the J O U R N A L of Value Engineering

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

Editorial Staff Contents

W. B . DEAN Message from the President 2
Editor Authors and Articles 4

PAT BENN Esteem Value in Consumer Products

by Carlos Fallon 7
Associate Editor
Value Engineering in Commercial Industry
R I C H A R D M E R C U R E AND by Walter N. Herold 9
W I L L OLSON
Letters to the Editor 11
Art
VE Hits the Alps
CODY PUBLICATIONS, INC. by John E. Reichen 13
Production Quantitative Decision-Making Applied to Project Selection
by R. E. Manelis 17
Value Engineering Illustrated
Realizations of an Appliance Manufacturer
by James Maclntyre 21
Editorial Board Value Engineering is Alive, Well, and
Chairman Moving into Marketing
ROBERT BIDWELL by Thomas J. Snodgrass 25
Consumer Value
Northeast Region
by John Steinmetz 29
WILLIAM GULDEN
The J O U R N A L needs you! 20
Southeast Region from the Editor 31
DONALD E . REDMON

North Central Region Cover

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

Southwest Region
CORWIN GRAY t h e J O U R N A L o f V a l u e E n g i n e e r i n g

International is published quarterly by the Society of American Value Engineers,

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

7 Esteem Value in Consumer Products

by Carlos Fallon
Esteem value affects the exchange and market value of con-
sumer products, according to Mr. Fallon. He feels that Value
Analysis is the 1970's will create opportunities to make prod-
ucts more marketable, useful, and beautiful for the consumer.
In the eyes of the nation's Value Engineers, Mr. Fallon him-
self epitomizes Esteem value.

CARLOS F A L L O N is RCA's corporate manager of value analysis.

I n addition to his work at RCA plants i n the United States
and Europe, he conducts lectures on value analysis i n England,
Norway, Sweden, and Denmark. I n 1968, he gave the key-
note address at the International meeting of S C A N V A V E , the
Scandinavian Society of Value Analysis. M r . Fallon has con-
tributed chapters to the American Management Association's
and A S T M E ' s books and technical papers to publications
such as I E E E Transactions and the Naval Engineers Journal.
He is Vice-President for professional development of the So-
ciety of American Value Engineers and a member of the Amer-
ican Society of Mechanical Engineers, American Society of
Naval Engineers, Mathematical Association of America, and
the Canadian Mathematical Congress.

9 A Challenge . . . Value Engineering in Commercial Industry

by Walter N. Herold
Value Engineering's greatest opportunity lies in commercial
industry, according to this author. For every dollar's worth
of defense hardware we produce, we produce at least ten
dollar's worth of commercial hardware; in fact, at least 90
percent of all goods are manufactured by commercial industry.
Almost 20 million people produce these goods, but not 1 in
7,000 is a Value Engineer . . . a distinct challenge to Value
Engineering.

M R . HEROLD is President of the Connecticut Yankee Chapter

of SAVE. He was born and educated in Germany, coming to
the United States in 1940. I n 1941 he joined Homelite, a
manufacturer of gasoline-powered, lightweight equipment,
leaving to join U . S. Forces i n World War I I . Three years
later he returned to Homelite as Field Service Representative
at the company's headquarters. He is presently Director of
Quality Control and head of Value Engineering for Homelite.
Mr. Herold also teaches courses i n Value Engineering at the
Bridgeport Engineering Institute.
 V E HitS the Alps by John E. Reichen 13
Although admitting some interest in cost reduction and indus-
trial engineering, the Swiss feel that Value Engineering per se
is unnecessary in their frugal country. However, the author,
during a stay in Switzerland, did talk one firm into a fling at
VE with interesting—if not lasting—results.

M R . R E I C H E N is a Designer at Tektronix, Inc., Beaverton, Ore-

gon, and does free-lance technical translating. A native of
Switzerland, he has a certificate of Horology from the Techni-
cum Neuchatelois, Switzerland, and an Associate of Science
in E E from Multnomah College, Portland, Oregon. Mr.
Reichen is a charter member of the Portland Chapter of the
Society of American Value Engineers. He is also a member
of Toastmasters International.

Quantitative Decision-Making Applied to Project Selection 17

byR. E. Manelis
What constitutes a good VE project is determined by several
factors, each important in its own right but of different rela-
tive importance in the total consideration. This article des-
cribes a quantitative approach whereby all factors are weighed
and each potential project graded to determine its relative
desirability.

RICHARD E . M A N E L I S is the Value Engineering Administrator

for Raytheon's Missile Systems Division. He holds degrees
from the University of Massachusetts ( B S E E 1 9 5 7 ) , the Uni-
versity of California ( M S 1 9 6 2 ) , and Suffolk University Law
School (J.D. 1 9 6 8 ) . He is Secretary for the Governor's Exec-
utive Council for Value Analysis in Massachusetts, National
S A V E Conference Chairman for 1972, and a Registered Pro-
fessional Engineer. As an instructor in management for
Northeastern University, he has used local community projects
for V E workshop classes. He is a member of the Creative
Education Foundation, the Massachusetts Bar Association, the
Boston Bar Association, and his local town committee.

Value Engineering Illustrated...

Realizations of an Appliance Manufacturer by James D. Macintyre 21
Commercial industry in general, and the appliance industry
in particular, require Value Engineering—or programs like it—
to remain competitive domestically * and internationally, ac-
cording to Mr. Maclntyre. He discusses managements con-
cern with cost improvement of a Whirlpool product and
demonstrates how acceptance of VE as a legitimate tool by a
product engineering group can improve the competitive posi-
tion of a company.

J A M E S D . M A C I N T Y R E is a Value Analyst for Whirlpool Cor-

poration, St. Paul Division, St. Paul, Minnesota, responsible
for initiating and implementing all Value Analysis activities
for the division. He is a graduate of the University of Minne-
sota, with a B. A. in Business. In addition to conducting
Whirlpool V E seminars, he has lectured and contributed to
TCC-SAVE-sponsored courses. Mr. Maclntyre has served as
chairman for Twin Cities S A V E committees on a state govern-
ment project, and is Vice-President of the Twin Cities chapter.
25 Value Engineering is Alive, Well, and Moving into Marketing
by Thomas J. Snodgrass
This article traces the movement of the original value concept
from a purchasing-oriented activity into its present major
area of influence, engineering. Although the closely guarded
information on value research does not appear in the literature,
it is important to know that value research techniques are
available and being used, with impressive results.
T H O M A S J . SNODGRASS is founder and President of Value
Standards, Inc., a Chicago-based consulting firm. Previously,
he was Manager of Engineering, Hotpoint Division, General
Electric Company, accumulating fifteen years' experience in
various General Electric Company departments. He is a
graduate of the University of Wisconsin and Illinois Institute
of Technology, with degrees in Chemistry and Metallurgical
Engineering respectively. He conducts annual Value Engi-
neering seminars for the University of Wisconsin and partici-
pates in a variety of American Management Society seminars
relating to Value Engineering.

29 Consumer Value
by John R. Steinmetz
Mr. Steinmetz believes that the "secrets" of being an expert
consumer are contained in the organized and systematic tech-
niques of our Value Engineering methodology. National
SAVE has formed a group assigned to this task—the author
will tell you about progress to date.
J O H N R . S T E I N M E T Z is Manager of Value Assurance at the
Federal Systems Division, Univac (Division of Sperry Rand
Corporation), St. Paul, Minnesota. He has worked over 15
years in Value Engineering and Cost Improvement, with prior
assignments in various manufacturing engineering capacities.
Mr. Steinmetz earned a B S I E degree from Stout University
and has taught many courses on V E and other subjects. He
has held all Twin Cities S A V E offices and is now a Board
member and responsible for Education, Professional Develop-
ment, and Intersociety Relations.

Honorary Vice Presidents

1962
William M. Allen
Chairman of the Board
The Boeing Company
Seattle, Washington
1962
Albert E. Everett
Dean, Northeastern University
Boston, Mass.
1962
Marion L. Hicks
Vice President, tegal & Procurement
-General Dynamics
Fort Worth, Texas
1962
Charles F. Home
President
General Dynamics
Pomona, California
1962 1966
Honorable Thomas D. Morris Honorable George E. Fouch
Assistant Secretary of Defense Deputy Assistant Secretary of Defense
The Pentagon The Pentagon
Washington, D. C. Washington, D. C.
1962 1967
George T. Willey Honorable John A. Volpe
Vice President and
General Manager (Retired) Secretary of Transportation
Martin-Marietta Corporation Washington, D. C.
Orlando, Florida
1968
1965 T. A. Wilton
James A. Drain President
Chairman of the Board The Boeing Company
Joy Manufacturing Company Seattle, Washington
Pittsburgh, Penna.
1966 1969
Thomas R. May Lee E. Sheehan
President Vice-President and General Manager
Lockheed-Georgia Company Honeywell Inc., Ordnance Division
Marietta, Georgia Minneapolis, Minn. 55343
Esteem Value in
Consumer Products
by CARLOS FALLON*
"The heart has its reasons which reason does not
understand," said Blaise Pascal. These reasons of
the heart, governed by emotion and judged by in-
tuition, determine esteem value, which, in part, af-
fects the exchange value and market value of con-
sumer products. Therefore, if people want a little
beauty in their lives, and they want it in living
color, that is what we have to give them.
T H E GOOD, The True, The Beautiful, all represent
human values. Of these, The Beautiful is the most
nearly universal. Men have argued and shed much
blood over good and evil and over what is true or
not true, but even during an artillery duel, as the
sun rises to herald a beautiful day, gunfire slackens,
and enemies pause to admire the dawn.
The Beautiful is an intuitive, nonverbal measure
of both truthfulness and goodness.
Farfetched?
Let me use some down-to-earth examples. Color
T V is prettier than black-and-white. Why? Be-
cause it is more true to life. It conveys more in-
formation—brings us closer to the real world. Un-
like black-and-white, it tells us that the peaches are
ripe and that the girl picking them has blue eyes.
The turquoise-blue sea between Florida and the
Bahamas is particularly beautiful in January and
February. Its white caps progress gently under a
clear, blue sky. At this season, far to the north,
the weather is ugly. Skies are overcast, and sullen,
dark-gray swells remind the seaman that he is sail-
ing in the WNA (Winter North Atlantic), a region
dreaded by marine underwriters.
Nobody is afraid of dark-gray water, but we are
afraid of deception, of wrecking the ship on a sub-
merged rock hidden by the ugly sea. The beauti-
ful Caribbean, on the other hand, tells us the
truth, shows us the shoals in light green and the
clear channel in deep blue.
What is truth?
I F BEAUTY provides an intuitive measure of truth,
truth itself is a measure of the quality of informa-
tion. Truthful information provides safety, and
safety is good.
We could say, therefore, that The Beautiful re¬
* All rights reserved by the author.
T H E J O U R N A L OF V A L U E ENGINEERING
veals The True, and The True reveals The Good,
but intuition is more of a flash than a roundabout
process. The Beautiful reveals The Good directly.
From beautiful to good
B E A U T I F U L WEATHER is good weather, good for
our health and spirit; ugly weather is bad weather,
bad for the lungs, bad for our aches and pains, and
downright depressing. It brings to mind a turbu-
lent sea hurling flotsam on a lonely shore, while
beautiful weather evokes a picture of happy people
playing on the beach. There is something good
about a pretty girl running along the beach. The
balance and proportion of her healthy body, the
smoothly flowing lines, the perfect harmony among
all the parts, all fill us with a sense of approval,
and if she is smiling, she is even more beautiful.
Aspects of value
IN CONSIDERING BEAUTY as an intuitive measure
of truth and of good, we cannot help but perceive
that beauty, truth, and good are like the three
strands of the cord of value, each supporting the
others and all pulling together.
It is misleading, therefore, to separate values
too arbitrarily, yet the human urge to classify—in
order to understand—has led men to define vari-
ous "kinds" of value. But classification seldom
changes the nature of whatever is being classified.
Use value and exchange value
T H E FIRST FORMAL classification of values,
which we owe to Aristotle, was colored by the
Classical Greek's love of individuality and by
Greek contempt for trade, hence the use of a
sandal to be put on the foot was more proper
than the use of a sandal to be given in exchange.
But if the sandal cannot be put on the foot, it
has no exchange value. If it can be put on the
foot, but has little esteem value because it looks
ugly and smells bad, it also has little exchange
value. If it can be put on the foot, looks good,
and smells like rich leather, but the town is in-
undated with such sandals, it only has exchange
value in another market.
Exchange value, therefore, is affected by use
7
value, esteem value, and market value. All these
interact, as Alfred Marshall put it, "Like a number
of balls resting against one another in a basin."
Cost!... value?
I L I K E TO T H I N K that one of the gods, at whose
feet I worship, got drunk one night, and put Correa
Moylan Walsh's Four Kinds of Economic Value
into a value analysis reading list. It could be,
however, that Satan himself introduced the book.
The prickly concept of "cost value", though rare
on this earth, is probably the dominant value in
hell. It is neither a good nor useful example of
any of the values we try to enhance in value analy-
sis. When we break a pencil in front of an audi-
ence to show that adding to the cost need not add
to the value, we are not only demolishing the
pencil, we are also demolishing Walsh's theory of
"cost value".
From the value analysis standpoint, the aspect
of economic value can be advantageously classified
as:
Use value
Esteem value
Exchange value
Market value
But we should not assume that by thus classifying
them we are separating them from each other in
real life. Analysis takes things apart to under-
stand them. T o function, they have to go back
together.
Esteem value
ISOLATING and condemning esteem value is per-
haps the biggest trap in this respect. The right
feel and appearance of military equipment contri-
butes to the morale of the men and is a desirable
form of esteem value. I n American industry, the
backbone of defense supply, esteem value serves
two purposes: it provides competitive advantage—
a beautiful product is often less costly to make
and easier, to sell than an ugly product—and it
guides the customer in selection of functionally
better products because, in good design as in
nature, form follows function.
Such principles of aesthetics as unity of de-
8 THE
sign, simplicity, and economy also improve per-
formance and reliability. The lucid formulation
which the scientist calls mathematical elegance
stems from the same source as the efficient de-
sign of the inspired engineer. Both use their sense
of aesthetics to let nature help them do what must
be done in the cleanest, simplest, most economical
manner.
Market value
UNDERSTANDING market value helps avoid another
trap, reducing cost at the expense of customer ac-
ceptance. The customers speak through the mar-
ket, as James M . Roche, General Motor's chair-
man of the board, said at the 1968 stockholder's
meeting. "In the dynamic and changing market
for new cars, our customers through their pur-
r
chases tell us what they want."
Use value and esteem value are related to the
physical properties which make a product satisfy
the customer. Market and exchange value are
related to its economic characteristics. The task
of value analysis, with respect to consumer pro-
ducts, used to be to improve such economic charac-
teristics as cost and delivery, without detracting
from the physical properties that make the cus-
tomer want the product. The idea was to provide
the same function for less cost.
But neither the same functions nor the same
products can hold a market these days, much less
break into a new one.
Fortunately, a scientific allocation of costs of-
ten results, quite by accident, in a better product.
Why not plan it that way? Improving the pro-
duct at every opportunity is what it takes to stay
abreast of competition. T o move ahead calls
for new ways to improve the product.
By bringing people from Marketing and Styl-
ing into the value task groups, value analysis to-
day is putting market-timing and appearance
among such customer benefits as performance and
dependability. It would be a gross waste of skills
to tell such a blue-ribbon team, "Your job is to
reduce cost, not improve the product."
By fully utilizing all the resources of its task
groups, value analysis in the 1970's will create
opportunities to make products not only more mar-
ketable, but also more useful and beautiful.
JOURNAL
A CHALLENGE . . .
Value Engineering in
Commercial Industry
by WALTER N . HEROLD
As T H E READER will no doubt have noticed, most
of this issue of the JOURNAL is devoted to "Value
Engineering in Commercial Industry." Recent •
expressions of the national S A V E officers (see the
fall issue of the JOURNAL and the August issue of
Production), as well as the advice of so prominent
a practitioner as Larry Miles himself, all lend
emphasis to the notion that the greatest opportunity
for Value Engineering lies in commercial industry.
The question may be asked why we should
separate commercial industry from other industry.
The answer is simple: There is more of it! A lot
more, let's say, than government- or defense-
oriented industry. How much more can readily be
seen by a few rough figures rounded off to make
it easy for the reader.
Gross national product
T H E GROSS NATIONAL PRODUCT will reach an esti-
mated $942 or so billion in the year 1969. Not all
of the gross national product is composed of man-
ufactured goods. So, to keep things simple, let's
just say that the value of the total manufactured
goods for this year will be approximately $400
billion.
"For every dollar's worth of defense hardware
we produce, we produce at least ten dollars' worth
of commercial hardware. There are not quite 20
million people employed to produce all these goods.
Not one in 7,000 is a Value Engineer! There are in
this country only enough known (by that I mean;
members of S A V E ) Value Engineers to have one
Value Engineer available for about 300 business
firms. Most of these Value Engineers are concen-
trating their efforts in plants where defense con-
tracts having Value Engineering clauses enforce ap-
plication of Value Engineering. Yet, even if we dis-
regard this gross maldistribution and would apply
our available Value Engineers uniformly across the
board to the available products, we would give each
Value Engineer the opportunity to work on about
$200 million worth of goods per year. If, on the
the average, Value Engineers were only 1 percent
effective, each would help to save $2 million during
OF V A L U E ENGINEERING
that same year.
Value Engineering asks us to "go where the
dollars are". I have presented this little exercise
in numbers simply to show you where a vast op-
portunity exists and to stimulate your imagina-
tion to ask some questions, questions to which we
must develop answers!
Almost everything ever said or written about
Value Engineering, especially in presentations to
management, has been hardware-oriented. No one
has escaped the examples where one dozen screws
have been replaced by a single spring; everyone
by now "knows that a pencil makes a mark", and
everyone knows that the function "make mark" is
worth about a penny; every Value Engineer
knows how to use a job plan, define functions,
find alternatives, compare costs; and most man-
agers have read about it. Most of us feel sorry for
the poor managers who simply haven't realized yet
what they are missing by not using Value Engi-
neering to the fullest extent possible in their enter-
prise. And that is, and has been, the story right
along.
But have we really used our imagination, have
we really used and applied what we have learned
as Value Engineers to help further Value Engineer-
ing in the area where the greatest opportunity
exists?
VE 22 years old
V A L U E ENGINEERING is now 22 years old. Value
Engineering can no longer qualify as an infant-
growth ought to be apparent! Growth means change,
the very change we advocate, and yet, change in our
presentations is lacking almost as badly as change is
lacking in every other situation.
What do I mean by "change"? I n this con-
text, I mean that change is necessary in our atti-
tude, a change in the orientation of our presenta-
tion, a change in approach. I feel that it is no
longer necessary to tell the world that Value E n -
gineering exists. The business world knows it.
I can no longer feel it necessary—or even useful—
to show our "before" and "after" mousetrap.
9

Managers' problems
TODAY'S MANAGER and today's management tech-
niques have changed. Today's Manager is tuned
to "return on investment, profit contribution, cost
reduction, and value improvement."
And while they are thinking of cost reduction,
we spend time explaining that Value Engineering
is not cost reduction. At this point, we are tuned
out because we are no longer addressing ourselves
to the manager's problems.
So the useful presentation will of necessity be
one which addresses itself directly to needs of man-
agement, and, in order to make these presentations
effective, we have to get answers to this question:
"What are management's problems?"
Then, because we are Value Engineers, we
must use all the techniques at our disposal to
determine what produced these problems. We
must find ways of solving them, and what the cost
impact of the alternatives is if we want to learn
where and how Value Engineering can best be
fitted into an organization.
Some of this work is being done, with effective-
ness, by consultants in Value Engineering. But
even the most high-powered consultants will go
through the information phase by using the knowl-
edge of the people inside the organization. What
I am suggesting is that all information necessary
to develop answers to our question is already at
hand. I t lends itself to complete analysis by
people trained in value work.
My personal experience, though limited to a
small region of the country, would make me be-
lieve that, at least in good times, companies are
willing to spend the time and money to allow their
employees to take part in various courses, work-
shops, and seminars offered to teach people how to
do Value Engineering ( I am not making any dis-
tinction here between Value Engineering and Value
Analysis. I feel that the distinction is one that
may lead to semantic arguments, thereby masking
the real purpose of this discussion).
When interest rates rise and profits are squeezed,
there occurs a rote reaction which tends to reduce
the enthusiasm with which firms spend money
for activities whose immediate results are not mea-
surable in added profit. And to the timid, the
great publicity which currently surrounds the Ad-
ministration's efforts to cool the economy might
well be a signal to stand back while citing a com-
mon road block, "Yes, but not right now!"
Now is the time
W E V A L U E ENGINEERS, in particular, know that
there has never been a more important time than
the present to put our special talents to work. The
10
change in attitude for success in this endeavor is
one that looks at a situation from the broader view-
point of the Manager to whom we have to make
our application.
Value Engineering is a technique for providing
good value; it is a technique for improving prof-
its; it can improve reliability; it can pinpoint
new opportunities; it can lower costs and, in addi-
tion, Value Engineering can be applied at all
levels of a system and at all levels in a business.
Implementation at one level
IDENTIFYING to determine where the level of im-
plementation should be in each firm involves deter-
mining where failure is most common. The func-
tion, "Install V E " requires full support of the one
person or agency who makes the program policy in
the firm. It doesn't matter whether you find the
opportunity in the Engineering Department, Man-
ufacturing, or in Purchasing, or as a Staff Assistant
to a General Manager. I n your case, you must
determine if the person to whom you make a pre-
sentation is, in fact, the person who is able to in-
stall a program. Once that determination is made,
once that one person has been located, it becomes
necessary to think yourself into his shoes. What
is it he is trying to do, and how can you be most
helpful?
At this point you will find many alternatives
and several solutions. If you are addressing a
Purchasing Manager you may have several ways
to reduce cost of inventories, to save by standardi-
zation, or to help in evaluation and selection of
vendors. If you are addressing an Engineering
Manager you may, in fact, have found a better,
lower-cost mousetrap; if you are working with
Manufacturing you may have found a lower-cost
way of assembling pieces, some new material easier
to machine. I n each case you will be strongly
tempted to make your presentation, emphasizing
the specific item or activity which you have se-
lected for a job that can be done better at lower
cost.
Prime objective lost
I F Y O U HAVE done your job well there is no reason
why your proposal should not be accepted, and
you will, in fact, help reduce inventories, find a
better vendor, build a better mousetrap, or reduce
assembly time from 7 to 6 minutes, but you will
have missed the job you set out to do. You will
have lost your prime objective because in all likeli-
hood you have failed to "Install Value Engineer-
ing" as an on-going action.
Many techniques can reduce inventory, help
T H E JOURNAL
 letters to the editor
To the Editor:
Congratulations on the September issue of
the JOURNAL. Y O U and your staff are to be
commended. I just hope the rest of the So-
ciety provides the support you so well deserve.
I am still looking for a location with a
company. I n the meantime I am doing con-
tract work for the Office of Economic Oppor-
tunity. If it is successful I will have an article
for you.
Yours for better value,
W I L L GARISS, Seattle
Thank you, Will! The only reward any SAVE
officer, local or national, asks is that his ef-
forts help members and affiliates grow in sta-
ture and recognition.
To the Editor:
I've been reading over and over again the
announcement in S A V E Communications that
you plan to feature for each issue of the
JOURNAL a theme as follows:
Fall: V E in Defense
Winter: Commercial Applications of V E
Spring: V E in the Building Trades
I find myself engulfed with particularly
negative emotions that come out as follows:
1. Since I'm in only one of these fields of
industry, perhaps I should get only one issue
of the JOURNAL.
2. If I should wish to contribute to the
JOURNAL, I'd better watch my timing or my
issue may already have gone to press.
3. I guess this is an attempt to get broader
coverage of more industrial areas in the JOUR-
NAL, but it is likely I'll read only one issue
and merely skim the others.
There must be other reasons for this
OF V A L U E ENGINEERING
seemingly peculiar theme arrangement. Can
' you give a clue?
t
Best regards,
RALPH I. MORSE
Rochester, New York
A theme does not constitute an entire issue
and no issue will limit itelf to a single subject.
However, some of our best know-how in VE
comes from cross-fertilization. Try this issue
and let's hear from you again.
To the Editor:
Communcations is defined by Webster as
the giving and receiving of messages. If any
message could be clearer than the number of
members downgrading to affiliate, it would
have to be outright resignation. These people
are trying to tell S A V E that it should use its
own principles in its own organization and not
join in "me-too" activities in imitation of
other technical societies. Our members make
their livings by showing their employers how
to reduce costs—How can you seriously expect
them to support frivolities such as the
JOURNAL?
Our best efforts at presenting V E material
should be published in other societies' techni-
cal journals and not buried under our own
private publication. Only in this way can
we make our story known to the rest of the
technical press.
ROBERT H . BOWERMAN
Middletown, R . I . 02840 Affiliate
We encourage Value Engineers to publish
wherever possible, but I don't believe that
other technical societies gained their stature
by only publishing their works in still other
Society's publications. Lets hear some other
members' responses.
11
select vendors, improve reliability, or even reduce
costs. To install Value Engineering your pre-
sentation must show not the cost of a piece of
hardware—not even the profit which might be de-
rived from changing this piece of hardware—but
instead the organization cost and return expected
from a Value Engineering group. The presenta-
tion must describe the planned activities of such a
group. I t must outline the goals and the proba-
bility of success, and i t must describe quite pre-
cisely what support is required from the Manager
to whom you make the presentation. I t must also
define the authority and publicity needed to assure
success of the program.
I am quite aware that some readers may think
that such an approach is outside the prerogative of
the average Value Engineer. Let me remind you
then that the principle of deferred criticism should
also apply to the presenter. I n my contact with
Value Engineers, and especially with those who are
Value Engineers i n name only without a f i r m base
of responsibility, i t has become quite apparent
that those who hope to work in commercial in-
dustry are frequently frustrated by a lack of recog-
nition of this very point. I t is not reasonable to
wait until Value Engineering is "discovered" by
management. I t is more reasonable to use our
skills to the best advantage for the f i r m with
which we have chosen to associate ourselves. I f
our attitude is one of confidence, backed by skill
and knowledge, and reinforced by a well-planned
and "Value-Engineered" presentation, we can hard-
ly fail to make the impression necessary to further
Value Engineering in commercial industry, pro-
vided it is made at the proper level.
Let's return once more to the numbers I men-
tioned in the beginning of this article. Five
hundred billion dollars' worth of goods are pro-
duced by somewhat over 300 thousand operating
manufacturing establishments, each of which em-
ploys an average of approximately 60 workers. The
fact that there are only enough Value Engineers
in the country to put one into one out of every 100
plants hardly constitutes a massive breakthrough.
Still, each of the 300,000 plus establishments is
in business to try to show the very best per-
formance possible. Only we Value Engineers can
see to it, by our own efforts, that Value Engi-
neering will be one of the useful tools helping each
of these establishments reach its goals. I f we are
successful in having Value Engineering accepted
by commercial industry i t follows naturally that
the goals of Value Engineering represented by
SAVE will also be reached.
The president of SAVE closed his message in
the fall issue of the Journal with these words,
" I t is a challenge to us a l l . " There is no way of
describing the task ahead more succinctly.

Publications now available

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Woodward 6. V a l u e Engineering Programmed
2. (a) " V a l u e E n g i n e e r i n g / A n a l y s i s Bib- Study Record (V.E. w o r k b o o k ) .25 e a .
l i o g r a p h y (Revised 1969 Edition 7. N a t i o n a l Conference Proceedings
including Addendum) 8.50 ea. 1969 (Two volumes . . p a p e r b a c k
(b) 1969 A d d e n d u m o n l y . . . f o r edition . . . limited quantity)
those w h o have a l r e a d y pur- M e m b e r Cost 5.00 set
chased 1 9 6 7 Edition 3.50 e a . N o n - M e m b e r Cost 7.50 set
3. 1966 (Hardback edition) M e m b e r Cost 7.50 e a .
" H o w to Plan & O r g a n i z e a V.E.
N o n - M e m b e r Cost 10.00 ea.
S e m i n a r " (A SAVE technical m a n -
1 9 6 7 (Hardback e d i t i o n ) M e m b e r Cost 8.50 e a .
ual) 3.50 e a .
N o n - M e m b e r Cost 12.50 e a .
4. "The C o n t r a c t u a l Aspects of V a l u e
1 9 6 8 (Hardback edition) M e m b e r Cost 8.50 ea.
Engineering" 8.50 ea.. N o n - M e m b e r Cost 12.50 e a .
B y : N a t h a n Kanton 1969 (Hardback edition) M e m b e r Cost 15.00 ea.
(Available November 1969 N o n - M e m b e r Cost 17.50 e a .

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2. M e m b e r Tie Tac 2.00 ea 10. M o n e y Clip 6.95 e a .
3. Past President (Chapter) 10k G o l d 5.00 ea 11. Scripto Vu-Lighter w i t h SAVE Emblem 1.95 e a .
4. National Officer—10k Gold 5.00 12. SAVE L o g o — G l o s s y Print .50 ea.
5. Member C h a r m — 1 4 k Gold 7.50 ea, 13. SAVE Decals 1— 4 .25 ea.
6. M e m b e r C h a r m on 1 " G o l d Disc 7.50 ea, 5 — 99 .20 e a .
7. C u f f Links 6.95 pr. 100—499 .1 5 e a . 500—up .10 ea.
8. Tie Bar (grip) 6.95 ea.
(Send your order w i t h check to S A V E National Business Office, W i n d y H i l l , Suite A - l 1741 Roswell
Street, Smyrna, Ga. 30080.)

12
T H E J O U R N A L
VE
Hits the MP*

by J O H N E . REICHEN
Following are some excerpts from two presenta-
tions made at meetings of the Portland, Oregon
SAVE Chapter, 4-10-69 and 5-15-69. The sub-
ject was "Selling Value to Management".

A B O U T TWO YEARS ago I planned to introduce V E

into Switzerland, mainly to gain V E experience
under foreign conditions. The following won't be
a blow-by-blow description of what took place but
will highlight my more interesting experiences.

No VE for Swiss?
A T T H E OUTSET, a management consultant i n Zu-
rich declared flatly, in a very lively dialogue, that ^
Switzerland and V E were incompatible. His rea- x yj^Qfr/Qt
sons, in addition to the usual roadblocks, were:
• Change is unnatural.
• To the Swiss, criticism, no matter how con-
structive and subdued, appears unethical.
• Without high costs, there can be no quality.
• The Swiss are, after all, world-famous for being
the savingest, Americans, the most wasteful:

OF VALUE ENGINEERING 13

Logical conclusion—U.S. needs V E , Switzer-
land does not.
Here was a challenge! Also, I noticed a
course advertised at the Swiss Federal Institute of
Technology, "Economic Design Practice by Value
Analysis". Since the consultant had just claimed
V E could not possibly be used in Switzerland, I
promptly signed up for the course to check this
enigma firsthand.
The course started with this premise: I n order
to minimize costs of items, you must know the
parts' essential functional requirements. That
sounded fair enough. "Function" was used in
about every other sentence, but the instructors used
it to imply how inexact a part could be and still
function. I t all amounted, really, to a functional
dimensioning course, introducing geometrical and
statistical tolerancing methods. These instructors
insisted that was the only way V E could be
taught. The course was excellent on cost-con-
14
scious electromechanical design, but it was not
cost-oriented.
Going to work
A B O U T 30 interviews with 14 prospects resulted
in my going into design for a maker and distri-
butor of audio-electronic instruments. His pro-
duct had the reputation for being well-engineered
and of top quality. The firm, with about 500 em-
ployees and workers, was strictly a one-man show—
the chiefs. Actually, he didn't particularly react
in favor of V E either, so I hoped to gain his con-
fidence by working out a tailor-made program, and
looking for the psychological moment to bring up
VE.
Three months later, a newly hired general
manager concluded a technical meeting with:
"We're not trying to put you (a vendor) down;
we want to reduce costs here with value analytic
techniques." Minutes after the meeting I cornered
the Manager. Of course, his idea about V E still
focussed on cost reduction and industrial engineer-
ing, holding the attitude, "We're doing it already."
After a "Fine, I hope to fit right into the program,"
from me, I was told there was no program. For-
tunately, his interest was aroused at the meeting
by my talk about potentials of Cost Avoidance.
Our conference ended with an order to come up
with a Cost Avoidance Plan for the firm in one
month. The manager liked my outline, except that
he wanted about 10 variations of training methods
proposed for selection. He must have seen the
handwriting on the wall for he spelled out some
limits: Involve only the technical area, don't
touch existing organization, and don't emphasize
change.
My regular designing, and my cost-conscious-
ness, met with the chiefs approval, however,
many ticklish points remained. A program out-
line, now in 10 variations, was examined, but still
brought no official green light.
The news at that time was full of the latest
advances in Japan: Fastest G N P rise, first in
shipbuilding, second in electronics in the world,
etc. I interpreted this to the manager as, in part,
an effect of the Japanese putting V E in high gear.
Also, at this time a S A V E Newsletter mentioned
increased V E activity. This, coupled with some
more overkill on my part, finally produced action.
Management specified a limited program of one
team, no seminar, and training on workshop pro-
jects at least one day (but not necessarily more)
per week. The program was to start in three
months. Meanwhile, we would work our details of
funding, facilities, project selection, preparation
of a manual, etc.
T H E J OUENAL

Particle analysis
O F COURSE, I keep looking out all the time for any
new ideas and techniques either originated, modi-
fied, or applied differently in Europe. One thing
new to me was Particle Analysis. This technique
is used to identify and eliminate all unnecessary
material particles, if I may take license with the
definition.
The basic procedure of Particle Analysis is
quite primitive: One draws the views (usually
three) in orthographic projection of the existing
item on mm-graph paper, then makes a red "x"
in all squares within the part outline which are
not essential to the parts function. A l l unmarked
squares within the original outline approximate
the shape of the new part. The result is drawn
as an isometric figure from which one decides on
the optimum material and process combination to
get an economically feasible item.
As I understand it, the two-word function defi-
nition is one prime tool and distinctive feature of
VE. I n all the literature I scanned over there,
and from talking to V E instructors, I found little
evidence of this. For an electrical wire, for in-
stance, our definition would be "conduct current";
theirs, "conduction of x amps of electrical current".
(The German language allows the two-word defini-
tion just as easily as English.) My mentioning
these points brought quite a few sneers for the
overly simple and illogical American.
Also there was this three-phase job plan. T o
OF V A L U E ENGINEERING
give a thumbnail sketch: It starts without an
Information phase, but with a Function Analysis
phase. The purpose of this phase is to reduce
the number of parts in an assembly to a minimum
by questioning each element, and eliminating it or
combining it with another one fulfilling the same
function. An example called out two different
primary functions and several unspecified second-
ary functions. This was followed by the Particle
Analysis as phase two. The final phase, called
Model and Proposal, asked for a prototype of
the results from the previous work to be sub-
mitted along' with a change request to manage-
ment for approval. According to their story, that
is all there was to V E .
VE manual
I T TOOK three attempts to generate a manual for
the new V E activity. The final version is a
partial translation of H i l l into German, omitting
all references to the military, as well as to anything
not essential for immediate use. When editing
the manual, I added a few special chapters and
standarized the nomenclature of the Job Plan to
have the names' initials in alphabetical sequence:
Phase German American
A Anfangsarbeiten Information
B Beschaffung von
Moeglichkeiten Speculation
C Charakterisierung Analysis
D Durchfuehrung Implementation
E Endarbeiten Reporting
The original reason for my doing this, to make
teaching easier, became secondary in the end; the
main advantage gained was in the numbering of
worksheets: Project No.—Phase—Sheet No., etc.
This automatically sequenced our filing jobs, co-
ordinated status control, and references to earlier
work were considerably simplified.
Operations begin
As OPERATIONS started, the manager said, "We're
really none too keen for new proposals. We have
a big backlog of perfectly good value-improvement
change proposals. If these cannot be implemented,
more will be worse!'' The first thing on the agenda,
then, was to get action on" these changes. This
change implementation had more benefits than ex-
pected. Examples were:
• The change proposal stack was lowered, creat-
ing a vacuum.
• Management was shown how much was or was
not saved.
15
 Other departments got a little taste of working
with us.
• I t gave the team pretraining since a f u l l sem-
inar was out.
• Savings from the change implementation were
not credited to the V E program, but neither
was our time charged to i t . Hence, we trained
for free as far as the books showed.
I n more than half the cases, our V E projects
came about for one reason—existing items costs
had gone completely out of proportion when an
engineer added features for a new-generation in-
strument. Figure 1 shows such a device. I t
is the cross section through the upper portion of
a special turntable which was then to be " V E ' d " .
Originally, the rotor was stopped, as desired,
by a manually actuated detent i n one of two
locations. Costs for this were predicted K n = 18,000
in the coming year (the money unit is Swiss franc,
equivalent to about $.25). One reason for the re-
design was that i t must be stoppable and releasable
directly from the electronic circuitry at any location.
The new design (figure 1) consisted of 32
parts and its costs were estimated at K i =50,000.
Figure 2 shows the device after an engineer gave
it a going over by the just-mentioned three-phase
VE method. This version now had 26 parts and
the estimated savings amounted to 17,880, or a
16
reduction of 35 percent from the original item.
W i t h costs still at K = 32,320, our team was per-
2
mitted to work at it. We chose to work mainly on
the "prevent turning" function since this func-
tional area contributed the highest costs. For simpli-
city's sake, we assigned as its worth the original
cost of K« = 18,000.
From several possible alternatives, we picked
two: one to submit and one as backup. Figure 3
shows the one approved by management for imple-
mentation. The number of parts was down to 20
and the estimated costs K = 24,480. This meant
:i
additional savings of 26 percent beyond the three-
phase " V E ' d " units, or 51 percent saved overall
from the first design proposal (figure 1 ) . This
" V E ' d " device was, incidentally, easier to assemble
and performed better and more reliably than any
previous unit, while retaining all necessary features
expected of the new design.
Our team finished 18 projects i n half a year,
saving 528,705 net or 43 percent (on individual
projects the minimum was 19 percent, the high
90 percent). The effort had a return ratio of
12:1; that is, 12 francs saved for one invested.
After this kind of start, management was very
enthusiastic about V E . Also, we got the red
carpet treatment from nontechnical people and
nonparticipating departments such as Purchasing,
and, of course from vendors. As the program
progressed, something happened which caught me
by surprise. Lower echelon people i n Production,
Quality Control, etc., who were very skeptical at
first, warmed up to VE's activity and came forth
increasingly with suggestion and help. I felt we
were really getting through with unusual ease.
But the more active these became, the more man-
agement cooled off. Creative thinking, i t ap-
peared, was in some places the exclusive domain
of chiefs.
Aside from the just-cited turn of events, I feel
my foreign V E experimentation was an unquali-
fied success. This particular program will proba-
bly not remain permanent i n its conceived form,
if at all. But the initial success, at least, should
assure us that V E can be sold to management,
even under difficult situations.
THE JOURNAL
Quantitative
Decision - Making
Applied to
Project
Selection
by R. E . MANELIS
Selection of projects often is done solely on the
basis of cost. What constitutes a "good project",
however, is determined by several factors, each im-
portant in its own right but of different relative
importance in the total consideration. This arti-
cle describes a quantitative approach whereby all
factors are weighted and each potential project
graded to determine its relative desirability. The
factor weights and grading scale are determined ob-
jectively and examples are used to demonstrate the
process.
Selection—chance or choice?
P R O J E C T SELECTION has long been a critical area
for value engineers. Choosing the right project
can mean the difference between failure and im-
pressive savings. This article proposes a method
which, while not a guarantee for success, provides
for objective selection of Value Engineering pro-
jects.
There are many factors bearing on the selection
of suitable projects. I t is virtually impossible for
one person, or even a group, to evaluate project
potential through composite perception. Only a
quantitative approach provides for examination of
projects against each of many factors. This ap-
proach incorporates a weighing process whereby
each factor considered is examined in the light of
its relative savings potential.
The quantitative process can be compared to
grade-point averaging in college, where each course
carries a weight expressed in credit hours indica-
tive of its importance. Each student is evaluated
in each course and his total grade points deter-
mine his relative class standing. By applying
this concept to project selection, each potential
project can be evaluated against a set of weighted
factors and its overall desirability as a project
determined. The quantitative process, demon-
strated here, follows the following sequence:
a> Determine all factors bearing on project se-
lection.
OF VALUE ENGINEERING
b) Define all factors specifically to avoid over-
lap.
c) Determine relative merit (weight) for all
factors.
d) Establish grading scale for each factor.
e) Determine for each project its grade for each
factor.
f) Compute score for each project.
Factors and definitions
T W E L V E FACTORS and their definitions are pre-
sented in Table 1. The reader will note that the
list is hardware-oriented but can be changed to
COST - THE DOLLAR E X P E N S E OF THE ITEM FOR TOTAL QUANTITY; E X P R E S S E D
AS DOLLARS PER YEAR OR DOLLARS PER CONTRACT.
C O S T - T O - V A L U E RATIO - THE RATIO OF UNIT COST TO UNIT VALUE (AN INDICATION
OF DOLLAR SAVINGS P O T E N T I A L ) .
PROBABILITY OF IMPLEMENTATION - THE REASONABLENESS OF THE EXPECTATION
THAT A SOUND PROPOSAL WILL BE IMPLEMENTED ( P O L I T I C S , S C H E D U L E , ETC.).
S T A T E - O F - T H E - A R T - THE EXTENT TO WHICH A PROPOSED PROJECT APPROACHES
OR S U R P A S S E S THE EXISTING S T A T E - O F - T H E - A R T . ( B E F O R E PRODUCTION R E L E A S E . )
VARIETY OF DISCIPLINES - THE NUMBER OF TECHNICAL AND NONTECHNICAL
DISCIPLINES INVOLVED IN THE DESIGN ( E L E C T R I C A L , MECHANICAL, CHEMICAL, E T C . ) .
AVAILABILITY OF NEEDED TALENT - THE EXTENT TO WHICH THE NECESSARY T A L E N T S
FOR PROJECT STUDY WILL BE AVAILABLE—INTERNALLY OR E X T E R N A L L Y .
7) NUMBER OF PARTS - NUMBER OF PARTS INVOLVED, INCIDENTAL HARDWARE.
8! C O M P L E T E FUNCTIONAL A S S E M B L Y - T H E EXTENT TO WHICH THE PROPOSED
PROJECT R E P R E S E N T S A COMPLETE FUNCTIONAL A S S E M B L Y .
NUMBER OF MANUFACTURING OPERATIONS - NUMBER OF P R O C E S S E S INVOLVED
IN THE MANUFACTURE ( E . G . , DRILLING, MACHINING, MILLING, ETC.).
io: NUMBER OF MATERIALS - E . G . , B R A S S , ALUMINUM, E T C .
PROBLEM CHILD - THE EXTENT TO WHICH THE EXISTING DESIGN IS AN ACKNOWLEDGED
I D
PROBLEM ( E . G . , WEIGHT, S I Z E , L O G I S T I C S , S C R A P , REWORK, PERFORMANCE, C O S T ,
SINGLE S O U R C E , F I E L D S E R V I C E , S C H E D U L E , ETC.).
COOPERATION AND INFORMATION - THE EXTENT TO WHICH NEEDED INFORMATION
AND DATA ARE A V A I L A B L E .
T A B L E I. PROJECT SELECTION FACTORS
17
 1 2 3 4 5 6 7 8 9 10 11 12 TOTAL

1. COST X 0 0 2 2 1 2 1 2 2 0 0 12

2. COST-TO-VALUE 2 X 1 2 2 2 2 2 2 2 1 1 19

3. IMPLEMENTATION 2 1 X 2 2 2 2 2 2
© 1 1 19

4. STATE-OF-THE-ART 0 0 0 X 1 0 0 0 0 0 0 0 1

5. DISCIPLINES 0 0 0 1 X 0 0 0 0 0 0 0 1

6. TALENT AVAILABLE 1 0 0 2 2 X 2 1 1 1 0 1 11

7. NO . OF PARTS 0 0 0 2 2 0 X 0 0 0 0 0 4

8. FUNCTIONAL ASSEMBLY 1 0 0 2 2 1 2 X 2 2 0 0 12

9. OPERATIONS 0 0 0 2 2 1 2 0 X 1 0 0 8

10. MATERIALS 0 0 © 2 2 1 2 0 1 X 0 0 8

11. PROBLEM 2 1 1 2 2 2 2 2 2 2 X 2 20

12. COOPERATION AND INFORMATION 2 1 1 2 2 1 2 2 2 2 0 X 17

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

reflect other types of projects or industries being Relative merit

considered.
I t should be pointed out that factor definitions OBJECTIVE RATING of the relative merit of factors
are extremely critical and should not overlap. I f can be done with the type of chart shown in Table
a given criteria is covered by two or more defini- II. Each factor is compared for importance with
tions, it will have an unrealistic additional weight every other factor and a weight of two points allo-
in the final computations. cated with each comparison. Again, allocation will
depend upon the situation of the
user. The objective is to deter-
COLLEGE GRADING ANALOGY: mine the relative importance of
various factors so that evaluation
70_80_ 9.0 1 0 0
of a project becomes less subjective,
AVERAGE
less intuitive and more scientific. Re-
2 I 3 • 4 CREDITS
GRADE ferring to Table I I for an example:
where factor three (probability of
EXAMPLE 1 : COST implementation) and ten (number of
10K 350 500K materials) are compared, i t was felt
SCALE $
that number three was of greater im-
GRADE P T S .
portance in project selection. Three
~7"TT~ was given two points and factor ten,
no points, as shown i n the circles.
PROJECT INVOLVES S 3 5 0 K ; THEREFORE GRADE = 7 . 1 Because the weights are added hori-
zontally, the two points are placed
EXAMPLE 2 : PROBABILITY OF IMPLEMENTATION
in the row of factor three and i n the
0 8 column of factor ten. The zero is
PROBABILITY
placed in the row for factor ten.
GRADE P T S .
10 When all comparisons are made, the
weight for each factor is simply the
80% PROBABILITY OF IMPLEMENTATION; THEREFORE GRADE = 8.0 total of all points in that row.

EXAMPLE 3: DISCIPLINES INVOLVED

QUANTITY
1 3_ Grading scale
I N T H E C O L L E G E GRADE POINT SYSTEM,
10
GRADE each course has a grade scale of from
0 to 100. Each student is given a grade
IF 2 DISCIPLINES INVOLVED, THEREFORE GRADE = 5
(4-credit A, 3-credit B , etc.), depend-
IF 4 DISCIPLINES INVOLVED, THEREFORE GRADE = 10
ing upon where in that scale his abil-
ities fall. Similarly, for quantita-
tive decision-making, i t is necessary
FIGURE 1 . SCORING LINEAR EXAMPLES

18 THE JOURNAL
 ALTERNATIVES: PROJECT PROJECT LOW
FACTOR COMMENTS
F A C T O R S (WEIGHT) A B TTIGH

1. COST S 10K P R O J E C T S UNDER 1 0 K G E N E R A L L Y NOT P R A C T I C A L

1 (12) _ 3 - ^ ^ ^ 9 6 5 0 0 K AND U P

2 (19) 2. COST-TO-VALUE 5 TO 1 IF UNDER 5 TO 1 P O T E N T I A L I S POOR

1 0 0 TO 1
3 ^ ^ - ^ 7 " AND U P
3 (19) 57 133
3. IMPLEMENTATION 0 IN T E R M S O F P R O B A B I L I T Y
1
4 ( 1)
5 " 4. STATE-OF-THE-ART 0 0 = ROUTINE, UNCREATIVE, DESIGN
5 10 1 0 • P R O P O S E D A D V A N C E IN S T A T E - O F - T H E - A R T
5 ( 1)
10 - " 5. DISCIPLINE VARIETY 1 QUANTITY TERM
6 (11) 3 AND O V E R

6. TALENT AVAILABILITY 0 E X P R E S S E D AS A P E R C E N T A G E
7 ( 4) 100

8 (12) 7. NUMBER OF PARTS B E L L - S H A P E D RELATIONSHIP - S E E DISCUSSION

'. NEXT SECTION
s
9 ( 8) 64 JL- ""~40 8. FUNCTIONAL ASSEMBLY 0 EXPRESSED AS A P E R C E N T A G E
100
10 ( 8) """"""sg - —
9. MANUFACTURING OPERATIONS 1 QUANTITY TERM
0 " 1 0 AND O V E R
11 (20) _ - — 0
10. MATERIALS 1 QUANTITY TERM
12 (17) _ J — ^ Tl9 — ^ ^19" 5 AND O V E R

11. PROBLEM 0.5 E I T H E R Y E S OR NO

TOTAL 808 757
12. C O O P E R A T I O N / INFORMATION 0 E X P R E S S E D AS A PERCENTAGE
100

TABLE IV. DECISION MATRIX

TABLE III. GRADING SCALES

to establish a grade scale for each factor. Once
this has been done, a project can then receive a
grade indicative of its place on the particular factor
grade scale. This grade will then be multiplied by
the factor weight. To establish grade scales for fac-
tors not generally measurable is difficult at best.
The scales which have been selected (Table I I I )
are for purposes of demonstration and should be
changed to reflect a particular situation.
Grade determination
To DETERMINE a grade for each project as against
each factor, an arbitrary maximum of 10 has been
selected. Each factor which can be expressed by a
linear measure can be set off against the 10-point
scale, and projects graded appropriately. Figure
1 shows this for linear examples.
As the number of parts in an item increases, its
potential as a Value Engineering project also in-
creases. However, a point of diminishing returns
is reached where i t becomes more practical to d i -
vide the item into several "subprojects" for appli-
cation of V E techniques. Therefore, when measur-
NUMBER OF P A R T S
5 10
PROPOSED PROJECT HAS 2 3 P A R T S ; GRADE T H E R E F O R E IS 8
FIGURE 2 . SCORING - B E L L C U R V E
ing the potential of a particular item for Value
Engineering, this relationship of parts to score is
best represented by a bell-shaped curve. Figure
2 shows the application to bell-shaped relation-
ships.
Resulting grades can then be placed in the
upper left portion of a decision matrix, as shown
in Table I V . The individual products of grade
and factor weight are entered in the other half of
the square. These products are then added verti-
cally to give the total score for the proposed project.
Many who use quantitative methods prefer to
normalize the factor weights so that they total
1, 10, or 100. The rationale behind this is that
the maximum total score then becomes 10 or 100,
depending upon the grading scale used. This ap-
pears to provide no practical advantage and adds
another step to the process.
Conclusion
T H E DECISION MATRIX can be used for any quan-
tity of projects. When the total project weights
have been established, the best potential project
will have the highest total. After one works the
quantitive process on several projects and analyzes
prior successful and unsuccessful projects, an appro-
priate allocation of weights and grade scale values
can be made. W i t h experience, a threshold value can
be established and a single project can then be
evaluated against this figure. I t is also suggested
that some industrious reader prepare a set of nomo-
graphs for project selection, which would, carry this
quantitative method one step further.
I t could be argued that this organized method-
ology is no stronger than the experience of the
15 23
individual using it. However, i t does serve as a
forcing technique to require consideration of all
elements bearing on project selection and is at
least one step removed from complete subjectivity.

OF V A L U E ENGINEERING 19
The JOURNAL
needs you!
The following editorial first appeared in the Sep-
tember issue of the JOURNAL. This issue reflects a
part of your response which has been wonderful.
It is repeated in the hope that with an even greater
input from an ever widening field of interest and
concern, we can fulfill our goal of a larger and more
useful publication. We hope soon to be able to
publish monthly and to reach many outside the
Society's membership with the expanding benefits
of applied Value Engineering. Thank you for your
contributions! Keep them coming! Route your
copy of this issue to concerned people in your or-
ganization. Urge your library to be a subscriber.
—BILL DEAN, Editor
THE J O U R N A L O F V A L U E E N G I N E E R I N G is the tech-
nical spokesman of the Society of American Value
Engineers and its members. It also wishes to serve
and reflect the ideas of those interested in the V E
technology who are not now members of the so-
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 out-
side the society membership. For those who would
like to submit material for publication, an author's
guide and instructions on preparation is available
on request. Members of the Editorial Review
Board are located throughout the nation for your
convenience and assistance. Direct your articles,
short subjects or inquiries to:
Robert Bidwell, Chairman
Editorial Review Board
D O D Value Engineering Services Office-DEVO
8D 376 Cameron Sta., Alexandria, Va. 22314
or:
W. B. Dean, Vice President-Communications
5204 Benton Avenue, Edina, Minnesota 55436
Poga 1

ciety. I t is Value Engineering methodology, appli-

P u W i , b F i l o l
STATEMENT O F OWNERSHIP, f * ' ^
M A N A G E M E N T A N D CIRCULATION PO"™^.^™""sc.,™ %£Z£?i*,;wm
(Act of October 23. 1962; Section 4369. Title 39. United Slatet Codt) on page 2
cation and benefits in all facets of business, indus- 1. DATE Of NUNC 11 TITLE Of PUBLICATION '; -J.-
9/24/69 | The J o u r n a l o f Value Engineering • ' ''.
try, service organization and Government. J. FMOUfHCY OF ISSUE
Quarterly . ' y ^
Both the Society and the V E methodology are 4. ICKATION Of INOWH OFFICE Of PUWICATIOM (Slrttl. lily, catmtj. 11*11. ZIP tcji)
c
•
4 1 0 W. V e r o n a S t r e e t , K i s s i r a m e e , F l o r i d a 3 2 7 4 1 (Osceola ounty)
currently i n a state of dynamic growth. Most i. LOCATION Of THE HEADOUARTERS CM GtMRAi IIISMIU OtfKti Of THE FUMISHEtS /Kef prittml

practicing value engineers recognize the urgent 7715 W i s c o n s i n A v e n u e , W a s h i n g t o n , D . C . 2O014

6. NAMES AND ADDRESSES OF PU WISH EH. EDITOR. AND MANAGING EDITOR
ru«usHE« ff-u-, .JJrcu) s o c i e t y o f A m e r i can v a l u e E n g i n e e r s , I n c . , National Business Office,
importance of achieving maximum utilization of Windy H i l l , Suite A-l, 1741 E o s w e l l S t r e e t . Smyrna; G e o r g i a 30080

our invested resources. The elimination of waste W. B . D e a n , 5 2 0 4 B e n t o n Aveml e , &3ina, Minnesota 55436
MANAGING EDITOR (HaKt and aJirni)
is critical to a healthy economy. Knowing the po- P a t Benn .
7. OWNER (If owned by a corporation, its name and address- mast be staled and also immediately thereunder the names and ad-
tential of applied Value Engineering, the society dresses of stockholders owning or holding I ptritnl or more of Mat amount of stock. If not owned by a corporation, the names and
addresses of the individual owners must be given. If owned by a partnership or other unincorporated firm, its name and address, as
well at that of each individual must be given.)
feels responsible for the continued development and NAME AMMESS

greater utilization of V E in behalf of the fullest pos- S o c i e t y o f American Value Engineer : 7315 Wisconsin A v e . , Washinston, C . 20014

sible achievement of its economic benefits.

8. KNOWN BONDHOLDERS. MORTGAGEES. AND OTH R SECURITY HOTOERS OWNING OR HOLDING 1 PERCENT OR MORE OF TOTAl AMOUNT
To fully exploit the advantages and benefits of Of BONDS. MORTGAGES OR OTHER SECURITIES (If there
NAME
V E requires an outreach to building trades, raw
None
material manufacturers, institutions, and the entire
complex of commercial and industrial enterprise as 9. FOR COMPIETION BY NONPROFIT ORGAMZAT1ONS AUTHORIZED TO MAIL AT SPECIAL RATES (Section 132.122, Postal Manual)
{Check tni)
well as expanded Government and defense usage. Th« pwpoie, function, onrf nonpiofil ilolut of thii or- [—1 Hov» net rhgng.d |—| Have changfd dgr.na
gonJzoiion ond th. •lempi itah.. Iw F«Terol incom. ta* 1—1 d p,K.tlin 12 1—1 pending 1 2 moniht
u f i n a S
(If changed, publisher must
submit explanation of change
pwpo»> monlhi wlb this statement.)
New horizons also exist for application of Value
Engineering to systems, software.
It is the purpose of the journal to report current
10. EXTENT AND NATURE Of OSCULATION
™"Zu" ™ "»K.1?",o
s ZS?ZL
3,011 2,882

advancements experienced by our readers, and to Hone None

capture the interest of personnel and organizations ........se,,.,..

2,289 2,041

outside our society as well as within. Only through 2,289 2,041

the sharing of ideas can each of us experience in- 0. FREE CISTRIMmON 1 imilndim s*mpltl> IT MAIt. CAUSER OR OTHER MEANS
t
375 375

creased benefits for ourselves and extend these ben- E. TOIAl nSTRnuTION (Sam . / C and O) 2,664 2,416

efits in a competent and professional manner to the F. OFFICE USE, LEfT-OYM. UNACCOUNTED. SFOUO AFTER PRHTMC
347 466

many potential users. G. TOTAL (Sum aj E & f-4wU tquol net prrst mm lisirw m A)
3,011 2,882
. ^ (Sigma/are c/ eJilor. prilirber. m*..g, . or
Your JOURNAL, therefore, solicits your articles, J
I certify rfijt the ititcmcnts midc by me above are comet
r

short subjects, and experiences on all facets of value

20 THE JOURNAL
Value Engineering
Realization of an
Appliance Manufacturer
by JAMES MACINTYKE
The author first comments on the need for Value
Engineering in the appliance industry, discusses
briefly Value Engineering's relationship to other
cost improvement programs, and then proceeds to
relate the circumstances behind managements con-
cern over cost improvement of a product manu-
factured by the St. Paul Division of Whirlpool
Corporation. The four projects used as examples
are intended not only to demonstrate Value En-
gineering's contribution towards product profita-
bility, but also to serve as a testimonial to the
progressive attitude of a product engineering group
that has accepted Value Engineering as a legiti-
mate tool helping to improve the competitive posi-
tion of its company.
The need
COMMERCIAL, INDUSTRY in general, and the
pliance industry in particular, require Value E n -
gineering or programs like it to remain competi-
tive—not only domestically but also international-
ly. Mr. Glenn Evans, President of Warwick Cor-
poration, speaking before a meeting of Cost Im-
provement people had this to say: "In the last
ten years, the growing flood of well-made, low-cost
imports from Europe and Japan have presented a
serious challenge to U.S. industry—even putting
the future of some in doubt.
At the present 20 percent of U.S. black and
white T . V . sets, 68 percent or 25 million radios,
and 75 percent or over 33 million tape recorders
are produced in the far east. Several American
manufacturers have surrendered to the point of
having parts or entire radio sets made in Japan
under their own brand names. Add to this the
Common Market influence in Europe, and we are
faced with an ever-increasing flow of foreign goods
into our market. As always, competition rears its
formidable head.
OF V A L U E ENGINEERING
Illustrated:
Programs that help
M O S T COMPANIES today have programs directed
at getting the costs cut of their products. Indus-
trial Engineering, Work Simplification, suggestion
boxes, Cost Reduction, Zero Defects, and Value
Engineering are, to varying degrees, utilized to
meet this end. The questions are: Why the need for
all these separate programs? Are they at cross-
purposes with one another? Without compiling
a dissertation on the objectives, scopes, and values
of the previously mentioned programs, let us brief-
ly pinpoint their respective relationship within the
Cost Improvement family.
Industrial Engineering and Work Simplifica-
tion can be considered as primarily concerned with
feeds, speeds, and work movement, the most effi-
cient method of performing the task. This can be
ap- down on the production line or it can be con-
cerned with the flow of office paper work. Zero
Defects, as the name implies, is a function of the
Quality Control department, orientated towards
sustaining or building customer confidence, with
Cost Improvement occurring only as a by-product
through decreased rejects and rework.
VE and cost reduction
A SUGGESTION BOX system generally yields that
which we define as Cost Reduction. Tradition-
ally, Cost Reduction efforts start with the known
costs of parts such as production components,
and reduces their cost of manufacture. Practi-
tioners of Value Engineering have claimed that
true V E goes beyond ordinary Cost Reduction by
attempting to achieve a component's function most
economically. I n fact, it may accurately be said
that through the V E methodology not only func-
tions but all facets of Cost Reduction are ex-
ploited.
21
 Value Engineering then provides us with a
much broader base and much wider spectrum for
realization of savings. Paradoxically, it should
now become evident that while all Value Engi-
neering efforts are directed at Cost Reduction,
most Cost Reduction attempts may not be con-
sidered as true Value Engineering. This seems to
be the case in the vast majority of V E representa-
tions by trade journals which seem limited to
material or process changes. All would have been
arrived at through Value Engineering, but were
probably generated by conscientious efforts of en-
gineering or procurement department in reevalu-
ating requirements. Examples of in-depth V E
have generally been found in the ordinance field
and made known in related publications.
Commercial VE
W H A T T H E N has been Value Engineering's con-
tribution to commercial industry? Unfortunately,
company proprieties and the absence of a central
monitoring authority, such as the Department of
Defense provides, make it difficult, if not impos-
sible, to measure Value Engineering's total worth
to commercial industry. It is possible, however, to
discuss how Value Engineering has assisted a
specific company to improve its profitability. For
this purpose, let's review the recent history of a
product manufactured by the St. Paul Division of
Whirlpool Corporation.
In terms of different types of products engi-
neered and built, St. Paul is the Company's most
diversified and complex operation. Through the
years, products developed by the Division have
later required phase-over to a facility with greater
production capacity. Thus the maintenance of
sales and employment levels requires one of two
Larry Miehal, Project Draftsman for the Ice Maker manufactured by Whirlpool Corporation
the Value Engineering wire form used to support the cutter-grid and evaporator. In his left'hand
holds the old sheet metal support assembly.
actions: either a new product must be developed,
or an existing one made more attractive to the
consumer. The second could be accomplished by
adding features, aesthetics, convenience, etc., but
probably would have a faster market reaction
through decreased cost to the consumer. This is
where Value Egineering can best enter the pic-
ture. (A paper covering the first alternative is
in process for presentation at the S A V E National
Convention;. therefore it will not be further de-
veloped here.) The second, which has historically
had the attention of Value Engineers, can best
be appreciated by use of examples.
Developing a VE story
T H E PHASE-OVER transition of an Ice Maker was in
process last year at the time a Value Engineering
seminar was to commence. Looking to the future,
Mr. L . G . (Bit) Holder, General Manager, pro-
posed that instead of working on diverse products
during the seminar, the workshop be devoted to
"value-engineering" the Ice Maker product. He,
along with others, thought that this line could
well be a sought-for product replacement.
I suspect that having read thus far many of
you might feel that a shift in emphasis from
training to results had compromised the seminar's
primary function. I n a sense this could be correct;
yet in a more positive sense, the situation might
better be viewed in light of presenting an oppor-
tunity to practice the V E methodology in an area
which would be of most benefit.
Project selection resolved
I N A L L TRUTHFULNESS, the Value Engineering
department was not especially enthusiastic about
Doints to
he
Jackie Callanan, Engineering Steno at Whirlpool, removes
has shown to be no longer required on the Ice Maker.
corrimitting themselves to a product with limited
production volume in comparison to products with
hundreds of thousands of units available else-
where. It is obviously a great deal easier to
achieve a $25,000 savings by reducing costs 50 on
500,000 units than it is to cut costs $5.00 on
5,000. Production remains a legitimate criterion
for project justification, yet it is not the only one.
What marketing manager can know when a new
product or a heavily promoted older one will really
take off? Think, for example, of the Edsel's failure
and the Mustang's success.
The Ice Maker situation was interesting in
that not one, but two, prerequisites for successful
Value Engineering were present. The studies had
the support of top management, and there existed
a definite and defined need for cost improvement.
The first contributed the manpower, resources, and
commitment, while the latter provided project
evaluators with the sustaining motivation to make
ideas work and get them installed.
Within five months after the seminar, a new
model Ice Maker incorporating four V E proposals
was released for production. Of these four pro-
posals, two originated in the seminar, and two
outside the seminar. (Note—five projects were
assigned to workshop participants: the remain-
ing three are currently undergoing further engi-
neering evaluation.)
Two examples from seminar
O N E O F the assigned projects was the front sup-
port assembly for a cutter grid and evaporator
plate used on the 220-pound Slope Front Ice
Maker. The assembly was constructed of three
major stainless steel channels plus various studs
and brackets. The current design was costly and
OF V A L U E ENGINEERING
the false bottom which Value Engineering
it was difficult to achieve acceptable alignment of
the components. Three proposals providing four
variations were proposed by the V E team. It was
felt that seven recommendations were required be-
cause of other contemplated design changes. The
primary recommendation was to provide support
with a single, stainless steel wire form plus the
necessary studs and brackets. As a result of this
proposal, 20 parts were eliminated, and costs re-
duced by 43 percent.
It goes without saying that all rookie Value
Engineers are cautioned to practice good human
relations throughout their studies and in their
presentations. Because of circumstances, one
seminar team found itself in a position to carry
this philosophy almost to an extreme. Their pro-
ject had been the float and valve assembly used
to control the water level in the Ice Maker water
pan. After investigating several alternate sys-
tems for controlling water, they determined that
a float assembly was the most economical means
of accomplishing the basic function. I n pre-
senting their project to the General Manager, his
staff, and other concerned individuals, they in-
dicated that the present engineering design pre-
sented the best value and that they could suggest
no ideas for significant cost improvement. They
commended Engineering for their design choice.
This team's contribution towards improved V E
relations with Design Engineering can best be
summed by relating the comments of the Engineer-
ing Project Manager: "The supporting point made
to management by the V E adviser that savings are
not always produced was appreciated. It makes
our reactions to these and future proposals far more
positive." Although the team was unsuccessful in
suggesting a better method of controlling water,
they did propose modifying the mounting for the
assembly. This was immediately accepted; con-
23
sequently, parts were reduced from ten to four,
with a resulting savings of 45 percent per assembly.
Forming a VE Team
I N EXCEPTIONAL CASES, where a particularly open-
minded Engineering group is not concerned with
whether an idea was "first invented here," it is
possible to deviate from the V E axiom that pro-
ject teams should be composed of individuals
divorced from the subject under evaluation. It is
also necessary that these individuals believe in
V E , and be willing to follow the job plan. If you
are fortunate enough to have access to such people,
your function as a Value Engineer is greatly facili-
tated. The obvious advantages are that 70-90
percent of idea salesmanship has taken place dur-
ing Phase I I (Speculation) rather than Phase V
(Presentation) of the V E job plan, and that you
have within your V E group people in a position
to implement the proposals.
Two examples outside the seminar
A STORAGE BIN false bottom used in commercial,
self-contained ice makers was the subject of an
investigatory study. Six functional areas were
represented on this study: Planning, Process
Development, Manufactaring, Design, Industrial
and Value Engineering. Two of these areas, In-
dustrial and Product Engineering, had direct pro-
duct affiliation. Investigation into the design
background of the plastic false bottom revealed
that it was part of an original design for a 220-
pound-per-day model; its primary purpose was to
provide a smooth, continuous scooping service to
facilitate ice removal.
When a 450-pound-per-day model was designed,
the same specification was applied; however,
when a smaller 110-pound model came along,
changes in bin configuration and door location
eliminated the need for a scooping surface. The
plastic bottom was retained for the secondary pur-
pose of separating ice from water in the bin
bottom. Subsequent redesigns of the 220-pound
and 450-pound models brought about similar bin
and door changes, but the plastic bottoms re-
mained. I n effect, what had occurred was that a
previously secondary function (separate ice from
water) had attained primary function status.
Applying Value Engineering methodology, zero
worth was assigned the false bottom as a scoop-
ing surface was eliminated from the design. It
can be argued that the part still had a primary
function of separating ice from water, but this
was originally secondary. Remember also that
the product design engineer responsible for this
product was a V E team member and was conceding
24
that this part was not required. This, in effect,
turned out to be the case as further investigation
determined that water in the bin bottom was no
real problem due to the built-in slope of the bin
to the drain. Also most of the water remaining
was held by surface tension of the cubes them-
selves. There were other roadblocks to overcome,
such as aesthetics, but it is interesting to note
that one of the strongest advocates for change was
the product engineer who also contributed the test
data and field opinions that eventually sold the
change. Put yourself in his position and try to
appreciate the unprejudiced attitude of this en-
gineer. As a result of this recommendation, a part
was eliminated on the Ice Maker that saved over
$3.00 per cabinet.
The last example did not have the benefit of
a formal team study. For that ^matter, Value E n -
gineering played no formal part in finalizing a
design or developing costs. This was carried out
entirely by Engineering and the Cost departments.
The circumstances that led to this change started
with Value Engineering questioning the neces-
sity of a rather bulky hinge located on the back
of an Ice Maker. The hinge apparently existed to
facilitate entry into the cuber top for service. I n
gathering facts as to why the hinge was necessary,
the question was asked: "Must we even provide a
removable top?" The front panel also provides an
entry for service.
As it turned out, the answer was no, and with
obvious cost advantages present, Engineering un-
dertook the design of a solid top. It did not prove
feasible to use a completely fixed top, however,
because of process problems. A semifixed design
was accepted, reducing parts from 29 to 13, which
resulted in savings of almost $1.00 each. Some-
times all that is needed is an idea presented to the
right person to get the "looked for" results.
In perspective
T H E CUMULATIVE E F F E C T of the four changes dis-
cussed was a total reduction in parts from 92 to
41, and a cost improvement of close to $6.00 per
Ice Maker.
Justification for a commercial commitment to
Value Engineering will not be found in a govern-
ment incentive sharing program, or, for that mat-
ter, in unspendable dollars of recorded savings.
The stimulant to a continuing investment in a
Value Engineering program is competition, the
need to produce goods at a price the market will
sustain, while allowing a reasonable percentage of
profit.
The appliance industry, having first served as
the cradle for Value Engineering, now continues
to evidence its effectiveness through price stability
in the face of accelerating inflation.
THE J OURNAL
VALUE ENGINEERING
is Alive, Well and
Moving into Marketing
by THOMAS J . SNODGRASS
The article, "Value Engineering is Alive, Well,
and Moving Into Marketing," traces the movement
of the original value concept from a purchasing- -
oriented activity into its present major area of in- "
fluence, engineering. The article then outlines
a next step which orients Value Engineering tech-
niques more closely to marketing. A comparison
is made between a technically oriented function
analysis of a stove and a customer-oriented func-
tion analysis. An example concerning user criti-
cism of two competitive makes is analyzed. Cer-
tain faults are tolerated, others are not. The
term, "value research," is used to describe the
overall system, but the confidential nature of cus-
tomer attitudes and cost information prohibits ex-
tensive publication of value research studies.
T H E MOVEMENT of value activity from its origin
to the present state-of-the-art is interesting. The
term, "value analysis," was first used in the
Material Services Department, Manufacturing
Services Division, General Electric Company, in
the late 1940's. It was a purchasing tool used for
more accurate comparison in make-or-buy deci-
sions. Next, was the realization that costs pre-
vention could mean as much, or more, than elimi-
nation of existing costs. This necessitated mov-
ing into engineering.
There are common elements in the method of
practicing either Value Engineering or value anal-
ysis. The Value Engineering effort is often re-
stricted to hardware components such as a group
of parts or assemblies, and a prejudgment has
been made that they represent a potential cost
reduction area. One or more items are selected
for comparable study. It is a rare study that does
not indicate significant areas of potential cost re-
duction, and often these areas are more easily
identified when similar competitive parts and as-
semblies are selected for comparative study.
In 1960 a research project was set up in the
Kitchen Appliance Department, Hotpoint Divi-
sion, General Electric Company, to expand Value
Engineering techniques to include the function
cost analysis of a total product compared to similar
OF V A L U E ENGINEERING
competitive products. The basic concept of this
experimental unit was to determine what a group
of specialists, permanently assigned to the job and
with complementing backgrounds, could accom-
plish in establishing the lowest acceptable cost for
the product, the Value Standard.
In spite of the competence developed by this
organizational unit, several obstacles arose. The
first was that of obtaining competitive costs. Pro-
cedures used for cost-estimating of new designs
were too involved, costly, and time-consuniing to
be used to determine the function costs. The
second obstacle became apparent as the various
function cost differences were analyzed. The ma-
jority of major cost differences involved marketing
features such as appearance, convenience, etc., and
required the permission of marketing people for
changes. There was considerable reluctance to
grant this permission. I n spite of the obstacles,
however, it was obvious that an organization,
specially trained and dedicated to evaluating pro-
ducts, concepts, etc., and comparing, them with
existing competitive products, was a significant
step forward in the saga of Value Engineering.
The consulting firm of Value Standards, Inc.
was organized in 1963 with the express objective
of carrying the Value Engineering effort one step
further, i.e., to relate customer attitudes and ac-
ceptance of the product to the function costs of
products. This approach, which some now call
value research, must be customer-oriented Value
Engineering rather than technically oriented Value
Engineering. This paper will concentrate on cus^
tomer-oriented function analyses and function at-
titudes. Obtaining function costs, comparing func-
tion costs to function attitudes, and establishing
value standards are included in a value research
study, but article length prevents detailed dis-
cussion of these items.
A Function Analysis is the starting point for
the various types of Value Engineering applica-
tions. I t ' quickly becomes apparent that there
are several qualifying terms necessary to the word
"function." These break down into first, the
overall need which the product fulfills for the
25
customer, sometimes called the Task; next, are Function Independent Functions
basic functions by which this need is met; and Task-Cook Food
finally, supporting functions which become the Primary Basic Functions
means by which the customer judges how well I . Provide Power 1
the product fulfills the need. I I . Select Temperature 5
One of the studies carried out, using technically I I I . Heat Pans/Containers 2
oriented Value Engineering, involved an electric I V . Bake Food 3
range. The range design was broken down into seven V. Broil Food 4
basic functions and was given an overall func-
V I . Store Utensils 2
tion designation of "Cook Food." The seven
Subtotal Basic Functions 17
primary functions, in turn, were broken down into
114 categories to which costs were assigned. Fol- Supporting Functions
lowing were the primary functions, with the second- V I I . Be Convenient 22
ary function categories indicated: V I I I . Be Dependable 12
I X . Provide Satisfaction 18
Technical and Process-Oriented Function Analysis X . Have Desirable Appearance 7
for an Electric Range X I . Be Status Symbol 2
Cook Food Total Secondary Functions Subtotal Supporting Functions 61
A. Produce Heat 9 Total Independent Functions 78
B. Control Heat 22
C. Contain Oven Heat 12 Again, a breakdown of one of the primary
D . Support/Contain Food 11 functions, this time a supporting function, and the
E . Support/Enclose/Decorate 44 parts assigned to it, looked like this:
F . Light Surface Units and Controls 4 Function No. of Parts Assigned
G. Miscellaneous and Nonallocated 12 V I I . Be Convenient
Total H I G. Clean Range
1. Clean Surface Unit —
An example of a breakdown which had these 2. Clean Oven 18
secondary functions and the part or parts assigned 3. Collect/Contain Spillage 5
to it was C4 Light Oven Interior: 4. Clean Burner Box 3
Function 5. Clean Overall 4
C4. Light Oven Interior Part Name 6. Clean—Other —
A. Support and The customer-oriented function outline has a
Connect Lamp Socket major advantage over the technically oriented. It
B. Interrupt Power Switch/Toggle can be developed by involving vital components of
Switch an organization: Engineering, Marketing, Man-
C. Actuate Light Switch Pushrod ufacturing, Finance, etc. They agree that the
D. Support Switch Switch Support verb-noun combinations really do describe what
E. Diffuse Light Diffusing Glass the product does and how. Marketing people are
F. Generate Light Lamp particularly enthusiastic about the supporting
G. Hold Glass Clips (2) function category. A consumer product has been
used for an example, but the same philosophy of
The fact that the secondary function categories customer-oriented function analysis can be applied
usually have only one part is typical of this type to any type of product and/or service. Recently,
of function analysis, because it is the individual this same approach was used on a water pollution
parts and assemblies that are actually being func- control system and worked exceedingly well.
tion-analyzed rather than the total task of Cook Once the customer-oriented function analysis is
Food. complete, it becomes the communication link be-
Later, another study was carried out, this time, tween the customer-product relationships and the
however, using the customer-oriented Value E n - cost-product relationships. The following table
gineering approach, i.e., value research. Here the provides a summary of faults recorded by in-
task was identified as "Cook Food," the same as dividuals using comparable competitive models of
the initial study. There were six primary basic stoves. The faults are assigned to function cate-
functions identified, and an additional five sup- gories very much as we assign costs to function
porting functions. Those secondary categories to categories. It shows the percent of users, out of
which now both customer attitudes and product the total, who recorded one or more faults, and the
costs were assigned were called Independent Func- percent of the total number of faults to total
tions: usages.

26 T H E J O U R N A L
 Table of Function Attitudes ment had very effectively convinced the field sales-
Primary Functions Function Faults man that he alone made the buying decisions.
Make "A" Make "B" An analysis of his function along with his answers
% % % % to a fairly detailed questionnaire, made it clear
Users Usages Users Usages that the operator of the equipment influenced the
I . Provide Power 6.7 2.3 6.7 .7 source selection. If the operator's acceptance was
I I . Select high, it had a comparably high influence on the
Temperature 60.0 8.6 73.3 8.5 particular brand purchased. The maintenance
I I I . Heat man, in this case, exercised no influence at all in
Pans/ Containers 3.3 .2 13.3 .9 terms of brand acceptance.
I V . Bake Food 10.0 1.6 6.7 .4 There are various types of studies to which
V. Broil Food 3.3 .2 6.7 .4 value research can be applied. First, there are
V I . Store Utensils 3.3 .2 6.7 .8 existing products. Studies which evaluate cus-
Subtotal Basic tomer attitudes and product costs of several dif-
Functions 70.0* 13.1 80.0* 11.7 ferent makes of products or services provide major
V I I . Be Convenient 77.4 15.1 53.3 15.4 cost reduction opportunities. They often indi-
V I I I . Be Dependable 64.5 16.0 56.7 11.1 . cate areas where the product or service has to be
I X . Provide improved in order to improve acceptance. If a
Satisfaction 80.7 11.2 63.3 21.2 major product line has not been completely ana-
lyzed for some time, it provides a very fertile
X . Have Desirable
33.2 2.7 field for prompt improvement possibilities.
Appearance
X I . Be Status Symbol 3.2 .2 3.3 .2 Prototypes are another area of application,
where relatively few prototypes are available; they
Subtotal
can be evaluated by small samples of potential
Supporting
customers. Function faults will highlight prob-
Functions 90.3* 42.7 80.0* 47.9
lem areas, particularly subjective customer atti-
tude areas to which the laboratory test is not sensi-
Looking at the differences in percent of func- tive. The prototype also provides an opportunity
tion faults, there was one area of high fault in to look at cost distribution in terms of customer
"Select-Temperature," and a significant difference attitudes.
in number of users faulting Make "A" in Be Con- Finally, value research can be used very ef-
venient, Be Dependable, Provide Satisfaction, and fectively during concept formulation. A concept
Have Desirable Appearance. An interesting as- can be translated into customer-oriented function
pect in analyzing function faults was the fact that analysis. From this, one has an outline for a
all faults were not elqually bothersome. Often, questionnaire to compare customer likes, dislikes,
certain faults were tolerated faults, and regardless and indifferences to overall objectives of the partic-
of the magnitude, represented very poor areas for ular product.
product improvement. On the other hand, there Results of value research practiced over the
were certain faults to which the customer was ex- past seven years do not appear in the literature.
ceedingly sensitive. These function categories The reasons are simple. These results represent
really shaped the overall acceptance of the cus- closely guarded information. Any company pro-
tomer to a given make of product. I n this particu- tects the attitude of its customer to the company's
lar example, make "A" acceptance was only fair products and to competitive products, and to the
;

to good. Make " B , " on the other hand, had an
excellent customer acceptance. Obviously, there
were differences that meant something in the func-
tion attitude tables and that needed correction if
the company doing the evaluation happened to
be Make "A."
When industrial products are considered, often
several customer levels must be identified and
separately evaluated. There is also the possi-
bility that there are several influences within one
customer level, and it must be determined which
exercises significant influences on the chief buying
influence.
A study carried out on heavy earth moving
equipment indicated that the Chief of Procure¬
* Represents percent of Users who complained one or more times
in the Basic or Supporting Function Categories.
company's product cost as compared with
the estimated competitive costs. The important
thing to recognize is that value research techniques
are available. They are being used, and the re-
sults are impressive. They often show ways to im-
prove customer acceptance, provide management
with tools by which it can maintain product lead-
ership and improve profitability, or it can establish
programs making the firm a value leader in a
particular competitive line. (The value leader is
defined as the company whose product has high
acceptance from the customer, and the product
generates high profits for the company.) Val-
ue research represents an important advancement
in a company's organizational structure and re-
wards are more than commensurate with costs.

OF V A L U E E N G I N E E R I N G 27
CONSUMER
VALUE
by J O H N R . STEINMETZ
DON'T look now, but the tires on your auto might
be over-the-hill! I f so you will once again enter
into the Consumer's Market Place and attempt to
maximize the value of your purchase.
This replacement set of tires can cost double
or half of what your neighbor just paid, can melt
away or last and last, can be safe, smooth riding,
and trouble-free, or anything but.
I n the life cycle of buying and using these
tires you can become convinced that you are the
world's greatest sucker or a very shrewd value
analyst.
As a typical "Poor Consumer" in a rough con-
test, you may have the apprehension of a quarter-
back in the game of the week, whose next play can
be either a spectacular success or a 20-yard loss on
third down.
Big deal? So what if you toss a few extra
bucks into feeding the economy? The answer is
simply this:
1) It adds up: The frequency and volume of
our purchases are unprecedented: Several hun-
dred billion, dollars worth of U.S. consumer goods
are purchased annually. W i t h each reflecting the
above principles of good or poor value, using our
fantastic multiplier, the economic effect is stagger-
ing.
2) "Sucker" choices can really hurt our eco-
nomic health as individuals, families, and as a
nation dependent on continually increasing value
of products and services. Disgruntlement, poverty,
inflation, etc., are the deficiency symptoms we
readily recognize.
3) "Expert" choices discipline industry and
provide more for all. Winning is better than los-
ing because it's nicer. The personal satisfaction
of being a sharp buyer is one of life's distinct
pleasures. Its personal significance pours into
everyday conversation and is worn like a badge
as the recounting demonstrates our one-upmanship
superiority.

Consumer value and SAVE secrets

T H E "SECRETS" of being an "expert" are con-
tained in the organized and systematic techniques
of our Value Engineering methodology. As a
formal discipline, so far we have been applying
them exclusively to the products and services of the
f ^ TVALTJE \ f company we work for. Any application to our
* a SUCKER V. [ EXPERT personal expenditures has been strictly on our own.
The time has come to change this, and National
SAVE has formed a group assigned to the task.

Progress to date
S O M E initial decisions have been made, as indi-
cated in the objective, scope, and general plan

Jill sheet shown i n the sheet which follows. Basically,

two V E studies are being performed. The first
involves tailoring and packaging of sets of, "Here's

28
THE JOURNAL
 Consumer Value Plan Sheet

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

V.E. Study O r i e n t a t i o n Sheet

Project T i t l e : Develop- "Here's How" techniques f o r consumer value

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

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

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

purchase. Further expansion w i l l be t o a d d i t i o n a l , more
s p e c i f i c approaches t h a t are t a i l o r e d t o c e r t a i n catagories
of items (such as t r a n s p o r t a t i o n , f o o d , s p o r t s equipment,
e t c . ) . As t h i s i s accomplished, an even g r e a t e r d e t a i l o f
s p e c i f i c s w i t h i n each o f these c a t a g o r i e s i s the long range
g o a l . Coverage w i l l extend t o :

Products: i n c l u d i n g purchase o f a t e l e v i s i o n , a
box o f potatoe c h i p s , camping t r a i l e r , e l e c t r i c
r a z o r , a f u l l set o f Christmas presents, a house,
a magazine s u b s c r i p t i o n , and hundreds o f o t h e r
items.
Non-Merchandise: I n c l u d i n g t h i n g s l i k e insurance
p o l i c i e s , loans o r savings p l a n s , memberships,
college selection, etc.
Time & D o l l a r Items: p u t t i n g i n a lawn, t a k i n g a
v a c a t i o n , r e d e c o r a t i n g your house, e t c .

General Plan: Completion

Schedule Actual
Orientation 10-1-69 10-5-69
Work package
Develop & D i s t r i b u t e 12-20-69
C o l l e c t , compile, e d i t 2-25-70
I n i t i a l publication 5-1-70
Second P u b l i c a t i o n 10-1-70
Next P u b l i c a t i o n s (Later Scheduling)

National SAVE - Consumer Value Program

V.E. Study O r i e n t a t i o n Sheet

Project T i t l e : Develop ways to u t i l i z e consumer V.E. techniques

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

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

Scope: E x i s t i n g consumer o r g a n i z a t i o n s have m u l t i - m i l l i o n d o l l a r

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

General Plan; Completion

Schedule Actual
Orientation 10-1-69 10-5-69
Work package
Develop & D i s t r i b u t e 12-20-6?
C o l l e c t , compile, e d i t 2- 25-70
Plan approval by SAVE board 3- 15-70
l e t phase implementation 5-1-70
a d d i t i o n a l phase implementations ( L a t e r Scheduling)
 '/,
I I I /

How" methods, techniques, and approaches for

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

If you would like to help we're prepared to

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

John R. Steinmetz
•
This work package is structured and explained
so that you can immediately become involved
in submitting your ideas, concepts, and experiences
into this National SAVE program. Chapter Presi-
SAVE Consumer Value Director dents may also choose to complete this work
package as a total chapter activity.
6 3 4 0 MONROE ST. N . E
Can there be any question on the importance
MINNEAPOLIS, MINN. 55421 of this on both a personal and nation basis? The
call is hereby sounded for your response! Now!

PRESIDENT
R O B E R T L . CROUSE. Manager
Value and Industrial Engineering
Honeywell, Inc., Minneapolis
SECRETARY/EXECUTIVE
VICE PRESIDENT
THEODORE C F O W L E R
Value Engineer
Xerox Corp., Rochester
TREASURER
S T E P H E N J . HOLLAND
Eastern Air Lines, Miami
VICE PRESIDENT-
ADMINISTRATION
MORGAN D. R O D E R I C K
Head of Value Engineering Office
Ship Systems Command
Officers of SAVE
VICE PRESIDENT- VICE PRESIDENT-
COMMUNICATIONS NORTH C E N T R A L REGION
W I I L I A M DEAN, Manager EVERETT KNICKERBOCKER
Value Engineering Ammunition Procurement & Supply Agency,
Honeywell, Inc., Minneapolis New Lenox, 111.
VICE PRESIDENT-
VICE PRESIDENT- NORTH W E S T R E G I O N
PROFESSIONAL D E V E L O P M E N T L. JAMES L E V I S E E
CARLOS FALLON, Manager Hyster Corporation
Value Analvsis
Portland, Ore.
RCA, Camden, N. J .
IMMEDIATE
VICE PRESIDENT- PAST P R E S I D E N T
NORTHEAST REGION FRANK J . JOHNSON, Manager
THOMAS J . TROUSK1E Value Engineering Department
Framingham, Mass. Lockheed, Georgia Company

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

. . . from the editor

A LONG SOUGHT Value Engineering explosion
is in process! A t last we are experiencing a re-
warding growth from within practicing organiza-
tions, plus an outward expansion encompassing a
growing number of industries and commercial en-
terprises, public institutions, and Government
agencies.
Top echelons i n military agencies are reacting
favorably to the significant increases in reporting
savings from V E incentive sharing. The D O D
evaluation of "Effects of Value Engineering
Changes on Reliability of Equipment in Service"
has confirmed that the preponderance of changes
either improve reliability/performance or have no
adverse effects. Symposia, such as the recent Air
Force Systems Command seminar at Colorado
Springs, ring with a new sincerity of purpose and
commitment.
Top level industry management personnel, too,
are expressing conviction that Value Engineering
deserves a more positive commitment, with cor-
responding assignments of responsibilities and an
integrated organizational structure for effective ap-
plication. Such action is fast making V E a
mainstream function for value assurance and profit
rather than an experimental sideline.
Commercial companies are recognizing the
competitive and profit advantages of astute V E
practice, and the necessity of V E application for
sustained existence. Institutions of all types are
beginning to react to user demands for con-
trolling rising costs. Think-Tank operations, De-
velopment agencies, and Building trades are seek-
ing V E information. Even the tax-paying public
is more knowledgeable of value, and their leverage
is increasing with an improved understanding of
their ability to apply value techniques. Con-
sumer pressure is being felt i n every avenue of
goods and service supply.
This trend means that practicing Value En-
gineers, plus the widening circle of other technical
and administrative personnel affected by Value
Engineering, must be knowledgeable of, and work-
ing with, this growing tide of value consciousness.
We must be seeking new techniques for effective-
ness and new opportunities for application. Most
importantly, we must be able to grasp the signifi-
cance of this new environment and capably plan
and structure integrated programs, define bene-
fits, and educate personnel i n responsibilities and
rewards. Information and guidance is available
from the SAVE National Business Office.
THE JOURNAL OF VALUE ENGINEERING, is
your media for keeping informed and responsive
to this growth. Let us know your experiences so
we can pass them to others, and in turn, help
you meet your needs. Expose your ideas through
papers, articles, and letters to the editor.
W. B . DEAN, Editor

OF V A L U E ENGINEERING 31
The

GOLDEN AGE
of Value Engineering

T. C. FOWLER
87 KIRKLEES ROAD
PITTSFORD

1970
SAVE
NATIONAL
CONFERENCE

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