Techniques o f Value Analysis and Engineering

How can we reduce to half the taxpayer's time in buying a license, paying a tax bill, securing information, etc.? How can we improve the effectiveness of our police? How can we receive information on robberies much faster? How can we teach world history more efficiently? How can we use developing student skills more effectively? How can we provide more classroom space most economically? How can we locate and interest the mathematics professor we need? How can we communicate benefits to the alumni better? How can we get the funding we require for an added facility?

7-2 Pattern for Disciplined Thinking
of Value Analysis o n Services Work

The disciplined thinking procedures follow closely the following pattern: 1. What is the overall problem area in which better answers are desired? 2. Divide the overall problem until it consists of individualized, coherent, important, secondary problems, each largely controllable by its own type of parameters. 3. Determine which problems can be solved concurrently and which must be solved consecutively. Establish the starting order. 4. Now start and follow through the thinking and search processes of the job plan. Force the thinking and language of "function" into all considerations. a. What functions are being performed? b. What functions are wanted? c. What functions are needed? d. What functions could be grouped for better solutions? e. What functions should be eliminated? f . Develop changes in, different groupings of, and alternative means for, accomplishing the functions. g. Associate present costs with each function being accomplished. h. Evaluate functions and function groups by meaningful comparisons.

Case Study'

One project related to admissions, room assignments, and laboratory tests. Annual costs for the functions provided were $320,000 for labor and
1 Society of American Value Engineers, Atlanta Chapter, George R. Weeks, Program Director.

Setting and Solving Services Problems


materials. In addition there was need for service improvement, such as reducing delays, overcrowding of certain areas, and assorted frustrations. In problem setting, items such as the following were brought into focus: 1. Overloading the floor secretary with admissions. 2. Multiple tests are erroneously ordered on same request. 3. Inefficiency in running stats one at a time. 4. Need better priority designation than "routine" or "stat." 5. Insufficient information given when floors call in stat. 6. Some routine requests are not in by 5:00 A.M. the day needed. 7. Room transfer delavs. 8. Lab notification from emergency room of patient status. 9. Excess amount of nontechnical work to be done in lab. 10. Ordering new supply of lab forms. 11. Wasted request forms. 12. Delays caused by not ordering required tests at proper time prior to surgery. 13. Duplication of lab requests. 14. Inadequate information on requests. 15. Some requests do not have needed specimens attached. 16. Use of control cards. 17. Scheduling outpatients for tests. 18. Notifying affected personnel of test schedules. 19. Conflict of X-ray and lab work. 20. New tests not covered by a request form. 21. Unneeded phone checks from floor concerning emergency X matches in blood bank. As the result of the problems set in these areas, the informationgathering, analysis, creativity, and preliminary judgment steps were used and the following items either went into implementation or were recycled to maximize their benefits or reduce their disadvantages.

1. Eliminate overloading ward secretary by: a. Changing admission hours to 12:OO noon to 2:00 P.M. b. Alerting doctors to time of admission c. Doctors providing preadmission information and arrival time d. Bringing all orders by lab e. Admission office stamping forms for all lab work f . Buying or renting a stamper for lab 2. Avoid multiple tests on same request by: a. Developing better communication between ward secretaries on different shifts b. Nurse catching it when checking request c. Checking control copies d. Including instructions in training for all new personnel e. Including instructions on ward bulletin board 3. Reduce inefficiency of processing stats one at a time by: a. Collecting several before processing


Techniques of Value Analysis and Engineering

b. Running a test every hour Fixing "sick" PCV machine d. Improving space conditions in lab e. Assigning complete responsibility for stats to one or two persons f . Utilizing one nontechnical person for collecting stats and performing nonskilled tasks in the lab 4. Improve request priority by publishing a definite definition of terms: Emergency Stat Today Routine Preop (give hour) 5. Eliminate floor calling for stats to be worked by accepting no verbal stats 6. Ensure that all routine requests are in lab by 5:00 A.M. the day needed by: a. Informing affected personnel of this cutoff time b. Not holding request until shift change c. Posting scheduled cutoff time (5:OO A.M.) on bulletin board for doctors and ward secretaries 7. Avoid delays resulting from room transfers by placing transfer slips in box after checking slips on spindle 8. Ensure that the emergency room notifies the lab of patient status, which will reduce delavs bv: . , a. Emergency room notifying lab when patient is admitted b. Improving communication between the emergency room and the admissions office to prevent duplicating CBC's (by attaching control copy to emergency room form, which goes to the admissions office) 9. Reassign nontechnical lab work by: a. Hiring nontechnical personnel and listing duties b. Obtaining voluntary help (six months only) c. Obtaining voluntary help for weekends to answer phone, etc. d. Appointing a collector e. Establishing an IV team and a blood-collecting team 10. Reduce the cost of request forms by: a. Reducing the number of different colors on the forms b. Using ten colors and five checked forms c. Getting all hospitals to use the same form 11. Reduce wasting of request forms by publishing cost of a form on the bulletin board 12. Avoid delays caused by not ordering test at proper time prior to surgery by: a. Having anesthesiologists check all patients b. ~ x ~ l a i n tonthe doctor the importance of notifying the lab i ~ c . Using preop flags d. Providing early notification to the operating room when a patient


Setting and Solving Services Problems


is placed on the operating room schedule or of any change in the schedule, so that the three-to-eleven shift can do surgical CBC and urine routines, thus avoiding stats 13. Avoid duplication of lab requests by using the control copy 14. Improve the adequacy of information on requests by: a. Listing specifications for "funny" tests on each floor b. Including diagnosis on all slips c. Listing tests that cannot be done simultaneously, for example, BSP and IVP d. Updating the procedures book 15. Prevent delays caused by requests not having needed specimens attached by: a. Not accepting slips without them b. Improved communication C. Bulletin-board instructions 16. Increase the effectiveness of the control cards by: a. Improved filing system b. Destroying cards when report is received c. Attaching a card to emergency room form when patient is admitted to avoid duplication 17. Avoid delays involving the scheduling of outpatients for tests by: a. Scheduling arrival prior to 9:00 A.M. b. Using appointment cards c. Posting test schedules in doctors' offices d. Scheduling clinic patients and standing orders e . Giving appointment and schedule information to information desk f. Publishing test schedules in Kenneg~am,Cup of News, and on the bulletin board. 18. Notify affected personnel of test schedules by: a. Using bulletin board (preop, 5:00 A.M., 1:00 P.M., etc.) b. Using other methods of communication 19. Eliminate unauthorized stats. 20. Reduce delay of stats and special orders by attaching a red card as a "flag." 21. Reduce wasted phone-call time concerning emergency "crossmatches" by having the lab secretary take the message. The benefits accrued to the hospital were twofold: ( 1 ) a reduction of overcrowding and delays in acquiring crucial additional space needed, and resulting frustrations, and ( 2 ) annual expense reduction of $50,000. Another project was a similar function-cost study of the admission kit. Information was gathered, and functions were studied. Creativity and judgment thinking were scheduled and completed. The savings in labor and material developed were about one-third, or $54,000 per year. Another project involved the isolation chart. The annual expense reductions developed were $57,000 in labor and material.


Techniques of Value Analysis and Engineering

7-3 Progression of Value Analysis
Work on Services

1. Exactly what are we trying to do? 2. Information step-jot it down. What happens, etc.? (See previous instructions on information step of the job plan.) 3. Analysis step-function identifying, evaluating, separating, grouping, and setting the precise problems that will be solved. 4. Recycle through information step. What else can be known about this precise situation? What knowledge about it? What assumptions about it? Perhaps do some hard work to develop some information that is not known but is needed. 5. Follow with analysis again. Do it thoroughly. What are the meanings, senses of direction, and orders of solution? Reshape or reword the exact problems now to be solved. Put them into proper language to allow creative solutions. 6. Apply creativity to the precise problems from above. Allow no judging. Secure much "free-wheel" thinking. Jot it down. 7. Proceed to judging. Now the task is not to eliminate the unsuitable approaches but rather to select one or two approaches that would have great benefit and minimize their disadvantages. 8. Often "how to minimize the disadvantages of a solution that has great advantage" becomes the next problem to cycle through the problem-solving plan of information, analysis, creativity, and judgment to a good final solution. 9. Now the development-planning step becomes of great importance. Assign the task of implementation with much care and concern. Schedule the progression of the change. Arrange for follow-up of progress. Expect some unexpected situations to arise to slow or stop the change. 10. Be prepared to take any serious "stoppers" of the implementation plan as new problems, and promptly develop suitable solutions to them by good use of the problem-solving system.
7-4 Start of Value Analysis Program in a City Government

Repeated urgent requirements for higher taxes to support what seemed to be required essential services caused great concern among business and industry leaders in the city. A few had had experience with value analysis in their businesses. Through the chamber of commerce they arranged for the city to receive some knowledge of value analysis approaches.

Setting and Solving Services Problems


Steps Taken

1. The city council was provided with 2 hours of orientation and indoctrination so that they would understand, in general, a little about the nature of value analysis and how the system of value analysis techniques would try to accomplish the needed results. ("What are we trying to do?" ) 2. Teams of two persons from each department were selected by the city management for some training in the techniques. Some of the departments were health, finance, police, fire, water, engineering, and parks. 3. Two-hour sessions of instruction in the techniques were held every Tuesday afternoon for ten weeks (twenty would have been even better). 4. Each team of two persons selected a project on which to apply value analysis approaches during their training. Some of the teams gathered essential information and did effective work on their projects between sessions. About 1 hour of the session was utilized in teaching them further techniques; in the other hour they were assisted in using the system on their own projects. 5. At a special meeting of the city council, each team reported on its attitudes, projects, and future recommendations. (Members of the chamber of commerce were welcome to attend any of the meetings, and some did so. )
Typical Findings of City Employee Teams during Their Value Analysis Training Project W o r k

1. Health department members studied the functions and subfunctions that needed to be performed, the means by which each was performed, its cost, and alternative methods of performing the functions and their costs. Sensible groupings of functions were so grouped. Very useful problems were "set." Creativity and judgment followed. Some of their findings and recommendations were: A considerable amount of their professional nurses' time was being consumed in nonprofessional type of work. By separating it out and eliminating the work that was making no contribution to useful functions, the equivalent of two more nurses' time was made available for nurses' work. This ended the nurse shortage, which they had been forced to endure because of budget restrictions. They studied real functions of each clerical operation. Then they grouped or eliminated enough as nonfunction operations to speed up services. Many improvements in the use of their doctors' time reduced client delays and excessive strain on their doctors.


Techniques of Value Analysis and Engineering

2. One of the projects of the fire department was the examination of maintenance costs of certain equipment, including fire hydrants. One item of expense on the hydrant was a large gasket, which cost $20,000 per year in material and installation cost. Studying its functions and searching for newer and better material to withstand the conditions brought them a new material that required replacing only one-tenth as often and did not cost any more originally. The new gasket would provide the same functions at an annual cost of $4,000, reducing operating costs $16,000. 3. One of the studies made by the team from the finance department was the expense of collecting taxes. In the information step, for example, some of the facts were: Thirty people were required to write receipts, which were given to taxpayers. The receipts were written and torn from a permanently bound book. It was said that the state law required that the receipts be written in and tom from a permanently bound book, which retains a copy.
In the analysis thinking they defined the function as: Collect money. Give receipt. In searching for alternatives, they were shown by equipment manufacturers that for a one-time $30,000 investment, modern equipment could be installed that would handle the entire task with only three, not thirty, people. Since very basic issues are involved, this alternative typically produced a violent disagreement between two members of the team, one of whom felt that the whole matter should be dropped immediately. The other member of the team felt that action should be initiated toward changing what he considered to be an "obsolete law" and slowly transferring the unnecessary people to other areas of city government that were requesting more people but unable to hire them because of budget limitations. In this case, each man made a separate report to the city council, rather than both as a team as in all other cases. 4. Projects from the other departments brought tangible useful suggestions for the city government group, who were hard pressed to meet the increasing demand for services with insufficient increases in taxes.

Case Study2

It was decided to offer the services of members of our chapter of the Society of American Value Engineers to our county's Goodwill Industries. 2 Warren A. Johnson, Proc. Soc. Amer. Value Engrs., vol. 4, pp. 77-79, 1969
( extracted with permission).

Setting and Solving Services Problems


This was decided because: 1. Under the recent increase required by the federal Minimum Wage Law, Goodwill Industries had been compelled to lay off numerous handicapped employees, as they could no longer afford to pay them. 2. Goodwill Industries was not able to afford professional engineering services and therefore had been accepting contract work, which was unprofitable. 3. Salvage operations resulting from community collections were also losing money for Goodwill, as their methods of operation were costing more than could be recovered through sales. 4. High operating costs were requiring the handicapped people, who comprise approximately 90 per cent of Goodwill's employees, to be laid off and returned to welfare roles at taxpayers' expense. The greatest and costliest problems were found in the materials-handling area. All of the items collected from the Goodwill booths throughout the country were brought in by the trucks to the receiving docks for processing. Since these collections usually took place throughout the night, teams actually followed various trucks and filmed the pickup operations. Before dawn, additional films were made on the receiving docks, showing the unloading and sorting activities. From studying these films, improved handling procedures were developed and considerable improvements were introduced to further reduce the time and expense previously incurred through the old methods. Some other projects were: 1. The analysis and evaluation of all incoming job-shop production contracts to determine which of these will yield the greatest returns to Goodwill Industries. Until these teams (which serve on a rotating basis) began performing this much needed service, this was one of Goodwill's most serious money-losing areas. As a result of these teams' evaluating efforts, this function is approaching the profit level. 2. The direct application of value analysis methodology to products that have been offered to Goodwill for long-term production but are presently too high in cost to meet competitive market conditions. There are numerous contracts of this type, and they received high priority by the team members, as their acceptance can provide the employment of many handicapped people who are unable to obtain jobs. 3. The evaluation and analysis of all incoming salvage to quickly determine the most profitable items to process and the most economical method for disposing of the undesirable materials. 4. The breaking down and planning of incoming job contracts in order to provide the most feasible and economical means of production. Team members working on this phase of the program actually designed special tooling whenever its development would result in work activity for an otherwise unemployable person. 5. The development of a much faster and more effective test procedure that is to be used in selection of appliances and television sets worthy of


Techniques of Value Analysis and Engineering

being repaired for resale in Goodwill's outlet stores. The method used often required several days of repair time, only to result in a nonresalable item. This team designed and built a simple test fixture that would quickly separate the worthwhile appliances for repair from the time-consuming money losers. As a result of this action, the Goodwill people became thoroughly indoctrinated with value analysis methodology and are making plans to utilize it in all of their operations as a standard operating procedure,

When used on a service, the value analysis system may start in the same manner as when used on a product or it may have a different starting point. With a product, the starting point, except for original design, is the product itself, with the development of thinking beginning with "What functions does it perform?" Similarly, the study of a service may start with the entire activity or some separable part of it and move off with the question "What functions does it perform?' Often, however, the study of a service may advantageously start with a focus on the cost of that service. For example, from the list of expenses it is seen that an item of service costs $25,000 annually. This then becomes the starting point, followed by the question "What functions do we receive for that $25,000?" Then follow all of the techniques of examining each function for its need and appropriateness, separating, grouping, searching for alternatives, evaluating suitable functions and/or function groups, etc. Problem setting and solving then proceed in the usual way.