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PROJECTS

CRITERIA

FOR T H E S E L E C T I O N O F VALUE ENGINEERING S t a n l e y C. D r o z d a l E n g i n e e r i n g Program Manager Watervliet Arsenal W a t e r v l i e t , New Y o r k 1 2 1 8 9

Value

C r i t e r i a F o r The S e l e c t i o n o f V a l u e E n g i n e e r i n g Projects A b s t r a c t - A l a r g e number o f c r i t e r i a f o r the s e l e c t i o n o f value engineering p r o j e c t s w i l l be p r e s e n t e d , which may b e s e l e c t e d t o s u i t p a r t i c ular needs and requirements.

problem f o r t h e v a l u e e n g i n e e r i n g manager and his o r g a n i z a t i o n , e s p e c i a l l y i f being measured each y e a r a g a i n s t a savings goal. In g e n e r a l , c r i t e r i a f o r p r o j e c t s e l e c t i o n w i l l d i f f e r with each organization i n business. By a n d l a r g e , t h e c r i t e r i a u s e d w i l l d e p e n d o n t h e t y p e and number o f i t e m s t h a t a n o r g a n i z a tion deals with a n dthe value engineering a b i l i t i e s ready f o r use. In s e l e c t i n g d e s e r v i n g v a l u e e n g i n e e r i n g p r o j e c t s , onemust not only decide which p r o j e c t s t o s t a r t , but a l s o which ones t o cont i n u e and which ones t o end. I nf a c t , the appraisal o f old, u n f i n i s h e d p r o j e c t s i s proba b l y a s important a s s e l e c t i o n o f new p r o j e c t s . In a d d i t i o n t o t h e s e l e c t i o n o f p r o j e c t s , t h e r e must a l s o be a d e t e r m i n a t i o n a s t o the s t r e s s t o be p l a c e d o n e a c h s e l e c t e d p r o j e c t . Most g u i d e l i n e s r e g a r d i n g what t o value engineer are o v e r - s i m p l i f i e d , sweeping s t a t e m e n t s w h i c h mean l i t t l e i n s p e c i f i c s i t u a t i o n s . There are, obviously, a wide d i v e r s i t y o f manufacturing i n t e r e s t s , companies o f g r e a t l y d i f f e r e n t s i z e s , and management w i t h v a r y i n g degrees o f s k i l l , knowledge a n d s o p h i s t i c a t i o n . E v e r y one o f t h e s e f a c t o r s i s i n f l u e n t i a l i n arranging a f e a s i b l e system o f s e l e c t i n g value e n g i n e e r i n g p r o j e c t s . Even i f we w e r e t o r e s t r i c t ourselves t o a lone industry, a s i n g l e , best system cannot be proposed. Therefore, i t w i l l be the purpose o f t h i s paper t o p r e s e n t a g r e a t number o f c r i t e r i a which can be s e l e c t e d f o r s p e c i f i c c i r c u m s t a n c e s , modified by such f a c t o r s a n d elements a s s i z e o f company, nature o f product o r s e r v i c e , competit i v e s i t u a t i o n , a n dthe amount o f c o n t r o l e x e r c i s e d by the.value engineering manager. I t f o l l o w s , however, t h a t a j u d i c i o u s s e l e c t i o n o f the c r i t e r i a c o n t a i n e d i nt h i s d i s c u s s i o n w i l l i n s u r e t h a t the amount o f e f f o r t being conc e n t r a t e d on p r o j e c t s r e s u l t s i nthe g r e a t e s t m o n e t a r y b e n e f i t f o r t h e t i m e and money b e i n g expended. The f o l l o w i n g l i s t o f c r i t e r i a r e p r e s e n t s c r i t e r i a used i n business and Government f o r the selection o f value engineering projects in the component a n dproduct a r e a , s i n c e t h i s i s u s u a l l y the most f r u i t f u l a r e a f o r value e n g i neering. Component S t u d i e s 1. ABC A n a l y s i s Criteria

A l t h o u g h t h e n e c e s s i t y f o r r e a l i s t i c and e f f e c t i v e methods o f s e l e c t i n g value engineering p r o j e c t s e x i s t s i nh a r d w a r e , f u n c t i o n a l a r e a s , t r a i n i n g , forms, r e p o r t s , ' p r o c e s s e s and c o s t a v o i d a n c e i n t h e R&E s t a g e , n o t m a n y m a n a g e m e n t s h a v e t r i e d t o u s e a common t e c h nique i nt h i s s e l e c t i o n . The q u a n t i t y o f r e s o u r c e s t h a t can b e assigned t ovalue engineering i s restricted, therefore, i t i s o f the greatest s i g n i f i c a n c e t h a t these u n p l e n t i f u l r e s o u r c e s be used where there i s high expectation for cost reduction. To d e t e r m i n e b e f o r e h a n d t h o s e p r o j e c t s w h i c h w i l l return large savings from value engineering i s a d i f f i c u l t assignment. One o f t h e g r a v e s t s h o r t a g e s i n v a l u e e n g i neering today i s the l a c k o f organized c r i t e r i a for d e c i d i n g w h e r e and when t o put v a l u e e n g i n e e r i n g i n t o p r a c t i c e . Many v a l u e e n g i n e e r i n g p r o j e c t s are chosen on a random b a s i s w i t h l i t t l e regard for maximizing savings for the value engineering effort involved. For a given quantity o f value engineering t i m e , some p r o j e c t s w i l l r e t u r n g r e a t e r s a v i n g s than o t h e r p r o j e c t s . T h i s i s o f much s i g n i f i cance t o the v a l u e e n g i n e e r i n g manager who h a s to p l a n , o r g a n i z e , c o o r d i n a t e and c o n t r o l h i s s c a r c e resources t o produce the g r e a t e s t savings. B e c a u s e o f t i m e , money and manpower l i m i t a t i o n s , i t i s not f e a s i b l e t o s t u d y e v e r y component, product, process, material, e t c . , therefore, i t i s very important that the value engineering manager apply h i s s c a r c e r e s o u r c e s t o get the most r e t u r n from t h e i r use. Many v a l u e e n g i n e e r s w o u l d s p e n d s o much time on p r o j e c t s r e t u r n i n g low s a v i n g s t h a t n o t enough time would remain t o work on p r o j e c t s which could produce t r u l y big savings. At the commencement o f a new v a l u e e n g i n e e r ing p r o g r a m , many p r o j e c t s a r e q u i c k l y i n i t i a t e d , based on the e x p e r i e n c e o f both workers a n d m a n a g e r s . B u t o n c e t h e s e p r o j e c t s a r e compp l e t e d , t h e p r o b l e m s t a r t s , "Where do we g o from here?" I t i s a vexing, concrete, real world
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Many c o m p a n i e s u s e t h e ABC A n a l y s i s t e c h n i q u e , w h i c h s e p a r a t e s p a r t s i n t o "A", " B " , a n d " C " i t e m s . T h e "A" i t e m s a r e t h e h i g h e x p e n d i t u r e items which u s u a l l y r e p r e s e n t only 15% o f the t o t a l number o f i t e m s , but about 70% o f the t o t a l c o s t s . T h e "B" items a r e t h e medium expenditure items which u s u a l l y r e p r e s e n t about 25% o f the t o t a l number o f items but about 2 0 % of the total c o s t s . T h e"C"items are the l o w expenditure items which u s u a l l y r e p r e s e n t about 60% o f the t o t a l number o f items but about 10% o f t h e t o t a l c o s t s . T h e "A" i t e m s m a y i n c l u d e items w i t h a low u n i t c o s t but h i g h volume o r i t e m s w i t h a h i g h u n i t c o s t a n dlow volume. T h e i m p o r t a n t f a c t o r i s t h e t o t a l amount o f e x p e n d i t u r e s , not u n i t c o s t o r q u a n t i t y used. Separat i o n o f p a r t s i n t o "A", " B " o r "C" i t e m s a f f o r d s a s t a r t i n g p o i n t f o r z e r o i n g i n o n t h e "A" i t e m s , or highest expenditure items. But we h a v e t o go a s t e p o r t w o f a r t h e r . We m u s t t h e n r a n k t h e "A" i t e m s i n t o t h o s e w h i c h a f f o r d t h e g r e a t e s t opportunity for the greatest reduction i ncost. This step, o f course, w i l l be h i g h l y dependent on t h e j u d g m e n t a n d e x p e r i e n c e o f t h o s e v a l u e e n g i n e e r s c o n d u c t i n g t h e "A, B , C " a n a l y s i s . A f t e r r a n k i n g t h e "A" i t e m s i n t o t h o s e a f f o r d i n g t h e g r e a t e s t s a v i n g s , we can go a s t e p f a r t h e r a n d c o n d u c t a p r o b l e m a n a l y s i s o f e a c h "A" i t e m , p i n p o i n t i n g such problem areas a s high s c r a p o r rework c o s t , s o l e source procurement, late d e l i v e r i e s from vendors, high maintenance c o s t s , high t e s t c o s t s , high packaging cost, high i n s p e c t i o n c o s t , e t c . A f t e r going through the ABC a n d p r o b l e m a n a l y s i s , t h e w o r t h i e s t c a n d i dates f o r value e n g i n e e r i n g e f f o r t can be p i n pointed. 2. Items Which Appear Ready f o r Improvement

A product which r e q u i r e s high maintenance o r r e placement c o s t i s a l i k e l y candidate f o r a value engineering study. 7. Exotic Materials

A p r o d u c t o r i t e m w h i c h i s c o m p o s e d o f many h i g h c o s t m a t e r i a l s provides opportunity f o r improved value. 8. Over-Designed Components

Those items which perform rugged f u n c t i o n s but are designed l i k e fine watches with toolmaker's tolerances offer an excellent opportunity for improved v a l u e . 9. C o r r e l a t i o n o f Resource t o Task

This s e l e c t i o n would c o n s i s t o f items t h a t have had no b a s i c changes f o r a number o f y e a r s a n d are lacking improvements p o s s i b l e through technological advances i n machining, processes and materials. 3. Complexity o f the Product

R e s o u r c e s r e f e r t o t i m e , money, manpower and know-how p o s s e s s e d b y t h e v a l u e e n g i n e e r i n g o r ganization. As f a r a s time i s concerned, s e l e c t i o n o f t o o many l o n g - r a n g e p r o j e c t s w i l l r e s u l t in too l a r g e a d r a i n on manpower time w i t h too much t i m e p a s s i n g b e f o r e r e s u l t s a r e accomplished. The amount o f money a v a i l a b l e f o r t e s t i n g , performing s t u d i e s and manufacture o f a l t e r nate items i s a l s o a f a c t o r . For example, i f t e s t i n g o f an a l t e r n a t e design r e q u i r e d $100,000 and o n l y $ 1 2 5 , 0 0 0 i n s a v i n g s w i l l b e r e a l i z e d , s e l e c t i n g a p r o j e c t with t h i s type r e t u r n would be q u e s t i o n a b l e . I n s o f a r a s manpower a n d knowhow a r e c o n c e r n e d , , i t w o u l d b e q u e s t i o n a b l e t o embark on s t u d i e s o f e l e c t r o n i c components i f t h e s p e c i a l t y a v a i l a b l e a r e men k n o w l e d g e a b l e i n mechanical components. T h er e v e r s e i s a l s o t r u e . In o t h e r w o r d s , t h e k n o w l e d g e o r know-how o f v a l u e e n g i n e e r i n g must be matched t o t h e component o r item being studied. Theideal situation would be t o have personnel capable o f handling a broad, d i v e r s i f i e d range o f problems a n d s i t u a tions . 10. Profit

G e n e r a l l y , the more complex the product o r item, the more chance t h e r e i s f o r r e d u c i n g c o s t . 4. State-of-the-Art

Product o r item designs which are pushing the state o f the a r t w i l l o f f e r s i z e a b l e potential for value engineering. 5. Development Time C y c l e

Many c o m p a n i e s , i na n e f f o r t t o i m p r o v e t h e p r o f i t p i c t u r e , s e l e c t those components o r products which show low p r o f i t margins o r t h o s e t h a t a r e approaching loss s t a t u s . This s e l e c t i o n should be t e m p e r e d b y t h e f a c t t h a t maximum s a v i n g s m a y be r e a l i z e d o n h i g h e r p r o f i t c o m p o n e n t s , w h i c h can be v a l u e engineered a n dr e s u l t i n a h i g h e r percentage andg r e a t e r c o s t s a v i n g s , a n d thus may b e a b l e t o " c a r r y " t h e l o w e r p r o f i t c o m p o n ents until such time t h a t the lower p r o f i t components can be v a l u e engineered. 11. Competitive Position

A p r o d u c t o r i t e m w h i c h has had a n a c c e l e r a t e d d e v e l o p m e n t p r o g r a m u s u a l l y c o n t a i n s many e l e ments o f overdesign andthus, opportunity f o r value engineering. 6. High Support Cost

I f a company i s i n danger o f l o s i n g i t s competit i v e p o s i t i o n on a p a r t i c u l a r p r o d u c t which may r e s u l t i n a s e r i o u s l o s s t o the company, a n a l l out v a l u e e n g i n e e r i n g e f f o r t s h o u l d be made.

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12.

Future

Potential

16.

High

Usage

Obviously, those components should be s e l e c t e d for value engineering which r e f l e c t the g r e a t e s t q u a n t i t i e s t o be produced over a long p e r i o d o f time. Then, the savings generated on the o r i g i nal value engineering study would r e s u l t i n l a r g e r e c u r r i n g savings u n t i l such time t h a t the component phased out o r became o b s o l e t e . 13. Interchangeability

This type o f product o r item accumulates savings even when a m i n o r c h a n g e i s made b e c a u s e o f t h e l a r g e m u l t i p l i e r e f f e c t and implementation o r o f f s e t t i n g c o s t s being more r e a d i l y a m o r t i z e d . 17. Excess Functions

Most v a l u e engineers w i l l f i n d l i t t l e d i f f i c u l t y in a r r i v i n g a tconclusions o r a l t e r n a t i v e s that w i l l a l l o w r e d u c t i o n s i nc o s t on a l m o s t any piece o f hardware. However, t h e r e i s no guarantee t h a t the i d e a s can be implemented i f each item o f a product must be a b s o l u t e l y i n t e r changeable i na l l d e t a i l , o r , under commercial c o n s i d e r a t i o n s where tool changeover, production l i n e change o r customer acceptance o f e x i s t i n g products makes change d i f f i c u l t . I nprivate i n d u s t r y , changeover c o s t o r customer r e s i s t a n c e may e a t u p a l l o f t h e s a v i n g s . Y e t , t h e r e a r e great possibilities for cost reduction that i n no w a y a f f e c t t h e u t i l i z a t i o n o r f u n c t i o n o f t h e hardware but are not completely i n t e r c h a n g e a b l e in every detail. These p o s s i b i l i t i e s would r e s u l t i nrecommendations which would permit the product t o f u n c t i o n a l l y interchange a s an assembly, but the d e t a i l p a r t s would not interchange. Or, i n t h e c a s e o f a n i n d i v i d u a l component, t h e two e n d p o i n t s o f t h e c o m p o n e n t w o u l d f i t i n t o the assembly, although the material o r configur a t i o n between the end p o i n t s c o u l d be v a s t l y different. 14. Receptive Change Climate

Frequently in design, excess functions are incorp o r a t e d w h i c h o n l y add t o c o s t w i t h o u t c o n t r i b u t i n g t o the b a s i c f u n c t i o n o f the component o r product. I f the p a r t does more - f u n c t i o n a l l y than i t has t o , poor v a l u e e x i s t s . 18. Excess Safety Margins and Close Tolerances

Excess s a f e t y margins and c l o s e t o l e r a n c e s only add t o the c o s t w i t h o u t c o n t r i b u t i n g t o t h e b a s i c f u n c t i o n o f the component a n d product. 19. Comparative Analysis

As t h e t e r m i m p l i e s , c o m p a r a t i v e a n a l y s i s i s c o n cerned with the comparison o f l i k e items. Suppose, f o r example, a company buys t h r e e d i f f e r ent sizes o f grinding wheels. Procurement r e c ords i n d i c a t e the following: S i z e o f Wheel 1/2 x 8 1/2 x 1 0 3/4 x 8 Q t yPurchased 2,000 1,900 1,800 Price $12.00 $25.00 $13.50

In order t o achieve l e a s t c o s t , a c l i m a t e must f i r s t be e s t a b l i s h e d which i s amenable t o change, a c l i m a t e i n which a l l persons who c o n t r i b u t e t o c o s t d e c i s i o n s make a d e t e r m i n e d e f f o r t t o a v o i d negativism, o r r e s i s t a n c e t o change. O f course, i f the value engineering organization operates i n a c l i m a t e o f top management support, the t a s k w i l l b e much e a s i e r . On t h e o t h e r h a n d , i f a company abounds w i t h people w i t h n e g a t i v i s t i c a t t i t u d e s and contentment t o go through the y e a r s w i t h o u t making changes, such a company o f f e r s a very f e r t i l e climate for value engineering studi e s s i n c e unnecessary c o s t s w i l l teem i n such a company. Making v a l u e e n g i n e e r i n g changes w i l l be a much more f o r m i d a b l e t a s k i n s u c h a n e n v i ronment, but t h i s d i s a d v a n t a g e w i l l be more than overcome by the v a s t n e s s o f c o s t reduction opportunities. 15. Item Standardization

N a t u r a l l y , t h e 1/2 x 10 w h e e l i s s u s p e c t . Both l a r g e r and s m a l l e r w h e e l s a r e l e s s e x p e n s i v e . I d e a s f o r v a l u e e n g i n e e r i n g s h o u l d come a u t o m a t i c a l l y i n t h i s s i t u a t i o n . Why n o t u s e t h e 1 / 2 x 8 o r 3 / 4 x 8 s i z e i n s t e a d o f t h e 1/2 x 10 size? Does the s u p p l i e r have a compromise s i z e wheel t o perform a wide v a r i e t y o f jobs a t a c o s t s i m i l a r t o t h e 1/2 x 8 w h e e l ? I s someone e l s e buying a "compromise" wheel s i z e i n l a r g e volume and can we t a g a l o n g o n t h e o t h e r b u y e r ' s volume? Because o f the obvious d i f f e r e n c ei n c o s t a t s u b s t a n t i a l l y t h e same q u a n t i t i e s , the 1/2 x 1 0 w h e e l s h o u l d b e c o m e a n i t e m f o r v a l u e engineering investigation. 20. Cost Per Pound

T h i s i s a t e c h n i q u e w h i c h i s w e l l known a n d u s e d i n i n d u s t r y . An o u t - o f - l i n e high c o s t per pound may d e n o t e a s u b j e c t f o r i n v e s t i g a t i o n . This, of course, i s another comparative analysis, technique. 21. Cost Per Dimension

The p o s s i b i l i t y o f s t a n d a r d i z i n g the i t e m may e x i s t s o t h a t a g r e a t number o f items may b e changed i n t o oneu n i v e r s a l l y acceptable item t o perform a given function a tconsiderably l e s s cost.

Products o r items may be s e l e c t e d f o r v a l u e e n g i neering study where dimensions such a s length, area, volume, e t c . , are s i g n i f i c a n t f o r comparison.

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22.

Cost Per Property

and/or

Function

In some c o m p a n i e s , f u n c t i o n a l p a r a m e t e r s a r e analyzed and standard values are applied t o perform various f u n c t i o n s . Products o r components w i t h many h i g h c o s t f u n c t i o n s can t h e n b e selected f o r study. 23. Reasonable Probability o f Success

"Bread a n d B u t t e r " p r o j e c t s a n d a l e s s e r number of long range p r o j e c t s with higher savings p o t e n t i a l o r t e c h n o l o g i c a l "break through" potential. S e l e c t i o n o f long-range p r o j e c t s is o n eo f the most d i f f i c u l t t a s k s o f the v a l u e e n g i n e e r i n g m a n a g e r . He m u s t s e l e c t t h e mix o f p r o j e c t s w h i c h , t h r o u g h s t u d y , i n t u i t i o n and e x p e r i e n c e , h e knows w i l l b e s t s a t i s f y t h e needs o f the company i n both the near and d i s tant future. 26. Questions Raised in Design Review

An e x p e r i e n c e d v a l u e e n g i n e e r , i n r e v i e w i n g c o m ponent design, should immediately recognize lower c o s t a l t e r n a t i v e s f o r the components being reviewed. He s h o u l d a l s o p o s s e s s a n i n t u i t i v e sense about the reasonable p r o b a b i l i t y o f success o f the value engineering p r o j e c t and thus be a b l e t o s e l e c t p r o j e c t s f o r s t u d y and r a n k them according t o the degree o f p r o b a b i l i t y o f success. 24. Management Support

Questions raised in design reviews pinpoint m a j o r p r o b l e m and high c o s t a r e a s a n d p r o v i d e projects for further value engineering study. 27. Material Costs

The p e r c e n t u t i l i z a t i o n o f raw m a t e r i a l s (how many c h i p s a r e b e i n g p r o d u c e d ) h i g h l i g h t s a r e a s of poor value. 28. Age o f the Product

S e l e c t i o n o f p r o j e c t s which represent "sacred cows" i nthe eyes o f top management a r e normall y doomed t o f a i l u r e and no time s h o u l d b e s p e n t on t h e m w i t h o u t f i r s t g a i n i n g t o p m a n a g e m e n t approval t o proceed. However, i f lower c o s t a l t e r n a t i v e s can be developed which a l s o g e n e r a t e good i n d u s t r i a l t e c h n o l o g y and e n h a n c e c o m p a n y p r e s t i g e -- t h i s t y p e o f p r o j e c t m a y b e considered for s e l e c t i o n , followed by " s e l l i n g " top management. 25. Long Range Versus S h o r t Range P r o j e c t s

An o l d p r o d u c t o f f e r s s u b s t a n t i a l p o t e n t i a l f o r c o s t reduction a s i t w i l l not normally contain t h e l a t e s t low c o s t m a t e r i a l s and w i l l not be produced taking advantage o f a l l the technological advances in p r o c e s s e s a n dproven advancem e n t s i n t h e s t a t e - o f - t h e - a r t . Some c o m p a n i e s use the c r i t e r i o n t h a t a n yitem t o be manufact u r e d o r procured which has not been m o d i f i e d or changed f o r f i v e y e a r s should be automatical l y value engineered. 29. Unsatisfactory Reports From Consumers

A well t r a i n e d value engineer o r value manager should be able t o recognize whether a project, once s e l e c t e d , w i l l involve a l o t o r a l i t t l e time i na p p l i c a t i o n o f v a l u e e n g i n e e r i n g t e c h n i q u e s b e f o r e a r e c o m m e n d a t i o n can b e made on low c o s t a l t e r n a t i v e s . A d e c i s i o n must theref o r e b e made a s t o w h a t p r o j e c t s w i l l b e selected for study. One o f the primary t o o l s used i nthe s e l e c t i o n o f long range p r o j e c t s i s an e v a l u a t i o n o f t h e t e c h n i c a l a n d e c o n o m i c a l potential. Another tool i s the reasonable probability o f success analysis. Still another c o n s i d e r a t i o n i s the amount o f e x i s t i n g l o n g range a n d short-range p r o j e c t s t o i n s u r e t h a t a n optimum m i x t u r e i s b e i n g w o r k e d on. Obviously, i f a value engineering organization i s working e x c l u s i v e l y on long-range p r o j e c t s , where no t a n g i b l e b e n e f i t s are evidenced i na long p e r i o d o f t i m e , management may t a k e a d i mview o f l a c k of accomplishment. Another danger o f concentration on a l l long-range p r o j e c t s i s that, i f a l l of the p r o j e c t s r e s u l t i nr e j e c t i o n , a l o t o f work, t i m e and c o s t w i l l have been used w i t h o u t b e n e f i t o f s a v i n g s . T h i s c o u l d happen even i f a l l the value engineering techniques were a p p l i e d d i l i g e n t l y and the v a l u e e n g i n e e r i n g s t a f f worked d i l i g e n t l y . Perhaps the proper s o l u t i o n would be an appropriate m i xo f long and s h o r t range p r o j e c t s , with the emphasis on a g r e a t e r number o f s h o r t range, medium s a v i n g s ,

This criterion i s self-evident, especially i f consumer c o m p l a i n t s a r e numerous and vehement. 30. Troublesome Components

Troublesome components o r assemblies reported from f a b r i c a t i o n o r assembly d i v i s i o n s could be potential project items. One o f the j o b f u n c tions o f value engineers should be t o be c o n s t a n t l y aware o f production a c t i v i t i e s through o b s e r v a t i o n o f and p e r s o n a l c o n t a c t w i t h the manufacturing organization. By t h i s t y p e o f o p e r a t i o n , many p o t e n t i a l s t u d y i t e m s may b e u n c o v e r e d . However, these p r o j e c t s should be weighed according t o p o t e n t i a l savings, quantities being produced, e t c . I nother words, 160 v a l u e e n g i n e e r i n g manhours s h o u l d not b e used t o d e v e l o p low c o s t a l t e r n a t i v e s which r e s u l t i n $100 s a v i n g s on a q u a n t i t y o f 10 p i e c e s , simply because the component i s a troublesome onet o manufacture. 31. Implementation Cost

Obviously, i f high implementation costs w i l l negate savings on a p a r t i c u l a r product o r item, a v a l u e e n g i n e e r i n g e f f o r t s h o u l d n o t b e made.

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SAVE

CONFERENCE

1978

T h i s d e t e r m i n a t i o n can b e made i n i t i a l l y b y t h e experienced value engineer o r value manager. 32. Cost Versus Function

highest dollar savings potential. The percentage method i s u t i l i z e d b y many v a l u e e n g i n e e r i n g l e a d e r s who c l a i m t h a t v a l u e e n g i n e e r i n g can f i n d 2 0 t o 25% o f n e e d l e s s c o s t i n a n y product. 37. T i m e t o Make Study

I f the cost appears unreasonable for the function o r appearance o f the part, opportunity for -value improvements e x i s t . 33. Complex Equipment and Tooling

Items t h a t r e q u i r e complex equipment and t o o l ing t o manufacture represent prime s u b j e c t s f o r value engineering study. 34. Procurement Problems

S u f f i c i e n t time must be a v a i l a b l e p r i o r t o procurement, t o schedule f i n a l i z a t i o n o f d e s i g n o r any l i m i t i n g f a c t o r f o r s e r v i c e s , functional areas, e t c . , s o that the study w i l l be t e c h n i c a l l y a c c u r a t e a n d f e a s i b l e and w i l l allow time f o r accumulation o f p e r t i n e n t data and p e r m i t such p r e t e s t i n g a s may be n e c e s s a r y . 38. Items That Lend Themselves Manufacturing Processes t oDifferent

Items t h a t are a s s o c i a t e d with procurement problems such a s s o l e source s u p p l i e r s , d i f f i c u l t y in meeting required d e l i v e r i e s , high s c r a p r a t e s , high c o s t s , e x o t i c materials and processing, andparts r e q u i r i n g long procurement lead t i m e s , o f f e r o p p o r t u n i t y f o r development o f low c o s t a l t e r n a t i v e s plus the added advantage o f eliminating procurement problems. 35. Tests for Value

An e x a m p l e o f t h i s i s a p a r t m a c h i n e d f r o m s o l i d b a r s t o c k w h i c h may b e made i n s t e a d a s a c o l d headed p a r t , powder m e t a l l u r g y p a r t , t u b u l a r p a r t , permanent mold c a s t i n g , stamping, impact e x t r u s i o n , d i e c a s t i n g , drop f o r g i n g , upset forging, sand c a s t i n g , investment c a s t i n g , s p i n ning o r a p l a s t e r mold c a s t i n g , e t c . 39. Items with F i n e F i n i s h e s

V a l u e means t h e l o w e s t c o s t f o r which a r e l i a b l e f u n c t i o n can be achieved. Broad g u i d e l i n e s by which v a l u e can be determined a r e answers t o the following questions: a. b. c. d. e. Does i t do more than i s required?

Costs for f i n e f i n i s h e s increase a ta geometric progression. T h e r e f o r e , i t e m s w i t h many f i n e finishes are candidates for value engineering study. 40. A v a i l a b i l i t y o f Data Necessary Analysis for an

Can we e l i m i n a t e t h e p a r t o r f u n c t i o n ? Does i t c o s t more than C a n i t be s i m p l i f i e d ? I s there a less expensive item o r material? Cana standard item be substituted? i t is worth?

Items which have an abundance o f data a v a i l a b l e make t h e v a l u e e n g i n e e r i n g s t u d y e a s i e r t o make as the value engineer i s dealing with f a c t s , not opinions. Examples o f required data are cost information, p r i c e h i s t o r y , procurement information, design parameters, test r e s u l t s , r e l i a b i l i t y data, maintenance data, etc. As s t a t e d f r o m t h e o u t s e t , n o a t t e m p t has b e e n made t o s e l e c t t h e s i n g l e b e s t c r i t e r i o n or combination o f c r i t e r i a . Each i n t e r e s t e d p r i v a t e i n d u s t r i a l concern o r government agency may w a n t t o s e l e c t t h e c r i t e r i a m o s t a p p l i c a b l e t o i t s a c t i v i t y and perhaps a r a n k i n g s y s t e m c a n b e e s t a b l i s h e d p e c u l i a r t o t h e i r own n e e d s and r e q u i r e m e n t s .

f. g.

C o n s i d e r i n g q u a n t i t i e s , can l e s s c o s t l y methods o r t o o l s be used? Does i t c o s t more than l a b o r , m a t e r i a l and p r o f i t w a r r a n t ? C a nsomeone e l s e p r o v i d e bility a tless cost? equal overhead,

h.

i.

dependa-

j.

I f i t were y o u r money, w o u l d you t o pay t h e c o s t ? Potential Savings

refuse

36.

Estimated

Many c o m p a n i e s s e l e c t p r o j e c t s f o r v a l u e e n g i neering s t u d i e s based on an estimated p o t e n t i a l s a v i n g s . An a r b i t r a r y percentage s a v i n g s potent i a l i s a p p l i e d t o e a c h p r e s e n t c o s t and d e t a i l e d s t u d i e s a r e made o n i t e m s w i t h t h e

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