Lapasar
Spend & Cost Management

Value Analysis

Also known as: Value engineering

Value analysis is a systematic method of improving the value of a product or service by examining its functions and finding lower-cost ways to deliver them.

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Value analysis asks what function each element of a product or service actually performs, and whether that function can be delivered more cheaply without losing quality or performance. It might mean simplifying a specification, substituting a material, standardising a component or removing features that add cost but little value.

Closely related to value engineering, this discipline shifts the focus from price to the ratio of function to cost. In procurement it is a powerful lever because it challenges over-specification — a common source of hidden cost — and can be run collaboratively with suppliers who often know where cost can be taken out of a design.

Frequently asked questions

What is value analysis?
Value analysis is a systematic method of improving the value of a product or service by examining what each function does and finding lower-cost ways to deliver it without sacrificing quality.
What is the difference between value analysis and value engineering?
The terms are often used interchangeably. Value analysis is traditionally applied to existing products or services, while value engineering is applied during design, before something is produced.

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