South Asian Journal of Social Studies and Economics

Manufacturing firms face the challenge of controlling production costs while maintaining product quality, functionality, and customer value. Value engineering provides a systematic approach to examining product functions, specifications, materials, and production alternatives to achieve the required performance at an optimal cost. This study examined the effect of value engineering techniques on the financial performance of manufacturing firms in Eldoret City, Kenya. The study adopted an explanatory research design involving 25 registered manufacturing firms. The target population comprised 250 employees, from whom a sample of 154 respondents was determined. A total of 114 usable questionnaires were analyzed. Descriptive statistics, Pearson correlation, and multiple regression were employed. Value engineering techniques recorded a composite mean of 4.05 and a standard deviation of 0.82, indicating a relatively high level of application. Pearson correlation analysis revealed a positive and statistically significant relationship between value engineering and firm performance (r = .655, p < .001). Regression analysis established that value engineering techniques had a positive and statistically significant effect on firm performance (β = .199, p = .001). The overall model explained 74.5% of the variation in firm performance. The study concludes that value engineering is an important strategic cost-management technique capable of improving manufacturing-firm performance when applied systematically without compromising product functionality. Manufacturing firms should integrate value engineering into product development, procurement, production, and financial decision-making.