the J O U R N A L of Value Engineering

message
from the president
AMONG T H E GOALS and objectives of the Society for 1969
1970 is our aim to double our membership and add 25
percent to the number of active, local chapters. Our number one objective, however, is to encourage and assist
members in successfully applying specific Value Engineering efforts to more diverse kinds of problems. I n our
operations back at the ranch, we are making this effort.
We are particularly going into more indirect areas, into
areas that now have no specific and finite improvement
plan or measurement. Occasionally, we fail. More often
we get at least a partial improvement, and we learn a little
more about how to introduce Value Engineering into new
and different environments.
A l l of us associated with Value Engineering
functions our customers desire. John proposes
can cite numerous cases where application of the
to go a step beyond this. He points out that
technique has been instrumental in reducing prothe ultimate need and success of "value" enduction costs and improving products in various
gineering is in the hands of the buyer, that the
degrees-ranging from satisfactory to the nearbuyer is the customer, and the customer is the
miraculous. We believe i n Value Engineering's
consumer. I f we, aided and abetted by John
powers, and for this reason it's very easy for us
and his committee, can devise means for conto slide into the smug attitude that the theory,
sumersboth public and privateto use Value
philosophy, teaching, and publicity of Value
Engineering tools, we will have taken a great
Engineering are solely responsible for its sucstep towards our ultimate professional goal: the
cess. For those of us i n this blissful state of
application, recognition, and complete accepteuphoria I want to repeat what I've said before:
ance of Value Engineering by the business
the real key to success i n our field is i n the
community.
application of the techniques of Value Engineering to specific problems i n order to provide the
Question:
How do we put Value Engibest solutions, all of which lends special signifineering
i
n
the
hands
of the consumer i n a form
cance to a recent John Steinmetz proposal.
he can easily use? How can we pass its
After years of listening to my harangue conbenefits on to the small businessman, to the
cerning actual in-depth application (i.e., the
housewife, to "Henry Homeowner," or to the
total, maximum benefit, end use of the techrest of the country's potential users, buyers, and
niques of Value Engineering), John, a T w i n
consumers? What pocket slide rule can we
City Chapter member, has decided that I have
generate that will give consumers quick use of
never really defined the ultimate and proper
the Value Engineering tools to acquire best
point
of technique application. To correct
value? (Just imagine what Value Engineering
this he has suggested a new committee for the
efforts this will force on us, the suppliers!!)
Society and has volunteered
to serve as its
Would not such a tool solve many problems
director.
Subsequently, this action was apin these high-priced times? This assist might
proved by your Board of Directors i n August.
actually result in effective lowering of the i n This committee's aim will be to produce "easy"
terest rates by multiplying the usefulness of
ways for consumers to use Value Engineering.
capital. I f you think i t is worth a try and
(An article, "Consumer Value," by John, aphave suggestions, send your ideas on "How the
pears in this issue on page 29.)
consumer can use Value Engineering to acquire
With varying degrees of success, all of us in
better values" to: M r . John Steinmetz, Univac
Value Engineering have applied V E techniques
FSD, Univac Park, P. O. Box 3525, St. Paul,
and methodology to the cost of the products we
Minnesota 55116.
produce, to the services we render, and to the
R . L . CROUSE

the JOURNAL of Value Engineering

Editorial Staff

Contents

W. B . DEAN

Message from the President

Authors and Articles

Esteem Value in Consumer Products

by Carlos Fallon

Editor
PAT

BENN

Associate

Editor

Value Engineering in Commercial Industry

R I C H A R D M E R C U R E AND
W I L L OLSON

Art
CODY PUBLICATIONS, INC.

Production

Editorial Board
Chairman
ROBERT BIDWELL

Northeast

Region

WILLIAM

Southeast

by Walter

Letters to the Editor

11

VE Hits the Alps

by John E. Reichen
13
Quantitative Decision-Making Applied to Project Selection
by R. E. Manelis
17
Value Engineering Illustrated
Realizations of an Appliance Manufacturer
by James Maclntyre

21

Value Engineering is Alive, Well, and

Moving into Marketing
by Thomas J. Snodgrass

25

Consumer Value
by John

GULDEN

Region

N. Herold

Steinmetz

29

The J O U R N A L needs you!

20

from the Editor

31

DONALD E . REDMON

North

Central

JOSEPH

South

Region

TRUMAN

Central

Region

V I N C E N T J . COPPOLA

Northwest
WILL

Region
DEARBORN

Southwest

Cover
The montage of consumer goods on our cover illustrates the
theme of this issue: Value Engineering and Commercial
Industry. Not quite 20 million people will produce 400 billion
dollars' worth of manufactured goods this year; but only 1 i n
7,000 of these 20 million (less than 3,000) is a Value Engineer.
What a challenge to expand the V E profession! And what a
boon to the consumer if this challenge is met! Cover design by
Richard Mercure.

Region

CORWIN GRAY

International
JOHN J . BENNETT

t h e

J O U R N A L

o f

V a l u e

E n g i n e e r i n g

is published quarterly by the Society of American Value Engineers,

Inc., 410 West Verona Street, Kissimmee, Florida 32741.
1969, by Society of American Value Engineers, Inc.
Subscription: Members of the Society of American Value Engineers automatically receive The Journal. Other subscriptions may
be placed w i t h the National Business Office at the following rates:
Domestic $25 a year. Foreign Postage $2.00 additional. Single issues
$6.25 plus postage. Forward address changes to S A V E National
Business Office, W i n d y H i l l , Suite A - l , 1741 Roswell Street,
Smyrna, Ga. 30080. Second class postage paid at Kissimmee, Florida
32741.

Authors
and
Articles
7 Esteem Value in Consumer Products
by Carlos

Fallon

Esteem value affects the exchange and market value of consumer products, according to Mr. Fallon. He feels that Value
Analysis is the 1970's will create opportunities
to make products more marketable, useful, and beautiful for the consumer.
In the eyes of the nation's Value Engineers, Mr. Fallon himself epitomizes Esteem value.
CARLOS F A L L O N is RCA's corporate manager of value analysis.
I n addition to his work at RCA plants i n the United States
and Europe, he conducts lectures on value analysis i n England,
Norway, Sweden, and Denmark. I n 1968, he gave the keynote address at the International meeting of S C A N V A V E , the
Scandinavian Society of Value Analysis. M r . Fallon has contributed chapters to the American Management Association's
and A S T M E ' s books and technical papers to publications
such as I E E E Transactions and the Naval Engineers Journal.
He is Vice-President for professional development of the Society of American Value Engineers and a member of the American Society of Mechanical Engineers, American Society of
Naval Engineers, Mathematical Association of America, and
the Canadian Mathematical Congress.

9 A Challenge . . . Value Engineering in Commercial Industry

by Walter N. Herold
Value Engineering's
greatest opportunity
lies in commercial
industry, according to this author. For every dollar's
worth
of defense hardware we produce, we produce at least ten
dollar's worth of commercial hardware; in fact, at least 90
percent of all goods are manufactured
by commercial
industry.
Almost 20 million people produce these goods, but not 1 in
7,000 is a Value Engineer . . . a distinct challenge to Value
Engineering.
M R . HEROLD is President of the Connecticut Yankee Chapter
of SAVE. He was born and educated in Germany, coming to
the United States in 1940. I n 1941 he joined Homelite, a
manufacturer of gasoline-powered, lightweight equipment,
leaving to join U . S. Forces i n World War I I . Three years
later he returned to Homelite as Field Service Representative
at the company's headquarters. He is presently Director of
Quality Control and head of Value Engineering for Homelite.
Mr. Herold also teaches courses i n Value Engineering at the
Bridgeport Engineering Institute.

V E HitS the Alps

by John E. Reichen

13

Although admitting some interest in cost reduction and industrial engineering, the Swiss feel that Value Engineering per se
is unnecessary in their frugal country.
However, the author,
during a stay in Switzerland, did talk one firm into a fling at
VE with interestingif not lastingresults.
M R . R E I C H E N is a Designer at Tektronix, Inc., Beaverton, Oregon, and does free-lance technical translating. A native of
Switzerland, he has a certificate of Horology from the Technicum Neuchatelois, Switzerland, and an Associate of Science
in E E from Multnomah College, Portland, Oregon. Mr.
Reichen is a charter member of the Portland Chapter of the
Society of American Value Engineers. He is also a member
of Toastmasters International.

Quantitative Decision-Making Applied to Project Selection

17

byR. E. Manelis
What constitutes a good VE project is determined by several
factors, each important in its own right but of different relative importance in the total consideration.
This article describes a quantitative approach whereby all factors are weighed
and each potential project graded to determine its relative
desirability.
RICHARD E . M A N E L I S is the Value Engineering Administrator
for Raytheon's Missile Systems Division. He holds degrees
from the University of Massachusetts ( B S E E 1 9 5 7 ) , the University of California ( M S 1 9 6 2 ) , and Suffolk University Law
School (J.D. 1 9 6 8 ) . He is Secretary for the Governor's Executive Council for Value Analysis in Massachusetts, National
S A V E Conference Chairman for 1972, and a Registered Professional Engineer. As an instructor in management for
Northeastern University, he has used local community projects
for V E workshop classes. He is a member of the Creative
Education Foundation, the Massachusetts Bar Association, the
Boston Bar Association, and his local town committee.

Value Engineering Illustrated...

Realizations of an Appliance Manufacturer

by James D.

Macintyre

21

Commercial industry in general, and the appliance

industry
in particular, require Value Engineeringor programs like it
to remain competitive
domestically * and internationally,
according to Mr. Maclntyre.
He discusses managements
concern with cost improvement
of a Whirlpool product and
demonstrates how acceptance of VE as a legitimate tool by a
product engineering group can improve the competitive
position of a company.
J A M E S D . M A C I N T Y R E is a Value Analyst for Whirlpool Corporation, St. Paul Division, St. Paul, Minnesota, responsible
for initiating and implementing all Value Analysis activities
for the division. He is a graduate of the University of Minnesota, with a B. A. in Business. In addition to conducting
Whirlpool V E seminars, he has lectured and contributed to
TCC-SAVE-sponsored courses. Mr. Maclntyre has served as
chairman for Twin Cities S A V E committees on a state government project, and is Vice-President of the Twin Cities chapter.

25 Value Engineering is Alive, Well, and Moving into Marketing

by Thomas J. Snodgrass
This article traces the movement of the original value concept
from a purchasing-oriented
activity into its present
major
area of influence, engineering.
Although the closely guarded
information on value research does not appear in the literature,
it is important to know that value research techniques are
available and being used, with impressive
results.
T H O M A S J . SNODGRASS is founder and President of Value

Standards, Inc., a Chicago-based consulting firm. Previously,

he was Manager of Engineering, Hotpoint Division, General
Electric Company, accumulating fifteen years' experience in
various General Electric Company departments. He is a
graduate of the University of Wisconsin and Illinois Institute
of Technology, with degrees in Chemistry and Metallurgical
Engineering respectively. He conducts annual Value Engineering seminars for the University of Wisconsin and participates in a variety of American Management Society seminars
relating to Value Engineering.

29 Consumer Value
by John R. Steinmetz
Mr. Steinmetz believes that the "secrets" of being an expert
consumer are contained in the organized and systematic
techniques of our Value Engineering
methodology.
National
SAVE has formed a group assigned to this taskthe author
will tell you about progress to date.
J O H N R . S T E I N M E T Z is Manager of Value Assurance at the

Federal Systems Division, Univac (Division of Sperry Rand

Corporation), St. Paul, Minnesota. He has worked over 15
years in Value Engineering and Cost Improvement, with prior
assignments in various manufacturing engineering capacities.
Mr. Steinmetz earned a B S I E degree from Stout University
and has taught many courses on V E and other subjects. He
has held all Twin Cities S A V E offices and is now a Board
member and responsible for Education, Professional Development, and Intersociety Relations.

Honorary Vice Presidents

1962
William M. Allen
Chairman of the Board
The Boeing Company
Seattle, Washington

1962
Honorable Thomas D. Morris
Assistant Secretary of Defense
The Pentagon
Washington, D. C.

1966
Honorable George E. Fouch
Deputy Assistant Secretary of Defense
The Pentagon
Washington, D. C.

1962
Albert E. Everett
Dean, Northeastern University
Boston, Mass.

1962
George T. Willey
Vice President and
General Manager (Retired)
Martin-Marietta Corporation
Orlando, Florida

1967
Honorable John A. Volpe
Secretary of Transportation
Washington, D. C.

1962
Marion L. Hicks
Vice President, tegal & Procurement
-General Dynamics
Fort Worth, Texas
1962
Charles F. Home
President
General Dynamics
Pomona, California

1965
James A. Drain
Chairman of the Board
Joy Manufacturing Company
Pittsburgh, Penna.
1966
Thomas R. May
President
Lockheed-Georgia Company
Marietta, Georgia

1968
T. A. Wilton
President
The Boeing Company
Seattle, Washington
1969
Lee E. Sheehan
Vice-President and General Manager
Honeywell Inc., Ordnance Division
Minneapolis, Minn. 55343

Esteem Value in
Consumer Products
by

CARLOS

FALLON*

"The heart has its reasons which reason does not

understand," said Blaise Pascal. These reasons of
the heart, governed by emotion and judged by intuition, determine esteem value, which, in part, affects the exchange value and market value of consumer products.
Therefore, if people want a little
beauty in their lives, and they want it in living
color, that is what we have to give
them.
T H E GOOD, The True, The Beautiful, all represent
human values. Of these, The Beautiful is the most
nearly universal. Men have argued and shed much
blood over good and evil and over what is true or
not true, but even during an artillery duel, as the
sun rises to herald a beautiful day, gunfire slackens,
and enemies pause to admire the dawn.
The Beautiful is an intuitive, nonverbal measure
of both truthfulness and goodness.
Farfetched?
Let me use some down-to-earth examples. Color
T V is prettier than black-and-white. Why? Because it is more true to life. It conveys more informationbrings us closer to the real world. Unlike black-and-white, it tells us that the peaches are
ripe and that the girl picking them has blue eyes.
The turquoise-blue sea between Florida and the
Bahamas is particularly beautiful in January and
February. Its white caps progress gently under a
clear, blue sky. At this season, far to the north,
the weather is ugly. Skies are overcast, and sullen,
dark-gray swells remind the seaman that he is sailing in the WNA (Winter North Atlantic), a region
dreaded by marine underwriters.
Nobody is afraid of dark-gray water, but we are
afraid of deception, of wrecking the ship on a submerged rock hidden by the ugly sea. The beautiful Caribbean, on the other hand, tells us the
truth, shows us the shoals in light green and the
clear channel in deep blue.

What is truth?
I F BEAUTY provides an intuitive measure of truth,
truth itself is a measure of the quality of information. Truthful information provides safety, and
safety is good.
We could say, therefore, that The Beautiful re
* All rights reserved by the author.
T H E

J O U R N A L

OF

V A L U E

ENGINEERING

veals The True, and The True reveals The Good,

but intuition is more of a flash than a roundabout
process. The Beautiful reveals The Good directly.

From beautiful

to good

B E A U T I F U L WEATHER is good weather, good for

our health and spirit; ugly weather is bad weather,
bad for the lungs, bad for our aches and pains, and
downright depressing. It brings to mind a turbulent sea hurling flotsam on a lonely shore, while
beautiful weather evokes a picture of happy people
playing on the beach. There is something good
about a pretty girl running along the beach. The
balance and proportion of her healthy body, the
smoothly flowing lines, the perfect harmony among
all the parts, all fill us with a sense of approval,
and if she is smiling, she is even more beautiful.

Aspects of value
IN

CONSIDERING BEAUTY as an intuitive measure

of truth and of good, we cannot help but perceive

that beauty, truth, and good are like the three
strands of the cord of value, each supporting the
others and all pulling together.
It is misleading, therefore, to separate values
too arbitrarily, yet the human urge to classifyin
order to understandhas led men to define various "kinds" of value. But classification seldom
changes the nature of whatever is being classified.

Use value and exchange value

T H E

FIRST FORMAL

classification of values,

which we owe to Aristotle, was colored by the

Classical Greek's love of individuality and by
Greek contempt for trade, hence the use of a
sandal to be put on the foot was more proper
than the use of a sandal to be given in exchange.
But if the sandal cannot be put on the foot, it
has no exchange value. If it can be put on the
foot, but has little esteem value because it looks
ugly and smells bad, it also has little exchange
value. If it can be put on the foot, looks good,
and smells like rich leather, but the town is inundated with such sandals, it only has exchange
value in another market.
Exchange value, therefore, is affected by use
7

value, esteem value, and market value. All these

interact, as Alfred Marshall put it, "Like a number
of balls resting against one another in a basin."

Cost!...

value?

I L I K E TO T H I N K that one of the gods, at whose

feet I worship, got drunk one night, and put Correa
Moylan Walsh's Four Kinds of Economic
Value
into a value analysis reading list. It could be,
however, that Satan himself introduced the book.
The prickly concept of "cost value", though rare
on this earth, is probably the dominant value in
hell. It is neither a good nor useful example of
any of the values we try to enhance in value analysis.
When we break a pencil in front of an audience to show that adding to the cost need not add
to the value, we are not only demolishing the
pencil, we are also demolishing Walsh's theory of
"cost value".
From the value analysis standpoint, the aspect
of economic value can be advantageously classified
as:
Use value
Esteem value
Exchange value
Market value
But we should not assume that by thus classifying
them we are separating them from each other in
real life. Analysis takes things apart to understand them. T o function, they have to go back
together.

Esteem

value

ISOLATING and condemning esteem value is perhaps the biggest trap in this respect. The right
feel and appearance of military equipment contributes to the morale of the men and is a desirable
form of esteem value. I n American industry, the
backbone of defense supply, esteem value serves
two purposes: it provides competitive advantage
a beautiful product is often less costly to make
and easier, to sell than an ugly productand it
guides the customer in selection of functionally
better products because, in good design as in
nature, form follows function.
Such principles of aesthetics as unity of de-

sign, simplicity, and economy also improve performance and reliability. The lucid formulation
which the scientist calls mathematical
elegance
stems from the same source as the efficient design of the inspired engineer. Both use their sense
of aesthetics to let nature help them do what must
be done in the cleanest, simplest, most economical
manner.

Market value
UNDERSTANDING market value helps avoid another
trap, reducing cost at the expense of customer acceptance. The customers speak through the market, as James M . Roche, General Motor's chairman of the board, said at the 1968 stockholder's
meeting. "In the dynamic and changing market
for new cars, our customers through their purchases tell us what they want."
Use value and esteem value are related to the
physical properties which make a product satisfy
the customer. Market and exchange value are
related to its economic characteristics. The task
of value analysis, with respect to consumer products, used to be to improve such economic characteristics as cost and delivery, without detracting
from the physical properties that make the customer want the product. The idea was to provide
the same function for less cost.
But neither the same functions nor the same
products can hold a market these days, much less
break into a new one.
Fortunately, a scientific allocation of costs often results, quite by accident, in a better product.
Why not plan it that way? Improving the product at every opportunity is what it takes to stay
abreast of competition.
T o move ahead calls
for new ways to improve the product.
By bringing people from Marketing and Styling into the value task groups, value analysis today is putting market-timing and appearance
among such customer benefits as performance and
dependability. It would be a gross waste of skills
to tell such a blue-ribbon team, "Your job is to
reduce cost, not improve the product."
By fully utilizing all the resources of its task
groups, value analysis in the 1970's will create
opportunities to make products not only more marketable, but also more useful and beautiful.
r

THE

JOURNAL

A CHALLENGE . . .

Value Engineering in
Commercial Industry
by

WALTER N . HEROLD

As T H E READER will no doubt have noticed, most

of this issue of the JOURNAL is devoted to "Value
Engineering in Commercial Industry." Recent
expressions of the national S A V E officers (see the
fall issue of the JOURNAL and the August issue of
Production), as well as the advice of so prominent
a practitioner as Larry Miles himself, all lend
emphasis to the notion that the greatest opportunity
for Value Engineering lies in commercial industry.
The question may be asked why we should
separate commercial industry from other industry.
The answer is simple: There is more of it! A lot
more, let's say, than government- or defenseoriented industry. How much more can readily be
seen by a few rough figures rounded off to make
it easy for the reader.

Gross national product

T H E GROSS NATIONAL PRODUCT will reach an esti-

mated $942 or so billion in the year 1969. Not all

of the gross national product is composed of manufactured goods. So, to keep things simple, let's
just say that the value of the total manufactured
goods for this year will be approximately $400
billion.
"For every dollar's worth of defense hardware
we produce, we produce at least ten dollars' worth
of commercial hardware. There are not quite 20
million people employed to produce all these goods.
Not one in 7,000 is a Value Engineer! There are in
this country only enough known (by that I mean;
members of S A V E ) Value Engineers to have one
Value Engineer available for about 300 business
firms. Most of these Value Engineers are concentrating their efforts in plants where defense contracts having Value Engineering clauses enforce application of Value Engineering. Yet, even if we disregard this gross maldistribution and would apply
our available Value Engineers uniformly across the
board to the available products, we would give each
Value Engineer the opportunity to work on about
$200 million worth of goods per year. If, on the
the average, Value Engineers were only 1 percent
effective, each would help to save $2 million during
OF

V A L U E

ENGINEERING

that same year.

Value Engineering asks us to "go where the
dollars are". I have presented this little exercise
in numbers simply to show you where a vast opportunity exists and to stimulate your imagination to ask some questions, questions to which we
must develop answers!
Almost everything ever said or written about
Value Engineering, especially in presentations to
management, has been hardware-oriented. No one
has escaped the examples where one dozen screws
have been replaced by a single spring; everyone
by now "knows that a pencil makes a mark", and
everyone knows that the function "make mark" is
worth about a penny; every Value Engineer
knows how to use a job plan, define functions,
find alternatives, compare costs; and most managers have read about it. Most of us feel sorry for
the poor managers who simply haven't realized yet
what they are missing by not using Value Engineering to the fullest extent possible in their enterprise. And that is, and has been, the story right
along.
But have we really used our imagination, have
we really used and applied what we have learned
as Value Engineers to help further Value Engineering in the area where the greatest opportunity
exists?

VE 22 years old
V A L U E ENGINEERING is now 22 years old. Value

Engineering can no longer qualify as an infantgrowth ought to be apparent! Growth means change,
the very change we advocate, and yet, change in our
presentations is lacking almost as badly as change is
lacking in every other situation.
What do I mean by "change"? I n this context, I mean that change is necessary in our attitude, a change in the orientation of our presentation, a change in approach. I feel that it is no
longer necessary to tell the world that Value E n gineering exists. The business world knows it.
I can no longer feel it necessaryor even useful
to show our "before" and "after" mousetrap.
9

Managers' problems
TODAY'S MANAGER and today's management techniques have changed. Today's Manager is tuned
to "return on investment, profit contribution, cost
reduction, and value improvement."
And while they are thinking of cost reduction,
we spend time explaining that Value Engineering
is not cost reduction. At this point, we are tuned
out because we are no longer addressing ourselves
to the manager's problems.
So the useful presentation will of necessity be
one which addresses itself directly to needs of management, and, in order to make these presentations
effective, we have to get answers to this question:
"What are management's problems?"
Then, because we are Value Engineers, we
must use all the techniques at our disposal to
determine what produced these problems. We
must find ways of solving them, and what the cost
impact of the alternatives is if we want to learn
where and how Value Engineering can best be
fitted into an organization.
Some of this work is being done, with effectiveness, by consultants in Value Engineering. But
even the most high-powered consultants will go
through the information phase by using the knowledge of the people inside the organization. What
I am suggesting is that all information necessary
to develop answers to our question is already at
hand. I t lends itself to complete analysis by
people trained in value work.
My personal experience, though limited to a
small region of the country, would make me believe that, at least in good times, companies are
willing to spend the time and money to allow their
employees to take part in various courses, workshops, and seminars offered to teach people how to
do Value Engineering ( I am not making any distinction here between Value Engineering and Value
Analysis. I feel that the distinction is one that
may lead to semantic arguments, thereby masking
the real purpose of this discussion).
When interest rates rise and profits are squeezed,
there occurs a rote reaction which tends to reduce
the enthusiasm with which firms spend money
for activities whose immediate results are not measurable in added profit. And to the timid, the
great publicity which currently surrounds the Administration's efforts to cool the economy might
well be a signal to stand back while citing a common road block, "Yes, but not right now!"

Now

is the time

W E V A L U E ENGINEERS, in particular, know that

there has never been a more important time than
the present to put our special talents to work. The
10

change in attitude for success in this endeavor is

one that looks at a situation from the broader viewpoint of the Manager to whom we have to make
our application.
Value Engineering is a technique for providing
good value; it is a technique for improving profits; it can improve reliability; it can pinpoint
new opportunities; it can lower costs and, in addition, Value Engineering can be applied at all
levels of a system and at all levels in a business.

Implementation

at one level

IDENTIFYING to determine where the level of implementation should be in each firm involves determining where failure is most common. The function, "Install V E " requires full support of the one
person or agency who makes the program policy in
the firm. It doesn't matter whether you find the
opportunity in the Engineering Department, Manufacturing, or in Purchasing, or as a Staff Assistant
to a General Manager. I n your case, you must
determine if the person to whom you make a presentation is, in fact, the person who is able to install a program. Once that determination is made,
once that one person has been located, it becomes
necessary to think yourself into his shoes. What
is it he is trying to do, and how can you be most
helpful?
At this point you will find many alternatives
and several solutions. If you are addressing a
Purchasing Manager you may have several ways
to reduce cost of inventories, to save by standardization, or to help in evaluation and selection of
vendors. If you are addressing an Engineering
Manager you may, in fact, have found a better,
lower-cost mousetrap; if you are working with
Manufacturing you may have found a lower-cost
way of assembling pieces, some new material easier
to machine. I n each case you will be strongly
tempted to make your presentation, emphasizing
the specific item or activity which you have selected for a job that can be done better at lower
cost.

Prime objective lost

I F Y O U HAVE done your job well there is no reason
why your proposal should not be accepted, and
you will, in fact, help reduce inventories, find a
better vendor, build a better mousetrap, or reduce
assembly time from 7 to 6 minutes, but you will
have missed the job you set out to do. You will
have lost your prime objective because in all likelihood you have failed to "Install Value Engineering" as an on-going action.
Many techniques can reduce inventory, help
T H E

JOURNAL

letters to the editor

To the Editor:
Congratulations on the September issue of
the JOURNAL. Y O U and your staff are to be
commended. I just hope the rest of the Society provides the support you so well deserve.
I am still looking for a location with a
company. I n the meantime I am doing contract work for the Office of Economic Opportunity. If it is successful I will have an article
for you.
Yours for better value,

seemingly peculiar theme arrangement. Can

' you give a clue?
Best regards,
t

RALPH I.

MORSE

Rochester, New York

A theme does not constitute an entire issue
and no issue will limit itelf to a single subject.
However, some of our best know-how in VE
comes from cross-fertilization.
Try this issue
and let's hear from you again.

W I L L GARISS, Seattle

Thank you, Will! The only reward any SAVE

officer, local or national, asks is that his efforts help members and affiliates grow in stature and recognition.

To the Editor:
I've been reading over and over again the
announcement in S A V E Communications that
you plan to feature for each issue of the
JOURNAL a theme as follows:
Fall: V E in Defense
Winter: Commercial Applications of V E
Spring: V E in the Building Trades
I find myself engulfed with particularly
negative emotions that come out as follows:
1. Since I'm in only one of these fields of
industry, perhaps I should get only one issue
of the

JOURNAL.

2. If I should wish to contribute to the

JOURNAL, I'd better watch my timing or my
issue may already have gone to press.
3. I guess this is an attempt to get broader
coverage of more industrial areas in the JOURNAL, but it is likely I'll read only one issue
and merely skim the others.
There must be other reasons for this

OF

V A L U E

ENGINEERING

To the Editor:
Communcations is defined by Webster as
the giving and receiving of messages. If any
message could be clearer than the number of
members downgrading to affiliate, it would
have to be outright resignation. These people
are trying to tell S A V E that it should use its
own principles in its own organization and not
join in "me-too" activities in imitation of
other technical societies. Our members make
their livings by showing their employers how
to reduce costsHow can you seriously expect
them to support frivolities such as the
JOURNAL?

Our best efforts at presenting V E material

should be published in other societies' technical journals and not buried under our own
private publication. Only in this way can
we make our story known to the rest of the
technical press.
ROBERT H . BOWERMAN

Middletown, R . I . 02840

Affiliate

We encourage Value Engineers to publish

wherever possible, but I don't believe
that
other technical societies gained their stature
by only publishing their works in still other
Society's publications. Lets hear some other
members' responses.

11

select vendors, improve reliability, or even reduce

costs. To install Value Engineering your presentation must show not the cost of a piece of
hardwarenot even the profit which might be derived from changing this piece of hardwarebut
instead the organization cost and return expected
from a Value Engineering group. The presentation must describe the planned activities of such a
group. I t must outline the goals and the probability of success, and i t must describe quite precisely what support is required from the Manager
to whom you make the presentation. I t must also
define the authority and publicity needed to assure
success of the program.
I am quite aware that some readers may think
that such an approach is outside the prerogative of
the average Value Engineer. Let me remind you
then that the principle of deferred criticism should
also apply to the presenter. I n my contact with
Value Engineers, and especially with those who are
Value Engineers i n name only without a f i r m base
of responsibility, i t has become quite apparent
that those who hope to work in commercial industry are frequently frustrated by a lack of recognition of this very point. I t is not reasonable to
wait until Value Engineering is "discovered" by
management. I t is more reasonable to use our
skills to the best advantage for the f i r m with
which we have chosen to associate ourselves. I f

our attitude is one of confidence, backed by skill

and knowledge, and reinforced by a well-planned
and "Value-Engineered" presentation, we can hardly fail to make the impression necessary to further
Value Engineering in commercial industry, provided it is made at the proper level.
Let's return once more to the numbers I mentioned in the beginning of this article.
Five
hundred billion dollars' worth of goods are produced by somewhat over 300 thousand operating
manufacturing establishments, each of which employs an average of approximately 60 workers. The
fact that there are only enough Value Engineers
in the country to put one into one out of every 100
plants hardly constitutes a massive breakthrough.
Still, each of the 300,000 plus establishments is
in business to try to show the very best performance possible. Only we Value Engineers can
see to it, by our own efforts, that Value Engineering will be one of the useful tools helping each
of these establishments reach its goals. I f we are
successful in having Value Engineering accepted
by commercial industry i t follows naturally that
the goals of Value Engineering represented by
SAVE will also be reached.
The president of SAVE closed his message in
the fall issue of the Journal with these words,
" I t is a challenge to us a l l . " There is no way of
describing the task ahead more succinctly.

Publications now available

"Application of Value Analysis/
Engineering
Skills"
(A
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including Addendum)
(b) 1969 A d d e n d u m o n l y . . . f o r
those w h o have a l r e a d y
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3.
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Administration"
By: G e o r g e R. W e e k s / D a v i d M .
Cooper A v a i l a b l e N o v e m b e r 1969
6.
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Programmed
Study Record (V.E. w o r k b o o k )
7.
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1969 (Two volumes . . p a p e r b a c k
edition . . . limited quantity)
M e m b e r Cost
N o n - M e m b e r Cost
1966 (Hardback edition) M e m b e r Cost
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1 9 6 7 (Hardback e d i t i o n ) M e m b e r Cost
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Items stocked at National Business Office

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M e m b e r Tie Tac
Past President (Chapter) 10k G o l d
National Officer10k Gold
Member C h a r m 1 4 k Gold
M e m b e r C h a r m on 1 " G o l d Disc
C u f f Links
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(Send your order w i t h check to S A V E National Business Office, W i n d y H i l l ,

Street, Smyrna,

12

Ga.

Suite A - l

1741

Roswell

30080.)

T H E

J O U R N A L

VE
Hits the MP*
by

J O H N E . REICHEN

Following are some excerpts from two

presentations made at meetings of the Portland,
Oregon
SAVE
Chapter, 4-10-69 and 5-15-69.
The subject was "Selling
Value to
Management".
A B O U T TWO YEARS ago

I planned to introduce V E

into Switzerland, mainly to gain V E experience

under foreign conditions. The following won't be
a blow-by-blow description of what took place but
will highlight my more interesting experiences.

No VE for Swiss?
A T T H E OUTSET, a management consultant i n Zurich declared flatly, in a very lively dialogue, that
Switzerland and V E were incompatible. His reasons, in addition to the usual roadblocks, were:

^
x

yj^Qfr/Qt

Change is unnatural.
To the Swiss, criticism, no matter how constructive and subdued, appears unethical.
Without high costs, there can be no quality.
The Swiss are, after all, world-famous for being
the savingest, Americans, the most wasteful:
OF

VALUE

ENGINEERING

13

scious electromechanical design, but it was not

cost-oriented.

Going to work
A B O U T 30 interviews with 14 prospects resulted
in my going into design for a maker and distributor of audio-electronic instruments. His product had the reputation for being well-engineered
and of top quality. The firm, with about 500 employees and workers, was strictly a one-man show
the chiefs. Actually, he didn't particularly react
in favor of V E either, so I hoped to gain his confidence by working out a tailor-made program, and
looking for the psychological moment to bring up
VE.

Logical conclusionU.S. needs V E , Switzerland does not.

Here was a challenge!
Also, I noticed a
course advertised at the Swiss Federal Institute of
Technology, "Economic Design Practice by Value
Analysis". Since the consultant had just claimed
V E could not possibly be used in Switzerland, I
promptly signed up for the course to check this
enigma firsthand.
The course started with this premise: I n order
to minimize costs of items, you must know the
parts' essential functional requirements.
That
sounded fair enough. "Function" was used in
about every other sentence, but the instructors used
it to imply how inexact a part could be and still
function. I t all amounted, really, to a functional
dimensioning course, introducing geometrical and
statistical tolerancing methods. These instructors
insisted that was the only way V E could be
taught. The course was excellent on cost-con14

Three months later, a newly hired general

manager concluded a technical meeting with:
"We're not trying to put you (a vendor) down;
we want to reduce costs here with value analytic
techniques." Minutes after the meeting I cornered
the Manager. Of course, his idea about V E still
focussed on cost reduction and industrial engineering, holding the attitude, "We're doing it already."
After a "Fine, I hope to fit right into the program,"
from me, I was told there was no program. Fortunately, his interest was aroused at the meeting
by my talk about potentials of Cost Avoidance.
Our conference ended with an order to come up
with a Cost Avoidance Plan for the firm in one
month. The manager liked my outline, except that
he wanted about 10 variations of training methods
proposed for selection. He must have seen the
handwriting on the wall for he spelled out some
limits:
Involve only the technical area, don't
touch existing organization, and don't emphasize
change.
My regular designing, and my cost-consciousness, met with the chiefs approval, however,
many ticklish points remained. A program outline, now in 10 variations, was examined, but still
brought no official green light.
The news at that time was full of the latest
advances in Japan: Fastest G N P rise, first in
shipbuilding, second in electronics in the world,
etc. I interpreted this to the manager as, in part,
an effect of the Japanese putting V E in high gear.
Also, at this time a S A V E Newsletter mentioned
increased V E activity. This, coupled with some
more overkill on my part, finally produced action.
Management specified a limited program of one
team, no seminar, and training on workshop projects at least one day (but not necessarily more)
per week. The program was to start in three
months. Meanwhile, we would work our details of
funding, facilities, project selection, preparation
of a manual, etc.
T H E

J OUENAL

give a thumbnail sketch: It starts without an

Information phase, but with a Function Analysis
phase. The purpose of this phase is to reduce
the number of parts in an assembly to a minimum
by questioning each element, and eliminating it or
combining it with another one fulfilling the same
function. An example called out two different
primary functions and several unspecified secondary functions. This was followed by the Particle
Analysis as phase two. The final phase, called
Model and Proposal, asked for a prototype of
the results from the previous work to be submitted along' with a change request to management for approval. According to their story, that
is all there was to V E .

VE manual
I T TOOK three attempts to generate a manual for
the new V E activity. The final version is a
partial translation of H i l l into German, omitting
all references to the military, as well as to anything
not essential for immediate use. When editing
the manual, I added a few special chapters and
standarized the nomenclature of the Job Plan to
have the names' initials in alphabetical sequence:

Particle

analysis

O F COURSE, I keep looking out all the time for any

new ideas and techniques either originated, modified, or applied differently in Europe. One thing
new to me was Particle Analysis. This technique
is used to identify and eliminate all unnecessary
material particles, if I may take license with the
definition.
The basic procedure of Particle Analysis is
quite primitive: One draws the views (usually
three) in orthographic projection of the existing
item on mm-graph paper, then makes a red "x"
in all squares within the part outline which are
not essential to the parts function. A l l unmarked
squares within the original outline approximate
the shape of the new part. The result is drawn
as an isometric figure from which one decides on
the optimum material and process combination to
get an economically feasible item.
As I understand it, the two-word function definition is one prime tool and distinctive feature of
VE.
I n all the literature I scanned over there,
and from talking to V E instructors, I found little
evidence of this. For an electrical wire, for instance, our definition would be "conduct current";
theirs, "conduction of x amps of electrical current".
(The German language allows the two-word definition just as easily as English.) My mentioning
these points brought quite a few sneers for the
overly simple and illogical American.
Also there was this three-phase job plan. T o
OF

V A L U E

ENGINEERING

Phase
A
B
C
D
E

German

American

Anfangsarbeiten Information
Beschaffung von
Moeglichkeiten Speculation
Charakterisierung Analysis
Durchfuehrung
Implementation
Endarbeiten
Reporting

The original reason for my doing this, to make

teaching easier, became secondary in the end; the
main advantage gained was in the numbering of
worksheets: Project No.PhaseSheet No., etc.
This automatically sequenced our filing jobs, coordinated status control, and references to earlier
work were considerably simplified.

Operations begin
As OPERATIONS started, the manager said, "We're
really none too keen for new proposals. We have
a big backlog of perfectly good value-improvement
change proposals. If these cannot be implemented,
more will be worse!'' The first thing on the agenda,
then, was to get action on" these changes. This
change implementation had more benefits than expected. Examples were:
The change proposal stack was lowered, creating a vacuum.
Management was shown how much was or was
not saved.
15

Other departments got a little taste of working

with us.

reduction of 35 percent from the original item.

W i t h costs still at K = 32,320, our team was permitted to work at it. We chose to work mainly on
the "prevent turning" function since this functional area contributed the highest costs. For simplicity's sake, we assigned as its worth the original
cost of K = 18,000.
From several possible alternatives, we picked
two: one to submit and one as backup. Figure 3
shows the one approved by management for implementation. The number of parts was down to 20
and the estimated costs K = 24,480. This meant
additional savings of 26 percent beyond the threephase " V E ' d " units, or 51 percent saved overall
from the first design proposal (figure 1 ) . This
" V E ' d " device was, incidentally, easier to assemble
and performed better and more reliably than any
previous unit, while retaining all necessary features
expected of the new design.
Our team finished 18 projects i n half a year,
saving 528,705 net or 43 percent (on individual
projects the minimum was 19 percent, the high
90 percent). The effort had a return ratio of
12:1; that is, 12 francs saved for one invested.
After this kind of start, management was very
enthusiastic about V E . Also, we got the red
2

:i

I t gave the team pretraining since a f u l l seminar was out.

Savings from the change implementation were
not credited to the V E program, but neither
was our time charged to i t . Hence, we trained
for free as far as the books showed.
I n more than half the cases, our V E projects
came about for one reasonexisting items costs
had gone completely out of proportion when an
engineer added features for a new-generation instrument.
Figure 1 shows such a device. I t

is the cross section through the upper portion of

a special turntable which was then to be " V E ' d " .
Originally, the rotor was stopped, as desired,
by a manually actuated detent i n one of two
locations. Costs for this were predicted K n = 18,000
in the coming year (the money unit is Swiss franc,
equivalent to about $.25). One reason for the redesign was that i t must be stoppable and releasable
directly from the electronic circuitry at any location.
The new design (figure 1) consisted of 32
parts and its costs were estimated at K i =50,000.
Figure 2 shows the device after an engineer gave
it a going over by the just-mentioned three-phase
VE method. This version now had 26 parts and
the estimated savings amounted to 17,880, or a
16

carpet treatment from nontechnical people and

nonparticipating departments such as Purchasing,
and, of course from vendors. As the program
progressed, something happened which caught me
by surprise. Lower echelon people i n Production,
Quality Control, etc., who were very skeptical at
first, warmed up to VE's activity and came forth
increasingly with suggestion and help. I felt we
were really getting through with unusual ease.
But the more active these became, the more management cooled off. Creative thinking, i t appeared, was in some places the exclusive domain
of chiefs.
Aside from the just-cited turn of events, I feel
my foreign V E experimentation was an unqualified success. This particular program will probably not remain permanent i n its conceived form,
if at all. But the initial success, at least, should
assure us that V E can be sold to management,
even under difficult situations.
THE

JOURNAL

Quantitative
Decision - Making
Applied to
Project
Selection
by

R. E . MANELIS

Selection of projects often is done solely on the

basis of cost.
What constitutes a "good
project",
however, is determined by several factors, each important in its own right but of different
relative
importance in the total consideration.
This article describes a quantitative
approach whereby all
factors are weighted and each potential
project
graded to determine its relative desirability.
The
factor weights and grading scale are determined objectively and examples are used to demonstrate
the
process.

Selectionchance or choice?
P R O J E C T SELECTION has long been a critical area
for value engineers. Choosing the right project
can mean the difference between failure and impressive savings. This article proposes a method
which, while not a guarantee for success, provides
for objective selection of Value Engineering projects.
There are many factors bearing on the selection
of suitable projects. I t is virtually impossible for
one person, or even a group, to evaluate project
potential through composite perception. Only a
quantitative approach provides for examination of
projects against each of many factors. This approach incorporates a weighing process whereby
each factor considered is examined in the light of
its relative savings potential.
The quantitative process can be compared to
grade-point averaging in college, where each course
carries a weight expressed in credit hours indicative of its importance. Each student is evaluated
in each course and his total grade points determine his relative class standing. By applying
this concept to project selection, each potential
project can be evaluated against a set of weighted
factors and its overall desirability as a project
determined.
The quantitative process, demonstrated here, follows the following sequence:
a> Determine all factors bearing on project selection.
OF

VALUE

ENGINEERING

b) Define all factors specifically to avoid overlap.

c) Determine relative merit (weight) for all
factors.
d) Establish grading scale for each factor.
e) Determine for each project its grade for each
factor.
f) Compute score for each project.

Factors and

definitions

T W E L V E FACTORS and their definitions are presented in Table 1. The reader will note that the
list is hardware-oriented but can be changed to

COST - THE DOLLAR E X P E N S E OF THE ITEM FOR TOTAL QUANTITY; E X P R E S S E D

AS

DOLLARS PER YEAR OR DOLLARS PER CONTRACT.

C O S T - T O - V A L U E RATIO - THE RATIO OF UNIT COST TO UNIT VALUE (AN

OF

INDICATION

DOLLAR SAVINGS P O T E N T I A L ) .

PROBABILITY OF IMPLEMENTATION - THE REASONABLENESS OF THE EXPECTATION

THAT A SOUND PROPOSAL WILL BE IMPLEMENTED ( P O L I T I C S , S C H E D U L E ,

ETC.).

S T A T E - O F - T H E - A R T - THE EXTENT TO WHICH A PROPOSED PROJECT APPROACHES

OR

S U R P A S S E S THE EXISTING S T A T E - O F - T H E - A R T . ( B E F O R E PRODUCTION R E L E A S E . )

VARIETY OF DISCIPLINES - THE NUMBER OF TECHNICAL AND NONTECHNICAL

DISCIPLINES INVOLVED IN THE DESIGN ( E L E C T R I C A L , MECHANICAL, CHEMICAL, E T C . ) .
AVAILABILITY OF NEEDED TALENT - THE EXTENT TO WHICH THE NECESSARY T A L E N T S
FOR

PROJECT STUDY WILL BE AVAILABLEINTERNALLY OR E X T E R N A L L Y .

7)

NUMBER OF PARTS - NUMBER OF PARTS INVOLVED, INCIDENTAL HARDWARE.

8!

C O M P L E T E FUNCTIONAL A S S E M B L Y - T H E EXTENT TO WHICH THE PROPOSED

PROJECT R E P R E S E N T S A COMPLETE FUNCTIONAL A S S E M B L Y .
NUMBER OF MANUFACTURING OPERATIONS - NUMBER OF P R O C E S S E S INVOLVED
IN THE MANUFACTURE ( E . G . , DRILLING, MACHINING, MILLING,

ETC.).

io:

NUMBER OF MATERIALS - E . G . , B R A S S , ALUMINUM, E T C .

I D

PROBLEM CHILD - THE EXTENT TO WHICH THE EXISTING DESIGN IS AN ACKNOWLEDGED

PROBLEM ( E . G . , WEIGHT, S I Z E , L O G I S T I C S , S C R A P , REWORK, PERFORMANCE, C O S T ,
SINGLE S O U R C E , F I E L D S E R V I C E , S C H E D U L E ,

ETC.).

COOPERATION AND INFORMATION - THE EXTENT TO WHICH NEEDED INFORMATION

AND DATA ARE A V A I L A B L E .

T A B L E I. PROJECT SELECTION FACTORS

17

10

TOTAL

11

12

12

1.

COST

2.

COST-TO-VALUE

19

19

1
1
11

3.

IMPLEMENTATION

4.

STATE-OF-THE-ART

5.

DISCIPLINES

6.

TALENT

7.

NO . OF PARTS

12

8.
9.
10.

AVAILABLE

OPERATIONS

MATERIALS

20

17

FUNCTIONAL

ASSEMBLY

11.

PROBLEM

12.

COOPERATION AND INFORMATION

T A B L E I I . D E T E R M I N A T I O N OF R E L A T I V E

reflect other types of projects or industries being

considered.
I t should be pointed out that factor definitions
are extremely critical and should not overlap. I f
a given criteria is covered by two or more definitions, it will have an unrealistic additional weight
in the final computations.

Relative

MERIT

merit

OBJECTIVE RATING of the relative merit of factors

can be done with the type of chart shown in Table
II. Each factor is compared for importance with
every other factor and a weight of two points allocated with each comparison. Again, allocation will
depend upon the situation of the
user. The objective is to determine
the relative importance of
COLLEGE GRADING ANALOGY:
various factors so that evaluation
70_80_
9.0 1 0 0
of a project becomes less subjective,
AVERAGE
less intuitive and more scientific. Re2 I 3 4 CREDITS
GRADE
ferring to Table I I for an example:
where factor three (probability of
EXAMPLE 1 : COST
implementation) and ten (number of
500K
350
materials) are compared, i t was felt
10K
SCALE $
that number three was of greater importance in project selection. Three
GRADE P T S .
~7"TT~
was given two points and factor ten,
no points, as shown i n the circles.
PROJECT INVOLVES S 3 5 0 K ; THEREFORE GRADE = 7 . 1
Because the weights are added horizontally, the two points are placed
EXAMPLE 2 : PROBABILITY OF IMPLEMENTATION
in the row of factor three and i n the
0
8
column of factor ten. The zero is
PROBABILITY
placed in the row for factor ten.
10
When all comparisons are made, the
GRADE P T S .
weight for each factor is simply the
total of all points in that row.
80% PROBABILITY OF IMPLEMENTATION; THEREFORE GRADE = 8.0
EXAMPLE 3: DISCIPLINES INVOLVED
1

3_

QUANTITY
10

GRADE
IF 2 DISCIPLINES INVOLVED, THEREFORE GRADE = 5
IF 4 DISCIPLINES INVOLVED, THEREFORE GRADE = 10

FIGURE 1 . SCORING LINEAR

18

Grading scale
I N T H E C O L L E G E GRADE POINT SYSTEM,

each course has a grade scale of from

0 to 100. Each student is given a grade
(4-credit A, 3-credit B , etc.), depending upon where in that scale his abilities fall. Similarly, for quantitative decision-making, i t is necessary

EXAMPLES

THE

JOURNAL

ALTERNATIVES:
F A C T O R S (WEIGHT)

(12)

(19)

PROJECT
A

(19)

1.

COST

2.

COST-TO-VALUE

"

57

1)

(11)

133

3.

IMPLEMENTATION

"
5

4.

STATE-OF-THE-ART

10

"

5.

DISCIPLINE

6.

TALENT

AVAILABILITY

7.

NUMBER

OF PARTS

4)

(12)

8)

64

10

8)

""""""sg

0
11

(20)

12

(17)

JL-

""~40
-

10K
5 0 0 K AND U P

P R O J E C T S UNDER

5 TO 1
1 0 0 TO 1
AND U P

IF UNDER

0
1

1 0 K G E N E R A L L Y NOT P R A C T I C A L

5 TO 1 P O T E N T I A L

I S POOR

IN T E R M S O F P R O B A B I L I T Y

FUNCTIONAL

9.

MANUFACTURING

_ J ^

TOTAL

Tl9

IV.

OPERATIONS

757

0
100

QUANTITY

TERM

E X P R E S S E D AS A P E R C E N T A G E

B E L L - S H A P E D RELATIONSHIP - S E E DISCUSSION
NEXT SECTION

'.
0
100

EXPRESSED

AS A P E R C E N T A G E

QUANTITY

TERM

MATERIALS

1
5 AND O V E R

QUANTITY

TERM

11.

PROBLEM

0.5

E I T H E R Y E S OR NO

12.

C O O P E R A T I O N / INFORMATION

0
100

E X P R E S S E D AS A PERCENTAGE

DECISION MATRIX
TABLE

to establish a grade scale for each factor. Once

this has been done, a project can then receive a
grade indicative of its place on the particular factor
grade scale. This grade will then be multiplied by
the factor weight. To establish grade scales for factors not generally measurable is difficult at best.
The scales which have been selected (Table I I I )
are for purposes of demonstration and should be
changed to reflect a particular situation.

Grade

0 = ROUTINE, UNCREATIVE, DESIGN

1 0 P R O P O S E D A D V A N C E IN S T A T E - O F - T H E - A R T

1
3 AND O V E R

1
1 0 AND O V E R

^19"

808

TABLE

ASSEMBLY

"
0

0
10

VARIETY

8.

10.

determination

To DETERMINE a grade for each project as against

each factor, an arbitrary maximum of 10 has been
selected. Each factor which can be expressed by a
linear measure can be set off against the 10-point
scale, and projects graded appropriately. Figure
1 shows this for linear examples.
As the number of parts in an item increases, its
potential as a Value Engineering project also increases. However, a point of diminishing returns
is reached where i t becomes more practical to d i vide the item into several "subprojects" for application of V E techniques. Therefore, when measurNUMBER OF P A R T S

10

15

23

PROPOSED PROJECT HAS 2 3 P A R T S ; GRADE T H E R E F O R E IS 8

FIGURE 2 .

OF

COMMENTS

TTIGH

1)
5

LOW

FACTOR

_ 3 - ^ ^ ^ 9 6

PROJECT
B

V A L U E

SCORING - B E L L C U R V E

ENGINEERING

III.

GRADING

SCALES

ing the potential of a particular item for Value

Engineering, this relationship of parts to score is
best represented by a bell-shaped curve. Figure
2 shows the application to bell-shaped relationships.
Resulting grades can then be placed in the
upper left portion of a decision matrix, as shown
in Table I V . The individual products of grade
and factor weight are entered in the other half of
the square. These products are then added vertically to give the total score for the proposed project.
Many who use quantitative methods prefer to
normalize the factor weights so that they total
1, 10, or 100. The rationale behind this is that
the maximum total score then becomes 10 or 100,
depending upon the grading scale used. This appears to provide no practical advantage and adds
another step to the process.

Conclusion
T H E DECISION MATRIX can

be used for any

quan-

tity of projects. When the total project weights

have been established, the best potential project
will have the highest total. After one works the
quantitive process on several projects and analyzes
prior successful and unsuccessful projects, an appropriate allocation of weights and grade scale values
can be made. W i t h experience, a threshold value can
be established and a single project can then be
evaluated against this figure. I t is also suggested
that some industrious reader prepare a set of nomographs for project selection, which would, carry this
quantitative method one step further.
I t could be argued that this organized methodology is no stronger than the experience of the
individual using it. However, i t does serve as a
forcing technique to require consideration of all
elements bearing on project selection and is at
least one step removed from complete subjectivity.
19

The JOURNAL
needs you!
The following editorial first appeared in the September issue of the JOURNAL. This issue reflects a
part of your response which has been
wonderful.
It is repeated in the hope that with an even greater
input from an ever widening field of interest and
concern, we can fulfill our goal of a larger and more
useful publication.
We hope soon to be able to
publish monthly and to reach many outside the
Society's membership with the expanding
benefits
of applied Value Engineering. Thank you for your
contributions!
Keep them coming!
Route your
copy of this issue to concerned people in your organization.
Urge your library to be a subscriber.
BILL DEAN,

THE

Editor

J O U R N A L O F V A L U E E N G I N E E R I N G is the tech-

nical spokesman of the Society of American Value

Engineers and its members. It also wishes to serve
and reflect the ideas of those interested in the V E
technology who are not now members of the society. I t is Value Engineering methodology, application and benefits in all facets of business, industry, service organization and Government.
Both the Society and the V E methodology are
currently i n a state of dynamic growth. Most
practicing value engineers recognize the urgent
importance of achieving maximum utilization of
our invested resources. The elimination of waste
is critical to a healthy economy. Knowing the potential of applied Value Engineering, the society
feels responsible for the continued development and
greater utilization of V E in behalf of the fullest possible achievement of its economic benefits.
To fully exploit the advantages and benefits of
V E requires an outreach to building trades, raw
material manufacturers, institutions, and the entire
complex of commercial and industrial enterprise as
well as expanded Government and defense usage.
New horizons also exist for application of Value
Engineering to systems, software.
It is the purpose of the journal to report current
advancements experienced by our readers, and to
capture the interest of personnel and organizations
outside our society as well as within. Only through
the sharing of ideas can each of us experience increased benefits for ourselves and extend these benefits in a competent and professional manner to the
many potential users.
Your JOURNAL, therefore, solicits your articles,
short subjects, and experiences on all facets of value
20

engineering from all practicing value engineers.

We are particularly desirous of receiving articles,
pro or con, about value application or related
fields, and problems and solutions from those outside the society membership. For those who would
like to submit material for publication, an author's
guide and instructions on preparation is available
on request. Members of the Editorial Review
Board are located throughout the nation for your
convenience and assistance. Direct your articles,
short subjects or inquiries to:
Robert Bidwell, Chairman
Editorial Review Board
D O D Value Engineering Services Office-DEVO
8D 376 Cameron Sta., Alexandria, Va. 22314
or:
W. B. Dean, Vice President-Communications
5204 Benton Avenue, Edina, Minnesota 55436
Poga 1
STATEMENT O F OWNERSHIP,
M A N A G E M E N T A N D CIRCULATION
(Act of October 23. 1962; Section 4369. Title 39. United Slatet Codt)
1. DATE Of NUNC
11 TITLE Of PUBLICATION
9/24/69
|
The J o u r n a l o f Value
J. FMOUfHCY OF ISSUE
Quarterly

P u W i , b

F i l

o l

*
'
^
PO"^.^""sc.,
on page 2

%Z?i*,;wm
';

Engineering

'
. ' y ^

4. ICKATION Of INOWH OFFICE Of PUWICATIOM (Slrttl. lily, catmtj. 11*11. ZIP tcji)

4 1 0 W. V e r o n a S t r e e t , K i s s i r a m e e , F l o r i d a 3 2 7 4 1
(Osceola
i. LOCATION Of THE HEADOUARTERS CM GtMRAi IIISMIU OtfKti Of THE FUMISHEtS /Kef prittml

ounty)

7715
W i s c o n s i n A v e n u e , W a s h i n g t o n , D . C . 2O014
6. NAMES AND ADDRESSES OF PU WISH EH. EDITOR. AND MANAGING EDITOR
ruusHE ff-u-,
.JJrcu) s o c i e t y o f A m e r i can v a l u e E n g i n e e r s ,
Windy H i l l ,

Suite A-l,

I n c . , National Business
Smyrna; G e o r g i a
30080

1741 E o s w e l l S t r e e t .

W. B . D e a n ,

5 2 0 4 B e n t o n Aveml e ,
MANAGING EDITOR (HaKt and aJirni)
P a t Benn .

-J.''.

&3ina, Minnesota

Office,

55436

7. OWNER (If owned by a corporation, its name and address- mast be staled and also immediately thereunder the names and addresses of stockholders owning or holding I ptritnl or more of Mat amount of stock. If not owned by a corporation, the names and
addresses of the individual owners must be given. If owned by a partnership or other unincorporated firm, its name and address, as
well at that of each individual must be given.)
AMMESS

NAME

S o c i e t y o f American Value

Engineer :

7315 Wisconsin A v e . , Washinston,

C . 20014

8. KNOWN BONDHOLDERS. MORTGAGEES. AND OTH R SECURITY HOTOERS OWNING OR HOLDING 1 PERCENT OR MORE OF TOTAl AMOUNT
Of BONDS. MORTGAGES OR OTHER SECURITIES (If there
NAME

None

9. FOR COMPIETION BY NONPROFIT ORGAMZAT1ONS AUTHORIZED TO MAIL AT SPECIAL RATES (Section 132.122, Postal Manual)
{Check tni)
Th pwpoie, function, onrf nonpiofil ilolut of thii or- [1 Hov net rhgng.d || Have changfd dgr.na
(If changed, publisher must
gonJzoiion ond th. lempi itah.. Iw FTerol incom. ta* 11 d
p,K.tlin 12 11 pending 1 2 moniht
submit explanation of change
pwpo>
monlhi
wlb this statement.)
u f i n a

10. EXTENT AND NATURE Of OSCULATION

"Zu" "K.1?",o
s

3,011
Hone
........se,,.,..

0. FREE CISTRIMmON 1 imilndim s*mpltl> IT MAIt. CAUSER OR OTHER MEANS

t

E. TOIAl nSTRnuTION (Sam . / C and O)

F. OFFICE USE, LEfT-OYM. UNACCOUNTED. SFOUO AFTER PRHTMC
G. TOTAL (Sum aj E & f-4wU

tquol net prrst mm lisirw m A)

.
^
I certify rfijt the ititcmcnts midc by me above are comet
J

None

2,289

2,041

2,289

2,041

375

375

2,664

2,416

347

466

3,011

2,882

(Sigma/are c/ eJilor. prilirber.

THE

ZS?ZL

2,882

m*..g, . or
r

JOURNAL

Value

Engineering

Illustrated:

Realization of an
Appliance Manufacturer
by

JAMES

MACINTYKE

The author first comments on the need for Value

Engineering in the appliance industry,
discusses
briefly Value Engineering's relationship
to other
cost improvement programs, and then proceeds to
relate the circumstances behind managements
concern over cost improvement
of a product
manufactured by the St. Paul Division of Whirlpool
Corporation.
The four projects used as examples
are intended not only to demonstrate
Value Engineering's contribution
towards product
profitability, but also to serve as a testimonial
to the
progressive attitude of a product engineering group
that has accepted Value Engineering as a legitimate tool helping to improve the competitive
position of its company.

The need
COMMERCIAL,

INDUSTRY

in

general,

and

the

ap-

pliance industry in particular, require Value E n gineering or programs like it to remain competitivenot only domestically but also internationally. Mr. Glenn Evans, President of Warwick Corporation, speaking before a meeting of Cost Improvement people had this to say: "In the last
ten years, the growing flood of well-made, low-cost
imports from Europe and Japan have presented a
serious challenge to U.S. industryeven putting
the future of some in doubt.
At the present 20 percent of U.S. black and
white T . V . sets, 68 percent or 25 million radios,
and 75 percent or over 33 million tape recorders
are produced in the far east. Several American
manufacturers have surrendered to the point of
having parts or entire radio sets made in Japan
under their own brand names. Add to this the
Common Market influence in Europe, and we are
faced with an ever-increasing flow of foreign goods
into our market. As always, competition rears its
formidable head.
OF

V A L U E

ENGINEERING

Programs that help

M O S T COMPANIES today have programs directed
at getting the costs cut of their products. Industrial Engineering, Work Simplification, suggestion
boxes, Cost Reduction, Zero Defects, and Value
Engineering are, to varying degrees, utilized to
meet this end. The questions are: Why the need for
all these separate programs? Are they at crosspurposes with one another? Without compiling
a dissertation on the objectives, scopes, and values
of the previously mentioned programs, let us briefly pinpoint their respective relationship within the
Cost Improvement family.
Industrial Engineering and Work Simplification can be considered as primarily concerned with
feeds, speeds, and work movement, the most efficient method of performing the task. This can be
down on the production line or it can be concerned with the flow of office paper work. Zero
Defects, as the name implies, is a function of the
Quality Control department, orientated towards
sustaining or building customer confidence, with
Cost Improvement occurring only as a by-product
through decreased rejects and rework.

VE and cost reduction

A SUGGESTION BOX system generally yields that
which we define as Cost Reduction. Traditionally, Cost Reduction efforts start with the known
costs of parts such as production components,
and reduces their cost of manufacture. Practitioners of Value Engineering have claimed that
true V E goes beyond ordinary Cost Reduction by
attempting to achieve a component's function most
economically. I n fact, it may accurately be said
that through the V E methodology not only functions but all facets of Cost Reduction are exploited.
21

Value Engineering then provides us with a

much broader base and much wider spectrum for
realization of savings. Paradoxically, it should
now become evident that while all Value Engineering efforts are directed at Cost Reduction,
most Cost Reduction attempts may not be considered as true Value Engineering. This seems to
be the case in the vast majority of V E representations by trade journals which seem limited to
material or process changes. All would have been
arrived at through Value Engineering, but were
probably generated by conscientious efforts of engineering or procurement department in reevaluating requirements. Examples of in-depth V E
have generally been found in the ordinance field
and made known in related publications.

Commercial VE
W H A T T H E N has been Value Engineering's contribution to commercial industry? Unfortunately,
company proprieties and the absence of a central
monitoring authority, such as the Department of
Defense provides, make it difficult, if not impossible, to measure Value Engineering's total worth
to commercial industry. It is possible, however, to
discuss how Value Engineering has assisted a
specific company to improve its profitability. For
this purpose, let's review the recent history of a
product manufactured by the St. Paul Division of
Whirlpool Corporation.
In terms of different types of products engineered and built, St. Paul is the Company's most
diversified and complex operation. Through the
years, products developed by the Division have
later required phase-over to a facility with greater
production capacity. Thus the maintenance of
sales and employment levels requires one of two

actions: either a new product must be developed,

or an existing one made more attractive to the
consumer. The second could be accomplished by
adding features, aesthetics, convenience, etc., but
probably would have a faster market reaction
through decreased cost to the consumer. This is
where Value Egineering can best enter the picture. (A paper covering the first alternative is
in process for presentation at the S A V E National
Convention;. therefore it will not be further developed here.) The second, which has historically
had the attention of Value Engineers, can best
be appreciated by use of examples.

Developing a VE story
T H E PHASE-OVER transition of an Ice Maker was in
process last year at the time a Value Engineering
seminar was to commence. Looking to the future,
Mr. L . G . (Bit) Holder, General Manager, proposed that instead of working on diverse products
during the seminar, the workshop be devoted to
"value-engineering" the Ice Maker product. He,
along with others, thought that this line could
well be a sought-for product replacement.
I suspect that having read thus far many of
you might feel that a shift in emphasis from
training to results had compromised the seminar's
primary function. I n a sense this could be correct;
yet in a more positive sense, the situation might
better be viewed in light of presenting an opportunity to practice the V E methodology in an area
which would be of most benefit.

Project selection resolved

I N A L L TRUTHFULNESS, the Value Engineering
department was not especially enthusiastic about

Larry Miehal, Project Draftsman for the Ice Maker manufactured by Whirlpool Corporation
Doints to
the Value Engineering wire form used to support the cutter-grid and evaporator.
In his left'hand
he
holds the old sheet metal support
assembly.

Jackie Callanan, Engineering Steno at Whirlpool, removes

has shown to be no longer required on the Ice Maker.
corrimitting themselves to a product with limited
production volume in comparison to products with
hundreds of thousands of units available elsewhere. It is obviously a great deal easier to
achieve a $25,000 savings by reducing costs 50 on
500,000 units than it is to cut costs $5.00 on
5,000. Production remains a legitimate criterion
for project justification, yet it is not the only one.
What marketing manager can know when a new
product or a heavily promoted older one will really
take off? Think, for example, of the Edsel's failure
and the Mustang's success.
The Ice Maker situation was interesting in
that not one, but two, prerequisites for successful
Value Engineering were present. The studies had
the support of top management, and there existed
a definite and defined need for cost improvement.
The first contributed the manpower, resources, and
commitment, while the latter provided project
evaluators with the sustaining motivation to make
ideas work and get them installed.
Within five months after the seminar, a new
model Ice Maker incorporating four V E proposals
was released for production. Of these four proposals, two originated in the seminar, and two
outside the seminar. (Notefive projects were
assigned to workshop participants: the remaining three are currently undergoing further engineering evaluation.)

Two examples from seminar

O N E O F the assigned projects was the front support assembly for a cutter grid and evaporator
plate used on the 220-pound Slope Front Ice
Maker. The assembly was constructed of three
major stainless steel channels plus various studs
and brackets. The current design was costly and
OF

V A L U E

ENGINEERING

the false bottom

which Value

Engineering

it was difficult to achieve acceptable alignment of

the components. Three proposals providing four
variations were proposed by the V E team. It was
felt that seven recommendations were required because of other contemplated design changes. The
primary recommendation was to provide support
with a single, stainless steel wire form plus the
necessary studs and brackets. As a result of this
proposal, 20 parts were eliminated, and costs reduced by 43 percent.
It goes without saying that all rookie Value
Engineers are cautioned to practice good human
relations throughout their studies and in their
presentations.
Because of circumstances, one
seminar team found itself in a position to carry
this philosophy almost to an extreme. Their project had been the float and valve assembly used
to control the water level in the Ice Maker water
pan.
After investigating several alternate systems for controlling water, they determined that
a float assembly was the most economical means
of accomplishing the basic function. I n presenting their project to the General Manager, his
staff, and other concerned individuals, they indicated that the present engineering design presented the best value and that they could suggest
no ideas for significant cost improvement. They
commended Engineering for their design choice.
This team's contribution towards improved V E
relations with Design Engineering can best be
summed by relating the comments of the Engineering Project Manager: "The supporting point made
to management by the V E adviser that savings are
not always produced was appreciated. It makes
our reactions to these and future proposals far more
positive." Although the team was unsuccessful in
suggesting a better method of controlling water,
they did propose modifying the mounting for the
assembly. This was immediately accepted; con23

sequently, parts were reduced from ten to four,

with a resulting savings of 45 percent per assembly.

Forming a VE Team
I N EXCEPTIONAL CASES, where a particularly openminded Engineering group is not concerned with
whether an idea was "first invented here," it is
possible to deviate from the V E axiom that project teams should be composed of individuals
divorced from the subject under evaluation. It is
also necessary that these individuals believe in
V E , and be willing to follow the job plan. If you
are fortunate enough to have access to such people,
your function as a Value Engineer is greatly facilitated. The obvious advantages are that 70-90
percent of idea salesmanship has taken place during Phase I I (Speculation) rather than Phase V
(Presentation) of the V E job plan, and that you
have within your V E group people in a position
to implement the proposals.

Two

examples outside the seminar

A STORAGE BIN false bottom used in commercial,

self-contained ice makers was the subject of an
investigatory study.
Six functional areas were
represented on this study:
Planning, Process
Development, Manufactaring, Design, Industrial
and Value Engineering. Two of these areas, Industrial and Product Engineering, had direct product affiliation. Investigation into the design
background of the plastic false bottom revealed
that it was part of an original design for a 220pound-per-day model; its primary purpose was to
provide a smooth, continuous scooping service to
facilitate ice removal.
When a 450-pound-per-day model was designed,
the same specification was applied; however,
when a smaller 110-pound model came along,
changes in bin configuration and door location
eliminated the need for a scooping surface. The
plastic bottom was retained for the secondary purpose of separating ice from water in the bin
bottom. Subsequent redesigns of the 220-pound
and 450-pound models brought about similar bin
and door changes, but the plastic bottoms remained. I n effect, what had occurred was that a
previously secondary function (separate ice from
water) had attained primary function status.
Applying Value Engineering methodology, zero
worth was assigned the false bottom as a scooping surface was eliminated from the design. It
can be argued that the part still had a primary
function of separating ice from water, but this
was originally secondary. Remember also that
the product design engineer responsible for this
product was a V E team member and was conceding
24

that this part was not required. This, in effect,

turned out to be the case as further investigation
determined that water in the bin bottom was no
real problem due to the built-in slope of the bin
to the drain. Also most of the water remaining
was held by surface tension of the cubes themselves. There were other roadblocks to overcome,
such as aesthetics, but it is interesting to note
that one of the strongest advocates for change was
the product engineer who also contributed the test
data and field opinions that eventually sold the
change. Put yourself in his position and try to
appreciate the unprejudiced attitude of this engineer. As a result of this recommendation, a part
was eliminated on the Ice Maker that saved over
$3.00 per cabinet.
The last example did not have the benefit of
a formal team study. For that ^matter, Value E n gineering played no formal part in finalizing a
design or developing costs. This was carried out
entirely by Engineering and the Cost departments.
The circumstances that led to this change started
with Value Engineering questioning the necessity of a rather bulky hinge located on the back
of an Ice Maker. The hinge apparently existed to
facilitate entry into the cuber top for service. I n
gathering facts as to why the hinge was necessary,
the question was asked: "Must we even provide a
removable top?" The front panel also provides an
entry for service.
As it turned out, the answer was no, and with
obvious cost advantages present, Engineering undertook the design of a solid top. It did not prove
feasible to use a completely fixed top, however,
because of process problems. A semifixed design
was accepted, reducing parts from 29 to 13, which
resulted in savings of almost $1.00 each. Sometimes all that is needed is an idea presented to the
right person to get the "looked for" results.

In

perspective

T H E CUMULATIVE E F F E C T of the four changes discussed was a total reduction in parts from 92 to
41, and a cost improvement of close to $6.00 per
Ice Maker.
Justification for a commercial commitment to
Value Engineering will not be found in a government incentive sharing program, or, for that matter, in unspendable dollars of recorded savings.
The stimulant to a continuing investment in a
Value Engineering program is competition, the
need to produce goods at a price the market will
sustain, while allowing a reasonable percentage of
profit.
The appliance industry, having first served as
the cradle for Value Engineering, now continues
to evidence its effectiveness through price stability
in the face of accelerating inflation.
THE

J OURNAL

VALUE ENGINEERING

is Alive, Well and

Moving into Marketing
by

THOMAS J . SNODGRASS

The article, "Value Engineering

is Alive,
Well,
and Moving Into Marketing," traces the movement
of the original value concept from a purchasing- oriented activity into its present major area of in- "
fluence, engineering.
The article then
outlines
a next step which orients Value Engineering
techniques more closely to marketing.
A comparison
is made between a technically oriented
function
analysis of a stove and a customer-oriented
function analysis.
An example concerning user criticism of two competitive makes is analyzed.
Certain faults are tolerated, others are not.
The
term, "value research," is used to describe the
overall system, but the confidential nature of customer attitudes and cost information prohibits extensive publication of value research
studies.
T H E MOVEMENT of value activity from its origin
to the present state-of-the-art is interesting. The
term, "value analysis," was first used in the
Material Services Department, Manufacturing
Services Division, General Electric Company, in
the late 1940's. It was a purchasing tool used for
more accurate comparison in make-or-buy decisions. Next, was the realization that costs prevention could mean as much, or more, than elimination of existing costs. This necessitated moving into engineering.
There are common elements in the method of
practicing either Value Engineering or value analysis. The Value Engineering effort is often restricted to hardware components such as a group
of parts or assemblies, and a prejudgment has
been made that they represent a potential cost
reduction area. One or more items are selected
for comparable study. It is a rare study that does
not indicate significant areas of potential cost reduction, and often these areas are more easily
identified when similar competitive parts and assemblies are selected for comparative study.
In 1960 a research project was set up in the
Kitchen Appliance Department, Hotpoint Division, General Electric Company, to expand Value
Engineering techniques to include the function
cost analysis of a total product compared to similar
OF

V A L U E

ENGINEERING

competitive products. The basic concept of this

experimental unit was to determine what a group
of specialists, permanently assigned to the job and
with complementing backgrounds, could accomplish in establishing the lowest acceptable cost for
the product, the Value Standard.
In spite of the competence developed by this
organizational unit, several obstacles arose. The
first was that of obtaining competitive costs. Procedures used for cost-estimating of new designs
were too involved, costly, and time-consuniing to
be used to determine the function costs. The
second obstacle became apparent as the various
function cost differences were analyzed. The majority of major cost differences involved marketing
features such as appearance, convenience, etc., and
required the permission of marketing people for
changes. There was considerable reluctance to
grant this permission. I n spite of the obstacles,
however, it was obvious that an organization,
specially trained and dedicated to evaluating products, concepts, etc., and comparing, them with
existing competitive products, was a significant
step forward in the saga of Value Engineering.
The consulting firm of Value Standards, Inc.
was organized in 1963 with the express objective
of carrying the Value Engineering effort one step
further, i.e., to relate customer attitudes and acceptance of the product to the function costs of
products. This approach, which some now call
value research, must be customer-oriented Value
Engineering rather than technically oriented Value
Engineering. This paper will concentrate on cus^
tomer-oriented function analyses and function attitudes. Obtaining function costs, comparing function costs to function attitudes, and establishing
value standards are included in a value research
study, but article length prevents detailed discussion of these items.
A Function Analysis is the starting point for
the various types of Value Engineering applications. I t ' quickly becomes apparent that there
are several qualifying terms necessary to the word
"function." These break down into first, the
overall need which the product fulfills for the
25

customer, sometimes called the Task; next, are

basic functions by which this need is met; and
finally, supporting functions which become the
means by which the customer judges how well
the product fulfills the need.
One of the studies carried out, using technically
oriented Value Engineering, involved an electric
range. The range design was broken down into seven
basic functions and was given an overall function designation of "Cook Food." The seven
primary functions, in turn, were broken down into
114 categories to which costs were assigned. Following were the primary functions, with the secondary function categories indicated:
Technical

and Process-Oriented
Function
Analysis
for an Electric Range
Cook Food
Total Secondary
Functions
A. Produce Heat
9
B. Control Heat
22
C. Contain Oven Heat
12
D . Support/Contain Food
11
E . Support/Enclose/Decorate
44
F . Light Surface Units and Controls
4
G. Miscellaneous and Nonallocated
12
Total
H I
An example of a breakdown which had these
secondary functions and the part or parts assigned
to it was C4 Light Oven Interior:
Function
C4. Light Oven

Interior

A. Support and
Connect Lamp
B. Interrupt Power
C.
D.
E.
F.
G.

Actuate Light Switch

Support Switch
Diffuse Light
Generate Light
Hold Glass

Part

Name

Socket
Switch/Toggle
Switch
Pushrod
Switch Support
Diffusing Glass
Lamp
Clips (2)

The fact that the secondary function categories

usually have only one part is typical of this type
of function analysis, because it is the individual
parts and assemblies that are actually being function-analyzed rather than the total task of Cook
Food.
Later, another study was carried out, this time,
however, using the customer-oriented Value E n gineering approach, i.e., value research. Here the
task was identified as "Cook Food," the same as
the initial study. There were six primary basic
functions identified, and an additional five supporting functions. Those secondary categories to
which now both customer attitudes and product
costs were assigned were called Independent Functions:
26

Function
Independent
Functions
Task-Cook Food
Primary Basic Functions
I . Provide Power
1
I I . Select Temperature
5
I I I . Heat Pans/Containers
2
I V . Bake Food
3
V. Broil Food
4
V I . Store Utensils
2
Subtotal Basic Functions
17
Supporting
Functions
V I I . Be Convenient
22
V I I I . Be Dependable
12
I X . Provide Satisfaction
18
X . Have Desirable Appearance
7
X I . Be Status Symbol
2
Subtotal Supporting Functions
61
Total Independent Functions
78
Again, a breakdown of one of the primary
functions, this time a supporting function, and the
parts assigned to it, looked like this:
Function
No. of Parts
V I I . Be Convenient
G. Clean Range
1. Clean Surface Unit
2. Clean Oven
3. Collect/Contain Spillage
4. Clean Burner Box
5. Clean Overall
6. CleanOther

Assigned

18
5
3
4

The customer-oriented function outline has a

major advantage over the technically oriented. It
can be developed by involving vital components of
an organization: Engineering, Marketing, Manufacturing, Finance, etc. They agree that the
verb-noun combinations really do describe what
the product does and how. Marketing people are
particularly enthusiastic about the supporting
function category. A consumer product has been
used for an example, but the same philosophy of
customer-oriented function analysis can be applied
to any type of product and/or service. Recently,
this same approach was used on a water pollution
control system and worked exceedingly well.
Once the customer-oriented function analysis is
complete, it becomes the communication link between the customer-product relationships and the
cost-product relationships. The following table
provides a summary of faults recorded by individuals using comparable competitive models of
stoves. The faults are assigned to function categories very much as we assign costs to function
categories. It shows the percent of users, out of
the total, who recorded one or more faults, and the
percent of the total number of faults to total
usages.
T H E

J O U R N A L

Table of Function
Attitudes
Primary Functions
Function Faults
Make "B"
Make "A"

Users Usages Users Usages

6.7
.7
2.3
6.7

I . Provide Power
I I . Select
8.6 73.3
60.0
Temperature
I I I . Heat
.2 13.3
3.3
Pans/ Containers
6.7
1.6
10.0
I V . Bake Food
.2
6.7
3.3
V. Broil Food
.2
6.7
3.3
V I . Store Utensils
Subtotal Basic
70.0* 13.1 80.0*
Functions
77.4 15.1 53.3
V I I . Be Convenient
64.5 16.0 56.7
V I I I . Be Dependable
I X . Provide
80.7 11.2 63.3
Satisfaction
X . Have Desirable
33.2
2.7
Appearance
.2
3.3
X I . Be Status Symbol 3.2
Subtotal
Supporting
Functions
90.3* 42.7 80.0*

8.5
.9
.4
.4
.8
11.7
15.4
11.1 .
21.2

.2

47.9

Looking at the differences in percent of function faults, there was one area of high fault in
"Select-Temperature," and a significant difference
in number of users faulting Make "A" in Be Convenient, Be Dependable, Provide Satisfaction, and
Have Desirable Appearance. An interesting aspect in analyzing function faults was the fact that
all faults were not elqually bothersome. Often,
certain faults were tolerated faults, and regardless
of the magnitude, represented very poor areas for
product improvement. On the other hand, there
were certain faults to which the customer was exceedingly sensitive.
These function categories
really shaped the overall acceptance of the customer to a given make of product. I n this particular example, make "A" acceptance was only fair
to good. Make " B , " on the other hand, had an
excellent customer acceptance. Obviously, there
were differences that meant something in the function attitude tables and that needed correction if
the company doing the evaluation happened to
be Make "A."
When industrial products are considered, often
several customer levels must be identified and
separately evaluated. There is also the possibility that there are several influences within one
customer level, and it must be determined which
exercises significant influences on the chief buying
influence.
A study carried out on heavy earth moving
equipment indicated that the Chief of Procure
* Represents percent of Users who complained one or more times
in the Basic or Supporting Function Categories.
OF

V A L U E

E N G I N E E R I N G

ment had very effectively convinced the field salesman that he alone made the buying decisions.
An analysis of his function along with his answers
to a fairly detailed questionnaire, made it clear
that the operator of the equipment influenced the
source selection. If the operator's acceptance was
high, it had a comparably high influence on the
particular brand purchased. The maintenance
man, in this case, exercised no influence at all in
terms of brand acceptance.
There are various types of studies to which
value research can be applied. First, there are
existing products. Studies which evaluate customer attitudes and product costs of several different makes of products or services provide major
cost reduction opportunities. They often indicate areas where the product or service has to be
improved in order to improve acceptance. If a
major product line has not been completely analyzed for some time, it provides a very fertile
field for prompt improvement possibilities.
Prototypes are another area of application,
where relatively few prototypes are available; they
can be evaluated by small samples of potential
customers. Function faults will highlight problem areas, particularly subjective customer attitude areas to which the laboratory test is not sensitive. The prototype also provides an opportunity
to look at cost distribution in terms of customer
attitudes.
Finally, value research can be used very effectively during concept formulation. A concept
can be translated into customer-oriented function
analysis. From this, one has an outline for a
questionnaire to compare customer likes, dislikes,
and indifferences to overall objectives of the particular product.
Results of value research practiced over the
past seven years do not appear in the literature.
The reasons are simple. These results represent
closely guarded information. Any company protects the attitude of its customer to the company's
products and to competitive products, and to the
company's product cost as compared with
the estimated competitive costs. The important
thing to recognize is that value research techniques
are available. They are being used, and the results are impressive. They often show ways to improve customer acceptance, provide management
with tools by which it can maintain product leadership and improve profitability, or it can establish
programs making the firm a value leader in a
particular competitive line. (The value leader is
defined as the company whose product has high
acceptance from the customer, and the product
generates high profits for the company.)
Value research represents an important advancement
in a company's organizational structure and rewards are more than commensurate with costs.
;

27

CONSUMER
VALUE
by

J O H N R . STEINMETZ

DON'T look now, but the tires on your auto might

be over-the-hill! I f so you will once again enter
into the Consumer's Market Place and attempt to
maximize the value of your purchase.

This replacement set of tires can cost double

or half of what your neighbor just paid, can melt
away or last and last, can be safe, smooth riding,
and trouble-free, or anything but.
I n the life cycle of buying and using these
tires you can become convinced that you are the
world's greatest sucker or a very shrewd value
analyst.

As a typical "Poor Consumer" in a rough contest, you may have the apprehension of a quarterback in the game of the week, whose next play can
be either a spectacular success or a 20-yard loss on
third down.
Big deal? So what if you toss a few extra
bucks into feeding the economy? The answer is
simply this:
1) It adds up: The frequency and volume of
our purchases are unprecedented: Several hundred billion, dollars worth of U.S. consumer goods
are purchased annually. W i t h each reflecting the
above principles of good or poor value, using our
fantastic multiplier, the economic effect is staggering.
2)
"Sucker" choices can really hurt our economic health as individuals, families, and as a
nation dependent on continually increasing value
of products and services. Disgruntlement, poverty,
inflation, etc., are the deficiency symptoms we
readily recognize.
3)
"Expert"
choices discipline industry and
provide more for all. Winning is better than losing because it's nicer.
The personal satisfaction
of being a sharp buyer is one of life's distinct
pleasures. Its personal significance pours into
everyday conversation and is worn like a badge
as the recounting demonstrates our one-upmanship
superiority.

Consumer value and SAVE

* a SUCKER

V.

TVALTJE \ f
EXPERT

secrets

T H E "SECRETS" of being an "expert" are contained in the organized and systematic

techniques
of our Value Engineering methodology.
As a
formal discipline, so far we have been applying
them exclusively to the products and services of the
company we work for. Any application to our
personal expenditures has been strictly on our own.
The time has come to change this, and National
SAVE has formed a group assigned to the task.

Progress to date

Jill
28

S O M E initial decisions have been made, as indicated in the objective, scope, and general plan
sheet shown i n the sheet which follows. Basically,
two V E studies are being performed. The first
involves tailoring and packaging of sets of, "Here's
THE

JOURNAL

Consumer Value Plan Sheet

N a t i o n a l SAVE - Consumer Value Program

V.E.

Project T i t l e :

Develop-

Study O r i e n t a t i o n Sheet

"Here's How" techniques f o r consumer value

Objective:

The f u n c t i o n o f the "Here's How" study i s t o provide

working g u i d e l i n e s t h a t anyone can f o l l o w f o r the purpose
of accomplishing a major improvement I n value received
from h i s consumer purchases.
Stated i n verb-noun form,
the f u n c t i o n i s t o , "GUIDE CONSUMER".

Scope:

An i n i t i a l s e t o f g u i d e l i n e s w i l l be basic t o any type o f

purchase.
Further expansion w i l l be t o a d d i t i o n a l , more
s p e c i f i c approaches t h a t are t a i l o r e d t o c e r t a i n catagories
of items (such as t r a n s p o r t a t i o n , f o o d , s p o r t s equipment,
e t c . ) . As t h i s i s accomplished, an even g r e a t e r d e t a i l o f
s p e c i f i c s w i t h i n each o f these c a t a g o r i e s i s the long range
g o a l . Coverage w i l l extend t o :
Products: i n c l u d i n g purchase o f a t e l e v i s i o n , a
box o f potatoe c h i p s , camping t r a i l e r , e l e c t r i c
r a z o r , a f u l l set o f Christmas presents, a house,
a magazine s u b s c r i p t i o n , and hundreds o f o t h e r
items.
Non-Merchandise: I n c l u d i n g t h i n g s l i k e insurance
p o l i c i e s , loans o r savings p l a n s , memberships,
college selection, etc.
Time & D o l l a r Items: p u t t i n g i n a lawn, t a k i n g a
v a c a t i o n , r e d e c o r a t i n g your house, e t c .

General Plan:
Orientation
Work package
Develop & D i s t r i b u t e
C o l l e c t , compile, e d i t
I n i t i a l publication
Second P u b l i c a t i o n
Next P u b l i c a t i o n s

Completion
Schedule
Actual
10-1-69
10-5-69
12-20-69
2-25-70
5-1-70
10-1-70
(Later Scheduling)

National SAVE - Consumer Value Program

V.E.

Project T i t l e :

Develop

Study O r i e n t a t i o n Sheet

ways to u t i l i z e consumer V.E. techniques

Objectivei

This study i s t o explore the realm o f e d u c a t i o n a l , s e l l i n g ,

and communication channels s u i t a b l e f o r e f f e c t i v e l y
u t i l i z i n g the "Here's How" techniques and t o take a c t i o n
on the f i n d i n g s f o r mutual advantage t o SAVE and the
consumer.

Scope:

E x i s t i n g consumer o r g a n i z a t i o n s have m u l t i - m i l l i o n d o l l a r
o p e r a t i n g budgets and conceivably SAVE operations can
e v e n t u a l l y expand t o t h i s scope. Syndicated newspaper
and n a t i o n a l magazine a r t i c l e s and s e r i e B o f a r t i c l e s
are one p o s s i b i l i t y , books, n e w s l e t t e r s , consumer
memberships, product e v a l u a t i o n s e r v i c e s t o i n d u s t r y ,
"Seven Wonders" o f consumber value as annual awards, consumer
c o n s u l t a t i o n s e r v i c e s , e t c . are a l l w i t h i n the t o t a l arena
of p o t e n t i a l developments.

General Plan;
Orientation
Work package
Develop & D i s t r i b u t e
C o l l e c t , compile, e d i t
Plan approval by SAVE board
l e t phase implementation
a d d i t i o n a l phase implementations

Completion
Schedule
Actual
10-1-69
10-5-69

12-20-6?
2- 25-70
3- 15-70
5-1-70
( L a t e r Scheduling)

How" methods, techniques, and approaches for

consumer use. The second involves exploring and
developing appropriate channels for putting the
"Here's How" to work. The reason for this article
is to get your help as a practicing Value Engineer
and experienced consumer in successfully completing both of these studies.
But!

If you would like to help we're prepared to

clarify and simplify the job by sending a "work
package" to you. A l l that is necessary is to drop
a line to

John R. Steinmetz
SAVE Consumer Value Director
6 3 4 0 MONROE ST. N . E
MINNEAPOLIS, MINN. 55421

'/,

This work package is structured and explained

so that you can immediately become involved
in submitting your ideas, concepts, and experiences
into this National SAVE program. Chapter Presidents may also choose to complete this work
package as a total chapter activity.
Can there be any question on the importance
of this on both a personal and nation basis? The
call is hereby sounded for your response! Now!

Officers of SAVE
PRESIDENT
R O B E R T L . CROUSE. Manager
Value and Industrial Engineering
Honeywell, Inc., Minneapolis
SECRETARY/EXECUTIVE
VICE PRESIDENT
THEODORE C F O W L E R
Value Engineer
Xerox Corp., Rochester
TREASURER
S T E P H E N J . HOLLAND
Eastern Air Lines, Miami
VICE PRESIDENTADMINISTRATION
MORGAN D. R O D E R I C K
Head of Value Engineering Office
Ship Systems Command

30

VICE PRESIDENTCOMMUNICATIONS
W I I L I A M DEAN, Manager
Value Engineering
Honeywell, Inc., Minneapolis

VICE PRESIDENTPROFESSIONAL D E V E L O P M E N T
CARLOS FALLON, Manager
Value Analvsis
RCA, Camden, N. J .

VICE PRESIDENTNORTHEAST REGION

THOMAS J . TROUSK1E
Framingham, Mass.

VICE PRESIDENTNORTH C E N T R A L REGION

EVERETT KNICKERBOCKER
Ammunition Procurement & Supply Agency,
New Lenox, 111.
VICE PRESIDENTNORTH W E S T R E G I O N
L. JAMES L E V I S E E
Hyster Corporation
Portland, Ore.
IMMEDIATE
PAST P R E S I D E N T
FRANK J . JOHNSON, Manager
Value Engineering Department
Lockheed, Georgia Company

THE

J O U R N A L

To affiliate

members:

This is the last issue which you will receive automatically.

Your subscription
at the special rate
of $5.00/year is needed if you wish to receive the Spring issue. This is your opportunity
to help
SAVE and the JOURNAL grow and improve.
It will help expand the scope and usefulness of both
the Society and of Value Engineering, and it will help us help you. A subscription blank is attached
for your convenience.
We sincerely hope affiliate subscriptions will not be a necessity in 1971.

. . . from the editor

A LONG SOUGHT Value Engineering explosion
is in process! A t last we are experiencing a rewarding growth from within practicing organizations, plus an outward expansion encompassing a
growing number of industries and commercial enterprises, public institutions, and Government
agencies.
Top echelons i n military agencies are reacting
favorably to the significant increases in reporting
savings from V E incentive sharing. The D O D
evaluation of "Effects of Value Engineering
Changes on Reliability of Equipment in Service"
has confirmed that the preponderance of changes
either improve reliability/performance or have no
adverse effects. Symposia, such as the recent Air
Force Systems Command seminar at Colorado
Springs, ring with a new sincerity of purpose and
commitment.
Top level industry management personnel, too,
are expressing conviction that Value Engineering
deserves a more positive commitment, with corresponding assignments of responsibilities and an
integrated organizational structure for effective application.
Such action is fast making V E a
mainstream function for value assurance and profit
rather than an experimental sideline.
Commercial companies are recognizing the
competitive and profit advantages of astute V E
practice, and the necessity of V E application for
sustained existence. Institutions of all types are
beginning to react to user demands for controlling rising costs. Think-Tank operations, DeOF

V A L U E

ENGINEERING

velopment agencies, and Building trades are seeking V E information. Even the tax-paying public
is more knowledgeable of value, and their leverage
is increasing with an improved understanding of
their ability to apply value techniques.
Consumer pressure is being felt i n every avenue of
goods and service supply.
This trend means that practicing Value Engineers, plus the widening circle of other technical
and administrative personnel affected by Value
Engineering, must be knowledgeable of, and working with, this growing tide of value consciousness.
We must be seeking new techniques for effectiveness and new opportunities for application. Most
importantly, we must be able to grasp the significance of this new environment and capably plan
and structure integrated programs, define benefits, and educate personnel i n responsibilities and
rewards. Information and guidance is available
from the SAVE National Business Office.
THE

JOURNAL

OF

VALUE

ENGINEERING,

is

your media for keeping informed and responsive

to this growth. Let us know your experiences so
we can pass them to others, and in turn, help
you meet your needs. Expose your ideas through
papers, articles, and letters to the editor.

W. B . DEAN,

Editor

31

The

GOLDEN AGE
of Value Engineering

T.
87

C.

FOWLER
KIRKLEES

ROAD

PITTSFORD

1970
SAVE
NATIONAL
CONFERENCE

April 12-15
Marriott Hotel Dallas
host: Dallas/Ft. Worth Chapter