Value engineering or value analysis had its birth during the World War II Lawrence D. Miles was responsible for developing the technique and naming it. Value analysis is defined as ―an organized creative approach which has its objective, the efficient identification of unnecessary cost-cost which provides neither quality nor use nor life nor appearance nor customer features.‖ Value analysis focuses engineering, manufacturing and purchasing attention to one objective-equivalent performance at a lower cost.
Value analysis is concerned with the costs added due to inefficient or unnecessary specifications and features. It makes its contribution in the last stage of product cycle, namely, the maturity stage. At this stage, research and development no longer make positive contributions in terms of improving the efficiency of the functions of the product or adding new functions to it. Value is not inherent in a product, it is a relative term, and value can change with time and place.
It can be measured only by comparison with other products which perform the same function. Value is the relationship between what someone wants and what he is willing to pay for it. In fact, the heart of value analysis technique is the functional approach. It relates to cost of function whereas others relate cost to product. It is denoted by the ratio between function and cost.