Larry Miles and Value Engineering
Who was Larry Miles?
Larry Miles was the father of the Value Method, or Value
Engineering, a problem solving method developed at GE in the late
What is Value Engineering?
Value Engineering is a systematic team approach used to
analyze and improve value in a product, facility, system or
service. It focuses on the functions of the "thing" in question.
The method has been around since the 1950's, and it's been very
successful for its serious practitioners. The Value Method is
much quicker and less expensive than the standard trial and error
approach that most people take by default.
Larry Miles came up with the powerful new concept of Function
Analysis, which is one of eight key elements in the value
analysis process. In working with value analysis (VA), you first
convert your product or process into a number of word-pairs
called Functions. If you ask, when considering a product or
process, What does it do?, the answer should be given in a series
of two-word sentences – a noun and a verb - such as
Remove Pollutants. The remainder of the study then
concentrates on the word-pairs rather than on the concrete
product or process. Value Analysts call this group of statements
a Function Analysis.
By concentrating all of their problem-solving effort on these
two-word Functions, the team accomplishes several objectives:
Besides the core of Function Analysis, there are other key
elements to the Value Analysis process.
They greatly minimize what Miles called functional fixedness.
For example, you can be more creative when tackling a problem
defined in terms of "Remove Pollutants" than one defined in terms
of "Make a better Catalytic Converter."
The team gains a more creative focus. This is because the team
no longer focuses primarily on the mechanical explanation of the
product, but instead focuses on what the product does for the
customer. Miles defined this creative focus of Function Analysis
in terms of the technique he called Create-by-Function.
It prevents a team from simply creating solutions to the
problems of the product under study instead of looking at the
product in terms of its function.
The team can capture the essence of a complex product or
process on one page of unambiguous statements. This is called a
Function Diagram or "FAST Diagram."
- CREATE BY FUNCTION
- THE JOB PLAN
- THE TEAM
Q: So if I wanted to begin implanting Value Analysis, where
would I start?
In modern VA, Implementation is step one. This is in keeping
with Leonardo daVinci's famous exhortation, "Think of the end
before the beginning." Here are the steps:
· Prepare a list, before even starting the
study, of all of the possible areas in which you might anticipate
the results to fall.
· List all of the roadblocks which you might
expect to strike in implementing those results.
· List all of the actions which you must
consider during the study in order to circumvent those
roadblocks. These lists are updated throughout the study. This
commonly results in few surprises during the later effort to
implement the results of the study. Implementation rates of a
properly conducted VA study are typically very near 100%.
How should I go about developing a team?
The ideal VA team comprises five experts on the product under
study, each from a different discipline. They must all be
Decision-Makers whose assignment presently includes
responsibilities on the product under study. The following
capabilities must be included in the team:
Project Engineer, Chief Draftsman, Designer. Ideally the
Engineer responsible for the product.
Factory Supervisor, Industrial Engineer, Manufacturing
Engineer, Methods Engineer
Cost Estimator, Industrial Engineer, Accountant
Marketing, Sales, Field Service, Purchasing
A Constructive Troublemaker, possibly an Engineer, Product
Manager, or Marketeer
Ownership: During the Synthesis Phase of the Job
Plan, as ideas and concepts arise, the team leader asks team
members which one of them will Champion the idea or concept. If
no one raises a hand, the idea or concept is dropped. One who
volunteers to become a Champion is charged with investigating the
feasibility and economics of the idea or concept. This Champion
Concept results in a series of solutions which are highly likely
to be implemented.
Q: So what else is unique about the Value Method?
Several characteristics differentiate the Value Method from
other techniques. These help ensure that the customer obtains the
kind of product they need and want.
- Value-based decision process
- Uses functional approach
- Follows a very systematic and organized job plan
- Directs efforts towards maximum possible alternatives through
- Good results are produced by taking the appropriate action at
the appropriate time. Unfortunately, the appropriate action and
timing are rarely sufficiently clear. Also, there are natural
organizational and human limitations that must be contended with
by everyone. The Value Method takes human and organizational
limitations into account in the key characteristic of its
processes. When the fundamental "requirements" of the Value
Method are adhered to by those making use of it, success is
- You may have heard of it.
Applications of the Value Method are known by several common
names. Value Engineering (VE), Value Analysis (VA), Value
Management (VM), and Value Planning (VP) are some of the most
common names used. These names describe small variations in the
general Value Method process related to the timing, selection,
type of activity, or other specific application. Application of
the Method is usually referred to as value studies. Each year
companies save billions of dollars in expenditures; improve
quality, service while improving customer satisfaction; and
increasing revenue, market share, and profits.
- Systematic and organized
The Value Method process uses tested and successful procedures
that are directed toward achieving success in meeting the
purposes for the "project" by all involved. The process instills
"common understanding", generates high production and high
performing team activities, reduces the time necessary to obtain
a product, and focuses the efforts on the purposes behind the
project or activity being studied. A standard job plan is used to
guide the entire process.
The Value Method generates, examines, and refines creative
alternatives toward the concept of producing an end product that
produces high customer acceptance. The process endeavors to widen
the number and scope of the available alternatives. This is done
to increase the potential for enhanced satisfaction, and take
advantage of the added expertise brought into the studied
activity through the value study process.
Functions and FAST
One of the most unique and useful qualities of the Value Method
is its use of functions to describe the activity or product being
studied. The value study breaks the "project" into components so
as to avoid misunderstanding of the planned intents for the
project. Then a Functional Analysis is conducted on each
component. In the Value Method process, functions are limited to
the shortest sentence possible. Just two words are usually
allowed: a verb (active preferred) and a noun (measurable
preferred). The main functional purpose for the component being
studied is the primary function. Of course, things often happen
as a result of the choice of a component, or something must be
done to make the selected component work as needed. These
functions are called supporting or secondary functions. The
results of the functional analysis are placed into a
function-logic diagram called a FAST (a short term for Functional
Analysis System Technique).
The true value of an activity or product is its relationship to
its perceived worth as opposed to its life-cycle costs. In Value
Method terms: Value = Worth / Cost. When an item has a Value
greater than 1.0, the item is perceived to be a fair or good
value. When an item has a Value is less than 1.0, the item is
perceived to be a poor value or bad value. When the perceived
worth far exceeds the life-cycle cost, we usually consider
purchasing the item.
The worth of a product
involves many features. The most common cited are: benefits
received, services obtained, satisfaction of the product
performance, quality, safety, and convenience. The worth of the
product is a measure of what is in it for the customers involved.
It is a measure of how well the end product meets the involved
essential needs and the added desires of those that have a voice
in the product selection or its use. An end product must always
supply the essential need, or its worth will be poor
The true cost of an item is not just the amount of money that you
pay when you buy it. Much more is involved. When you buy
something, you also buy its long-term effects. The initial costs
plus these long-term costs are called life-cycle costs. This
includes things like the time involved to get the project done,
the people needed (number, expertise and so on), the degree of
difficulty involved, availability of money or other resources,
the amount of maintenance needed, and the money that must be
expended and kept in reserve.
Q: Why does the methodology apply to everything? The
secret is because the methodology involves function analysis and
everything has a function. Therefore the methodology has
universal application to every endeavor.
Value Methodology is a complete system to produce results!
Q:How did this Value Method develop?
Larry Miles, its “father,” moved from design
engineering to purchasing for General Electric (GE) shortly
before the United States entered World War II. Later (about
1943), he was assigned to be the procurement officer for a GE
manufacturing plant. He developed a reputation of great
enthusiasm for conceiving cost-effective operations and using
unusual methods for problem solving.
Due to the competition for raw materials, products, personnel,
and other resources in a time of war, Mr. Miles developed a
procedure for procuring, designing, and using components and
products. This procedure used "functions" as its basis. Mr. Miles
found that he could more readily obtain what he needed if he used
his new procedure, rather than specifying standard designed
components. This new "function" based procedure was so successful
that it was possible to produce the goods with greater production
and operational efficiency, and less expensively. As a result of
its tremendous initial success, GE formed a special group to
refine the method. Larry Miles headed the group.
In the mid-1960's, three Federal organizations, Navy Bureau of
Shipyards and Docks, US Army Corps of Engineers, and US Bureau of
Reclamation adopted the use of the "function" based procedure in
their organizations. Due to the nature of their work and involved
staff, these Government groups named the method "Value
Engineering". The name Value Engineering subsequently became the
most universally accepted name for the "function" based
In the 1960's, Mr. Charles Bytheway developed an additional
component to the basic Method. During his work for Sperry UNIVAC,
he created a functional critical path analysis procedure that
highlighted the logic of the activity under value study. A
diagramming procedure called the "Functional Analysis System
Technique" (FAST) was adopted as a standard component of the
Before the death of Mr. Miles in 1985, the Value Engineering
process had gained world-wide acceptance. It spawned an
international organization dedicated to its practice, and the
certification of competent practitioners (Society of American
Value Engineers International or SAVE International). Further, it
had saved billions of dollars.