Chapter: - 8 Value Engineering Job Plan
Introduction: -
The VE job plan can be applied to any subject. It is a mechanism for guiding a study from inception to conclusion. By adhering to certain formalities, the VE job plan ensures that consideration is given to all necessary facets of the problem.
The VE job plan breaks out the task being studied into functions. It provides time for the essential creative work and its necessary analysis so that the best choices can be made for further development. The job plan leads to the establishment of an effective program aimed at the selection of best value alternatives. It concludes with specific recommendations, the necessary data supporting them, a list of implementing actions, a proposed implementation schedule, and a required follow-up procedure.
The job plan is normally organized by a value team leader. It is typically conducted in eight sequential phases:
1. Orientation Phase
2. Information Phase
3. Function Analysis Phase
4. Creative Phase
5. Evaluation Phase
6. Development Phase
7. Presentation Phase
8. Implementation Phase
The Orientation Phase is conducted to prepare for the value analysis. This phase, which may last several weeks, lays the groundwork for an efficient and productive study by refining the problem statement, collecting much of the data needed, and organizing for the efforts to follow.
The value study comprises Phases 2 through 7 of the job plan. The more analytical steps in the value methodology, the phases typically performed in a workshop setting involving all stakeholders. Systematic pursuit of the methodologies within these phases leads to recommendations for improving the existing situation and thereby increasing value for everyone involved. They conclude with a presentation of recommendations for improvement to the decision-maker.
The Implementation Phase occurs after the value study is over and decisions have been made. It monitors the approval process and implementation of the action plan. The name of the phase may be slightly misleading. Project approval is normally not given solely on the basis of the brief presentation that occurs at the conclusion of the workshop. Approval will usually be obtained after the completion of follow-up actions such as providing more data and meeting with others. Implementation itself begins after the final approval is granted.
Figure 5 depicts each phase of the job plan. It lists the questions that each phase is designed to answer and identifies the activities performed. This chart is discussed in detail in Chapter V, where each phase is described.
Although the job plan divides the study into a distinct set of work elements, judgment is necessary to determine the depth to which each phase is performed as a function of the resources available and the results expected. The VE program in the Defense Department does not necessarily use all the steps of the job plan. In fact, the only requirement for the Government is that a change made to improve the value (i.e., performance and/or cost) of a required function be based on a function analysis to determine the best value. For example, an activity supporting the DoD Component Breakout, Competition, or Spares Management initiatives may be a relevant use of VE. From a contractor perspective, any analysis leading to an approved VECP is applicable.
A. ORIENTATION PHASE: -
The purpose of the Orientation Phase is to refine the problem and prepare for the value study. Although a problem area may have been identified, the value study or workshop has a far greater likelihood of success if ample preparation time has been devoted to
(1) Determining what aspects of the problem will be addressed in detail and
(2) Preparing everything needed for the analysis itself.
Throughout these preparatory activities, a close working relationship between the value team leader and the manager sponsoring the project also contributes significantly to a successful outcome.
The following subsections describe the activities that occur during the Orientation Phase. Note that the activities may occur in an order different from that shown here. Some activities may also be repeated or may occur simultaneously if other people are supporting the team leader’s efforts.
Note that the first five activities represent one systematic approach to refining the problem. The job plan itself can also be used entirely in the context of the Orientation Phase as a formal project planning tool.
i. Identify the Specific Issues To Be Addressed
The problem area should be divided into its constituent elements. Each element should represent a specific issue that can be addressed and resolved. Consider the Navy’s Standard missile program. The program office found itself in a situation where missile demand was level, but the price was increasing while budgets were decreasing. Of the three controllable constituent elements of missile cost (production, development, and logistics), production costs were determined to be the most fruitful area for further investigation, primarily because trade-offs could be made between cost and performance. In fact, the production costs could readily be broken down into smaller and smaller constituent elements to form the basis of individual VE projects.
Identifying such specific issues is accomplished by developing an understanding of the sponsor’s problems and avoiding areas that the sponsor would not be able change because of political, cultural, or feasibility implications. Once the problems are understood, they can be addressed at varying levels of detail. At this stage of the value methodology, enough detail is needed to obtain a general grasp of potential VE projects.
ii. Assess the Potential Gains for Resolving Each of These Issues
The purpose of this activity is to identify issues that have the greatest potential for value improvement. Solution areas postulated this early in the process should be used for this purpose only. Such solutions should not inhibit creative activities applied later in the job plan to generate alternatives.
The assessment of the potential gains for resolving issues should be as quantitative as possible; however, at this stage of the analysis, estimates will be crude. While it may not be too difficult to develop a reasonable understanding of the costs involved, savings estimates are much more problematical since no solution has been developed. Some information is normally available, however.
In the Standard Missile example, one of the VE projects involved the transceiver assembly. One potential solution was replacing the assembly with a less costly one. Savings estimates were very difficult since the characteristics of the new assembly were unknown. Another potential solution involved developing a higher component level of aggregation. Here, savings would be generated by eliminating tests.
iii. Prioritize the Issues
While prioritization should take into account the potential gains, it should also consider the likelihood of determining an effective solution and the feasibility of implementing that solution. In the case of the transceiver assembly for the Standard missile, the second potential solution, developing a higher component level of aggregation, was much more straightforward and had a higher likelihood of success than replacing the assembly with one less costly, the first potential solution.
Understanding the importance of the problem to the project sponsor is also a key factor. If the sponsor is determined to solve the problem, the likelihood of success is enhanced. Once management commitment is understood, it is useful to ask why a problem has not been solved before.
The answer to this question may identify roadblocks to be overcome. Knowing what stands in the way of a solution is another important feasibility consideration that should enter into the prioritization process. Finally, other benefits such as performance improvement should also be taken into account.
iv. Draft a Scope and Objective for the Value Study
The study team’s efficiency is significantly enhanced when limits are established in advance. More than one of the constituent problem elements may be included in the scope. The scope must be approved by the study sponsor. Ultimately, the scope and objective will be finalized in the Information Phase. This preliminary work will expedite that process.
v. Establish Evaluation Factors
Targets for improvement should be challenging, and evaluation factors must be measurable. They determine the relative importance of the ideas and potential solutions generated by the team. Both improvement targets and evaluation factors must be approved by the study sponsor.
vi. Determine Team Composition
Essential characteristics for team members include technical or functional expertise, problem-solving and decision-making ability, and interpersonal skills. Participants should be team players who are willing to share responsibilities and accountability while working together toward a common objective. The team should also be multidisciplinary and include all factions affected by the study to ensure that relevant stakeholders and experts are included. Kaufman suggests that because gathering all the information needed to make a “no-risk decision” is impossible, a multidisciplinary team should provide enough different perspectives to at least substantially reduce the risk.
The team should ideally have no more than 12 participants. After the team members have been selected, the team leader should prepare a management memorandum to be sent to all team members to:
· Emphasize the importance of their role,
· Approve the necessary time commitment,
· Authorize sharing of any objective and subjective data that bear on the problem, and
· Identify the team leader
vii. Collect Data
The team leader organizes the data-collection activities in advance of the workshop. As more information is brought to bear on the problem, the probability of substantial benefit increases. To increase the study team’s productivity, collect as much data as possible in advance. It is often beneficial to involve the entire team in the data-collection effort. Some team members may have key information readily available to them.
The data should be as tangible and quantitative as possible; they should include anything potentially useful for
(1) Understanding the problem,
(2) Developing solutions, and
(3) Evaluating pros and cons of the solutions.
The paramount considerations are getting enough facts and getting them from reliable sources.
In addition to possessing specific knowledge of the item or process under study, it is important to have all available information concerning the technologies involved and to be aware of the latest technical developments pertinent to the subject being reviewed.
Developing alternative solutions and ranking them depend on having cost data. Data on customer and user attitudes also play a key role.
Part of the VE study is aimed at identifying which aspect of the task holds the greatest potential for payoff. This potential for payoff is a function of the importance to the user and customer. The seriousness of user-perceived faults is also a factor in prioritization.
viii. Prepare Logistically for the Value Study
The value study facilitator, who may also be the team leader, is responsible for preparing the team to participate in the value study. Initially, brief meetings with potential team members may be held to determine who should participate. The team leader/facilitator should:
· Ensure participants know what data they should bring,
· Set up study facilities and prepare materials (easels, markers, etc.),
· Set up kickoff briefing and results briefing with management, and
· Obtain an example of a study item for the team to use.
Pre-study reading materials should be identified and distributed to participants. Documents that may be assigned as advanced reading include the agenda, operational requirements documents, design documents, performance requirements, production quantities, inventory data, failure/quality information, and others necessary to ensure consistent understanding of the issues.
It may be useful to schedule a pre-workshop orientation meeting to:
· Review workshop procedures;
· Acquaint people with the problem and the read-ahead material;
· Eliminate incorrect preconceived notions about VE, the job plan, the workshop itself, the problem, the people, and so on;
· Jump-start the team-building process;
· Clarify acceptable and unacceptable behaviors (rules of the road) for team member participation; and
· Identify additional information needs.
It is a good idea to set the date reasonably far in advance (4 to 6 weeks) to allow personnel to arrange their schedules around the study. When a workshop setting is used, the value study typically takes 3 to 5 days.
- INFORMATION PHASE
The purpose of the Information Phase is to finalize the scope of the issues to be addressed, targets for improvement, and evaluation factors while building cohesion among team members. In many respects, the Information Phase completes the activities begun in the Orientation Phase. This work is normally carried out in the workshop setting and is therefore usually the first opportunity for all team members to be together. Consequently, it is important to use the Information Phase to motivate the team to work toward a common goal.
Finalizing the scope of the issues to be addressed, targets for improvement, evaluation factors, and data collection are ideal endeavors for building that cohesion. The specific activities are described in the following subsections.
i. Establish Workshop Rules of the Road
This activity is the beginning of the team-building process; the facilitator should ensure that all team members know each other and their relevant backgrounds, authority, and expertise. Some authors (e.g., Stewart) suggest team-building exercises be conducted at the beginning of the Workshop. The following guidelines should be established to set the stage for an effective working relationship among the team members:
· Share workload equally whenever possible.
· Be willing to admit that you do not know something, but strive to get the answer. Do not be afraid to make mistakes.
· Stay focused—off tangents—and follows the basic problem-solving steps. Do not waste time discussing whether or not you should use each step; do it and evaluate it all after you have completed the entire workshop. Be sure you understand the approach and its purpose, including the reason for each step and the technique being applied. Keep the discussions relevant.
· Do the job together as a team. Do not force your solutions, sell them! Remember, there can be more than one solution to a problem.
· Be a good listener; do not cut people off and do not second-guess what other people are about to say and what they are thinking.
· Keep an open mind and do not be a roadblock.
· Be enthusiastic about the project and what it is that you are doing.
· Do not attempt to take over as a team leader; be as helpful as possible. Remember, the leader already has a difficult job in trying to guide, control, and coordinate the overall effort.
· Accept conflicts as necessary and desirable. Do not suppress them or ignore them. Work them through openly as a team.
· Respect individual differences. Do not push each other to conform to central ideas or ways of thinking.
· Work hard. Keep the “team climate” free, open, and supportive.
· Fully use individual and team abilities, knowledge, and experience.
· Accept and give advice, counsel, and support to each other while recognizing individual accountability and specialization.
ii. Finalize the Problem and the Associated Facts
Discuss the problem so that all team members achieve a consistent understanding of the issues at hand. Work on specifics, not generalities. This approach also serves as a useful team-building exercise.
The VE team should have gathered information consistent with the study schedule before the start of the workshop. If possible, obtain physical objects (e.g., parts) that demonstrate the problem. Where supported facts are not obtainable, the opinions of knowledgeable persons may be used. Such people may be invited to participate in the workshop, or their opinions may be documented.
The Information Phase is typically used to familiarize the team members with the data and the data sources in the context of defining the problem. The keys are:
· Get up-to-date facts,
· Get facts from the best sources,
· Separate facts from opinion, and
· Question assumptions.
Having all of the pertinent information is the ideal situation, but missing information should not preclude the performance of the VE effort.
Quality Function Deployment is a structured approach to defining customer needs or requirements and translating them into specific plans to produce products or develop processes to meet those needs. Ball suggests that Quality Function Deployment techniques can be beneficial in the Information Phase because a better understanding of customer requirements leads to a better understanding of function.
iii. Refine the Scope
The problem at hand often requires more time than the workshop schedule permits. In these cases, it is important to re-scope the problem to ensure that the most important elements are examined during the workshop. Plans for continuing the effort on the balance of the problem can be made at the end of the workshop.
Once the scope is determined and the final set of facts are collected from the best possible sources of data, targets for improvement and evaluation factors should be reexamined and finalized. The study sponsor should approve any changes.
- FUNCTION ANALYSIS PHASE
The purpose of the function analysis phase is to identify the most beneficial areas for study. The analytical efforts in this phase form the foundation of the job plan. The disciplined use of function analysis is the principal feature that distinguishes the value methodology from other improvement methods. The following subsections describe the activities in the Function Analysis Phase.
i. Determine the Functions
For the product or process under study, this activity encompasses determining 40 to 60 functions that are performed by the product or process itself or by any of the parts or labor operations therein. Functions are defined for every element of the product or process that consumes resources. The functions are typically recorded on adhesive backed cards for later manipulation.
A function is defined as the natural or characteristic action performed by a product or service. Unstructured attempts to define the function(s) of an item will usually result in several concepts described in many words. Such an approach is not amenable to quantification. In VE, a function must be defined by two words: an active verb and a measurable noun.
· The verb should answer the question, “What does it do?” For example, it may generate, shoot, detect, emit, protect, or launch. This approach is a radical departure from traditional cost-reduction efforts because it focuses attention on the required action rather than the design. The traditional approaches ask the question, “What is it?” and then concentrate on making the same item less expensive by answering the question, “How do we reduce the cost of this design?”
· The noun answers the question, “What does it do this to?” The noun tells what is acted upon, (e.g., electricity, bullets, movement, radiation, facilities, or missiles). It must be measurable or at least understood in measurable terms, since a specific value must be assigned to it during the later evaluation process that relates cost to function.
A measurable noun together with an active verb provides a description of a work function (e.g., generate electricity, shoot bullets, detect movement, etc.). They establish quantitative statements. Functional definitions containing a verb and a non-measurable noun are classified as sell functions. They establish qualitative statements (e.g., improve appearance, decrease effect, increase convenience, etc.). It is important to provide the correct level of function definition. For example, the function of a water service line to a building could be stated as “provide service.” “Service,” not being readily measurable, is not amenable to determining alternatives. On the other hand, if the function of the line was stated as “conduct fluid,” the noun in the definition is measurable, and alternatives dependent upon the amount of fluid being transported can be readily determined.
The system of defining a function in two words, a verb and a noun, is known as two-word abridgment. Advantages of this system are that it:
· Forces conciseness. If a function cannot be defined in two words, insufficient information is known about the problem or too large a segment of the problem is being attempted to be defined.
· Avoids combining functions and defining more than one simple function. By using only two words, the problem is broken down into its simplest element.
· Aids in achieving the broadest level of dissociation from specifics. When only two words are used, the possibility of faulty communication or misunderstanding is reduced to a minimum.
· Focuses on function rather than the item.
· Encourages creativity.
· Frees the mind from specific configurations.
· Enables the determination of unnecessary costs.
· Facilitates comparison.
ii. Classify the functions
The second major activity in the Function Analysis Phase is to group the functions into two categories, basic and secondary.
The basic function is the required reason for the existence of an item or a product, and answers the question, “What must it do?” Basic functions have or use value:
A basic function is the primary purpose or most important action performed by a product or service. The basic function must always exist, although methods or designs to achieve it may vary.
A product or service may possess more than one basic function. This is determined by considering the user’s needs. A non-load-bearing exterior wall might be initially defined by the function description “enclose space.” However, further function analysis determines that, for this particular wall, two basic functions more definitive than the above exist; they are “secure area” and “shield interior.” Both answer the question: “What does it do?”
Secondary functions answer the question “What else does it do?” Secondary functions are support functions and usually result from the particular design configuration. Generally, secondary functions contribute greatly to cost and may or may not be essential to the performance of the primary function:
A function that supports the basic function and results from the specific design approach to achieve the basic function. As methods or design approaches to achieve the basic function are changed, secondary functions may also change.
There are four kinds of secondary functions:
1. Required—a secondary function that is essential to support the performance of the basic function under the current design.
2. Aesthetic—a secondary function describing esteems value.
3. Unwanted—a negative function caused by the method used to achieve the basic function such as the heat generated from lighting which must be cooled.
4. Sell—a function that provides primarily esteem value. For marketing studies, it may be the basic function.
Secondary functions that lend esteem value (convenience, user satisfaction, and appearance) are permissible only insofar as they are necessary to permit the design or item to work or sell. Therefore, they sometimes play an important part in the marketing or acceptance of a design or product. Value analysis separates costs required for primary function performance from those incurred for secondary functions to eliminate as many non-value-added secondary functions as possible, improve the value of the remaining ones, and still provide the appeal necessary to permit the design to sell.
iii. Develop Function Relationships
Two principal techniques have been developed to create a better understanding of functional relationships—a Function Hierarchy Logic model and the Function Analysis System Technique (FAST). This handbook concentrates on the customer-oriented FAST approach and the use of the FAST diagram. FAST was developed by Charles W. Bytheway of the Sperry Rand Corporation and introduced in a paper presented at the 1965 National Conference of the Society of American Value Engineers in Boston.
Since then, FAST has been widely used by Government agencies, private firms, and VE consultants. FAST is particularly applicable to a total project, program, or process requiring interrelated steps or a series of actions. The basic customer-oriented FAST steps are briefly described below.
· Step 1—determine the task function: A FAST diagram begins with the basic functions on the top and the secondary functions on the bottom. A task function is “that function which fulfills the overall needs and wants of the user—in other words, is the main reason for the existence of the product or process in the eyes of the customer or user.” If the task function is among the basic functions already identified, it should be pulled to the left side of the FAST diagram. If it does not exist, it must be created. Determining the task function is not always an easy process. For instance, the most offered task function for a cigarette lighter is “lights cigarettes.” This, however, immediately stumbles over the obvious question, “What about pipes and cigars?” An alternative might then be “generates flame.” However, the electrical resistance lighter in a car only “emits energy.” It becomes apparent that the thought process must focus in either one direction or another to develop a multiplicity of two-word abridgements from which one or more levels may be chosen as the level of the primary functions to be studied.
· Step 2—Identify the primary basic functions: Select the basic functions that directly answer the question “How does (the product or process) perform the task function?” If all direct answers are not among the existing basic functions, create a new one. All of these “primary” basic functions are grouped at the top of the first column to the right of the task function.
· Step 3—identify the primary supporting functions: All customer-oriented FAST diagrams contain primary supporting functions that assure dependability, assure convenience, satisfy the user, or attract the user. In the FAST diagram, place all of the primary support functions to the right of the task function, below the primary basic functions.
· Step 4—Expand the FAST diagram to the right: Keep asking how (the product or process) does this from the viewpoint of a user. Most answers will be found among the existing functions. Add second, third level, and lesser functions as needed, but don’t expand a function unless the “how” question is answered by two or more functions. Both primary basic and primary supporting functions should be expanded in this way. Repeating the “how” question in this way is sometimes called the ladder of abstraction method. It is a thought-forcing process. Because using more than one definition can generate more creative ideas, this approach leads to greater fluency (more ideas), greater flexibility (variety of ideas), and improved function understanding of the problem.
· Step 5—verify the FAST diagram: The FAST diagram (see Figure 6) is verified by driving one’s thinking up the ladder of abstraction. Asking “why” raises the level, making the function description more general.
In practice, the desired level is one that makes possible the largest number of feasible alternatives. Since the higher levels are more inclusive, affording more opportunities, what is desired is the highest level that includes applicable, achievable alternatives. A practical limit to the “why” direction is the highest level at which the practitioner is able to make changes. If the level selected is too low, alternatives may be restricted to those resembling the existing design. If the level is too high, it may obscure achievable alternatives and suggest alternatives that are beyond the scope of effort.
Figure 6. Illustrative Customer-Oriented FAST Diagram
iv. Estimate the Cost of Performing Each Function
All VE efforts include some type of economic analysis that is used to identify areas of VE opportunity and provide a monetary base from which the economic impact of the effort can be determined. The prerequisite for any economic analysis is reliable and appropriate cost data.
Consequently, the VE effort should use the services of one or more individuals who are skilled in estimating, developing, and analyzing cost data. The cost of the original or present method of performing the function (i.e., the cost for each block of the FAST diagram) is determined as carefully and precisely as possible given the time constraints for preparing the estimate.
The accuracy of a cost estimate for a product depends on the:
· “Maturity” of the item,
· Availability of detailed specifications and drawings, and
· Availability of historical cost data.
Similarly, the accuracy of a cost estimate for a service depends on the:
· People involved;
· Time spent performing the service;
· Waiting time; and
· Direct, indirect, and overhead labor and material costs.
In some cases, a VE study will involve both products and services.
v. Determine the Best Opportunities for Improvement
The objective of this activity is to select functions for continued analyses. This is often accomplished by comparing function worth to function cost, where value is defined by the ratio of worth to cost. Thus function worth helps determine whether the VE effort will be worthwhile and provides a reference point to compare alternatives. It can even be used as a psychological incentive to discourage prematurely stopping the VE effort before all alternatives are considered.
It is usually not necessary to determine the worth of every function. Cost data aid in determining the priority of effort. Because significant savings potential in low-cost areas may not be a worthwhile pursuit and high-cost areas may be indicative of poor value, the latter are prime candidates for initial function worth determination. Costs are usually distributed in accordance with Pareto’s Law of Maldistribution; that is, a few areas, “the significant few,” (generally 20 percent or less) represent most (80 percent or more) of the cost. Conversely, 80 percent of the items, “the insignificant many,” represent only 20 percent of total costs. Figure 7 illustrates this relationship.
Figure 7. Pareto’s Law of Maldistribution
A technique for developing the worth of functions developed in the early days of value analysis and still effective today is comparing the selected function to the simplest method or product that can be imagined. A technique to assign worth of functions that has become increasingly popular is to ascertain the primary material cost associated with the function.
The value calculation can be done in many ways. For example, some workshop facilitators use a ratio of “percent relative importance” to “percent of cost.” In this approach, all functions are evaluated pairwise, with different numbers assigned to reflect the relative importance of the two functions being compared (e.g., 3 may mean a large difference in importance, 1 may mean a small difference in importance). A relative importance is calculated for each function individually as the sum of the relative importance scores that function received when it was ranked higher than another function in the pairwise comparisons. The “percent relative importance” is calculated by converting the individual function relative importance scores to a percentage of the total. The “percent of cost” is the cost of a function relative to the total cost of all functions. Snodgrass suggests another approach based on high, medium, and low scores for function acceptance, function cost, and function importance.
Whatever approach is used, the best opportunities for improvement are determined by improving functions having excessively low ratios of worth to cost. This ratio is referred to as the value index.
vi. Refine Study Scope
As a final activity in the Function Analysis Phase, the study scope is refined to reflect the changes that have taken place.
- CREATIVE PHASE (SPECULATION PHASE)
The purpose of the Creative Phase is to develop a large number of ideas for alternative ways to perform each function selected for further study. The two approaches to solving a problem are analytical and creative. In the analytical approach, the problem is stated exactly and a direct, step-by-step approach to the solution is taken. An analytical problem is one that frequently has only one solution that will work. The creative approach is an idea-producing process specifically intended to generate a number of solutions, each of which solves the problem at hand. All solutions could work, but one is better than the others; it is the optimum solution among those available. Once a list of potential solutions is generated, determining the best value solution is an analytical process (as discussed in the latter phases of the job plan).
Creative problem-solving techniques are an indispensable ingredient of effective VE. By using the expertise and experience of the study team members, some new ideas will be developed. The synergistic effect of combining the expertise and experience of all team members will lead to a far greater number of possibilities. The subsections that follow describe the activities in the Creative Phase (also called the Speculation Phase).
i. Discourage Creativity Inhibitors
For these processes to work well, mental attitudes that retard creativity must be overcome. The facilitator should point out creativity inhibitors to the study team. Awareness of these inhibitors encourages people to overcome them. Parker identifies the following as common habitual, perceptual, cultural, and emotional blocks to creativity:
· Habitual Blocks:
- Continuing to use “tried and true” procedures even though new and better ones are available.
- Rejection of alternative solutions those are incompatible with habitual solutions.
- Lack of positive outlook, lack of effort, conformity to custom, and reliance on authority.
· Perceptual Blocks:
- Failure to use all the senses for observation.
- Failure to investigate the obvious.
- Inability to define terms.
- Difficulty in visualizing remote relationships.
- Failure to distinguish between cause and effect.
- Inability to define the problem clearly in terms that will lead to the solution of the real problem.
· Cultural Blocks:
- Desire to conform to proper patterns, customs, or methods.
- Overemphasis on competition or cooperation.
- The drive to be practical above all else, thus making decisions too quickly.
- Belief that all indulgence in fantasy is a waste of time.
- Faith only in reason and logic.
· Emotional Blocks:
- Fear of making a mistake or of appearing foolish.
- Fear of supervisors and distrust of colleagues.
- Too much emphasis on succeeding quickly.
- Difficulty in rejecting a workable solution and searching for a better one.
- Difficulty in changing set ideas (no flexibility) depending entirely upon judicial (biased) opinion.
- Inability to relax and let incubation take place.
The following list adapted from Thirty’s “good idea killers” could also be pointed out to the team as attitudes to avoid:
· It is not realistic.
· It is technically impossible.
· It does not apply.
· It will never work.
· It does not correspond to standards.
· It is not part of our mandate.
· It would be too difficult to manage.
· It would change things too much.
· It will cost too much.
· Management will never agree.
· We do not have time.
· We have always done it that way.
· We already tried it.
· We never thought of it that way.
· We are already too far.
It should be emphasized that the Creative Phase does not necessarily identify final solutions or ideas ready for immediate implementation. It often provides leads that point to final solutions.
Beginning the Creative Phase with a creativity-stimulating exercise can also be useful. Kaufman and McCuish report a threefold increase in ideas with the use of such a stimulus.
ii. Establish Ground Rules
The ground rules for creative idea generation, as adapted from Parker, are summarized as follows:
· Do not attempt to generate new ideas and judge them at the same time. Reserve all judgment and evaluation until the Evaluation Phase.
· Focus on quantity, not quality. Generate a large quantity of possible solutions. As a goal, multiply the number of ideas produced in the first rush of thinking by 5 or even 10.
· Seek a wide variety of solutions that represent a broad spectrum of attacks upon the problem; the greater number of ideas conceived, the more likely there will be an alternative that leads to better value.
· Freewheeling is welcome. Deliberately seek unusual ideas.
· Watch for opportunities to combine or expand ideas as they are generated. Include them as new ideas; do not replace anything.
· Do not discard any ideas, even if they appear to be impractical.
· Do not criticize or ridicule any ideas. (It may be useful to turn the tables on criticism by, for example, maintaining a criticizer list or imposing a mock penalty on criticizers.)
iii. Generate Alternative Ideas
In this phase of the study, it is important to generate a free flow of thoughts and ideas for alternative ways to perform the functions selected for study, not how to design a product or service. While creativity tools are available for problem-solving situations, no specific combination of techniques is prescribed for all VE efforts, nor is the degree to which they should be used predetermined.
The selection of specific techniques and the depth to which they are used is primarily a matter of judgment and varies according to the complexity of the subject under study.
The following describes some idea-generation techniques commonly used in the VE context:
· Brainstorming. Brainstorming is a free-association technique groups use to solve specific problems by recording ideas individuals in the group spontaneously contribute. Brainstorming is primarily based on the premise that one idea suggests others, and these suggest others, and so on. Brainstorming could be done by an individual, but experience has shown that a group can generate more ideas collectively than the same number of persons thinking individually. Sperling has suggested combining group and individual brainstorming. He found that after the group brainstorming process was complete, individual brainstorming can generate additional ideas of comparable quality.
· Gordon Technique. The Gordon technique is closely related to brainstorming. The principal difference is that no one except the group leader knows the exact nature of the problem under consideration. This difference helps avoid premature ending of the session or egocentric involvement. A participant may cease to produce additional ideas or devote energy only to defending an idea if convinced that one of the already proposed ideas is the best solution to the problem. It is more difficult to select a topic for such a session than for a brainstorming session. The subject must be closely related to the problem at hand, but its exact nature must not be revealed until the discussion is concluded.
· Checklist. This technique generates ideas by comparing a logical list of categories with the problem or subject under consideration. Checklists range in type from the specialized to the extremely generalized.
· Morphological Analysis. Morphological analysis is a structured, comprehensive system for methodically relating problem elements to develop new solutions. In this approach, the problem is defined in terms of its dimensions or parameters, and a model is developed to visualize every possible solution. Problems with too many parameters rapidly become intractable.
· Attribute Listing. This approach lists all the various characteristics of a subject first and then measures the impact of changes. By so doing, new combinations of characteristics (attributes) that will better fulfill some existing need may be determined.
· Input-Output Technique. The input-output technique (1) establishes output, (2) establishes input as the starting point, and (3) varies combinations of input/output until an optimum mix is achieved.
· Theory of Inventive Problem Solving (TRIZ). TRIZ is a proven management tool whose use will increase with greater awareness of its capabilities. The methods and tools are embodied in a five-step process: problem documentation and preliminary analysis; problem formulation; prioritization of directions for innovation; development of concepts; and evaluation of results. Dull points out that VE and TRIZ have strengths and weaknesses. Combining these two problem-solving methodologies can create synergies that lead to more robust and comprehensive results, especially for more technically complex projects where the added benefit is worth the effort. He suggests it is easier to integrate TRIZ into the VE job plan than vice-versa and provides an example of a way to do so. Clarke goes into greater detail in the Creative Phase by suggesting how TRIZ can be used to augment traditional brainstorming. Ball supports Clarke’s conclusion: “This is a much more intensive method of identifying potential solutions than generally used in a VM study.”
When using any one of these techniques, review (and rearrange) the elements of the problem several times. If possible, discuss the problem with others to get a new viewpoint. Try different approaches if one technique is not effective. Before closing the book on possible solutions, take a break to allow time for subconscious thought on the problem while consciously performing other tasks.
- EVALUATION PHASE
The purpose of the Evaluation Phase is to refine and select the best ideas for development into specific value improvement recommendations. Ultimately, the decision-maker should be presented with a small number of choices. In the Creative Phase, there was a conscious effort to prohibit judgmental thinking because it inhibits the creative process. The Evaluation Phase must critically assess all the alternatives to identify the best opportunities for value improvement. This phase is not the last chance to defer ideas; detailed cost-benefit analyses conducted in the Development Phase lead to the final set of choices presented to the decision-maker. The following subsections describe the activities in the Evaluation Phase.
i. Eliminate Low Potential Ideas
Eliminate ideas that are not feasible, not promising, or do not perform the basic function. A useful approach to this activity is to classify the ideas into three categories:
· Yes: These ideas appear to be feasible and have a relatively high probability of success.
· Maybe: These ideas have potential but appear to need additional refinement or work before they can become proposals.
· Not Now: These ideas have little or no potential at this time.
At this point, eliminate only the “not now” ideas.
ii. Group Similar Ideas
Group the remaining ideas into several (three or more) subject-related categories. Examine the ideas to determine if they should be modified or combined with others.
Sometimes the strong parts of two different ideas can be developed into a winning idea. In other cases, several ideas may be so similar that they can be combined into a single all-encompassing idea. Some workshops employ a “forced relationships” technique that deliberately attempts to combine ideas from the different subject-related categories in order to discover new, innovative alternatives.
iii. Establish Idea Champions
The remaining activities in this phase are designed to prioritize the ideas for further development. An idea champion is a study team member who will serve as a proponent throughout the prioritization process. If an idea has no champion, it should be eliminated at this point.
iv. List the Advantages and Disadvantages of Each Idea
Identify advantages and disadvantages of each idea. At a minimum include relative ease of change, cost, savings potential, time to implement, degree to which all requirements are met, and likelihood of success. Try to anticipate all of the effects, repercussions, and consequences that might occur in trying to accomplish a solution.
It is also useful to suggest how to overcome the disadvantages. No matter how many advantages an idea has, disadvantages that cannot be overcome may lead to its rejection.
v. Rank the Ideas
Develop a set of evaluation criteria to judge the ideas using the factors considered when listing advantages and disadvantages (e.g., cost, technical feasibility, likelihood of approval, time to implement, and potential benefit). Rank the ideas according to the criteria developed. No idea should be discarded; all should be evaluated as objectively as possible. Ratings and their weights are based on the judgment of the people performing the evaluation. Techniques such as evaluation by comparison, numerical evaluation, or team consensus may be used. Chang and Liou suggest using a simplified risk identification and analysis process to evaluate the performance of alternatives and combine these results with criteria weights to determine the best alternatives for further development.
This initial analysis will produce a shorter list of alternatives, each of which has met the evaluation standards set by the team. At this point in the Evaluation Phase, it may be useful to adapt an idea suggested by Pucetas for the Creative Phase. Pucetas recommends using Force Field Analysis to “measure the sensitivity of the VE team regarding controversial project issues.” For the higher ranked ideas, the VE team should suggest ways to improve upon the disadvantages and enhance the advantages.
This exercise can lead to the following potential benefits:
· Ideas may be revised to improve their potential for success.
· Insight into implementation issues may be obtained from the suggested ways to improve the disadvantages.
· Insight into the acceptability of the idea and the likelihood of management approval may be derived from suggested ways to enhance the advantages.
This approach can therefore serve as a basis for distinguishing among the higher ranked ideas (i.e., re-ranking them) and consequently simplifying and strengthening the process of selecting ideas for further development.
vi. Select Ideas for Further Development
Typically, a cutoff point is established for identifying ideas for further development. If there is a natural break in quantitative evaluation scores, a cutoff point may be obvious. If only qualitative evaluation scores are used, or quantitative scores are very close, a more refined ranking scheme may be needed to make the selection. However, if several alternatives are not decisively different at this point, they should all be developed further.
Alternatives with the greatest value potential will normally be among those selected. If that is not the case, reexamine those ideas to determine whether they should also be developed further. It is also useful to retain at least one idea from each of the subject-related categories used to group ideas at the beginning of the Evaluation Phase.
- DEVELOPMENT PHASE
The purpose of the Development Phase is to determine the “best” alternative(s) for presentation to the decision-maker. In the Development Phase, detailed technical analyses are made for the remaining alternatives. These analyses form the basis for eliminating weaker alternatives. The activities in this phase are described in the following subsections.
i. Conduct a Life-Cycle Cost Analysis
Life-cycle cost is the economic measure of value. A life-cycle cost analysis must rank all remaining alternatives according to an estimate of their life-cycle cost-reduction potential relative to the present method. Cost estimates must be as complete, accurate, and consistent as possible to minimize the possibility of error in assessing the relative economic potential of the alternatives. Specifically, the method used to cost the original or present method should also be used to cost the alternatives.
Be thorough in identifying all costs. For the originating organization, costs may include:
· New tools or fixtures;
· Additional materials;
· New assembly instructions;
· Changes to plant layout and assembly methods;
· Revisions to test and/or inspection procedures;
· Retraining assembly, test, or inspection personnel;
· Reworking parts or assemblies to make them compatible with the new design; or
· Tests for feasibility.
Other costs not normally incurred by the originating activity but that should be considered include:
· Technical and economic evaluation of proposals by cognizant personnel;
· Prototypes;
· Testing the proposed change, including laboratory, firing range, and missile range charges;
· Additional Government-furnished equipment that must be provided;
· If applicable, retrofit kits (used to change design of equipment already in field use);
· Installation and testing of retrofit kits;
· Changes to engineering drawings and manuals;
· Training Government personnel to operate and maintain the new item;
· Obtaining new and deleting obsolete Federal stock numbers;
· “Paperwork” associated with adding or subtracting items from the Government supply system;
· Maintaining new parts inventory in the supply system (warehousing);
· Purging the supply system of parts made obsolete by the change; and
· Changing the contract work statements and specifications to permit implementation of the proposal.
It is not always possible to determine the precise cost of certain elements of a change. For example, it is difficult to obtain the actual cost of revising, printing, and issuing a page of a maintenance manual. Nevertheless, this is a recognized item of cost, because the manual must be changed if the configuration of the item is changed. It is common practice to use a schedule of surcharges to cover areas of cost that defy precise determination. Such a schedule is usually based on the average of data obtained from various sources.
It is easier to compare alternatives using a “constant dollar” analysis in lieu of a “current dollar” approach. This permits labor and material cost estimates to be based on current operational and maintenance data and eliminates the need to figure out how they would inflate in some future year. Therefore, the net present worth of each of the alternatives should be calculated, but only after there is management agreement on the following two factors:
· The discount rate to be used. This is the difference between the inflation rate assumed and the time value of money (interest rate).
· The length of the life cycle. This is the number of years of intended use or operation of the object being studied.
The Office of Management and Budget Circular A-94, “Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs,” provides annual guidance on appropriate discount rates to use. Normally, the Defense Department allows a period of 15–20 years as a reasonable life cycle. However, program or command may have guidance for a particular situation.
ii. Determine the Most Beneficial Alternatives
Certain key questions should be answered as part of this effort:
· What are the life-cycle savings?
· Do the benefits outweigh the costs?
· What are the major risks?
· How can the risks be mitigated?
· Are there any outstanding technical issues?
If more than one alternative offers a significant savings potential, it is common to recommend all of them. One becomes the primary recommendation and the others are alternative recommendations, usually presented in decreasing order of saving potential. Take other non-quantified benefits into account.
The VE team should consult with personnel knowledgeable about what the item must do, the operational constraints it faces, how dependable the item must be, and what environmental conditions it must operate under. Technical problems related to design, implementation, procurement, or operation must be determined and resolved.
iii. Develop Implementation (Action) Plans
The implementation plan for each alternative should include a schedule of the steps required to implement the idea, who is to do it, the resources required, the approval process, the documents needed, the timing requirements, coordination required, and so on. Anticipate problems relating to implementation and propose specific solutions to each. Particularly helpful in solving such problems are conferences with specialists in relevant areas.
When needed, testing and evaluation should be planned for and scheduled in the recommended implementation process. Occasionally, a significant reduction in implementation investment is made possible by concurrent testing of two or more proposals. Also, significant reductions in test cost can often be achieved by scheduling tests into other test programs scheduled within the desirable time frame. This is particularly true when items to be tested are a part of a larger system also being tested. However, care must be exercised in instances of combined testing to prevent masking the feasibility of one concept by the failure of another.
- PRESENTATION PHASE
The purpose of the Presentation Phase is to obtain a commitment to follow a course of action for initiating an alternative. A presentation to the decision-maker (or study sponsor) is made at the conclusion of the workshop. This presentation is normally the first step (not the last step) in the approval process. Typically, a decision to implement is not made at the time of the briefing. Additional steps include:
· Answering additional questions,
· Collection of additional data,
· Review of supporting documentation, and
· Involvement of other decisions-makers.
The sole activity in this phase is preparation of a presentation to encourage commitment. An oral presentation can be the keystone to selling a proposal. It should make an impact and start the process of winning management and other stakeholder support. The presentation gives the VE team a chance to ensure that the written proposal is correctly understood and that proper communication exists between the parties concerned. The presentation’s effectiveness will be enhanced if:
· The entire team is present and is introduced;
· The presentation lasts no longer than 20 minutes with time for questions at the end;
· The presentation is illustrated using mockups, models, slides, vu-graphs, or flip charts; and
· The team is prepared with sufficient backup material to answer all questions during the presentation.
The presentation should:
· Describe the workshop objectives and scope,
· Identify the team members and recognize their contributions,
· Describe the “before” and “after” conditions for each alternative,
· Present the costs and benefits/advantages and disadvantages/impact of each alternative,
· Identify how to overcome roadblocks,
· Demonstrate the validity of the data sources, and
· Suggest an action plan and implementation schedule.
Many suggestions may be offered to improve the probability of success and reduce the time required for acceptance and implementation of proposals. Those that appear to be most successful are as follows:
· Consider the reviewer’s needs. Use terminology appropriate to the training and experience of the reviewer. Each proposal is usually directed toward two audiences. First is the technical authority that requires sufficient technical detail to demonstrate the engineering feasibility of the proposed change. Second are the administrative reviewers for whom the technical details can be summarized while the financial implications (implementation’s cost and likely benefits) are emphasized. Long-range effects on policies, procurement, and applications are usually more significant to the administrator than to the technical reviewer.
· Address risk. Decision-makers are often more interested in the risk involved in making a decision than the benefits or value that might be achieved. Do not confuse decision-making risk with technical risk. Decision-making risk encompasses the uncertainty and complexity generated from making change. Therefore, consider the organizational culture and behavior when characterizing the recommendation.
· Relate benefits to organizational objectives. If the proposal represents advancement toward some approved objective, it is most likely to receive favorable consideration from management. Therefore, the presentation should exploit all the advantages a proposal may offer toward fulfilling organizational objectives and goals. When reviewing a proposal, the manager normally seeks either lower total cost of ownership or increased capability at the same or lower cost. The objective may be not only savings but also the attainment of some other mission-related goal of the manager.
· Show collateral benefits of the investment. Often, VE proposals offer greater benefits than the cost improvement specifically identified. Some of the benefits are collateral in nature and may be difficult to quantify. Nevertheless, collateral benefits should be included in the proposal. The likelihood of acceptance of the proposal is improved when all its collateral benefits are clearly identified and completely described.
The Presentation Phase should end with a list of actions leading to approval:
· Preparation and submission of a final workshop report with all the necessary supporting documentation,
· Briefings to other key stakeholders, and
· A schedule for a follow-up meeting to approve the proposal.
- IMPLEMENTATION PHASE
The purpose of the Implementation Phase is to obtain final approval of the proposal and facilitate its implementation. Throughout this phase, it is useful to keep in mind factors that contribute to successful change:
The VE/VA techniques provide an excellent method for planned and managed change. However, even when the job plan is applied well, challenges to the change process occur due to individual differences and human interpretation. At each stage of the change process, a number of varying responses may be expected from individuals involved throughout the organization. These responses range from active support to resistance. One of the approaches that have demonstrably improved the chances for success of the planned change and reduced reactive resistance is to let people in on the action—to participate in the decision-making process.
Fraser goes on to note the five factors Kolb and Boyatzis have identified as most highly related to goal achievement: awareness, expectation of success, psychological safety, measurability of the change goal, and self-controlled evaluation.
VE is ideally suited to meeting these challenges. The following subsections depict a typical sequence of events.
i. Prepare a Written Report
It is unusual to base a decision only on the basis of an oral presentation; supporting documentation is normally required. Therefore, the results of the study should also be documented in written form. Failure to provide adequate documentation is a prime factor in proposal rejection.
Oral presentation of study results is most helpful to the person who is responsible for making the decision; however, it should never replace the written report. A written report normally demands and receives a written reply; whereas oral reports can be forgotten and overlooked after they are presented. In the rush to wrap up a project, promote a great idea, or save the laborious effort of writing a report, many proposals have fallen by the wayside because the oral presentation came first and was inadequate. The systematic approach of the VE job plan must be followed all the way through to include the meticulous and careful preparation of a written report. Like any other well-prepared staff report, this final report should:
· Satisfy questions the decision-maker is likely to ask,
· Provide assurance that approval would benefit the organization,
· Include sufficient documentation to warrant a favorable decision with reasonable risk factors (both technical and economic), and
· Show how performance is not adversely affected.
The report should be accompanied by a team letter that summarizes the recommendation and action plan. This letter should also request action from the sponsor. Send the letter and the report to all stakeholders.
ii. Enhance the Probability of Approval
Approval of a proposal involves change to the status quo. Because of this, or other pressing priorities, a manager may be slow in making a decision. The manager who makes an investment in a VE study expects to receive periodic progress reports before a final decision is made. Regular reporting helps ensure top management awareness, support, and participation in any improvement program. Therefore, it is advisable to discuss the change with the decision-makers or their advisors both before and after submitting the final report. This practice familiarizes key personnel with impending proposals and enables a more rapid evaluation. Early disclosure may also serve to warn the originators of any objections to the proposal. This “early warning” will give the originators opportunity to incorporate explanations and details into the final report to overcome the objections. These preliminary discussions often produce additional suggestions that improve the proposal and enable the decision-maker to contribute directly.
Implementation depends on the expeditious approval by the decision-makers in each organizational component affected by the proposal. The VE team should become liaisons between decision-makers and stakeholders by preparing information that weighs the risk against the potential reward and thinking about potential roadblocks to determine, in advance, how they should be overcome.
Some organizations have found it helpful to convene an implementation meeting with all stakeholders. Once tentative decisions have been made, this meeting is used to help everyone understand which proposals or modified proposals have been accepted, rejected, or will be studied further.
In some cases, the tentative decisions are changed based on a clarification of a misunderstood assumption.
iii. Monitor Progress
Implementation progress must be monitored just as systematically as the VE study. It is the responsibility of the VE study team to ensure that implementation is actually achieved. A person could be given the responsibility of monitoring deadline dates in the implementation plan and the process for obtaining any implementation funding.
iv. Expedite Implementation
To minimize delays in the implementation process, use the knowledge gained by those who originated it. The VE team should be called on to provide assistance, clear up misconceptions, and resolve problems that may develop. In addition, where possible, the VE team should prepare first drafts of documents necessary to revise handbooks, specifications, change orders, drawings, and contract requirements. Such drafts will help to ensure proper translation of the idea into action and will serve as a baseline from which to monitor progress of final implementation. The VE team should review all implementation actions to ensure communication channels are open and that approved ideas are not compromised by losing their cost effectiveness or basis for original selection.
v. Follow-up
The final activity of the Implementation Phase includes several diverse tasks that foster and promote the success of subsequent VE efforts:
· Obtain copies of all complete implementation actions,
· Compare actual results with original expectations,
· Submit cost savings or other benefit reports to management,
· Submit technical cross-feed reports to management,
· Conduct a “lessons-learned” analysis of the project to identify problems encountered and recommend corrective action for the next project,
· Publicize accomplishments,
· Initiate recommendations for potential VE study on ideas evolving from the study just completed, and
· Screen all contributors to the effort for possible receipt of an award and initiate recommendation for appropriate recognition.
