PRESIDENT'S MESSAGE 1 A. R. Tocco

NOTES FROM THE EDITOR 2 Marvin Kaplan

IMPLEMENTING A VALUE ASSURANCE PROGRAM IN THE DESIGN ORGANIZATION 3

Riley A. Murray

IDENTIFYING V.E. COSTS 9 Robert L . Bidwell

NEW D.O.D. REQUIREMENTS FOR V.E. . . . 16 Daniel J. Cantor

V.E. & ITS USES DURING DESIGN 20 C. R. Olsen

QUANTIFYING V.E. IN AN R&D PROGRAM . 25 C. L . Carpenter

V.E. DURING DEVELOPMENT 27 Harry O. Huss

MILITARY PRODUCTS V.E 32 Sol Mendelsohn

TECHNICAL NOTES & REVIEWS 34 D. M . Natelson

S.A.V.E. CHAPTER NEWS 36 J. Waltzman

E.I.A. - S.A.V.E. LETTER . 39

D.O.D. LETTER 41 George E. Fouch

1963 ANNUAL CONVENTION 42

V.E. CALENDAR EVENTS 44

ENGINEER'S CORNER 46 Frederick S. Sherwin

1 9 6 3

O F F I C I A L P U B L I C A T I O N o f t h e

S O C I E T Y o f AMERICAN V A L U E E N G I N E E R S

NO 6-63-4

S O C I E T Y OF A M E R I C A N V A L U E E N G I N E E R S

OFFICERS: 1963-1964

President: Anthony R. Tocco Space Technology Lab., Inc.

Vice-Presidents: Thomas D. Morris Ass't. Secretary of Defense (I & L)

George T. Willey, V.P., General Manager Martin/Orlando

Marion L . Hicks, Vice-President General Dynamics/Ft. Worth

Albert Everett, Dean Northeastern University

Charles F. Home, President Electronic Industries Association

William M. Allen, President The Boeing Company

Secretary: Frederick S. Sherwin Raytheon Company

Treasurer: C. E. Harris USAF/Pentagon

Board of Directors: D. Fram

Sperry Gyroscope Company

P. Radcliff ITT Kellogg Communications J. Levisee Hyster Company

R. L . Bidwell Martin Company

D. L . Gleason Precision Screw Products Co.

E. D. Heller General Dynamics/Astronautics

T H E J O U R N A L OF V A L U E E N G I N E E R I N G

Official Publication of the

SOCIETY OF AMERICAN VALUE ENGINEERS

EDITORIAL STAFF

Executive Editor - Marvin Kaplan

Associate Editor - Arthur F. de la Parra

Secretary - Bertha Kaplan

EDITORIAL BOARD

Technical Notes & Reviews David M. Natelson

Engineer's Corner Frederick S. Sherwin

Mil i tary Products VE Sol Mendelsohn

Commercial Products VE Ted H. Redman Carl Chase, Associate

S.A.V.E. News Jacob Waltzman

Distribution Kr nest L. Kramer

Advertising Ernest Yurman

•lustrations Joseph Tomek Donald Connor-

Published Quarterly by the SOCIETY OF AMERICAN VAI UK ENGINEERS, Copyright 1962 by the Society.

N e w i Y o r k n N t 0 Y m a i I ** ^ P ° S t a g 6 i S P e n d i n g a t

S.A V.E. accepts no responsibility in connection with any liabil i ty which might develop as a result of articles or ad­vertising published. The opinions expressed are those of the authors and advertisers and do not necessarily represent the Society. Journal written permission required for reprints.

Subscription Prices: $5.00 per year; single issue $1 25 (Special issues available at additional cost).

A l l Manuscripts for review should be submitted with drawings suitable for reproduction, to the Executive Editor.

Advertising rates, change of address notification, member­ship information, article contributions, and al l other cor­respondence should be bent to:

S.A.V.E. JOURNAL c/o Loral Electronics Corp. 825 Bronx River Avenue Bronx 72, New York

Attention: Marvin Kaplan Executive Editor

General Counsel: Leonard J. Williams, Attorney at Law Suite 202, 1028 Connecticut Avenue, N.W Washington 6, D. C. Tel. - 296-3131

President's Message A NEW H O R I Z O N

In Apri l of this year the Budget Bureau of the Executive Office of the President,

published a report entitled "Cost Reduction."* It is significant to note that Value

Engineering is described in the section on Property and Supply Management,

wherein VE is credited with substantial economies in defense hardware procure­

ments; generously illustrated by numerous case histories. Far less obvious to

the casual reader and in many respects far more significant, is the reference to

value engineering in the chapter dealing with "New Aspects for Managing Com­

plex Programs." It is here that VE is equated to Program Definition, Incentive

Contracting and PERT and is referred to as a new technique developed to improve

the management decision making process.

The report speaks of top management decisions which must reflect an assessment

not only of the original cost of a weapon system, but of the costs involved (luring

its operational life—expressed in another way, the economics of Maintainability.

It is an established fact that the cost of maintainance of a weapon system during

its operational l ife is many times its original purchase price. It follows there­

fore, that the principles of VE can yield tremendous dividends i f applied system­

atically in the development phase of a maintainability concept. This logical

amalgam of Maintainability and Value Engineering is already taking place in

certain major weapon system programs. It is our position that VE should un­

hesitatingly provide the leadership to accelerate the process, and through proven

accomplishment bring about rapid DoD-wide and defense industry-wide acceptance

1 of the concept. The opportunities in this field are limitless;

all that is required to reap the harvest is the application of

creative VE talent and drive, at the right time—now. See your

local Maintainability Engineer today!

*Obtainable from Superintendent of Documents, U. S. Government Printing Office, Washington, D.C, - Price 25C\

A. R. TOCCO, President Society of American Value Engineers

6-63-4 S.A.V.E. JOURNAL I

Notes From The Editor D E S I G N E D V A L U E

The articles in this issue of the Journal have been oriented to­wards the implementation of V E at the concept stage of a design.

Although the application of V E / V A , in production, has produced a high order of savings, it

represents only a fraction of the potential cost reduction possible via "designed value". A few of

the advantages of this early stage V E concept have been listed in their order of relative import­

ance:

1- V . E . recommendations are considered as a source of idea stimulation rather than design criticism.

2- Engineering changes are practically eliminated, thus providing greater potential savings.

3- One- shot production runs can benefit almost completely from design concept V . E . 4- The eventual appearance, in successive designs, of good V . E . techniques and

material should minimize managements' requests for costly paperwork docu­mentation of "before and after" savings.

Many valuable suggestions are included, in this issue, for proven methods of implement-

ating, administrating, estimating, and cost identifying high value ideas in the "before-the-fact"

stage of product design. It is incumbent upon all value engineers to become familiar with these

approaches in order to enhance their profession and increase their company's profits.

Thanks From A Grateful Editor

I have reserved this space to express my sincere appreciation, to my Editorial Staff, for

their unstinting services during the preparation of the last four issues of the Journal. The crea­

tion and publication of our Society organ is the product of the ingenuity, long hours, and unself­

ish cooperation of our entire group.

It is with both regret and pride that I shall turn over the Journal, in a short time, lo my

successor. I am sure that the ever increasing enthusiasm in V . E . and S.A.V.E. will contribute

to the continued success of our publication.

On behalf of the Editorial Staff and the Society I wish to thank my

employer, Loral Electronics Corp., for their aid In providing the

time and financial support to carry out many SAVE und Journal

activities.

Sincerely,

Marvin Kaplan, Executive Editor

2 S.A.V.E. JOURNAL 6-63-4

IMPLEMENTING A VALUE ASSURANCE PROGRAM

IN THE DESIGN ORGANIZATION

R I L E Y A. MURRAY, P. E . , S.A.V.E. Value Engineering Specialist Goodyear Aircraft Corporation Akron 15, Ohio

This practical program for implementing value assurance into the design stage of a product includes procedures and forms, a recommended management organization, what data are required for value analysis, and where to find potential value engineers.

INTRODUCTION

The critics of value engineering say that they have had enough philosophy about cutting costs and increasing profits, that they want methodology for achieving these objectives.

This paper describes a practical method for imple­menting value assurance into the design stage of a product.

VALUE APPROACH TO DESIGN

The design development of a product consists of four basic steps:

1. Design proposal 2. Preliminary design 3. Detailed product design 4. Design review changes

The design proposal starts with an idea for a product this is wanted or needed and to which a price tag is attached. Since the prospective customer will re­ceive many proposals, he must be convinced that your design proposal economically provides the required strength, weight, performance, and other requirements in a package he considers to be of best value to him.

In other words, you must have a means of determining the value of the various requirements for the design. You must be able to measure value, to say that greater

or lesser value exists. While you cannot direct­ly compare the value of performance against weight or other nonre-lated parameters, you can determine and com-

j pare the cost of achiev-1 ing the various require-I ments in terms of dol-1 lars and cents, which

our economic system accepts as a measure for value. The comparative cost, therefore, is one of most impor­tant tools available to the value engineer.

The value engineer must first determine the cost of different requirements before he can compare them, which means he must have cost data - that is, value standards - that are as accurate as possible.

Once a proposal has been accepted, a cost target for the design has been established. In the second step -the preliminary design - the major components are defined in greater detail and the final configuration is determined. It is a period of compromise, when addi­tional customer desires are considered and alternate designs are presented. The comparative cost becomes even more important. More accurate and detailed cost data are required to establish the value of changes, for it must be determined whether the cost target of the proposal can be met or whether the changes have sufficient value to warrant a new cost. It is the last chance, for the customer will now say yes or no.

During the third step - the detailed product design -a strict budget goes into effect. Each assembly and detail must be considered in relation to its value to the end product. Nickels and dimes saved here can mean the difference between profit and loss. Small savings from unnecessary tolerances or operations in the original design add up to a sizeable sum that could be lost because of the implementation cost for redesign.

During this third step, the comparative cost analy­sis reaches its greatest importance. The cost data must be as detailed and accurate as possible, and the cost analysis must be as detailed as that found in manufacturing process sheets if the final design is to approach its ultimate in value.

Design reviews - the fourth step in product design -can take place any time, but they fall into two broad types: those before and those after manufacturing commitments. Both types should be conducted accord-

6-63-4 S.A.V.E. JOURNAL 3

ing to standard value-engineering procedures, which, have been covered thoroughly in value-engineering literature.

In reviews conducted before manufacturing commit­ment, schedule dates have value. If time is critical, which it usually is, an emergency task force of the design originators, including the value-oriented per­sonnel assigned to the project from other departments, should take a second look to make sure that major value considerations have not been overlooked.

COMPARATIVE COSTS ANALYSIS

For design proposal work, the value engineer uses costs developed from historical data for various types of construction and for meeting different requirements and conditions of manufacture. Figure 1 shows one type of data usable for design proposals. In addition, there are established value standards for such factors as performance, weight, and reliability. Placing a dollar value on items of this nature is not wishful thinking, because many of the incentive-type contracts awarded by the armed forces include rewards or penalties dependent on the degree to which the require­ments are achieved.

As a greatly simplified example of a condition that might occur during the design-proposal step, assume that two alternates satisfying the requirements of the specification have been developed according to the classical techniques of value engineering. The first alternate costs $1000 less than the second. So far,

COST PER CASTING (DOLLARS)

(FIGURE 2)

the first has the better value, but assume further that the second has slightly better performance or less weight. Does the first still have the better value ? Not if the customer is willing to pay a premium for the extras. In the case of aircraft, the customer would consider it good value to pay $100 to save a pound of weight. At $10 a pound, he would consider the weight savings an exceptional value.

As the design development becomes more detailed, so does the comparative cost analysis. Figures 2 through 4 illustrate the basic methodology for comparative cost analyses. The methodology is both feasible and time-proved in that it has been known for over 10 years. 1-2,a

Figure 2 shows a wheel that has gono through the functional-analysis approach of value engineering and now must be resolved as to whether It will bo machined from bar stock or be a steel casting. Tho compara­tive costs of these two manufacturing mothods are shown in Figure 3. Alternate proposals or design solutions can be presented in a similar manner.

Figure 4 shows a cost analysis of tho socond method for manufacturing the wheel. Again, tho same type of cost analysis can bo applied to other design alternates.

Since the basis of tho oompiirntlvo cost analysis hinges on this stngo of tho oponllon, some of the details are worth noting; In pitrtloular, how the fig­ures were derived.

(FIGURE 1)

aSuperior numbem In the loxl r e f e r to items in the List of Ro forenoon.

4 S.A.V.E. JOURNAL 6-63-4

VALUE E N G I N E E R I N G COMPARATIVE C O S T ANALYSIS

DESIGN ENGINEER VALUE ENGINEER John Smilh

V.E. REPORT NO. . DATE

DESIGN FUNCTION

Provide adjustm

QUANTITY CONSIDERATIONS TOTAL PARTS PER CONTRACT TOTAL PARTS PER SHOP RELEASE TOTAL PARTS PER ASSEMBLY

PART NAME PART NUMBER MODEL

SPECIAL CONSIDERATIONS

DESIGN ALTERNATES: Machined fro

VALUE ENGINEERING EVALUATION

RAW MATERIAL PURCHASED COMPONENT LABOR-RUN TIME LABOR-SETUP

PLANNING RELEASE ENGINEERING RELEASE

CONCLUSIONS:

BREAK-EVEN INFORMATION: New design

(FIGURE 3)

It is true that the actual man-hours cannot be known until after the! part has been made, but it is possible to estimate the man-hours that should be used. The estimating and industrial-engineering departments in most companies have historical standard manufactur­ing data, which they use every day in arriving at such figures. Most companies use a manufacturing process sheet that gives a step-by-step procedure for making a part, a standard time allowance for each step, and the tools and equipment to be used

Figure 5 shows a typical standard time data sheet.d

Normally, such sheets specify the average time ex­pected for the specified piece of equipment, the types of material, and the quantity* If different quantities are to be considered, the standard is adjusted by means of the learning curve.

The final step in a cost analysis is the conversion of the labor hours to dollars. Dollar conversion factors are among the most closely guarded secrets in a com­pany, but usually they are not suitable for value engi­neering. It is not too difficult, however, to convert them for such use. Tables I and II show a set of these factors in a form suitable for value-engineering use. 4

V A L U E E N G I N E E R I N G C O S T ANALYSIS

DESIGN FHCIMFFR J ° e Poaks

VALUE ENGINEER John Smith

V.E. REPORT NO. " 4 ' ' J

DATE 9 - z - 6 Z

PAGE ' °*3

MODEL G A S1>'

RATES: LABOR S b z

TOOLING

DESIGN ALTERNATE

MATERIAL REQUIRED 1/Z diam by 1-3/8 long

HRS rod 1020 steel

TOTAL/CONTRACT TOTAL/SHOP RELEASE _

. TOTAL/ASSEMBLY

REALIZATION FACTOR _ _ LEARNING CURVE FACTOR _

Chamfer 1/16 by 4S deg and cut off to 0.940

OPERATIONS AND PROCESSES multiples oi 1-3/8 in. "

mgh drill 1 -7/3Z d ti by 3/32 deep by

REMARKS Operations 8 and 9 comparable for both

TOTAL TIME FACTORED TIME (HRS)| COST SUMMARY UNIT COST

UNIT ANALYSIS (MIN)

MACHINE HANDLING TOTAL RUN

0. 134S| 0. 1368

TOTAL UNIT COST _

(FIGURE 4)

COST FACTORS

Basically, four main factors must be considered in the analysis of any manufactured product:

1. Labor 2. Tooling and equipment 3. Materials 4. Dollar conversion

RADIAL ARM ROUTER - OPERATION 4401

Gage Stack Gage Stack

0. 012 20 0. 064 6

0. 016 20 0. 072 5

0. 020 18 0. 081 5

0. 025 15 0. 091 4

0. 032 12 0. 102 4

0. 040 8 0. 125 3

0. 051 7 0. 156 2

0. 200 1 and over

HANDLING TIME P E R STACK (MINUTES)

Material thickness

Up to 5 by 5 in

5 by 5 in. 12 by 12 in.

12 by 12 in. 24 by 24 in.

24 by 24 in. 36 by 36 in.

36 by 36 in. 48 by 48 in.

0.012 to 0.064 1.65 2.40 3. 20 4. 00 5.00

0. 072 and up 1. 30 2. 00 3.40 3. 20 3.85

SETUP TIME (MINUTES) 12

(Includes one collar change)

RUN TIME (MINUTES)

Per linear inch 0. 005

(Includes 2 cuts, rough and finished.)

HANDLING TIME INCLUDES:

1. Stack number of parts indicated in stack chart and square up.

2. Position RB and drive wood screws.

3. Scrap aside, out wood screws, and parts aside.

Figure 5 - Typical Standard Time Data Sheet

FIGURE 5

6-63-4 S.A.V.E. JOURNAL 5

TABLE I - DOLLAR CONVERSION - LABOR RATES

Average hourly rate (dollars)

Function Labor Overhead Contract and

Administration Materials Total

Production 1.197 2.82 0.67 0.00 5.46

Tooling 2.32 2.82 0.67 0.85* 6.66

Engineering 2.88 1.89 0.67 0.40+ 5.84

Planning and tool design

2.32 2.82 0.67 0.00 5.81

•Average cost of construction materials for jigs, fixtures, dies, blocks, templates, etc. (omitted from rate if raw materials are figured separ­ately).

"•"Engineering supplies.

NOTE: Overhead consists of the indirect costs of manufacturing and of tooling or engineering as applied to the direct-labor hours. The amortized costs include machinery maintenance and depreciation, power and light, insur­ance, taxes, supplies, supervision, plant engineering, production con­trol, inspection, purchasing, material planning, etc. Contract and administration consists of the expense of finance and ad­ministrative functions applied to the direct-labor hours of manufactur­ing and of tooling or engineering.

T A B L E n - LABOR-HOUR

REALIZATION FACTORS Shop Realization factor

Machine

Sheet-metal fabrication

Process and paint

Sheet-metal subassembly

Major assembly

1.36

1.71

1.95

2.29

2.62

NOTE: The realization factor is used to convert standard man-hours oflabor expended to actual hours of labor. The factor is an average of the weekly performance of each shop department. It is measured by accounting for the number of standard man-hours allotted to the jobs (orders) received and the actual man-hours of labor accumulated against these same jobs. The reali­zation factor is determined as follows: Realization factor = Actual direct-labor man-hours/Standard direct/labor man-hours. In other words, actual man-hours consist of standard man-hours multtpltod by tho realization,factor. For example, in tho sheet motal fabrication shop, Realization factor = 1.71, Standard man-hours = 1.2750 (assumed) and Actual man-hours = 1.2750 X 1.71 = 2.1803.

PROCEDURES AND DOCUMENTATION

Any value-assurance program will fail without clearly designated procedures and documentation. The first procedure is to designate value-oriented personnel in tooling, purchasing, etc. as the value engineer's con­tacts for authoritative information. (I am assuming that the company has provided a value training pro­gram, another necessity for a successful value-assur­ance program.) Some of these individuals, such as those in tool planning, will be assigned full time and probably work in the engineering area with the value engineer. The fact that the value engineer is esta­blished as a contract with the transmittal authori­tative information to the designer ensures that such information receives the consideration it merits. No usurping of the designer's prerogative to make his own contacts is intended. One of the most important ob­jectives of a value-assurance program is to encour­age the designer to make these contacts.

The need for documentation of the decisions made dur­ing design development cannot be over-emphasized. The resulting history and data can be used to support the present design development, to determine the dir­ection for future designs, and to help re-evaluate the design during reviews.

A value-engineering design record form similar to Figure 6 is prepared by the value engineer at each step of the design development. The form is primar­ily a record of the reasons for the design decisions, but it also documents the basic design criteria. This secondary function becomes increasingly important for the communication of ideas as the design progres­ses and more engineers are involved in the details. The form provides a check of the design criteria at each design level. Any difference in the value engi­neer's and the designer's information is immediately apparent and can be corrected.

Since the design proposal Is very general, the value-engineering documentation may consist of a very lim­ited number of the value-engineering records and eval­uations of comparative cost studies. The accepted de­sign proposal provldos the end-item target cost for the preliminary design to follow. The value engineer ob­tains and notoH on the form the breakdown of the end-Item target cost Into target costs for the major con­figurations oBtablished during preliminary design. Later, ho does the same with the target costs for the product design details.

Thoro should be a separate form for each level of pro-ducldoUitl as itdevelops in engineering. Theoretically, tho actual cost of each part or assembly should be de­termined and compared with the target cost, but this is not possible except in the case of purchased parts or until the part has been manufactured. Therefore, an estimated cost is established for comparison purposes. Any time the estimated cost exceeds the target cost, it

6 S.A.V.E. JOURNAL 6-63-4

is a signal for re-evaluation of the design or of the target cost.

It is absolutely essential that the documentation hon­estly reflect the cost history, so space is provided on the form to show when the estimate is not based on standard data but is actually an educated guess. While not scientific, such a guess does offer a realistic approach to controlling costs when time is critical. When guesses and target costs are close, a detailed estimate is in order.

Distribution of the documentation normally is lim­ited to the value-engineering organization, but the records should be open for review by those concerned, and a summary of the design cost should be made available to engineering management.

THE NEED FOR STANDARD DATA

One roadblock to the development of a value-assur­ance program is the lack of standard data suitable for use by the value engineer. It is not unusual in a com­pany for the estimating group to use one set of data to establish the cost of the product and for industrial engineering to use different data to establish the man­ufacturing time. Neither of these may be directly usable for value engineering.

One solution has been the establishment of a standard data committee, which develops one set of data to be used throughout the company. When used by value engineering to determine the broad costs in a design proposal and to evaluate a preliminary design, the standard data are similar to those of the estimating group. When used in the detailed product-design stage, the data are similar to industrial engineering's standard manufacturing time.

Good standard manufacturing cost data applied to de­sign alternates can provide a better measure of value than can a comparison of an actual cost with an esti­mated cost. Value proposals that compare actual costs to estimated costs result in considerable controversy that can be avoided, because many times the potential savings of estimated costs are false.

For example, suppose that a comparison of the esti­mated cost and the actual cost of two designs results in the following figures:

Design A

Design B

Cost Saving for B

Estimated cost

$1100

1000

$ 100

Actual cost

$1320

1200

$ 120

VALUE ENGINEERING DESIGN RECORD

COST

TARGET

ESTIMATED .

GUESSED .

ACTUAL

DRAWING NO.

NOMENCLATURE

BASIS FOR SELECTION

However, comparing the estimated cost and the actual cost could result in the following misleading figures:

Design B - actual cost

Design A - estimated cost

False potential saving for A

$1200

1100

$ 100

DESIGN CRITERIA

D Acir cilurTmn END-ITEM DESIGN QUANTITY oAaii. ruriL. i IUN — — — SECONDARY FUNCTIONS

DETAIL-DESIGN QUANTITY

SPECIAL VALUE FACTORS SPECIAL VALUE FACTORS SPECIAL VALUE FACTORS

MANUFACTURING CONSIDERATIONS

ACTUAL QUANTITY ON ORDER _

SHOP LOT RELEASE FOR DESIGN QUANTITY

SHOP LOT RELEASE FOR VARIOUS QUANTITY ORDERS

QUANTITIES

SHOP LOT RELEASE

TOOLING FACILITIES MATERIALS MISC. REQUIREMENTS .

COMPARATIVE COST STUDIES

ALTERNATE DESIGNS CONSIDERED

INFORMATION SOURCES TOOLING MANUFACTURING PURCHASING RELIABILITY QUALITY STANDARDS

STRESS . WEIGHTS . VENDORS .

FIGURE 6

THE VALUE ENGINEER

Another roadblock to the development of a value-assurance program is the seeming lack of potential value engineers. Ideally, value engineering is per­formed by all engineers. Value assurance during the design stage is not a new philosophy. The principle advocated by value engineering have always been stated as, or understood to be, the function of engi­neering. A value-assurance program must be based on a recognition of this fact if it is to succeed. The missing ingredient has been a systematic method of accomplishment.

The value engineer must be able to recognize all the areas of a design and concentrate his efforts on the 20 percentthat creates 80 percent of the product cost. He must be able to communicate with the engineer and visualize much of the design detail. He must have a broad knowledge of engineering, manufacturing, pur­chasing, etc. to recognize problems in those respec­tive areas and to know where to get the answers.

6-63-4 S.A.V.E. JOURNAL 7

It would appear that such men are hard to find, and they are, but most companies have them. They are the liaison engineers who work with production. Every day they are faced with difficulties that must be solved by gathering information from many sources, both in and out of the company. Resolving engineering, manu­facturing, tooling, and purchasing difficulties with a design is their way of life. MANUFACTURING ENGINEERING

MANAGEMENT CONTROL AND INDUSTRIAL ENGINEERING

VALUE IMPROVEMENT PROGRAMS

Although many individuals undoubtedly would be suit­able, liaison engineers are the best source for potential value engineers. A good liaison engineer with 5 to 10 years' experience, and with training in the techniques of value engineering, manufacturing processing, and cost estimating, will make a good value engineer.

The broad knowledge needed for value engineering is not enough. The human relations aspects is equally essential. A good value engineer is able to obtain the respect and confidence of the people he works with, especially the designer. He is aggressive, but in a tactful way. He willingly accepts the fact that, no mat­ter how great his own contribution, the credit belongs to the designer. Finally, he believes in value engineer­ing and has the ability to arouse enthusiasm for it in others.

BENEFITS OF VALUE ASSURANCE

One immediate benefit of a value-assurance program is that the implementation of value proposals is not a problem, because the proposals are part of the design released for manufacture. Another benefit is the incorporation of many value suggestions for improve­ments that would be lost because of the cost of imple­mentation.

A few of the fringe benefits of value assurance are:

1. Value engineeringis apartnerwith, not a critic of design.

2. Design engineering has aline of communication that gives the lowest designer the opportunity to be heard. Many valuable ideas are lost be­cause the designer performs a drafting func­tion for his superior.

3. The effectiveness of the designers is increased when they become acquainted with the cost fac­tors being considered in their designs.

PROJECT VALUE ENGINEER

FIGURE 7 VALUE ANALYSIS TRAINING

CONCLUSION

This paper has suggested only the basic outline for a very necessary phase of value engineering, that of value assurance. The other phase is value improve­ment, which provides the basic training for value engi­neers, develops data for the value analysis, and serves as a constant reminder of the need for foresight in de­sign values. In a functional organization similar to that shown in Figure 7, both phases provide a well-inte­grated value-engineering program that begins at the design stage of a company's products.

One purpose of this paper has been to stress the im­portance of putting a dollar value on ideas. The gen­eration of ideas and the importance of product function in developing more ideas with value-engineering tech­niques have not been included. George Papen summed it up when he said, " Designs are but ideas - thoughts - and unless they must be produced, they can be as wild or expensive as the designer's fancy can make them. "4

LIST OF R E F E R E N C E S 1. Van Hamersveld, J . : "Designing with Dollars,"

Product Engineering, March 1948; 19:81-86. 2. Luders, R. H.: "Engineering Cost Analysis,"

Machine Design, July 1952; 24:145-49. 3. Van Hamersveld, J : "Cost Control Engineer­

ing . . . Stepping Stone to Better Design Profi­ciency," Machine Design, February, March 1951; 23:108-14, 132-38.

4. Papen, G. W.: Design for Producibility. Un­published college course no. X466ABC, Berk­eley, Calif., University of California, 1953.

8 S.A.V.E. JOURNAL 6-63-4

IDENTIFYING V. E. COSTS

ROBERT L . BIDWELL Manager, Value Analysis Administration and Jan Fortune Coordinator, Value Analysis Program The Martin Co., Orlando, Florida

The important techniques for identifying and reducing, as well as avoiding or preventing, R & D costs are expertly described in this article. Step by step methodical procedures are clearly explained in conjunction with applicable charts.

Identifying opportunities for applying already well-defined value analysis methodology is one of the vast untapped reservoirs for savings in this challenging and profitable industrial discipline.

Numerous articles and a great deal of research have been devoted to discussing and developing function, cost, value, the formal job plan—and the creative thinking that goes with it—the tools of value analysis.

These, however, lose their impact if they are not prodded on by a vital dimension in cost reduction activities: identifying the areas where these methods can be applied most profitably.

Identification of these opportunities, or guiding value analysis efforts into the most lucrative areas, is the subject of this article. Included will be a discussion of several methods of identifying and reducing exist­ing costs as well as avoiding or preventing costs in a research and development activity.

The phase of the cost reduction cycle to be expanded here will provide an effective identification and delin­eation of areas of greatest opportunity, and will accom­plish the effective meshing of value analysis efforts with existing dynamic business operations.

The opportunities to be discussed can be as readily applied in the vast consumer production industry as they can in the defense industry.

VALUE ANALYSIS PROGRAM

An alarming majority of firms today attack cost reduction in a dis­organized manner; so, additional e m p h a s i s ? needs to be placed on a comprehensive and ef­

fectively organized approach to achieve better value. Exhibit A shows the relative position of identification in an organized cost reduction cycle. The first method under the identification phase is called the "Modified ABC Method", which can be used to clearly portray the distribution of expenditures for parts in a product, parts scrapped, labor skills, and inventory investment. The usual and most familiar application of the ABC method is an inventory control.

FUNCTIONAL COST ANALYSIS

Preparing an ABC analysis, whether for a missile or a toaster, requires the following: list every part, apply the unit cost to each, multiply the unit cost by quantity used (normally for a period of a year) and arrange the items according to the amount of expen­diture, starting with the highest sum (See Exhibit B).

TYPICAL SUMMARY DATA FROM COST ANALYSIS

Evident in a study of this listing is the fact that a rela­tively small percentage of items represents the major portion of the total expenditures (Exhibit C). These high expenditure items, or "A" items, normally repre­sent only 10 to 15 percent of the total number of items, but as much as 60 to 80 percent of the total expenditures.

The listing shows also that the great proportion of the number of items only account for a small percentage of total expenditures. These low-expenditure items are the 'C items in Exhibit C, and may represent 10 to 15 percent of the dollar expenditure but 60 to 70 per­cent of the number of items.

The middle group of items are the 'B" items. The nature of the distribution and the particular local application will govern the size of each classification.

It should be noted that the "A" category may include items with a low unit cost used in large quantities or items with a high unit cost used in small quantities.

6-63-4 S.A.V.E. JOURNAL 9

Exhibit A

Martin-Orlando Division

VALUE ANALYSIS PROGRAM

THE RELATIVE POSITION OF IDENTIFICATION IN THE ORGANIZED VALUE ANALYSIS

COST REDUCTION C Y C L E

I IDENTIFICATION H APPLICATION OF VA in IMPLEMENTATION

Identify Areas of Opportunity Apply Value Analysis/Engineering Discipline and Philosophy

Utilize Status Reports of Programmed Follow-up and Control

Select from the "Total Cost of Doing Business"

Systems - Components Parts - Assemblies Methods - Materials Facilities - Tooling

Job Plan plus Techniques

Phases of Job Plan

Information Speculative/Creative Analytical Planning Execution Summary/Conclusion

Measure final results.

Feed back data and initiate, control to assure maximum value in future.

Under a Condition of: Question to be asked constantly:

1. Evolving Concept and Development Costs

and/or

2. Existing operational costs.

What is it? What is the function ? Is the function required? What is the function worth? What is the cost? What else will perform the function ? What does that cost?

Other Techniques:

Evaluate by comparison Use company specialists Use vendors Work on specifics

Exhibit B

ABC ANALYSIS AND SUBSEQUENT REFINEMENT B Y P R O B L E M

ANALYSIS AND FUNCTIONAL COST ANALYSIS*

ABC ANALYSIS P R O B L E M ANALYSIS FUNCTIONAL COST ANALYSIS

Category Item Unit Cost

Ann. Usage

Annual Expenditures Scrap Rework

Labor Sole Insp. Skill Source Test Time

Engr. Chg. Mech. Elec. Flint. Flnlnh Insp. Pack.

A XXX XXX XXX XXX

425 1,000

740 90

1,000 401 510

4,000

$425,000 401,000 377,000 360,000

X

X X X

X X $40 $20 Id $10 $5 $10

XXX 200 250 50,000 X

B XXX

XXX

160

15

300

800

48,000

12,000

X

C XXX XXX

10 20

1,000 200

10,000 4,000

*This is a typical case. The column headings under the problem analysis and functional C O M ttiialyftU - ill vary with local problems and conditions.

10 S.A.V.E. JOURNAL 6-63-4

Exhibit C

TYPICAL SUMMARY DATA FROM ABC ANALYSIS

CATEGORY NO. OF ITEMS PERCENT OF TOTAL ITEMS ANNUAL

EXPENDITURES PERCENT OF ANNUAL EXPENDITURES

A 1,500 15 7,000,000 70

B 2,500 25 2,000,000 20

C 6,000 60 1,000,000 10

TOTAL 10,000 100- 10,000,000 100

The common denominator of each category (A,B,C) therefore, is the AMOUNT OF EXPENDITURES and not unit cost or quantity used.

Since the ABC method highlights where costs are con­centrated, it can successfully orient the value engi­neer or other individuals responsible for maximum value.

Do procurement problems exist in the nature of a sole source of supply, past due deliveries, etc?

Are frequent redesigns and engineering modifica­tions associated with the item?

Are there unusual maintainability or testing costs involved?

But this is not completely adequate, and a modifica­tion to the usual role of an ABC analysis needs to be introduced to improve its effectiveness in cost reduc­tion activities.

Even though an ABC analysis identifies the high ex­penditure items, it doesn't sufficiently highlight the high cost items from the cost reduction viewpoint. High expenditures as shown on the ABC analysis are not necessarily synonymous with high costs when it comes to cost reduction.

HYPOTHETICAL EXAMPLE

In a hypothetical example having 500 "A" items, as­sume that annual expenditures range from $500,000 down to $50,000. Perhaps it can be conjectured from experience that a 10 percent reduction in the cost of any or all of these items appears logical.

Bearing in mind, however, that cost reduction effort should first be concentrated on the items that will reap the greatest rewards, it is necessary to isolate those "A" items that can be reduced 20 to 60 percent in cost—not just 10 percent—and still perform the required function.

TYPICAL REVIEW QUESTIONS

The action to be taken now involves a review of the "A" items in relation to any associated problems. For example:

What items incur high scrap or rework costs ?

This review will show that some items have many problems while others are virtually trouble-free (Exhibit B). The information can be weighted to help the selection of the best items for value analysis study.

What this actually accomplishes is to include or re­flect a whole variety of cost factors less identifiable and less measurable than unit cost.

A simple example of this added selection process would be an "A" item with an annual usage of 2,000 at a unit cost of $50. If each part incurred rework, spe­cial testing or other operations that added $5 to the unit cost, the part warrants a higher ranking in the analysis because of the additional cost factors. In­stead of annual expenditures of $100,000 for this "A" item, it would increase to $110,000 to reflect the cost of added operations.

Completion of the ABC analysis and the problem weighting process permits the successful integration with elements of established value analysis discipline i.e. analysis of the cost of the item into its functional areas.

For a specific item the functional areas can include, but not be limited to: electrical, mechanical, manu­facturing, quality and inspection, packaging, ware­housing, and maintenance (Exhibit B).

The proper integration of the ABC analysis, followod by the problems and functional cost analyses, provldos a major and very useful methodology for the identifi­cation phase.

6-63-4 S.A.V.E. JOURNAL II

COST REDUCTION IDENTIFICATION

What are some other ways to identify opportunities for cost reduction? One practical method is to isolate a high costparameter and develop a solution that fulfills the required function at lower cost.

The nature of the activities and processes that might be considered here could include an expensive welding process, an exotic and costly material, or a scarce labor skill.

All activities or parts affected by the high cost para­meter are listed and the total costs incurred are quantified. This action is necessary if one is to cor­rectly ascertain the expenditures justified to improve the high cost parameter versus the cost reduction anticipated.

A technological advance in a process, a material, etc., can often be applied across a whole series of activities. The cumulative effect upon the value-per-dollar ratio is often significant.

Internal and external methods are also applicable to the identification phase.

NON-ASSOCIATED PERSONNEL OBSERVATIONS

Simple "observation" in the manufacturing areas where the physical action occurs is a widely used method of identification. Strange as it may seem, personnel from non-manufacturing areas, such as a value engi­neer or a buyer, will frequently have more success than a manufacturing foreman who employs "obser­vation". To a degree, this is natural, for an indivi­dual who is "too close" to his problems frequently does not see them.

The use of "observation" has considerable merit and aperson can train himself to recognize something that "doesn't lookright" or "appears inefficient." Caution is required, however, for areas of opportunity un­covered by observation do not reveal their relative importance. It merely is evidence that the item can be observed. All too often managers and others be­come trapped into chasing a lot of "obvious" prob­lems that in full perspective are insignificant. The fundamental and significant problems receive little or no attention or perhaps remain "unobserved".

Another appropriate avenue can be followed with good results when primarily utilized in seeking cost re­duction opportunities in the administrative field.

A revealing way to penetrate these areas is to list every form and report that is either produced or received by a particular organizational unit. The volume of each form and report processed annually and the time required for preparation, filing and reviewing plus any other actions should then be deter­mined and converted into dollar costs.

Then, once again, as previously described under the ABC analysis, the items can be arranged in order of magnitude and effort concentrated on the most costly items. The analysis of forms and reports brings into focus the existence and purpose of the variety of scrap re­ports, service trouble reports, and problem reports available in a business. These reports are fertile sources for identifying areas of opportunity. But, like the "observation" method, the reports frequently give no indication of the magnitude of the specific problem relative to all other problems.

Until the data are placed in proper perspective, those responsible for cost reduction must avoid the pitfall of focusing attention on insignificant cost reduction areas.

A scrap report lends itself to the application of an ABC analysis. Specific attention can be directed to the high dollar losses and then to the particular dimension, sur­face finish, etc., with the greatest incidence rates.

SOLICITING IDEAS

Problems may be fruitfully solicited by just asking others for ideas. Frequently, the ideas for improved efficiency and lower costs that are proposed here al­ways affect the "other fellow's organization" and may be biased. Company specialists who have proposed ideas but haven't yet mustered sufficient support to have them implemented represent yet another method for uncovering areas of opportunity.

IDEAS FROM EXTERNAL SOURCES

The following group of methods useful for identifica­tion of areas of opportunity for cost reductions are based mainly on sources external to the business operation.

Vendors represent a major field for cost reduction ideas. They can even be engaged in a formal manner in the task of delineating areas of opportunity. A for­mal solicitation can be made with each purchase order and request for quotation so the vendor can feed back cost reduction items.

Quite naturally, vendors need to be handled properly to keep them as a continuing source of ideas. They also require guidance so that their efforts are along areas of major benefit to the company.

Under the proper conditions, vendors will gladly chan­nel resources of men and funds into the correction of aproblem or development of anew product or process. These can bring long run benefits to a firm seeking higher value.

Trade magazines and the publications of professional societies are still another in the kit of tools used in identification. Systematic and selective reading of trade journals provides a continuing source of new ideas and represents one of the best ways to keep abreast of the latest developments in any one field of interest.

12 S.A.V.E. JOURNAL 6-63-4

Still another method that brings forth areas of oppor­tunity is attendance at meetings held by professional societies or periodic plant visits. This will generate items through both discussion and observation. In this case, though, the source of knowledge is external to the company's activities.

All efforts from these external areas should be gathered and channelled so that they bear upon the "A" areas of opportunity as previously developed through the ABC analysis.

There is little need, for example, to visit plants mak­ing gears and attending all meetings held by gear ex­perts if none of your costs go toward the purchase or production of gears.

CUSTOMER LIAISON

The final method that can be used to direct attention to the proper area of opportunity relates to the customer.

The customer should be used to the greatest degree possible in the challenge of cost reduction and higher value. The customer will highlight problems in the product and indicate his resistance to the high cost areas where he firmly believes that the value received is not commensurate with cost. Customers will also identify advantages that he sees in competitive products.

When areas of opportunity are identified by this method they must be analyzed and put into proper perspective.

The foregoing discussion has concerned itself solely with identifying opportunities for reduction of existing costs.

R & D ACTIVITIES

Today, due to the increasing efforts and attention de­voted to research and development activities, this area of endeavor has a profound impact on the entire cost structure of a company.

The remainder of this article deals with identifying and reducing costs before they become established, thereby avoiding or preventing costs.

Costs can never be incurred if they are avoided in advance.

A company's research and development activity is where concepts are formulated, predesigns developed, and prototype models prepared prior to finalization of the product.

This phase of activity represents the vital decision­making processes where the future costs are largely dictated.

During the R&D period it is extremely important to determine the areas of opportunity relating to the estimated or projected costs. Naturally, necessary actions are required to assure maximum functional value is received for the cost incurred.

R & D COST IDENTIFICATION

Unfortunately, the necessity to identify and reduce costs at this stage is less readily understood because the elements appear less tangible. A greater portion of the considerations during this period are qualita­tive rather than quantitative and therefore less con­crete and seemingly less manageable.

Obviously, when it comes to value analysis and identi­fying opportunity areas in the research and develop­ment phase, a more challenging situation is posed.

While during the R&D phase the freedom and flexibil­ity to have high cost areas identified and corrected is extremely broad, this does not permit the firm to seek a theoretical maximum value.

The point made here is this: If the Department of Defense had determined that it requires a missile with a 10,000 mile range, the R&D and value efforts are confined to this objective.

The efforts are not along the paths of determining that aircraft will perform the function best and most economically.

A similar non-defense economy example exists where a Board of Directors of an automobile manufacturer has decided that it requires a car engine that delivers 100 miles per gallon for use in a compact car. Here, cost and value decisions again have general boundaries imposed, but these are not nearly so circumscribed and frozen as after an item is tooled and in production!

With the broad objective established, the alternate systems to accomplish it must be delineated. The prime objective must then be analyzed to determine the function to be performed, and set forth as major assemblies and sub-assemblies each having specific, carefully defined functions.

Confronted with this situation, the individuals respon­sible for developing the new item need to generate alternate ways to accomplish each function. The pro­portionate effort devoted to each function from the standpoint of costs and values may be approximately ascertained using the following approach:

CREATIVE THINKING

An intensive analysis of the basic function and indivi­dual specifications for each element needs to be car­ried out. Emphasis .should be placed on creative think­ing and the consideration of as many possibilities aH

6-63-4 S.A.V.E. JOURNAL 13

the state-of-the-art dictates as feasible. Study will then isolate the several methods that meet the func­tional requirements. These then require further study from the standpoint of value.

USE OF YARDSTICKS

To accomplish this, yardsticks for costs need to be employed.

Useful yardsticks include the current costs to produce different finishes, dimensions and tolerances, the costs of different materials, and the cost of production operations.

Tooling yardsticks can also be utilized that will indi­cate thepath to the design with the best value. A good knowledge of the capabilities within the firm is essen­tial . The individuals concentrating on high value in this research and development area will develop an opinion as to where the organization's strengths and weak­nesses exist.

Applying these figures, yardsticks and backgrounds systematically will guide the selection towards a final design and other desideratum. Selection of the least costly and most functionally satisfactory proposal, out of those under consideration, will be enhanced. The guarantee of it being the least costly available depends upon the extent of possibilities considered.

The proper emphasis on costs in the research and development stage will yield major benefits. Startling as it may seem, the effect upon the product can com­monly represent factors of 3 or 4 times—with some instances of costs 10 or more times—the level re­quired to achieve the same function. This situation reflects the fact that there are a multitude of ways to design and produce a product or achieve an objective.

All too often the high cost and inefficient ways are selected.

Keeping costs at a minimum in this stage can be termed cost avoidance or value assurance. When it is ap­proached aggressively, the customer definitely re­ceives more value for the dollars spent. Lower cost levels at this stage also mean more business for the firm and a more competitive position in the consumer or defense economies.

L a w r e n c e

D .

m i l e s '

c o m p r e h e n s i v e book on

TECHIUQUES OF u m u E n n m v s i s mid EncmEERinc

Lawrence D. Miles, Manager, Value Service, General Electric Co.; President, The Society of American Value Engineers

90 illustrations

scores of case histories

275 pages, $8.50 -

Here's the book to help you solve practically ail types of production cost problems—and improve product performance—through ef­fective use of modern value analysis.

Written by the man who actually created this powerful cost-cutting system, the book takes up in detail how value analysis is suc­cessfully applied to "anything that costs money" (be it a service, product, or proc­ess), how it helps improve operations in manufacturing, purchasing, product design, quality control, sales, accounting and other important phases of business.

This book puts within your reach a com­plete set of workable value techniques which you can use or readily adapt in your own operations—from facts on how to put new "life" into old products, to clear blue­prints on how to set up and run your own value analysis department. An entire chap­ter devoted to measurements and tests helps you determine the grade or degree of excellence of your value work. SEE THIS BOOK AT YOUR LOCAL BOOK­STORE OR SEND COUPON BELOW.

McGRAW-HILL BOOK CO., Dept., V-VA-6 327 West 41st Street, New York 36, N.Y. Send me Miles' TECHNIQUES OF VALUE ANALYSIS AND ENGINEERING for 10 days on approval, in 10 days I will remit $8.50 plus a few cents for delivery costs, or return book postpaid. (We pay delivery costs if you remit with this coupon. Same examination and return privilege.)

Name(PRiNT)

Address .

City Zone - State

Company—

P o s i t i o n — For price and terms outside U.S., write McGraw-Hill Intl., N.Y.C. V-VA-6

14 S.A.V.E. JOURNAL 6-63-4

" V A L U E " IS OUR PRODUCT

Serving the needs of Industry

INDUSTRIAL V A L U E S E R V I C E S , INC.

1405 NORTHERN BLVD.

ROSLYN, L. I., NEW YORK

516 MA 1-7442

WE ARE SPECIALISTS IN VALUE ENGINEERING & ANALYSIS

• EDUCATION PRODUCT STUDIES

• V. E. AUDITS • PROGRAM ORGANIZATION

• MANAGEMENT ORIENTATION SEMINARS

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FACILIT IES AT REASONABLE COST.

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6-63-4

VALUE ENGINEERING EQUALS MICON ELECTRONICS

S.A.V.E. JOURNAL 15

NEW DOD REQUIREMENTS FOR VALUE ENGINEERING

DANIEL J . CANTOR, Pres. Daniel J . Cantor & Co. Suburban Station Bldg. Philadelphia, Pa.

It will now be the policy of the Department of Defense to incorporate value engineering provisions into all contracts of sufficient size and duration to offer reasonable likelihood for cost reduction. The article reviews the many tools required for V. E . implementation.

Value engineering, in the government's definition, involves the continuing and intensive appraisal of an item beingprocured. All elements influencing its cost are to be considered. However, the required perform­ance, quality, maintainability, standardization or inter changeability cannot be affected adversely by the change.

CONTRACT PROVISIONS

Contract provisions for value engineering may either provide:

1. Incentives to permit the contractor to share in cost reductions that derive from his submitted proposals;

2. Value engineering program requirements which obligate the contractor to maintain an agreed upon value engineering program; and

3. A combination of the above two arrangements.

In incentive arrangements, the Department of Defense is prepared to provide for contractors to have a 50% share in cost reductions. This can exist in a normal situation in which the contract price is reduced as a result ofValue Engineering and acceptance of the cost reduction proposal.

In fact, the extent of potential benefits to the govern­ment from Value Engineering will be the most impor-

- tant factor in fixing the J0KT percentage for the con-

% tractor. It may even be as high as 75%.

MM These and other matters of Value Engineering policy are carefully spelled out in the Armed Services Procurement

Regulation published as Revision 13, dated December 31, 1962.1

BACKGROUND OF V. E .

While Value Engineering has become an important management tool for industry and government in just the past decade, it has been pointed out that its objec­tive is not new.

Brigadier General Gerald F . Keeling of the Air Force Systems Command in a recent talk noted that "the objective of value engineering — reduction of cost without impairment of performance" was contained in the first contract with the Wright Brothers. At this dawn of the space age, the contract provided an incen­tive for speeds in excess of 40 miles an hour - and a penalty for slower performance.2

The Air Force, which gives pioneering credit to Navy's BuShips and to Army Ordnance, has nevertheless applied the principles of Value Engineering on perhaps a broader front than its companion services.

Prior publicity was given before publication of the new value engineering regulations, including carefully developed advance information, from the office of Army Colonel William W. Thybony, Chairman of the Armed Services Procurement Committee, Office of the Assist­ant Secretary of Defense. Industry had its opportunity to comment on the new regulations and their opinions were given consideration before their publication.

THREE (3) SCHOOLS OF V . E . THOUGHT

I have been supplied with the following information by George E . Fouch, Deputy Assistant Secretary of Defense. Mr. Fouch has the following to say:

"Value Engineering has incited a considerable body of comment that seems to represent three schools of thought. The first school says that Value Engineering is simply old medicine in a new bottle. The second

16 S.A.V.E. JOURNAL 6-63-4

school is convinced that Value Engineering is a universal solvent - it will dissolve away almost any evil ranging from the trivial to acute cases of bad management. The third school sees Value Engineering as an ephemeral fad - something like 'rock and roll' that will pass away and be followed by the twist, or the jump, or whatever new gyrations an imaginative choreographer can concoct.

V . E . IS HERE TO STAY

Value Engineering has substantial potential for serving the economic interests of both industry and the Depart­ment of Defense. Value Engineering is not destined for just 'one brief strut across the stage' and then for disappearance into oblivion. Value Engineering is here to stay. These opinions are based on consideration of ... the economic, social and technological background of, .. > our times - both on the national and international levels.

COST VS FUNCTION

Value Engineering is a purposeful, planned confronta­tion of the challenge of cost reduction, making use of the best available tools of modern industrial engineer­ing, mathematics, operations research, and other relevant fields of science, engineering and industrial management.

Whether we use the ASPR definition or alternative definitions, we find ourselves reducing Value Engineer­ing to two dimensions, namely, cost and function - the realization of a desired function at minimum cost.

$6 BILLION R & D PROCUREMENT

Concerning the dollar value of annual R&D procure­ment which will be affected by these new clauses, the Comptroller's Office of the Secretary of Defense states that although a precise answer is impossible, this fis­cal year the DOD will spend approximately $6 billion on R&D procurement. Probably a billion of this falls into the category of basic research, feasibility studies, and other such efforts, where VE clauses will not apply. Within the remaining 5 billion dollar effort, Value Engineering Program requirements, with or without incentives, will be applied to contracts over one million dollars. Although no specific estimate of the portion of the five billion dollars which this covers is possible, it is probably over 50% of this total in dollars.

With reference to measurement of savings on items with no history, the ASPR establishes the principle that V E program requirements only will be used when savings are not measurable.

As to the cost reduction goals to be achieved through Value Engineering, these are 64 million dollars for F Y 63 and 100 million for F Y 64.

THE NEW REGULATION

In the new regulation the Department of Defense provides that the value engineering effort must be the

result of an effort above and beyond what the contrac­tor might normally do, or.be required or encouraged to do.

BENEFITS AND REWARDS

If the cost reduction proposals are adopted by the government, a change order puts this into effect. Then, the contract price will be reduced by the stipulated percentage of decrease, or in some cases, a fee will be increased.

All fixed-price type and cost-plus-incentive-fee con­tracts that do not have a value engineering program, are now to include a value engineering incentive if the amount is $100,000 or more. In some cases, smaller contracts will be included in this category. And in others, where the item is controlled by the commer­cial market, there may be no potential for cost re­duction, and, therefore, the item will not be included in this program.

In advertised contracts, the percentage will be stated in the Value Engineering Incentive clause. In nego­tiated contracts, the solicitation will state the per­centage, but the percentage may be a subject of nego­tiation before the award.

The most important factor in fixing the percentage is the extent of the potential benefits to the govern­ment from value engineering. Normally, the contrac­tor' s share in any cost reduction will be 50% of the amount by which the contract price is reduced as the result of the cost reduction proposal. The percent­age may reach as high as 75%.

REWARD BASED ON RISK

The theory of this high incentive is that the reward is based on risk. Therefore, the government reasons that the contractors should fund the value engineering efforts themselves. The price or cost estimates of a proposal by a prospective contractor should, there­fore, not include or provide funds for value engineering.

All cost-reimbursement type contracts of $1,000,000 or more will include value engineering, except where the contract is for basic research, feasibility studies, or the like, or if there is a cost-plus incentive fee contract.

Although value engineering stresses continuing ap­praisal, the aim of the program is to realize its potentialities when it will do the most good, such as in the initial research-design-development - production cycle. Specifications, production drawings and methods should reflect this full value as soon as possible.

VALUE ENGINEERING PROGRAM REQUIREMENT

It is apparent that the inclusion by the government of a value engineeringprogram requirement, particularly

6-63-4 S.A.V.E. JOURNAL 17

in fixed price contracts, would seem to increase the initial cost to the government. Therefore, the procur­ing activity must be certain that there will be a very likely net saving to the government.

FUNDING THE PROGRAM WITH INCENTIVE PROVISION

In some cases where a value engineering program with incentive is included in the contract, government funding allowances may be set for value engineering. In these cases, the government may fund the labor, material and overhead for the required value engi­neering program. If this is done, the government requires that five times the total funding be attained in cost reductions before the contractor be permitted to share in the adopted cost reductions. The contrac­tor's share will ordinarily be 50%.

As an example, a contract with an annual value of $1-5 million will be permitted a yearly funding limit of $20-40 thousand. A $5-10 million annual value con­tract would be allowed $40-80 thousand dollars for value engineering.

The contractor, of course, must support his cost re­duction submissions with sufficient evidence to merit the approval of the procuring agency. The decision of the Contracting Officer, as to the acceptance of any proposal for cost reduction, is final and not subject to the contract's disputes clause. The proposal may be rejected or accepted in whole or in part. In any case, the contractor must continue with his obligation to perform.

LINE ITEM LISTING

Value engineering program requirements may be with or without incentive to the contractor. Where there is a contract provision to provide a specified level of value engineering effort, this will be stated as a line item and the cost or price will be separately identified.

MANUAL TO BE ISSUED

These are the main ASPR provisions. Col. William W. Thybony, Chairman of the ASPR Committee, ad­vises me that the proposed DOD Value Engineering manual will, hopefully be published this Spring.

ESTABLISHING PERCENTAGE

The Air Force has not yet had a sufficient volume of experience to provide information as definitive as it may have at a later time. However, the Air Force Systems Command, through John E . Tolnitch of their Directorate of Procurement, has been kind enough to furnish me with answers to many questions. Relative to establishing the percentage of the cost reduction to be provided by the contractor, the Systems Command has not attempted to require any stated percentage of cost reduction by the contractor. However, the poten­

tial for cost reduction is the governing factor for in­clusion of a Value Engineeringprovision in a contract. In the case of a contract for a system or equipment for which there is a firm specification a Value Engineering cost sharing incentive would be appropriate for nego­tiation. If the item being procured had not been sub­jected to Value Engineering previously, they would expect a large percentage of cost reduction. Thus far they have not attempted to rely upon Air Force experi­ence, but depend upon reasonable averages experienced by companies who have a mature Value Engineering program. Thus, they would normally hope for a cost reductionpotential from 20% to 40% depending upon the complexity of the item, the number of functional parts, etc.

If the procurement were for development of an item for which no firm configuration has been established, the Systems Commandwould consider negotiating with the contractor for an agreement whereby he would exert a stated effort in Value Engineering. They would agree to pay him a stated sum for the sustained Value Engi­neering. However, the Systems Command would not stipulate that a givenpercentage of cost reduction must be achieved. The potential for effective Value Engi­neering would determine the amountwe would be willing to pay him for the level of agreed effort. To date there is no Air Force experience formula for measuring his Value Engineering accomplishments, and they would at this stage rely upon the industry average.

WHAT HAPPENS I F CONTRACTORS HOLD BACK?

As for assurance that the contractor did not hold back when bidding the original contract price, prices in contracts containing Value Engineering provisions are negotiated under the same general policy and technique guidelines as prices in any other contracts. Gen­erally the contractor is requested to furnish the con­tracting officer with information supporting his cost proposals. This information is analyzed in the light of the relationships of cost elements to the total con­tract price. Additionally, the contracting officer may require the contractor to furnish a certification that cost or pricing data furnished is complete, current and accurate. Any false representation by a contractor would subject him to the penalties of 18 United States Code 1001, November 1962.

HOW ARE V E PROPOSALS EVALUATED?

How does the review process of the Air Force work which evaluates the documentation of the contractor's actual cost reduction figures on which the percentage was to be based?

Value Engineering cost reduction data are analyzed in the same manner using the same analytical techniques as any other contract change having an impact (debit or credit) on contract price.

18 S.A.V.E. JOURNAL 6-63-4

HOW DOES THIS WORK FOR NEW ITEMS?

On R& D contracts of entirely new items, how does the Air Force assure itself that the contractor had a ca­pable Value Engineering staff?

If the Request for Proposal (RFP) contemplates a Value Engineeringprovision in the contract, it may stipulate that a team of Air Force Specialists may visit the pro­posed contractor's headquarters and/or plants to de­termine if he has in being or has the capability of establishing aValue Engineering organization to meet the requirements of the proposal. Or the RFP may require a submission of the proposed contractor's organization for performing the required Value Engi­neering. The evaluation of the capability would con­sider such things as total number of qualified Value Engineering specialists, organizational dispersment, authority and liaison channels, attention given to Value Engineering by top management, the acceptance of Value Engineering by the design and development engi­neers and evidence of their cooperation with the Value Engineering specialists.

QUALIFICATIONS OF A VALUE ENGINEER

Ivan M. (Jack) Marty, J r . who was the co-chairman of the American Management Association (AMA) semi­nar on Value Engineering this past year provides these views on what qualifications are required of a Value Engineer, or a Value Analyst as he is sometimes called. Jack Marty's own background is that of a career value engineer who has had training in econo­mics, industrial management and design engineering.

He believes that there is no academic degree which will make a value engineer and that the complexity of the product governs the educational or background requirements. Some men are exactly geared to do value work, others are not. A company or government agency should choose open-minded, inquisitive, mature, self-starters who are technically oriented and who have the ability to communicate and persuade - sources would include tool, manufacturing or process engi­neers, design engineers, industrial engineers, tool and die makers, and technically trained buyers. Mr. Marty says that you should teach them the principles and techniques of value analysis and give them the broadest possible perspective of business goals and management viewpoint. Allow a year's practice and you have a val­ue engineer.

For the man who should head such a program, you need an open-minded manager who has the ability to see the "big picture" and think in terms of the long-range ef­fects of his decisions or advice in regard to the pro­duct and his company. He may often be organizationally placed so that he reports to the corporate level. It would be preferable that he have an engineering or industrial engineering degree or the equivalent. Valid experience as a shop supervisor, tool and die maker,

design engineer, or similar occupation, with further experience in purchasing would be nice to have in this person.

His specialty in conception, research, analysis and the sale of ideas that are practical for his products, his company, andparticularly in government situations, of public benefit. He may often lead the buyer or engi­neer into a departure from a traditional approach and train them to maintain a value position in the future.

THE GOVERNMENT'S PROGRAM

Each part of the Armed Services will be expected to use value engineering where it should be used. Typi­cal of the Pentagon approach is the insistence of the Army's Policy Division for Research and Develop¬

... ment that a substantial program be maintained. Under the Chief of this Division, Col. W. D. Gower, the Army is requiring meaningful reports on value engineering projects and results from all Army commands.

Intensive training programs are being undertaken to educate the engineers and staff personnel in value en­gineering objectives, techniques and reporting. In­dustry will have to move rapidly to be up to the govern­ment' s knowledge on this subject.

For some time to come, in the administration of the new DOD Value Engineering Requirements, Govern­ment Administrators and Industry personnel will find the need to think broadly and constructively and, with the utmost cooperation, to learn together.

Our national survival may depend on how well Industry and Government meet the challenge of providing a complex but modern and effective defense with the scarce dollars available.

Current ASPR in-process changes may affect portions of referenced paragraphs in this article -Editor.

2 I n the 1908 contract between the Army Signal Corps and the Wright Brothers, the contractor was to re­ceive 100% of his bid price if the aircraft achieved 40 mph in level flight. The contract price was to be reduced 10% for every mile per hour under 40 down to 36. Below36mph, it would be rejected. For every mph in excess of 40, the contract price was to be In­creased by 10%. On the Wright Brothers bid of $25,000, they achieved 42.5 mph and received a 25% bonus equal to $6,250 and a total of $31,250.

6-63-4 S.A.V.E. JOURNAL 19

VALUE ENGINEERING AND ITS USES DURING DESIGN

C. R. OLSEN Raytheon Company Sudbury, Massachusetts

The problems of an engineer, written by an engineer, are discreetly discussed and evaluated in this paper. The language of the researcher must be understood before the value engineer can ^blast, create and refine."

We began analyzing value when we first decided a bottle of warm milk was more desirable than a teddy bear. We have been analyzing value ever since.

When our wives selected us, they carefully studied the cost and the contribution. Each of us had differ­ent standards by which he compares values. These standards change with time.

When we were young, we wanted sports cars, then station wagons, then, later in life, compact sedans; but, what make of car should we buy? Manufacturer's claims are unreliable guides. We don't know enough of the product to judge accurately, as the basic facts of quality, endurance, and serviceability are not ap­parent on the surface.

To help us judge value, professional value analysts in the form of consumer testing organizations publish cost, serviceability, and durability comparisons. We can then apply our own standards to be sure we get the product which will meet our requirements at minimum cost.

People (you and I) are waking up to the fact that we Can get reliable, serviceable products for less money if we analyze and buy carefully. Manufactured (your employer and mine) are waking up to the fact that they can produce reliable, serviceable products at less cost. This takes more than the concepts which the R & D engineers, product engineers, industrial engi­neers, and quality engineers can contribute. It takes

the contribution of a specialist, highly train­ed in the art of saving cost while maintaining quality and serviceabil­ity. It takes the contri­bution of a value engi­neer.

At the time of the Roman Empire, there was only

type of engineer, known as an architect^ Vitruvius,* in 35 B. C , described the job requirements for an architect as follows: "He must be talented as well as willing to learn. Theory and practice must go hand in hand. He must be educated, versed in drawing, schooled in geometry and history, not ignorant in the Laws of Optics, be acquainted with the philosophers of medicine, and must know the decisions of jurists. He must be acquainted with astronomy." In other words, an engineer was a diversified individual with many attributes.

DEFINITIONS OF AN ENGINEER AND A PRODUCT

What is today's engineer ? The definition I have always preferred is, "An engineer is a maker of tools." That is, tools for living or, in the case of some of us in the ordnance field, tools for survival.

What is the product of an engineer? Is it the iron lung or the machine gun? No! These are the pro­ducts of the artisan or mechanic. The one and the onlyproduct of the engineer is a piece of paper; a pa­per that enables someone else, someone skilled in a different field, to build the product he has defined. Many people tend to think the development is over when a model has been made. This is not true. The development is incomplete unless documents, draw­ings that will let someone else reproduce the model, have been made and verified. An engineer's only pro­duct is a piece of paper!

TEAM E F F O R T

Let's examine the kind of man who makes this piece of paper that enables someone else to build the de­sign. Today, it is often not one man; it is a team made up of specialists. Today's projects don't always start with the creative engineer, the designer, or inventor. Often, we move back one stage to the system designer who conceives a complete system and whose product is only apaper specification. This specification breaks the system down to component blocks so that digestible

•Vitruvius, The Ten Books on Architecture, Book I The Education of the Architect.

20 S.A.V.E. JOURNAL 6-63-4

bits can be assigned to different design specialists. These specialists design parts in the system which may go together properly if the paper assigning the bits to these designers was correct. From these parts' design sketches, a model is built. It seems inevitable that most mechanical models are fabricated on a mill­ing machine from a solid block of stainless steel; but, is the development finished at this point? No! The development has not been completed until the model shop revisions and the test results on the model have been fed back into the paper design.

MODEL SHOP VS PRODUCTION DESIGN

One of the most common traps at this point is to have _ the models built in a fine model shop; a model shop , f

with the best of technicians, men capable of working from a description on the back of an envelope or from a waving of the hands. These highly skilled model makers can be the designers' worst enemy. By relying upon them and their ability to make a working model, regardless of completeness of the drawing, by making working models and not utilizing the range of toler­ances shown on the drawings, a design engineer is often deluded into thinking that he has a proven product in his piece of paper; when, in fact, he has only a work­ing model and a paper design which will not permit that model to be reproduced by less skilled tradesmen.

It is characteristic of model shop operations to be over conservative in using better materials than may be required by the job; to use the first part finished as a gauge for the manufacture of the mating part rather than use the drawings' dimensions and to, in general, do a splendid job in the tradition of the finest craftsmanship. Without control, this can add years of high-cost manufacture to a production item.

At some point after the model and design documents are completed, the item is released to the production operation where the product engineer, the methods engineer, quality engineers, and production try to, literally, follow the drawings and specifications. There is seldom sufficient time at this point for any major redesign effort. Minor substitution of materials and substitution of castings or stampings for milled parts are generally the extent of allowable effort.

The product must now be manufactured, tested, and inspected; but, wait! So far, we have created a system, broken it down into bits, completed and tested the de­signs of the bits, andplaced them in production. Each bit and sub-component is described on drawings and specifications; but, who has read these specifications? Did the systems engineer ? No! He created an over­all specification which described the system. Did the design engineer? It is doubtful. He doesn't have the time to even read all the detailed specifications he is applying to the part.

READING SPECIFICATIONS

Some may challenge the statement that the design engineer does not read all of the detailed specifications. I have thirty-two company specifications which apply to a simple No. 6-32 thread Fillister Head Machine Screw; a standard item used in many of a company's products. These company specifications apply in addition to the Federal Screw Thread Standard Hand­book and the Federal Test Method Standards. Now, who applied these specifications to this screw; in fact, who selected this screw? Was it the design engineer, the designer, or a draftsman? Which one of these individuals who selected this screw read all thirty-two specifications? Surely, there is room here for a functional look at the requirements for fastening, which this screw is intended to serve.

The problem of getting the maximum value thinking into the design as early as possible must not be mini­mized. Regardless of how short the development time is or how fi.ne a job is done, the inclusion of production thinking to functional design can result in a very worth­while savings in time and dollars.

In the early 1950's, I was project engineer responsible for the design and development of a new fuze family for the Navy's air-to-air rockets. I had the finest of supporting services and we succeeded in producing and delivering a fuze which was very advanced for the times and in which we could take pride because of its extremely low manufacturing cost. The fuze satis­factorily met all of the performance standards and applicable military specifications and was produced in quantity for only a few dollars each.

RESISTANCE TO CHANGES

As a project manager, I strongly resisted all changes; changes which I felt were unnecessary, which required time and effort to qualify, and, in general, I acted like a typical design engineer when faced with tolerance relaxations and producibility changes.

The Navy spent approximately $50,000,000 procuring these fuzes and, to this day, I don't know what part of that $50,000,000 represents unneeded cost there, merely because I was untrained in value. Was it $5,000,000 or $15,000,000? I know that much exces­sive cost was there because we subsequently designed a mechanism with less than half the parts which accomplish the same job at a substantially reduced cost.

One of the hardest things a value engineer must face is the job of getting across the message to the de­signer; to convince the designer that value engineering has a profitable place in his design; that is need not disrupt his design schedules, and that, properly sup­ported by him, it can further his reputation as well as create aproductwe can afford in these days of increas­ing cost.

6-63-4 S.A.V.E. JOURNAL 21

COMMUNICATION TOLERANCES

The most common complaint of manufacturing and production engineering people is that the design engi­neer does not speak their language; that they cannot communicate in a common tongue, and that somehow things would be better if only the designers under­stood the problems. I, too, have expressed this com­plaint and have only recently discovered a universal means of communication; a means of communication which is understood by the most exotic designer as well as by the mechanic at the bench; a means of communication which is understood by all levels of management, technical and non-technical; a means of communication which the company president and the customer as well as the designer clearly understand. I call this means of communication the Universal $ign Language.

Universa l $ign Language

You will find this Universal $ign Language is not even limited to the United States. It is clearly under­stood by the children in Mexico and the politicians in Geneva.

Learn to make your communication with the designer who does not understand the problem in this language. I would like to give you one example in which it worked.

In a major missile program, the product engineer had been trying to change from a metal-cased diode to a glass diode for a year. He had two reasons:

1. A substantial reduction in package size which would permit the incorporation of other needed circuits.

2. It was cheaper.

No one disagreed with the product engineer; yet, no one was prepared to incorporate the change "now." When this proposal was thoroughly evaluated by a for­mal value engineering group, the advantages were so apparent that approval was quickly given. Only when the dollar sign was applied in a sound value engineer­ing manner was this proposal communicated effectively to the design group and all levels of management. This single change resulted in savings of over a million dollars.

One of the most common causes of excessive cost and wasted manufacturing effort is a lack of apprecia­tion of the true costs of relative tolerances. In today's project-team approach, we often find that the critical and difficult tasks are assigned to the best engineer, while those tasks which are considered "beneath his dignity" or to be within the capabilities of design tech­nicians are left to be determined by the draftsman.

A common and most obvious symptom of this philoso­phy is the inappropriate use of title block tolerancing. The title block tolerance on dimensions and surface finish provides an all-too-easy means of avoiding thinking. Its major advantage is that it saves time which can be devoted to girl watching, football pools, coffee breaks, and the many other chores of today's world. The use of tight title block tolerance should be challenged on every dimension and on every surface. This, challenge should be made by the project-team supervision in the interests of both harmony and efficiency. This, in fact, seldom happens and the challenge is usually omitted or made by the manu­facturing operation at a later and more costly point.

Many design engineers will object to a statement which implies that each characteristic of a design is not handled by fully competent and qualified personnel. When you face such aproblem, pick specific tolerances, surface finishes, or specifications and find out who applied those specific items. Many of the most trouble­some and non-functional requirements will be found to have been delegated to a level where independent judgment is not considered a virtue and where tradi­tion determines standards. When you have identified a specific individual who was delegated this specific function, inquire of his supervisor as to when the last time this individual was permitted to go through your manufacturing shops. In a high percentage of cases, the designer responsible for much of the high cost design has never been through the manufacturing areas.

At the beginning of the century, we had civil and me­chanical engineers as well as the new electrical engi­neers; then, the efficiency expert developed. He was the forerunner of today's industrial engineer, product engineer, and methods engineer. Today, the existing classifications of engineers are too long to enumerate. Specialization has become the order of the day.

USE OF SPECIALISTS

Why bring forth this new specialist, the value engineer ? It is said he has a new and exclusive tool which he uses; the tool of "Value Analysis." What is this tool? Is it really a new tool or is it a plain, old hatchet which he uses to cut costs?

22 S.A.V.E. JOURNAL 6-63-4

The Stone Age man made his axe from stone. It took him days, or even months, to make a good axe. The tools with which Solomon built his temple were made of bronze^ then, came the iron and steel axes. The woodsman in the North Woods treasured his axe above all his possessions. He would not lend his axe to any­one; even his best friend. He prided himself on being able to cut more wood with it than anyone within miles and, yet, it only cut wood. Today, in the North Woods, the chain saw has replaced the axe.

In the hands of the value engineer, the chain saw has replaced the hatchet. The chain saw has many links and many teeth to bite deep and hard. The cutting edges on this new tool are very selective. However, they only cut material; parts and processes which will not affect the required functions or operations. There are a number of basic links the value engineer must have in his saw as well as the others.

Above all, the value engineer must keep his saw sharp and well lubricated. No function in any organization will last without the lubrication of understanding and good will. His saw will quickly deteriorate, rust, and eventually fall apart without oil.

BASIC LINKS

1. Materials - an extremely important link. The properties of materials must be considered carefully. Our background knowledge must be combined with expert advice from metallur­gists, plastics engineers, process and testing laboratories. There are many new materials on the market. Your knowledge of these and their properties must be up to date. The chemistry of materials is advancing at a terrific rate. The R & D engineer hasn't time to keep up to date in this field. This is a fertile field for the value engineer to save money. Pick a suitable material; one that will save money. Pick a suitable material; one that will save processing labor.

2. Tools - This is normally an expensive link; expensive in its first cost or maybe in its up­keep, . but it may pay to expend more money in this link to save money in manufacture, assem­bly, or testing of the product.

Are there standard tools adaptable to your use ? Can the parts be changed to simplify your tooling? Consult your methods engineers, tool designers, and make your tool cost compatible with the quantities to be manufactured.

3. Equipment - Is your plant equipped to handle, economically, the product to be manufactured? It might pay to invest in equipment to shorten manufacturing time or, possibly, send the work out to a well-equipped source.

4. Processes - New techniques and new processes for the manufacture of your links are being developed almost daily. You must be up to date on applicable techniques and processing possibilities.

A good value analyst must consult capable people in his own company; he must read and read; he must talk frequently with others outside of his own plant. New processes for painting, plating, and heat treating may cut processing time and give better results.

The worlds of organic materials and modular con­struction are just opening up. Get acquainted with them.

5. Standards - If you can use standard links, your product becomes less costly. The value engi­neer must be well acquainted with all standard items which are available on the market and keep his eyes alert for places to use them to replace specially designed parts and equipment. Not only nuts, bolts, eyelets, washers, but dimensions and tolerances, materials and pro­cesses; they are all documented, so use them.

Line your walls with standards. Keep them before your eyes at all times. Learn to recognize where they can be used. Learn to adapt assemblies, to use stan­dard fastenings, parts, and assemblies.

6. Operation - As you view this link, look care­fully at the construction. Maybe it is designed far beyond its requirements for strength. Check back to the drawings and specifications to make sure it will operate as specified. Are the operating parts built to do the job? Can better materials be used to improve operation and cut costs ?

7. Function - Your link has a definite function to perform. Its function is defined in the speci­fications. Does it perform as specified? Then, look further and see if the specifications define requirements beyond the actual needs. Big links and more intricate links cost more than small links and simple links. Use the small and simple links when these will perform the actual function required. Read and study the specifications, talk to R & D engineers, pro­duct engineers, and ask a lot of questions. This may disclose the inclusions of nice secondary functions; nice to have but not necessary.

8. Reliability - This must be built into every link. If one link breaks, the whole chain saw is use­less. The value engineer must realize that he must do nothing to jeopardize reliability. In all changes and contemplated changes, the engineer must consider, "Is reliability being jeopardized?"

6-63-4 S.A.V.E. JOURNAL 23

You must also take a realistic view of the reliability requirements. Does the purpose of the link and its natural life justify a high expenditure for greater reliability ?

9. Cost - our Universal $ign Language. This is the major link in the chain and, yet, cost can­not be cut without full consideration of all the other links or elements we have discussed. To fully analyze this link, we need the help of cost accounting, purchasing, inventory control, and methods. The value engineer must have an innate sense of cost of materials and purchased parts, and be able to discuss, intelligently, details with vendors' and manufacturers' rep­resentatives. He must seek out the lowest cost items to fulfill all requirements.

10. Market - There is no use making links if you cannot sell them. The value engineer must keep a close association with competitive arti­cles on the market. Is your saw sharper and more effective than your competitors' ? Talk toyourmarketingpeople. Are they striving for a certain part of the market? Is your product adapted to that section of the market? Should it be designed to cut a lot of big trees and last indefinitely, or is it designed to cut a few small trees in the course of a year and sell for less? Keep looking at your competitors' products; they may give you some good ideas. They have probably gotten some ideas from your product. You can get many ideas from all manufactured items you see. Look them over carefully; see how other people are saving costs. This will be one of the brightest links in your saw.

The effective operation of all of these moving parts in our chain saw is not dependent on one link, one person, or one tooth in the saw. It is the coordinated action of many links, many people, and much help from outside sources. It is important, then, that the whole working unit be well lubricated so that the sources of informa-

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tion will not dry up. The function of the value engi-nearmustbe defined and under stood by all his sources of information. The motives of the questions and the insistence for information must be understood as a means to an end and not be interpreted as criticism. Much of the reaction to the value engineer from his colleagues will depend on the value engineer, himself, and the type of chain saw oil he uses.

In closing, I would like to give you an illustration of how quickly a student can forget what he learns in a training seminar. I enrolled in the first Value Engineering Course at Northeastern University and one of my team partners was our plant purchasing agent.

We listened attentively, did a creditable job and, then, I am afraid, one of us, at least, reverted to rigid thinking and being a bottle neck. Within % month after the completion of the program, my partner, the pur­chasing agent, came to me and asked that I investigate the use of Iridite to replace Anodize on aluminum components of a missile. I immediately reacted in the typical fashion; informed him that I investigaged this two years ago and accomplished all that could be done and that any remaining anodizing was definitely needed and of small significance.

Suddenly, an alarm bell started ringing in my sub­conscious and I recognized exactly the attitude the course instructors illustrate. In the interests of har­mony rather than conviction that anything worthwhile would result, I agreed to check over the materials list and find what, if any, items still had Anodize and the need for Anodize versus Iridite.

I hardly think I need go further, but a few days later I had compiled twopages which listed merely the draw­ing numbers of the anodized items and, after evalua­tion, only two items on the entire two pages required anodizing. A savings of $15,000 a year resulted from this simple suggestion which I almost discouraged.

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24 S.A.V.E. JOURNAL 6-63-4

QUANTIFYING VALUE ENGINEERING IN

AN R & D PROGRAM C. L . Carpenter Consultant Rte. 2, Box 97 A Reeds Ferry, N. H.

The author reviews suggested mathematical models for expressing the trade-off between ef­fectiveness of performance, confidence levels, and costs in order to minimize "opinons".

The value concept has been present to some degree in all design, development, and production efforts. Until fairly recently the emphasis has been in the production phase, since definite dollars and cents can be docu­mented as saved, without degradation of the opera­tional capabilities. The repetitious manufacturing of products is a fertile area to simplify designs and pro­cesses, with appreciable savings in cost.

Recently, considerable thought and effort has been expended to develop a quantative means of expressing the value factors of an R and D effort, and to measure the savings after the effort has been accomplished.

The following method of Quantifying Value for any R and D program is advanced as a means of achieving a universally understood quantitative measure of value and comparison of the value of products in the devel­opment phase.

EFFECTIVENESS

The Performance Criterion Breaking Effectiveness into its component factors we have:

(a) Accuracy (b) Availability (c) Reliability (d) Quality

To define these terms:

—A

t

ACCURACY

Accuracy is the capabil­ity of performing the assigned task within the stated limits of error, whether it be a missile, test equipment, or com­plete system. This can be expressed as a deci­mal (or percentage) or

the possible perfectperformance. (Performance to the nominal being perfect.)

AVAILABILITY

Availability is the capability of readiness to perform the task at any time. This can be expressed as a decimal (or percentage) of the total time scheduled for readiness.

RELIABILITY

Reliability is well known as the probability of a sys­tem functioning at anytime. This is universally ex­pressed in decimals.

QUALITY

Quality is the characteristic pertaining to the degree to which specifications for materials, parts andprocess are met. One good means of expressing this is by A Q L (Acceptable Quality Level) which is normally expressed in decimals. N

DEGREES OF CONFIDENCE

It must also be considered that for different equip­ment, different levels of emphasis apply to the afore mentioned Effectiveness Factors. For example, in a missile highest emphasis is placed on Reliability and Accuracy. The other factors are important, but the emphasis on a one shot item is for accuracy and re­liability. Another example is test gear which must have accuracy and availability above all else. The test gear is used many times and can be available for main­tenance more often than a single effort item for these reasons, an emphasis or weighting factor must be applied to each of the major factors comprising Effec­tiveness. The confidence level must also be factored into each of the above figures. This is a decimal fi­gure denoting the degrees of confidence in the au­thenticity of the factors.

6-63-4 S.A.V.E. JOURNAL 25

Symbol Chart (A x D a x C a ) X (B x Djj x Cb) X (R x C r x D r ) X (Q x

Effectiveness - E Accuracy - A Availability - B Reliability - R Quality - Q Emphasis - D Confidence - C Performance - P Cost - F Schedule - S

Using the above symbols an Effectiveness expression now looks like

((A) x (Da) x (C^) X ((B) x (Dtf x (C^) X ((B) x (D r) x

(C r)) X ((Q) x (Dq) x (Cq))

Each individual factor can be expressed quantitatively in presently utilized decimal expressions.

(Since Value Engineering is a means of determining the cost in cost units)

Effectiveness Performance

Value =

Cost/schedule Cost/schedule

We now examine the denominator of the equation and determine the relationship of the cost and schedule.

Cost is straightforward and is expressed in monetary units (dollars). Estimated costs are expressed in the same units as actual costs. Estimated costs are the forecasts and actuals are derived after the items are made.

The Schedule Factor can be expressed as the original estimated schedule divided by the datum schedule.

If the actual cost is divided by the estimated cost (after the cost records are available) and then the confidence is factored in, a realistic expression of the cost/value is obtained. The estimated or actual sched­ule divided by the datum schedule, factored by the emphasis level and the confidence level provides a schedule factor. These cost and schedule factors multiplied then will provide a Cost Schedule denomin­ator for the Value Equation. Now we have an expression such as:

Dq x C q )

(Act Cost) (Act Sched)

(Est Cost) X Conf X (Datum Sched) X (Emph) X (Cont)

Performance Criteria or Effectiveness Cost Cost

Decimal expressions for each factor may be used, in fact, the normal means of expressing each of the factors is a decimal of less than unity. Substituting these decimals, an expression for value of some deci­mal quantity is derived.

COST SCHEDULE VS. VALUE is-

It can readily be seen that variations in any factor has an effect on the resulting expression for value. The larger the cost schedule expression becomes, the smaller the value becomes. And the larger the effec­tiveness of performance expression becomes, the greater the value. However trade offs may be made in order to achieve a desired level of value.

It is agreed that a mathematical formula for deriva­tion of the confidence levels and emphasis factors would be desirable in order to eliminate as much "opinions" as possible. However since "value" to any consumer is relative to how much the consumer desires the product, the introduction of judgement and experi­ence in arbitrarily estimating the confidence and em­phasis levels is not degratory. In fact, most indepen­dent judgement of confidence and emphasis levels based on the same information will be suprisingly close.

This method would be useful in evaluating and com­paring factors involved in trade offs. An estimate can be made showing (1) the change in Value generated by a trade off, and (2) the change in cost generated by a trade off. Decisions may be reached on trade offs much more quickly and realistically with an objective evaluation and quantitative comparison of the factors as provided by this method. Functional capabilities may be assigned finite values and the effect of varia­tions in these values can be evaluated by use of the equation developed in this article. A determination of the effect of variations in these factors is provided by use of the equation described in the preceding para­graphs.

B L A S T

C R E A T E

R E F I N E

26 S.A.V.E. JOURNAL 6-63-4

VALUE ENGINEERING DURING DEVELOPMENT

Harry O. Huss Value Analysis Coordinator U.S. Army CBR Agency Army Chemical Center, Maryland

The U.S. Army is emphasizing the use of value analysis techniques during development to re­duce the unit production cost of new items. Some comments on the application of these tech­niques during development are presented in this paper.

INTRODUCTION

During the last few months the Army Materiel Com­mand, of which the CBR Agency is a part, has become concerned with the determination of the "Improvement Coefficient" of new materiel because funds will not support all the research and development desired and it is imperative that low yield programs be decisive­ly amputated. The "Improvement Coefficient" is de­fined as the ratio of the effectiveness of the new item divided by the effectiveness of the old item. Some of the factors used in analyzing the effectiveness of a new item are the total cost of development, the time for completing the development, the reliability of the items under operational use, and the dollar cost of equipping the Army with the new item.

In this article some ideas will be given on the use of value engineering during development, the differences between traditional value analysis and value engineer­ing during development, some of its advantages and disadvantages, how it can best be accomplished, areas for emphasis and the reporting of results.

In general, the terms value analysis and value engi­neering are used interchangeably but the term value analysis will be used to refer particularly to the prin­ciples and techniques employed whereas value engi­neering will be used to refer to the application of these principles and techniques to the reduction in cost of an end item or process.

TRADITIONAL VALUE ANALYSIS/VALUE E N ­GINEERING

Traditionally, value en­gineering has been ac­complished on materiel that has been type-clas­sified or has been in production. The advant­ages of accomplishing

value analysis at this time are obvious. The design has been finalized, complete engineering, maintenance and use documents are available, procurement and cost information can be obtained, industry has become familiar with the item, vendors have probably been brought into the picture, some use experience has been obtained, repair parts are in the supply system, and some information is available on the reliability of the item in operational use and the extent of main­tenance required. In short, we know a great deal about the item and we are well prepared to sit down and make our value engineering study.

VALUE ENGINEERING DURING DEVELOPMENT

In contrast with this, value engineering during devel­opment is handicapped by the almost complete absence of such knowledge. There are some instances where the application of value analysis as an after-the-fact approach is almost useless, particularly in those cases where only one procurement is planned or the number of procurements are small and infrequent. In these cases value engineering, to be accomplished at all, must be accomplished during development. How­ever, value engineering must be employed in the development of all materiel to obtain the maximum defense for our military dollar. Figure I is a repre­sentation of the relative return which can be expected from the expenditure of value analysis effort at vari­ous times throughout the development cycle. Early value engineering during development results in:

1. Incorporation of cost reduction charges prior to initiation or finalization of drawings, speci­fications, manuals, safety directives and other engineering documentations.

2. Minimizing of extensive retesting.

3. Inclusion of value engineering improvement in the first approved design and, therefore, a minimization of the need for subsequent changes.

6-63-4 S.A.V.E. JOURNAL 27

4. Immediate reflection of cost reduction im­provements in production.

1. Possible adverse affect on the development time schedule.

5. Inclusion, in the only economical way possible, of value engineering improvements in items of low volume procurement or where production tooling is developed prior to completion of development.

6. Greater standardization of equipment in the field and resultant simplification of spare parts logistics.

2. Difficulty of determining actual cost improve­ment.

3. Greater team effort required among developer, production engineers, quality assurance engi­neers, procurement personnel, value engineers and others to achieve cost reduction goals and a reluctance of team members to accept changes.

J- HtEE OF PAPER WORK REVISION ^ - H A X DOCUMENT REVISION - * \

-RETESTS

TIME WHEN VALUE ENGINEERING I S ACCOMPLISHED

FIGURE I

Telescoping of research and development, prototype production and supply procurement makes sequential value engineering nigh impossible. Value engineering, therefore, must be accomplished during development or it won't be done at all.

Value analysis should be inherent in the tasks, per­formance and responsibilities of every individual in an organization as a vital part of his motivation. Every person has a clear-cut responsibility to keep costs at the minimum level consistent with the satisfactory performance of his duties. The value engineer, parti­cularly during the development and engineering stages, is the catalyst that motivates and accelerates savings. The value engineer must not delay the devel­opment schedule. He must motivate the development engineer to recognize and consider all cost reduction ideas and he should, without adversely affecting the development engineer's time schedule, assist in the review of requirements, designs, test plans, etc. and continually monitor the development work in order to have all cost reduction suggestions incorporated early in the design.

Some objections raised to the conduct of value engi­neering during development have been:

4. Expenditure of efforts on designs which will , never be placed in production.

5. Rapid obsolescence of some weapons systems does not justify the effort.

To a limited extent these objections are valid but the potential cost savings and the tremendous returns from the value engineering investment justifies a vig­orous endeavor to overcome these roadblocks so that the maximum possible value engineering can be con­ducted during development.

A negative attitude cannot be tolerated and we must do everything in our power to make the value analysis approach the "work habit" of all of our people at all times.

ACCOMPLISHMENT OF VALUE ENGINEERING DURING DEVELOPMENT

The accomplishment of value analysis is always ateam effort but particularly during development is it a team effort. We frequently hear the comment that our devel­opment people are competent engineers and automat­ically consider costs in their designs. This statement is true but - these engineers don't have the time to give value engineering the emphasis required to reap the maximum return. There are four principal peo­ple concerned with the development of an item and these four can be considered to make up the Project Engineer Team. All of these men are cost-conscious individuals but their primary responsibility is not the reduction of costs and, therefore, a value engineer must be added to the team just as a metalurgist or a human factors engineer is called in from time to time to contribute his specialty. The fact that additional costs can be squeezed out of a product is no reflection on any member of the project engineer team. A break­down of the principal responsibilities of the project engineer team is given in Figure II .

28 S.A.V.E. JOURNAL 6-63-4

FIGURE n PROJECT ENGINEERS PRINCIPAL RESPONSIBILITIES

Individual Primary Responsibility Secondary Responsibility Other

Development Engineer Performance Time Schedule Cost

Industrial Engineer Manufacturability Time Schedule Cost

Quality Control Engineer Inspectability Time Schedule Cost

Procurement Engineer Delivery Time Schedule Cost

Value Consultant Cost Other Characteristics

FIGURE II In the conduct of value engineering during development, there are at least 12 phases of development shown in Figure HI when value engineering should be conducted. The first opportunity to employ value engineering is during the establishment of the qualitative materiel requirement (QMR), the military characteristic (MC), and the initial use or design concept. PLANNING FOR VALUE ENGINEERING DURING DEVELOPMENT To give greater assurance that value engineering will be accomplished during development, management can provide considerable help by insisting that certain requirements be met. Specific statements on value engineering should be included in the QMRs and MCs. Preferably a target unit production cost should be given so that the development team (the project engi­neer team) will know what the user or management believes the item to be worth. This is not only con­sistent with the "Improvement Coefficient" philosophy

FIGURE m VALUE ENGINEERING DOZEN FOR DEVELOPMENT

1. QMR and Design Concept

2. Preliminary Drafting Design

3. Preliminary Manufacturing Inquiries

4. Vendor's Present Methods and New Methods

5. Purchasing Contracts for Components

6. Preliminary Test Development

7. Prototype Development

8. Final Engineering Tests

9. Final Design

10. Actual Production

11. Field Operations

12. Maintenance

but is the very essence of minimum cost engineering. This practice has been used in industry for some time with considerable success but has had minimum appli­cation in the military. In one of our development con­tracts containing a value engineering provision, the contractor has established his own target cost and it is amazing how cost conscious all personnel engaged in this development have become. Hardly a technical briefing occurs without the design engineer alluding to the selection of a design or a component which is less expensive than a design previously considered. To assist in the management of its projects, most civilian and military activities have established a list of important review points (milestones) during the development process. Consideration should be given to the inclusion of several value analysis milestones in this list to ensure that project managers give pro¬

, i per consideration to this important requirement. For some projects the preparation of a Development Plan or a Product Master Plan is also required. These plans should also make provisions for the conduct of value analysis and the agenda for every technical re­view meeting should include an item on value analysis or cost minimization. In some civilian and military installations, this is being done; also final drawings, specifications, engineering deviations and other engi­neering documents are reviewed by competent value engineers prior to release. This procedure makes for a greater cost consciousness on the part of all parti­cipants and ensures that value engineering is accom­plished at all levels. Another important area for the inclusion of value engineering provisions is in development contracts. Army Research and Development Directive 70-17 ''Value Analysis in Development Contracts," and pro­visions in the latest revisions of the Armed Services Procurement Regulations provide guidance for con­tract provisions. Both military organizations and industrial companies interested in Government con­tracts will be concerned with these value analysis contract provisions. Generally these provisions re­quire the services of a full time value engineer as­sisted by the value engineering staff of the contractor to ensure:

1. Maximum utilization of standard or existing items and components not requiring additional design effort.

2. Consideration of the total costs of the weapons systems to include material, assembly, testing, packaging, spare parts, maintenance, opera­tions and logistics.

3. A thorough review of the function of each part or assembly, its design, the materials used, tolerances, etc. to obtain the optimum design from a value engineering standpoint.

SPECIAL TECHNIQUES

A number oftools are availableto the design engineer and the value analyst to assist him in obtaining the optimum cost relationship for his product. One of these is P E R T Cost (Program Evaluation and Review Tech-

6-63-4 S.A.V.E. JOURNAL 29

nique) the use of which can assist the project engineer materially in determining the least expensive way of accomplishing a task. This technique can be used in any organized value program just as target unit pro­duction costs, value design reviews, and workshop seminars are employed. This subject will not be dis­cussed here but the study of the possible application of this technique to your value engineering program would be worth while. Traditionally our design engineers have been expected to develop an item which meets the military character­istics and to accomplish this task within the required time schedule and available funds. The engineers' efforts have been concentrated primarily in the devel­opment of a reliable item meeting all specified re­quirements. Very seldom is any specific attempt made to optimize value by considering the interrelationships between cost and the other design parameters. Mr. E . D. Heller of the General Dynamics Company dis­cusses this subject in the September issue of S.A.V.E. Costs are a very important consideration in any design and techniques must be employed for equating costs vs the other important design parameters such as relia­bility, weight, maintenance, performance at extreme temperatures, etc. An example of a cost relationship is shown in Figure IV. As generally indicated in the curves on this chart, the cost of producing a part increases and the cost of maintaining the part de­creases as the reliability increases. Inspection of the Total Cost Curve indicates that a reliability somewhat higher than Reliability "A" can be obtained at a lower cost. When the total cost of achieving the desired reliability is appreciably higher than the minimum such as Reliability " B", a detailed value engineering study should be made of those components responsi­ble for the rapid rise of the costs in an effort to de­crease that cost. If the reliability or any other design parameter has been unrealistically specified from a cost standpoint, cost information of the type depicted in these curves can be used as a basis for critically reviewingthe requirement and for requesting, if justi­fied, a relaxation of that requirement.

DETERMINATION OF PRODUCT COSTS The determination of the cost of items in development or any cost reductions resulting from a change in design is much more difficult for items under devel­opment than it is for items for which we have procure­ment cost and usage data. To assist the value engi­neer in estimating costs, information must be made available to him on the cost of the standard military and commercial components which are to be incorpor­ated into the design or are sufficiently similar so that a cost comparison can be made. For completely new designs, current information is required on the various manufacturing processes and the relative cost of manufacturing a part by these processes in the re­quired quantities. With this information, cost com­parisons can be made and the design finalized.

Many books and magazine articles have been pub­lished on manufacturing processes and product design but none of them are adequate for the rapid determin­

ation of the cost of manufacturing parti by different materials.

REPORTING

Another difficult task in connection with the conduct of value engineering during development is the report­ing of results. Much of the value of emphasizing value engineering in development is intangible; its contri­butions before the design is placed on paper cannot be measured. However, as soon as an engineering draw­ing has been made of the part, design changes made to reduce its cost or improve its value can be consi­dered as a reportable value analysis cost reduction suggestion, even though the improvement did not re­sult from the direct efforts of the assigned value engineer. Remember, everyone on the development team contributes to the value engineering effort. Cost savings (cost avoidance) generally should be reported only once. The total cost savings can be determined by multiplying the unit cost savings of each accepted proposal by the total planned procurement of the item as projected in the official planned procurement docu­ments.

SUMMARY

The conduct of value engineering during development can result in:

1. A shorter development time because of greater use of standard and proven designs and of sim­pler and less costly designs.

2. A more reliable system because of the use of components whose reliability is known or whose simpler design makes for greater reliability.

3. A lower unit production cost of the item.

4. A conservation of manpower since use of stan­dard or simpler designs require less design effort and more than compensates for the value engineering effort required.

5. A lower overall cost of development.

30 S.A.V.E. JOURNAL 6-63-4

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Military Products V. E. The recent S.A.V.E. Annual Meeting represented a

major milestone in the growth of the Society and the development of Value Engineering as an effective man­agement technique.

The meeting also provided a sounding board for advocates, as well as, critics. On the surface, this may appear to be a healthy sign in the good old Ameri­can tradition. However, some of these criticisms are in obvious conflict with the long recognized basic con­cepts and principles of the Value movement.

Those of us working in the V . E . field have many differences of opinion and perhaps always will. As a matter of fact, these differences provide a vehicle for the exploration of approaches, techniques and appli­cations. Constructive self-criticism has helped V . E . progress more rapidly. One look at the growth of S.A.V.E. over the past year shows conclusively the soundness of the basic concepts and principles under­lying V. E .

The nature of certain criticisms did not fit the pattern of those which in the past have led to progress. Instead, these criticisms supported the views of those publications which have been reporting an undercurrent of confusion and lack of unity between industry and the D.O.D. regarding V . E .

I would like to briefly comment on these basic criticisms, in the hope that all the S.A.V.E. chapters will organize a series of Panel Discussions to air this subject in depth.

In one of the addresses it was said, "To begin with, I do not consider value engineering a science, unless you are inclined to call many other industrial functions sciences as well. In fact, in my mind, it is hard for me to consider value engineering as a separate tech­nology since so many of the basic elements of value engineering are drawn from many other disciplines. Generally persons with sound broad technical knowl­edge are required to effectively apply value engineer­ing, not technical specialists.

This was the first of the four major criticisms to point out trouble areas where overstatement of capa­bilities or contribution could adversely affect the future of Value Engineering.

Leaders in the V . E . field actively engaged in value work, generally agree that V . E . is a 'Management Technique." Admittedly, V . E . has assembled and organized a group of techniques from many other disciplines. The fact is that V . E . as an organized ap­proach centered around functional evaluation, fills a void that has always existed in military procurement.

The nature of military contracts with their associ­ated condensed schedules and limited quantities de­

mands that V . E . begin early in the development of a weapons system or product. To get results, we must stimulate and motivate design personnel who are tech­nical specialists, with the need for considering cost asadesignparameter. It is industry's experience that the guidance of a Value Engineering trained technical specialist in a design review adds validity to value alternatives which are evolved. In addition, it is as a direct result of his training that a high percentage of his proposals are accepted.

To go to another criticism it was stated, "I do not feel that a man heading up the value engineering function must report to top management in his com­pany or division of his company."

The organizational structure and t̂he reporting level of the man heading up the V.ET. function is a matter for each company to decide. In a recent survey (March 1963) conducted by the Electronics Industries Association, in 68% of the 89 companies replying V . E . reported to the President General Man­ager or Vice President level. Considering that each company made this decision without outside influence is evidence enough of the need for the V . E . function to report to top management.

Continuing on to the next criticism, it was said, "I do not feel that value engineering should try to be all things to all people. The value engineering func­tion must work in harmony with other cost reduc­tion-type functions within the structure of the organi­zation. Value engineering cannot effectively, and should not, attempt to embrace all cost reductionfunc-tions within its domain. Value engineering should concentrate on what it can do best for the functional-cost analysis of hardware."

It is obvious from this criticism, our critic is under the impression that Value Engineers preach a gospel which dispels the existence of other forms of cost reduction. Nothing could be further from the truth. From its very inception, V . E . leaders have emphasized the fact that V . E . was another technique and was never intended to replace existing cost reduc­tion disciplines. I agree that V . E . must work in har­mony with other cost reduction-type functions to avoid duplication of effort, and to channel projects to obtain best results.

The implication that V . E . should concentrate on hardware only is a decision which industry will have to make. Certainly, the concepts and techniques of V . E . have application to other than hardware areas. In fact, V . E . training which has been expanded to in­clude special groups such as Operations Research, Reliability, and Systems and Procedures has proven to be extremely beneficial as reported in several arti­cles in the S.A.V.E. Journal.

32 S.A.V.E. JOURNAL 6-63-4

A final criticism included in the talks was, "In my opinion the most serious criticism that can be leveled at value engineers today is that value engineers have not selectively and analytically applied your re­sources . Let me elaborate on this point by stating that value engineers have not maximized the return on the dollars invested in value engineering."

To quote, again, the Electronic Industries Associ­ation survey, "The trend here shows that in industry work projects in Value Engineering are assigned by management about at the same rate that they are se­lected by the Value people themselves." The follow­ing table summarizes the survey's results:

Method of Project Selection % of Projects*

Management Directive 28.4 Recommendation by Functional

Organization 21.4 Value Audit 12.7 Value Engineering Personnel 30.5 Other 6.9

•combined statistics from the two industrial groups surveyed.

If these methods are "haphazard" then the manage­ments of these companies are indeed idealistic in ex­pecting their value programs to return from five to ten times the program cost especially since almost half (48%) of these organizations require their Value Engineering group budget to "pay for development costs of worthwhile value improvement ideas."

Even more significant than the statistics is the fact that there has been no practical channel through which to obtain timely approval on potentially worth­while Value Proposals in the Military Procurement system. This forces the Value Programs to concen­trate on those items for which approval of changes is not required. This problem was the basis for the convention's theme. To state the facts in a positive mode, much more benefit could be derived from Value Engineeringprograms if V . E . C P . ' s could be processed on a timely basis at a local procurement level. Most Value Managers look forward to this day.

In addition to these limitations, the current evolu­tionary status of many Value Programs is reflected in the type of projects which are undertaken. The major­ity of programs (64%) are in the training seminar phase of development. Experience has shown all of us in the field that there is not enough time available in a workshop seminar to do justice to a complex product or system. Therefore, the concentration in these areas has been on simpler parts and assemblies.

In conclusion, if we are to be assured that the "New Climate in Defense Procurement" is fair and clear, it is apparent that the Society of American Value Engineers still has much work before it to edu­cate the leaders of industry and government whose support is so necessary for the success of the Value Movement.

SOL MENDELSOHN

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6-63-4 S.A.V.E. JOURNAL

T e c h n i c a l N o t e s a n d R e v i e w s Value Engineering Organization & Operation Report -Value Engineering Bulletin No. 1 published in March, 1963 by the E . I . A. Engineering Dept., 11 West 42nd Street, New York36, New York. 43 pages plus exhibits, Price $2.50

This report, the first published by the EIA subcommit­tee onV. E . Operation, is the result of a study to com­pile and publish useful information on practices and trends in this field within military and industrial organizations.

The mission and scope of the subcommittee is stated in the report as follows:

"To provide the member companies of EIA as well as Military and Government agencies with up-to-date, factual, objective, and impartial guidance and counsel within the specific area concerned with the organization and operation of Value Engi­neering and/or Analysis groups or units.

It is the intent of this Subcommittee to make an in-depth national survey and to obtain and assem­ble certain key data and information. This infor­mation, when collated, and edited, will serve as the base material for a helpful guide on the sub­ject of organizing and operating V E / V A groups in industry and government."

Specifically, the course of action utilized to develop the data called for an extensive nation-wide survey covering large and small businesses, both defense oriented and commercial as well as heavy and light types of industries, nonproducing service type busi­nesses such as utilities, transportation, steamship companies; and also government producing groups such as arsenals, Navy Ordnance factories, etc.

To do this key committee members divided the nation into zones and set to work selecting names of com­panies thought to have an interest in V E . Other com­mittee members for the Army, Navy and Air Force supplied names and addresses of military and govern­ment agencies with V E interests.

Each of those selected were then set a specially pre­pared 32 part questionnaire specifically designed to answer the need. The study is the result of the analy­sis of this data.

The report itself is organized into six major areas: Introduction, General Information, Value Program Personnel, Methods of Operation, Measurement and Scope of V E and Exhibits.

A Manual of Microminiaturization Techniques (Second Edition), published by Loral Electronics Corporation: Bronx 72, New York, 1963, 116 pages, at $20.00 per subscription.

The manual was developed initially as an internal company document to acquaint Engineering Value Engineering, etc. (in as painless a fashion as possible) with the field of microminiaturization and to provide them with a complete tabulation of all technical data, photographs and sketches available from every manu­facturer in the country of either micromin components or circuits. In addition to listing the ambient and en­vironmental electrical and mechanical data, various charts give the trade-offs of packaging density, rel i­ability, cost and delivery for similar items so as to provide the engineer with everything he could possibly need to make maximum utilization of micromin in his designs.

Organizationally the new edition of the manual (June, 1963) categorizes micromin circuity techniques into three generic families: Discrete components, Thin Film and Solid State. To permit a direct comparison within and among the various manufacturers and tech­niques, each device on the data sheets is compared -relative to cost, power dissipation, size and weight -to a standard printed wiring based prototype circuit.

Supplementing the circuitry tabulations, are sim­ilar types of data sheets on existing types of micro­miniature components. These components have been categorized into five groups.

These supplementary sections not only facilitate the use of the tabulations but also summarize the cur­rent technological status of microminiaturization in the military and in private industry. Included are overall lists of vendors by type of circuit or compo­nent, glossaries of micromin terms and trade names, a summary of current and projected military micro­min programs, types of fabrication techniques and design considerations and a very comprehensive in­troductory section on the evolution of microminiatur­ization from two dimensional hand wired chassis and P. C. construction through three dimensional soldered and welded cordwood construction to the most recent developments in the Thin Film and Solid State tech­niques. All of these sections are abundantly illustrated with actual photographs and/or sketches.

At this point in time the Loral Micromin Digest is probably the most current complete and comprehensive document of its kind available. I heartily recommend it for anyone interested in the field of microelectronics.

DAVID M. NATELSON

34 S.A.V.E. JOURNAL 6-63-4

*20

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Original ly prepared for internal use only, this

compilation of vital information on modem

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H I G H L I G H T S • Evolution

• Glossary of Terms

• Glossary of Trade Names

• Military Micromin Programs

• List of Vendors

• Fabrication Techniques

• Cost-Size-Weight

• RFI Design Considerations

• Discrete Component Devices

• Thin Film Devices

• Solid State Devices

• Microminiature Components

• •• Supplements shall be provided periodically

as part of the MICROMIN DIGEST cost.

Micromin Digest Loral Electronics Corporation 825 Bronx River Avenue Bronx 72, New York

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6-63-4 S.A.V.E. JOURNAL 35

S.A.V.E. Chapter News LIST OF CURRENT CHAPTERS AND PRESIDENT/CHAIRMAN

Delaware Valley (Northeast Region) Robert J . Davidson, J r . , Chief Prod. Eng. Branch Hq. PAAFCMD, Att: REHPPE 1411 Walnut Street, Philadelphia, Pa.

Metropolitan New York (Northeast Region) Marvin Kaplan, Mgr. of Industrial Engineering Loral Electronics Corp. 825 Bronx River Ave., Bronx, N. Y.

Mid New York State (Northeast Region) Frank Z. Cueto, I.B.M. 93 Liberty St., Owego, N.Y.

Mohawk Berkshire (Northeast Region) Raymond J . Spenard, V. A. Education & Training Watervliet Arsenal Ord., Watervliet, N. Y .

Paul Revere (Northeast Region) Robert J . Gillespie, Div. V. E . Coordinator Sylvania Electronics System 40 Sylvan Rd., Waltham, Mass.

National Capital (Southeast Region) Robert Parsons The Martin Company Baltimore 3, Maryland

Chicago (North Central Region) Paul Radcliffe, Supv. Value Standard Eng. ITT - Kellogg 500 N. Pulaski, Chicago 24, 111.

Dallas-Fort Worth (South Central) Rand Creasy, Value Control Coordinator General Dynamics/Ft. Worth P. O. Box 748 Fort Worth 1, Texas

Los Angeles (Southwest Region) Jules S. Rensen Space Technology Labs, Inc. Redondo Beach, California

Salt Lake Area (Southwest Region) David E . Allen, Supervisor, Value Engineering Wasatch Division Thiokol Chemical Corporation Salt Lake City, Utah

San Diego (Southwest Region) Albert S. Freedman Manager, Design Assurance General Dynamics/Electronics P. O. Box 127 San Diego 12, California

San Francisco Bay (Southwest Region) Alfred H. Petersen, Manager of Value Products Services Lockheed Missiles & Space Co. P. O. Box 504, Sunnyvale, Calif.

LIST OF CHAPTERS BEING FORMED AND PRESIDENT/CHAIRMAN

Buffalo/Rochester (Northeast Region) Merton E . Davis, J r . , V. A. Specialist Spaulding Fibre Co. 310 Wheller St., Tonawanda, N. Y .

North Jersey or Newark (Northeast Region) Arthur Wojtowicz, V. E . Coord. The Bendix Corp., Eclipse-Pioneer Div. Williams Ave. & Route 46, Teterboro, N. J .

Quebec (Northeast Region) John F . Gilmore, Value Engineer Canadair Ltd. 101 Crescent Avenue St. Eustache sur le Lac Quebec, Canada

Connecticut Valley (Northeast Region) James H. Savage, Manufacturing Representative P.O. Box 235 Larchmont, New York

36 S.A.V.E. JOURNAL 6-63-4

LIST OF CURRENT CHAPTERS AND PRESIDENT/CHAIRMAN (Cont.)

Atlanta (Southeast Region) Frank J . Johnson, Mgr. V.A. Lockheed Aircraft Co. Georgia Div., Marietta, Ga.

Orlando, Florida (Southeast Region) Robert L . Bidwell Mgr. V. A. Administration Martin-Marietta Corp. P. O. Box 5837, Sand Lake Rd., Orlando, Fla.

Redstone Arsenal (Southeast Region) Arthur E . Harvey, Chief, V.A. Office Army Missile Command Attn: ORDAB-IV, Redstone Arsenal, Ala.

Denver (North Central Region) Louis Winans, Value Analyst The Martin Company Denver Division (M. S. 236) Denver, Colorado

Dayton (North Central Region) Harley C. Witham V. E . Project Officer USAF System Command Wright-Patterson, AF Base, Ohio

Twin City (North Central Region) R. L . Crouse V. E . Mgr. Minn. Honeywell Regulator Co. 2600 Ridgway Minneapolis 40, Minn.

Cleveland (North Central Region) Dr. C . C. Van Vechten, Tapco Group, Eng. Div. Thompson Ramo Wooldridge, Inc. 23555 Euclid Ave., Cleveland, Ohio

Detroit (North Central Region) Michael Pinto, Pioneer Eng. & Mfg. Co. 19669 John R. St., Detroit, Mich.

Mount Vernon (North Central Region) Donald W. Summerhayes, Cooper-Bessemer Corp., Mount Vernon, Ohio

St. Louis (North Central Region) Edward H. Hutton, Procurement V.A., McDonnel Aircraft Corp. Lambert-Saint Louis Municipal AP P.O. Box 516, St. Louis 66, Mo.

New Orleans (South Central Region) William F . Smith, Avondale Shipyards, Inc. P.O. Box 1030, New Orleans, La .

Portland Area (Northwest Region) L . James Levisee, Corporate Director of Procurement, Hyster Co. P.O. Box 4318, Portland, Oregon

Seattle (Northwest Region) Charles E . Brewster, V . E . Staff, The Boeing Co. P.O. Box 3707 (MS 15-53), Seattle, Wash.

Tucson/Phoenix/Scottsdale (Southwest Region) W.G. McMurray, Military Electronics Div. Motorola, Western Center, Scottsdale, Ariz.

Request for Papers

6-63-4 S.A.V.E. JOURNAL

Chapter Activities California Area - San Diego Chapter

Aug. - Panel Discussion by local SAVE members. Sept. 4 - Speaker - E . D. Heller, General Dynamics/

Astronautics.

New York Area - Mid New York State Chapter Sept. 5 - (Syracuse) Guest lecturer Oct. 24 - (Utica) Marketing's presentation of value

incentive clauses in defense contracts. Dec. 5 - (Syracuse) Installation Banquet, Ladies

Night, Entertainment. Jan. 30 - (Utica) President's Address, New Year

Planning.

New York Area - Metropolitan New York Chapter Sept. 11 - Speaker - Larry Miles, General Electric

Co. Oct. 9 - S p e a k e r - E d . O'Connell, V . E . Weekly Nov. 13 - Speaker - Bob Gillespie, Sylvania Electro­

nics Sys.

Pennsylvania Area - Delaware Valley Chapter Sept. - Speaker - George E . Fouch, Deputy Asst.

Secy of Defense.

MISCELLANEOUS ACTIVITIES

New York Area - Metropolitan New York Chapter April 25 -The Metropolitan New York Chapter

scoreda first inS.A.V.E. Corporate mem­bership, announced at the Convention, was presented to Loral Electronics Corp. It was accepted by Mr. Ed. J . Garrett, Vice President & General Manager.

The New York Metropolitan Chapter now wishes to welcome Mr. S. Kameoka as a member of our chapter. Mr. Kameoka is the Manager of Technical Coordination Division, Sumitomo Electrical Industries, Ltd. and resides in Japan.

California Area - Los Angeles Chapter The Chapter Effectiveness Award has been presented to the L.A. Chapter. This award is based on membership, communication with other chapters, rating of its technical program, and its educational activities.

The Los Angeles Chapter has created a task force of top men experienced in all phases of value work to deal with the prob­lem of reporting the results of value engi­neering efforts. This group is charged with the development of proposed formats

and ground rules for documenting the out­put of work performed under the heading of value engineering. Their task will also include definition of the categories for which results can or should be reported. The working group includes representa­tives from military agencies and industry including the training, engineering, pur­chasing, and subcontractor areas. A legal and finance manager will be available to consult with the group during the six months in which they will analyze the prob­lem, develop and test solutions. The final report will be proposed for national imple­mentation. Members of Working Group "A" are: Walter Bayne, Roeketdayne; Joe Garson, Hughes; Bill Wilkinson, STL: Ray Doty, Department of the Army; Ben Sorin, Department of the Navy; Reagan Barnett, General Dynamics/Pomona; Art Pearl-man, Space-General Corp.; Adrian Weishaar, Nortronics; Benny Highsaw, Ets-Hokin & Gavan, Inc.; Jess Shaner, General Dynamics/Pomona (Finance Con­sultant) and Don Whitman, STL (Legal Consultant).

SEMINARS, WORKSHOPS & TRAINING AIDS

July 8-12 - Ann Arbor, Michigan Area University of Michigan, five day intensive course on VE/VA theory and applications.

July 17-19, 22-24 - New York Area American Management Association, Inc., 1515 Broadway, New York 36, N.Y. at the Hotel Astor.

Sept. - New York Area Industrial Value Services, Inc., 1405 Northern Blvd., Roslyn, L . I . , New York, Seminar for eight weeks on Functional Analysis, Economic Analysis, V. E . Program Requirements, Contracts & Incentives.

V. E . Films

1- KMore For Your Money", available from the Army Missile Command, Redstone Arsonal, Alabama.

2- K This is Adres", available from the Army Missile Command, Redstone Arsonal, Alabama.

3- "The Search for Savings", available from Fred W. Bright, Ind. Education Films, 3 Palmer Square, Princeton, N. J .

38 S.A.V.E. JOURNAL 6-63-4

E I A t r a n s f e r s V E a c t i v i t i e s to S . A . V . E .

E l e c t r o n i c Industr ies Association ENGINEERING DEPARTMENT

COMMITTEE CORRESPONDENCE

Apr i l 23, 1963

M r . A. R. Tocco, President - S A V E Space Technology Laboratories, Inc. Redondo Beach, California

Subject: Transfer of Certain V E Activities from E I A to S A V E

Dear Tony:

It is the purpose of this letter to formally transfer, from E I A to S A V E , those Value Engineering activities which it now seems could be more appropriately handled by your organization.

As a trade association representing the Electronics Industry, E I A feels that it should direct its major emphasis to those aspects of V E which are of par­ticular concern to its members rather than continue its broader approach to the problem which was heretofore practically unlimited. It is also our opin­ion that other aspects of V E , such as those relating to the professional devel­opment of the individual, are properly within the bailiwick of a professional society such as S A V E .

This is not to be construed as a de-emphasis of the importance of V E by E I A , but rather as a recognition of the fact that with the successful organization of S A V E , E I A has an opportunity to share the very considerable amount of effort in this field with another group, in such a manner as to permit more efficient utilization of the concerned manpower.

It was only because of a lack of any other active national group that E I A , in mid-1958, organized its Value Engineering Committee under Admiral R. S. Mandelkorn, with relatively unlimited scope. By so doing, E I A feels that it has contributed materially to the current high level of acceptance that V E now enjoys.

We look forward to working with S A V E in those areas of mutual concern, and feel sure that you wi l l share our feeling that the attached allocation of V E areas wil l further accelerate the benefits that industry can realize through Value Engineering.

F . S. Sherwin, Chairman E I A V E Committee

(Letter continued on next page)

6-63-4 S.A.V.E. JOURNAL 39

Upon Motion at its T w e n t y - f i r s t meeting on J a n u a r y 25, 1963, the E I A C o m ­mittee on Value E n g i n e e r i n g , under the C h a i r m a n s h i p of M r . F . S. Sherwin , unanimously approved the following t r a n s f e r of ac t iv i t i e s to S A V E :

1. Def ini t ion of V E t e r m s and nomenclature 2. V E funct ional a n a l y s i s techniques 3. Make or buy m e a s u r e m e n t p r o g r a m 4. M e a s u r e m e n t of V E ideation p e r f o r m a n c e 5. * V E product conceptual design c h e c k l i s t 6. * C o m p r e h e n s i v e V E t ime phased by P e r t 7. * V E re la t ionsh ips with other operation's e f forts 8. * Value E n g i n e e r i n g duties and r e s p o n s i b i l i t i e s

9. E d u c a t i o n a l p r o g r a m s conducting s u r v e y s evaluating educat ional ac t iv i t i e s sponsoring V E tra in ing within col leges

Other V E promot ional and educat ional ac t iv i t i e s

10. E d u c a t i o n a l in format ion in format ion of ava i lab le tra in ing tra in ing a ids

11 . * * E d u c a t i o n a l m a t e r i a l tra in ing s e m i n a r m a n u a l

12. V E Bibl iography . The V E Commit t ee s of E I A w i l l continue to r e c o r d

j V E a r t i c l e s of in teres t to the e l e c t r o n i c s indus try . It i s suggested that S A V E a s s u m e respons ib i l i ty for a broad, a l l - i n d u s t r y , b ibl iography.

13. Nat ional C o n f e r e n c e s on Value E n g i n e e r i n g . In the past E I A has sponsored conferences cover ing

V E f r o m a g e n e r a l educational and or ientat ional object ives approach . It i s suggested that this type of conference be sponsored by S A V E and E I A C o n ­f e r e n c e s be d i rec t ed p r i m a r i l y towards a r e a s of i n t e r e s t to E I A m e m b e r companies .

* Copy of c u r r e n t i n t e r i m E I A - V E report enc losed to fac i l i ta te S A V E assumpt ion of respons ib i l i ty in these a r e a s .

* * A V E E d u c a t i o n and T r a i n i n g Guide recent ly f i n a l i z e d by E I A i s now in p r o c e s s and w i l l be f o r m a l l y i s s u e d as an E I A Publ i ca t ion in the next few months . A copy w i l l be f o r w a r d e d to you as soon as it becomes a v a i l a b l e .

40 S.A.V.E. JOURNAL 6-63-4

S.A.V.E. to assist DoD in V.E. Program Specialization Preparation

OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE WASHINGTON 25, D.C.

9 - MAY 1963 INftAUATIQNS AND IOOISTICS

Dear Mr. Tocco:

There are varying Value Engineering Program requirements cur­rently i n existence and use i n the Department of Defense today. As a part of the DoD effort to accelerate the application of Value Engineering to Defense equipment and supplies, my office i s i n i t i a t i n g a project to develop more uniform requirements for Value Engineering Programs. We expect to complete a f i n a l draft of a proposed DoD Value Engineering Program Specification "by 31 July 1963.

The government-prime contractor relationship i s similar i n many respects to a prime contractor-subcontractor relationship. Knowledge of prime contractor-subcontractor Value Engineering arrangements would therefore be useful background material for our project.

I would appreciate i t i f the Society for American Value Engineers would c o l l e c t existing work i n t h i s area for our use. Collection of such material might also stimulate SAVE develop­ments of recommended approaches to prime-sub Value Engineering relations.

Sincerely,

Mr. A. R. Tocco Space Technology Labs One Space Park Redondo Beach, California

GEORGE E . FOUCH Deputy A s s i s t a n t Secretary of Defens* (Equipment Maintenance and Readiness)

6-63-4 S.A.V.E. JOURNAL 41

1963 ANNUAL CONVENTION PHOTOGRAPHS •

(Left to Right) (Upper) E . J . Garrett = G. E . Fouch - A. R. Tocco -

B. J . Shillito - M. D. Roderick - E . D. Heller (Lower) M. Hicks - F . S. Sherwin - D. E . Redmon -

W. R. Feichtinger - T. D. Morris -R/Adm. H. J . Goldberg - Major Gen. D. F . -Callahan - Marvin Kaplan *

(Left to Right) » Hon. T. D. Morris - Marvin Kaplan - L . D. Miles - m R. S. Mandelkorn - A. R. Tocco

E . J . Garrett, Vice-Pres., Loral Electronics Corp., Accepts First S.A.V.E. Corporate Membership Certificate from M. Roderick

42 S.A.V.E. JOURNAL 6-63-4

1963 ANNUAL CONVENTION PHOTOGRAPHS

HONOR AWARDS

Jules Rensen - Chapter Effictiveness E . D. Heller - S.A.V.E. Journal Article Bernard Eades - Honors

J Hon. Thomas D. Morris Asst. Secretary of Defense ^

Fred S. Sherwin Transfers EIA Value Engineering Activities to S.A.V.E. President A. R. Tocco

6-63-4 S.A.V.E. JOURNAL 43

V.E. Calendar Events

September 4

San Diego Chapter Meeting

September 7

San Francisco Bay Area Chapter Meeting

September 7

Dallas - Fort Worth Chapter Meeting

September 7

Paul Revere Chapter Meeting

September 10

Delaware Valley Chapter Meeting

September 11

Metropolitan New York Chapter Meeting

September 20

Los Angeles Chapter Meeting

October 2

Delaware Valley Chapter Meeting

October 4

Salt Lake Area Chapter Meeting

October 4 Dallas - Fort Worth Chapter Meeting

October 8

Paul Revere Chapter Meeting

October 9

Metropolitan New York Chapter Meeting

October 10

Los Angeles Chapter Meeting

October 24

San Diego Chapter Meeting *

November 1

Dallas - Fort Worth Chapter Meeting

November 7

Paul Revere Chapter Meeting

November 13

Metropolitan New York Chapter Meeting

November 14

Los Angeles Chapter Meeting

December 5

San Diego Chapter Meeting

December 30 San Diego Chapter Meeting

IT'S N O T H O W L I T T L E IT C O S T S AT T H E B E G I N N I N G . . .

IT'S H O W M U C H I S S A V E D AT T H E E N D

44 S.A.V.E. JOURNAL 6-63-4

JOURNAL BINDERS Mail Checks To:

Sturdy gold printed blue plastics ring binders with a 3 year Journal storage capability.

Cost — $3.00 Delivery — 2 weeks

MARVIN KAPLAN, Executive Editor S.A.V.E. JOURNAL LORAL ELECTRONICS CORP. 825 BRONX RIVER AVENUE BRONX 72, NEW YORK

S O C I E T Y O F A M E R I C A N V A L U E E N G I N E E R S

M E M B E R S H I P I N F O R M A T I O N

OBJECTIVES

To create, stimulate and promote interest in the advancement and diffusion of knowledge of value engi­neering and value analysis, and its application to the research, design, development, test evaluation, engineering, production, purchasing and distribution phases in government, private industry and commerce.

For membership information please write to:

W. G. McMURRAY S.A.V.E. NATIONAL MEMBERSHIP CHAIRMAN

c/o MILITARY ELECTRONICS DIVISION MOTOROLA, WESTERN CENTER

SCOTTSDALE, ARIZONA

OR

The nearest S.A.V.E. Chapter listed on Page 36 in this Journal issue.

CHANGE OF ADDRESS NOTICE PLEASE NOTIFY THE NATIONAL SECRETARY I F YOUR ADDRESS

CHANGED IN THE LAST SIX (6) MONTHS.

FRED S. SHERWIN, S.A.V.E. SECRETARY MANAGER, VALUE ENGINEERING SERVICES RAYTHEON COMPANY, EXECUTIVE OFFICES LEXINGTON, 63, MASS.

6-63-4 S.A.V.E. JOURNAL 45

E n g i n e e r ' s C o r n e r -Machine Shop Costs

MACHINE SPEEDS OPERATION SPEEDS

Operations per

Minute

Punch Press-High Speed Auto. Cold Header 1/8" Stock

4 tons 250 -400 Punch Press-High Speed Auto. Cold Header 1/8" Stock 175 -300 Punch Press-High Speed Auto. 15 tons 150 -250 Punch Press-High Speed Auto. 25 tons 125 -200 Cold Header 1/4" Stock 100 -175 4 Slide Machine Light 75 -175 Punch Press 60 tons 75 -150 Cold Header Heavy 50 -160 4 Slide Machine Heavy 50 -125 Punch Press-Hand Feed (Blank) 75 tons 50--125 Punch Press-Hand Feed (Blank) 300 tons 40--80 Thread Roller 40--80 Screw Head Slotter 30--60 Automatic Wire Cutter & Stripper 30--60 Dial Tapper 30- 50 Punch Press-Forming-Slide Feed 30- 40 Punch Press-Forming-Hand Feed 15- 30 Tapping Machine-Foot Operated 15- 25 Tubular Riveting Machine 8- 15 Resistance Welding Machine. 2- 8 Molding Machine-Thermoplastic 1- 4 Brazing Machine 1- 2 Molding Machine-Thermosetting 1/2- 1

Take Micrometer Reading Use GO & NOGO Snap Gage Stamp Part with Hammer Stamp Part with Rubber Stamp Drill Small Hole—Drill Press Pierce Small Hole—Punch Wrap Part in Tissue & Seal in Carton Position Part in "Egg Crate" Carton Pick Up & Position Part in Fixture Pick Up & Drop Part in Fixture Pick Up, Start, & Hand Drive Small Screw) Pick Up, Start, & Air Drive Small Screw Power Drive Small screw—Hopper Feed Rivet with High Speed Hammer (2) Parts Resistance Weld (2) Parts Tubular Rivet (2) Parts Cut-Off Small Tubing - Screw Machine Cut-Off Small Tubing - Abrasive Wheel Count Parts Visibly Sort Handful of Parts (2) Stacks Deburr Small Screw Machine Part Polish Head of Chrome Plated Screw Draw Arc & Hand Weld 1" Pass Ream Hole—Drill Press

Operations per

Minute

5-8 10-15 15-20 20-30 4-8

20-30 2- 5

10-15 15-30 30-50 3- 6 *

10-12 10-20 4- 8 5- 10 8-15 5-10

30-60 60-120 60-100 7-12 5-12 3-6 2-10

RELATIVE MATERIAL COSTS PRICES AS OF MARCH 1961

BASED ON 100 lb. QUANTITIES

Material

Copper (Hard Rolled) Brass (Cartridge) 70% cu. Aluminum (5052) Steel C R . (Commercial - 1010) Steel H.R. -

Steel Stainless (302-304) Magnesium (AZ31BH24) Beryllium Copper

Copper Brass (Free turning) Aluminum Steel 1112 Steel Low carbon Steel Stainless (302-304) Magnesium (AZ61A) Beryllium Copper Copper OFHC up 25% Brass Aluminum Steel H.R. Steel Stainless H.R. Magnesium (AZ31B) Copper Brass Aluminum Steel C R . Seamless

(Welded 15% less) Steel Stainless

Magnesium AZ31B

Form

Sheet

(light to heavy gage)

Bar and Rod (extruded)

C R . H.R.

small to large (3/8 up) Shapes (extruded)

Tubing

" small (1/2" to large (to 4"O.D.) over 4" 0;D;

Tubing small (1/4 O.D.) to large

(1 1/4 O.D.) Tubing

Price/lb.

.93

.88

.80

.20

.18

.80 2.12

3.35 2.85

.70

.85

.26

.17

.82 1.40

2.85 1.00 .90 .76 .18 .73

1.17 .98 .95

1.16

2.60

.80/ft. 1.50/ft. 2.25/ft.

1.00 4.77 1.32

46 S.A.V.E. JOURNAL 6-63-4

Engineer's Corner Cont'd

CREDITS: McGraw - Hill Publishing Co. and Lockheed, California

4 S.A.V.E. JOURNAL

Journal Advertising SIZE

1/3 Page 1/2 " 2/3 " Full " Cover Colors

DIMENSIONS RATE

7-1/2" x 3-5/16" or 2-1/2" x 10" $ 75 3-3/4" x 10" or 7-1/2" x 5" 110 5" x 10" or 7-1/2" x 6-5/8" 140 7-1/2" x 10" $200

. " ,$275

(Each Color) $ '60

Submission Deadline Dates — Feb. 5, May 5, Aug. 5 & Nov. 5 Circulation — 2000 (including members & subscriptions)

Mechanical Copy or Line Illustrations — Black on White Requirements Half-tones — Glossy Photos or Negatives

ERNEST YURMAN, Advertising Editor

L I S T O F A D V E R T I S E R S

Alpha Wire Corp. Page 24

Gries Reproducer 31

Industrial Value Services 15

Ivy Lyn Printers 33

Loral Electronics Corp. 35

McGraw-Hill Book Co. 14

Micon Electronics Inc. 15

Space Tech. Labs., Inc. Inside Back

Cover

Request for Papers Articles should comply with the following requirements:

TITLE — A literal NOUN-ADJECTIVE name of your subject material.

SYNOPSIS — A 20 - 40 word description of the highlights of your article.

COPY — Approximately 2000 - 3000 words, typewritten and double spaced.

SUB-HEADINGS — Where applicable, use a 2 - 5 word key heading of the paragraph(s) that follow.

ILLUSTRATIONS — Black - on - white line drawings, glossy or matte photographs.

AUTHOR'S PHOTO - 2" headview.

AUTHORIZATION — Approval for reproduction is required for all contributed material.

SUBJECTS — Original prepared copy on V. E . techniques and information relative to materials, organization; cost, procurement, reliability, quality control, education and design.

DEADLINES — JOURNAL publication — Feb. 5, May 5, Aug. 5, Nov. 5.

Send your SYNOPSIS as soon as possible!

48 S.A.V.E. JOURNAL 6-63- 4

S T L V A L U E E N G I N E E R I N G

Objective: To further STL as a recognized leader in producing high performance, reliable, and maintainable equip­ment at minimum cost through control of all phases of hardware development f r o m system design through hardware manufacture to ultimate usage.

Implementation: STL has established a Value Engineering organization responsible for the following aspects of Product Assurance:

1. Develops and initiates corporate Value Engineering policies and procedures.

2. Preparation of Value Engineering program plans for specific projects.

3. Audits Value Engineering programs to ensure compliance with customer requirements, adherence to value engineering program plans, and to evaluate value engineering accomplishments.

4. Preparation of Value Engineering sections of proposals.

5. Establish orientation and educational programs.

6. Perform Value Engineering cost reduction studies.

STL has limited openings on its Corporate Product

Assurance Staff for highly qualified engineers now

engaged in Reliability, Quality Assurance and Value

Engineering. Please contact Dr. R. C. Potter,

Manager of Professional Placement at STL, an equal

opportunity employer.

S P A C E T E C H N O L O G Y L A B O R A T O R I E S , I N C . O N E S P A C E P A R K • R E D O N D O B E A C H , C A L I F O R N I A

a subsidiary of Thompson Ramo Wooldridge Inc.

Los Ange les • V a n d e n b e r g AFB • Norton A F B , S a n Bernard ino • C a p e C a n a v e r a l • W a s h i n g t o n , D . C . • Boston • H u n t s v i l U • Day ton - Houston

THE PURPOSES OF THE SOCIETY SHALL B E :

To create, stimulate and promote interest in the advancement and diffusion of knowledge of value engineering and value analysis, and its application to the research, design, development, test, evaluation, engineering, production, purchasing and distri­bution phases in government, private industry and commerce.

c/o LORAL ELECTRONICS CORP., 825 BRONX RIVER AVE. , BRONX 72, N.Y.

O F F I C I A L P U B L I C A T I O N of the

S.A.V.E. JOURNAL CUMULATIVE INDEX JUNE 1963 *(Place In Front Of Journal Binder)

P G . 1 S S U E T I T L E AU THO R

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3 Mar. 63 V.E. With M i c r o e l e c t r o n i c s R. J . G i l l e s p i e X

3 Sept. 62 Cost as a Design Parameter E. D. H e l l e r X

3 Dec. 62 V.E. i n Heavy I n d u s t r y M. S. M e r r i t t X

6 Sept. 62 Value E n g i n e e r i n g i n R & D L. D. M i l e s X

6 Dec. 62 What's Wrong w i t h V.E. Today F. S. Sherwin X

7

8

Mar.

Dec.

63 62

VA/VE & the S t a f f S p e c i a l i s t

V.E. i n Paperwork

H.

s .

E. Fearon, Ph.

Simon

D.

X

X

9 Sept. 62 Value Engineering a t Ford C D. Horner X

12 Sept. 62 The S t a t u s of V.E. i n D.O.D. J . J . Riordan X

12 Mar. 63 Weight Engineering V.E. L. M. Epps X

13 Dec. 62 S p e c i a l t y S u p p l i e r i n V.E. A. S. Winthrop X

11* Sept. 62 PERT as a V.E. Tool J .

R.

S. Rensen

F. W a l t i X X

17 Dec. 62 An E v o l u t i o n i n Depth L. A. Chapter X

17 Mar. 63 Patents to Reduce R&D Costs M. Kaplan X

19 Sept. 62 V.E. and the Government Hon. R.E. Lankford X

21 Mar. 63 V.E. M i l S p e c i f i c a t i o n s E. Yurman X

2h Sept. 62 V.A. and Q u a l i t y C o n t r o l A. R. P e n n e l l X

2k Mar. 63 C o n t r a c t o r ' s V.E. C h e c k l i s t A. R. Tocco X X

25 Dec. 62 L.A. S.A.V.E. Colloqium J . J . Riordan X

27 Mar. 63 M i l i t a r y Products V. E. s . Mendelsohn X

28 Sept. 62 V.A. Aid F . S. Sherwin X

28 Mar. 63 Purchasing Magazine (ReviewJ P. F a r r e l l X X

28 Mar. 63 P r o f i t C o n t r o l (Review; P. C a r r o l l X X X

30 Sept. 62 Techniques of V.A. & Eng. L. D. M i l e s X

30 Sept. 62 Fundamentals of V.A. Technocopy, I n c . X

3U Dec. 62 E. I . A. Proceedings X

3 June 63 Implementing a V.A. Program

i n the Design O r g a n i z a t i o n R. A. Hurry X

9 June 63 I d e n t i f y i n g V.E. Costs R. L. B i d w e l l X X

16 June 63 New D.O.D. Requirements f o r

V.E.

D. J . Cantor X X

20 June 63 V.E. & I t ' s Uses During

Design

C R. Olsen X

2? J une 63 Q u a n t i f y i n g V.E. i n an R & D

Program

u • L. Carpenter X

27 June 63 V.E. During Development H. 0. Huss X

3li June 63 E. I . A. B u l l e t i n #1 X

* Journal Binder Available From Executive Editor - Cost - $3.00 each