JOURNAL f Value Engineering

JOURNAL f Value Engineering

Value Engineering—Quo Vadis?

Human Factors and Successful VECP's

Expense or Savings in Government Specifications?

Effect of Value Engineering on System Reliability

message from the president

E V E N ANCIENT PHILOSOPHERS agree that the price of living is change. Change however, can be either an advancement or a retreat, a growth or a failure, an enlarging or a shrinking. It can be improvement on top of improvement or a weakening cascaded into further weakening. In living there will be change, and so it is with value engineering. As there is change with individual members and with the member's programs, there will be change in the Society of American Value Engineers. A weakening of value engineering effort will shrink or destroy programs and the Society.

Anemic value engineering is not difficult to find. We find it everywhere, where people are wont to say, "We've always done value engineering, only by another name." Permitting this untruth to stand impairs and debilitates the technology and application of value engineering. This pernicious disease can bring decay and destruction to ourselves, our program and our Society.

To build a stronger and more capable individual, a more effective program and a more viable Society, we must prune, as a good horticulturist does, to allow better growth and life. We must see that the proper nourishment is given to programs, individuals, and the Society if we are to have a living value engineering program and Society.

The choice is ours, individually, as to whether our Society and programs in which we work are to grow or shrivel. Once our concentration is on the living and building cycle as a goal, we can improve and breath greater life into our Society, with more effective programs, and, at the' same time, become more capable people.

«A J- I n ° r d e r t o g u i d e a l i v i n g v a l u e e n g i n e e r i n g Society, the theme of this year's activity is Application of value engineering in commercial industry." The commercial industry segment of our

economy is, by far, the largest portion of the gross national product. This area has been somewhat neglected compared to the utilization of value engineering in the military sphere. It is necessary on a continuing basis for our entire membership to solicit comments, recommendations and help from line managers and operating personnel (i.e., production people, foremen, design engineers design engineering managers, procurement people, program administrators, controllers, and most of all, marketing people) concerning what they personally and professionally want as a result of value engineering expenditures. How do they want value engineering performed? How do they want value engineering recommendations? How can value engineering help them in their job assignments? If we all constantly direct our efforts toward finding these needs and satisfying them by the end of this year your Society will have achieved three major, significant objectives proposed for this year.

These objectives are:

1. Each of the regions to hold at least one dynamic conference. The objective; to help those members and their organizations that are members of the Society, to show people in other areas of work what membership in this Society could mean to them in their daily work and to assist toward their organization's basic goals. '

2. As a spinoff from these conferences, together with our efforts to assist more commercial-industry people in both small and large industry, to expand the number of active local S A V E chapters by at least eight. The North Central Region goal should be an increase of three chapters. The Northeast Region, two. The Southeast Region, one; and the Southwest Region, two.

3. Based on the increased numbers of active chapters and on these regional conferences at least double the number of members in the Society by April 1970. '

The goals of increased membership and chapters are only coincidental to a living Value Engineering Society, but are indicative of its vitality. These goals serve as measuring devices of growth performed individually and at the local chapter level. Increasing application and acceptance of value engineering in the commercial-industrial environment is certainly evidence of a living Value Engineering activity. I t is a challenge to us all.

R. L . C R O U S E

the JOURNAL of Value Engineering

Editorial Staff

W . B . D E A N

Editor

P A T B E N N

Associate Editor

R I C H A R D M E R C U R K

Art and Layout

C O D Y ' S P R I N T E R S & P U B L I S H E R S

Production

Editorial Board

Chairman R O B E R T B I D W E L L

Northeast Region

W I L L I A M G U L D E N

Southeast Region D O N A L D E . R E D M O N

North Central Region J O S E P H T R U M A N

South Central Region V I N C E N T J . C O P P O L A

Northwest Region W I L L D E A R B O R N

Southwest Region C O R W I N G R A Y

International J O H N J . B E N N E T T

Contents ; Message from the President 2

Authors and Articles 4

Value Engineering—Quo Vadis? by George E. Fouch 6

Human Factors and Successful V E C P ' s by Everett Knickerbocker 10

Expense or.Savings in Government Specifications . by Charles A. Cattaneo 12

Coming Events 15

A Study of Training Needs of Engineering Managers . . . Implications to Value Program Managers by Fred Schwarz 16

New Society Service: Manpower/Industry Matchmaking . 19

The Effect of Value Engineering On System Reliability

by Martin T. Pett 20

The J O U R N A L needs you! 22

from the Editor 23

cover . . . Our cover was designed by Richard Mercure, a design artist at Honeywell's Ordnance Division, Hopkins, Minnesota. He used a posterized photographic technique (the photographic image is separated into contrasting tones by the making of separate plates, which are then combined into one plate for a poster effect) to illustrate our theme for this issue, DOD. Before joining Honeywell, Mr. Mercure majored in graphic design at the Minneapolis School of Art, earning a B F A degree.

the JOURNAL of Value Engineering 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 with 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 SAVE • National Business Office, Windy Hill, Suite A-1, 1741 Roswell Street, Smyrna, Ga. 30080. Second class postage paid at Kissimmee, Florida 32741.

Authors and

Articles

6 V A L U E E N G I N E E R I N G . . . QUO V A D I S ?

by George E . Fouch

After several years of Value Engineering organizational experimentation by the Services and Industry, a common VE success pattern seems to be emerging. Integration of VE in the day-to-day management and operations of the Department of Defense may not be far off.

Mr. George E . Fouch is Deputy Assistant Secretary of Defense for Logistics Management Systems and Programs. After receiving a B. SC. and M.B.A. from Ohio State, he became assistant professor of Business Administration at Wittenburg University, and then Director of Commercial Research, Goodyear Tire and Rubber Company. Among other posts held in" government and industry were: Vice-president, General Manager, Sterrett Motors; planning and logistic support, Berlin Airlift, Military Air Transport Service; and Manager, Subcontracting, J-47 Engine Program, General Plastics Company. Mr. Fouch received the Distinguished Public Service Award from SAVE in 1965 and a c i ta t ion from Engineering News Record magazine in 1966.

-.. it

10 H U M A N F A C T O R S A N D S U C C E S S F U L V E C P ' S by Everett Knickerbocker

More than technical and economic soundness is necessary for acceptance of Value Engineering Change Proposals (VECP's) according to this article. The emotional impact of VECP's upon evaluators is also extremely important.

Mr. Everett Knickerbocker is Manager of Value Engineering at the U.S. Army Ammunition Procurement and Supply Agency, Joliet, Illinois. Over the past seven years, he has built a Value Engineering Program in a complex of twenty-four government owned, contractor-operated plants supplied by over one-hundred industrial firms. The Program grew from zero to a twenty-million-dollar-a-year savings program. Everett Knickerbocker was elected Vice-president for the North Central Region of the Society of American Value Engineers for 1969 through 1971.

E X P E N S E OR S A V I N G S I N G O V E R N M E N T S P E C I F I C A T I O N S ?

by Charles A. Cattaneo

Specifications can be cos t ly contract items. Therefore, companies must continue, and even increase, participation in specification review and coordination.

Mr. Cattaneo is the Configuration and Data Management (CDM) Manager on American Society of Metals (ASM) Programs for the Martin Marietta Corporation Orlando Division. Since joining them in 1951 Mr. Cattaneo has supplemented his field of concentration with experience in engineering development of servomechanisms and inertial control systems, field test programs, laboratory analysis, and preparation of hardware specifications. He has been the CDM manager in Advanced programs, the Shillelagh program, and the Specification Department. He has a B E E from Clarkson College of Technology (1951) and an MBA from Rollins College (1963) where he instructs in business statistics courses.

13

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

. . I M P L I C A T I O N S

by Fred C . Schwarz

16

Proper management of scientific and technical talent is vital today. The study described in this article was conducted to aid the Management Institute of. the University of Wisconsin develop programs geared to needs of technical managers.

Professor Fred C. Schwarz is responsible for planning and conducting executive development programs at the Management Institute of the Department of Commerce, University Extension, University of Wisconsin. He holds a bachelor's degree from Montclair State College, New Jersey, and a master's degree in education from George Washington University, Washington, D.C. Before joining the University of Wisconsin, he had seventeen years of industrial experience with firms such as Honeywell Inc. (Director of Manpower Development) and Vitro Corporation of America (Personnel Manager, Vitro Laboratories). Professor Schwarz has also served as a consultant to several large companies, including Ford and G.D. Searle and Company. He is a charter member of the Wisconsin Society of American Value Engineers and served as President of the Chapter in 1967. He is the former Vice-president for professional development of the National Society of American Value Engineers and has administered and instructed in the past four national Society workshops.

E F F E C T O F V A L U E E N G I N E E R I N G O N S Y S T E M R E L I A B I L I T Y by Martin T . Pett

There is increasing emphasis on cost reduction programs by DOD and the military services. Almost all major programs contain contractual provisions whereby the supplier can increase his profits by reducing expenditures. Value Engineering can pay handsome rewards in terms of improved reliability - i f certain pitfalls are avoided.

Mr. Pett is a Senior Project Engineer, Product Effectiveness, Missile Systems Division, Hughes Aircraft Company, responsible for direction and control of Reliability and Value Engineering activities on several missile programs. He holds patents on two electronic or electromechanical devices and has authored several technical papers in his field. He has previously held supervisory positions in engineering and served as Chief Reliability Engineer and Program manager. Mr. Pett has degrees in engineering and law.

20

Value Engineering -Quo Vadis?

i

by George E . Fouch

Mr. George E. Fouch prepared—but was unable to present because of a severe bout of diabetes—the following paper at the SAVE National Conference, San Diego, California, in April.

I T IS OBVIOUS to an observer, such as myself, that the Society of American Value Engineers ( S A V E ) has matured greatly and made tremendous progress, particularly in the administrative area, since 1963. This progress would have been impossible without a dedicated membership and strong leadership by the officers of S A V E . I am sure that S A V E faces many future challenges and opportunities.

6 T H E J O U R N A L

On the horizon Internal maturing I WOULD L I K E to briefly evaluate the challenge I see on the horizon and to examine the possible impact of this challenge on Value Engineering ( V E ) as a methodology and to Value Engineers as individuals. While I will base my remarks primarily on developments affecting the DOD Value Engineering Program, I believe that most of what I say will ultimately be equally applicable to the private sector of our economy.

Let's begin by viewing Value Engineering as a methodology, and I might add, as a form of contract incentive. Personally, I am very optimistic about the future of the Value Engineering methodology and contract incentives. I believe our program is now beginning to reach a point of maturity where V E will be a planned, purposeful activity that is knowingly identified and sponsored by line and program management. Before I explain why, let's look at the external environment as it bears on Value Engineering.

External environment T H I S ENVIRONMENT continues to be favorable to V E . Pressures from Congress for greater cost consciousness, competition between agencies for the limited tax dollar, and predictions of a possible taxpayer's revolt have increased. Within the DOD, one of Deputy Secretary Packard's first acts was to endorse the Cost Reduction Program ( C R P ) , and V E is the most important element in this Program. Secretary Morris' successor is Mr. Shillito, who, as former head of Logistics Management Institute, conducted fundamental studies which laid the foundation for expansion of the D O D V E program in 1963. He is a proven supporter of the DOD V E program.

Perhaps the most important factor is a quote from a memorandum signed by Deputy Secretary of Defense Packard to the Departmental Secretaries on April 5 of this year. He said, "Despite . . . progress, considerable potential for further savings appears to exist. We must obtain full value for each defense dollar. I would therefore appreciate it if you would advise all appropriate personnel of their continuing responsibility to utilize appropriate Value Engineering methods and V E Contract Incentives to help insure maximum value for expended resources."

"Strong management action and support are also necessary if we are to fully realize the full benefits of a strong, viable Value Engineering Program. In this connection, it is my understanding that the F Y 65 V E manpower augmentation resulted in considerable experimentation in V E operating concepts and organizational arrangements. I believe the time has come to review the results of this experimentation and gain the benefits possible through more uniform use of the more successful practices. Accordingly, I am requesting the Assistant Secretary of Defense (l&L) to reconvene the V E Evaluation Group, established by the Secretary of Defense in 1965, to review the overall status of the DOD V E Program."

Membership of this group includes the Assistant Secretary of Defense ( l&L) , his counterparts in each of the Services; the Deputy Director, Defense Research & Engineering, OSD; and the Director, DSA. Thus, in space age terminology, all external pressures are "GO" for V E .

Now L E T ' S TURN to internal matters, and see how V E is maturing into a more purposeful, planned kind of activity. One way of judging this is to review the progress in rules for reporting Value Engineering in the Cost Reduction Program.

In 1963, V E was not officially part of the Cost Reduction Program, but fell under "Eliminating Goldplating," a name, which while accurate, made many people, particularly engineers, unhappy. These rules have gradually been purified to the present position: that Value Engineering must be identified as such prior to approval of the change, either by use of a proposal identified as V E , or by identifying items on which V E was undertaken. This step has also generated some criticism, but thinking people generally recognize it as a prerequisite to ( 1 ) making V E a planned rather than random occurrence, and (2) pro-

( viding an audit trail capable of eliminating most of the confusion and controversy engendered by previous rules. This policy substitutes the cost of a few moments to formally identify V E activity with the gain of vastly reduced, non-productive time and energy in demeaning debate between V E , t3RP, and audit personnel. And there is a bonus! The management which identifies projects is less likely to be "surprised" at the end of the year when it is too late to correct poor performance.

It was recognized (by DOD) that this new policy would require adjustments in many operating organizations, and could even affect performance adversely in the short run. However, we have been very encouraged with the overall results to date.

Encouraging progress I N F Y 67, at the end of the second quarter, we had achieved only five percent of our year's goal. This increased to 17 percent in the first six months in F Y 68, and with the new rules coming in F Y 69, we have achieved 2 9 percent of our goal in the first six months, probably an all-time high. This encourages our conviction that new V E / C R P reporting policy will benefit the V E program in the long run.

Progress in the D O D - V E Contract Incentive Program is also encouraging. Estimated savings to D O D increased to $51.8 million in F Y 68, a 33 percent increase over F Y 67. The second quarter of F Y 69 was the highest in the history of the program, and we expect to exceed that record in the third quarter of F Y 69.

Much of this progress is due to the fact that management on both sides is now taking the Value E n gineering Change Proposal ( V E C P ) opportunity more seriously. The Air Force Systems Command sponsored an AFSC-Industry V E C P Symposium in Florida last December, and has a top management meeting on this same subject for September of this year. It is gratifying to note that this has been accompanied by a significant increase in estimated V E C P savings to A F S C . The Atlantic Coast Commander of the Naval Air System Command sponsored a similar conference for his contractors and overhaul facilities at Virginia Beach on May 1 and 2.

Goal setting for V E C P ' s is becoming an increasingly common practice in both DOD and industry.

O F T H E S O C I E T Y O F V A L U E E N G I N E E R S 7

Most major Commands in the Departments have set goals for the number of V E C P ' s to be received. One division of a large contractor, for example, has a goal of over $16 million in V E C P ' s during 1969.

Management precepts B E H I N D THIS PROGRESS, a body of management precepts for successful V E is evolving. While these precepts are not yet official (we hope to formalize them shortly), I believe they reflect the current trends in thinking. What are these precepts?

• The Value Engineering discipline and V E Contract Incentives provide individual engineers, technicians, contracting officers, and managers with specific techniques for use in meeting performance and schedule requirements at minimum cost.

• The V E discipline can be applied by the individual, or by the team or task force approach, depending on local operating circumstances.

• The operating V E staff is normally a service function, to assist line and system/project management. Normally, V E goals are allocated to these organizations, rather than to the V E staff.

• Operating management should periodically review V E progress, including results obtained, status of V E proposals in hand, and projects under way.

These precepts are not the product of some staff officer's fertile imagination, but are based on close observation of the more successful V E programs in DOD and industry. They are proven techniques being adopted by increasing numbers of our contractors and defense organizations.

I believe we are now beginning to see daylight in the need to involve management in V E . The obvious relation of these precepts and the rules for reporting V E in the DOD Cost Reduction Program needs no elaboration. Behind both the precepts and the new reporting policy lies a firm conviction that to maximize the V E benefits to the DOD, V E must be integrated into day-to-day management and operations.

The developments I have described thus far indicate a bright future for V E methodology and contract incentives. But as management responds in an increasingly positive manner, the pressure on Value Engineering personnel to produce should also increase. This pressure may take surprising forms, which could challenge the past role of the Value E n gineer and the V E Manager.

New developments L E T ' S L O O K at some developments in DOD aimed at integrating V E methodology into day-to-day management and operations. These developments are ( I ) Integrated Logistics Support, (2) Configuration Management, (3) Work Breakdown Structure, and (4) Systems Engineering.

We can begin with Integrated Logistics ( I L S ) . It has been around now for several years, but is only now beginning to take on "full steam." V E has long advocated a total cost viewpoint, and this is a major trend in I L S . Its primary objective is to assure that

design includes adequate consideration of the effective and economical support of a system or equipment at all levels of maintenance for its programmed life. The program offers industry a greater planning role in maintenance and support. In short, I L S emphasizes value rather than price.

We turn now to Configuration Management. A new set of DOD Directives, Instructions, and Standards on Configuration Management has been issued. These documents will create greater uniformity in such systems used in the DOD. They normally require that a Functional Configuration Identification ( F C I ) be initiated concurrently with approval to initiate Engineering or Operational Development, and maintained as the Product Configuration Identification ( P C I ) is generated as development proceeds. This means that a functional analysis will be developed as a part of normal development work.

This development has a number of other impacts on V E . First of all, these documents will provide a more firm data base to which V E can be applied. Secondly, V E C P processing will be simplified and expedited. Engineering Change Proposals (ECP's) will now use the same form as VECP's . E C P ' s will also have a before and after cost. Target processing times and priorities for V E C P ' s are also established. Targets for processing V E C P ' s worth under $100,000 will be 45 days; those for V E C P ' s over $100,000 will be 15 days. Routine V E C P ' s will receive priority in processing over routine ECP's . Approved V E C P ' s and E C P ' s will now be scheduled for implementation, with follow-up to assure action is taken.

As configuration management helps provide V E its technical base, the directive and standards on Work Breakdown Structures will provide better and more uniform cost visibility. As the terms imply, Work Breakdown Structure is a technique for breaking down a total job into its elements, which then can be displayed in a manner to show the relationship of these elements to each other and to the whole. Work Breakdown Structure is much like the cost models sometimes used by Value Engineers in disseminating cost visibility information.

What gains do we expect from the new policy guidance on Work Breakdown Structure?

• The Work Breakdown Structure provides the functions of the whole and the related parts of a system or equipment.

• Ability to compare similar work efforts will be improved, and experience will be transferable to similar new programs.

• The total project's visibility to management will be increased, and all management information-performance, schedule, and cost—will relate to a single framework.

In the new Work Breakdown Structure directive we again see integration of V E methodology into the day-to-day mainstream of activity. Better cost visibility will be possible. Work Breakdown Structure, combined with configuration control, will give V E a sound technical and cost baseline for the "before"— and thus expedite identification of key targets of opportunity, and gathering of present costs.

Second, Work Breakdown Structure could help in


the attack of parasitical overhead, which I discussed last year in Atlanta. The astute manager will want to know the contribution of specialized work capabilities to the Work Breakdown Structure. Where vast disparities exist, appropriate action could be taken.

The last development I would like to mention-Systems Engineering—is still under study, but I am confident that this will answer the question, what does Systems Engineering do—that is, what are the functions to be performed? It will probably also require cost-to-produce targets. A joint RDT&E, OSTJ ( l & L ) , OSD (Comptroller), and Military Departments work group is meeting weekly to develop uniform DOD Systems Engineering guidance.

Let me summarize this portion by stating that if you get the impression we are incorporating many aspects of the V E job plan and V E methodology into the normal, day-to-day management systems of DOD and defense contractors—you are right!

A bright future L E T M E REITERATE that the future of V E in DOD appears bright. Formidable external forces for cost consciousness lend support to the need for V E . Present OSD top management are advocates. There are growing signs of increasing top and middle management support, both in the military departments and the defense industry.

Perhaps the most encouraging aspect of all is that

after several years of V E organizational experimentation by the Services and Industry, a common V E success pattern, built around the precepts I mentioned earlier, seems to be emerging. As this pattern spreads, adjustments at .some operating organizations will cause temporary difficulty. But in the long run, I believe this emerging pattern offers significant opportunity for solving many of the major problems that V E has experienced in recent years—in short, we may well be approaching the point where we have truly integrated V E in the day-to-day management and operations of the Department of Defense. These are the reasons I believe the future of the Value Engineering methodology and Value Engineering Contract Incentives in the Department of Defense is bright.

As a result of Deputy Secretary of Defense Packard's letter, we in DOD are examining our progress to date in order that our V E program will be even more effective in the future.

I am sure that this examination will result in changes in our program. Many of these changes will be along the lines I have discussed here today. Such changes will probably affect the role of Value Engineers, Value Engineering Managers, and Value E n gineering organizations.

Whether we succeed in these changes depends largely on the fashion in which the people [ S A V E Society members and practicing Value Engineers] adapt to the new circumstances. I therefore encourage you to give these trends some serious thought in the coming year.


Human Factors and Successful VECP's

by Everett Knickerbocker

T H E NEED for a refined methodology and use of techniques for developing and submitting Value E n gineering Change Proposals (VECP's ) has been established. Careful consideration must be given to total economic impact, and the technical performance consistent with functional demands. One would think that incorporation of total technical and economic evaluation, adequately proven and substantiated, would be all that is necessary for successful approval of a V E C P . However, this is not necessarily true and little has been done to determine why.

In the fall of 1966, Mr. Lawrence D. Miles spoke at the joint Western Electronics Conference and Value Engineering Symposium. He introduced some new thoughts regarding the problem of non-acceptance (or acceptance with reservation) of Value Engineering Change Proposals which were apparently sound. Mr. Miles identified and introduced a factor he called the "embarrassment factor." Taking a cue from his talk, I have developed some techniques which can expand the acceptance rate of technically sound V E C P ' s through use of appropriate "human factors."

Steps to proposal acceptance T H E AREAS of challenge requiring maximum effort include proposal acceptance, implementation, and measurement of results. Basing my research on the information furnished by Mr. Miles, one salient fact appeared: To achieve proposal acceptance, steps must be taken to overcome any adverse emotional impact the proposal may have on the evaluator.

To use measuring instruments, it is necessary to break out the specific actions or impacts which, respectively, generate fear or confidence. Four elements determine whether a particular action will be positive or negative. From these we can determine the actions

required for a favorable reaction and acceptance. Each of these four elements will be discussed, and the effect of a particular element will be described.

The first element is called Pride of Authorship. To obtain maximum positive benefits from pride of authorship, one should solicit participation of decision-makers in development of a proposal. The most dangerous adverse consideration with respect to pride of authorship, and the one which will almost certainly cause rejection, is to destroy a favored concept of the decision-maker.

The second element is Favorable Recognition. To achieve this, build into the proposal factors which will be favorable and complimentary to the decision-maker. Such complimentary actions made by people who are important to the decision-maker will almost certainly assist in acceptance of the proposal. Conversely, inclusion of anything in the proposal which will tend to reflect unfavorably upon the decision-maker will almost assuredly result in an adverse decision.

The third element is Personal Protection. Include in all proposals elements readily identified by the decision-maker as factors that will add security to or reflect favorably upon his work. Conversely, inclusion of factors or elements which jeopardize the decision-maker's security or reputation will adversely affect his decision.

The fourth element is Improved Existence. Incorporate into the proposal, factors which will assure an improvement in the circumstances or environment of the decision-maker. Conversely, avoid inclusion of factors which can reduce the compatibility of the environment in which the decision-maker operates.

Measuring emotional impact B E C A U S E O F the very general nature of the terms "human factors" and "emotional impact," it is neces-

W. R. Moseley and R. D. Templeton illustrate "Pride of Authorship." Mr. Moseley, left, Vice-President (Lone Star Division), Day & Zimmermann, Inc., Tex-arkana, Texas, holds the old mine and points to the old spotting charge. Mr. Templeton, Plant Manager, Day & Zimmerman, Lone Star Army Ammunition Plant, Texarkana, Texas, holds the new mine with the new spotting charge.


"Favorable Recognition" is one important element in promoting acceptance of Value Engineering Change Proposals. General Erwin M. Graham, Jr, Commanding General, Ammunition Procurement and Supply Agency, presents a Cost Reduction plaque to personnel at the Sunflower Army Ammunition Plant, Lawrence, Kan.

sary that terms be defined to establish the particular emotional and human factors that must be considered.

As a first step in developing the emotional impact consideration, let us consider two parameters: one, a method of measuring human factors and two, a system for identification of elements which will allow for their control.

Let us first look at a system for measuring emotional impact. Following the concept of restricting our evaluation to the minimum number of functions of measurement, several factors of prime importance emerge.

The underlying factor is that portion of the individual's emotional makeup identified as "EGO." For our purpose, "ego" will be defined as the emotional variable that moves into either a positive position or negative position, based upon influences from either outside or inside of the individual. The sum of these influences causes the ego to either shrink or expand and thus often become the controlling emotional factor which determines the nature of the decision reached. In order to measure ego, it is necessary to identify the specific emotional factors that cause either opposition to, or a desire for, a particular idea or proposal. For the purpose of this discussion let us identify the factor that will cause a rejection as the Embarrassment Factor. Let's further consider it as a fear generator and, therefore, a negative factor which would result in rejection. Opposing the embarrassment factor is Self-Respect, a confidence factor and a positive influence favorable to acceptance.

With ego as a variable force, embarrassment as a fear generator that will shrink the ego, and with respect as the confidence factor expanding ego, it is now possible to partially identify the elements of emotional impact which cause embarrassment and self-respect.

Applications of techniques U P TO THIS POINT a case has been developed for considering the emotional impact of value engineering change proposals upon the decision-maker. Some

broad techniques and methods have been defined for assuring a more favorable consideration of proposals.

Let us now consider the detailed application of these techniques. In the V E job plan we consider a function cost relation to worth. It now becomes necessary to consider function, cost, worth, and emotions. This means that each step of the job plan must incorporate provisions for study of emotional impact upon the evaluator. Such consideration must include, in the information phase, a plan for assembling all possible information regarding the relationship of the functions under study to the individuals evaluating proposals. This relationship must include the impact of proposed changes on original concepts on the personnel responsible for them. Such information should be arranged in an organized manner using a five-question approach similar to the six basic questions familiar to every value engineer.

The proposal— 1. What is it? 2. What does it do? 3. What is its effect on the decision-maker? 4. How else can we present the proposal? 5. What will that effect be?

In the second step of the job plan, the creative phase, as many functional alternatives as possible are creatively considered, regardless of their impacts upon emotions of the decision-makers. In the analytical and evaluation phase of the job plan, however, speculative approaches to the emotional factors should be analyzed in the same manner as the technical alternatives for the function. In the program development stage, the emotional factors that we have considered should be related to the total plan and made an integral of the proposal.

In the presentation and marketing of the proposal, maximum use should be made of all favorable emotional factors. In'addition to applying emotional factors to the technical aspects of the proposal, consideration must be given to the emotional impact of roadblocks on the team members and specialists participating in proposal preparation. All emotional factors must be identified and exploited to the benefit of the proposal.

Sample cases PRIDE OF AUTHORSHIP

O N E PRODUCING contractor proposed a major design change to a practice mine delay element. The change reduced costs by incorporating into the delay element its own oxygen supply, eliminating the cost of drilling four angle holes. By obtaining the active support and participation of the agency's original design engineer, and offering him an opportunity to test the new delay element, the design engineer was able to develop a new type spotting charge for the practice mine. This made him a co-author of the proposed change. The redesign, which did a great deal to reduce cost of the practice mine, was promptly approved and implemented.

FAVORABLE RECOGNITION

A L T H O U G H CONTRACTORS operating a series of plans were not eligible for VECP's , they were given favor-


able recognition and an improved image for developing and reporting savings under the Cost Reduction Program. Through a series of visits, joint meetings and joint workshops, a general feeling was developed among participating contractors that their cost reduction and value engineering efforts had received favorable recognition and acceptance. Over sixty million dollars in cost reductions were reported in the Value Engineering area alone by these plants in a period of six years. The major sustaining effort to keep these plants interested in the program was that of recognition and favorable comments from Commanders and Managers of all levels of the Agency. Of course, this also included favorable comments and publicity in the neighboring communities of the particular contractors' activities. Thus, having established a reputation as an efficient, economy-minded operator, the contractor did not desire to lose this favorable position.

P E R S O N A L P R O T E C T I O N

T H E MANAGER of a major sub-unit of a corporation decided in favor of an active Zero Defects Program. His decision was brought about by visits from the Top Manager to his and other sub-units of the corporation, and to the corporate headquarters. The visits left little doubt that his security would be jeopardized unless he were capable of generating a program of Zero Defects comparable to that of all other divisions of the organization. By actively supporting and developing implementation an active program, his position of security was significantly improved.

I M P R O V E D E X I S T E N C E

T H E MANAGER of Industrial Engineering, in a division of a chemical corporation, developed a series of Value Engineering proposals which markedly reduced the cost of manufacture of certain products of the company. In so doing, he called to the attention of the reviewing headquarters of the company a particular individual's talent. By diplomatic aggressiveness, the industrial engineering manager was able to achieve a great number of approved Value Engineering Change Proposals and a very definite reduction in cost directly attributable to this capacity. One of the motivating forces behind this accomplishment was the knowledge that there was not a staff value engineer at the corporate headquarters. His hope was to be promoted to corporate level, with an increase both in his status and material wealth, by being able to produce acceptable Value Engineering Change Proposals in greater quantities and value than could other divisions.

Summary

T H E THOUGHTS and suggestions in this paper have not been 100 percent proven, but they are in the process of proof in the hardest testing machine of all, that of actual application to proposals being submitted.

_ A number of case studies have been researched, however, which substantiate the concepts offered. These are listed below. It is suggested that others who may take up the concept of Emotional Impact in their proposals accumulate additional information and apply it to their future studies.

Members Of SAVE Board Of Directors

1969-1970

President Robert L . Crouse

Honeywell Inc. Aerospace Div.

Treasurer Stephen J . Holland

Eastern Airlines

Exec. V-P Theodore C. Fowler

Xerox Corp.

V-P Administration Morgan D. Roderick

Ship Systems Command

V-P Communications William B. Dean

Honeywell Inc. Ordnance Div.

V-P Prof. Development Carlos Fallon

RCA

V-P Northeast Region Thomas J . Trouskie

Raytheon Co.

V-P Southeast Region Richard E . Biedenbender

Office of the Ass't Secretary of Defense

V-P N. Central Region Everett Knickerbocker

Ammun. Procurement & Supply Agency (U.S. Army)

V-P S. Central Region Clarence P. Smith

LTV Aerospace Corp.

V-P Northwest Region L . James Levisee

Management Consultant

V-P Southwest Region Glen D. Hart

Aerojet-General Corp.

V-P International Affiliates Arthur E . Mudge

Joy Mfg. Co.

Exec. Secretary Frank Johnson

Lockheed-Georgia Co.


Expense or Savings in Government Specifications?

by Charles A. Cattaneo

T H E INTERPLAY of specifications between the government, system contractors, and vendors develops situations ripe for Value Engineering Analysis.

In this article the term "specification (s)" will be used to include all military and federal documents prepared by government agencies in accordance with DOD Standardization Manual 4120.3M.

How specifications may be expensive T H E R E ARE many ways in which a specification may create contract expense. Let us look at three examples of recent problems at my company.

These can be categorized as:

• Specification requirements beyond the contract technical requirements,

• Specification requirements beyond the existing capability of performance of our company or vendors,

• Specification requirements that affect small quantity procurement.

MIL-A-8625, Anodic Coatings for Aluminum and Aluminum Alloys, is an example of category 1. The Company has been anodizing to Revision A of this specification for several years with no problems in meeting program system environmental requirements. Revisions B and C of this specification released by the government contained additional requirements and tests not necessary for known applications. While there is a tie-in with the next example, the impact of this specification alone would have been in excess of $100,000.

An example of the second category is MIL-C-5541, Chemical Films and Chemical Film Materials for Aluminum and Aluminum Alloys. Again, the basic specification has been used for many years, but Revision A added film requirements that could not be met under the coating methods of MIL-A-8625. To fully comply with these two specifications would take additional manufacturing facilities valued at $200,000.

My example for the third category is more com

plicated since it is not only an expense in its present form but is an example of cost saving through a contract value engineering clause. MIL-S-19500, Semiconductor Devices, General Specification for, is universally invoked on government contracts and therefore is required on company standards or other procurement drawings. After part qualification, "Group B" tests are required for each procurement lot. The effect of these "Group B" test cost on small lot procurement is shown in Figure 1.

FIGURE 1 PROCUREMENT 10T SIZE AND GROUP B TEST

COST TRENDS FOR A SELECTED ITEM Total Cost

Procurement Unit Part Group B Per Delivered Lot Cost Test Cost Unit

1,000 $ 7.45 $1,060 $ 8.51 100 12.62 1,450 27.11

50 22.42 2,190 66.30

Some of this expense was overcome recently through a Value Engineering Change Proposal ( V E CP) . The approved V E C P produced a net total cost reduction of $44,600 which was shared in accordance with the contract V E clause. The saving was caused by deleting the "Group B" tests and replacing these with modified tests, and conditioning and screening techniques. It was demonstrated that the reliability of the parts was not degraded by this change in lot testing.

So it can be seen from these few examples that conditions exist for considerable expense and/or cost savings within present and future contracts.

Alternatives of action T H E R E ARE several alternatives we can follow:

• Live with the expense or dollars lost,

• Don't meet the requirements—"head-in-sand,"

• Waive the requirement for the contract,

• Get the specification changed.

The first action is obviously not' to anyone's advantage and unless it is late in the contract life or the cost of implementing a change is off-setting, some positive action should be considered.

Don't think that the ostrich is the only one with his head in sand. There are several examples of specification requirements that have not been met for years. Most of these are processes which either receive little Quality Control attention, are expensive to check, or just aren't feasible to do another way. The universal aerospace requirement for cadmium plating is QQ-P-416. On threaded parts or mounting hardware the thickness tolerances are technically unrealistic, but parts are bought and accepted every day.

The individual contract waiver is an immediate action and may be sufficient within the life of a contract. But the knowledge of this waiver on other programs or on continuing contracts is a matter of concern.

Ultimately, the validity of our specification problem should be tested by attempting to get the specification changed. It is here that we enter the eternal triangle of the specification world.


GOVERNMENT PREPARING ACTIVITY

VENDORS SYSTEM CONTRACTORS

The Government Preparing Activity is charged through Title 10, U.S. Code, Chapter 145, Cataloging and Standardization Act, to "Standardize items used throughout the DOD by developing and using single specifications, eliminating overlapping and duplicate specifications, and reducing the number of sizes and kinds of items that are generally similar." DOD Directive 4120.3, Defense Standardization Program, is the policy document that establishes a program and implements the Act through the Standardization Manual 4120.3M.

Manual 4120.3M establishes the practices of specification preparation, coordination, and maintenance by Government Agencies. It also states that "Industrial cooperation shall be sought and coordination with industry and nationally recognized standardization associations shall be required." Note that this indicates widespread satisfaction, not just the needs or desires of a single company or small area of interest. The Manual also directs that, "Industry comments shall be evaluated and adopted to the maximum practicable extent, except that essential quality or performance requirements shall not be sacrificed." So the preparing activity has the technical responsibility to see that the specification describes an item or process that: (a) "has the required performance characteristics" (for an unknown application), (b) "has the degree of reliability for the intended operations" (on an unknown contract), (c) "performance of the military mission will not be compromised" (on an unknown program).

On the other hand, the system contractor, who is faced with using or procuring to contractually applicable specifications, finds them occasionally restrictive or expensive, as indicated in our three examples. He therefore applies for contract waivers and/or petitions for changes to the specification through the industry/association coordination required by 4120.3M.

Likewise, the vendor with an advanced part or process has a selfish viewpoint as to the content of a specification. If he can get requirements in a specification that make his product the only qualifier he has a lock on the market. So he petitions/lobbies/ politics to influence the preparing activity in his favor.

The channel for requesting a specification change is the same as that used by the preparing activity

for review and coordination, and that is the industry associations and national standardization organizations recognized by the DOD. My company is active on committees of the Aerospace Industries Association (AIA) and the Electronic Industries Association ( E I A ) . The AIA represents fifty-nine system contractors in the aerospace field and accounts for three-quarters of the DOD budget for that area. Most of their effectiveness is in the preliminary survey of draft documents and changes, where potential expenses and technical problems are disclosed and recommended solutions coordinated. For example, a recent change to part standard MS-21919, Cable Clamp, which would have increased the price and decreased procurement sources,' received heavy response from industry through the committees and was cancelled. On E I A committees 360 companies are represented, many of which fall into the vendor category. So this association being vendor-oriented is a balance or counterforce to pressures of the AIA which is basically system-oriented. The result of this multi-association coordination with the preparing agencies is a compromise specification, a bes t fit of today's production capability but lagging the state-of-the-art by several years and requiring tailoring for some specific applications.

What happens when a company alone tries to change a specification? When the V E C P action on MIL-S-19500 was successful, an attempt was made to take advantage of the provision in the V E clause pertaining to collateral savings. It was estimated that DOD annually procured, through MIL-S-19500, components with a market value of 250 million dollars. By changing the Group B test, as suggested and approved in the V E CP, the Government would save 30 million dollars annually. Manual 4120.3M provides that: "Proposed revisions resulting from V E C P ' s shall be coordinated as Standardization Program projects. Such proposals will receive priority attention when supported with evidence of accepted waivers, deviations, or other appropriate engineering evaluations. If acceptable to the preparing activities, projects for expedited revision of the specifications will be appropriately scheduled." However, this proposed change was not acceptable to the preparing activity. He cited disagreement with the technical backup and, more important, that industry representatives were not united in their opinions.

The immediate expense of this specification has been solved with the V E C P , and we continued to press this case, along with other problems, through our AIA and E I A representatives.

Conclusions and recommendations INDUSTRY must continue and even increase its participation in the triangle of specification review and coordination. While the return on investment is not practically measurable, enhancement of direct savings and V E opportunities can be realized only through a positive approach to the government/industry relationship.


coming events

i Plan VECP preparation workshop A V E S E M I N A R / W O K K S H O P is planned for early October in Minneapolis/St. Paul under joint sponsorship of: D C A S D - T C (Defense Contract Adrninistra-

; tion Series District-Twin Cities), S A V E - T C C (So¬' ciety of American Value Engineers—Twin Cities

Chapter), APSA (Ammunition Procurement and Supply Agency—Joliet, 111.).

j The theme of the seminar will be "How to Successfully Prepare and Submit VECP's ." Participants will have an opportunity to prepare a complete V E C P package from a carefully composed "Case Problem" situation. This workshop., is a follow-up to one held in '67 which stressed general V E philosophy, methodology and management techniques, as well as aspects of the D O D V E Incentive Sharing program.

With emphasis. on the administrative aspects of preparing and submitting V E C F s , this workshop is intended to stimulate greater participation by small-and medium-size companies in this area having defense contracts containing V E sharing provisions.

For information contact: Mr. John Bade, Defense Contract Administration Services District, Twin Cities, 2305 Ford Parkway, St. Paul, Minnesota 55116.

AOA announces conference T H E V A L U E E N G I N E E R I N G DIVISION of the American Ordnance Association announces its annual two-day technical conference will be held at Headquarters, Andrews Air Force Base, Washington D.C. October 14 and 15 ,1969 .

The subject of this year's conference, "Proven Applications of Successful Value Engineering," is an in-depth continuation of last year's subject, "Successful Applications of Value Engineering to the Department of Defense V E Incentive Program."

This year's conference will be of prime interest to top management of all defense companies, large or small. It will report the key elements of Organizational structure and responsibilities, found by participating contractors to be effective in marketing V E CP's. Released for the first time at the conference will be results of a year-long survey of over 8 0 companies whose V E C P results verify the critical roles, that management, organization, competent staffing, marketing and methodology play in a highly profita-

k bie industry value program. Key representatives of D O D will report V E pro

gram status and policy changes aimed at full contrac-^ tor participation.

For further information regarding this important conference, contact Col. John Dickson, AOA National Headquarters, Transportation Bldg., Washington, D.C. 20006.

OF T H E S O C I E T Y O F V A L U E E N G I N E E R S 15

A Study of Training Needs of Engineering Managers

. . . Implications to Value Program Managers

by Fred Schwarz

T H E PROBLEM of technical manpower is twofold: (1) The need to attract and develop competent technical professionals, and (2) the need to attract and develop competent administrators to manage these professionals. This study is concerned with the second aspect—the need for competent managers. The Management Institute of the University of Wisconsin has found that more and more companies are emphasizing the development of managers from within their organizations, rather than trying to lure them away from other organizations.

Proper management of scientific and technical talent is vital to full utilization of this talent. Therefore, there is a need to train and develop people with a technical background and orientation in the art and science of management. The present study was conducted to assist the Management Institute in meeting this need through development and presentation of programs geared especially to needs of the technical manager.

Questionnaire for managers T H E QUESTIONNAIRE form used in conducting the research presented a list of seventeen subject areas relating to aspects of a manager's job. For each of the seventeen subject areas the respondent was asked to indicate whether he had "no need," "some need," or "much need" for training in this area. This provided the information concerning the "need for management training." The rest of the questionnaire was concerned with collecting various types of information from the respondent—characteristics of his employer, personal history data, and reactions to his job. The intent of the questionnaire was to collect data which may discover a relationship between the need for training and personal and organizational variables. This summary report only covers a part of this larger investigation: the relationship of management level and organization size to the need for training.

The 645 managers of engineers in the United States and Canada surveyed were selected by random sampling from the membership roster of the Engineering Management Group of the I E E E .

Experience with pilot study data indicated two variables having a definite impact upon the need for training in the subject areas listed in the question

naire1 the management level of the respondent, and the number of people employed by his company. For this reason, where possible the figures presented here take into account the influence of these variables.

In the tables the designations, "large organizations" and "small organizations," refer to organizations with over 10,000 employees and to organizations with less than 250 employees, respectively. Categories of these sizes were chosen because they represent both ends of the continuum of number of employees. The relationship between the number of employees and the complexity of the organization is probably not perfect, but the two categories chosen certainly represent highly complex organizations on the one hand and relatively simple organizations on the other hand. The designation "all organizations" includes the entire sample of managers, from small organizations to very large multi-division organizations.

Engineering executives T H E 171 engineering executives*'in our sample averaged forty-six years of age, with eighty-two percent of them older than thirty-nine years of age. Forty-one percent of these executives have graduate degrees, twenty-six percent are from small organizations, twenty-three percent are from large organizations. The areas of training need (of the seventeen training need items) considered most important are as follows:

PERCENT "MUCH NEED" Organization Size

EXECUTIVES ALL LARGE SMALL Decision-Making 51 59 51 Planning 44 38 49 Performance Standard Setting 42 38 48 Oral Communication 40 41 33 Project Performance Measurement 39 41 33 Written Communication 38 26 42 Delegation 38 38 33 Employee Development 37 41 27 Scheduling Procedures 37 36 44

As the chart illustrates, the training needs of executives from large organizations, in general, differ from those of executives from small organizations. The large-organization executives emphasize: decision-making oral communication, project performance measurement, employee development, and delegation. The small-organization executives emphasize: planning, performance standard sett'ng, scheduling procedures, and written communication. The large-organization executive appears to emphasize training in human relations and evaluative skills, whereas the small-organization executive emphasizes more task-oriented skills. It would only be conjecture to say what causes these differences; it may be a difference in exposure to recent developments in management theory and practice.

Middle managers T H E AVERAGE AGE of the 344 engineering middle managers in our sample is forty-two years. Sixty-five percent of these middle managers are over thirty-nine years of age. Thirty-six percent have earned degrees. The sample of middle managers was drawn mainly


from larger organizations, forty-five percent coming from large organizations and only seven percent from small organizations. Areas of training need (of the seventeen training need items) considered most important are as follows:


SMALL MIDDLE MANAGERS ALL LARGE Planning 47 46 Decision Making 45 38 Performance Standard Setting 37 36 Project Performance Measurement 37 33 Delegation 34 33 Scheduling Procedures 34 28 Budgeting for Projects 34 30 Oral Communication 33 34 Written Communication 33 30

f i

Since there were only a small number of middle managers (22) in the small company sample, the data is not presented for this category because its representativeness is open to question. The data does indicate that the large organization middle manager has less need for training in some areas than middle managers from smaller organizations. Areas of decision making and scheduling procedures stand out the most. At this level, in the large organization, the importance of "planning" takes precedence over "decision making," whereas at the executive level the reverse was true.

First-line supervisors T H E SAMPLE from first-line supervisors was the smallest (130) of the three levels of managers. Most of the supervisors came from large organizations (48 percent) with again only a small percentage (6 percent) coming from small organizations. The supervisors in our sample averaged thirty-eight years of age, with forty-two percent over thirty-nine years of age. The supervisory sample contained a slightly greater percentage of persons with degrees (37 percent) than the middle managers sample (36 percent). This group of managers considered the following areas of training need (among the seventeen training need items in the questionnaire) most important:


SMALL FIRST-LINE SUPERVISORS ALL LARGE Planning 46 45 Decision Making 41 37 Oral Communication 36 32 Employee Development 34 34 Scheduling Procedures 33 34 Project Performance Measurement 33 39 Performance Standard Setting 32 43 Written Communication 31 27 Budgeting for Projeds 31 27

As with the middle manager sample, the supervisory sample from small organizations was too small (eight persons) for any meaningful comparison. The figures do indicate that the large organization supervisor has a greater need for training in some areas than do his counterparts in smaller organizations; particularly in the areas of "project performance measure

ments" and "performance standard setting." The large organization supervisor appears task-

oriented, emphasizing "planning" and "performance standard setting" as the two main training interests. The evaluative skills of "decision-making" and "performance measurement" are next in line, with more human relations skills such as employee development, oral communication, or delegation farther down the line or omitted from the top nine training needs.

Comparing management levels In the large-organization sample, the importance of training in "decision-making" corresponded nicely to the management hierarchy—the executive having the greatest need and the supervisor the least need. Like- • wise, the importance of "oral communication" increased as one moves up the management hierarchy. "Planning" was very important to the supervisor and the middle manager, but two levels indicated a concern in the latter three areas. The remainder of this section will be devoted to discussing some of the possible ramifications and implications of the above training areas as they relate to the technical manager's job. At the outset it is interesting to note that the same areas appear on both the lists.

Decision-making T H E m E N T i F i c A T i O N of decision-making skill as a much needed training subject by all levels of management in both large and small organizations is understandable in view of recent trends in management. Traditionally, the job of the manager has been described in terms of the managerial functions of planning, organizing, directing, and controlling. It is only in the last few years that decision-making has been recognized as a legitimate fifth function that, in many ways, gives meaning and depth to the other four. To a certain degree, the decisions which a manager makes constitute the ultimate measure of his effectiveness.

In addition, as organizations grow in size the decision making process must be delegated. There is a limit to what one man can accomplish. Also, we now recognize that if a manager is to be held accountable for results he must have the authority, to make decisions which effect results. Thus, decision making skill is beginning to emerge as a prime factor in managerial performance.

The engineering manager is typically called upon to make decisions in such areas as project priority, cost estimating, potential profitability of new products, time requirement, as well as numerous other technically related areas. Also, he must make decisions of a management nature such as hiring, promotion, wage increases, upgrading, etc. The importance of decisions made by technical administrators in both areas (technical and human resources) has a direct impact on his company's present status as well as its competitive future.

Another matter of importance is the trend toward group rather than strictly one-man decision-making. Because of the complexity of modern organizations it is a rare occurrence when a single individual possesses all the insight, facts knowledge and experience to carry him through the total decision making process of problem identification, development of alternatives, evaluating these alternatives, and develop-


havioral scientists are providing new insights in this area.1

A very encouraging fact is that studies indicate that both the skills of problem analysis and decisionmaking can be implemented.

Short- and long-range planning A RECENT TREND in management evidenced by this survey, as well as by the literature, is emphasis on planning. Planning has always been considered one of the basic functions of a manager, along with organizing, controlling, coordinating, and more recently, innovating and decision making. It may be surprising plans for implementation. Findings of the being therefore to see that it was of much concern to middle level and first-line supervisors in large and small companies and also executives of small firms. The planning process in large firms is usually coordinated by an individual in corporate headquarters and/or someone relatively high in the management hierarchy.2 In the small company the top executive usually coordinates this function. How do we account then for this high interest on the part of the majority of respondents answering the questionnaire?

Two things may explain this situation. First, rapidly changing technology has made planning more difficult because it has become more dynamic. E d Green, former Corporate Director of Planning for Westinghouse says, "There are only three things which we know about the future: It will not be like the past . . . it will not be like what we think it is going to be . . . and the rate of change will be faster tomorrow than it was yesterday."a Thus, more than ever before there is a premium being placed on looking ahead. This means advance decisions on the overall direction of the operation, the setting of specific objectives, establishing programs to achieve these objectives, and controlling toward results. Also implied is a need to continually evaluate, reassess, and if necessary chart new courses to be followed.

Another reason which may explain the need for improvement is short- and long-range planning by all levels of management is the complex nature of today's

lArgyris, Chris, "Interpersonal Barriers to Decision Making," Harvard Business Review, March—April, 1966, pp 84-97.

2Wood, Jerome W., The Management of Scientific Personnel, American Management Society, New York, page 55. •lEd Green, President, Planning Dynamics Inc., Pittsburgh, Penn. From an address at an. executive seminar at the American Management Association, New York City, New York.

industry. Top management and corporate planners recognize that they must rely on inputs and feedback from all managers in their organizations down to first-line supervision. These facts of modern management, combined with the increasing use of management by objectives, are forcing lower level managers and staff functions into more accountable planning and recognition by top management that implementation of plans requires involvement of those who are going to execute the plans. This has probably contributed to forcing the planning process downward in most companies.

Implication of the study V A L U E PROGRAM MANAGERS are frequently concerned about continued top management support. The value program manager usually points out to his top management the benefits of savings which the V . E . program provides in order to solicit management support. This study presents another implication for value program managers. The first two fables show that executives and middle managers expressed "much need" for training and development of their decision-making and planning skills. Out of seventeen topics in management training in the questionnaire, these two ranked at the top. The third table shows that although first-line supervisors ranked planning at the top of their training need list, decision-making was fourth highest.

The value program manager should emphasize the opportunity for all level managers to develop their problem solving, decision-making, and planning skills through value engineering training courses and implementation of project results. This study shows the need for training by all level managers in two skills which value engineering training and practice provide. Your value program can meet the two most important training needs of your managers if your company is typical of those technical firms questioned in this study.

KEEP APRIL 14-15-16 1970

OPEN FOR DALLAS CONFERENCE

HAV E Y O U PREPARED A PAPER?


New Society Service

manpower/industry matchmaking

T H E RAPID CHANGES in industry today, intense competition, conglomerate raiding, and extreme fluctuation in defense product needs are creating a high degree of mobility for technical as well as management personnel.

We in the Society, and a fair segment of industry, recognize the benefits of application of Value E n gineering philosophy and methodology to products, services, and organizations. Value trainees now are in demand. However, all too frequently neither the company nor the man can find the proper match.

Therefore, the Society intends to become a source of assistance to our members by creating both a marketing function and an education service for manpower matchmaking.

Basically, the services will consist of:

• Utilization of S A V E periodicals to list employer opportunities.

• Recommendations of methods and channels by which members can best help themselves.

• Encouraging industry/government to funnel information regarding manpower needs and planning to the Society.

• Compiling a listing of periodicals for recommended reading—samples of resumes that "grab," etc.

• Seeking active assistance of members to establish a network of "helpers to job seekers."

The main purposes are not only to offer positive aids to our members and to retain the reservoir of value men in the field, but also to acquaint employers with the breadth of talent encompassed by our membership.

In addition, we may arouse the active interests of "outsiders" in the techniques and benefits of Value Engineering.

More specific details of the steps to be followed to participate in this service will be released soon.

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

The Effect of Value Engineering on System Reliability

by Martin T. Pett

There continues to be increasing emphasis on cost reduction programs by the Department of Defense and the military services. Of particular interest are the Armed Services Procurement Regulation (ASPR) clauses covering Value Engineering. Most major programs contain contractual provisions where the supplier can increase his profits by reducing his costs. The prospects of increased profits have interested many management people in establishing Value E n gineering organizations within their companies.

One of the Value Engineering results is the submittal of Value Engineering Change Proposals ( V E CP's) when V E C P ' s are accepted by the contracting agency. The contractor agrees to reduce target cost; as payment for his services, he receives a share of the savings in the form of increase in target profit. The change may involve other than hardware changes. Changes to statements of work or data requirements qualify as V E C P items. One requirement of a V E C P is that there is no deterioration in performance (including equipment reliability) as a result of the proposed change.

A question of critical interest in a V . E . program is, therefore, "What is the effect upon equipment reliability as a result of the proposed change?" This paper describes an evaluation of factors relating to the impact of value engineering on equipment reliability factors.

Equipment Reliability and Changes to equipment or contract performance may have either beneficial or detrimental effects upon equipment reliability. Changes with the following features are likely to improve reliability.

• Reduction in parts count. • Reduction in power consumption. • Improved accessibility and testability. • Reduction in number and complexity of manu

facturing operations. • Improvement in marginal design parameters.

Changes with the following features are likely to degrade reliability.

• Relaxation of part testing and quality screening.

• Use of high-risk components or techniques.

• Arbitrary relaxation of specification tolerances.

In the interest of better reliability, one must pro

mote and support V E C P ' s which improve rehability, and impede those which are degrading. The following section will deal with such features:

Parts count reduction Frequently, Value Engineering studies of electronic equipment result in proposals to simplify design and reduce part count. The cost savings resulting from such changes are obvious. Reliability improvement may also result from the change.

Mean time between failure (MTBF) is almost exactly inversely proportional to parts count, other factors, such as stress level, environment, and part qual-

By simplifying manufacturing operations, Value Engineering reduces errors and costs in production of complex items such as the 200-box radar MA-1 armament control system, shown above with an F-106A Delta Dart. Hughes Aircraft Company builds the MA-1 Electronic System, as well as the AIM-4F and AIM-46 Super Falcon missiles, foreground and left.


ity being equal. An exception to this is equipment using redundancy as a method of achieving required reliability. If redundant or fail-safe elements of the design are removed in the cost reduction effort, reliability may be impaired. Any change in the design should, therefore, be analyzed by means of a change in the reliability model. The reliability prediction technique, using a serial model and basic piece part failure rates, will show a direct increase in M T B F , with a decrease in the number of parts used.

Some Value Engineering redesign involves application of microcircuits in devices which previously used discreet or hybrid circuits. A very significant reliability breakthrough has occurred in this area. Certain manufacturing processes and circuit types have been costly and troublesome. Significant reliability improvement can be attained by diligent application of sound engineering principles. However "short-cut" approaches can result in serious reliability degradation. The temptation to exaggerate cost savings may induce an organization to reduce reliability testing and evaluation efforts to a point of high risk. Acceptable reliability must be soundly pursued.

Reduced power consumption V A L U E ENGINEERING changes which result in a reduction in electrical power consumption usually improve equipment reliability. Heat is one of the enemies of reliability. If power consumption is reduced, not only does this permit use of smaller and more reliable power sources, but other circuits and adjacent parts operate in a cooler environment.

A reduction in power consumption may be brought about by a variety of means. A change in method and degree of regulating D.C. power can often greatly reduce power consumption. In almost every major system, there are situations in which power requirements are overspecified to "be on the safe side." The result is more costly, more complex, and less reliable power sources. Switching-type regulators, for example, are much more efficient than continuous-type.

Analysis of effect on reliability should always take into account heat generated as it affects the regulator and adjacent components. In complex, multi-mode systems, total power consumption can be reduced by assuring that only essential circuits and systems are functioning during each mode of operation. If the duty factor can be substantially reduced, reliability is improved by an equivalent ratio, quent reliability improvement, a recent Value Engi-

As an illustration of« a V E change with subse-neering change to a missile electronic power supply involved a change from continuous to pulse width regulation. The power dissipation was reduced 40 percent, part count was reduced approximately 35 percent, and the expected M T B F has doubled. The cost of production of the unit has been reduced 51 percent.

Accessibility and testability I T CAN B E a formidable task to ascertain that all functions are properly operating in a complex system. It is frequently difficult and time-consuming to gain access and make adjustments to faulty circuits. Changes of a Value Engineering nature which improve accessibility and testability improve maintainability.

These changes, however, can improve reliability as well. The more easily and completely a system can be tested, the more likely it is that potential failures are detected and eliminated. It is not easy to provide a quantitative measurement of the reliability improvement brought about by this type of change. The multiplicity of human factors and other elements make accurate prediction almost impossible. The concept of reliability, however, must not be narrowed to only that which can be statistically measured.

Producibility improvements T H E TRANSITION from experimental, or developmental, equipment to production equipment is usually a big step. The design, intended for manufacture in a model shop and operated and maintained by engineers, is frequently prohibitively expensive to produce in large numbers.

It is easy to understand the relationship between 1 the cost and producibility, but the relationship be

tween reliability and producibility is less obvious. The producibility-reliability relationship comes about because of the nature of the production process and production problems. Pressure is always brought to bear upon production personnel to maintain a schedule and control costs. This task is frequently made impossible by a non-producible design. One feature frequently compromised in the squeeze is reliability.

Equipment which must undergo many complicated manufacturing operations is subject to a disproportionate number of workmanship errors. Experience on several major missile programs has shown that manufacturing workmanship difficulties contribute 35 to 40 percent of field reliability problems. Value Engineering changes that reduce operations contribute to a more reliable product. This factor does not necessarily show up in the reliability analysis, but it is nevertheless present in a very tangible sense.

Improvements in design margins OCCASIONALLY, equipment exhibits marginal performance which cannot be assessed as a specific violation of the specification. If the equipment requires frequent adjustment or exhibits marginal performance, design improvements may be submitted as Value E n gineering changes, if they result in reduced maintenance and repair costs.

The relationship between marginal design and reliability becomes apparent when one considers variations from specified performance as a reliability failure. A frequent fringe benefit from design margin improvement is improved equipment reliability. Discretion must be exercised to assure that the design change is one of improved design margins and manufacturing yield and not simply an unproven design innovation.

Reliability and cost improvement S O M E O F the cost reduction attained as the result of Value Engineering programs on components of a missile system are shown in the following chart. The percentage increase in estimated M T B F is also indicated. The greatest reliability improvements were experienced in simplification of units containing large quantities of electronic devices.


Equipment Mfg. Cost Reduction MTBF Improvement Autopilot 3 7 % 8 0 % Transmitter Receiver 3 3 % 6 1 % Electrical Control Unit 5 1 % 9 5 % Electronics Unit 3 8 % 156% Guidance Seeker Head 2 5 % 7 2 %

Reliability pitfalls in VE C E R T A I N L Y NOT all V E changes enhance reliability. Sometimes a costly but effective unit or device, when redesigned for cost reduction, no longer performs reliably. It is the responsibility of reliability analysts to monitor and evaluate design and other program changes to assure that reliability is not com

promised. Sometimes Value Engineering Changes proposed delete certain testing or inspection requirements, or relax specifications in order to improve test yield.

These changes may compromise systems reliability. Occasionally, specification tolerances are unduly restrictive or test sequences redundant. Changes to relax these requirements are beneficial. Data should be presented, however, to assure that reliability will not be compromised. The responsibility of the reliability engineer in the V E program is threefold: to contribute ideas which improve reliability, to vigorously support changes improving reliability, and to express caution regarding changes which degrade reliability.

The JOURNAL needs you! T H E J O U R N A L O F V A L U E ENGINEERING is the technical spokesman of the Society of American Value Engineers and its members, but it also wishes to serve and reflect the ideas of all practicing value engineers and those interested in the V E technology who are not now members of the society. It is dedicated to the continued advancement of the Value Engineering methodology and to extending its application and benefits in all facets of business, industry, service organization and Government.

Both the Society and the V E methodology are currently in 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 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 DOD Value Engineering Services Office-DEVO 8D 376 Cameron Sta., Alexandria, Va. 22314

or:

W. B. Dean, Vice President-Communications 5204 Benton Avenue, Edina, Minnesota 55437

Beginning with the fall issue, the journal will be published quarterly in September, December, March, and June. Society members receive subscriptions automatically with payment of membership dues. Affiliate members may subscribe at the subsidized rate of $5.00 per year and non-members may subscribe at $25.00 per year. A subscription form is attached for your convenience.

22 • S E P T E M B E R , 1969 T H E J O U R N A L

...from the editor

EXPANSION O F Commercial Value Engineering or Value Analysis, had its origin in private industry. The Navy, and later the other branches of the military services, aggressively adopted and applied the methodology. As savings and value improvement benefits became evident, the Department of Defense invited contractors to employ V E to help stem increasing costs of defense.

Early in the program, however, DOD recognized that contract cost reduction often resulted in fee reduction for contractors, thus negating the contractors' desire to propose contract cost reduction ideas. As a result, they introduced, through the Armed Services Procurement Regulations ( A S P R ) , a Value Engineering Incentive Sharing Program wherein contractors shared in savings proposed. As the program progressed, contractual and incentive award regulations were refined to where, today, alert defense contractors find sharing from value engineering change proposals a major source of added income.

Recent statistics show a marked growth in defense contractor development of active V E programs. V E incentives have also had a significant effect on growth and refinement of the V E technology itself. Of equal importance is the influence the D O D program has had on development of effective organization structures for applying and marketing Value Engineering Change Proposals ( V E C P ' s ) . Results-oriented companies realize the important role that management environment, assignment of responsibility, organizational structure, and operating mechanics play in successfully implementing V E savings and reaping profitable rewards. Savings recorded by the DOD attest to the effectiveness of both the V E technology and its organized application.

An enigma exists, however, in that commercial industries, where the V E technology was spawned, have apparently not as aggressively fostered V E development, nor has there been the growth in applied Value Engineering that one should expect. This is particularly perplexing in view of the fact that commercial enterprises receive total benefits from Value Engineering changes, while defense industries receive only an average of 43 percent of savings.

There are some who believe that V E may be more widely used commercially than is reported or evident

through commercial memberships in the Society of American Value Engineers. This analysis is highly questionable since it is difficult, if not impossible, to build a case for the advantages of hidden V E practices. Certainly, the advances made in both the V E technology and the organizational structure for effective application should be of greater value to commercial, non-military industrial and institutional organizations than they are to defense.

In the building and building material trades, in software and in services, Value Engineering can provide stimulus for cost saving innovation that could be the key to continued profitable existence for many small companies. Institutions and state and local government could surely use V E to help placate near-revolting taxpayers.

Certainly the advances thus far made in the V E technologies and application through defense usage should be exposed and fully exploited by all. It would seem that this could be best accomplished through the open exchange of tested V E techniques. Today the Society of American Value Engineers provides the most active media by which such exchange is being accomplished.

In the future issues of the JOURNAL O F V A L U E E N GINEERING it is our intention to explore as many of these non-military applications and benefits of V E as possible. In the winter issue (December), for example, we would like to air problems and solutions of commercial applications of Value Engineering. The spring issue will feature V E in the building trades. Only through our readers' expression in the form of articles, experiences, letters, and questions to the editor, can we hope to give you a full review of the facts and fallacies about Value Engineering. Your comments please!

W. B. Dean Vice-President, Communications

OF T H E S O C I E T Y O F V A L U E E N G I N E E R S 23

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JOURNAL f Value Engineering

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