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What is a Value Specialist?
A value specialist is in business to ass i s t people in getting their money's worth
for the goods and services they buy. He helps people determine what is good value
in a specific situation. H e does this by urging his clients to buy those things they
really need and not waste money on i tems the clients really neither need nor want.
The value specialist is not a moralist; he does not dictate what i t is his clients
want. Conversely, he sees that they get what they want. For example: Client Jones
asks what should I pay for a fifth of gin; I like a gin and tonic every night. The value
specialist asks if Jones likes imported gin better than domestic gin. Jones says i t
all tastes the s a m e to him. The value specialist says buy the cheapest gin you can
find, it will cost about $3 a fifth. Client Smith also wants a fifth of gin. Although
he doesn't drink, he likes to impress his friends and business associates. His
counsel: buy imported; it will cost about $6 a fifth. Both Jones and Smith can beat
the value specialist's price by careful shopping, but only by 10 o r 15 per cent.
Had they split the difference and bought a good domestic gin for $4.50 a fifth, Jones
would have paid 50 per cent more for something he could not have enjoyed, and
Smith would not have impressed his friends and thus wasted the $4.50 he spent.
THE IMPORTANCE OF VALUE
Under t h e p r e s su re of a r a p i d l y expanding economy and t h e s h a r p e s t
f o r e i g n and domestic c o m p e t i t i o n i n h i s t o r y , i n d u s t r y is making a
g i a n t e f f o r t t o i n c r e a s e p roduc t i v i t b - -- t o t u r n ou t more and b e t t e r
goods f a s t e r and a t l e s s c o s t . I n f l a t i o n , s p i r a l l i n g wages and
p r i c e s , and i n c r e a s i n g c o r p o r a t e t a x e s add t o t h e problem. The
c h a l l e n g e of p l a c i n g a compe t i t i ve product ox t h e market must be
accep t ed , no t by management a l o n e but by everyore i n t h e bus ine s s .
No a c t i v i t y , whethern e n g i n e e r i n g , manufactur ing, f i n a n c e o r market-
i n g , is exempt from t h e r e s p o n s i b i l i t y of p rov id ing t h e customer
w i t h product va lue -,- a t a f a i r p r i c e t o him and a r ea sonab l e p r o f i t
t o t h e manufacturer .
The customer , i n many c a s e s , i s t h e government. And t h e government
is v i t a l l y i n t e r e s t e d i n r e c e i v i n g more va lue f o r i ts defense d o l l a r .
Defense c o n t r a c t s c o n t a i n i n c e n t i v e and other. c l a u s e s s p e c i f i c a l l y
aimed a t ach iev ing v a l u e eng inee r i ng from i ts b i d d e r s .
Much remains t o be done.
*
Thi s manual is t o g ive r o u an unders tand ing of va lue -- and of t h e
t e chn iques t h a t have been developed t o produce b e t t e r va lue .
It shou ld a s s i s t you i n your s t u d y of Value Engineer ing and g ive you
a l a s t i n g r e f ererice fo r - waking f u t u r e cos t -consc ious d e c i s i o n s .
WHAT DOES VALUE MEAN?
F o r 2 , 0 0 0 y e a r s , men have s e a r c h e d f o r some a b s o l u t e way of measur ing
v a l u e . A r i s t o t l e , t h i r d c e n t u r y p h i l o s o p h e r , was i n t e r e s t e d i n i t s
d e f i n i t i o n . S i n c e t h e n men have n e v e r s t o p p e d t r y i n g t o e x p l a i n ,
d e f i n e and c l a s s i f y i t .
UTILITY THEORY
Nothing seemed more
p l a u s i b l e t o e a r l y
p h i l o s o p h e r s t h a n t o
a s s o c i a t e v a l u e w i t h
u t i l i t y . That i s , u n t i l
someone r e a l i z e d t h a t i r o n
had more u t i l i t y t h a n g o l d
-- b u t g o l d w a s t h e more
v a l u a b l e .
LABOR THEORY
What is t h e v a l u e of a s m a l l b o l t i n a n a i r p l a n e wing i f f a i l u r e of t h a t b o l t would c a u s e t h e p l a n e t o c r a s h , d e m o l i s h i n g t h e p l a n e and k i l l i n g t h e p i l o t ? What is t h e v a l u e of t h e b r a k e s on y o u r c a r which you u s e i n one s i t u a t i o n t o p a r k and i n a n o t h e r s i t u a t i o n t o a v o i d a f o u r - c a r c o l l i s i on? What is t h e v a l u e of t h e p i c t u r e tube i n your TV s e t , and d o e s i t have a h i g h e r o r l ower v a l u e t h a n t h e s m a l l b o l t i n t h e a i r p l a n e wing?
Another t h e o r y proposed w a s t h e s o - c a l l e d l a b o r t h e o r y of v a l u e ,
which s a i d t h a t l a b o r and v a l u e a r e p r o p o r t i o n a l . F o r example: *
c o a l h a s no v a l u e u n t i l i t h a s been t r a n s p o r t e d t o t h e fu r3ance ,
r e q u i r i n g l a b o r f o r mining and t r a n s p o r t a t i o n . Yet t h e same amount
of s a n d , r e q u i r i n g t h e same amount of l a b o r and t r a n s p o r t a t i o n , d o e s
not have t h e sa,ne v a l u e a t t h e f u r n a c e . S i m i l a r l y , one d o e s no t
i n c r e a s e t h e v a l u e of a p roduc t by s e l e c t i n g a means of p r o d u c t i o n
w i t h t h e h i g h e s t l a b o r c o s t .
COST THEORY
An outgrowth of t h e l a b o r t h e o r y i s t h e c o s t t h e o r y - t h a t i s , a l l
c o s t is l a b o r , t h e r e f o r e v a l u e e q u a l s c o s t . T h i s t h e o r y is u p s e t by
t h e same r e a s o n i n g t h a t r e j e c t e d t h e l a b o r t h e o r y . Cost and l a b o r
may indeed be p r o p o r t i o n a l , b u t c o s t and v a l u e a r e n o t .
PRICE THEORY
P r i c e p a i d i n exchange has been used a s a measure of v a l u e f o r t h e
i t em r e c e i v e d . But i n r e a l i t y , t h e p r i c e p a i d and t h e t h i n g exchanged
c o u l d no t have had t h e same v a l u e t o both pe r sons o r t h e exchange
would never have been made.
So, a f t e r p i c k i n g h o l e s i n e v e r y p a s t
d e f i n i t i o n , we have come t o some
c o n c l u s i o n s : I 1. VALUE I S NOT A BUILT-IN
FEATURE OF ANYTHING.
2 . VALUE I S ESTABLISHED BY COMPARISON.
Value is one of t h o s e f a m i l i a r words which is d i f f i c u l t t o d e f i n e f o r t h e ve ry r e a s o n t h a t i t is s o w e l l unders tood wi thou t d e f -
3 . VALUE I S THE RELATIONSHIP I i n i t i o n .
BETWEEN WHAT A PERSON WANTS AND WHAT HE I S WILLING TO GIVE I
I N ORDER TO GET IT .
KINDS O F VALUE
I r o n has many u s e s -- b u t g o l d i s more v a l u a b l e .
Chr i s tmas t r e e s r e p r e s e n t c o s t and l a b o r . What a r e t h e y worth on New year's Day?
Diamonds, l i k e c o a l , a r e dug from t h e ground -- l a b o r is a l l t h e y c o s t . Yet t h e y ' r e more v a l u a b l e by f a r .
A t e n d o l l a r b i l l has l i t t l e use a s paper and d o e s n ' t c o s t much t o make, but i t I s a c o n s i d e r a b l e amount of goods.
Some economis ts s a y h e r e a r e f o u r k i n d s of v a l u e :
USE V A L U E
The power of a t h i n g t o s e r v e o u r
einds. The p r o p e r t i e s and q u a l i t i e s
which accompl ish a u s e , work o r
s e r v i c e .
ESTEEM V A L U E
The power of a t h i n g t h a t makes
u s want i t . The p r o p e r t i e s ,
f e a t u r e s , o r a t t r a c t i v e n e s s
which cause t h e d e s i r e .
COST V A L U E
The e f f o r t r e q u i r e d t o produce
a t h i n g . Anything t h a t is produced
has c o s t v a l u e - b u t t h i s c o s t v a l u e
has no r e l a t i o n s h i p t o i t s u s e ,
esteem o r exchange v a l u e ,
Can Opener - Housepaint
P a p e r c l i p - Bul ldozer
E l e c t r i c Can Opener - Gold
T i e Clasp - Rembrandt P a i n t i n g
Rolls-Royce
Obso le te i n v e n t o r y ; Spo-
i l e d merchandise ; Conver-
t e d s e a w a t e r a s opposed
t o l'normal1l s o u r c e water .
EXCHANGE VALUE
The p r o p e r t i e s o r q u a l i t i e s which
enab le u s t o exchange a t h i n g f o r .
something e l s e we want. Gold, Money, Green
Stamps, Checks
VALUE RELATI ONSHIPS
Anything t o have va lue must have a use . I f i t is d e s i r e d i t a l s o ha s
esteem. I n a l l p r o b a b i l i t y i t has c o s t , b u t i ts c o s t va lue does no t
mean t h a t i t ha s comparable u s e , esteem o r exchange va lue .
Human d e s i r e produces esteem va lue . S c a r c i t y , u rgen t need, p r e s t i g e
o r e s t h e t i c q u a l i t i e s cause human d e s i r e .
A bouquet of v i o l e t s cause human d e s i r e by i ts e s t h e t i c q u a l i t i e s .
The w o r l d ' s l a r g e s t c o l l e c t i o n of Johann S e b a s t i a n Bach ' s o r i g i n a l
manuscr ip t s g i v e s p r e s t i g e t o i ts owner, bu t has no more use va lue
t h a n p r i n t e d c o p i e s of t h e s h e e t music.
Both a i r and wate r have use v a l u e , but t h e y a r e s o abundant t h a t we
u s u a l l y t a k e them f o r g r an t ed . I f e i t h e r were denied u s , however,
t h e i r esteem va lue would r i s e sha rp ly .
A cub i c f o o t of wa t e r is worth a f r a c t i o n of a c e n t d e l i v e r e d through b
your wa te r meter . Th is can be cons idered i ts use va lue . I n a
munic ipa l water system i t is a l s o i ts approximate c o s t va lue . The
same amount of wa te r has cons ide r ab l e esteem va lue t o a t h i r s t y man
on t h e d e s e r t . I f t h e same man had p l e n t y of wa te r and o t h e r s had
none, t h e water would have exchange va lue t o him.
Value h a s no r e l a t i o n t o t h e a c t u a l c o s t o l p r o d u c i n g a p a r t o r
d e v i c e n o r d o e s i t have any r e l a t i o n s h i p t o t h e consequences i n
t he e v e n t of f a i l u r e of t h a t p a r t o r d e v i c e .
V a l u e is d e t e r m i n e d o n l y by compar i son . I t is t h e l o w e s t p r i c e
you must pay t o p r o v i d e a r e l i a b l e f u n c t i o n . "Lowest p r i c e "
i m p l i e s c o m p a r i s o n - w i s e c o m p a r i s o n of v a l u e s - t o d e t e r m i n e
VALUE.
The v a l u e of a b o l t i n a n a i r p l a n e wing is d e t e r m i n e d by t h e
means of p r o v i d i n g t h e f u n c t i o n of t h a t b o l t a t t h e l o w e s t
c o s t . I f t h e c o s t of t h e b o l t i n q u e s t i o n w a s 25 c e n t s and
t h e b o l t w a s f ound t o be t o o s m a l l t h e s i z e might b e
~ n c r e a s e c l and t h e c o s t might become 50 c e n t s o r $ 1 , b u t
n e v e r w i l l t h e c o s t - o r t h e v a l u e - be e q u a l t o t h e c o s t of
t h e p l a n e o r t h e v a l u e of t h e p i l o t ' s l i f e . The v a l u e of t h e
brakes on t h e c a r is e s t a b l i s h e d by t h e l o w e s t c o s t a t which
t h e b r a k i n g f u n c t i o n c a n b e p r o v i d e d . The v a l u e of t h e TV
p i c t u r e t u b e i s d e t e r m i n e d by t h e l o w e s t c o s t a t which i ts
' f u n c t i o n c a n b e produced .
VALUE I N INDUSTRY
-- -
VALUE IS THE LOWEST COST TO PROVIDE
ESSENTIAL FUNCTION
FUNCTION I S ANYTHING THAT MAKES THE
PRODUCT WORK OR SELL - -
Through Value A n a l y s i s , Genera l E l e c t r i c C o r p o r a t i o n found t h a t a n
average of 25% of manufac tu r ing c o s t s a r e unnecessary . They i n c r e a s e
t h e c o s t of t h e product b u t add n o t h i n g t o i ts VALUE.
T h i s e x t r a c o s t is p r e s e n t i n i n d u s t r y TODAY -- because of h a b i t ;
thought p a t t e r n s ; p e r s o n a l l i m i t a t i o n s ; t h e d i f f i c u l t y of d i s s e m i n a t i n g
i d e a s -- and because t o d a y ' s t h i n k i n g is based on y e s t e r d a y ' s knowledge.
companies engaged i n producing consumer goods must c o n s i d e r esteem
a l o n g w i t h u s e s o t h e y can s e l l t h e i r p r o d u c t s . Government c o n t r a c t o r s
cannot i g n o r e s a l e a b i l i t y , bu t a r e f a r more concerned w i t h t h e use
v a l u e 01 t h e i r p roduc t s .
Value r e s e a r c h shows t h a t government c o n t r a c t o r s produce goods,
p r i n c i p a l l y i n t e n d e d t o s e r v e a "use", t h a t c o n t a i n f a r more e x c e s s
c o s t t h a n o r d i n a r y consumer goods. Some of t h e e x c e s s c o s t can be
ana lyzed a s p r e s t i g e o r " t e c h n i c a l a e s t h e t i c s " , b u t most of i t i s a
r e s u l t of NOT KNOWING THE DOLLAR VALUES OF FUNCTIONAL AREAS i n t h e
product a t t h e t ime money was expended.
Value E n g i n e e r i n g i s an o r g a n i z e d , s y s t e m a t i c and c r e a t i v e approach f o r
e f f i c i e n t i d e n t i f i c a t i o p of unnecessary c o s t -- c o s t which p r o v i d e s
n e i t h e r q u a l i t y nor u s e nor l i f e nor appearance nor customer f e a t u r e s .
Value Engineer ing is a s p e c i f i c s e t of t e c h n i q u e s t h a t produce remark-
a b l e r e s u l t s because i t a t t a c k s t h e b a s i c problem - i t c u r e s t h e d i s e a s e
r a t h e r t h a n t h e symptoms.
Value Engineer ing t e c h n i q u e s aim t o p r o v i d e more v a l u e f o r t h e
cus tomer . They b e a r no r e l a t i o n t o c o s t r e d u c t i o n t e c h n i q u e s ,
which f o c u s o n l y on c o s t s and how t o reduce them.
Value Engineer ing t e c h n i q u e s t a k e t h e fundamenta l approach of
f u n c t i o n ; t h e y a r e aimed a t p r o v i d i n g f o r t h e r e l i a b l e performance
of a f u n c t i o n w i t h t h e e s s e n t i a l q u a l i t y a t t h e lowes t c o s t ,
i n s t e a d of merely t a k i n g t h e product as i t s t a n d s and t r y i n g t o
produce it a t t h e lowest c o s t .
Value Engineer ing is r e a l l y a ph i loso- phy o r a way of t h i n k i n g t h a t a p p l i e s t o a l l f u n c t i o n s i n a b u s i n e s s and t o a l l b u s i n e s s e s , l a r g e o r s m a l l . I
VALUE ENGINEERING , , . . A PHILOSOPHY
The B i r t h
"The Father of Value Analysis". Tha t ' s what they c a l l Lawreoce D.
Miles. And probably no man ever had a s t r a n g e r in t roduct ion t o h i s
ch i ld . Pul led i n t o the General E l e c t r i c Corporation o f f i c e s one day,
Miles, a long-time employee of GE, d i d n ' t have any idea why he was
the re . Then one of the corpora t ion o f f i c e r s asked him suddecly,
"Miles, d i d you know t h a t Lucky S t r i k e Green went t o war?"
Confused, Miles admitted he remembered t h e famous World War I1
a d v e r t i s i n g slogan.
"But d i d you know it never came back?" the same o f f i c e r asked q u i e t l y .
This anecdote i l l u s t r a t e d f o r Miles t h e odd f a c t , brought t o l i g h t by
World War 11, t h a t many emergency s u b s t i t u t i o n s of ma te r i a l made
because of war-caused mate r i a l shor tages not t n l y cos t l e s s , but i m -
proved t h e product.
The green co lo r of Lucky S t r i k e packages was impossible t o ob ta in i n
World War 11. So the company was forced t o "send it t o warv.
But s a l e s d i d n ' t s u f f e r , the package worked a s well. A l l t h a t was
lacking was the added cos t of t h e color .
So Lucky S t r i k e Green became a war casual ty .
And General E l e c t r i c wanted Miles t o make s i m i l a r acc iden ta l b e n e f i t s
of war-time exigencies t o occur i n peacetime . . . on purpose.
- 9-
The Growth
Miles' approach was first to analyze the function of a part or product
and then find a simple, low cost method of performing the function.
He found that by comparing the function of a part with its cost, he
could locate what he calls areas of ''poor value."
The Navy's BUSHIPS found out about GE'S Value Analysis and started a
similar program they called Value Engineering. It embodied the same
techniques and concepts but the Navy used teams composed of representatives
from Engineering, Purchasing and Manufacturing in a seminar situation.
The Challenge
The philosophy of Value Engineering is to give the customer more for his
money -- to assure that he will receive goods and services which will
reliably perform those functions he requires at minimum cost.
Value Engineering is not merely a search for new materials and processes --
the laboratories, Engineering and Manufacturing organizations are
constantly doing that.
Nor is it a substitute for the effective cost reduction committees which
daily are increasing our value.
b
Value Engineering is a well-informed creative study of every item of
cost in every part or material with one objective -- equal or better
performance at lower cost.
SIX REASONS FOR UNNECESSARY COSTS (POOR VALUE) I N A PRODUCT - - -- - - I 1. Lack of i n fo rma t ion a t t h e t ime of d e c i s i o n making.
2. Lack of good i dea .
3. Something c r e a t e d t o s a t i s f y temporary c i rcumstances and never changed.
4. Honest wrong b e l i e f .
5. Habi t .
6. A t t i t u d e .
It is t o t h e r e l i e f o r p r even t i on of t h e s e , t h a t Value Engineer ing is ded i ca t ed .
Two of t h e most important f a c t o r s i n ho ld ing c o s t down a r e knowing what
t h i n g s a r e a v a i l a b l e and how much t h e y c o s t . Value Engineer ing must
b r i n g new in format ion i n t o t h e p roduc t from new a r e a s w i t h i n t h e company
and from s p e c i a l t y s u p p l i e r s o u t s i d e of t h e company -- new p o s s i b i l i t i e s
and new v a l u e o p p o r t u n i t i e s -- and s e e t h a t de s igne r s have i n fo rma t ion
a v a i l a b l e t o make c o s t consc ious d e c i s i o n .
R e l a t i o n s h i p of Value Engineer ing t o Cost Reduction
The most b a s i c p r i n c i p l e of Value Engineer ing is t h e use of t h e f u n c t i o n a l
approach.
The f u n c t i o n a l approach ha s been around a long t ime. . .but peop le r e f u s e
t o u s e i t . They s t i l l p i c k up a p a r t and s a y , "How can we g e t t h i s f o r
l e s s ? " r a t h e r t han look a t t h e f u n c t i o n t h e p a r t performs and s a y , "How
can we perform t h e f u n c t i o n f o r l e s s ? "
How c a n we make t h e p a r t cheaper? Th i s has been t h e c o q v e n t i o n a l c o a t -
r e d u c t i o n ap3rouch. M a t e r i a l r ep lacement , d i f f e r e n t t o o l s , d i f f e r e n t # <
p r o d u c t i o n methods o r a speed up of o p e r a t i o n s . How can we make t h i s
p a r t i c u l a r p a r t f o r l e s s money?
Another approach a l o n g t h e same l i n e is t h e p u r c h a s e r ' s v iewpoin t . "Who
w i l l s e l l i t t o u s f o r l e s s ? " T h i s shows i n make-or-buy d e c i s i o n s ,
c o m p e t i t i v e b i d d i n g , s e l e c t i o ~ of q u a l i f i e d b i d d e r s , e t c .
The F u n c t i o n a l Approach
Value E n g i n e e r i n g s t a r t s from a comple te ly d i f f e r e n t r e f e r e n c e p o i n t -- a f u n c t i o n a l d e f i n i t i o n -- and p r o v i d e s a s y s t e m a t i c and o r g a n i z e d
method of f i n d i n g t h e most economical way t o p rov ide t h e f u n c t i o n .
The Value Engineer c o n s t a n t l y r e l a t e s c o s t t o f u n c t i o n . I n s t e a d of
a s k i n g how t o make something c h e a p e r , he a s k s "What f u n c t i o n is r e q u i r e d ? " ,
"What is t h a t f u n c t i o n r e a l l y wor th?If , and "What a r e t h e alternative^?^^ --
"How many ways can t h e funmot ion be provided?"
He wants t o know a l s o I1What a r e t h e c o s t s ? " i n o r d e r t o p r e s e n t a c h o i c e
t h a t w i l l o f f e r t h e most v a l u e .
I n f a c t , a s e r i e s of q u e s t i o n s must be as!ied and answered i n o r d e r t o
f u l l y incorpoc-ate t h e f u n c t i o n a l approazh.
1. What is i t ?
2 . What does i t do?
1 3 . What does i t c o s t ? I 4. What is t h e f u n c t i o n worth?
5, What e l s e w i l l do the job?
I 6. What does t h a t c o s t ? -
Value Engineer ing b o i l s down t o d e f i n i n g a P m c t i o n m d f i n d i n g t h e
lowes t c o s t met,hod t o r e l i a b l y perform t h a t f unc t i on .
De f in ing a f u n c t i o n is not easy . I t r e q u i r e s c a r e f u l thought , a l l
t h e f a c t s , a r ~ d a genuine unders tand ing o f t h e p roduc t .
F ind ing t h e lowest c o s t mecans t o perform t h e f u n c t i o n is not e a sy
e i t h w . It r e q u i r e s an open mind, i n g e n u i t y , and knowledge i n o r d e r
t o e e t a b l i s h a l t e r n a t e niet.hods of performing t h e func t i on .
It a l s o r e q u i r e s d e t a i l e d knowledge of how much t h i n g s c o s t . T h i s
knowlecige i~ o f t e n unknown and must be found on ly by p a i n s t a k i n g
i n v e s t i g a t i o n .
I I d e n t i f y a func t i on . -- - I Evalua te t h e f u n c t i o n comparison. - - I
Value Engineer ing i n P r n c t i c e - -
Value Engineer ing is o f t e n de sc r i bed as an a t t i t u d e .... an a t t i t u d e
of const ructAve d i s c o n t e n t . . . . . an a t t i t u d e of c o n s t a n t q u e s t i o n i n g
. . . . an a t t i t u d e t h a t t h e product can be improved -- t h a t unnecessary - c o a t , c o a t t h a t does ncd c c n t r i b u t e t o va lue , - can be removed -- that ,
b
q u a l i t y an-d r e l i a b i l i t y - can be me.int,ained o r improved at lower c o s t .
But t h i s a t t i t u d e must be channeled t o g e t t h e b e s t result^.
The channe l ing is provided by t h e Value E n ~ i n e e r i n g Job Plan -- - - -- an
o rgan ized approach t o a Val.ue Engineer ing s t udy -- and by a sy s t ema t i c
use o f t h e -- Value W i n e e r i n g Techniques.
There a r e f i v e e s s e n t i a l c h a r a c t e r i s t i c s p e c u l i a r t o a Value
Engineer ing s tudy ,
. A f u n c t i o n a l approach
, A r e s e a r c h e f f o r t
. C r e a t i v i t y
A t t i t u d e
. Use of a d o l l a r s i g n f o r measurement
A l l t h e t e chn iques - a l l t h e phases of t h e job p l a n f a l l i n t o one o r
more of t h e s e e s s e n t i a l a r e a s ,
The Studv i n a Nutshe l l
Armed w i t h your ATTITUDE of c o n s t r u c t i v e d i s c o n t e n t you f i r s t RESEARCH
yoqJr p roduc t -- l e a r n 311 you can about i t , With t h i s knowledge you
Can d e f i n e FUNCTIOYS and a s s o c i a t e DOLLAR VALUE wi th t h o s e f u n c t i o n s ,
You w i l l t h en be a b l e t o use yoilr CREATIVITY t o develop a l t e r n a t e means
t o p r ov ide t h e f u n c t i o n s , You can ana lyze va lue by comparing t h e c o s t s
of t h e v a r i o u s means,
UNDERSTAND THE PRODUCT
F i r s t S t e p : GET THE FACTS
Here is t h e p l a c e t o a s k -- "What is i t ? "
"What does i t do?"
Ifwhat does it c o s t ? "
F o r t h e answer t o "What is it", you want t o know more t h a n i ts name.
You want t o know ..... ... What is i t made of?
. . . What does it look l i k e ?
. . . How b i g is i t ?
... How is it made?
. . . and e v e r y t h i n g e l s e abou t ltwhat is i t t t t h a t w i l l h e l p you know your p roduc t
The h e a r t o f Value Engineer ing is nex t ... t h e f u n c t i o n a l approach.
Here t h e q u e s t i o n is . . . . .
T h e key t o e f f e c t i v e Value Engineer ing -
CHALLENGE EVERYTHING ! ! !
1 ... What does it do?
... What must it do?
I ... What does t h e u s e r want it t o do?
J ... Why does i t do it t h i s way?
.. . How does it do i t ?
... How wel l is it done?
Where do you g e t t h e answers t o a l l of t h e s e q u e s t i o n s ?
From t h e d e s i g n e r ... i f you want t o know why a c e r t a i n m a t e r i a l w a s
used o r a t o l e r a n c e was c a l l e d ou t on a b l u e p r i n t .
From t h e people who use i t ... i f you want t o f i n d out what t h e p a r t
must do.
From t h e s u p p l i e r ... i f you wonder why he made i t t h i s way.
From t h e customer ... i f you want t o f i n d out what he wants.
From t h e buyer , t h e p l a n n e r , t h e t e s t i n g group, t h e s e r v i c e and
maintenagce groups ..... from every source of i n fo rma t ion you have
t ime f o r .
- GET ALL THE FACTS -
I n ha l f t h e c a s e s when a l l t h e f a c t s a r e supposed
t o be i n , t h e y ' r e no t . Unless you g e t more f a c t s
t han anyone e l s e you w i l l m i s s u n t o l d o p p o r t u n i t i e s .
When you d o n ' t have f a c t s you a r e u s i n g pe r sona l
op in ion . Many a problem s o l v e s i t s e l f when you
g e t a l l t h e f a c t s . b
A c i r c u i t board module frame assembly was f i t t e d w i th a s p e c i a l handle t o f a c i l i t a t e i ts i n s e r t i o n and removal from a mi s s i l e -bo rne package. The package had a t o t a l of twenty-s ix removable modules, each wi th its s e p a r a t e handle . The hand les were s p e c i a l l y made f o r t h i s job and c o s t $7.50 each f o r a t o t a l of $195 worth of hand les i n each a i r b o r n e package.
The r e a s o n f o r t h e b u i l t - i n h a n d l e s was ' tobvious . t t One c o u l d v i s u a l i z e a m i s s i l e on t h e pad, i n t h e l a t e s t a g e s of countdown. Something is wrong w i t h a p o r t i o n of a c i r c u i t ! A t e c h n i c i a n r u s h e s up , opens a w h a t z i t i n t h e s i d e of t h e m i s s i l e , g r a b s t h e r e a d y hand le of a module, removes it and p l u g s i n a good one.
When someone GOT THE F A C T S i t t u r n e d o u t t h a t modules --- were NOT removed d u r i n g countdown. They w e r e n ' t even removed w h i l e t h e w a s i n t h e m i s s i l e . THEY WERE ONLY REMOVED WHEN THE PACKAGE WAS I N THE SHOP.
T h i s f a c t l e d t o a p roposa l t o f u r n i s h a s imple 25 c e n t t o o l t o be k e p t i n t h e shop -- a t o o l t h a t would do t h e job of many $7.50 hand les .
A l l I n d i a n s walk i n s i n g l e f i l e . A t l e a s t t h e one I s a w d i d .
A l l Value E n g i n e e r i n g work r e s t s squat -c ly
c l e a r , s i m p l i f i e d d e f i n i t i o n of f u n c t i o n .
To g e t t h i s c l e a r , s i m p l e d e f i n i t i o n ,
you must d i s c i p l i n e y o u r s e l f t o t h i n k
i n t h e s i m p l e s t t e r m s :
on t h e f oirntlil t i o n o f i t
I Before we d e c i d e what t o d o , l e t ' s f i n d o u t where we a r e a n d what I
I we want t o do.
A. L i n c o l n
ONE VERB AND ONE NOUN FOR ANY FUNCTIONAL DEFINITION -------
I f a f u n c t i o n c a n b e d e s c r i b e d i n two words , it is p robab ly c l e a r l y
u n d e r s t o o d . I f more words a r e u s e d , i t i s n ' t . I f you keep expanding
your words , e v e n t u a l l y you have a p a r a g r a p h which d o e s n ' t d e s c r i b e
t h e f u n c t i o n of t h e p a r t a t a l l ... b u t r a t h e r e x p l a i n s how t h e p a r t
is pe r fo rming now.
T h i s is d i f f i c u l t ... b u t wor th i t . The mere e f f o r t i t t a k e s f o r c e s
you t o c o n c e n t r a t e s o l e l y on f u n c t i o n , r a t h e r t h a n t h e p a r t a s i t is.
Some examples :
Connects ... P a r t s
T r a n s m i t s ... Motion
P r o t e c t s ... S u r f a c e
Conducts ... C u r r e n t
S u p p o r t s ... Case
Put t h e s e verb-noun d e f i n i t i o n s on t h e F u n c t i o n D e f i n i t , i . o n Worksheet -- and keep them where you can s e e them. Y o u ' l l f i n d t h a t your f i r s t
d e f i n i t i o n o r verb-noun combinat ion may n o t be t h e f u n c t i o n a l d e f i n i t i o n
y o u ' r e l o o k i n g f o r s o you a s k two more q u e s t i o n s :
How does i t do i t ?
Why does i t do i t ?
These q u e s t i o n s w i l l h e l p c l a r i f y your d e f i n i t i o n . Add t h e answers ,
i n verb-noun combina t ions , t o your F u n c t i o n D e f i n i t i o n Worksheet.
Then q u e s t i o n t h e s e d e f i n i t i o n s i n t h e same way.
Keep i t up u n t i l you a r e s a t i s f i e d t h a t you have d e f i n e d what t h e
p a r t o r assembly r e a l l y does o r what you r e a l l y want i t do do.
For example, l e t ' s t a k e your k i t c h e n r e f r i g e r a t o r . What does i t do?
Well , your f i r s t answer might be " p r o v i d e s c o l d , " So you w r i t e t h a t
on your worksheet . When you
a s k "How does it do i t ? " ,
your answer w i l l p robab ly
be l1 t rans f e r s h e a t . " Put
i t down. "Why d o e s i t do
i t ? " would e v e n t u a l l y end
up "Prese rves food , I'
FUNCTION DEFINI
COMPONENT
' I O N WORKSHEET
FUNCTION (Verb-noun
Looking at your worksheet now, you might decide that what you're
really trying to do is to preserve food. Provide cold and transfer
heat are only ways to provide this function. -
NOTE: If it were a laboratory refrigerator, the answer to - "Why does it provide cold?I1 might well be "inhibit bacteria" or "condition material,"
If preserving food is the only function of your refrigerator, you
might try to get better value by evaluating alternate methods ---
If it's cold you want and if you're convinced that some type of
heat exchange is how you want to get it, you can evaluate alternate
methods to transfer heat --- Serve1 refrigeration compared to
compressor type, for example.
The goal of Value Engineering is to develop practical value alternatives. I
EVALUATE THE FUNCTION BY COMPARISON
Basic and Secondary Functions
A product, an assembly, even a single part -- all have a basic function and usually one or more secondary functions.
The basic function is the specific purpose for which the item was made
... the reason for its existence in the first place. It is the function
that must remain even if everything else is eliminated.
Basic functions are nearly always use functions. Your refrigerator
has the basic function to '!preserve food."
But it has secondary functions -- something else it does or other
features that help sell it, give it esteem value, fulfill quality and
reliability requirements.
Such functions as ''make ice-cubest' ; "freeze ice-cream" ; ''chill martinis. 'I
Such features as shelves in the door, egg racks and a butter conditioner.
Such attractions as colored enamel and chrome-plated hardware.
Each of these functions or features has its cost -- and also its value.
The functional evaluation is not complete until the costs have been
broken down and assessed against each function and feature ,., along with some idea of what each function or feature is worth.
I The Function Evaluation Chart is designed to tabulate these functions as well as to assign costs and values to them,
. 0 o WHAT DO YOU U S E FOR A STANDARD OF CO?"PARISON?
Commercial equ iva l en t s which you buy f o r home use w i l l g ive YOU
good va lue comparisons, For i n s t a n c e , if you see an e l e c t r i c swi tch
c o s t i n g $5 on equipment you a r e reviewing, you might ques t ion i ts
value. Why? Because you know from experience t h a t t h i s f u n c t i o n may
be performed by a household type c o s t i n g 29 c e n t s a t t h e l o c a l hardware
Another type of comparison can
Perhaps a compet i to r has found
value i n h i s product -- and if
f o r value,
D e t e r ~ i n i n g worth is
e s s e n t i a l l y a technique
of covparison t o f a m i l i a r
i tems o r func t ions , It
fo l lows n a t u r a l l y t hen t h a t
a broad experience w i l l h e lp
you g e t t h e most va lue i n t o
t h e i tems being reviewed,
be made by reviewing compet i t ive items,
a b e t t e r way -- has incorpora ted more
he has , we can use t h i s i n our s ea rch
EVALUATE BY COMPARISON with
Common p a r t s ,
Standard pa r t s .
Basic ma te r i a l s ,
Evaluate Functional Areas
Another technique is to divide costs into functional areas and then
define just what it is you are buying with that cost -- using the verb-noun definition,
The refrigerator, for example, has functional areas of mechanical,
electrical, insulation, features, appearance, assembly, etc. This
method of dividing costs into functional areas drastically highlights
areas of poor value -- areas whose cost-function ratio is inconsistent with that of other areas,
Spotlight Hidden Costs
Examine the tolerances and finishes specified. These cost money. If
possible, determine and assign a dollar-sign against inspection,
fabrication and test tolerances,
Did you ever consider that a drawing shows a preconceived idea of the
method of manufacture? Does it have to? Frequently the tolerances
spelled out on a drawing will dictate a milling machine operation, yet
a cast or welded part will to the job. Tolerances may cost dearly yet
contribvute no value,
Another idea of hidden cost is a result of habit. A common example
of this is standardxall-outs. Such notations as 1/8" rivets on 1"
centers. Examine these areas. Satisfy yourself that this is
necessary not habit,
TAKE THE CREATIVE STEP
Up t o now we have answers on what the item a c t u a l l y is, what its bas ic
and secondary funct ions a r e , what these cos t t o perform, and what we
t h i n k i t ' s r e a l l y worth t o perform them.
Now we must f i n d something e l s e which w i l l t o a job a s well a s t h e
present item -- something e l s e wi th t h e same QUALITY and RELIABILITP -- o r BETTER.
Don't t ake t h i s s t e p u n t i l your mind is completely f r e e d from
t h e p a r t and or iented toward the funct ion,
Here is where you suspend judgement . . . . . . . . Here is where you put your imagination t o work,
Here is where you "BLAST!! CREATE AND REFINE."
Here is where you do your l 'brainstormingm f o r new and divergent
ways t o provide the funct ion,
a
WHAT ELSEw WILL DO THE JOB?
It's smart t o ge t input from o the r a r e a s t o help answer t h i s question.
It may be t h a t t h e item can have a s u b s t i t u t e made by a vendor who
s p e c i a l i z e s i n t h i s type product. The PURCHASING AGENT w i l l know
of such a vendor,
It may be t h a t w e can make something i n our own shop which w i l l
s a t i s f y t h e requirements and y e t cos t a grea t deal l e s s money. The
OPERATIONS people would be a b l e t o help here,
Maybe t h e to le rances on c e r t a i n a r e a s a r e too c lose f o r requirements
and a r e making t h e p r i ce of t h e item too much due t o r e j e c t s . Here
QUALITY CONTROL can make worthwhile suggestions,
A team approach of t h i s type is an e s s e n t i a l i n f ind ing Ifwhat e l s e
w i l l do t h e job,If
PUT A DOLLAR SIGN ON EACH MAIN IDEA
Analyze the ideas you've cooked up, I t ' s important t o remember t h a t
you're not t r y i n g t o e l iminate ideas , but a re t ry ing t o see how ideas
can be made t o work, -----
Now you a r e ready t o add judgement t o your ideas i n order t o r e f i n e
themo Cul l over the ideas and s e l e c t seve ra l which appear most
promising. Write down the reasons f o r r e j e c t i n g each of the others .
You may want t o r e t u r n t o them l a t e r i f the f i r s t i deas s e l e c t e d t o
not pan out,
Of t h e ideas s e l e c t e d , es t imate your cos t of each, Compare t h i s t o
t h e o r i g i n a l cos t and t o your es t imate of worth,
Now arrange them i n an order of Eff ic iency is not t h e negat ive v i r t u e of e l iminat ing what is
precedence and sys temat ica l ly wasteful , but t h e p o s i t i v e v i r - t u e of bui ld ing up what is bes t ,
pursue each one u n t i l you f e e l
t h a t you have the bes t so lu t ion .
INVESTIGATE BEFORE Y O 3 INVEST
Take t h e b e s t i d e a s and deve lop them i n t o usab le p roposa l s . You want
t o check t h e f e a s i b i l i t y of your i d e a s and v e r i f y t h e d e t a i l s . Don't
h e s i t a t e t o a s k f o r h e l p -- h e l p from company s p e c i a l i s t s -- h e l p
from s u p p l i e r s and o u t s i d e s p e c i a l i s t s . When c o n s u l t i n g s p e c i a l t y
o r o t h e r vendors , d o n ' t j u s t hand them a drawing o r s p e c i f i c a t i o n and
a s k "What can you do w i t h t h i s ? " I n s t e a d g e t them t h i n k i n g of t h e
f u n c t i o n s you want. They may know of a s p e c i a l t y p r o c e s s , product
o r m a t e r i a l t h a t may h e l p you.
USE ALL OF INDUSTRY'S KNOW-HOW
Don' t r e -d i s cove r t h e wheel
S ince t h e end of World War 11, t h e fo l l owing t r u e
s t o r y has been brought t o l i g h t .
I t seems t h a t Von Braun was appoin ted p r o j e c t eng ineer of t h e V-2 r ocke t development, and one of t h e problems t h a t became appa ren t was t h a t of a h igh-pressure f u e l pump t o pump f u e l i n t o t h e combustion chamber. They worked on t h e p r o j e c t f o r s i x months, decided on t h e s p e c i f i c a t i o n s f o r t h e pump, i n v e s t i g a t e d v a r i o u s de s igns and began t o su spec t t h a t t h e s p e c i f i c a t i o n s were impossible t o meet.
A f t e r s i x months
Von Braun f i n a l l y dec ided t o c a l l i n a l l t h e pump manufac tu re r s i n Germany and t a l k t o them about t h e problem. He f e l t t h a t t h e b e s t way t o handle t h e s i t u a t i o n was t o r e a d o f f t h e list of s p e c i f i c a t i o n s t o t h e assembled e n g i n e e r s and manufac tu re r s , hoping t h a t when he reached a p o i n t where t h e s p e c i f i c a t i o n s were seemingly imposs ib le , t h a t he would be a b l e t o draw t h e men i n t o a d i s c u s s i o n l e a d i n g t o a s o l u t i o n ,
The experts met
So he spoke before the assembled group of pump manufacturers, listing one-by-one the specifications for the pump and pausing after each for any comments. The specifications were as follows:
The pump had to deliver 150 lbs. of fuel per second.
The pump must operate at 300 lb/sq.in. pressure at the low pressure end.
With this rate of delivery and pressure, the pressure must be maintained constant to within about .4%.
The pump must be capable of being stored for long periods of time, and yet be immediately available for use.
After being out of service for some length of time, it must come to full and constant pressure delivery within a matter of three seconds.
Impossible?.
After each of these specifications he surveyed the audience, but no one made any comments. After Von Braun had finished, he rather apologetically asked, "Does anyone have any comments or any ideas?"
One fellow rose and said, "Sir, it looks to me like what you need is a standard firefighter's pump. A standard firefighter's pump has to deliver large volumes of water in order to put out a fire. It has to deliver the water at a high pressure so that the firemen can be at a safe distance from the fire. The pressure must remain very constant, because other- wise the stream cannot be directed. A firefighter's pump has to be stored for long periods, because fires may not occur for six months or a year and yet, when they do occur, the pump has to work and it has to come to full pressure delivery in a very short time."
A six months margin
In Winston r;hurchillls History of the Second World War - -9
he said that if the V-2 rocket had become operational six months sooner, the outcome of the war, favorable to the allies, would have been seriously in question.
KNOW YOU ARE RIGHT
Review each i d e a w i t h t h e thought "Is t h i s r e a l l y t h e b e s t idea?"
Don ' t be a f r a i d t o e x e r c i s e your own judgement a t t h i s p o i n t .
You a r e now ready t o g e t t h e answer t o t h e q u e s t i o n "What does t h a t
c o s t ? " You o b t a i n c o s t i n fo rma t ion from t h e same s o u r c e s as before :
E s t i m a t i n g , Fac to ry depar tments , company e x p e r t s , vendors of s t anda rd
p r oduc t s and s p e c i a l t y vendors. You need c o s t i n fo rma t ion on new
m a t e r i a l , f a b r i c a t i o n , i n s p e c t i o n , t e s t i n g , t o o l i n g , de s ign and
i n c o r p o r a t i o n , and implementat ion o r cost-of-change.
Armed w i th t h e s e f a c t s you a r e ready t o make a f i n a l e v a l u a t i o n and
come up w i th a proposa l . A t t h i s t ime you w i l l p robab ly be t h e
"exper t " on t h e p r o j e c t . You know more f a c t s about i t t h a n anyone
e l s e . So t r u s t your judgement -- i t is based on f a c t , i s n ' t i t ?
MAKE YOUR PROPOSAL
Make a r e p o r t of your r e s e a r c h , your c r e a t i v i t y and your p roposa l .
Communicate t o o t h e r s t h e r e s u l t s of your e f f o r t s . S e l l your re -
commendations.
The r e p o r t must be p repared s o a s t o be understood. Inc lude p e r t i n e n t *
informat ' lon such as before -and-a f te r p i c t u r e s , be fore -and-a f te r c o s t
breakdowns and vendor q u o t a t i o n s . At tach o r r e f e r e n c e a l l s p e c i f i c
eng inee r i ng d a t a , eng inee r i ng s t u d i e s and s t u d i e s p e r t i n e n t t o manu-
f a c t u r i n g methods, t ,echniques , e t c . Send your r e p o r t t o t h e person
o r pe rsons who a r e r e s p o n s i b l e f o r t h e i t em o r who a r e i n a p o s i t i o n
t o make d e c i s i o n s r ega rd ing i t .
THE VALUE ENGINEERING T E C H N I ~ E S
Twenty Keys t o Value
Use t h e Value Engineer ing Job P l a n
Get a l l t h e f a c t s
Use i n fo rma t ion from on ly t h e b e s t sou rce
Def ine t h e f u n c t i o n
Eva lua t e by Comparison
Analyze c o s t
Do c r e a t i v e t h i n k i n g
Eva lua t e t h e f u n c t i o n
B l a s t , C r e a t e , Ref ine
I d e n t i f y and overcome roadb locks
Cha l lenge requ i rements
Use s p e c i a l t y vendors
Use t h e company's s p e c i a l i s t s
Use s t a n d a r d s
Use good human r e l a t i o n s
Get new in fo rma t ion
Get a d o l i a r s i g n on every g iven t o l e r a n c e
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Work on s p e c i f i c s - avoid g e n e r a l i t i e s
Use your own judgement
Use t h e c r i t e r i o n "Would I spend my money t h i s way?"
THE VALUE ENGINEERING TECHNIQUES --
1. USE THE VALUE ENGINEERING JOB PLAN
Value Engineering is an or~anized and systematic search for better value. The VE Job Plan is what makes it organized and systematic.
2. GET ALL THE FACTS
This is a realistic, hard-boiled job. You need facts on costs, inventory, requirements, usage, specs, development, manufacturing and history. You'll find that in most cases when all the facts are supposed to be in, they're not! Unless you get more facts than anyone else, you're not going to get the job done.
3. USE INFORMATION FROM ONLY THE BEST SOURCE
Not just the "normalft source - not the easiest source - but the best source. Get answers about manufacturing from manufacturing, purchasing answers from purchasing, customer needs and wants from no one but the customer.
4. DEFINE THE FUNCTION
Define t h e f u n c t i o n i n two words - a verb and a noun. T h i s f o r c e s you t o s e p a r a t e f u n c t i o n s - t o cons ide r them one a t a t ime. It keeps you from cons ide r i ng a p a r t o r a s ~ e m b l y , . ~ a s i t is , and f o c u s e s your c r e a t i v i t y on what i t does.
I f a f u n c t i o n can be d e s c r i b e d i n two words, i t is probab ly c l e a r l y unders tood. I f more words a r e r e q u i r e d , t hey won' t d e s c r i b e t h e f u n c t i o n a t a l l bu t r a t h e r w i l l e x p l a i n how i t is be ing performed,
Def ine a l l f u n c t i o n s - b a s i c f u n c t i o n , secondary f u n c t i o n s , f u n c t i o n s of a s s emb l i e s , f u n c t i o n s of each p a r t , f u n c t i o n a l a r e a s .
Def ine each f u n c t i o n a t d i f f e r e n t l e v e l s of a b s t r a c t i o n - t o h e l p i d e n t i f y t h e f u n c t i o n s t h a t a r e r e a l l y wanted.
Wri te down a l l t h e f u n c t i o n s t h a t come t o mind. S e l e c t t h e f u n c t i o n o r f u n c t i o n s which b e s t d e s c r i b e what you r e a l l y want, c r o s s i n g out t hose t h a t d o n ' t apply .
5. EVALUATE BY COMPARISON
Value is determined by comparison - no o t h e r way. Compare t h e i t em w i t h f a m i l i a r commonplace i t ems t h a t perform s i m i l a r j obs , What does i t look l i k e ? What does i t make you t h i n k o f ? What e l s e c o s t s about t h e same? What ha s s i m i l a r a t t r i b u t e s ? : These may be i n e n t i r e l y u n r e l a t e d f i e l d s , such ag u n i v e r s a l hardware o r even toys .
6 . ANALYZE COSTS
Know t h e t y p e of c o s t i n f o r m a t i o n t h a t w i l l l e t you t i e s p e c i f i c b i t s of c o s t t o s p e c i f i c b i t s of f u n c t i o n . The more a c c u r a t e l y t h i s a s s o c i a t i o n c a n be made, t h e b e t t e r .
Know t h e shop c o s t ( a s f a r a s p o s s i b l e ) o f :
Each component Each manufactur ing p r o c e s s a p p l i e d t o a component Each s t e p of assembly Each t o l e r a n c e , s p e c i a l f i n i s h , e t c . Each i n s p e c t i o n
Consider a l l r e c u r r i n g c o s t s .
Raw m a t e r i a l D i r e c t l a b o r Overhead I n s p e c t i o n Purchased p a r t s and m a t e r i a l R e j e c t i o n , rework and r e t e s t , s c r a p
Cons ide r non- recur r ing c o s t s ( ~ o r t i o n s t h a t have no t been expended). Eng ineer ing , T o o l i n g , Planning.
Know c o s t p e r u n i t . Cons ide r u n i t s t o be manufactured.
Cons ide r c o s t p e r pound, p e r f o o t , s q u a r e - f o o t , g a l l o n , p e r u n i t of t e n s i l e s t r e n g t h , p e r u n i t of weight i n c r e a s e ( o r d e c r e a s e ) , l e n g t h i n c r e a s e , a r e a o r volume i n c r e a s e , e t c .
Know s h i p p i n g and packing c o s t .
Cons ide r t o t a l c o s t . Are you i n f l u e n c i n g maintenance c o s t s , f o r example?
7. DOCREATIVE THINKING
Turn o f f t h e j u d i c i a l p a r t of your mind. Put your i m a g i n a t i o n t o work. Apply c r e a t i v i t y t o t h e f u n c t i o n a l d e f i n i t i o n s , n o t t o p r o d u c t s . What e l s e w i l l do t h e job? I n what new and unique ways can t h e f u n c t i o n be performed? Someone has s a i d t h e r e a r e a t l e a s t e i g h t ways of doing p r a c t i c a l l y e v e r y t h i n g .
Use b o t h i n d i v i d u a l and group c r e a t i v i t y - bra ins to rm! SUSPEND JUDGEMENT! Bring ou t a s many p o s s i b l e a l t e r n a t i v e s a s you c a n , r e g a r d l e s s of how p r a c t i c a l they seem a t f i r s t . Save judgement t i l l l a t e r ,
8. EVALUATE THE FUNCTION
Technique #1. Evaluate the function
Define each function . Identify basic and secondary functions . Evaluate each function by comparison . Ask - and answer - five basic questions 1, What is the item? 2. What does it do? 3 , What else will do the job? 4, What does - that cost? 5 , What does it cost now?
Technique #2. Evaluate functional areas. Divide costs into functional areas - such as the electri- cal function of a switch as opposed to its mechanical function of switching - or the threads of a bolt that, by themselves, have both a cost and a function,
Relate cost to function. Find out where the money is being spent, Then find out what you are buying with that money.
Divide costs in one or more functional ways until you find a cost that seems unreasonable,
Technique #3. Evaluate basic function. This is a step-by- step approach to the analysis of a device or assembly. It can also be applied to parts, especially where you can identify definite functional areas of the part.
. Temporarily accept all other parts of the product as satisfactory. . Temporarily assume that only basic function has value.
1,
Identify the basic function or functions of the assembly. . Identify the basic functions of the parts of the assembly. At this time, identify a function as basic only if it contributes to the performance of the basic function of the assembly. (Remember that each part will have its own basic function.) . Evaluate the functions by comparison. . The total values of the individual basic functions is the value of the assembly's basic function,
9. BLAST, CREATE AND THEN REFINE
It's more effective to take a simple concept and build up to meet all needed requirements than it is to take a complex idea and try to identify and eliminate all of the elements of unnecessary cost,
Blast. Blast down to basic functions only - strip them bare by temporarily disregarding all other parts of the product or by accepting them as-is, and by temporarily disregarding secondary functions,
Create. Do creative thinking to develop alternate ways-and-means of accomplishing the over-simplified concepts revealed by the blasting. These should be the simplest and least expensive ways you can think of, even if you know full- well they are not entirely satisfactory.
Refine. The refining comes about when you start to adapt the ideas so they are satisfactory. Other re- finements will appear when the secondary functions are reviewed. Continue creativity. Knowingly add increments of function along with additional increments of cost until the refined product fully accomplishes the total function - then STOP.
10. IDENTIFY AND OVERCOME ROADBLOCKS
. Anticipate roadblocks. . Evaluate whether roadblocks are real or imaginary. . Roadblocks can be things - they can be situations - they can be people. . Most roadblocks are the result of habit - or attitude. . Look out for self-imposed roadblocks. . Identify the specific roadblock - define it as clearly and sharply as possible. . Then set about overcoming it.
11. CHALLENGE REQUIREMENTS
Challenge requirements and specifications (including Military Specifications) for such things as finishes, tolerances, stress, tests, inspection and delivery schedules. These usually cost a lot of money. Finding an unnecessary, unwanted or obsolete requirement will pay quick dividends.
Here are some reasons why requirements should be challenged - reasons why they may be unnecessary.
. Changing conditions. What was true then may not be true now.
. Poor communications. Misunderstanding as to actual requirements.
. Lack of time. When original decisions were made.
. Product patterned after a prototype.
. Lack of cost knowledge. Not knowing the specific cost of the requirement.
. Unknown technical requirements. Stress, heat, radiation.
. Pride of fatherhood. On the part of whoever made the specification.
At one time specifications and requirements were sacred. No one dared question them. We assmed that the customer or whoever made the specification knew that it would produce what he wanted. Value work has shown over and over that specifications and so-called requirements are only methods used to obtain the functions that represent real value to the user. If anything is sacred it's the customer desired functions and features -- not the specifications. The military customer not only permits his specifications to be challenged, he has offered to share the savings with the contractors who challenge (and change) them successfully.
12. USE SPECIALTY VENDORS
Draw on the almost unlimited resources of industry. Take advantage of the know-how of people who make a business of producing the product, process or service you want - or one like the one you want.
Use specialty products and processes.
Look for vendors who specialize in manufacturing, processes, testing, design, stamping, molding, etc.
Use Job Shops.
Find large and small quantity producers.
Look for newly developed processes, materials, tools and machines,
Ask Purchasing and Vendor Research to recommend specialty vendors.
Avoid expensive wdo-it-yourself" approaches.
Don't re-invent the wheel.
13. USE THE COMPANY'S SPECIALISTS
A company like ours has people and departments whose sole purpose is to give specialized service. Take advantage of what's already here. Don't hesitate to seek out and consult company experts.
14. USE STANDARDS
Search diligentiy for a standard. Standard products are , inherently less costly than "specialt1 or "one-time usett parts. The full meaning of this technique includes the appropriate use of parts of standard products as well as the use of the standard product iteself. Can the product be designed to accept a standard part rather than designing a flspecial't part to fit the product?
15. B E GOOD HUMAN RELATIONS
Human beings d i s l i k e change. Value work nea r ly always involves a change of some s o r t . People may be suspic ious of your motives, and they probably won't want t o accept your ideas .
v
Trea t people wi th t h e d i g n i t y and cons ide ra t ion they have a r i g h t t o expect. Avoid any appearance of being c r i t i c a l . Give w i l l i n g and e n t h u s i a s t i c c r e d i t t o o the r s . Try t o make them a p e r t of t h e opportuni ty t o g e t b e t t e r value.
16. GET NEW INFORMATION
Bring new information i n t o each func t iona l a r ea . Find what new products , m a t e r i a l s o r techniques have been developed s i n c e t h e l a s t time someone s t u d i e d the item. Find what changes i n requirements have been made.
17. GET A DOLLAR SIGN ON EVERY GIVEN TOLERANCE
Tolerances c o s t money. So do f i n i s h e s . General ly speaking, a t i g h t t o l e rance c o s t s more than a loose one. I f p o s s i b l e , determine and a s s i g n a $ a g a i n s t i n spec t ion , f ab r i ca t ionaand t e s t t o l e rances .
The to l e rance ( o r f i n i s h ) , spe l l ed out on a drawing might fo rce a m i l l i n g machine opera t ion when a c a s t o r welded p a r t w i l l do t h e job. I n o the r words, they may c o s t dea r ly but c o n t r i b u t e no value. Be s u r e those c a l l e d f o r a r e needed and not t h e r e s u l t of h a b i t .
Define and eva lua te t h e func t ion of t h e to l e rance o r f i n i s h .
18. WORK ON SPECIFICS - AVOID GENERALITIES
"It always c o s t s more t o machine a p a r t t han i t does t o f a b r i c a t e it!" "I t ' s no t p r a c t i c a l t o buy t h e s e because we c a n ' t g e t good q u a l i t y . " Recognize t h a t g e n e r a l i t i e s a r e a f o r c e t h a t keeps t h e s ta tus -quo .
The f i r s t s t e p must be t o e l i m i n a t e t h e g e n e f a l i t y i n o rde r t o come t o g r i p s w i th t h e s p e c i f i c problem. What does t h i s s p e c i f i c i t em c o s t ? Can we (buy , c a s t , f a b r i c a t e , machine, e l i m i n a t e , e t c . ) t h i s s p e c i f i c i tem i n t h i s s p e c i f i c c a se .
19. USE YOUR OWN JUDGEMENT
How much of your t ime do you pu t i n doing t h i n g s e x a c t l y a s you think- t h e y shou ld be done?
Someone has s a i d t h a t Value Engineer ing is "organized common sense . " I f y o u ' r e going t o g e t v a l u e , i t ' s v i t a l t o do what makes t h e b e s t s ense . Any d e v i a t i o n from answers t h a t make t h e b e s t s ense w i l l r e s u l t i n e i t h e r lower performance o r lower va lue . Performance can be checked r i g h t away by t e s t s . Decreased v a l u e , on t h e o t h e r hand, o f t e n shows up on ly a s buying r e s i s t a n c e , Even t h e n , cause and e f f e c t a r e s o s e p a r a t e d t h a t you c a n ' t always connect sales o r p r o f i t loss w i t h s p e c i f i c poot- value d e c i s i o n s ,
20. USE THE CRITERION, 'lWOULD I SPEND MY MONEY THIS WAY?"
When t h e average person spends h i s own money, h e ' s governed by t h e fo l l owing t y p i c a l c o n d i t i o n s :
. He has a l i m i t e d amount t o spend.
He t r i e s t o g e t t h e most use and appearance he can f o r h i s money.
He expec t s t o g e t t h e s e f u n c t i o n s w i t h i n r ea sonab l e l i m i t s i n r e t u r n f o r h i s money. I f he d o e s n ' t , he makes a p p r o p r i a t e changes - e i t h e r t h e n o r t h e next t ime he g e t s ready t o spend h i s money.
He knows he c a n ' t g e t r easonab le va lue i n exchange f o r ' h i s r e s o u r c e s u n l e s s he has va lue a l t e r n a t i v e s c l e a r l y s e t up and u se s a l l t h e i n fo rma t ion he can g e t hold of t o make a dec i s i on .
. Before he spends h i s money, he w i l l have a good i dea of t h e r e l a t i v e use v a l u e s , t h e r e l a t i v e esteem va lue s and t h e i r r e l a t i v e c o s t s ,
THE VALUE ENGINEERING JOB PLAN
INFORMATION PHASE: Research and data gathering -- Get the Facts and Know the Costs.
DETERMINE F'UNCTIONS o 0 o o
CREATIVE PHASE :
EVALU AT1 ON PHASE :
Think of all possible alternate means of
obtaining the functions -- Speculate. SUSPEND JUDGMENT ,
Analyze ideas. Estimate their dollar values.
Relate cost and function.
INVESTIGATION PHASE: Pick the best ideas and plan their development,
Plan the proposals.
REPORTING PHASE: Prepare a concise report. Give the facts
and proposals to those who can do something
-bout it,
THE VALUE ENGINEERING JOB PLAN
I. INFORMATION PHASE
. Get all the facts. Costs Quantities Vendors Test results Specifications Manufacturing process information
Get drawings and planning cards.
. Get samples of parts and assemblies whenever you can.
. Study the item's history: engineering, manufacturing, procurement.
. Analyze costs.
. Discuss thoroughly with everyone involved. Talk to the designer. Talk to the person responsible for decisions
regarding the item. Learn the basic manufacturing -- observe the manufacturing.
Get purchasing information from the buyer. Ask questions, listen, study, develop a
complete understanding of the product and its function.
. Try to find what functions the customer or user really needs* or wants.
. Decide the amount of effort that should reasonably be expended on each item of cost.
. Organize your material. Discriminate between significant and insignificant facts.
. Define functions . . . . verb-noun definitions.
11. CREATIVE PHASE
, Apply creative thinking to the functions defined in the information phase, Create alternatives.
, Use your imagination - overcome habit and tradition. , Suspend judgment,
. Concentrate on simple, direct ways to perform basic functions - features and secondary functions will be added as needed,
Consult others who may help you*
l Create as many ideas as you can,
. Systematically explore various materials, machine processes, rearrangement of parts, etc.
, Record every suggestion that seems remotely possible.
111. EVALUATION PHASE
Analyze ideas - which ideas have greatest chance of success?
Don't try to eliminate ideas - 'analyze them to see how they can be made to work.
Pay special attention to ideas that have an uobvious" reason why "it won't wor.klIm
. Select th& best specialists for consultation.
. Select the best vendors for consultation. Estimate the dollar cost of each idea.
Relate specific costs to specific functions.
I V . INVESTIGATION PHASE
. Pick t h e bes t i deas - p lan t h e s t e p s of development.
. What is needed t o prove t h e idea?
. Consult with expe r t s from both i n s i d e and outs ide t h e company.
. Can a s p e c i a l t y vendor make i t ?
. Is it a l r eady a v a i l a b l e somewhere? Is something l i k e i t a v a i l a b l e somewhere? Can you change t h e i d e a , without i n j u r i n g f u n c t i o n , s o t h a t a v a i l a b l e i tems can be used?
. Use s tandard p a r t s and m a t e r i a l s . Try t o a l t e r t h e i d e a s l i g h t l y so s tandards can be used.
. Plan t h e p re fe r r ed proposal - p lan a l t e r n a t e proposa ls i f f e a s i b l e .
V. . REPORTING PHASE
. Assemble a c o ~ c i s e r e p o r t .
. Report information such a s :
Before and a f t e r ske tches of t h e p a r t s Descr ip t ion of func t ions Q u a n t i t i e s used Costs - inc luding m a t e r i a l , l a b o r , overhead Proposed means of performing the func t ions Proposed c o s t s
Include c o s t of change and implementation
Engineering c o s t s Tooling c o s t s Tes t ing Other non-recurring c o s t s
. Attach copies of p e r t i n e n t d a t a such a s engineer ing s t u d i e s , t e s t r e s u l t s , vendor quota t ions , e t c ,
Get copies of t he r e p o r t i n t h e hands of persons r e spons ib l e f o r t h e i tem o r whcl a r e i n a p o s i t i o n t o make dec i s ions regard ing it.
GENERAL DYNAMICS/CONVAIR VALUE ENGINEERING JOB PLAN & RELATED TECHNIQUES
Educational Services
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v KEY TECHNIQUES JOB PLAN PHASE
Creative Evaluation The Value Engineering Job Plan [nformat ion ~nvesti~ativel Reporting
Define the Function Basic - Secondary Analyze Costs Mfg. Cost - 6 on main idea
3 v s . parameters
Do creative thinking
Evaluate the Function Basic function By comparison
Blast, Create, Refine
Challenge requirements
Use available resources Specialty suppliers Company specialists
U s e Standards
SUPPORTING TECHNIQUES
Get all the facts
U s e information from only the best source
Get new information
Use your own judgement
Work on specifics - avoid generalities Identify and overcome roadblocks
Use good human relations
Use the criterion "hould I spend my money this way?"
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