An Alternative to Cost Cutting


Value engineering is the structured application of proven techniques at various design phases with the primary aim of cost avoidance, without sacrificing scope and quality. The principle involves evaluating the function of the process and/or equipment and focusing on poor value items/functions. This approach requires extensive team interaction and creativity.

What is VALUE?

Value is the ratio of functionality to cost. The function is the specific task required to satisfy a customer need and the cost is the resource consumed in achieving the function.



  • Used on new plants/revamps:
    clarifies scope
    encourages focus on poor value
    encourages alternatives
    basis for cost reduction


  • Used on existing plants:
    highlights poor value operations
    encourages alternative operations
    compares costs of operation with benefits

Structured Steps for Value Engineering

The following steps are required to build and develop the value engineering exercise:

Information gathering
Function analysis
Creative phase


The main differences between value engineering and cost cutting are summarised as follows:


Value Engineering Cost Cutting
It is Function based Equipment/material based
Focus Poor value functions Big cost items
Results Increased value Scope reduction
Optimises Overall design Local design
Clarifies Client requirements Nothing

Value Engineering is a technique that is used to identify poor value functions and identify ideas for lower cost, higher value alternatives. It allows the creative generation of solutions to specific functionality problems, without reducing the scope of the process.