1985 save international conference...all papers have been edited — frequently condensed — by the...

1985 SAVE International Conference...

...hands from many lands meet "deep in the heart of Texas"

Coverage of SAVE award presentations and other Conference highlights begins on page 15.

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by K.R. Thorson and R. Snidar, June 1984 (Soft Cover) $ 10.30 $9.95 This 37 page manual provides guidelines, examples and case histories on how prime and subcontractors involved in any type of U.S. federal acquisition contract can optimize profitability by fu l ly utilizing the Value Engineering Incentive clause. The manual specifically deals w i t h the methods and procedures through which a subcontractor can take advantage of the VE Incentive clause and provide benefits for himself, the prime contractor and the Federal Government. A must for everyone involved in contracting w i t h U.S. Government, i f they want to improve their profits.

The Negotiation & Settlement of Approved V E C P s 17.00 15.00 For use with DAC #76-39, 20 Oct. 1982

The purpose of this document is to provide to Government contractors and their suppliers, who are relatively new to the field of Value Engineering proposals, assistance wi th management, negotiation and settlement of VECPs. Additionally, the sequential coverage of the subject herein is intended to help reduce the submittal of incomplete or poorly substantiated negotiation data which could lead to loss of all or a portion of the Contractor's share of the savings resulting f rom an approved change. In short, this document w i l l attempt to explain what must take place after a VECP has been adopted in order to get paid.

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by C. Fallon, 1980 (Soft Cover) A revision of Carlos Fallon's 1971 book, "Value Analysis to Improve Productivity." The 1980 edition emphasizes how productivity can be made more interesting and pleasant for the producers themselves, how the mind power of the entire work force can be harvested to yield technological innovations and esthetic advances beyond what was possible yesterday. 277 pages of the latest thinking by Carlos Fallon about value.

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VALUE WORLD July/August/September, 1985

Contents

E D I T O R

O. James Vogl, CVS

P U B L I S H E R

Society of American Value Engineers 221 N . LaSalle St., Suite 2026 Chicago, Illinois 60601 (312) 346-3265 A D V E R T I S I N G and P R O D U C T I O N O F F I C E 221 N . LaSalle St., Suite 2026 Chicago, Illinois 60601

VALUE WORLD is published quarterly by the Society of American Value Engi-neers on the 15th of March, June, September and December, and is distrib-uted internationally.

Contributions: Contributions to VALUE WORLD are welcome. Please send articles or other contributions to VALUE WORLD Editor, 4909 via el Sereno, Torrance, California 90505. Editorial changes and publication of an article or other contribu-tion in any particular issue are at the discretion of the Editorial Staff.

Advertising: Advertising information, rates and specifications are available from Humes & Associates, Advertising and Pro-duction Managers of VALUE WORLD.

Subscriptions: Yearly rate to SAVE Members ($16.50) is included in annual dues rate. Non-Members, in U.S., $22.00; International, $26.00 (includes Air Mail postage). Technical society and organiza-tion bulk rates are available upon request from the Society of American Value Engi-neers, Irving, Texas. Make all checks payable to SAVE in U.S. Funds on U.S. Bank.

Change of Address: Send all address changes to VALUE WORLD, 221 North LaSalle St., Suite 2026, Chicago, IL 60601

Copyright r&. Society of American Value Engineers, 1985.

All rights reserved.

4 How Did Value Analysis Get Started Anyway? by Lawrence D. Miles Value Engineering and Brainstorming:

6 Another Look by Paul Rousseau

9 Owner/Designer Participation Improves Value Engineering Studies by J. L. Mohart

-g SAVE International Conference X O Award Presentations

19 Value — Star of the Future by Ginger Willingham The Perception of Value Engineering

21 b y A - J- D e l l ' I s o l a > R E - > c v s a n d

A r f J - Grant McVeigh, P.E.

26 Spelunker's Corner

28 V E / V A Dictionary by R. Glenn Woodward, CVS Reviewing and Updating 1-90 Design

Q "I Improves Project While Saving on Costs by Doug Cooley

E D I T O R I A L P O L I C Y : To provide informative, time-ly and interesting communications pertaining to Value Engineering/ Value Analysis and related disciplines. VALUE WORLD enables contributors to express themselves professionally in advancing the art. VALUE WORLD is dedicated to the establishment of a mutual bond among those seeking to better the quality of working life and establish a communications network through which participants can interact for mutual benefit.

The views expressed in VALUE WORLD are neither approved nor disapproved by the Society. They are the expressions of the author(s). All papers have been edited — frequently condensed — by the editor. VALUE WORLD is published quarterly on approximately the 15th of March, June, September and December, and is distributed inter-nationally.

Value World, July/Aiifiust/S,-pli-mlx-r/l

How Did Value Analysis Get Started Anyway?

By Lawrence D. Miles

Lawrence D. Miles has been practicing VA principles since he originated the techniques as a member of General Electric's corporate purchasing staff.

Reprinted with special permission of Purchasing World Magazine.

A century ago buyers and purchasing agents found it relatively simple to get materials and supplies into their factories. In time the invention of new products wi th no previously established markets represented big opportunities for resourceful companies. While the industrial market began to change dramatically, buyers still bought according to instructions that carefully de-scribed and specified the item.

As the sources of supply broadened, good practices of searching for suppliers and getting competitive bids developed and the buyer's role expanded somewhat. That was normal buying and normal competition. Value analysis (VA) as a buyer's tool had yet to be born.

With the advent of the war in the early 1940s, all energies, creativity, equipment, and supplies were directed toward the war effort. Consumer items were abandoned. After the war, in the late 1940s, we found ourselves wi th worn out consumer goods and inven-tories depleted.

Many old line companies expected a burst of con-sumer demand which did not come because new sup-pliers appeared on the scene who employed new and

With the advent of the war in the early 1940s, all energies, creativity, equipment, and supplies were directed toward the war effort.

better materials, ideas, manufacturing methods, and technologies.

As one GE manager said to his management, " I used to make and sell 9,000 of these refrigerator cold con-trols each day. M y production line is again ready, but I am only getting orders for 3,000 units. Our former cus-

And we did do something, something dramatic in fact, by using different purchasing approaches.

tomers are buying them at lower cost, and they claim the competition is just as good. But our material costs are too high.

Management focused its attention on purchasing. The word went out: "You've got to buy our materials at lower prices so we can compete."

At this time, in 1947, I was a purchasing agent in one of GE's plants. I was familiar wi th all stages of the manufacturing process and knew there was an oppor-tunity for purchasing to make an enormous contribu-tion to the company's profitability. I remember a staff meeting and the words of H.L. Erlicher, who was then vice president for purchasing: "They are looking down my throat to f ind ways to reduce these purchase costs."

I told him that I had seen enough to know we could do it. I told him I wanted to be transferred to his cen-tral purchasing staff to research, establish, and prove methods for purchasing that could help restore profit-ability. He said "O.K." and I was transferred in November 1947.

The purchasing vice president formally announced the establishment of the new function. We were imme-diately deluged wi th managers hustling in products they couldn't sell. They would say "This is a tough one. We've had engineering and manufacturing cost reduction committees working on it and they say no more cost can come out without reducing quality."

And we did do something, something dramatic in fact, by using different purchasing approaches. By the end of January — just two short months — we were able to achieve the following significant improvements and in the process discovered the underlying principle

4 Value World, July!August/September! 1985

behind value analysis:

We found that traditional purchasing methods that bought materials by certain dimensional specifications were obsolete in areas where quality and cost competi-tion existed. We considered the customer's needs by asking: "What does the product do?" To determine this, we established the concept of "product function study." We realized that the customer was looking for each element of cost to bring him USE function. And we quickly recognized that the customer might also want some AESTHETIC function as well . As a result, it became the buyer's task to identify and buy for proper functions.

By employing this approach, savings of as much as 25% to 50% or more became routine discoveries — all without sacrificing their ability to perform.

Engineering vice president H.A. Winne said, "This is the best method yet found to help engineers f ind and eliminate unnecessary costs f rom their products. Value exists in a product when we get the right function at the right cost. Why don't you call this process Value Analysis?"

The success of the new methodology lead to N . DuChemin, manufacturing vice president, saying "Tremendous! Train 1,000 people a year in the tech-niques." So, we began to teach buyers to learn about the functions of their products, how to locate and buy

A time of different needs and different opportunities had come to purchasing people and VA Methods were created to cope with it.

the proper items as they related to function. Training was initiated for designers and materials users to teach them how to think about, express, and specify the needed functions of their products.

This change to function buying restored volume and profit to dozens of product lines, some of which reported dollar benefits on an annual basis a year later as reported here — refrigerator cold control ($240,000 annual savings), refrigerator butter conditioner ($100,000), conduit products ($65,000), X-ray timer ($40,000), oil burner control ($30,000), television tube ($1,400,000).

A time of different needs and different opportunities had come to purchasing people and VA Methods were created to cope wi th it. In a future column, I ' l l explain more of what was done and how to develop VA. A

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Value World, July/AuKU\l/Srpteml>er/l9H5 5

Value Engineering and Brainstorming; Another Look

Paul Rousseau is a Manager of Continuing Education at St. Clair College, Chatham, Ontario, Canada. He is a SAVE member and is working towards his AV.S. Paul also does training and consulting in problem solving and developing creative potential.

The purpose of value work is to reduce or eliminate unnecessary cost while maintaining, and even increas-ing, the value of the product, process or structure. This is accomplished by identifying functions, focusing on an essential but costly one, searching for alternatives to executing that function and implementing the new design.

Creative output is usually seen as being restricted to one phase of the job plan — that is, the searching for alternatives phase. This is where the team brainstorms ideas. Brainstorming is often seen as synonymous to creativity or creative output.

The great contribution of brainstorming as a tech-nique of creative production is that it encourages a group of people to sit down wi th the expressed inten-tion of generating ideas. Normal daily activities pre-clude such behavior f r o m occurring naturally, and brainstorming sessions can compensate for the minimal amount of time people spend on innovation. Organizations vary in their encouragement of creative behavior, but generally speaking most work places do little to encourage this k ind of thinking.

Combined w i t h value work, however, brainstorming can contribute much more. The value job plan "sets up" the idea-generating activity by focusing energies on the most promising area in terms of cost reduction and by semantically organizing our search by state-ments like " I n what ways might I support weight?" From a broader perspective, the fact that value work is usually done in multi-disciplinary teams also encour-ages better results when brainstorming. In a sense, the widespread use of brainstorming as an idea generating technique in doing value work seems like a good idea.

Brainstorming: A Critique Like most things in life, there are some shortcomings

to brainstorming as an idea generating technique. M y intent i n this paper is to critique the technique 1 and to offer suggestions how brainstorming might be modified to maximize its benefits as an idea-generating technique.

Since its development by Alex Osborn, brainstorm-ing has enjoyed high status as the king of ideation tech-niques. It is wel l known and has widespread use. W i t h its popularity, however, has come abuse. I t has acquired a bad name in some circles because its use has been equated w i t h f r ivol i ty and the generation of creative but useless ideas. (This is not totally the fault of the method as we w i l l discover later.)

The method also has its built-in problems. Conse-quently, many decision makers do not give the method its f u l l and deserved attention. At worst, some execu-tives cringe when they hear the word. There is not much one can do when words like brainstorming become abused except to insure that the technique is properly used, including strict adherence to its rules. I t is perhaps a good practice to discuss w i t h team mem-bers their experience w i t h and attitudes towards brain-storming before using it i n value work.

A second problem that arises when brainstorming value work is that the session is perceived as the place for creativity. This is unfortunate because creativity should be part of every phase of the job plan. When creativity is partially defined as divergent thinking, then it becomes obvious that time spent i n the informa-

... many decision makers do not give the method its full and deserved attention.

tion phase asking a wide variety of questions w i l l reap large benefits when defining the function.

Yet, creativity is usually restricted to one phase. Not only does this shortchange the potential, but it tends to "cheapen" the value of creative production. The think-ing is sort of like, "Well, we have been working hard at defining our primary function. Let's take a break and generate some alternate ways of doing the function.

6 Value World, July/August/September/1985

After that we ' l l get back to work and see about imple-menting i t . "

While creative production can be " f u n , " it is, to quote Sid Parnes, not for f u n . 2 The sooner that we inte-grate creativity throughout the fabric of value work, the quicker we w i l l realize the real potential of VE.

Brainstorming is usually performed in a group, and this had led to a common belief that creative output is essentially the result of group effort. Individuals, working on their own, are not generally creative. This belief, however, is far f r o m the truth. The fact that it is held by many people makes it a problem. One particu-lar issue is that people may do nothing to improve their individual creative output, resulting in lower effort and productivity. Individual efforts at creative production must be encouraged. One way of doing this is to have team members brainstorm a number of ideas and then give each member one or more ideas to develop and f report back to the team their results.

A fourth point relates to the origins of the technique. Alex Osborn, one must remember, worked in the ad-vertising industry, where novelty and surreal images hold high value. Brainstorming is especially attractive to this k ind of industry where many crazy ideas are en-couraged. The value of novelty may not be prominent in other fields. I f one is looking for a more cost-effective design for a bridge, reliability, strength and durability hold greater value than novelty.

The technique is excellent in generating ideas w i t h novelty value but not as good in turning up ideas wi th practical value. In fact, this characteristic probably does more damage to the status of brainstorming than anything else.

How often have we heard after a brainstorming ses-sion the comment "That idea is not practical?" Perhaps the rules should be changed to encourage more prac-tical ideas. At a minimum, however, we must learn how to treat some of the output f r o m brainstorming as provocations rather than ideas. This w i l l be discussed further later i n this article.

A f i f t h and more common criticism of brainstorming is its "shotgun" approach to idea generation — that is,

The sooner that we integrate creativity... the quicker we will realize the real potential of VE.

quantity begets quality. While the latter may or may not be the case, it begs the question "Why not be more efficient and aim for quality ideas in the first place?" Many arguments have been developed to counter this question such as "the group members need to purge ordinary ideas" or that "the group has to be primed to get to the really good ideas." Yet, the question must be answered.

D.N. Perkins wrote a book trying to come up wi th some answers.3 Some of his conclusions are enlighten-ing: when a problem solver (one involved in a value study) has some idea of the pertinent criteria, deliber-ate long searches are usually a waste of time, and

learning how to think about how we think w i l l greatly improve the effectiveness of our idea searches.

The belief that quantity guarantees quality must always be taken w i t h a grain of salt. Sometimes the most obvious solution is the simplest one, and at other times no amount of time spent brainstorming w i l l ever generate the best solution. Brainstorming as an idea

Anyone familiar with group process theory... knows that group politics occur whenever people work together.

generating mechanism, while good, is not a panacea.

Sixth, the fact that brainstorming usually takes place in a group creates its own problems. Anyone familiar w i t h group process theory and practice knows that group politics occur whenever people work together. The nature of the politics change as the group develops f rom dependence to interdependency (the level f r o m which the highest quality group work results), but a unique type manifests itself during the brainstorming session. It is called the "Let's look at i t this way" syndrome.

It is a basic human need to be recognized, and when one is involved in a less than ideal stage of group devel-opment, recognition is not distributed evenly. Some group members might resort to being funny to draw at-tention, and this is perfectly all right wi th in the rules of brainstorming. Of course this tends to have a degener-ating effect on the quality of group output. Others, not feeling that their ideas have been heard, w i l l f ind a number of subtle, ingenious ways to insure that their point of view is the best one. In fact, the phrase "Let's look at it this way' ' is often heard during brainstorming sessions. I f a team member holds formal or even infor-mal power outside the life of the team, their wish w i l l more likely be respected, thus eroding the creative energies of the other group members.

These behaviors are not always obvious, and require a team leader w i t h good group process skills to manage them. Perhaps value engineers should spend more time developing group process skills as a means of managing these behaviors during brainstorming.

One f inal criticism. Restricting oneself to brain-storming as the only idea-generating technique tends to blind us to the rich complexity of human thought. H . Keith van Heerden, a value engineer working in South Africa, wrote in a recent paper that the Job Plan is really a "Think Plan." I t implies that once we begin to see value work as essentially working through a delib-erate and structured thought process, we will begin to spend more time developing our thinking skills.4

I n a way, creative production is not really that myste-rious. It takes hard work and an ability to engage nor-mal thought processes such as recognition, noticing, problem finding, and directed remembering in a delib-erate and systematic manner for creative production. The VE job plan helps by providing u systematic strut-

Value World, July/Autiuxl/SepU'iulx'r/l 7

ture wi th in which to work. We have a responsibility as value engineers to work on our thinking skills to make the process work even better for our clients.

Some Help To repeat an earlier comment, brainstorming as an

idea generating technique has made a great contribu-tion to VE. It has some shortcomings, however, some of which have been outlined above. The remainder of this paper w i l l focus on other ways to make brain-storming work more effectively.

Edward deBono has written extensively on the topic of lateral thinking. Lateral thinking is the deliberate employment of techniques designed to "break" mind sets or patterns that emerge f rom normal thinking. Lateral thinking techniques can be easily integrated into brainstorming.

To do the latter, one must consider much of the out-put f rom brainstorming as essentially provocations rather than ideas. For example, suppose a team was brainstorming alternatives to the function "support weight." Some standard responses might be: use cement, use alloys, eliminate the function, and so on. Someone might say "use vacuum," to which the response might very well be "that's impractical." If treated as a provocation, however, the ideas in response to the question: " I n what ways might we use vacuum to support weight" would be enlightening. These ideas would then have to be elaborated on or "shaped" for implementation.

If one examines the list of "rejects" resulting f rom a brainstorming session their nature becomes obvious. Of course they are not feasible or practical! They are

... one must consider much of the output from brainstorming as essentially provocations rather than ideas.

remove skin so perhaps we might remove the "skin" f rom the weight to be supported. The noun peel has got

Value engineers could belter serve their clients if they learn more about creativity, group process and develop their own thinking skills.

something to do wi th sound and perhaps we might in-vestigate sound vibrations as a means of supporting weight.

There are many idea-generating techniques such as attribute listing, morphological analysis, checklisting and others. Value engineers must have a knowledge of and practical skills in using these techniques when doing value work.

Conclusion Brainstorming is a popular and effective technique

for creative production. Like all things, it is not perfect. Its shortcomings can be neutralized to a certain degree by recognizing the output produced by brainstorming as essentially provocations leading to potential ideas, and by taking into account the characteristics of group behavior. Value engineers could better serve their clients if they learn more about creativity, group pro-cess and develop their own thinking skills.

Brainstorming still has a major role to play in value work, but it must be used wi th care. Creative behavior must be encouraged throughout the value job plan. A growing body of knowledge exists that is of tremen-dous potential value to the value engineer wishing to learn more about creativity and thinking. Becoming a better thinker can only guarantee that one w i l l achieve excellence in value engineering. A

two steps away f rom that. What needs to be done is to treat them a provocations f rom which ideas can emerge.

One practical suggestion would be to delegate at least one of the "rejected" ideas to each team member to work on individually. They would then report back to the group. Chances are that some genuinely original solutions would emerge.

Some more specific idea-generating techniques can be introduced during the idea-generating phase. (Notice that I did not call it brainstorming. The reason is to place brainstorming in its proper place, that is one technique among many that can be used to generate ideas.) One such technique is called "Random Input." It was created by Edward deBono as a lateral thinking tool. 5 Essentially, what one does is to force together a function wi th a random word (usually chosen f rom a dictionary) as a provocation for i M alum piodm tmn. Suppose we went back to the function of support weight and forced the random word "peel" with it.

What ideas does this suggest? To peel means to

References: 1 -deBono, Edward, "Why Brainstorming May Be Dangerous,"

Letters To Thinkers. (Aldershot, Hampshire, England: Gower Pub-lishing Ltd. 1983). This article forms the basis of my critique.

2 - Parnes, Sidney, The Magic of Your Mind. (Buffalo: Creative Edu-cation, 1981). Although not specifically quoted in this book, Sid Parnes makes this point regularly at the Annual Creative Prob-lem Solving Institute. The book, Magic of Your Mind, is an excel-lent description of the Osborn-Parnes model.

3 -Perkins, D.M., The Mind's Best Work. (Cambridge: Harvard Uni-versity Press, 1982).

4 -van Heerden, H . Keith, "Thoughts on Thinking", SAVEProceed-ings: 1984 International Conference.

5 -deBono, Edward, Cort Thinking IV. (Toronto: Pergamon Press 1975).


Owner/Designer Participation Improves Value Engineering Studies

James L. Mohart is with the firm of Black & Veatch and has participated in numerous value engineering studies. He is responsible for the development and updating of design procedures and related engineering memoranda for the Engineering Manuals used by the firm's Civil-Environmental Division. In addi-tion, he is responsible for revisions to and development of many of the Standard Technical Specifications used by the division. Mr. Mohart spent three years in the Contractors' Submittals Department, where he supervised a seven-man engineering group responsible for the review of more than $100 million in equip-ment and materials for water and wastewater treatment facilities. He is a member of The American Society of Civil Engineers, The American Water Works Association and SAVE.

Great Idea But No Sale! Value engineering (VE) is a catalyst used by the value

specialist to stimulate thought and purposely create different perspectives that lead to beneficial new ideas and the potential for improvement. This potential may never be realized though, because it often requires some type of change on the part of the people affected by it. To optimize the VE process, the value specialist must also consider the human element and how this can affect the results of a VE study.

Most of us have been in the position of trying to sell a great idea that would lower costs and increase profits, only to see it fail . Typically, an analysis would probably reveal that we followed a very logical approach, but only took into account the worth of our idea, and not the people it would affect. Quickly we learn that it takes more than just a good idea to make changes and that we must also consider the attitudes of the people that w i l l be affected by the changes.1 It is well-docu-mented that people naturally resist changes, and that this resistance is an attitude problem. 2 Also, these at-titudes are not formed, nor changed, in a logical man-ner,3 and this makes it more diff icult to gain acceptance of even the best ideas. I believe it is the responsibility of the value engineer to not only ascertain the best value of a product, but also to perform this task in a manner that wi l l promote implementation of the ideas that enhance va lue '

M y experience relates primarily to VE studies of wastewater treatment facilities in conjunction wi th the Environmental Protection Agency's (EPA) VE program. Studies performed as pari of this program differ f rom other VE in that they arc generally conducted by an in-dependent consultant whose team members are f rom the staff of other engineering firms which may be direct competitors with the design f i rm . The other principal parties, the owner and designer, represent

different organizations wi th differing objectives. The owner assumes the role of management, and in that regard determines what is in the best interest of the community. The design engineer's responsibility is to develop a workable facility that satisfies the owner's basic needs. The role of the value engineer is to im-prove the designer's work, much the same way an

Most of us have been in the position of trying to sell a great deal that would lower costs and increase profits, only to see it fail

editor improves an author's work. Given this set of cir-cumstances, opposition prior to a study can develop for some of the following reasons:

• Misunderstandings about the purpose of VE. • Reluctant Owner forced to conduct VE study by

EPA. • Uneasiness about schedule disruptions that may

delay Federal funding or completion of facilities. • Concern by the designer that embarrassing errors

may be discovered. • Apprehensions that the value engineer may pro-

pose elimination of items that are desired but not absolutely necessary.

• Worries that the value engineer may cheapen the project.

• Experience wi th poorly performed VE studies. When design engineers are not asked to assist in tin-

workshop beyond their initial presentation, they often form adverse attitudes toward the VK study. This i - , counterproductive to the objectives of the study I have

Value World. lulv Auru-.! ,',, ;•.'. .'.',•/.

discussed this situation wi th several of our engineers and those other firms. They seem to react negatively when their participation is limited to the initial and final presentations.

This attitude is understandable, considering that they know more about their project than anyone else and have devoted considerable time and effort to i t . For the value engineer to be successful, the designer must be convinced that some changes in the project are worthwhile. I n my experience, this is accomplished more easily, and to a greater degree, w i th the design engineer's participation and cooperation.

The Solution Involving the owner and designer in the VE work-

shop, and providing them w i t h complete information about what w i l l take place before, during, and after the study, significantly improves the results obtained. Based on their knowledge o£ the project and their dedication to it, they naturally feel they have something to con-tribute, and soliciting their assistance promotes con-structive cooperation.5 I n addition, design engineers whose projects have been the subject of our VE studies have commented that this openness has increased their confidence in our ability and professionalism.

Involving the owner and designer in the workshop allows them to contribute to the creation and develop-ment of ideas generated f rom the study. Their involve-ment should be in all phases of the study — to suggest alternatives, provide constructive criticism, evaluate ideas, and furnish information — supporting alterna-tives. While participating, they become familiar w i th the advantages and disadvantages of all the ideas under consideration.

Their contributions are important; but even more important, this participation leads to a more positive attitude toward successful implementation, because they are partially responsible for some of the ideas that were suggested. This type of participation is a proven management technique, and as Lawrence K. Williams states: "Individuals are much more prone to adopt and actually work for changes when they have had a hand in the design of same."6

Providing the owner and designer w i th comprehen-sive information about the purpose of a VE study and the role they play, focuses their attention on positive

Involving the owner and designer in the VE workshop... significantly improves the results obtained.

objectives and relieves some of their anxieties. It should be emphasized to them that the objectives of the value engineer are the same as theirs — the best possible product at the least cost — and that their par-ticipation is needed to maximize the benefits of the study. Participation allows them to monitor the prog-ress of the workshop and express concerns about alter-natives that could possible delay the project, endanger

operational reliability, or create unnecessary public concern.

Some alternatives are politically sensitive. It could be troublesome for the owner or designer to hear about these ideas for the first time at a f inal presentation at-tended by the news media and funding agencies. The

One method we use to compare different VE approaches is the percentage of recommended alternatives that are implemented.

VE team may decide to recommend controversial ideas anyway, because of their potential significant benefits. When the owner and designer are aware of this in ad-vance, they can respond to questions more intelligently.

Measuring Results The worth of VE studies is often measured in terms

of the maximum possible cost savings; however, this may not be the best yardstick for determining the value because many of the proposed recommendations may never be implemented. The potential cost savings on any project w i l l vary depending on the skill of the designer or value engineer, the magnitude of the pro-ject, the owner's attitude, etc. One method we use to compare different VE approaches is the percentage of recommended alternatives that are implemented. This procedure has shortcomings also, but it does eliminate some of the quantitative variables that make a com-parison diff icult .

A review of 22 VE studies performed by eight differ-ent firms indicated that approximately 20 percent more of the recommended alternatives were imple-mented when the owner and designer participated in key sessions of the VE study, than when they didn't. (See Table l.j These results are based on limited data and a statistical analysis using the " t " distribution to determine the validity of this information.

The analysis consisted of a comparison based on the percentage of acceptance between studies w i th and without owner/designer involvement. The objective was to determine i f the difference between the results obtained in the studies was due to a difference in the studies, or normal distribution. The analysis indicated there was a difference between the means of the two groups, and it can be concluded this was due to owner/designer participation since this was the only consistent difference in the studies. This conclusion is based on statistical probability of over 95 percent,

TABLE 1

Percentage of Participation Alternatives

Owner Designer Implemented

30% 58%


which is generally taken to be fair ly conclusive statistical evidence. 7 ' 8 These results are not surprising, based on the cooperative attitudes observed in the owner and the designer when they were involved in VE studies.

Implementation Techniques We employ several different techniques to involve

the owner in the VE study, but the fundamental strategy of all of them is to convince the owner of the benefits to be gained through participation. When we first begin discussing VE w i t h a prospective client, we begin encouraging their participation in the workshop. When proposals are submitted or when presentations are given, further encouragement is given. We have convinced the management of one municipality of the benefits of VE, and they now routinely assign the proj-ect manager to participate in the VE studies we con-duct for them.

After we receive a commitment f r o m the owners, we inform them of exactly what w i l l happen during the study and what we foresee their role to be. It is also ad-visable to make certain that they have a clear calendar for the week of the study, so they can devote enough time to make the effort worthwhile.

To involve the designer i n the study, we use tech-niques similar to those used to involve the owner. We schedule the VE workshop in the designer's offices. In addition to promoting the designer's participation in the workshop, this offers several other advantages.

A l l of the information available to the design team cannot generally be made readily available to the VE team. For example, many times only one set of the ex-isting facility drawings are available, and the designer has understandably not made them available to the VE team. Also, many other items can be provided more conveniently such as technical reference materials, equipment suppliers catalogs, copy machines, miscel-laneous supplies, etc.

We generally request that the owner commit a key member of the designer's staff, preferably the project engineer, to participate in the VE study. We caution him to clear his calendar for the week of the VE study, and brief h im on how the workshop w i l l be conducted and his role in the study.

It is not always practical for the owner's representa-tives to be present during the entire workshop. A sam-ple 40-hour VE workshop schedule has been included (See Table 2) to show key periods for their participation. The requested participation time of the owner amounts to about 60 percent of the total study.

Key sessions for the owner's involvement include the function analysis and cost allocation phase, the crea-tive phase, the preliminary screening, and the first evaluation. During function analysis, misunderstand-ings the owner might have about the various plant components are cleared up. Participation by the owner's representative during the creative phase gives him an opportunity to offer ideas, or make comments that may generate new ideas.

The owner provides valuable assistance to the VE team during the preliminary screening and first evalua-

tion by eliminating ideas that are not unfeasible. We have had many owner's representatives participate in the entire workshop. They indicate it has been a very rewarding experience.

When an owner elects to participate in the entire study, we treat h im as another team member and assign h im alternatives to develop that relate to por-tions of the project w i t h which he is most familiar. For example, on one study we proposed several alterna-tives relating to the bid requirements of the front end documents, and asked the owner's representative to complete the development of these ideas because they related to his duties as project manager. When an owner does not elect to participate in the entire study, we encourage h im to attend the sessions identified as Requested Participation on the sample schedule. It has been our experience that his participation is most ef-fective during these periods.

Obviously, it is not advisable, or necessary, for the design engineer to attend the entire workshop. The sample schedule indicates the most productive periods for their participation. Key sessions for designers are the functional analysis and cost allocation phase, the preliminary screening, and the first evaluation. Gen-erally, their contributions are the same as previously described for the owner, exept that during the preliminary screening, the designer can help eliminate a large number of unfeasible ideas, and this significant-ly improves the efficiency of the VE team.

I have indicated that the designer's participation is optional during the creative phase; that he is allowed to participate in this part of the study may seem a bit unorthodox. We invite the designer to observe this phase of the study, but only a few have accepted our offer. During one of those studies, the design engineer was represented by three individuals f rom different f irms that formed a joint venture. None of these per-sons had had any prior exposure to VE, but were very open-minded about the possibilities.

When we first begin discussing VE with a prospective client, we begin encouraging their participation in the workshop.

When they accepted our invitation to sit i n during the creative phase, we cautioned them about negative comments, explained the process and our objectives, and then proceeded w i t h the session. After they had observed the brainstorming session for a short time, they began contributing ideas. The session became so successful that it extended 2Yz hours past the scheduled quitting time. The remainder of this study proceeded very smoothly, and the positive affect that participation had on the designers was evident. During our final pre-sentation, they voluntarily contributed information that supported the proposed alternatives.

The requested time of participation for the designer is approximately 30 percent of the total time. If the designer is also to participate in the optional periods,

Value World, July/August/September/1985 11

TABLE 2

TYPICAL VE STUDY FORMAT SHOWING PERIODS OF

PARTICIPATION BY THE OWNER AND DESIGNER

Day

O W N E R P A R T I C I P A T I O N D E S I G N E R P A R T I C I P A T I O N

^ Team Coordinator Orientati on Day 2

Time (hrs.) 8am 10 12-1

V E Activity Creative Phase (cont.)

Preliminary Screeni ng

Ranking of Alternatives

Detai I ed Descr i pt ions

Day 3 Time (hrs.) 8 am 10 I I 12-1

V E Activity Detailed

Descriptions (cont.)

1 J

First E val uation

— 1 1 .

Development (Layout, Design,L-C Costing)

OWNER P A R T I C I P A T I O N D E S I G N E R P A R T I C I P A T I O N

Day 4 Time (hrs.) 8am 10 12-1

V E Activity 1 . . J_ i • >

Development (cont.) Final

Evaluation OWNER P A R T I C I P A T I O N

Final Evaluation

D E S I G N E R P A R T I C I P A T I O N

Day 5 Time (hrs.) 8 c i 1 1 im 9 | 0 II 12 - 1 2 3 4 5 6

V E Activity Presentation a Draft Report Preparati on

V E Team Presentation

OWNER P A R T I C I P A T I O N D E S I G N E R P A R T I C I P A T I O N

Requested Participation

Optional Participation

Value World, Julyi'August/September11985

his participation w i l l be approximately 60 percent of the 40-hour workshop.

Advantages We have found that the owner and designer develop

cooperative attitudes towards objectives of the VE study through involvement, and are more inclined to promote implementation of the proposed alternatives even after the workshop has concluded. This is especially important because the incentive for imple-menting the alternatives begins to diminish after the workshop has been completed.

During the study and the f inal presentations, the VE team coordinator (VETC) is a catalyst i n promoting alternatives. After the coordinator departs, the incen-tive for implementation is reduced. Generally, budgetary constraints prohibit follow-up visits by him.

Involving design engineers in the workshop familiar-'" izes them w i t h the recommendations that w i l l be pro-posed during the f inal presentation and permits them to discuss these ideas in detail at that time. This discus-sion helps clarify the alternatives and places the designer i n a better position to discuss the ideas wi th the owner's representative.

During f inal presentations, when questions have been raised by funding agencies or representatives of the owner who have not participated in the VE work-shop, I have observed on several occasions that designers who have participated in the study w i l l voluntarily respond to those questions on behalf of the VE team. This type of unsolicitated response is a fur-ther indication that the designer has become thoroughly familiar wi th the proposed alternatives and receptive to involvement in the workshop. Positive support such as this helps create a favorable attitude among the owner's and designer's staff who have not participated in the study, but who may decide whether an idea is accepted.

Eliminating unfeasible ideas early in the VE work-shop improves efficiency, because it increases the time available to develop more promising ideas and avoids making the designer respond wi th a formal rejection to

Involving design engineers in the workshop familiarizes them with the recommen-dations. ..

the unfeasible ideas. To accomplish this, we ask the owner and designer to jo in us i n a Preliminary Screen-ing session (See Table 2), to review the ideas generated during the Creative Phase and to inform us of any cir-cumstances that would make further consideration of these ideas nonproductive.

Generally, these circumstances result f rom one of the three following conditions: (1) contraints known only to the owner and designer prohibit implementation; (2) the designer has already proven the proposed idea un-feasible; and (3) the alternative has been adopted by the designer but is not yet shown on the drawings.

Ideas that the owner or designer indicate are unfeasi-ble are not rejected on their word alone, and the VE team must be presented wi th convincing facts or calcu-lations that substantiate these claims. Usually, this sup-portive data is based on special information that was developed during meetings and conversations between and owner's and designer's representatives. It is not among the data available for the VE team to review and is only brought to light through direct questioning by the team.

When the owner and designer participate in the VE workshop, it provides a vehicle to clarify misunderstandings between them.

A word of caution here: the VETC must be extremely careful about accepting information f rom only the best source.9 That w i l l not always be the owner or designer.

The value engineer must be prepared to identify and deal w i t h such age-old roadblocks as "It's always done that way," or "The EPA requires that," etc. Many of these issues turn out to be the type of minor roadblocks referred to by A. E. Mudge, 1 0 and they can be resolved during the workshop because of their early discovery. This results in a more well-defined idea w i t h fewer ob-jections and a better chance of implementation. When we determine that the designer has already adopted one of our ideas, i t is dropped f r o m further considera-tion as a "Recommended Alternative," and a concise description of it is included in a section of the report titled "Suggestions to the Engineer."

In addition to the formal workshop sessions, I con-tact the designer, as needed, to have all questions answered concerning the design drawings or other in-formation that the engineer has furnished. When mem-bers of the VE team do not consult w i th the designer on these issues and attempt to determine the answers themselves, they run the risk of setting up a strawman and damaging their credibility. Interaction wi th the designer i n these question and answer sessions results in a more accurate report that w i l l save time and im-prove the validity of the f inal recommendations.

When the owner and designer participate in the VE workshop, it provides a vehicle to clarify misunder-standings between them. This is especially important when considering a system as complicated as a water or wastewater treatment facility, because as Lawrence D. Miles states: "Lack of sufficient communication, misunderstandings, and normal frictions between human beings become increasingly responsible for un-necessary costs i n the more complicated products and systems." 1 1

Communications can become even more compli-cated for the consulting engineer, because many times they are separated f rom the owner by several hundred miles and meet less frequently as the design prog-resses. As an example of this, the VE team on one proj-ect noticed that an excessive number of butterfly

Value World, July/Aiinust/Seplember/19H5 13

valves were used throughout the project and questioned the designer about it. He indicated this was based on the client's request; however, the client was present and indicated that he had not been advocating butter-f l y valves, but was merely pointing out that plant per-sonnel had had good results using these valves. As a result the VE team replaced several butterfly valves w i t h more appropriate valves and significantly im-proved the project.

The owner's participation in the VE study offers them a chance to view the project and project costs f r o m a different perspective. The VE process fosters a greater understanding of overall plant operation and the functional relationship between individual plant components. Also, it may be the only opportunity the owner has to examine the facility as it is completely taken apart, component by component, and to hear the relative merits of a broad spectrum of alternatives discussed by highly qualified technical experts.

When the owner and engineer consider project costs, they generally look up a lump sum cost for the entire project or numerous individual unit costs for excava-tion, concrete, equipment, etc. The VE team estimates project costs differently by developing costs that relate to the function of individual components or processes of the project. This enables the owner to see the cost of arbitrary choices that have been made in equipment, materials, and plant design, and exposes unnecessary costs.12

As an example of this, on one project the owner re-quested that the designer provide redundancy in pip-ing f r o m a pump station at the plant to a grit handling facility. This resulted in two pipelines between these structures. The VE team proposed a single pipeline at a savings of more than $100,000. When the owner was advised of the increased cost created by this arbitrary choice, he decided to use one pipeline and admitted that cost considerations had not been a factor in the original decision.

Disadvantages I n the past four years that we have involved the

owner and designer, we have found no serious draw-backs. The only disadvantages we can cite are the time spent by the owner and designer and the disruption to their schedule. No one has ever objected to this com-mitment, because the value of their involvement becomes obvious to them as the workshop progresses.

Summary I have participated in VE studies conducted by five dif-

ferent firms and have observed several variations of the 40-hour workshop. Following the fundamental concepts of VE each time has always resulted in the creation of an abundance of ideas that would eliminate unnecessary costs. However, it's not enough for the value specialist to merely reveal a more economically attractive idea, because that won't necessarily bring about change. Resistance to change is created by negative attitudes, and value engineers must create an atmosphere that is con-ducive to change to maximize the results of their efforts. A study conducted in cooperation wi th owner and de-

signer is more successful in accomplishing results and promoting VE concepts than one that isn't. Using the proven management technique of involving those af-fected by a change in the development of the change pro-motes a spirit of cooperation and results in a more effec-tive and more efficient VE study. A

Footnotes

1 - Glen D. Hart and Larry W. Zimmerman, VALUE ENGINEER-ING — A Practical Approach For Owners, Designers, and Con-tractors, Van Nostrand Reinhold Company, New York, 1982, p. 23.

2 - Lawrence K. Williams, "The Human Side of a Systems Change, "Management Systems, Peter P. Schoderbik, ed., Sec-ond Edition, John Wiley & Sons, Inc., New York, 1971, p. 338.

3 - Williams, pp. 338-389. 4 - William L . Gage, Value Analysis, McGraw-Hill, London, 1967,

p. 141. 5 - John M. Amos and Bernard R. Sarchet, "Executive Comment"

by J. Harold Yeager, Management for Engineers, W. J. Fabrycky and J. H. Mize, ed., Prentice-Hall International Series in Indus-trial and Systems Engineering, Prentice-Hall, Inc., Englewood Cliffs, New Jersey, 1981, p. 170, 216.

6 - Williams, p. 391. 7 - Christopher Chatfield, Statistics For Technology, I . R. Vesselo,

ed., Penguin Books, Inc., Baltimore, 1970, pp. 143-146. 8 - Wilfred J. Dixon and Frank J. Massey, Jr., Introduction to

Statistical Analysis," Third Edition, McGraw-Hill Book Co., New York, 1969, pp. 116-119.

9 - Lawrence D. Miles, Technique of Value Analysis and Engineer-ing, Second Edition, McGraw-Hill Book Company,' New York, 1972, pp. 99-100.

10 - Arthur E. Mudge, Value Engineering — A Systematic Approach, Copyright 1971, by Arthur E . Mudge, p. 94.

11 - Miles, p. 13. 12 - Miles, p. 14-15.

Bibliography

Amos, John M., and Bernard R. Sarchet, "Executive Comment" by J. Harold Yeager, Management for Engineers, W. J. Fabrycky and J. H. Mize, ed., Prentice-Hall International Series in Industrial and Systems Engineering, Prentice-Hall, Inc., Englewood Clifs, New Jersey, 1981.

Chatfield, Christopher, Statistics For Technology, I . R. Vesselo, ed., Penguin Books, Inc., Baltimore, 1970.

Dixon, Wilfred J. , and Frank J. Massey, Jr., Introduction to Statistical Analysis," Third Edition, McGraw-Hill Book Co., New York, 1969.

Fallon, Carlos, Value Analysis — To Improve Productivity, John Wiley & Sons, Inc., 1971.

Gage, William L . , Value Analysis, McGraw-Hill, London, 1967.

Hart, Glen D., and Larry W. Zimmerman, VALUE ENGINEERING — A Practical Approach For Owners, Designers, and Contractors, Van Nostrand Reinhold Company, New York, 1982.

Miles, Lawrence D., Techniques of Value Analysis and Engineering, Second Edition, McGraw-Hill Book Company, New York 1972.

Mudge, Arthur E . , Value Engineering — A Systematic Approach, Copyright 1971, by Arthur E . Mudge.

Williams, Lawrence K., "The Human Side of a Systems Change, "Management Systems, Peter P. Schoderbik, ed., Second Edition, John Wiley & Sons, Inc., New York, 1971.

14 Value World, July I August/September 11985

1985 SAVE International Conference

Value — ^ off the future Apr i l 28 — May 1, 1985 San Antonio , TX

Ginger Willingham

SAVE's 25th annual conference was dedicated to Lawrence D. Miles, founder of Value Engineering

J'

SAVE President John A. Jonelis

International Panel I


J . K. "DUSTY" FOWLKES Lawrence D. Miles Award

For only the second time since it was established, SAVE's highest award was conferred on J. K. "Dusty" Fowlkes, Chairman of Value Analysis, Incorporated. The Lawrence D. Miles Award, recognizing the highest level of endeavors in the promotion and advancement ct the value discipline, honors individuals nationally recognized

as having created a major milestone widely adopted for use by others in the field.

In 1958, Mr. Fowlkes left General Electric and formed Value Analysis, Incorporated to provide Industry and government with the results-oriented discipline for identifying and removing unnecessary costs. Over the past 27 years, his company has trained more than 50,000 individuals from over lOOO organizations. ^

Mr. Fowlkes receipt of the Miles Award was endorsed by a host of individual leaders from the SAVE community.

MARY ANN GILLEECE Award: Presidential Citation

Mary Ann Gilleece is the Deputy Under Secretary of Defense. In that position she has actively supported value engineering and SAVE in the Department of Defense. Her

outspoken support of VE in letters, conferences, and open meetings has been a positive force in controlling cost for the benefit of taxpayers. Her citation reads, "In recognition of her efforts in Improving the value climate in the United States and her invaluable support of Value Engineering."

WILLIAM J . WARWICK Award: Presidential Citation William J. Warwick is Group Vice President, AT&T Consumer Products. He has been instrumental in providing ATb\T's support for an officer on the National

Board of Directors for the past 10 years. This support of salary, travel and secretarial has totaled well into six figures. His citation reads, "In recognition of the many years of support for the Society of American Value Engineers and therewith promoting throughout the World the awareness and use of the value disciplines."

LAMONT M. LaROBARDIER, C V S Award: Value Engineer of the Year

Lamont M. LaRobardier was introduced to VE in 1981 and two years later was awarded his CVS. He has numerous published papers and articles including a Value Analysis Handbook. He is a guest speaker, lecturer and teacher in industry, at SAVE chapter functions, at educational institutions, and a leading salesman and promoter of VE.

GORDON A. FRANK Award: Distinguished Service -Government

Gordon Frank is the Chairman of the Department of Defense's VE Committee. He is directly responsi-ble for reactivating the DOD VE Council and he has made the council an authoritative voice with regard to policy. He was Coordinator of the first DOD Value Engineering Conference where over 294 VE Managers imple-mented ways to improve the flow and approval of VE proposals.

ALFRED F. LYNG Award: Distinguished Service -Government

Alfred F. Lyng is the Chief Engineer of the Pennsylvania Department of Transportation (PennDOT). He was directly responsible for developing a VE program that brings results. Under Mr. Lyng's leadership the PennDOT standard specifications have been reduced from 3 in. to 1 in. thick by identifying, specifications using VE two-word, functional abridgements.

Value World, July/August/September/1985

HENRY S. MLODOZENIEC Award: Outstanding Achievement in Management

Henry S. Mlodozeniec is Director of Army VE Programs. His leader-ship was highly instrumental in guiding a study that was used as a model for tracking Design to Cost in all DTC contracts. He made significant and innovative changes to the Army Material Development and Readiness Command VE Program. His technical background and managerial competence earned him the reputation of being a leader in VE program management.

RUDY H. KEMPTER, CVS Award: Fellow-SAVE Rudy Kempter has been involved in more than 300 individual VE Studies, and has lectured and performed consulting work on five continents. He has published a large number of articles and papers on various VE subjects, has promoted the use of Life Cycle Costing to evalute VE proposals, and has Integrated Design-to-Cost Concepts into the VE methodol-ogy. Rudy has been a SAVE member since 1966. He is past President of the National Capital Chapter and a former Vice President-International.

RICHARD G . BRADYHOUSE, CVS Award, Distinguished Service -SAVE

Dick Bradyhouse has been SAVE National Director - Career Advancement since 1977, aiding members in seeking new positions and companies in locating competent VE people. Dick has keep current with innovations in VA/VE and has developed the Value Added Analysis and Design for Assembly Programs, into very practical adjuncts to the basic VA/VE workshops.

JOHN W. BRYANT, CVS Award, Fellow-SAVE John Bryant has served SAVE as a founding member of the Upstate New York Chapter, member of the original National Board of Direc-tors and National President. He has been a contributor to the growth of our profession. John developed function modeling which relates order of function to cost and other design objectives, and taught the first credit course on VE Northeastern University. He has also developed and taught the first VE program for. General Services Administration, Army Corps of Engineers, Navy Labora-tories, Navy Superintendent of Ships, Commonwealth of Pennsyl-vania, and Navy Bureau of Docks.

HAROLD G . TUFTY, CVS Award, Fellow-SAVE Hal Tufty has conducted more than 5 0 0 VE 40-hour workshop/ seminar studies on management, manufacturing, and construction in the private and public sectors in the USA and overseas. He is president/owner/editor/publisher of Value Engineering & Management Digest, the only commercial publication devoted primarily to VE. Since 1972 he has been SAVE National Director, Federal Liaison. He is founding president and Executive Director of the Value Foundation. Hal chaired Congres-sional receptions resulting in the strong support of VE by the General Accounting Office.

PAUL E. FRUSTI, C V S Award: Emeritus

Paul Frusti is 74 years old and has continued the meritorious activity for which he was recognized as a Fellow-SAVE in 1978. He was Director of Technical Programs for the 1978 SAVE International Conference in Detroit. He is presently lecturing on VE at the University of Michigan and has lectured at Michigan State University.

EDWARD NOLAN Award, Emeritus

Ed Nolan was certified in 1974, the same year he retired. He has continued to be active in the Paul Revere chapter. In 1976 Ed helped train Air Force System Command members to be VE monitors. He volunteered to teach the Chapter-sponsored 40-hour VE Workshop in 1981. He has held chapter office after retirement and has one of the best atten-dance records at the monthly meetings. He is an inspiration to the other members.

Award Presentations

Value World, July I August/September/1985 17

D. E. A. TANNENBERG 7985 Honorary Vice President Dieter M. Tannenberg, Senior Vice President of AM International and President

.• -^Mw A^^m of its Multigraphics Division A^m^A^^^m w a s elected by the SAVE

Board of Trustees to the office of Honorary Vice President. This honor is bestowed on individuals whose association with SAVE brings honor and prestige to the Society. Mr. Tannenberg has devoted countless hours to the mission of promoting awareness of the value disciplines. He was cited for extraordinary work and accomplishments In promoting awareness of the benefits of Value Engineering.

The Board Meets

Walt Wichita and Bill Lynch j

f

Ronald Schliebe I


Value — Star of the Future

By Ginger Willingham

Ginger Willingham is Corporate Secretary and Controller of VEI, Inc., a con-sulting engineering firm in Dallas, Texas. She is a past President of the SAVE D/FW Chapter, and has been Manager of Annual Conferences for SAVE since 1983.

The Dallas/Fort Worth Chapter Conference Commit-tee donned their white hats and sheriffs badges and rode deep into the heart of Texas to officially welcome over 500 people to the 1985 SAVE International Confer-ence. Activities began Friday, Apr i l 26, w i t h a Board of Directors meeting, pre-conference wrap-up arrange-ments, and the early arrival of many value practi-tioners whose trips served two functions: attend the conference — but first, attend the San Antonio Fiesta!

As the beautiful city calmed down on Sunday morn-ing, the pace picked up inside the San Antonio Marriott Riverwalk Hotel. Conference registration began, ex-hibitors set up displays, more and more people kept ar-riving for SAVE's 25th annual conference.

Art Mudge of Joy Manufacturing kicked off Sunday afternoon w i t h "Timber - A VE Basics Workshop," which was wel l attended. The CVS Board was busily grading exams which had been administered on Satur-day. The Value Foundation conducted a Board Meeting. The exhibits officially opened. We were on our way to SAVE's most successful conference in recent years.

Value Analysis, Inc. graciously started off our Open-ing General Session wi th the slide presentation "Dreamers," a beautiful and moving introduction that brought tears to some eyes, and provoked thoughts i n everyone's minds. International greetings were heard f rom wel l wishers and other societies all over the world. President John Jonelis officially welcomed everyone and introduced the keynote speaker, Mary

...The 1985 SAVE Annual International Conference is dedicated to Larry Miles..

Ann Gilleece. Ms. Gilleece, Deputy Under Secretary of Defense, Acquisition Management, gave a dynamic description of the use and results of VE throughout the Department of Defense. She was presented wi th the

Presidential Citation, to which she glowingly pro-claimed, " I deserve this!"

" H i , ya'U" set the scene for Texas' casually formal hospitality, and one of the most important announce-ments of the conference was heard: The 1985 SAVE Annual International Conference is dedicated to Larry Miles. Larry could not attend this conference, but his presence was felt in slides, tape recordings, quotes and conversation throughout the days. Attendees were en-

... President Jonelis was "arrested" for impersonating an officer.

couraged to sign a dedication card, to be delivered to Larry at the end of May. The tone was set....

More than 60 speakers addressed the San Antonio conference. In addition to the "basics" session on Sun-day, Value Analysis, Inc. conducted a four-hour work-shop on Basic VA/VE Techniques. The CVS Board pre-sented "How to Become a Value Practioner," and J. J. Kaufman conducted a panel on Function Analysis Sys-tem Technique (FASTI.

Alexander A. Cunningham, Executive Vice President of General Motors Corp., North American Passenger Car Operations, stimulated our minds w i t h his discus-sion of "value thinking." Representatives of numerous G M divisions presented a series of papers all day Tues-day, coordinated by the outstanding Sidney R. Bon-vallet, who delivered two papers herself.

"Recent VE Initiatives and Their Implementation in the D o D " were covered in two separate panel discus-sions. The Corps of Engineers, St. Louis, conducted demonstrations of their VE-Trieval System. Washing-ton and California were represented by individuals dis-cussing the use of VE in those states.

Papers were presented covering the application of


VE in construction, hospital productivity, purchasing, and forecasting; quality and creativity were addressed. "Contributory Learning for the Value Practitioner" provided an exchange for those who use VE and those who want to use it, by sharing actual experiences w i t h one another. The "Construction Roundtable" offered a similar opportunity for the construction industry.

"Global Value," an international exchange session, featured VE applications in other parts of the world. A second international session provided further discus-sions; f ive papers were presented by international members. More than a dozen foreign countries were represented at the conference.

On the lighter side, over 230 people attended " A Taste of Texas" at the Lone Star Brewery for a bar-becue dinner, all the Lone Star beer they could con-sume, and dancing under the stars. President Jonelis was "arrested" for impersonating an officer, and then deputized by the conference committee. Akira Kodama, Secretary General of the Society of Japanese Value Engineering, was made an "honorary Texan" and presented w i t h an official white hat. And the Korean Chapter of SAVE, represented by 12 Korean members, was presented w i t h their official chapter charter.

The Spouses' Program, attended by more than 60 people, included visits to missions, museums, the

sunken gardens, the historical district and an authentic Mexican market. The program was capped wi th a champagne brunch on barges floating down the San Antonio River.

... the "Stars of Value" cast a glow over the city of San Antonio, deep in the heart of Texas.

There is a song that says "The stars at night are big and bright.. .deep in the heart of Texas." From Apr i l 28 through May 1, 1985, the "Stars of Value" cast a glow over the city of San Antonio, deep in the heart of Texas. The brightest star, Larry Miles, shined his light on the conference f r o m afar — the way a real star shines. Were it not for his guiding light, which first began twinkling 26 years ago, the San Antonio conference would not have occured. Were it not for the "stars" who have developed over the last 26 years, value analysis would have no future. Thank you, Larry, for your guiding light. Because of you, "Value" truly is.. . Star of the Future! A

William H. Copperman, CVS

Howard Elegant

Teresa and Tricia Barlow 1 Gordon Frank


The Perception of Value Engineering

By AJ. Dell'Isola, P.E., CVS and Grant McVeigh, P.E.

This article summarizes the results of a Value ..' Engineering Questionnaire instigated by the President of Smith, Hinchman & Grylls, Architects & Engineers, and submitted to 24 in-house professionals. They pre-sented a cross section of team resources used on VE studies. The objective was to determine the percep-tions their VE experiences had on their design work. The results indicated concern over time of application and formats, but were unanimous that it improved their professional capabilities.

The Value Management Division of Smith, Hinch-man & Grylls (SH&G), was established in November, 1975. Since its inception, the V M Division has con-ducted over 300 studies and workshops on a wide range of projects. During that period, some 50 SH&G employees attended the 40-hour workshop and were subsequently used as team members for VE studies. These professionals represented a cross section of the in-house capabilities of the f i r m and provided the tech-nical support needed for conducting VE studies.

In November, 1984 the President of SH&G, Phillip Meathe, appointed Mr. Grant McVeigh, Division Director, Mechanical Engineering, to survey members of the staff who had participated wi th the V M Division as team members for their "Perception of Value Engi-neering." Grant contacted the V M Division Director, A l Dell'Isola, and developed a VE questionnaire of 12 questions. The questionnaire is shown in Figure 1. It was sent to 24 professionals; 21 responded for a 91% return. These professionals represented the following disciplines:

Vertical Transportation Specialists 1 Structrual Engineers 3 Mechanical Engineers 5 Architects (Programming) 1 Architects (Design) 4 Architects (Interior-Layout) 1 Civi l Engineers 1 Soils/Foundation Specialist 1 Controls and Instrumentation Specialist 2 Environmental Specialist 1 Program Managers 2 Electrical Engineers _2

24

The results of the summary are shown in Figure 2.

The objective was to determine the perceptions their VE experience had on their design work.

As a general conclusion, the results indicated that the VE team participants found their association wi th the V M Division quite favorable. Over 50 percent of respondents indicated an above average response for each question.

The respondents generally seemed to react favorably to the challenges of a workshop, broadening of knowl-edge of associated disciplines, of overall cost sensitivity of improved decision-making using the VE techniques. Of special interest to Mr. Meathe were answers indi-cating a unanimous positive response to recommenda-tions that a V M Division is appropriate for SH&G as an A/E f i rm , that all major SH&G designs be value engi-neered, and that VE be used as part of the marketing and sales effort of the company.

Most respondents gave no answers to question no. 10 regarding the negative aspects of VE. However, there were two responses regarding the negative aspects of the adverse time impact that can occur when VE is ap-plied during later design phases.

One other interesting fact was brought out by the study. In response to question no. 12, all but one respondent were looking forward to participating in future workshops. I n analyzing the negative response, it was found that the respondent had only participated in one workshop. Further investigation indicated that the bulk of below average and poor responses were f r o m respondents w i t h 0-2 workshop attendance. This fact seems to support the belief that increasing the participation in VE workshops increases the number of positive perceptions.

A l l in all, the survey had a positive impact on the perceptions of VE i n SH&G. This favorable perception was especially worthwhile to the top management of the company who had not been directly involved in VE activities. The results are a greater integration of the VE concept wi th in the company, wi th emphasis on ex-panding sales and marketing roles. A


QUESTIONS: (CIRCLE YOUR ANSWERS)

1. How did you find the challenges of a VE workshop?

Poor

1 Below Avg.

2 Average

3 Above Avg.

4

2. Did you broaden your knowledge of your particular discipline?

Poor

1 Below Avg.

2 Average

3 Above Avg.

4

Excellent

5

Excellent

5

Did you broaden your knowledge of the Associated Building Disciplines5? (integrated process)

Poor

1 Below Avg.

2 Average

3 Above Avg.

4 Excellent

5

Have you increased your knowledge of the present value of overall cost (cost sensitivity) impacts (initial costs in other disciplines, maintenance, operations replacement, etc.)?

Poor

1 Below Avg.

2 Average

3 Above Avg.

4 Excellent

5

Has your analytic approach to design solutions been improved, i.e., the VE analysis procedure: creative, judgment and development phases, energy and cost models, etc

i s 9

Poor

1 Below Avg.

2 Average

3 Above Avg.

4

Do you think it has improved your decision-making abilities?

Poor

1 Below Avg.

2 Average

3 Above Avg.

4

Excellent

5

Excellent

5

Do you think that all major SH&G designs should be value engineered?

Poor Below Avg. Average Above Avg. Excellent 1 2 3 4 5


Figure 1

8 effort" f e C l ^ V a l U C e n g i n e e r i n S s h o u l d be used as part of marketing and sales

Poor Below Avg. Average Above Avg. Excellent

1 2 3 4 5

9. Do you feel that a value management division is appropriate for SH&G as an A/E firm?

Yes No

10. What are the negative aspects of participation in VE activities?

11. How many workshops have you attended?

0 2 3-5 5-10 Over 10

12. Are you looking forward to participation in further workshops?

Yes No

Do you have any additional comments and/or suggestions regarding VE workshops?

The foregoing information is to be used for statistical purposes only - your personal identification is unnecessary; however, since only about 25 questionnaires have been issued, it is important that you do respond to validate the study. Your earliest response will be appreciated. ^

Thanking you in advance

Grant MacVeigh

Figure 1 (cont'd.)


V E QUESTIONNAIRE SUMMARY

Question Poor (1)

Below Average

(2) Average

(3)

Above Average

(4) Excellent AVERAGE

(5)

#1* 11 3.6

#2 3.4

#3 10 3.8

#4 8 10 3.6

#5 8 3.6

#6 11 3.5

#7* 14 3.8

#8 6 11 3.7

#9 YES NO 19 2

90% Yes

#11 0-2 3-5 5-10 10 +

#12 YES NO 20 1

95% Yes

*One had no Answer.

Figure


NEW BOOK BULLETIN NEW BOOK B ULLETIN

T H I R D E D I T I O N

VALUE ENGINEERING IN THE CONSTRUCTION INDUSTRY by A . J . Dell'Isola

NOW AVAILABLE THROUGH THE SAVE BOOKSTORE

Find out how you can use advanced value engineenng (VE) techniques to isolate, control and reduce costs on all aspects of design and construction.

The Third Edition offers money-saving features such as:

Modeling techniques that w i l l guide you through the VE process.

Worksheets for organizing your approach and for comparing costs of alternate approaches.

Life cycle costing guidance for estimating the cost of operations, maintenance, alterations and repairs for a job.

Detailed appendices providing typical value engineering proposals and a building program for a hypothetical office building development. , . i

Now you can do something to offset the spiraling costs of the construction industry!

SEND COMPLETED ORDER FORM TO:

SOCIETY OF AMERICAN VALUE ENGINEERS, INC. 220 N o r t h Story Road, Suite 114 I rv ing , TX 75061 (214) 986-5171

Quantity Item No. and Description Price Each Total Price

A1005 VE in Construction Industry by

A.J, Dell'Isola SAVE Member 41.50

Non-Member 46.00

Interest 1% per month on all accounts not paid within 30 days.

Al l prices include Book Rate postage and handling. Add $20.00 per book/videotape for Overseas Airmail . Add $30.00 per film/correspondence course for Overseas Airmail .

A l l prices subject to change without notice.

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Value World. July/AuKu.\l/S,-plrml

"SPELUNKERS CORNER "The '84 Dialogues Are Paying Off"

The government's machinery for reflecting major policy changes at the working level is usually slow. In fact it can also be masked or distorted f r o m the original policy idea — much like the old parlor game telephone, i f you can remember it. Then again, when something positive finally happens, we are compelled to take note of its success. As Lee laccoca would say, "Well, I ' m here to tell ya'. . .!"

After the Department of Defense (DoD) and service headquarters brass sent out their pro-Value Engineer-ing Change Proposal (VECP) signals i n 1981 and 1982, some of us industry "spelunkers" had serious doubts that anything new would occur to awaken the sleeping VECP giant. However, in 1983, the Commander of the Air Force's Aeronautical Systems Division (ASD) chal-lenged his VE guys to f ind out what was needed to in-crease industry participation in VECP's. By the time Bil l Lucka, Grover Cleveland, John Seigrist and some other blue-suited Contractual Aspects of Value Engineering (CAVE) dwellers f rom ASD got done they had a basket f u l l of both complaints and ideas.

Just the fact that a dedicated team of knowledgeable people made the trips, asked the questions and listened to the industry cynics was a big plus. That alone was more than could have been expected. However, ASD moved out aggressively w i t h a couple of conferences in 1984, the latter of which (in September) really kicked off some good dialogue. It served to bring a large num-ber of ASD personnel into a more sensitive under-standing of the VE incentive clause attributes.

One major issue that kept surfacing was the inordi-nately long time required for the government to re-

To this "spelunker" that letter was the equivalent of turning on a halogen light in the CAVE where only a candle had burned before.

spond to VECP's and, where inclined, to accept the idea by a contract change. In this column of the Apr i l / May/June, 1985 Value World, Bi l l Copperman dis-cussed one aspect of this issue involving the use of the Urgent classification to get the ball rolling. Let's look at the critical contractual step in the processing of VECP's.

When fu l ly executed supplemental agreements were the norm, this contractual VECP acceptance usually

came after the contractor had lost hope or (what is more important) after the opportunity for savings was seriously depleted. In March of this year, ASD's Office of Procurement Policy (Col. Krahenbuhl) signed a let-ter to the troops in the contractual trenches which en-couraged the use of contract Change Orders where such use was feasible and where government benefits were served.

To this "spelunker" that letter was the equivalent of turning on a halogen light in the CAVE where only a candle had burned before. It implied to me that the

VEI: Treatment Of Development Costs

VE Incentive provisions in a contract do not obligate the company to do any work whatsoever. However, in the event a company chooses to pur-sue VE the monetary rewards must be wel l worth it; otherwise, there is no motivation to offer cost reductions which would necessarily f low to the Government.

A great inhibitor to overt pursuit of VE was the language set for th i n DAR 1-1702(b) which said in part: "Use of the voluntary approach should not in itself increase costs to the Government." I n Apr i l 1983, a Regional Director of DCAA, received a clarification to this language which alleviates the problem of investing in the development and submission of VECPs when some or all may not be accepted by the Government for implementa-tion.

The opinion makes it clear that "development costs should be charged directly to the contract, but only to the extent that the development costs are associated w i t h adopted VECPs." Another portion of the opinion is of particular significance and states, " I n our opinion development costs related to unsuccessful VECPs concerned w i t h a voluntary VE incentive program are allowable in-direct charges, to the extent that they meet the definition of allocability in DAR 15-201.4 and are reasonable in the conduct of the contractor's business as a whole."

The foregoing bestows discretion on the treat-ment of development costs for VE and should be sustained! By John Wood, Gary Jennings and Dick Quinn

26 Value World, July I August I September 11985

government finally recognized that enhancing their potential benefits justified a little risk on their part. Risk-taking no longer was the sole province of the con-tractor. As a veteran of the Electro-Optical Maverick Program, vintage 1968-1975 (one of the few successful

Just hang on to your hats and watch the statistics as the newly stimulated flow of VECP savings comes out of the ASD pipeline over the next few years.

Total Package Procurements), where change orders were a way of life in stimulating 91 successful VECP's for over $28 mill ion in savings, I can only praise this return to sanity.

So what w i l l it take to keep this enlightened policy alive? The government buyer must be 1) able to wrap his arms around a credible "Not-To-Exceed (NTE)" non-recurring expense; 2) assured by his manufactur-ing analysts that the recurring savings are real; 3) assured by his engineering analysts that the VE'd design w i l l not decrease function or performance and 4) assured by his logistics guys that operational support impacts do not wipe out the acquisition benefits.

It's up to the contractor to write up these areas in the VECP wi th conviction and clarity, set up briefings and maintain dialogues wi th these key players after the VECP is submitted. Fine tuning can follow concur-rently w i th the definitization and (best of all) while the savings accrue.

You might ask, " I f this is such a BIG DEAL why is the Air Force lagging in the DoD VECP sweepstakes?" Just hang on to your hats and watch the statistics as the newly-stimulated flow of VECP savings comes out of the ASD pipeline over the next few years.

Keith R. Thorson, CVS

We Beg Your Pardon...

Our apologies to Mr. Gu Sinyi who recently brought a number of printing errors to our attention in his arti-cle, "Value Index Direct Analysis Method and Basic Point Method," published in the Oct./Nov./Dec, 1984 issue of Value World. Mr. Sinyi, in the interest of ac-curacy, was thoughtful enough to bring this to our at-tention and provide us w i th the following corrections. Each correction is keyed to the page number, column and line of type in which it appears.

incorrect correct

Pg. 19, left column, line 9 of VI ; = 1; if VI,- = 1;

line 19 = =

line 31 VI ; VI , '

line 34 vi ; . V I /

right column, line 14 Optimum "Optimum

line 30 Method is Method follows it, is

line 33 | A C , . | , A C , - - «F,.|B l A Ci1 . | A Cil = |C,-«F i |>B, line 37 K, | = C , 1 - VI,. K l = c , | i -vi/iui line 38 c ; Kl line 39 as VI,- as V I / line 40 N = line 41 = v i i i c y c ^ . i - v i ? ] = ' / 2 ( C , / C i , p . | l - V I ^ | ( 2 ) Pg. 20, left column, line 1 is determined is completely determined

line 1 C and VI C ;- and VI,-

line 5, 6 and 9 N m

CALL FOR PAPERS 1986 SAVE INTERNATIONAL CONFERENCE

Value Engineering — Road to Affordability Miami, Florida

Doral-on-the-Ocean Hotel Technical and panel presentations featuring: - Government programs - Design to Cost Affordability & Productivity —

Computer Aided Design - Fundamental Education

- Motivation and Creativity - Quality Circles - Case Histories on VE Programs - VE Basic and Advanced Courses

Please contact:

Deadline for draft papers — November 15, 1985

Jim Vogl, CVS Editor Peter S. Megani, Presidential Envoy 4909 via el Sereno or Martin Marietta Orlando Aerospace Torrance, CA 90505 P.O. Box 5837, MP 275 (213) 378-1803 Orlando, F L 32855 (305) 356-3211

Value World, Julyi'August,'September•/'1985 27

VE/VA Dictionary

By R. Glenn Woodward, CVS

R. Glenn Woodward, PE, CVS, is a fellow of SAVE. He has served at the national level of SAVE as Vice President of Professional Development and Chairman of the CVS Committee. He has worked in VE in the government and industry for the past 25 years.

The preparation of this Value Engineering Dictionary involved many people putting in many hours over several years. The definitions, whenever available, were taken f rom books by the best known writers on VE/VA, and f rom widely distributed government and industry publications.

Multiple definitions have been used. Their order in no way indicates one definition is preferred over another; however, all are acceptable and in current use.

These are preliminary definitions. You, the value practitioners, are the editors and revisers of this dic-tionary. Where you feel strongly that changes, add

1985 save international conference...all papers have been edited — frequently condensed — by the...

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