Value Engineering in the Era of Industry 4.0 (VE 4.0): A Comprehensive Review, Gap Analysis, and Strategic Framework

Value Engineering (VE), traditionally centered on optimizing the function-to-cost ratio, is being redefined by the transformative impact of Industry 4.0. Through the integration of cyber-physical systems, Artificial Intelligence (AI), Internet of Things (IoT), Digital Twins, and real-time analytics, VE 4.0 shifts from cost reduction to strategic, digitally enabled value creation. This evolution fosters smarter, more adaptive, and collaborative value optimization across complex industrial systems. This study critically analyzes the shortcomings of traditional VE, including limited digital integration, reactive implementation, and a narrow lifecycle perspective. In response, it introduces VE 4.0 as a function-driven, data-intelligent, and human-centric methodology that enables intelligent, real-time, and sustainable value creation. The proposed framework comprises six interrelated components: (1) foundational principles emphasizing digital integration, adaptability, sustainability, and organizational readiness; (2) digital transformation of VE processes through AI, IoT, digital twins, and data analytics to support predictive and connected decision-making; (3) enhancement of the VE Job Plan using advanced tools such as natural language processing (NLP), augmented/virtual reality (AR/VR), and blockchain to improve speed, accuracy, and lifecycle alignment; (4) a phased implementation roadmap including assessment, planning, piloting, scaling, and continuous improvement; (5) an enhanced Lean Six Sigma DMAIC framework embedded with smart technologies for ongoing, real-time optimization; and (6) enablers and mitigation strategies addressing challenges related to leadership, digital capabilities, infrastructure, and cybersecurity. By redefining VE as a digitally empowered, ethically guided, and sustainability-aligned methodology, this study positions VE 4.0 as a strategic enabler of innovation, resilience, and long-term value creation. It concludes by highlighting future research directions to support the evolution, validation, and cross-sector implementation of VE 4.0 in smart and sustainable industrial systems.