that achieve consistent results from value engineering typically invest in several enabling factors.

Cross-Functional Team Composition

Effective value engineering teams combine diverse expertise to ensure comprehensive analysis and creative solution generation. Optimal team composition typically includes:

• Design engineers with deep product knowledge

• Manufacturing specialists who understand production constraints

• Procurement professionals with supplier market intelligence

• Quality assurance representatives to maintain standards compliance

• Cost analysts to validate financial projections

• Customer-facing personnel who understand user requirements

For engineering projects serving Atlantic Canadian industries—including fisheries, energy, and marine sectors—including team members with specific domain expertise ensures that value engineering recommendations align with the unique operational requirements of these markets.

Timing and Integration with Development Processes

Value engineering delivers maximum benefit when applied early in the product development cycle, during the concept and preliminary design phases when 70-80% of life cycle costs are determined. However, the methodology also provides value when applied to existing products seeking cost reduction or performance improvement.

Leading engineering organisations integrate value engineering checkpoints into their stage-gate development processes, ensuring systematic evaluation at key decision points. This integration prevents value engineering from becoming an afterthought applied only when projects encounter cost problems.

Measuring Value Engineering Success

Quantifying the results of value engineering efforts enables continuous improvement and demonstrates return on investment to stakeholders. Key performance indicators for value engineering programmes include:

• Cost reduction achieved as a percentage of original estimates

• Value improvement ratio (value added per dollar invested in VE activities)

• Implementation rate of VE recommendations

• Time-to-market impact of design changes

• Quality and reliability metrics following VE implementation

Industry data suggests that well-executed value engineering programmes typically achieve return on investment ratios of 10:1 to 25:1, making VE one of the highest-yield investments available to product development organisations. For engineering firms operating in the competitive Atlantic Canadian market, these returns translate directly to enhanced project profitability and client satisfaction.

Partner with Sangster Engineering Ltd. for Value-Driven Product Development

Value engineering represents a proven methodology for optimising product designs to deliver maximum function at minimum cost. When applied systematically by experienced professionals, these techniques enable engineering projects to achieve cost targets without compromising performance, quality, or reliability.

Sangster Engineering Ltd. brings decades of professional engineering expertise to product development challenges across Nova Scotia and Atlantic Canada. Our team combines deep technical knowledge with practical experience in value engineering methods, helping clients throughout the Maritime provinces achieve their cost and performance objectives. Whether you're developing new products, optimising existing designs, or seeking to improve manufacturing efficiency, we provide the analytical rigour and creative problem-solving that value engineering demands.

Contact Sangster Engineering Ltd. in Amherst, Nova Scotia, to discuss how our value engineering capabilities can enhance your next product development project. Our professional engineers are ready to analyse your requirements and develop recommendations that deliver measurable value improvements for your organisation.

Partner with Sangster Engineering

At Sangster Engineering Ltd. in Amherst, Nova Scotia, we bring decades of engineering experience to every project. Serving clients across Atlantic Canada and beyond.

Contact us today to discuss your engineering needs.