VALUE WORLD

July/Sept 1 Volume 6 No.

The Journal of Value Engineering for the Society of American Value Engineers

TABLE OF CONTENTS

IN THIS ISSUE Page

Features Benjamin Franklin's Junto, Selections from

The Autobiography of Benjamin Franklin John A. Jonelis, CVS 4

The V E Decisions of 1982 Howard M. Pryor 8

1 labits and Attitudes . / J ^ f l r V > ^ ^ ^ ^ ^ L % ^ ^ ^ ^ ^ \ . Walter J. Kirst 21

Value Management of Logistics Support Edward B. Lowe 22

Psychological Aspects of Value Analysis Fred Spiegl 24

Special Reports

1982-1983 Financial Report J.A. Dziekonski, CVS and B.A. Zolezzi, CVS 17

What Did We See in '83? 1983 Conference Report C P . Smith, CVS 20

Regular Departments

Improvement Carlos Fallon, CVS 3

Window on Value ,1 ^ ^ L ^ H . ^ V - ^ H - l A ^ ^ k - m v ^ ^ ^ \ • • • 26

Calendar of Events 27

Other Articles

Learning and Using A . E . Mudge, CVS 3

Executive Survival Kit Herbert E . Markley 6

Voice of India S.S. Venkataramanan, CVS 11

"Market Basket" Signode 25

T . G . I . M Arthur E . Mudge, CVS 25

When You're Hot, You're Hot! James A. Dziekonski, CVS 25

PLUS

SPECIAL CLIP AND S A V E SECTION -Directory of SAVE Board of Directors and National Directors and Committee Chairmen 15

Publisher Society of American Value Engineers

220 N. Story Rd. , Suite 114 Irving, Texas 75061

Phone (214) 253-5171

1983-1984 S A V E National Board

President Executive Vice Vice President -Vice President -Vice President • Vice President • Immediate Past Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President

President - Finance - Administration - Communications - Professional Development President International

- Northwest Region - Great Plains Region - Great Lakes Region - Northcentral Region - Northeast Region - Southwest Region - Southcentral Region - Southeast Region

William F . Lenzer John A. Jonelis B. A. Zolezzi Nathan Borsuk Edward W. Mitchell R. Glenn Woodward John W. Bryant William J. OP de Beeck Douglas M. Hood Teresa A. Barlow Eugene R. Smith John H . Maurer Hal Goldman Julian J. Pennello Robert C. Pumpelly Peter S. Megani

Co-Editors

Rita Bates - Managing Editor

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Value W o r l d July/September 1983

Carlos Fallon, CVS IMPROVEMENT

As we learned f r o m Charles W . Bytheway i n the 1965 proceedings, everything can be i m ­proved. Everything? The wheel? Yes, the wheel! Both the Japanese and the West Ger­mans have been successfully using elec­tromagnetic forces to replace wheels i n their high-speed trains.

Because our popula t ion pressure and pre­sent road system have not yet created the need for such high-speed trains is no reason to let our technology ignore such a fu ture need. The Nor th Amer ican continent s imply cannot af­f o r d to be lef t behind . We have to keep our tools sharp.

I want to recommend the t w o books I con­sider necessary for the value specialist w h o wants to continue i m p r o v i n g . Y o u don ' t have to order these books r igh t away. Ask your l ibrary to get them. I f they can't order them for you , they can borrow them f r o m another l ibrary — but by a l l means, get your hands on the books and read them. Here they are: Peters, Thomas J. and Waterman, Robert H . Jr. I n Search of Excellence. New York: Harper & Row, 1982. Ohmae, Ken ich i . The M i n d of the Strategist. New York: M c G r a w - H i l l , 1982.

Dr. Ohmae's previous Japanese book The Corporate Strategist has sold more than 100,000 copies, w h i c h is very h i g h for a Japanese publ ica t ion . His doctorate is f r o m M . I . T . and he is now Managing Director of the Tokyo off ice of McKinsey & Company, one of the most respected management consult ing f i rms i n the w o r l d .

The author of the other book is also part of McKinsey & Company's New York team. The subtitle to the book is Lessons f r o m America 's Best Run Companies. Robert H . Waterman, Jr. s t i l l works i n and out of McKinsey 's New York off ice where he is a director.

Thomas J. Peters, w h o was a Pr incipal at McKinsey, has set up his o w n consul t ing f i r m i n Cal ifornia .

Believe me, these t w o books, w r i t t e n w i t h an ocean between them, very honestly show that there is more to value than least cost.

Most of my readers w i l l have some manufactur ing or buy ing experience. I ask you now, w h i c h of your suppliers cou ld you depend on for quali ty, re l iabi l i ty , t ime ly delivery, and a fa i r price? Y o u w i l l f i n d t h e m I n Search of Excellence. Noth ing l ike your o w n experience to te l l you w h i c h way to go.

I t may be that you have this question i n m i n d , " W h a t is a good company strategy fo r growth and prof i t?" .

I n The M i n d of the Strategist there are answers; many answers to many var ing prob­lems. Dr. Ohmae clarifies a serious problem i n our system th ink ing ; organic processes are analog rather than d ig i ta l ; not black-or-white, yes-or-no.

I was to ld once by a design engineer that linear programming is robust because it is linear. By robust, of course, he meant not likely to generate errors. True. Everything is simpler i f i t is linear. But, as Dr. Ohmae points out, l i f e itself, is not ru led by zero-and-one, yes-or-no; but i t presents an i n f i n i t e variety of possiblities i n between.

This brings us to improvement. The subtit le of Chapter 9, page 279, of In Search of Ex­cellence is called Hands on, Value Dr iven . This chapter makes i t clear that i n a l l the com­panies rated as excellent, a def ini te system of shared values is central. Instead of the cumbersome super ordinate goals (p. 280) he calls them "shared values" (p. 281).

These shared values are in fo rma l ly but un­questionably supported by management. A l l manner of legends, myths, and parables f i l t e r d o w n to let a l l wage-earners know how management feels about the company's shared values.

Can Value Analysis be Improved?

Certainly. The most important cont r ibu t ion is i n he lp ing a company establish a system of shared values suitable to their o w n i n d i v i d u a l needs. No general manager is happy lay ing o f f workers because the economy is d o w n . He has to look in to the systems of shared values. Shared w i t h whom?

Managers and investors share i n the value of the company's p ro f i t . W i t h w h o m do the hour ly workers share their values? A l l they want is a decent, safe place i n w h i c h to work . Nowhere i n their u n i o n contract does i t say that they are peasantry and that managers are gentry. Using their economic power to l o rd i t over their subordinates undermines a basic task of modern management; the task of ad­minis ter ing a decent, safe, and happy w o r k environment. A l l wage-earners should f i n d more than meeting their economic needs i n the o.'e t h i r d of their lives they spend at work . I n mosi. successful companies managers main­ta in a happy w o r k relationship w i t h their subordinates.

Many suggestions have surfaced but not one of them is satisfactory to everybody. The issue is the stabili ty of the l i ve l ihood of the work force. I t h i n k i t migh t be a matter of cost comparison — the cost of layoffs and^of replacing lost ski l ls , etc., but we are s t i l l look­ing for answers.

LEARNING AND USING

The learning and using of the cost improvement organized job plan must be approached the same as a child learning to walk. The child must first learn how his arms and legs work, then how to use them to crawl and then how to walk. Only after this step-by-step process can he progress to running and jumping. Without going through this develop­ment process, the child could be seriously injured.

Similarly, an individual or group must approach the use of the job plan in much the same manner. Each individual must first learn what it is and how it is used, then apply it in

every detail to a series of small prob­lems or projects. Only after this step-by-step learning process should the individual progress to major pro­blems or large applications of the job plan. Without going through this development process, the individual could end up with serious problems or confrontations.

One of the major problems en­countered when working with new users of this job plan, is that they want to move too fast. They hear the fundamentals and the first broad brush description of the job plan and they think that they are instant specialists. The real problem is that the individuals try to learn too fast instead of learning to last. From see­ing this happen too many times in

many organizations, my recom­mendation is to secure a full under­standing of the fundamentals of the job plan, apply it to a small project and build gradually. Build one suc­cess upon the preceeding one; gradually build in magnitude.

A . E . Mudge, CVS

You Hold the Key to Unlocking Successful Value Engineering / Cost Improvements

S U B M I T Y O U R I D E A S T O D A Y !

Value W o r l d July/September 1983 3

Benjamin Franklin's Junto / Selections from

THE AUTOBIOGRAPHY of

BENJAMIN FRANKLIN

For twenty years, S A V E has been trying to discover ways to support V E -learning for chapter members and for members where there are no chapters.

If we look back 250 years to Ben Franklin's Junto, we can rediscover his way

to: (1J Support VE-learning in chapters, and (2) Organize V E groups where S A V E membership cannot support full

chapters.

(Marginal notes by John A. Jonelis, 5/17/83)

I should have mentioned before that, i n the

au tumn of the preceding year, I had fo rmed

most of my ingenious acquaintance in to a

club of mutua l improvement, w h i c h we called

the JUNTO; we met on Friday evenings. The

rules that I drew up required that every

member, i n his tu rn , should produce one or

more queries on any po in t of Morals , Poli t ics,

or Natural Philosophy, to be discussed by the

company; and once i n three months produce

and read an essay of his o w n w r i t i n g , on any

subject he pleased. Our debates were to be

under the direct ion of a president, and to be

conducted i n the sincere spir i t of i nqu i ry after

t ru th , w i thou t fondness for dispute, or desire

of v ic tory; and to prevent warmth , a l l expres­

sions of positiveness i n opinions, or direct

contradict ion, were after some t ime made

contraband, and prohib i ted under small

pecuniary penalties.

About this t ime there was a cry among the

people for more paper money, only f i f t een

thousand pounds being extant i n the pro­

vince, and that soon to be sunk. The weal thy

inhabitants opposed any addi t ion , being

against a l l paper currency, f r o m an apprehen­

sion that i t w o u l d depreciate, as i t had done i n

New England, to the prejudice of a l l creditors.

We had discussed this po in t i n our Junto,

where I was on the side of an addi t ion , being

persuaded that the f i r s t small sum struck i n

1723 had done much good by increasing the

trade, employment, and number of i n ­

habitants i n the province, since I now saw al l

the o ld houses inhabited, and many new ones

bu i l d ing ; whereas I remembered w e l l that

w h e n I f i r s t walked about the streets of

Philadelphia, eating m y r o l l , I saw most of the

houses i n Walnu t Street, between Second and

Front streets, w i t h b i l l s on their doors. " T o be

l e t ; " and many l ikewise i n Chestnut Street

and other streets, w h i c h made me then t h ink

the inhabitants of the ci ty were deserting i t

one after another.

This was 1727 when Ben was 2 1 ; f i v e years before the b i r th of George Washington. ^ ^ s c h o o , w e

" l ea rned" that Ben Frankl in established the f i r s t publ ic libraries. It was actual ly

„ , , , . accomplished by h i These rules would . .„

. . , , Junto, work today j o r a small group discussing/learning

VE.

Six of the nine or iginal members of the Amer ican Philosophical Society were members of the Junto. The society s t i l l continues. I t was designed by F rank l in to give a common ground of association to those i n the various Amer ican colonies who were pursuing studies i n science and phi losophy.

The Junto could extract the gist of a matter, and devise means f o r better solutions.

Today, we cal l that "determining the / u n c t i o n " , and the "Job p l a n " .

Our debates possessed me so f u l l y of the su-

ject that I wrote and pr in ted an anonymous

pamphlet on i t , ent i t led The Nature and

Necessity of a Paper Currency. I t was w e l l

received by the common people i n general;

but the r i c h men dis l iked i t , for i t increased

and strengthened the clamor for more money,

and they happening to have no wri ters

amoung them that were able to answer i t ,

their opposi t ion slackened, and the po in t was

carried by a major i ty i n House. M y fr iends

there, w h o conceived I had been of some ser­

vice, thought f i t to reward me by employ ing

me i n p r i n t i n g the money; a very profi table

job and a great help to me. This was another

advantage gained by m y being able to wr i t e .

The u t i l i t y of this currency became by t ime

and experience so evident as never afterwards

to be m u c h disputed; so that i t grew soon to

f i f t y f i v e thousand pounds, and i n 1739 to

eighty thousand pounds, since w h i c h i t arose

dur ing war to upwards of three hundred and

f i f t y thousand pounds, trade, b u i l d i n g , and

inhabitants a l l the w h i l e increasing, though I

now th ink there are l imi t s beyond w h i c h the

quanti ty may be h u r t f u l .

* * *

A n d now I set on foot my f i rs t project of a

publ ic nature, that for a subscription l ibrary. I

drew up the proposals, got them put into f o r m

by our great scrivener, Brockden, and by the

help of m y fr iends i n the Junto, procured f i f t y

subscribers of fo r ty shi l l ings each to begin

w i t h , and ten shi l l ings a year for f i f t y years,

the te rm our company was to continue. We

afterwards obtained a charter, the company

being increased to one hundred; this was the

mother of a l l the Nor th Amer ican subscription

libraries, now so numerous.

* * *

A t the t ime I established myself i n Penn­

sylvania, there was not a good bookseller's

shop i n any of the colonies to the southward

of Boston. I n New York and Philadelphia the

printers were indeed stationers; they sold on­

l y paper, etc., almanacs, ballads, and a f ew

common school books. Those w h o loved

reading were obliged to send fo r their books

f r o m England; the members of the Junto had

each a few. We had lef t the alehouse, where

we f i rs t met, and h i red a room to h o l d our

club i n . I proposed that we should a l l of us

b r ing our books to that room, where they

w o u l d not only be ready to consult i n our con­

ferences, but to borrow such as he wished to

read at home. This was accordingly done, and

for some t ime contented us.

Our c lub, the Junto, was f o u n d so useful ,

and a f f o r d e d such sa t is fact ion to the

members, that several were desirous of in t ro­

ducing their f r iends, w h i c h cou ld not w e l l be

done wi thou t exceeding what we had .settled

as a convenient number, v i z . , twelve. We had

4 Value W o r l d July/September 1983

f r o m the beginning made i t a rule to keep our

ins t i tu t ion a secret, w h i c h was pretty w e l l

observed; the in ten t ion was to avoid applica­

tions of improper persons fo r admittance,

some of w h o m , perhaps, we migh t f i n d i t d i f ­

f i c u l t to refuse. I was one of those w h o were

against any add i t ion to our number, but i n ­

stead of i t , made i n w r i t i n g a proposal that

every member separately should endeavor to

f o r m a subordinate c lub, w i t h the same rules

respecting queries, etc., and w i t h o u t i n f o r m ­

ing them of the connection w i t h the Junto.

The advantages proposed were, the improve­

ment of so many more young citizens by the

use of our inst i tut ions; our better acquain­

tance w i t h the general sentiments of the i n ­

habitants on any occasion, as the Junto

member migh t propose what queries we

should desire, and was to report to the Junto

what passed i n his separate club; the promo­

t i o n of our part icular interests i n business by

more extensive recommendation, and the i n ­

crease of inf luence i n pub l ic affairs, and our

power of doing good by spreading through

the several clubs the sentiments of the Junto.

The project was approved, and every

member undertook to f o r m his c lub, but they

d i d not a l l succeed. Five or six on ly were

completed, w h i c h were called by different

names, as the Vine , the U n i o n , the Band, etc.

They were useful to themselves, and afforded

us a good deal of amusement, in format ion ,

and inst ruct ion, besides answering, i n some

considerable degree, our views of in f luenc ing

the publ ic op in ion on part icular occasions, of

w h i c h I shall give some instances i n course of

t ime as they happened.

When more and more persons became interested i n j o in ing the Junto, the or ig inal club was not permitted to expand because the values of the discussion group wou ld be lost. Instead they fo rmed add i t iona l Juntos. Perhaps pur SAVE chapters should be l i m i t e d to 12 members. Or perhaps, we should organize Juntos as we l l as chapters.

F rank l in described the members of his or iginal Junto: they were not unl ike the members of OUT present-day SAVE.

O n the whole , I proposed as a more effec­

tual watch, the h i r i n g of proper men to serve,

constantly i n that business; and as a more

equitable way of support ing the charge, the

levying a tax that should be proport ioned to

the property. This idea, being approved by

the Junto, was communicated to the other

clubs, but as arising i n each of them; and

though the p lan was not immediately carried

into execution, yet, by preparing the minds of

people for the change, i t paved the way for the

l aw obtained a f ew years after, w h e n the

members of our clubs were g r o w n into more

inf luence.

Abou t this t ime I wrote a paper (first to be

read i n Junto, but i t was af terward published}

on the dif ferent accidents and carelessnesses

by w h i c h houses were set on f i r e , w i t h cau­

tions against them, and means proposed of

avoiding them. This was much spoken of as a

useful piece, and gave rise to a project, w h i c h

soon f o l l o w e d i t , of fo rming a company for the

more ready ext inguishing of fires, and mutua l

assistance i n removing and securing of goods

w h e n i n danger. Associates i n this scheme

were presently f o u n d , amount ing to th i r ty .

Our articles of agreement obliged every

member to keep always i n good order, and f i t

for use, a certain number of leather buckets,

w i t h strong bags and baskets (for packing and

transporting of goods), w h i c h were to be

brought to every f i re ; and we agreed to meet

once a mon th and spend a social evening

together, i n discoursing and communicat ing

such ideas as occurred to us u p o n the subject

of fires, as migh t be useful i n our conduct on

such occasions.

I began now to t u r n m y thoughts a l i t t le to

publ ic affairs, beginning, however, w i t h

small matters. The c i ty wa tch was one of the

f i rs t things that I conceived to want regula­

t i o n . I t was managed by the constables of the

respective wards i n t u rn ; the constable warn­

ed a number of housekeepers to attend h i m fo r

the n ight . Those w h o chose never to attend

pa id h i m six shi l l ings a year to be excused,

w h i c h was supposed to be for h i r i n g

substitutes, but was, i n reality, m u c h more

than was necessary for that purpose, and

made the constableship a place of prof i t ; and

the constable, for a l i t t le d r ink , o f ten got such

ragamuffins about h i m as a watch, that

respectable housekeepers d i d not choose to

m i x w i t h . W a l k i n g the rounds, too, was of ten

neglected, and most of the nights spent i n t i p ­

p l i n g . I thereupon wrote a paper to be read i n

Junto, representing these irregularities, but

insis t ing more par t icular ly on the inequal i ty

of this s ix-sh i l l ing tax of the constables,

respecting the circumstances of those w h o

pa id i t , since a poor w i d o w housekeeper, a l l

whose property to be guarded by the watch

d i d not perhaps exceed the value of f i f t y

pounds, pa id as much as the wealthiest mer­

chant, w h o had thousands of pounds ' w o r t h

of goods i n his stores.

The Junto was also instrumental i n reforming the police dept., and i n f o r m i n g the first volunteer f i r e dept.

W E B S T E R ' S NEW C O L L E G I A T E DICTIONARY, 1973

jun-ta / 'hun-te , 'jent-e, 'hen-te/ n [Sp.

f r . f em. of jun to jo ined, f r . L junctus,

pp. of jungere to j o i n — more at YOKE]

1 : a counc i l or committee fo r po l i t i ca l

or governemntal purposes; esp : a

group of persons cont ro l l ing a govern­

ment esp. after a revolut ionary seizure

of power 2 : JUNTO

jun-to / ' jent-( ,)o/ n . p ] juntos [prob.

alter, of j u n t a ] : a group of persons j o i n ­

ed for a common purpose

R E F L E C T I O N S

Carlos F a l l o n , ou r V E p h i l o s o p h e r

emeritus, has considered the foregoing and

his response, i n part, is:

I t h i n k Frank l in had a w o n d e r f u l idea. I

don ' t believe i n l i m i t i n g chapter

membership, but I t h i n k each chapter

should have a value task group . . .

O n page one of your enclosure is the

suggestion that road blocks be subject

to a small pecuniary penalty. Attached

is the " s m a l l pecuniary penal ty" for

the road block I am about to raise.

The Spanish w o r d junta s imply means

a gathering. I n Frankl in 's day, i t did not have its present-day connotation of " a gathering of extreme-rightist military men. Today, government by junta is government by mi l i t a ry men who think that the army way is more orderly than d e m o c r a c y . F o l l o w i n g my characteristic resistance to chango. I l ike the term "value task group" In­stead of junto. Maybe somoono with o more f lexib le mind can como up wllh a better name for our discussion groups. These could be assigned at ono chaptor meeting for the mooting lo follow. They could be glvon u subjoct In ndvonce.

Value World July/Soptombor 1983 5

ACTIONS

The SAVE Regional VP's discussed the ap­

p l ica t ion of the Franklin-type juntos for i m ­

prov ing the VE knowledge of members. They

accepted Carlos Fallon's suggestion and

changed the name to 'Value Study Group" .

The result is that the Nat ional Business Off ice

w i l l make study courses available for :

(1) Chapters, to increase the VE knowledge

of their newer members.

Example- A group of members study a

lesson and then assemble pr ior

to regular chapter meetings fo r

discussion. The discussion is

led by an experienced member

w h o uses the study guide's

answer sheets to grade papers

and administer tests.

(2) Small groups of persons (members or

non) who are not served by chapters.

Example- Some cities have suff ic ient VE-

interested persons to f o r m a

Value Study Group but not suf­

f ic ien t to f o r m a chapter. Those

groups cou ld meet on a regular

basis to study, share and

discuss. They w o u l d have an

experienced member, or take

turns, administer ing the study

course. SAVE Nat ional could

he lp suppor t t he i r e f for ts

th rough the Regional VP and

Chapter rebates.

S T U D Y C O U R S E A V A I L A B L E F R O M NBO

Value Foundation's 10 lesson study course:

Basic Value Analys is plus text, Value

Analysis; Fal lon, soft bound .

Available at $20.00 each i n packets of six or

more; includes one set of answers for

homework and t w o tests to be administered

by an experienced member. Call , or wr i t e to,

the Nat ional Business Off ice .

The course is also available at $75.00 each

as an i n d i v i d u a l correspondence course. This

includes the guide, the texts, m a i l i n g

envelopes, and available telephone consulta­

t ion . Cal l , or wr i t e to , the Value Foundation,

986 Nat ional Press Bldg . , Washington, D . C ,

20045, Te l . (202) 347-7007.

F U T U R E Y o u w i l l hear more about a l l of this f r o m

your Regional Vice President. A n d , i f you or

your chapter are interested i n increasing your

VE acumen, hopefu l ly he w i l l hear more f r o m

you.

JOHN A . JONELIS

Executive Survival Kit Value has to be merchandised Q l t seems as though everyone is

on a qua l i ty kick today. Yet, when we

t ry to sell qual i ty , i t seems that buyers are

real ly interested i n price. Are we i n this coun­

t ry really serious about improv ing quali ty?

S.L.C.

A Yes, I t h ink we are. But we have to clar­

i f y our t h i n k i n g . As I have said before,

I am not convinced that the level of quali ty is

as l o w as some believe i t is. More of ten, the

impression of l o w quali ty is the result of i nd i f ­

ferent service after the sale.

A major cause of the qual i ty confusion is

the attitude i n this country that you can ex­

pect something for noth ing . A few decades

ago, people bought on value. For instance,

w h e n a so-called popular-sized car was pur­

chased, the price was reasonably modest. The

buyer d i d not expect to get the same quali ty as

his neighbor w h o bought a luxury car at twice

the price. Both received the value they were

seeking. The buyer of the lower-priced car fe l t

that he received every b i t as much value for

each of his dollars.

I n recent years, however, buyers began to

expect Cadillac qual i ty at Chevrolet prices. I f

they d idn ' t get i t , these buyers became

disgruntled and organized protests. There

was a solution: buyers cou ld stop buy ing u n t i l

a given supplier accommodated their stan­

dard of value. To some extent, this happened

after W o r l d War I I . Americans became more

w o r l d l y i n their outlook, and i t became chic to

buy fore ign goods, i nc lud ing automobiles. I n

those early days, buyers were buy ing on

p r i c e _ n o t qua l i t y . The impor t ed cars

couldn ' t compare w i t h those of Detroit for

qual i ty , but they woro low-priced and

economical to oporute.

The foreign manufacturers recognized that

price might get them into our market, but i t

couldn ' t keep thorn thore. They began to i m ­

prove their products, and many d i d indeed

become better vuluos. Whether real or imagin­

ed, many people—both as consumers and as

industr ial buyers—believed that imported

products were of higher qual i ty , and usually

these products wore lower in price. The fact

that lower prices were often made possible

because the foreign supplier was subsidized

by its government was not relevant or even

k n o w n to many buyers.

W h i l e this was going on, Amer i can

management was becoming overly enamored

w i t h the bot tom l ine . Too few CEO's paid at­

tent ion to quali ty and service. Companies

began to develop purchasing techniques

w h i c h , among other things, rewarded pur­

chasing agents w h o could t r i m their purchase

prices. I t w o u l d have been more beneficial to

have given rewards for reducing costs

through improved design, better quali ty, and

dependable del ivery. These buyers forced

suppliers to cut corners.

Herbert E. Markley

Rarely d i d a purchasing agent return i n ­

ferior goods and dismiss the supplier u n t i l

evidence was presented that guaranteed

quali ty at a given level . W h y d idn ' t the buyers

do this? W e l l , the user company had

schedules to meet. A n d no purchasing agent

was going to accept the responsibil i ty for his

o w n manufactur ing facil i t ies going d o w n

because of a lack of purchased parts caused by

his refusal to accept shipments.

People are always going to buy on price

unless we learn how to merchandise qual i ty.

I t can be done. One foreign car bui lder does i t

a l l the t ime. We w i l l have to do i t by stressing

value. Y o u and other CEO's can make this

happen. When you sell, make sure that your

customer understands how you as a supplier

are p rov id ing the best value. Your assistance

i n design, your dependabil i ty on delivery,

and your service after the sale are as much a

part of what the customer pays for as the pro­

duct itself.

O n the buy ing side of the equation, I hope

you w i l l insist that quali ty is an important i n ­

gredient i n what you considor va lue

Reprinted w i t h portnission of Industry

Week. Tho Into llorbnrt K. Markloy, is former

presidont of Tho T l iukon Co.

6 Value W o r l d July/September 1983

MANAGER, VALUE ENGINEERING

Already a world leader in digital switching, Northern Telecom has evolved into a new era where communications technology is increasing the world's capacity to accumulate, absorb and integrate information. In this competitive business environment, Northern Telecom has an increasing commitment to productivity improvement.

To further this commitment, we now require a Manager, Value Engineering to assist in planning, promoting, organizing and controlling the application of productivity generating techniques to tap the synergistic potential of Northern Telecom Canada Limited.

Based at our Toronto Headquarters, you will contribute significantly to the attainment of major financial targets and potential improvements measured in tens of millions of dollars annually.

Ideally you will have a minimum of 10 years design/manufacturing experience in an industrial environment coupled with an engineering degree. Certification in Value Engineering is a prerequisite as you will be involved in the leading of workshops or sponsoring of the same. The successful candidate must possess leadership qualities, be both highly motivated and motivating, and able to communicate effectively at all levels within the organization.

In addition to a competitive salary and comprehensive benefits including relocation assistance where necessary, we offer in-house training and development, and performance based progression.

Please send your resume, in confidence, to: Cynthia J . Yano, Staffing Manager, Northern Telecom Canada Limited, 304 The East Mall, Islington, Ontario, Canada M9B 6E4 (416) 232-2000

WE HIRE TALEN

mj^jmk northcrr • • • telecom

Value World July/September 19B3

THE VE DECISIONS OF 1982 by Howard M. Pryor

Professor of Contracting Management, School of Systems and Logistics, Air Force Institute of Technology, Wright-Patterson A F B O H

Our f i rs t case of the year, the Cardan Com­

pany (1) came about as an appeal of the con­

tracting off icer decision that the contractor

was not ent i t led to a value engineering share

where the contractor proposal corrects an er­

ror i n the Government w o r k specification. I f

the nature of the change seems almost super­

f i c i a l , the issues are certainly much more con­

sequential.

The facts were simple: the contract directed

the contractor to accomplish site renewal

w o r k to include the sowing of seed over about

six acres. The work specification called for

f ive species of seed to be appl ied at the rate of

20 pounds of seed per 1,000 square feet of

area. This is the equivalent of 871 pounds of

seed per acre. The Cardan b i d inc luded

$30,624 for this seed. ($5.86 per pound X 871

pounds X 6 acres.)

About f ive weeks after contract award, the

president of Cardan discussed the possible

reduct ion i n seed amount per acre w i t h the

Assistant Area Engineer and stated a w i l l ­

ingness to submit the idea as a VECP i f the

Corps of Engineers was interested. The

f o l l o w i n g day the Assistant Area Engineer

t o l d M r . Cardan to go ahead and submit his

proposal.

I n about th i r ty days, a Cardan letter propos­

ed to reduce the seed ratio to 218 pounds per

acre. The letter pointed out that this ratio had

been used for other government site renewal

w o r k i n the same locale.

I n a memo of the same date as the Cardan

letter, the A i r Force asked the Corps of

Engineers to review the seed specification as

to type and quanti ty and " t o revise i f

necessary." Dur ing the hearing, i t was admit­

ted that the A i r Force knew of Cardan's iden­

t i f i ca t ion of the seeding error and of Cardan's

intent to submit a VECP at the t ime the A i r

Force directed their request to the Corps.

I n about 2Vz weeks, a letter f r o m the Con­

tracting Officer 's Representative (COR) i n ­

formed Cardan that a reduct ion i n the seed

was being processed because of the A i r Force

request ment ion above. This letter was f o l l o w ­

ed, i n t w o days by a contract mod i f i ca t ion

proposal revising the seed m i x and setting the

ratio at 150 pounds per acre.

Af t e r t w o more weeks the contractor was

once again in formed of the seeding change

and was asked for a cost proposal related to

the deductive change order. A companion let­

ter stated that the Cardan VECP was being re­

jected because of the change i n the require­

ment prompted by the A i r Force.

The contractor immediate ly restated his

posi t ion as to the va l id i ty of his VECP. Abou t

fou r weeks later, the contractor was to ld , oral­

ly , that his VECP w o u l d f a i l because the VE

clause i n his contract stated that a VECP could

not be based solely on a change i n deliverable

end i t em quantities. W i t h i n a week, Cardan

pointed out, by letter, that the end i t em under

the contract was not "deliverable seeds" but

rather undeliverable grass. The contractor

subsequently f i l e d his c la im.

The contractor posi t ion: a government error

called to the government's at tention saved

the Government money. As long as a contrac­

tor proposal results i n an acceptable qual i ty

and is not s imply a reduct ion i n end i tem

quantities, i t should be a v a l i d VECP.

The Government posi t ion: a contractor

should not share i n the results i f his submit tal

only achieves, th rough a better estimating

procedure, a correction to a Government

overdes ign. The Government c i t ed the

Hol loway (2) decision i n support of their posi­

t i on .

I t should be noted that the ASBCA refused

to accept Hol loway as a precedent, po in t ing

out that the Engineering Board had indulged

i n adverse comment about a VE share that had

been agreed to and was not part of the

dispute. Next the ASBCA disagreed w i t h the

effect of the Engineering Board decision's i m ­

pl ica t ion that a VE settlement cou ld be used to

punish one contractor for a design mistake

made by a second contractor. Aga in , the

ASBCA f o u n d no meri t to the Government

w i s h to use Hol loway as a precedent.

The ASBCA decided i n favor of Cardan, for

$15,350. I t was acknowledged that there

might be ambigui ty i n the contract as to what

was the end i tem of performance i n the con­

tract as related to seeds. The ASBCA fe l t that

more than delivery of seeds, per se, was called

for and i f the language was actually am­

biguous, the matter w o u l d be resolved against

the government, as drafter, i n favor of the con­

tractor.

The decision says, i n part, " w h i l e i t may be

true that i t was contemplated . . . that the

greatest savings w o u l d result f r o m proposal

relat ing to complicated engineering pro­

blems, we k n o w of noth ing . . . w h i c h states

that proposals must relate to such problems.

The Cardan decision may w e l l become one

of the more w i d e l y ci ted cases since i t square­

l y answers one of the questions consistently

raised du r ing the brief history of contractual

value engineering: should a contractor share

i n the results of ca l l ing an error i n the

specifications to the at tention of the Govern­

ment? The Board thoroughly squelches any

no t ion that this is somehow " u n f a i r " to the

Government. I f the who le idea of contractual

VE is to save the Government money, then the

cause of the analysis or the procedure that

leads to the VECP are not integral to the ac­

ceptance or rejection of the contractor pro­

posal.

The second case of the year, the J. A .

McDermott Corporation (3) centers around the

fundamental concepts of the nature of a

VECP. The contractor's idea seemed to have

resulted i n a change to contract technical re­

quirements but a savings to the Government

was not supported by the evidence.

McDermot t received a contract for 900 vehi ­

cle warn ing l ights . The u n i t inc luded a skirt;

the skirt f i n i s h was to be i n accordance w i t h a

M i l i t a r y Standard (MIL-L-45325D). A t least

t w o di f ferent approaches were set f o r t h

depending on whether stainless or a plastic

material was used for the skirt . The technical

r e q u i r e m e n t s o f the c o n t r a c t became

somewhat confused by the appearance of

Amendment #1 to MIL-L-45325D w h i c h was

never made part of the contract bu t w h i c h was

treated as though i t had been, by the contrac­

tor and by the Government.

About 3 months after award, McDermott

submitted a VECP that addressed the material

used i n the skirt and the means of p rov id ing

color to the. skirt . The VECP used Amendment

#1 to the MIL-STD as a po in t of departure.

I n a remarkable degree of promptness, the

Contracting Off icer responded i n three weeks

rejecting the VECP on the basis that A m e n d ­

ment #1 permit ted both material change and

the color change. I n the v iew of the Board, the

matter migh t have rested there as a k i n d of

"Mex ican stand-off" had not the Government

i n about t w o months of the VECP rejection

issued a Cut Sheet that amended the M I L -

STD. The Cut Sheet, w h i c h also was ap­

parently referred to as Amendment #2, seem­

ed to incorporate the color change idea of the

VECP i n the v i ew of the contractor. I n the

v i ew of the Contracting Off icer , the Cut Sheet

"mere ly c l a r i f i e d " the w o r d i n g of Amend­

ment # 1 .

I n a f i n a l decision, twenty three months

after the f i rs t rejection, the Contracting Off icer

again rejected the contractor's VE c la im for

the reasons given above. McDermot t f i l e d an

appeal to this action.

The Board thought the Contracting Off icer

was erroneous i n stating that the color change

was permissable under Amendment # 1 . As

the Board saw the mattor, the color change

was acceptable only aftur the Cut Sheet

enlargement; it was in fuel a contract change.

The author, using lnnguogo not u t i l i zed by the

8 Value W o r l d July/September 1983

Board, m igh t say that there was constructive acceptance of the contractor's idea.

Before the contractor cou ld begin to celebrate his v ic tory , however, the Board pro­ceeded to deny f u l l status as a VECP to the contractor submit tal . As the Board decision points out, a long standing prerequisite of a VECP is that i t reduces overall costs to the M i l i t a r y Department. The parties were given an oppor tuni ty to reopen the record to show the effect on costs of the color change. W h i l e McDermott submitted some u n i t cost informa­t i o n involved i n material changes, the con­tractor seemed unable to provide clear evidence as to cost reduct ion attributable to the colorat ion change. Therefore the contrac­tor proposal lost its e l ig ib i l i t y for award under the VE clause i n the contract and the appeal was denied. -

For some years now, there have been dialogues between the contractor and the Government where the contractor comes up w i t h an idea that reduces cost and the contrac­tor feels that automatically qua l i f ied the idea as a VECP. Not so, says the Government; there are other attributes that a proposal must have to be considered a VECP. I t must be ini t ia ted, and/or developed and/or documented a n d / o r / prepared and/or submitted by the Contractor. It must require a change to the instant contract to be implementable i n the instant compact. I t must not adversely affect any esseritial func­t i o n and so on. Reducing costs, ^b le ly , does not qua l i fy a proposal; there arer many ways for a contractor to reduce cost? that w i l l not qua l i fy for submittal as a VEC

The McDermott decision now points to the other side of the coin; a contractor proposal may have one or more of the other attributes that have evolved over the years^but i f i t does not offer a reasonably h i g h potential for reducing overall costs to the agency^ then i t cannot qua l i fy as a VECP.

The t h i r d case fo r 1982, the Raytheon (4) was a move for reconsideration by the ASBCA of their decision dated 17 Nov. 8 1 . For a discussion of that decision see an earlier article (5). The contractor again main­tains that the terms, "cos t r e d u c t i o n proposal" and "value engineering change proposal" used i n the same contract clause are ambiguous. The ASBCA was asked to rule this ambiguity, against the drafter, namely the Government and the Board was asked to resume an attitude of liberal interpretation evidenced i n an Ai rmot ive decision (6).

reasonable interpretation. The decisions of this court teach that a contract amenable to only one reasonable construction i n l igh t of a l l of its provisions, should be enforced accor­d ing to its tenor as a whole , w i t h o u t regard to possible ambigui ty i n on ly one p r o v i s i o n . "

I n restating their earlier decision on Raytheon, the Board again f o u n d no basis for resolving an ambigui ty against the drafter and the Board f o u n d no need to provide any addi­t ional interpretation, l iberal or otherwise.

The fou r th case for the year, K . I . M . (8), came into being as a result of the contractor asking for senatorial intervent ion i n its behalf. The Senator, i n tu rn , asked the General Ac ­counting Off ice to check in to the complaint . One of the basic responsibilities of the Comp­troller General (CG) is to conduct investiga­tions on behalf of the legislative branch of the Federal Government,.

K . I . M . had developed a modi f i ca t ion k i t that w o u l d extend the service l i f e of a vacuum pump used i n certain Navy ground support equipment . J^J^Mr i ransmi t t eoMhei r idea to PRD ElerJffonics, a f i r m holding^Gontracts

The Board refused to be placed i n a posi t ion that w o u l d cal l for free unstructured modes of interpretat ion. By indi rec t ion the Board reminds a l l of us that i n their interpretation basic rules of contracting are not set to one side i n dealing w i t h value engineering.

The ASBCA quoted f r o m an earlier Court decision, M a r t i n Lane (7), that a test for am­bigu i ty goes to an objective examination of the contract language to establish, "whether the contract is susceptible to more than one

[""-contra w r t i f the Navy for such equipment. At^the

/ t i m e the idea was conveyed to PRD, K . I . M ^ d i d not have any contract w i t h PRD nor w i t h the Navy.

The Comptrol ler General (CG) direct ly stated a rule that has been variously verbaliz­ed over the years, " the Value Engineering Program is a purely contractual matter . . . The Value Engineering Program (was) to en­courage contractors to submit cost saving changes to contracts. Contractors are awarded a share of the savings that result . . . A v a l i d VECP can only be submitted, and thus, an award can only be made, under an existing wr i t t en contract containing a value engineer­ing clause."

The CG immediately established that since K . I . M . had no existing contractual relat ion at the t ime the idea was submitted to PRD, no entit lement to a VE award cou ld exist.

Further developments, however^-fevealed that the idea was subrrnt te j i - tOme Navy by PRD as an ECI'.~As"a result PRD ordered a substantial number of modi f i ca t ion kits f r o m K . I . M . Further orders for the modi f i ca t ion kits seemed l ike ly .

The unexpected tu rn of events, apparently left a small company a happy one. There should be a clear warn ing i n this case, never­theless, that a good idea that is passed on wi thou t contract coverage is at h i g h risk. We have only to ask what happens to contractors that do have such contractual coverage and f i n d they must f igh t for their rights to con­clude that a naive reliance upon the good i n ­tentions of others may be short l i ved .

The f i f t h case centered around some w o o d acquired by Midwes t Contractors (9), w h i c h passed into the possession of the Government, and whether the contractor had ever been paid for i t , i n f u l l . I t reportedly came into be­

ing because of an unfortunate delay i n the decision to proceed w i t h the VECP submitted by the contractor.

The contractor called for Midwes t to instal l 70 carports, made of wood , onto f a m i l y hous­ing uni ts at Fort S i l l OK. Contract award was on 27 March 1980. Eighteen days after award, the Contractor submitted his VECP proposing to instal l metal carports instead of wood . A l t h o u g h not part of the record, Midwes t had apparently successfully submitted the same idea under an earlier contract.

I n t h i r ty nine days, Midwes t was advised, orally that the VECP w o u l d be disapproved. Midwes t therefore released a purchase order for wood . Twenty f ive days after the oral re­jection, the Resident Engineer asked i f sav­ings were s t i l l feasible; the Midwes t answer was a part ial af f i rmat ive . The contractor was instructed to proceed w i t h the VECP albeit somewhat belatedly. Even though Midwes t qu ick ly alerted their suppliers, a substantial amount of the w o o d arrived on site. As Midwes t had no place for long term storage, the lumber was delivered to the Government for indoor storage at Fort S i l l .

The appeal to the ASBCA was grounded on the c la im by Midwes t that the lumber

Xdelivered to the site and turned over to the Government was never f u l l y paid for . I t may be \ i o t ed that the cost of the wood , shipped but riot used, was $40,518. The amount c la im­ed by Ihe contractor was $22,284.90.

To oi i r u l t imate loss, the administrative judge d i d not disclose the logic used i n reaching ja decision i n favor of Midwes t . The Government moved for reconsideration (10) but the Board rather tersely upheld the earlier decision/

The /administrative judge d i d suggest a sound rule for the parties to f o l l o w ; namely appl icat ion of the terms of the VEI clause. Since we do not have access to a l l of the

/ t e s t i m o n y or the fi les involved, we can only speculate as to w h y the sound rule was not fo l l owed . A key sentence of the contract clause (11) used said, "Instant contract sav­ings . . . are the estimated reduction i n the Contractor's cost of performance resulting f r o m acceptance of the VECP."

A brief summary of the numbers provided

may be of assistance:

(1) FFP

(2) Total VECP

(3) Sub Total (4) Contr Share

(5) Sub Total (6) Wood Shipped (7) Total

Gov' t Cont ' r

$781,170 $781,170.

93,078 93,078. 688,092 688,092.

28,908 51,192.90

717,000 739,284.90

40,518 40,518.00 $757,518 $779,802.90

A n explanation of some of the above amounts is i n order. $93,078 was tho total amount of savings for wood , had the V E C P ac­ceptance been t imely . Because of the dolay in reaching a decision, $40,518 In wood was purchased and delivered. Hy transfor this contractor-acquired property bucamo govorn-

Value World July/Soptombor 1983 9

ment owned property. The net effect of the

VECP amounted to $52,560 or $93,078

-$40,518. As shown i n the le f t co lumn above,

the contractor's instant share; l ine 4; was 55%

of $52,560 or $28,908. M a k i n g prov is ion for

f u l l reimbusement of the^ Midwes t cost for

lumber transferred arrives at the bo t tom l ine

total of $757,518.

The t w o amounts i n l ine 7, above, vary by

an amount of $22,284.90 or the amount of the

Midwes t c la im. There is the same amount of

variance i n l ine 4. Since the other lines are

ident ical i t w o u l d seem that the f o u r t h l ine is

the source of basic disagreement.

I n the r ight hand co lumn, l ine 4 lists

$51,192.90; an amount that is the result of

m u l t i p l y i n g $93,078 by 55%. Stated another

way the contractor c laimed his percentage

share of what the savings w o u l d have been

w i t h a t imely decision by the Government.

A cursory review of the clause sentence

quoted earlier confi rms that VE sharing is bas­

ed upon estimated reductions i n contractor

costs result ing f r o m VECP acceptance, not as

they migh t have been had certain delays not

taken place.

I t is hoped that Fort S i l l f o u n d some good

and wor thwh i l e use for $40,518 w o r t h of

lumber. From the Government po in t of v iew,

however, some rather expensive education

was acquired. Not on ly d i d the Government

delay result i n a missed oppor tuni ty for a sav­

ings of $18,233.10 or $40,518 x 45%, but the

Board decision resulted i n an addi t ional cost

of $22,284.90 or a total of $40,518, for con­

tracts axiom, "The Government must t u rn

square corners w h e n i t deals w i t h a contractor

on VE shar ing."

The next case for the year, Erickson A i r

Crane (12), was i n some ways a parallel to

McDermott , discussed earlier, i n the crucial

issue of whether the contractor's submittal

was a VECP or not.

The Department of Energy (DOE) assumed

responsibil i ty for a contract awarded to

Erickson on 12 Jan 76. I n a short w h i l e

Erickson awarded a subcontract to a jo in t ven­

ture, Professional Hole D r i l l i n g Inc. , and

Caissons Inc. (PHD/C). The subcontract

covered foundations fo r towers for 136 miles

of power transmission lines i n Colorado.

The contractor l is ted f ive types of founda­

t i o n foo t ing (A, K, D, F, R) to be used depen­

d i n g u p o n the soil/site condi t ions en­

countered. The types A or K invo lved the use

of an auger. The types D, F or R d i d not. A

modi f ica t ion of the Type A k n o w n as " A M "

had been used i n hard soi l . As part of the

record i t was shown that the Contracting Of­

ficer 's Representative had recommended that

the Type A M be inc luded i n the contract

specification but i t was not done.

About ten days after pr ime contract award

(22 Jan 76), the COR, dur ing a preconstruction

conference, recommended to the subcontrac­

tor PHD/C that the Type A M founda t ion be

considered.

I n about a m o n t h (23 Feb 76) the pr ime con­

tractor, Erickson, proposed by letter to use the

Type A M founda t ion where appropriate, i n

the manner described by the COR.

I n about six weeks (9 A p r 76) the COR

repl ied to Erickson agreeing to the use of the

Type A M founda t ion bu t on ly i n st ipulated

circumstances. I t was noted that PHD/C had

already installed six of the Type A M founda­

tions on the basis of oral Government permis­

sion.

Six months later (18 Oct 76) Erickson

asserted a VE c la im on behalf of PHD/C based

on 943 Type A M installations. The record

showed a total of 1459 Type A M footings were

installed du r ing the l i f e of the contract.

Five months ensued before on answering

COR letter (22 Mar 77), c i t ing the A p r i l 76 let­

ter of the COR, stated that the foo t ing method

had been agreed u p o n at the t ime by the par­

ties. The VE c la im was rejected as un t ime ly .

Erickson responded to the Mar 77 letter

t ransmit t ing the subcontractor pos i t ion that

the COR letter was considered to be

nonresponsive.

Af t e r eleven months, (15 Feb 78), a meeting

was he ld of a l l of the parties to discuss the

c la im. Since l i t t le is shown i n the record as to

this meeting i t must have been inconclusive.

O n 8 May 78 the subcontractor PHD/C f i l e d

a more detailed c la im for a VE share amoun­

t ing to $1,440,367.73; the c l a im being denied

by the Contracting Off icer . This appeal was

only one of th i r ty f ive appeals related to this

pr ime contract.

The Erickson decision is a perfect example

of how a decision br ief w i l l sometimes pose

more questions that i t answers. For instance

we don ' t know (a) wha t i f anything the sub­

contract said about VE; (b) whether the pr ime

contractor was conversant w i t h VE; (c) were

the savings to the Government on the order of

$2.8 mi l l i on?

W i t h our fust ra t ingly incomplete informa­

t i o n we can only pass on the decision of DOE

Board of Contract Appeals. The c l a i m was

denied. In the v iew of the Board, the contrac­

tor should have iden t i f ied his proposal, at the

t ime of submit tal , as a VECP, even though the

contract clause d i d not require i t . I t may be

noted that DOD stopped requir ing an expl ic i t

ident i f ica t ion by A p r i l of 1974. I t has been

stated that this issue was not stressed by the

DOE attorneys.

The Board points out, w i t h more relevance,

that i f the Contractor had submitted the infor ­

mat ion called for i n the VE clause, the

Government might have been on notice what

type of proposal was being submitted.

No th ing i n the record shows that PHD/C was

invok ing the VE clause or is there any

evidence that the Government recognized or

treated i t as a VECP.

Three cases ci ted i n the appeal are dismiss­

ed by the DOE Board as not being relevent to

the issues. The Kromer (13) decision is ci ted

as being more relevant. F rom the po in t of

v i ew of this author (14) that m igh t be an un­

fortunate choice: as we saw i n Kromer, there

was some doubt as whether or not the contrac­

tor d i d , i n fact, submit a VECP.

I n a s imilar ve in as we go over the scanty

facts provided we f i n d that the contractor d i d

submit an idea; i t was accepted; i t i nvo lved a

deviat ion f r o m the contract and there were

some (?) savings. The ASBCA has he ld i n the

past that suggestions by government person­

nel do not preclude share entit lement.

O n the negative side i t migh t be said that i t

does not appear that the contractor(s) in tend­

ed that the February 76 proposal be handled

as a VECP. I t is clear that after eight months or

so they d i d want i t to be so treated. I f the DOE

Board had addressed this issue, i t w o u l d have

been more h e l p f u l ; can a contractor submit a

"no-cost" change and then be permit ted to

change his classification i f i t retroactively

becomes apparent that the "no-cost" change,

i n fact, reduces costs, appreciably?

Further checking has revealed that the h i g h

dol lar savings were predicated on the

assumption that a l l of the A M footings were

subst i tut ion for R footings - the h i g h cost f o r m

- w h i c h d i d not seem to be supported by the

evidence.

The seventh and f i n a l case of the year

Honeywel l (15) raises but does not answer the

issue of interactive VECP's.

O n 1 Mar 76, the A r m y awarded a contract

to Honeywel l for a quanti ty of A D A M uni ts .

The A D A M is an ar t i l lery delivered ant i ­

personnel mine of a wedge shape, f i t t e d in to

pie-shaped assemblies and stacked w i t h i n

an ar t i l lery projecti le. Integral to safe handl ­

ing of the rounds is a Safe and A r m i n g

assembly inc lud ing , among other parts, a

gasket. The gasket was the central theme of

the VECP's discussed below.

O n 26 Jan 77, Honeywel l submitted a VECP-

019R1 proposing a change i n the gasket f r o m

the lead, specified, to a cork and rubber com­

bina t ion . O n 3 A u g 77 the VECP was accepted

and f u t u r e shar ing was agreed u p o n .

Honeywel l agreed to forego any instant sav­

ings share. The VECP had an effect u p o n labor

as w e l l as material .

A f o l l o w - o n contract, awarded 4 May 78,

incorporated VECP-019R1. A second VECP

submitted under the f o l l o w - o n contract, pro­

posed a change f r o m the cork and rubber

gasket to a f iber gasket. Th is VECP, VECP-035

contained the f o l l o w i n g reservation:

" T h i s proposal is not intended to supercede

VECP-019R1 . . . The savings associated w i t h

VECP-019R1 w i l l remain i n effect for fu ture

contracts and the use of this alternate material

retains f u l l value of VECP-019R1."

VECP-035 was submitted 10 Nov 78. I t is a

part of the record that the company engineers

discussed this reservation with A R R A D C O M

personnel in advance of its use. Further the

reservation was discussed with DCAS person-

10 Value W o r l d July/September 1983

nel dur ing periodic VE reviews. I n the record

there was no ind ica t ion of any Government

objection to the w o r d i n g of the reservation.

The Government accepted the second VECP

on 19 Jan 79. The reservation statement was

not incorporated in to the contract modi f ica­

t i o n but the Government agreed that the reser­

vat ion had been accepted and incorporated

into the contract.

O n 21 Nov 79, Honeywel l submitted a letter

ou t l i n ing a proposal to def ini t ize the sharing

associated w i t h the second VECP. This letter

was amended by a Honeywel l letter of 12 May

80 w h i c h corrected computat ional errors i n

the earlier letter.

Between these two letters, the A r m y had ar­

r ived at a posi t ion of being unhappy w i t h the

course of events for two reasons: they alleged­

l y f o u n d that the actual cost of cork and rub­

ber gaskets was about $356 per 1,000 uni ts

w h i l e the VE sharing had been based on an

estimated of about $50 per 1,000 units . The

"over payment" was calculated to total over

$82,000. Secondly the A r m y fe l t Honeywel l

should repay fu ture shares relating to VECP-

019R1 on units i n the contract that used

VECP-035. When the Contracting Off icer re­

quested the repayment per above on 10 May

80, the contractor f i l e d a t ime ly appeal.

The Government raised a basic issue w h e n

they pointed out that fu ture sharing is related

w h e n a VECP is "used" i n the f o l l o w - o n con­

tract. I t was their contention that w h e n a f iber

gasket took the place of the cork and rubber

version, a fu ture share based on the "use" of

cork and rubber was w iped out.

VOICE OF INDIA

India 's interest i n VE began i n the

mid-1960s - a relatively early start compared

to many other countries. This was w h e n the

Tata I ron & Steel Co. L t d . , Jamshedpur sent a

couple of their engineers to USA for t ra in ing

i n industr ia l engineering w i t h emphasis on

VE. Almos t simultaneously, the Automobi le

Products of India L imi t ed , Bombay inst i tuted

a VE cel l i n their Bombay works and organiz­

ed a good b i t of successful VE work , much of

it p i lo ted by Ashok Kumar Sethi who later

was to become the f i rs t President of the Ind ian

Value Engineering Society (INVEST).

Subsequently however, there was a s lump

and not u n t i l 1971 w h e n the Ind ian A r m y

constituted a small VE cell at their Head­

quarters i n New Delh i , d i d VE appear on the

scene again. Meanwhi le , quite a f ew other

companies had been making use of VE techni­

ques but w i t h o u t fan-fare or formali t ies and

usually on a part-time basis. W i t h the found­

ing of INVEST i n October, 1977 a l l this

history cou ld be collected and publ ished. The

The Board held that w h i l e the Government

posi t ion was technically correct, such an ap­

proach w o u l d be contrary to VECP po l icy and

w o u l d discourage submission of sequential,

interactive VECP's.

The Board then side-stepped the issue by

saying, i n this dispute, a reading of the VE

clause together w i t h the reservation language

leads to support of the contractor posi t ion, i .e.

Honeywel l d i d not have to repay fu ture shares

for the overlapping uni ts . The parties were

warned to avoid payment of saving shares

under the second VECP that had already been

reflected i n the savings share of the f i rs t

VECP.

I n responding to the Government c la im that

there was "inadvertence" or lack of contrac­

t ing off icer authority, the Board f o u n d no

evidence that any mistake of l aw or fact cou ld

be la id to responsible Government employees,

the c la im for r e fund was denied and the

Honeywel l appeal sustained.

I n conclusion, the reservation clause may

have b lur red the issue a l i t t le but the use of se­

quential , interactive VECP's w o u l d seem to be

encouraged and r i g h t f u l l y so.

Reference List

1. Cardan Co., 82-1 #BCA 15,628, 4 Feb

82

2. Hol loway Constr., 79-1 BCA #13,551,

16 Nov 78

3. J.A. McDermot t Corp. , 82-1 BCA

#15,655, 11 Feb 82

- India

p o p u l a r i t y of V A / V E increased great ly

thereafter.

Dur ing the last six years, the INVEST

gathered strength every year and now has a

membership of 229 inc lud ing 50 corporate

members. I t has successfully organized three

National Conferences attended by 100 to 150

delegates on each occasion and he ld four ex­

hibi t ions for the benefit of the publ ic . The. na­

t ional headquarters is at New De lh i and four

chapters have been formed at Bangalore,

Hyderabad, Jamshedpur and Chandigarh.

M u c h of the credit for this successful work

goes to its present President, P .N. Handa and

the chapter organizers, M . S . V i t t a l at

Bangalore, S.S. Iyer at Jamshedpur and Bharat

Heavy Electr icals L i m i t e d , a corporate

member and one of the biggest Ind ian com­

panies, i n Hyderabad. The Fourth Nat ional

Conference of INVEST took place May 1 2 - 1 4 ,

1983 i n N e w Delh i .

Today, there are at least 40 companies and

Government departments systematically us-

4. Raytheon Corp., 82-1 BCA #15,663, 19

Feb 82

5. Value W o r l d , V o l 5 #2, Jul/Sep 82, p . 5

6. A i rmo t ive Eng., 74-1 BCA #10,517, 1

Mar 74

7. M a r t i n Lane vs US, 15 CCF #83,669, 16

Oct 70

8. K . I . M . A s s o c i a t e s , C o m p G e n

#B203876, 19 Mar 82

9. M i d w e s t C o n t r a c t o r s , 82-1 B C A

#15,722, 31 Mar 82

10. M i d w e s t C o n t r a c t o r s , 82 -1 B C A

#15,953, 20 Jul 82

11 . DAR, 7-602.50 (1977 Aug)

12. Erickson A i r Crane, 83-1 BCA #16,145,

30 Sep 82

13. Kromer Inc. , 80-2 BCA #14,465, 8 May

80

14. "Lessons f r o m Recent Dec i s ions"

SAVE Proceedings 1981, p . 121

15. Honeywel l Inc. , 83-1 BCA #16,180, 19

Nov 82

ing V A / V E and the popular i ty is g rowing .

T w o leading academic inst i tut ions, v i z . , the

Ind ian Insti tute of Management - Bangalore

and the Ind ian Institute of Technology - New

De lh i have offered VE as an elective subject

of three credits for their students. A cor­

respondence course has been organized f r o m

Bombay by Nagam H . Atthreya, a SAVE

member interested i n VE since 1977. R.P.

B i l l imor i a , a top publ ic sector o f f i c i a l , has

organized the f i rs t recognized school of VE i n

New Delh i intended specifically to t ra in peo­

ple to become CVSs. The school completed its

f i rs t course i n 1982 and some of the students

have appl ied to SAVE for the CVS examina­

t i o n this year.

W h i l e fur ther g rowth of VE i n India is sure,

i t w i l l not be w i thou t its ups and downs.

M u c h w i l l depend upon the dedication and

zeal w i t h w h i c h VE enthusiasts use and

spread the benefits derived f r o m VE. This is

the b ig task under way i n India.

S.S. Venkataramanan, CVS SAVE Director International Affairs

A paper or ig ina l ly scheduled to be delivered before the A n n u a l Conference of the Society of Amer ican Value Engineers, Chicago, I L . , May 1983 by M r . Howard M . Pryor.

The views expressed herein are those of the author and do not necessarily reflect the views of the A i r Tra in ing Command, the Uni ted States A i r Force, or the Department of Defense.

Value W o r l d July/September 1983 11

Society of American Value Engineers VOLUNTEER FOR NATIONAL OFFICE

^ f e e l I am qua l i f i ed for the f o l l o w i n g Nat ional Office(s) and am interested i n serving i n this

capacity (or suggest another qua l i f i ed i nd iv idua l ) :

Check one or more: v i c e President -President - Northeast Region

Executive Vice President - Southeast Region

Vice President - Admin i s t r a t i on - Nor th Central Region

Vice President - Finance - South Central Region

Vice President - Communicat ions - Great Plains Region

Vice President - Professional Development - Great Lakes Region

- Northwest Region

- Southwest Region

- International

Name:

Home Address:

Business Address:

Home Phone:

Business Phone:

B A S I C F U N C T I O N S AND R E S P O N S I B I L I T I E S O F S A V E N A T I O N A L O F F I C E R S

PRESIDENT

Provide leadership, management and

overall d i rec t ion to a l l SAVE activities and

operations. Promote growth and stature of the

Value Engineering profession. Preside at

Board of Director and Executive Committee

Meetings and the A n n u a l Business Meet ing.

EXECUTIVE VICE PRESIDENT

Executive Director for the l ine organization

of the Society. Assist the President as re­

quested i n the overall adminis t ra t ion of SAVE

and act for h i m i n a l l funct ions relating to the

Regional Vice Presidents, the Vice President

-International, Chairman and Nat ional Direc­

tors report ing to h i m .

VICE PRESIDENT - A D M I N I S T R A T I O N

To make recommendations for developing

and managing the overall area of SAVE ad­

minis t ra t ion . Establish effective communica­

t i o n channels and fo l low-up a l l Board action

items. Report to the Board, th rough the Presi­

dent, those action items and milestones com­

pleted and delinquent. A d d i t i o n a l duties w i l l

be as specif ical ly directed by the President.

VICE PRESIDENT - FINANCE

\ . Recommend and develop new sources for

increasing income.

2. Report the f inanc ia l status of the Society.

3. Recommend f inanc ia l guides and controls.

VICE PRESIDENT - C O M M U N I C A T I O N S

To develop, promote and direct a strong

and active publ ic relations act ivi ty for the ad­

vancement of Value Engineering and the

Society of American Value Engineers.

VICE PRESIDENT - PROFESSIONAL

DEVELOPMENT

Promote, encourage and assist i n profes­

sional development and the furtherance of

research i n the value disc ipl ine . Establish and

mainta in professional standards relating to

the performance and conduct of Value

Engineering practitioners.

REGIONAL VICE PRESIDENTS

1. Manage activities and insure complete

l ia ison between the Chapters and the National

Officers.

2. Provide assistance and consultat ion to help

Chapter Presidents supervise the Operation of

the Chapters.

3. Represent the regional members on the

Board of Directors.

4. Assure that the Chapters i n the region

operate w i t h i n the policies of the Society.

VICE PRESIDENT - I N T E R N A T I O N A L

1. Promote the growth of Value Engineering

throughout the w o r l d by developing and ex­

panding international aff i l ia t ions w i t h SAVE.

2. Coordinate activities and insure complete

l iaison between the International affi l iates,

Chapters, Members, and the National Of­

ficers.

3. Supervise the operation of international af­

f i l ia tes .

4. Represent the international members on the

Board of Directors.

5. Assure that the international membership

operates w i t h i n the policies of the Society.

12 Value W o r l d July/September 1983

Society of American Value Engineers VOLUNTEER FOR NATIONAL DIRECTORSHIP

OR COMMITTEE CHAIRMANSHIP I feel I am qual i f ied for the f o l l o w i n g National Directorship(s) or Committee Chairmanship(s),

and am interested i n serving i n this capacity (or suggest another qua l i f ied i nd iv idua l ) :

Check one or more:

Controller

Nat ional Director - International Af fa i r s - A S I A

Nat ional Director - International Af fa i r s - EUROPE

Nat ional Director - International Af fa i r s - MIDDLE EAST

Nat ional Director - International Af fa i r s - C A N A D A

Nat ional Director - International Af fa i r s - I N D I A

Nat ional Director - International Af fa i r s - Other

(Please specify) —

Nat ional Director - Membership

Chairman - Membership Review Committee

Nat ional Director - Chapter Development Chairman - Board of Review

Nat ional Director - Chapter Effectiveness

Nat ional Director - Off icer Development

Nat ional Director - Chapter Programs

Nat ional Director - Const i tut ion & Bylaws

Nat ional Director - Honors & Awards

Nat ional Director - Public Relations

Nat ional Director - Federal Liaison

Nat ional Director - Value Management i n State and Local Governments

Nat ional Director - In format ion Services

Nat ional His tor ian

Nat ional Director - Inter-Society Relations

' Nat ional Director - Cert i f icat ion Requirements

Cer t i f icat ion Board

Nat ional Director - Career Advancement

Nat ional Director - College Relations

Nat ional Director - Technological Advancement

Nat ional Director - Nat ional Standards Committee

National Director - A n n u a l Conference Technical Program

Editor, Proceedings

Nat ional Director - Conferences

National Director - Interactions Editor

National Director - Value W o r l d Editor

I cannot serve as a Director or Committee Chairman but volunteered to w o r k on the f o l l o w i n g

committee(s): . — _ -

Name:

Home Address: ——

Business Address:

Home Phone:

Business Phone:

Value W o r l d July/September 1983

B A S I C F U N C T I O N S AND R E S P O N S I B I L I T I E S O F S A V E C O M M I T T E E D I R E C T O R S (ND) AND C H A I R M E N

Reporting to Executive Director and Executive Committee

CONTROLLER

Acts i n consort w i t h Executive Director i n

the operation and adminis t ra t ion of f inanc ia l

and other business funct ions of the Society

w i t h i n operating pol icy and procedures on a

day-to-day basis.

Reporting to Vice President - International

N D - International Af fa i r s - ASIA , C A N A D A ,

EUROPE, I N D I A , M I D D L E EAST

A N D OTHERS

1. Encourage the technical and professional

development of the Value Disciplines (VE,

V A , V M , VP, etc.) for the area represented

through the creation of an organizational l i n k

w i t h SAVE.

2. A c t as spokesman representing the i n ­

terests of the organizations and memberships

of the area represented to the SAVE Board,

and represent the SAVE Board to those being

represented.

Reporting to Executive Vice President

N D - MEMBERSHIP

Promote, encourage, and assist i n develop­

ing and expanding the membership of SAVE.

C H A I R M A N - MEMBERSHIP REVIEW

COMMITTEE

Review and c lass i fy app l ica t ions f o r

membership i n SAVE.

N D - CHAPTER DEVELOPMENT

Promote, encourage and assist Chapter ex­

pansion.

N D - CHAPTER EFFECTIVENESS

Provide standards of performance and

measurement by w h i c h Chapters can grow

and develop. Provide incentives for the

Chapters to meet these standards.

N D - OFFICER DEVELOPMENT

Promote, encourage, advise and assist i n

t h e e s t a b l i s h m e n t a n d o p e r a t i o n o f

developmental programs fo r officers of the

Society. This is to be done so that orderly and

effective steps may be taken by both i n ­

dividuals and organizational components of

the Society to achieve and main ta in compe­

tent g rowth patterns and h i g h level of e f f i ­

ciency for staff and l ine off icer personnel.

N D - CHAPTER PROGRAMS

Develop techniques, methods, and ideas to

assist Chapter Program Committees i n plann­

ing and preparing the type of programs that

increase membership, attendance, and profes­

sional development of local Chapters and

members.

Reporting to Vice President - Administration

N D - CONSTITUTION A N D B Y L A W S

M a i n t a i n the SAVE Cons t i tu t ion and

Bylaws currently effective, as a guide fo r the

conduct of the affairs of the Society; moni tor

and review Chapter Const i tu t ion and Bylaws

to assure their conformance w i t h Society - ap­

proved practices and to obtain reasonable

u n i f o r m i t y i n Chapter practices.

N D - HONOR & A W A R D S

To direct and coordinate a l l Honors,

Awards , Resolutions, and Citat ion activities

concerned w i t h ind iv idua l s . Also responsible

for establishing cri teria for these Honors and

Awards .

Reporting to Vice President - Communica­

tions

N D - PUBLIC RELATIONS

Develop and promote the publ ic relations,

policies, and programs fo r the specific

discipl ine assigned.

N D - FEDERAL L I A I S O N

To foster, encourage and on request assist

i n the establishment of Value Engineering

Programs i n Federal Government Agencies.

N D - V A L U E M A N A G E M E N T I N STATE A N D

L O C A L GOVERNMENTS

To foster, encourage and assist i n the

establishment of Value Management Pro­

grams i n State and Local Governments.

N D - I N F O R M A T I O N SERVICES

Develop and main ta in systems to promote

the exchange o f i n f o r m a t i o n be tween

members; develop and main ta in systems to

moni tor trade magazine articles; assist i n

communicat ing VE capabilities to other

societies, organizations and associations.

N A T I O N A L HISTORIAN

Conduct a review of available material to

obtain pertinent facts and in fo rmat ion needed

to permit w r i t i n g of the history of SAVE.

N D - INTER-SOCIETY RELATIONS

Initiate and promote greater cooperation

w i t h other professional societies i n the f i e l d of

engineering, science, and management by

jo in t programs for exchanging in fo rmat ion

and sponsoring conferences and meetings

w i t h such societies having interests and ob­

jectives compatible w i t h those of the Society

of Amer ican Value Engineers.

Reporting to Vice President - Professional Development

N D - CERTIFICATION REQUIREMENTS

Assist the Vice President - Professional

Development, i n the development, review

and adminis t ra t ion of the Cert i f icat ion Pro­

gram.

N D - CAREER A D V A N C E M E N T

Provide assistance to Members to p lan ,

search and secure more ga in fu l employment

of their Value Engineering talents.

N D - COLLEGE RELATIONS

Develop a program to encourage univer­

sities and colleges to offer Value Engineering

courses and seminars and to promote the i n ­

terest of both instructors and students i n the

value engineering descipline.

N D - TECHNOLOGICAL A D V A N C E M E N T

Advance the art and science of Value

Engineering

DIRECTOR - N A T I O N A L STANDARDS

COMMITTEE

Establish u n i f o r m and recognized de f in i ­

tions and terms w h i c h iden t i fy and describe

the activities, techniques, and disciplines

employed i n the Value Engineering profes­

sion.

Reporting to National Director - Conference

N D - A N N U A L CONFERENCE TECHNICAL

PROGRAMS

Develop and manage Conference Technical

Program.

Reporting to National Director - Annual Conference Technical Programs

EDITOR, PROCEEDINGS

1. Sol ici t and select speakers fo r annual con­

ference, i n coordinat ion w i t h the Conference

Staff.

2. Select papers to be p r in ted i n the annual

Proceedings.

a) Establish guidelines, edi tor ial po l icy ,

and due dates for the papers.

b) Edit papers before acceptance, to

c o m p l y w i t h (a) above.

c) Ensure that the accepted papers meet

SAVE professional standards established

i n (a) above. ,

3. Perform such other related duties as

directed.

Reporting to Executive Director

N D - CONFERENCES

Exercise administrat ive control and guide

the operation of a l l Nat ional and Regional

Conferences, par t icular ly w i t h regard to

theme, program, scheduling, organization

p lanning , and f inanc ia l p lann ing . Approve

and coordinate a l l conference dates to avoid

conf l ic t .

Reporting to Executive Committee

N D - INTERACTIONS EDITOR

Manage and edi t publications of the SAVE

INTERACTIONS Newsletter.

N D - V A L U E WORLD EDITOR

A d v i s e o n p u b l i s h a b l e m a n u s c r i p t

materials; recommend po l i cy matters and

potential sources of manuscript materials.

14 Value W o r l d July/September 1983

CLIP AND SAVE SAVE 1983-1984 BOARD OF DIRECTORS CLIP AND SAVE and NATIONAL DIRECTORS (ND) and COMMITTEE CHAIRMEN

(1) Denotes National Board of Directors Member (2) Denotes Executive Committee Member

President (1,2) William F . Lenzer, CVS Value Engineering, Inc. 10712 North Stemmons Freeway Dallas, T X 75220 Phone: 214/357-0870

V.P. - Northeast Region (1) Hal Goldman, CVS Goldman Associates 470 Park Ave. South New York, N Y 10016 Phone: 212/481-3422

Executive V.P . (1,2) John A. Jonelis, CVS 7281 Steinmeier Dr. Indianapolis, IN 46250 Phone: 317/352-2723

V.P. - Finance (1,2) Beverly A. Zolezzi, CVS Value Engineering Dept. (T2) Detroit Diesel Allison, Div. of GM Box 894 Indianapolis, IN 46206 Phone: 317/242-5985

V.P. - Administration (1,2) Nathan Borsuk, CVS Port Authority of N.Y. & N.J. 1 World Trade Center 72E New York, N Y 10048 Phone: 212/466-8852

Immediate Past President (1,2) and Nominating Committee Chairman John W. Bryant, CVS 4 Pinebrook Lane S. Easton, MA 02375 Phone: 617/238-9541 or

714/548-8018

V.P. - Communications (1) Edward W. Mitchell, CVS Northern Telecom Canada Ltd. 304 The East Mall Islington, ON M9B 6E4 Phone: 416/232-2000

V.P. - Prof. Development (1) R. Glenn Woodward, CVS 9215 Dewberry Lane College Park, MD 20740 Phone: 301/935-5338

V.P. - Southeast Region (1) and Certification Director Peter S. Megani, CVS E-Systems Inc. /ECI Division P.O. Box 12248 St. Petersburg, F L 33733 Phone: 813/381-2000 ext 2401

V.P. - Northcentral Region (1) John H . Maurer, CVS Westinghouse Productivity Center P.O. Box 160 Pittsburgh, PA 15230 Phone: 412/778-5129

V.P. - Southcentral Region (1) Robert C. Pumpelly Value Engineering, Inc. 10712 North Stemmons Freeway Dallas, T X 75220 Phone: 214/357-0870

V.P. - Northwest Region (1) Douglas M. Hood, CVS 821 N.W. Flanders Portland, OR 97209 Phone: 503/223-2876

V.P. - Southwest Region (1) Julian J. Pennello, CVS 1509 Mission Ave. Carmichael, C A 95608 Phone: 916/440-3476 ext 264

V.P. - Great Plains Region (1) Teresa A. Barlow, CVS Barlow Associates

ND - Membership Glenn Lee Adams A V C O Aerostructures Div. P.O. Box 210, Dept. 530 Nashville, T N 37202

ND - Chapter Effectiveness William H. Lynch 450 West Rd. , 400S Kokomo, IN 46902

ND - Chapter Development John D. Jackson, CVS 1745 Hilltop Circle Fort Worth, T X 76114 Phone: 817/777-2224

ND - Chapter Programs Rafael R. Dominguez, CVS Bendix Corp., H.V.S .G. 901 Cleveland Street Elyria, O H 44036 Phone: 216/329-9386

ND - Individual Honors and Awards Howard H . Burroughs Western Electric Company P.O. Box 1104, Dept. 5352 Indianapolis, IN 46206 Phone: 317/352-2517

ND - Constitution & By-Laws Howard Rooks Route #3 Marion, IA 52302 Phone: 319/395-2204

ND - Federal Liaison Harold Tufty, CVS Value Engineering Digest 986 National Press Bldg. Washington, DC 20045 Phone: 202/347-8998

2272 Chestnut St. Quincy, I L 62301 Phone: 217/224-9751

V.P. - Great Lakes Region (1) Eugene R. Smith, CVS 2215 N. Allison Ave. Speedway, IN 46224 Phone: 317/244-9149

ND - Public Relations Russ C. Brannen, CVS 28717 Osborn Road Bay Village, O H 44140

V.P. - International (1) William J. OP de Beeck 26 Lombaard Street 2580 St. Katelijne Waver Belgium Europe Phone: 03/317 17 17 ext 1704

Value W o r l d July/September 1983 15

ND - Value Management -State and Local Government Paul Rezachek Dept. of Admin. - State of MN Division of Procurement 50 Sherburne Avenue 112 Administration Bldg. St. Paul, MN 55155 Phone: 612/296-2621

ND - Information Services Bert J. Frattini, CVS Dravo Engineers & Constructors One Oliver Plaza Pittsburgh, PA 15222 Phone: 412/566-4710

ND - Career Advancement Richard G. Bradyhouse, CVS The Black & Decker Mfg. Company 701 E Joppa Road Towson, MD 21204 Phone: 301/583-3863

ND - College Relations Paul T. Filipi, CVS 12713 Morrison Drive Omaha, NE 68154 Phone: 402/221-3908

ND - Value World Technical Editor and Editor - Proceedings O. James Vogl, CVS 4909 via el Sereno Torrance, C A 90505 Phone: 213/414-6212

National Standards Committee Brian Higgins, CVS 7053 S. Lewis Court Littleton, CO 80127

ND - Technological Advancement Thomas Cook, CVS Thomas Cook Associates, Inc. 2970 Maria Dr. #109 Northbrook, IL 60062 Phone: 312/498-3870

C E R T I F I C A T I O N R E Q U I R E M E N T S National Director and ND - Int. Affairs - Asia J. Jerry Kaufman, C V S J.J. Kaufman Associates 12006 Indian Wells Drive Houston, T X 77066 Phone: 713/444-6887

Secretary Jimmie L . Carter, CVS Cooper Mining & Construction P.O. Box 632 Salem, V A 24153 Phone: 703/389-7213, ext. 284

Recertification Director Larry W. Zimmerman, CVS L-Z Associates, Inc. 6110 Executive Blvd., Suite 203 Rockville, MD 20852 Phone: 301/984-9590

Workshops Director Samuel C. Lashutka, CVS 4916 Arbor Village Drive #A Columbus, OH 43214 Phone: 614/888-0144

A V S Director W. T i m Baun, CVS Detroit Diesel Allison Div. General Motors Corp. Mail Drop T-2 P.O. Box 894 Indianapolis, IN 46206 Phone: 317/242-5165

Workshop Backup Tom King, CVS Joy Manufacturing Co. Liberty Street Franklin, PA 16323 Phone: 814/432-1335

SJVE Representative Akira Kodama Secretary General Soc. of Japanese Value Engr. c/o Sanno Institute of

Business Administration 6-39-15 Todoroki, Setagaya Tokyo,Japan Phone: 704-111

CVS Recertification Backup and ND - Int. Affairs - Middle East Paul V. Dobrow, CVS 4112 Stoconga Drive Beltsville, MD 20705 Phone: 202/272-0450

V.P. - Int. Affairs Clive Bebbington 575 Trottier St. St. Bruno, PQ Canada Phone: 514/653-3164

ND - Int. Affairs - Canada Robert P. Charette, CVS Roy Hanscomb Associates 433 Place Jacques Cartier Montreal PQ H2Y 3B1 Canada Phone: 514/871-0020

ND - Int. Affairs - India S.S. Venkataramanan, CVS Venconvave Private Limited 814, Chiranjiv Tower 43 Nehru Place New Delhi - 110019 India

ND - Conferences Ginger Willingham Value Engineering, Inc. 10712 N. Stemmons Freeway Dallas, T X 75220 *• Phone: 214/357-0870

ND - Business Manager, Interactions Editor and Value World Managing Editor Rita Bates S A V E Business Office 220 N. Story Rd. , Suite 114 Irving, T X 75061 Phone: 214/253-5171

Controller James A. Dziekonski, CVS Cost Improvement Management Services, Inc. P.O. Box 1248 Golden, CO 80402 Phone: 303/839-1980

Senior Vice President C ^ Smith, CVS RouV.6, Box 327 Kemp/r%75143 Phone: 214/357-0870

S A V E Secretary Desiree Smith 220 N. Story Road, Suite 114 Irving, T X 75061 Phone: 214/253-5171

16 Value W o r l d July/September 1983

Society of American Value Engineers May 24, 1983

1982-1983 Financial Report Chicago, Illinois

We feel all the loose ends have been tied together and we know of no previous commitments that have not been honored.

We as a Board have,

1. Cleared out more of our dead inventory ($17,793 last year down to $15,105 this year), but have more to go.

2. The inventory control system is working and you can get answers, if you need them. And, it's on the money.

3. Paid chapter dividends on time and the full amount when we know where to send them.

4. Entered into new contracts on books and publications.

5. Challenged the State of Texas on their levying of personal property taxes.

6. As some of you know, rejected

Rita Bates plea for a word pro­cessor for the last two years due to our financial condition. But, this year we did a study on our typesetting costs and found that we could justify it. But, instead we purchased a Osborne Computer and a Qume Daisywheel Printer. (Typesetting $8,000 - Com­puter & Printer $3,600). This produces cah^era-ready copy, as seen in the May edition of Interactions.

7. Returned to the membership more than in the past, even in this past year's economic slide. We have lost member­ship, and figured on that, but membership even slipped fur­ther than anticipated. (124 less or about $5,000).

8. Had our share of turnover in the way of secretaries this past

year, but feel we have a fan­tastic staff on board at the pre­sent time. Also, Rita's bout with the flu played havoc with our Office operation and will take a while to get back on an even keel. We would like to thank everyone for their help and assistance.

It has been our intent that Expense and G&A would match Income (not including Conference Income) so that this Society could grow. We are not at that point and probably won't be there for a few more years.

You have handouts covering our financial status from this year, prior years and we would entertain any questions from the floor at this time.

Functionally,

James A. Dziekonski, Controller and Beverly A. Zolezzi, CVS Vice President - Finance

1982-1983 year ending April 30, 1983 Presented May 24, 1983

INCOME EXPENSE G E N . & ADMIN. D I F F E R E N C E

Membership Dues & Fees

59,436 26,016 46,255 (12,835)

Conference 69,036 42,446 10,590 16,000

Publication Sales

26,799 16,658 1,913 8,228

Publications Rental

1,160 86 417 657

Certification 1,584 3,543 445 (2,404)

Chapter Dividend

11,021 11,047 1,148 (1,174)

Interest 2,039 — 0 — 10 2,029

Workshop — 0 — 377 365 (742)

Totals 171,075 100,173 61,143 9,759

Value W o r l d July/September 1983 17

Society of American Value Engineers, Inc. Financial History

Presented May 24, 1983

As of the close of Business, April 30th each year

1978 1979

*

1980

* *

1981 1982

* * *

1982 1983

1. Sales 144,868 142,772 154,220 171,829 165,313 164,815 171,075

2. Direct Mat.

3. Direct Labor

4. Overhead

5. Cost Sales 148,295 159,392 158,481 155,157 154,501 96,195 100,173

7. Programmed Expense 60,320 61,4*98 60,680

8. Before Tax Profit 7,122 10,222

9. State Taxes 31 463

10. Net Income (3,427) (16,620) (4,261) 16,672 10,812 7,091 9,759

11. Cash 20,056 12 ,778 20,400 30,445 39,052 39,052 49,451

12. Receivables 4,573 6 ,571 11,678 6,709 15,210 2,870 10,035

13. Inventory 20,316 16 ,494 20,360 18,561 17,852 17,793 15,105

14. Cur. Assets 44,945 35 ,843 52,438 55,715 71,862 59,715 74,591

15. Current Liab. 26,291 32 ,955 52,955 38,504 43,600 6,518 7,006

16. Work. Invest 18,654 2 , 8 8 8 (517) 17,211 28,262 53,197 67,585

17. Fixed Invest 17,761 18 ,389 18,977 17,116 16,977 16,977 18,228

18. Total Invest 36,415 21 ,277 18,460 34,327 45,239 73,174 85,813

19. Equity 28,813 12 ,193 7,932 24,604 35,416 70,174 79,933

20. Debt 7,602 9 , 0 8 4 10,528 9,723 (9,823) (3,000) (5,880)

21. Ret. on Sis. (2.4%) (11.6%) (2.8%) 9.7% 6.5% 4.3% 5.7%

22. Ret. on Inv. (9.4%) (78.1%) (23.1%) 48.6% 23.9% 9.7% 11.4%

23. T .I . to Sis. 25.1% 14.9% 12.0% 19.9% 27.4% 44.4% 50.2%

24. Debt Ratio 20.9% 42.7% 57.0% 28.3% (21.7%) (4.1%) (6.9%)

25. Ret. on Equ. (11.9%) (136.3%) (53.7%) 67.8% 30.5% 10.1% 12.2%

* Jim Dziekonski appointed VP-Finance September 22, 1979 to complete unexpired te rm of A l i ce Mozley

** Translation f r o m depreciated assets per depreciation schedule to f ixed assets at appraised value. ($9,723 adjustment)

*** Accountant 's translation f r o m accrual to cash basis of accounting per W i g n a l l , Chapman, McGee, and Company (Auditors)

18 Value W o r l d July/September 1983

SOCIETY OF AMERICAN VALUE ENGINEERS, INC. IRVING, TEXAS

COMPARATIVE BALANCE SHEET AS OF APRIL 30, 1983

1981 1982 1983

ASSETS

Cash on hand and in bank

Accounts receivable

Prepaid expenses

Conference advances

Inventory

Furniture and Fixtures

Office equipment

Security deposit

Total assets

$ 30,445

6,356

353

18,561

6,895

9,780

441

$ 72,831

$ 39,052

10,185

1,213

3,371

17,852

6,895

10,082

441

$89,091

$ 49,451

10,137

1,421

7,861

15,105

6,895

11,333

503

$102,706

LIABILITIES

Credits for returns

Accounts payable

Payroll taxes payable

Chapter rebates payable

Conference income (advance payments)

Dues received in advance

Society fund balance

Total liabilities and fund balance

$ -

12,617

43

3,349

22,495

34,327

$ 72,831

$ -

- 560

648

6,927

16,040

19,425

45,491

$ 89,091

$ 720

604

724

6,402

35,382

31,788

27,085

$102,706

Value W o r l d July/September 1983 19

What Did We See in '83?

If you were looking for "innova­tion" at a SAVE International Con­ference, let's hope you were in attend­ance, at the 1983 S A V E , Interna­tional Conference, recently con­ducted in Chicago, Illinois.

Here, you would have immediate­ly noted that Hoshang Karani, Robert Redford, Tom Cook, Don Lenef and their associates were very creative in expanding the normal three concurrent session configura­tion to a four concurrent session ar­rangement. How they did it, we real­ly don't know, but suddenly we now have added a new series of technical sessions known as "Outreach -Other Worlds". As the Conference rolled along toward its very successful con­clusion, we realized the "Chicago Crowd" had done it again! We had another winner on bur hands with the fourth session. Our attendees want more of this in the future.

Then right along in the same vein of International Outreach, our Presi­dent,. Bill Lenzer, arranged for special "executive communication" sessions geared to meaningful ex­pansion of value applications and recognition throughout the upper management levels of American In­dustry and Commerce, plus the In­ternational environment of value that has become such a vital growing force for S A V E and all it stands for during the past 3-5 years.

Meanwhile, close examination of the technical programs in progress

Jack Reichert Brunswick Corporation

Keynote Speaker

1983 Conference Report by C. P. Smith

revealed many interesting ap­proaches for education in value. Beginning on Sunday, we caught George Fridholm conducting the perennial Introduction to V E Ses­sion. Then you ask, what happened to Art Mudge? Well, you take a look at Monday's schedule and see that Art is now conducting a special "Ex­ecutive Sess ion" for Industry Leaders, listed as "By Invitation Only".

Also on Sunday, in the Exhibit Area, we all had an opportunity to meet the authors and publishers,

* I

Dr. William H. Copperman Hughes Aircraft Company

"Collateral Savings—The Real Challenge"

which was a good touch for all con­cerned. This year video tapes were in abundance for our view and edification in the exhibit area.

Monday's opening session was a dynamic, energetic kickoff for our Conference thanks to Jack Reichert, C E O , Brunswick Corporation. There must have been 325 people out there in the audience who wished they had a boss like Jack who would speak about them the way he spoke about Hoshang Karani. We think Tom Cook was sort of proud of Hoshang also. After the kickoff, we had a terrific game plan ready for the technical sessions. Let me share a few of the titles with you; Govern­ment and Defense Collateral Sav­ings, Life Cycle Costing, V E in Transportation, Evaluating V E in Construction, One Person V E , One Day Studies, The Third Wave, A More Constructive Community, Workshops for Problem Solving

-Analysis of Creative Products, Center on the Client Communica­tions Results through Creativity. Diversion was provided in sessions on V E in Department of Transporta­tion, Waste Water Treatment, V E and Sizzle, Strategy Workshop, Value Purchasing, Problem Solving and Neuro-Linguistic Programming!

Then if you prefer panels, we had them on value, quality circles, con­struction/design modifying tech­niques, management mandate, and then further International Exchange of techniques - the International Discussion Session, various applica­tion testimonials *and continuing workshops.

In conjunction with this very heavy dose of technical transfusion and mental enhancement, certain functions were also very successful for the lighter side of Conference at­tendance. The Ladies Program gave a beautiful insight to the inner beau­ty of an otherwise sort of plain ap­pearing City of Chicago. The "Special Nite" gave us an oppor­tunity to "go to the top of the world'' in the Sears Tower and see the four corners of the earth from the top of Chicago.

So whatever you wanted in a S A V E Conference was ready for you in Chicago. Get your reservation in early for Sacramento in '84 so you don't miss any nuggets in the S A V E Goldrush of '84.

We'll Show You More in '84!

Hoshang Karani Brunswick Corporation

Conference General Chairman

20 Value W o r l d July/September 1983

HABITS AND ATTITUDES Walter J. Kirst

Value Engineering Coordinator • Control Data Corp. Terminals and Small Systems Division

Habit is One of the Deepest Laws of Nature

H a b i t is general ly unders tood as a

stereotyped f o r m of response; doing the same

th ing always i n the same way, under the same

condit ions. Habits are automatic reactions

and responses that we 've learned to per form

w i t h o u t having to T H I N K or DECIDE. Because

our habits are so int imately fami l ia r to us,

their effects are of ten overlooked.

Usually, w h e n we t h i n k of the w o r d

H A B I T , i t 's a bad habit that we have i n m i n d .

This is because i t 's usually easier for us to

recognize the role a bad habit plays i n our l i f e .

We a l l recognize that " smoking can be hazard­

ous to your hea l th" or "overeating is bad for

y o u " , but h o w of ten do we t h i n k of the

benefits of habit w h e n getting dressed or dr iv­

ing a car. Being able to do these things

w i t h o u t T H I N K I N G or DECIDING gets us

through our day ef f ic ien t ly and smoothly. We

have T h i n k i n g Habit Patterns and Decision

M a k i n g Habits that cause us to do things that

are both good and bad for us.

Habit Limits Our Options

I f we a l low our t h ink ing and decision mak­

ing patterns to become inf lex ib le , we stunt

our oppor tuni ty for g rowth . We l i m i t our op­

tions for ways to accomplish a task or behave

i n a part icular manner. As we age, our habits

cause us to become "set i n our w a y . " They

cause us to be less creative, less receptive to

new ways, and we become more judgemental .

Negative Habits

Negative t h ink ing habits restrict g rowth

and l i m i t change. We use k i l l e r phrases l ike :

" I t can't be done . . . " , "We 've always done i t

that way . . . " , " I ' m too o l d for tha t" . We

l i m i t our o w n progress by operating f r o m a

negative posi t ion.

We come by negative t h i n k i n g unin ten­

t iona l ly because we l ive i n a negative society.

Fami ly structure, education, place of work ,

and other inst i tut ions teach us the automatic

" N O " . The f i rs t w o r d a c h i l d learns after

mama and daddy is " N O " . I f ch i ld ren hear

t h e m s e l v e s b e i n g c a l l e d " s t u p i d , "

"naugh ty , " etc., they develop negative

thought patterns, and w i l l get i n the habit of

t h i n k i n g they are " s t u p i d , " or "naugh ty" .

Chi ldren are condi t ioned to develop negative

habits that later support negative attitudes.

We can choose to condi t ion them i n a positive

way so they can develop the habit of t h i n k i n g

they are w o r t h w h i l e and can search for op­

t ions. We can choose to change our o w n

habits i n a posit ive way . It 's just as easy to ' 'be

on t i m e " as i t is to be f ive minutes late for a

meeting. It 's much easier to "do something

r igh t the f i r s t t i m e " , i t 's benefic ia l to you and

those around you to "develop safe w o r k

habi ts" .

The f o l l o w i n g synopsis of a poem, of

u n k n o w n authorship, makes the po in t of early

negative condi t ion ing very w e l l .

Once a l i t t le boy went to a b ig school. W h e n

he f o u n d his way around, school d i d n ' t seem

so b ig and he was happy.

One day the teacher said "Today we are go­

ing to make a p ic tu re" . The l i t t le boy took out

his crayons and paper and started to draw, but

the teacher said, "Wai t ! I t is not t ime to

beg in . " When everyone was ready the teacher

said "we ' re going to make f l o w e r s , " and she

showed the class how to draw a red f lower

w i t h a green stem. The l i t t l e boy l i ked his pic­

ture better but he turned the paper over, and

drew a f lower just l ike the teacher's. The same

th ing happened again and again w i t h clay,

paper cutouts, and many other things. The l i t ­

tle boy started to make what he had thought

of, but the teacher t o l d h i m exactly what to

make and he d i d .

Then one day the boy and his f a m i l y moved

to another c i ty . He had to go to another, even

bigger, school. His f i rs t day i n school the

teacher announced "Today we are going to

make a p ic tu re . " The l i t t le boy wai ted for the

teacher to te l l h i m what to make. But the

teacher said nothing. Final ly , w h e n the

teacher noticed the l i t t le boy wasn ' t d rawing

she said, " D o n ' t you l ike to make pictures?"

" O h yes" said the l i t t le boy, " W h a t are we to

make?" " I don ' t know u n t i l you make i t , "

said the teacher. " H o w shall I make i t ? " said

the l i t t l e boy. " W h y , anyway y o u l i k e " the

teacher said. " I f everyone made the same pic­

ture, how w o u l d I know w h o made w h a t ? " " I

don ' t k n o w , ' ' said the l i t t l e boy as he began to

draw a red f lower w i t h a green stem.

Conditioning

Habits usually are not created by one

monumental experience or an i n d i v i d u a l ac­

t i v i t y . Habit occurs one b i t at a t ime. We are

usually condi t ioned very gradually, unaware

of acquir ing that habit u n t i l i t has control of

us. Since condi t ion ing is so subtle and easily

picked up , in tent ional ly surround yourself

w i t h posit ive inputs (positive people, motiva­

t ional books and tapes, etc.) I f you don' t , the

automatic " N O " can take control , then you're

not as usefu l to yourself or your job.

Resistance to Change

Habit causes us to c l ing to the past.

Resistance to change is a p o w e r f u l force i n a

person's l i f e . There is the story of a group of

people i n South America who for generations

have gone b l i n d and died i n their late 30's. I t

was discovered that an insect l i v i n g i n the

wal ls of their m u d huts was the cause of their

blindness and eventual death. Once the cause

of the problem was discovered, this group of

people had several alternatives:

• They cou ld fumigate the huts.

• They cou ld b u r n the huts to the ground

and rebui ld .

• They could relocate to an area free of i n ­

sects, or

• They cou ld do noth ing .

They chose to DO NOTHING! Because of

fear and resistance to change, they chose

blindness and early death. We make a lot of

sacrifices to stay w i t h our comfortable rut ,

called Habit .

There is Hope — You Can Change

Habits can be usefu l i f they help us be pro­

gressive and product ive. However, i f habits

immobi l ize us or cause us to be in f lex ib le , we

are our o w n worst enemy. Behavior can be

changed; you alone control your destiny, the

fu ture is up to you .

Confucius said, "Habits take us where we

were yesterday and our attitudes keep us

there."

Habits and At t i tude go hand-in-hand;

change one and you w i l l automatically i n ­

fluence the other. Our habits support our at­

titudes and, at the same t ime, we cult ivate

habits as a result of our attitudes.

Att i tudes can enrich our lives or rob us of

the enjoyment of l i f e . W i t h the wrong at­

t i tude, we accept the ROADBLOCKS to pro­

gress. A negative attitude allows us to accept

roadblocks as reasons, rather than the excuses

they are, to keep us f r o m acting. We become

satisfied w i t h on ly what i t takes to get by. We

may get by, but do we really live?

Y o u can enrich your l i f e w i t h a positive at­

t i tude. Minute-by-minute l i v i n g can be more

rewarding for yourself and others. Y o u can

develop the attitude, there is a better way . . .

search for alternatives. Create a W I N - W I N

si tuation.

A W I N - W I N atti tude takes cooperation - be­

ing w i l l i n g to share the spotl ight - want ing

(Continued on Page 23)

Value W o r l d July/September 1983 21

VALUE MANAGEMENT OF

LOGISTICS SUPPORT Edward B. Lowe

Manager

Value Management

Integrated Logistics Support Divisions

Westinghouse Electric Corporation

Introduction

Logisticians are fami l ia r w i t h the terms of

Logistics Support Analysis (LSA), Level of

Repair Analysis (LORA), Sensitivity Analysis ,

L i fe Cycle Cost, Design Reviews, Design to

Cost, and many others. We need to incor­

porate into the logisticians " tools of the

t rade" the knowledge and desire to apply

Value Analysis (VA) techniques to the

logistics support system, and to its technical

as w e l l as business aspects. This w i l l result i n

a 25% to 40% improvement i n product cost

w i t h addi t ional increases i n value, qual i ty ,

re l iabi l i ty , and produc t iv i ty .

The use and appl icat ion of the Value

Analysis techniques provides the Program/

Project Manager w i t h an advantage i n

management of a program. W h e n appl ied to

the logistics support elements a more improv­

ed, complete and cost-effective logistics sup­

port package w i l l result. Likewise, u t i l i za t ion

of the V A techniques assists management i n

surfacing the problems or opportunit ies

w i t h i n the logistics support business. I t pro­

vides techniques for establishing prior i t ies for

the opportunit ies, i den t i fy ing the corrective

action required, and provides the appropriate

V A techniques for the resolution of problems.

Logistics Value Management Planning - Value

Management Planning can be appropriately

appl ied to a logistics organization or the

management of a logistics program w h i c h

supports items i n DoD inventory. Al so , this

p lanning can be appl ied by the DoD and the

mi l i t a ry services i n managing their programs/

projects.

A review of the elements of a Value Job Plan

and a review of the type of in fo rma t ion re­

quired as w e l l as the tasks required fo r i m ­

plementat ion w i l l provide us an ins ight as to

the make-up of a central value management

organization. Disciplines that are shown i n

the value job p lan are those i n the area of

f inance, engineering, manufactur ing opera­

t ions, and program management (mul t i - func­

t i o n discipl ine) .

Program management w o u l d be an ideal

d isc ipl ine for integration i n the central value

management o r g a n i z a t i o n because tha t

d i s c i p l i n e has experience i n d e f i n i n g ,

organizing, and sell ing m u l t i - f u n c t i o n pro­

grams and runn ing those programs as a

business. I t is proposed that a typ ica l central

value management organization consist of a

representative f r o m the controller 's depart­

ment, a representative f r o m engineering, a

representative f r o m manufactur ing opera­

tions, and a representative that has had m u l t i ­

f u n c t i o n program experience. The central

value management organization provides

leadership and funct ions as a catalyst i n

achieving the company or logistics program

goals. The cen t ra l va lue management

organization should report to h i g h level

Manager or to an organizational pos i t ion that

w i l l enhance the Value Management ac­

t iv i t ies .

Strategy

The implementa t ion of Value Management

i n a program, business un i t , or support

system requires a strategic approach. A

representative strategy is ou t l ined as fo l lows :

1. Establish a central value management

organization that w i l l provide leader­

ship and f u n c t i o n as a catalyst i n achiev­

ing the goals.

2. T ra in the value management organiza­

t i o n and the funct ion/department value

representatives i n Value Analysis u t i l i z ­

ing the resources available.

3. A p p l y V A b y p r o d u c t / h a r d w a r e

workshops on logistics-deliverable pro­

ducts. This w i l l result i n lower product

costs, higher re l iab i l i ty and qual i ty for

those products, as w e l l as, t ra in ing i n

the appl ica t ion of the value process.

T h r o u g h workshops teamwork w i l l

become prevalent and barriers w i l l be

overcome.

4. Establishment of V A w i l l increase the

sensit ivity to " V A L U E " and enhance the

Value Engineering Change Proposal

(VECP) act iv i ty . This w i l l result i n more

proposals and potential savings as p ro f i t

margin .

5. A p p l y V A (after i t has been established)

to non-hardware areas such as pro­

posals, software, technical publications,

p u r c h a s i n g , spares d o c u m e n t a t i o n ,

qual i ty , components, shippers, w o r k

processes, faci l i t ies , program manage­

ment, etc.

6. A p p l y V A to business systems areas.

Logistics Applications

Project candidates and selections are for­

mulated f r o m inputs obtained f r o m the func­

t ional and program areas. The candidates can

be categorized as: product candidates; pro­

cess candidates; business system candidates.

Some examples of process candidates are:

Prof i tab i l i ty of a func t iona l product

Proposal process

Purchasing resale process

Provisioning documentat ion process

Technical publ icat ions process

Software

A n example of a system candidate w o u l d be

a computer system that is proposed for an ex­

pansion to a completely automated business

system.

Some product candidates w o u l d encom­

pass:

• A conceptual design of an i t em of test

equipment.

• A test equipment i t em that has been pro­

duced previously and the reorder quanti­

ty and value is suf f ic ien t fo r workshop

candidate.

• Spare parts regardless of the support

phase, includes post product ion spare

items. Through appl ica t ion of the value

job p lan to post p roduc t ion spare i tem,

results are obtained i n the ref inement of

the manufactur ing process as w e l l as i n

the selection of alternative materials,

design improvements/changes and test

methods/levels.

Value Management/Value Analysis of the

maintenance and logistics activities w i l l also

provide lower operational costs. The total cost

of ownership is affected by operating,

maintenance and other logistics costs. Reduc­

ing these costs ( in excess of any attendant i n ­

crease i n procurement cost) results i n a lower

l i f e cycle cost. Larger potent ial savings ju s t i fy

the investment fo r the value study and subse­

quent implementa t ion expenses du r ing the

operational phase. Value studies i n the

maintenance areas du r ing the operational

phase have been very successful. Dur ing

maintenance of equipment, failures, major

points of wear, and trouble areas become ap-

22 Value W o r l d July/September 1983

parent to maintenance and repair personnel.

The collective ski l ls , knowledge and ex­

perience - of these personnel is an asset that

can be u t i l i zed to great advantage i n the value

process.

There is an u n l i m i t e d resource of ideas

available f r o m maintenance and repair per­

sonnel. Some of the applications and benefits

of using V A techniques i n maintenance-

oriented activities are:

a. A value program can respond to unfore­

seen problems that develop after an i t em

has been i n service, such as early fa i lure

i n c i d e n t s , excessive f r e q u e n c y of

replacements i n the f i e l d or depot, ex­

cessive or repeated increases i n the cost

to manufacture or repair, restricted

avai labi l i ty or replacements, or changes

i n mission ( funct ion) .

b. The value process can develop, evaluate

and implement new and expanded repair

methods to extend the l i f e of existing

hardware, reduce reject and disposal

rates, reduce costly and t ime-consuming

processing, s i m p l i f y inspect ion and

testing procedures, and take advantage of

new and improved indust r ia l too l ing ,

equipment and processes.

c. VE can propose changes to technical

data, repair manuals, qual i ty inspection

cri ter ia and the various standards,

specifications and tolerances that govern

the inspection, repair, overhaul, testing

and acceptance of items undergoing

depot-level maintenance. Maintenance

and repair personnel are i n the best posi­

t i o n to observe the cond i t ion of items

received after varying service intervals

the types, causes and effects of damage

and the effectiveness of prescribed

(Habits and Att i tudes Continued)

the new to work . Rather than shr inking f r o m

change, support progressive change. Become

involved i n improvements. Because so many

people fear and resist change, quite of ten new

methods are subtly undermined. We can

choose to t h ink posi t ively. We can be proud of

ourselves and our job.

How Do Attitudes Develop?

We are born w i t h an attitude screen. W h e n

we are very young, our attitude screen is

crystal clear, l ike clean panes of glass. As we

grow older, our attitude screen becomes

cloudy and f i l l e d i n w i t h the results of past i n ­

d i v i d u a l experiences, l ike a di r ty w i n d o w .

Our fu ture success depends on what we do

w i t h our attitude and how we see things

through our attitude screen. We react to

things not as they are, but as we see them.

The Conscious and Subconscious Mind

Dr. Abrham Maslow compared man's m i n d

to an iceberg.

The conscious m i n d (exposed 10%) is sup­

ported by and relies on the tremendous

maintenance methods. Areas can be iden­

t i f i e d i n the technical data package that

can be el iminated or relaxed w i t h o u t

reducing the re l iab i l i ty or necessary per­

formance standards of the end i tem.

d . V A can provide a systematic problem-

s o l v i n g technique f o r maintenance-

r e l a t e d p r o b l e m s s t e m m i n g f r o m

eng inee r ing designs, spec i f i ca t ions ,

modif icat ions, etc.

e. The value process can be used i n prepar­

ing and reviewing specifications for pro­

curement of equipment, materials and

services.

Summary

Value Management/Value Analysis has

developed specific techniques that have ap­

p l ica t ion i n business systems, procedures,

processes, services, and products. This also

encompasses the s ignif icant opportunit ies

that are available i n Logistics Support.

Value Management provides a v i t a l and key

cont r ibut ion to logistics p lanning tasks. A p ­

pl ica t ion of the V A techniques to logistics

elements and system could result i n an

estimated 25-40% improvement i n costs w i t h

addit ional increases i n quali ty, re l iabi l i ty ,

and product iv i ty . A successful value task

must f o l l o w the Value Job Plan completely

w i t h no short cuts. Preparation and u t i l i za t ion

of a Logistics Value Management Plan w i l l

provide the discipl ine for t h i n k i n g i n terms of

" V a l u e " and seeing that the process is seeded

w i t h i n the logistics disciplines.

Logistics Value Management Planning re­

quires:

-A central Value Management organization

-Training of the iden t i f i ed personnel

volume of energy stored i n the subconscious

m i n d (submerged 90%). A t the same t ime, the

vast power of the subconscious m i n d is sub­

jected and control led by the conscious m i n d .

Charles Kettering once said;

" T H E ONLY DIFFERENCE BETWEEN A

M A N BEING OBSOLETE A T 35 OR A

PIONEER A T 70 LIES I N HIS A B I L I T Y TO

CHANGE HIS A T T I T U D E . "

The Choice is Yours

Y o u can m o d i f y your behavior. Y o u can

CHOOSE to be positive — you can inf luence

your surroundings. FEELINGS FOL L OW

BEHAVIOR. W h e n you A C T POSITIVE, you

w i l l FEEL POSITIVE.

The attitude you have is yours by CHOICE,

whether i t 's positive or negative. Y o u control

your attitude, i n fact . . . YOUR's is the only

attitude you can control . W i t h a negative at­

t i tude, y o u ' l l get negative results and develop

a habit of b locking alternatives. W i t h a

positive, healthy attitude, y o u ' l l get posit ive

results and develop the habit of searching for

alternatives and possibilities. The choice is

-Seeding of the process v ia p roduc t

workshop

-Appl ica t ion of the value process to non-

hardware areas

-Appl ica t ion of the value process to

business systems

-Appl ica t ion of the value process to

maintenance areas

The fu ture for the value analysis discipl ine

is l i m i t e d only by the creative imaginat ion

and energies of logisticians and supporters.

REFERENCES

1. Miles, Lawrence D. , Techniques of Value Analys i s and

Engineering, McGraw Hi l l Book Co. , Inc. 1961

2. Pendergast, John F . , "Profit and Research and Improve­

ment", and "Value Leadership - A n Approach to Organiz­

ing and Managing Your Value Program", Value Programs

for Industry, Inc.

Edward B. Lowe received a BSEE degree

from the Universi ty of Cinc innat i i n Ohio,

and a Master of Science degree i n Electrical

Engineer ing from Drexel U n i v e r s i t y i n

Phi lade lph ia , Pennsylvania . He recently

completed the National Security Management

Course of the Nat ional Defense Universi ty i n

Washington, D . C , and has completed the A d ­

vanced Logistics Engineering course from G e o r g e W a s h i n g t o n U n i v e r s i t y i n

Washington, D.C. Mr . Lowe is a member of the Society of Logistics Engineers (SOLE),

SAVE and par t ic ipant i n the Nat ional Secur­

i ty Indust r ia l Associat ion (NSIA). Mr . Lowe

has twenty years of experience in logistics

that have addressed a l l the elements of logistics support. His most recent eight years

of experience have been i n Integrated

Logistics Support Program Management.

UP T O Y O U ! What w i l l you do w i t h this most

precious gif t?

FEELING POSITIVE FEELS GOOD! ! !

B I B L I O G R A P H Y

Sidney F . Randolph, "Attitude - constructive or destructive,

you have one", Chevrolet Value Engineering, undated arti­

cle, pp 1-3

Sidney F . Randolph, "Habts - habits - habits", Chevrolet

Value Engineering, undated article, pp 1-3

W. B. Dean, Value Engineering Handbook, {(Professional

Value Service) 1980

Value Workshop Seminar Handbook, (Value Analysis , Inc.)

1980

Dr. Berlie J. Fal lon, Keys to Creative L iv ing (Success Motiva­

tion Institute) audio tape

David D. Burns, M.D . " Y o u can change the way you feel",

Magazine article of unknown origin with reference to Dr.

Burns' book, "Feeling Good: T h e New Mood Therapy"

(Signet)

Faith in the future is taking out a four year loan on a car that is guaranteed

for only one.

Value W o r l d July/September 1983 23

PSYCHOLOGICAL ASPECTS OF VALUE ANALYSIS

Value Analysis (VA) or Value Engineering (VE) is basically a scientific problem solving method. Yet, in a field of many effective problem-solving techniques, V E / V A has demonstrated a much higher success than others, especially in the cost-effective areas. E v e n those who have practiced this methodology ask what makes it so outstand­ing - we have more than an academic concern. The practitioner also has found a managerial paradox - the very tool that efficiently serves management goals does not enjoy commen­surate support in return. This lack of support is primarily due to a lack of understanding of the tremendous benefits that V A provides more than commonly used problem solving techniques. Most of the answers are evident in the behavorial aspects of V A . If we examine the behavioral aspects of this successful method we wi l l find the reasons for the poten­tial improvements which many organizations enjoy by fully implementing the sound psychological aspect of V A .

Much of V A is practiced i n group decision environment. A n integrated team is generally productive for complex tasks. Also, consider that people's individual behavior tends to be constrained in most task situations. We bring people together in a group decision mode primarily 1) to bring more information to the situation; 2) to analyze information more critically; and 3) create ideas in cross-talk.

At the same time we should recognize that there may be situations in which the manager: 1) already has all the information he needs; 2) is perfectly capable of processing the informa­tion himself; and 3) does not require the com­mitment of others for implementation. In some situations V A may not be appropriate or required. Notwithstanding, research shows that decisions are put into action more effec­tively with group consensus. Decisions im­posed from the outside or by a minority are not likely to be lasting or effective. Restrictive authorization is a poor tool for effecting im­portant changes and attitudes.

Consequently, it profits us to understand the basic methods available to change opin­ions, attitudes and habits:

1. Coercion or power has an important role in relationships. This role may be from implicit to explicit, ranging in accept­ance of authority from mutual respect of private property to an agreement not to use physical force.

2. Brainwashing, which is commonly used in various forms involves a rather subtle exploitation of some well-known truths under which some people may be forced to change their attitudes and behavior. The line between coercion and persua­sion becomes very delicate.

24 Value World July/September 1983

by Fred Spiegl Staff Value Engineer Space Division

3. The brainwashing that some of us deplore, utilizes principles not very dif­ferent from the education that most of us value positively.

4. Manipulation seems a sometimes slip­pery method commonly used by such phrases as:

"You've got to make them think it is their idea."

"You've got to make them like you."

"You've got to sell yourself."

"You've got to be sincere."

These are all forms of manipulation.

The manipulative model tends to develop dependent relationships. The mani­pulators are sensitive to needs of the other person and tend to act by indirec­tion rather than by direction. In many situations this is a useful, acceptable and moral method.

5. Perhaps a much more powerful model of influence on human behavior is called the collaborative model. The col­laborative model is similar to that of the Alchol ics Anonymous concept and depends on a person wanting to be helped. It is predominantly an argumen­tative process in which the responsibility never leaves the person that desires to change.

6. Counselling and psychiatry have moved rapidly in this direction, non-directive therapy being a current predominant form of behavior modification. But many people may be psychologically weak and not willing to change until the pain becomes crippling enough to warrant

To present a paper to the S A V E Interna­tional Conference you must have a paper published in the Proceedings.

The first step is to select your subject. Please check with the Conference Chairman or the Proceedings Editor to see if your subject is compatible with the Conference theme.

Once the subject has been approved, the Editor wi l l send you a brochure on how to prepare a paper for the S A V E Proceedings. Please follow the directions carefully for if you do not, your paper wi l l be unacceptable and we wi l l lose your services as a speaker.

The brochure wi l l direct you to prepare a draft of your paper, complete with abstract and biography. These should be sent to the Editor for editing as soon as possible. The

help. Yet others may see the problems more clearly and want more immediate action. People may not feel the tension of their unsatisfactory behavior and may have different aspiration levels.

One of the reasons V E is most successful in Japan is a strong compulsion for peo­ple wanting to change once the V E change teams have agreed on results.

7. Effective performance appraisals also provide a successful approach to en­couraging and implementing V E by pro­viding the following:

People want to know where they stand;

Employees want recognition for extra ef­fort; and £

Employees would like feedback about where they can improve their work and get more pay.

We can encourage performance on a continu­ing basis with people on all levels of manage­ment. Personal motivation, training and rein­forcement used to generate sufficient desire are recommended methods in the daily work­ing routine. V A consequently has been and is a proven successful tool to bring about major changes effectively and lastingly.

References

1. Managerial Psychology, Harold J . Leavitt, 4th Edit ion 1978,

University of Chicago Press.

2. Value Analys i s , Carlos Fal lon, 2nd Edit ion 1978, Triangle

Press.

3. Management of Organizational Behavior, Paul Hersey and

Kenneth H . Blanchard, 4th Edit ion 1982, Prentice-Hall, Inc .

T H E W O R L D IS CHANGING SO F A S T . . . that you couldn't stay wrong all the time even if you tried, says the newsletter of the Assn Execs of Upstate NY.

edited paper wi l l be returned to you for typing on the special S A V E paper which wi l l accom­pany the edited copy.

The final typed copy M U S T be received by the indicated date else it can not be given to the printer by his deadline for having the Pro­ceedings ready for the Conference.

Please contact: Jim Vogl, Editor 4909 via el Sereno Torrance, C A 90505 (213) 378-1803

or Julian J. Pennello, Conference Chairman 1509 Mission Ave. Carmichael, C A 95608

CALL FOR PAPERS 1984 CONFERENCE

"MARKET BASKET" SIGNODE

(May 4, 1983 interview on channel 26, Chicago, Illinois)

T V Interviewer: M r . John Deininger, Presi­

dent of Signode, a w e l l -

k n o w n manufactur ing f i r m

here i n the Chicago area. M r .

Deininger, you were part of

a seminar this morn ing , that

took place here at the Hyatt

Regency, discussing Value

Engineering as a means of

making Amer ican industry

more competi t ive. Just h o w

d i d you go about doing this ,

and w h y do y o u feel this is

the answer to making us

more competitive?

M r . Deininger: W e l l , Value Engineer ing,

w h i c h has been around fo r

some t ime , we f i n d i t purely

a formal d isc ipl ine of apply­

ing i t th rough and immers­

ing a l l the employees in to

this s k i l l , i t enables us to

achieve outstanding perfor­

mance. A t Signode, we

employed this f o r m of pro­

gram last September, and

since have appl ied i t to three

products and have had

s ignif icant savings i n the

magnitude of 40-50% on

each product .

T V Interviewer: W e l l I w o u l d say that cer­

ta inly has value. N o w a f ew

years ago we were t o l d , at

least here, there w o u l d

reports that we were sort of

overloaded w i t h engineers,

and now i t develops that we

have a shortage. Is this pro­

gram of Value Engineering

have an impact on that situa­

tion?

M r . Deininger: Not as far as adding more

engineering to the w o r k

force, but I th ink that we

have done to prove to

ourselves that our engineers

are able to work more pro­

duct ively w i t h this new con­

cept.

T V Interviewer: N o w then, before this con­

cept came about, just how

d i d you go about complet ing

or comput ing these tasks

before you , and just what is

the pr imary th ing that makes

the d i f f e r e n c e i n y o u r

results?

M r . Deininger: I t h ink that our company

was typ ica l of most U.S.

companies that t radi t ional ly

operated w i t h diverse func­

t i o n a l a reas , w h e r e

eng inee r ing , m a n u f a c t u r -

. ing , marketing were operat­

ed pretty m u c h on a separate

basis. But we f o u n d that by

b r ing ing a l l parties together

to use this func t iona l cost

approach i n analyzing the

product that we were able to

come up t h rough group

dynamics of investigating

and problem-solving that

achieves these results.

T V Interviewer: Do you mean that you are ac­

tua l ly w o r k i n g i n tandem

w i t h your competitors?

M r . Deininger: No, I ' m ta lk ing about the

i n t e r -depa r tmen ta l m u l t i -

funct ions of dif ferent people

f r o m different departments

w o r k i n g together and the

formed teams that actually

concentrate on a g iven pro­

duct to f i n d alternative ways

to improve how i t funct ions

or to lower its cost, and

p r imar i ly to provide better

value to our customers.

T V Interviewer: A s f o r t h e e n g i n e e r s

themselves, M r . Deininger,

is this going to open up any

p o s i t i o n s f o r e x t r a

engineers, either i n this

f i e l d , or some other areas?

t i T.G.I.M." For a number of years i n the past, we have

seen pins or signs w i t h the letters " T . G . I . F . " As we a l l recongize these four letters stand for the statement, "Thank God I t ' s F r iday" . I t goes w i t h o u t saying that many ind iv idua ls , i n the past and present, have had the fee l ing.

I n today's economic environment each of us must take another look at the part icular situa­t i on . When we do, we may and should be replacing " T . G . I . F . " w i t h " T . G . I . M . " or "Thank God I t ' s M o n d a y . "

Keep i n m i n d , as you read this , that y o u are among the fortunate ones today. Y o u do have a job to come to on Monday morn ing . This is reason enough to " T . G . I . M . " . Being among those employed you have the oppor tuni ty to assist your company i n reducing its costs through the Cost Improvement A c t i v i t y .

Y o u may ask w h y this second reason is so important . By reducing our costs, w h i l e re­ta ining the necessary qual i ty and re l iabi l i ty , we become the low cost producer. This i n t u rn adds to our and other's job security. Then as the economy turns upward , we w i l l be among the f i rs t companies to recover f r o m the recession, thereby necessitating the rehi r ing of our f e l l ow workers that were not as for­tunate as ourselves.

Yes, I say, "Thank God It 's M o n d a y . "

A . E . Mudge, CVS

M r . Deininger: What we're f i n d i n g is that

the engineers are c o m ­

plemented by other people.

From manufactur ing, f r o m

m a r k e t i n g a n d o t h e r

disciplines, so to improve

their insights as to what the

product is expected to do,

and how i t provides greater

value for the customer, and

i n so doing, I t h ink we are

c o m p l e m e n t i n g t h e

engineers to be more effec­

t ive and eff ic ient .

T V Interviewer: Thank you M r . John Dein­

inger, President, Signode

Company, Chicago area. M r .

Deininger, thank you very

much, and good luck Sir.

LIFE. . .is what happens to you w h i l e you are

mak ing other plans.

"When You're Hot, You're Hot!"

The words of this popular song are used by many of us w h e n we w i n something, gain a v ic tory i n a tennis match, handball , or whatever. I t is used by many teams to be boast ful ly modest.

But where are the other words that go w i t h these, " W h e n you ' re not, you're no t ! " We usual ly don ' t hear them or don ' t wan t to hear them. Why? A l l of our t ra in ing has been devoted to preparing us to be winners , not losers. We a l l k n o w that i n sports there w i l l be winners and losers. The object is to have more victories than defeats. Seeing the replay of the game can show the errors that were made. Then the errors can be counted and new strategy planned for the upcoming game, w i t h confidence that these changes w i l l change the outcome of the next game.

I n industry, fo r the most part, we haven't learned this s imple l i t t l e lesson. There is a great tendency to cri t icize the opposi t ion, m in imize the things that produced results, and continue on our merry way not changing a t h i n g w h e n we pursue the next job. When , i n fact, we should:

1. Replay the events. a. What d i d they do right? b . What d i d we do wrong?

2. Correct the errors that were made. a. What has to be corrected? b. H o w can they be corrected to make

sure they don ' t occur again? 3. Plan a new strategy.

a. W h o has to do what? When? Where? How? Why?

b . Have we planned for achievement? Inc lud ing price?

4. Have confidence. Do you have that inner feel ing that tells you you have a winner?

Then, w h e n our competitor asks how y o u achieved the result, you can say v

" W h e n You ' re Hot , You're H o t ! "

James A . Dziekonski , CVS

Value W o r l d July/September 1983 25

WINDOW ON VALUE

V A L U E PAVES T H E W A Y -General Dynamics, Fort Worth Division

Value Engineering (VE) techniques have

paved the way to Cost Reduct ion success at

General Dynamics, Fort W o r t h Div i s ion .

Three thousand t w o hundred twenty eight

employees have received certificates fo r com­

ple t ion of t w o week VE Seminars. The lessons

learned help employees develop ideas fo r the

Cost Reduction and Employee Suggestion

Programs. I n t u r n , ideas submit ted as

Employee Suggestions have become VE

Change Proposals.

Results have been excellent. Recently 235

men and w o m e n were honored at the annual

Awards Banquet fo r outstanding performance

i n Cost Reduction i n 1982. Each employee

documented a savings of $100,000 or more for

the calendar year. Sixty-seven of these receiv­

ed recognit ion for having saved more than

$1,000,000 each. I n total , over $221 m i l l i o n i n

savings was documented fo r 1982.

The Fort Wor th Faci l i ty lead a l l of the

General Dynamic Divisions for Employee

Suggestions i n 1982 and was recognized by

the Nat ional Associa t ion of Suggestion

Sytems for having obtained the highest dollar

savings per employee. The Fort W o r t h D i v i ­

sion saved an average of $332 per employee

w h i c h was best i n the nat ion for Aerospace

Equipment Manufacturers.

I n add i t ion the Fort W o r t h Div i s ion was

selected as the 1982 recipient of the U.S. A i r

Force Contractor VE Achievement A w a r d .

Vice President and General Manager,

Herbert F. Rogers, i n a ceremony at the Pen­

tagon on A p r i l 19, 1983, accepted a plaque

and certificate on behalf of the entire d iv i s ion .

The certificate as signed by Secretary of the

A i r Force, Verne Orr, and reads as fo l lows :

"General Dynamics has demonstrated a

sincere interest i n reduc ing F-16

weapon system costs through a con­

certed Value Engineering effort . Value

Engineering Change Proposals approv­

ed by the F-16 System Program Off ice

i n Fiscal Year 1982 contr ibuted to a

cost avoidance of 24 m i l l i o n dollars.

G e n e r a l D y n a m i c s F o r t W o r t h

Divis ion 's continued ef for t to provide

qual i ty Value Engineering Change Pro­

posals is most commendable ."

The Cost Reduction and Value Control Pro­

grams compl iment each other at General

Dynamics, Fort Wor th Div i s ion . Both are pro­

mot ing cost reduct ion as a way of l i f e fo r a l l

employees, w h i l e p rov id ing our customer the

utmost i n value for each dol lar they spend.

Perry C. Bales

Div i s ion Cost Reduction Coordinator

Editor, "Cost Reflect ions" General Dynamics, Fort W o r t h D iv i s ion

V E SAVINGS IN EPA REGION IV

Charles R. Jeter, EPA Regional A d ­

ministrator reported recently Value Engineer­

ing has saved more that $100 m i l l i o n on 48

wastewater treatment projects i n EPA's

Southeast region (Region IV) since 1975. " V E

has been par t icular ly successful i n the

Southeast, w i t h Region I V showing an

average net savings of eight percent on con­

struct ion projects, and a net re turn of $25 for

each dollar spent on V E " .

EPA began using value engineering on a

voluntary basis i n its $18 b i l l i o n national con­

struct ion grants program i n 1975, and later re­

quired i t for any project costing $10 m i l l i o n or

more. The procedure is voluntary for projects

costing less than $10 m i l l i o n .

The reason a dollar won't do as much

for people as it once did

is that people won't do as much for

a dollar as they once did.

WRITING A BOOK . . . is like scrubbing

an elephant - there's no good place to

begin or end, and i t 's hard to keep

track of what you 've already covered,

says Association Trends Newsletter.

ESTIMATING S O F T W A R E A N A L Y Z E D IN JUNE OF ISSUE C O S T ENGINEERING MAGAZINE

"Computer-Assisted Est imating—Analyz­

ing the Opt ions" by Lawarence C. Bacher w i l l

be featured i n the June issue of Cost Engineer­

ing magazine, w h i c h also supplies a handy

reference l is t of commerc ia l ly available

estimating software.

The entire issue w i l l be dedicated to com­

puter topics and w i l l also feature t w o articles

co-authored by Steven Z immerman and Leo

M . Conrad, "Programming the Cri t ical Path

Method i n B A S I C " and Programming PERT

i n B A S I C " .

For more in fo rma t ion on the June issue and

other issues of Cost Engineering, contact

Judith L . Wal ls , editor and advertising

manager, or Tracy Novak, associate editor at

the Amer ican Association of Cost Engineers

Headquarters, 308 Monongahela B u i l d i n g ,

Morgantown, W V 26505-5468 304/296-8444.

Take comfort in simple rules that never change

Theories may come and go, and modes of management may vary, so isn't it reassuring to know that there are a few simple laws that never change?

Here they are: 1. Nothing is as easy as it appears to be. Everything takes longer than expected, and if anything can go wrong it wil l , and at the worst possible time; 2. Anytime things seem to be going better, something has been overlooked.

3. Nothing is impossible for the person who doesn't have to do it; 4. A l l employees have the right answers to all problems. These answers evaporate when people are promoted to a position of respon­sibility; 5. Once a job has been foul­ed up, any attempt to correct the situation only makes it worse; 6. It is always difficult to make things sim­ple; 7. It is always simple to make things difficult; 8. The specialist learns more and more about less and less , and ends up k n o w i n g everything about nothing; 9. The generalist learns less and less about more and more, and ends up know­ing nothing about everything; 10. Whatever happens, there is always someone who knew it would.

You wil l gain a new sense of security by placing your absolute trust in these laws — try it, and see.

Capsules Comments, quoted in Candy Wholesaler, Nov. 1982

Nat'l Candy Wholesalers Assn.

A teenager can do at least

one thing his parents cannot

and that's to answer

a telephone in the middle

of the first ring.

26 Value W o r l d July/September 1983

CALENDAR OF EVENTS

SAVE-NATIONAL J U L Y , 1983 22- 23 Executive Committee Meeting, Irving, T X

A U G U S T , 1983 V 1 Dues not paid are considered delinquent 15 Deadline for October Interactions and Oct/Dec Value World

SEPTEMBER, 1983 15 Deadline for November Interactions 23- 24 S A V E Board of Directors Meeting, Easton, MD

SAVE CHAPTER MEETINGS As most S A V E Chapters usually take a break during the summer months, we have not received their scheduled meeting dates for the upcoming year. If you intend to be in the area, contact the local President for current information on their meeting schedule.

056 - Northern Ohio - Contact President Rafael R. Dominguez 216/329-9386

Preliminary Schedule September 14 Joint Meeting with NCS C A D / C A M Society October 12 Panel Discussion

067 - Dallas/Fort Worth - Contact President Mike Deming 214/266-4780

Preliminary Schedule September 13 Gerry Ennis, Factory for the Future October 13 Quality Circles

OTHER ITEMS OF INTEREST Federation of Materials Societies

Sept. 6-9 International Conference on Lasers, Canton, China, sponsored by the Optical Society of China. Con­tact Prof. Wan Daheng, P.O. Box 8211, Shanghai, China.

Sept. 26-28 6th International Symposium on Ceramics, Bologna, Italy, Contact Segretaria del SIMCER, Centro Ceramico Via Martelli, 26-40138 Bologna, Italy.

Nov. 14-17 Annual Meeting of the Materials Research Society, Boston, MA. Contact MRS Secretariat, 110 Materials Research Lab, University Park, PA 16802.

Nov. 14-17 International Congress on the Application of Lasers and Electrooptics, San Francisco, CA, spon­sored by the Laser Institute of America. Contact LIA 5151 Monroe Street, Toledo, O H 43523 419/882-8706.

Institute of Industrial Engineers, 25 Technology Park/Atlanta, Norcross, GA 30092 404/449-0460

August 11-13 Three day seminar "Productivity Measurement and Improvement Strategies", covers control system fundamentals, productivity process modeling and various systems of measurement, im­provement and management planning to link the entire process and Techniques, Dallas, T X .

August 15-17 Three day seminar on robotics at the IIE Education Center in Technology Park/Atlanta. Designed to acquaint participants with the variety of equipment available, and how and where robots might be used most effectively, includes a full-day laboratory experience and a workshop session.

Sept. 28-30 Repeat of robotics seminar.

University of Wisconsin-Extension, Management Institute, 432 N. Lake Street, Madison, WI 53706 Joan Hamann 608/262-2668 or Sandy Courier 608/262-2703.

August 25-26 Two day seminar "Informal and Formal Report Writing Using the Word Processor" designed for managers of all levels, engineers and technical personnel.

A SAVE SERVICE TO MEMBERS

Value World July/September 1983 27

i A

F R O M T H E S A V E B O O K S T O R E SUBSCRIPTIONS VALUE ENGINEERING & MANAGEMENT DIGEST - A publication of the Tufty Communications Cc ' , (One year subs.) International Subscribers add $15.00 for Air Mail Postage.) $150.00

CORRESPONDENCE COURSES

AN INTRODUCTION TO VALUE ANALYSIS & VALUE ENGINEERING 14.4 CEU's - Independent study course emphasizes the application of VA/VE to products and services, uses the text, "Techniques of Value Analysis and Engineering", 2nd Edition by Lawrence D. Miles. $182.00 Tuition and Service Charge, $34.95 Text $216.95 Total

FUNCTION ANALYSIS FOR ARCHITECTS, ENGINEERS, AND BUILDERS 10 CEU's - Independent study course designed to introduce architects, engineers and builders to the principles of Function Analysis (Value Management/Engineering) uses the text "Value Management for Construction", Macedo, Dobrow and O'Rourke, 1978. $182.00 Tuition and Service Charge, $39.50 Text, $221.50 Total

VIDEOTAPE RENTALS

"COST IMPROVEMENT'S CONTRIBUTION TO FINANCIAL FLEXIBILITY" by Andre R. Horn, Chairman of the Board, Joy Manufacturing Com­pany (Tape #3) (NEW - RELEASED MAY, 1983)

"VALUE ENGINEERING AT JOY MANUFACTURING COMPANY" by Jim Wilcock, former Chairman of the Board, Joy Manufacturing Company (Tape #1) • ..'

"VALUE ENGINEERING FOR MANAGEMENT" by George J. Rabstejnek, President, Harbridge House, Inc. (Tape #2)

All three videotapes are available for two weeks rental. Please request Letter Agreement for Tape #1, #2 or #3. The Letter Agreement, signed by your President of Vice President, must be returned to the Business Office with your check for $50.00 (per videotape) before the videotape can be shipped to you for your meeting.

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