1. VM SAVE International providing value ….. to the world VM Briefing SAVE International introduces “ Value Methodology ” Presentation version 1

2. VM SAVE International providing value ….. to the world VM Briefing What Is It? History of VM & SAVE Why Use It? Who Uses It? How Is It Applied?  Methodology  Function Analysis Example Applications Reasons for Low Value Next Steps  SAVE Membership  Training, Certification VM in the next Millennium Agenda:

3. VM SAVE International providing value ….. to the world VM Briefing What is It:  Value Methodology (synonyms: value analysis, value engineering and value management) ... function-oriented, systematic, team approach to add customer value to a program, facility, system, or service. Improvements like performance, quality, initial and life cycle cost are paramount in the value methodology.

4. VM SAVE International providing value ….. to the world VM Briefing Brief History: Began at GE early 1940’s 1947 - Value Analysis  Lawrence D. Miles  “Father of VM” 1954 - Value Engineering  U. S. Navy Society of American Value Engineers (SAVE)  Formed in 1959 Value Management, Value Control, Value Improvement SAVE International  Name change 1996

5. VM SAVE International providing value ….. to the world VM Briefing Why Use It: Customer Satisfaction Performance Improvement Productivity Improvement Quality Improvement Time Saving Proven over 50 years Functions Achieved Results Oriented  Enhanced operation  5 - 15% cost savings  Lower life cycle costs  Increased revenue Benefit to cost 20:1

6. VM SAVE International providing value ….. to the world VM Briefing Who Uses It: Construction  ASTM E-1699 Manufacturing / Industry  ISO Certification Transportation Environment Health Care Services & Systems Government  OMB Circular A-131  Public Law 104-106

7. VM SAVE International providing value ….. to the world VM Briefing How is it Applied? Methodology  PRE-STUDY  VALUE STUDY Information Phase Function Analysis Phase Creative Phase Evaluation Phase Development Phase Presentation Phase  POST-STUDY Pre Study Value Study Post Study

8. VM SAVE International providing value ….. to the world VM Briefing Value Study Information Phase  Review Data Package  Present Study Overview Stakeholder Briefing  Review Project Background / History  Determine Value Study Expectations  Visit Site  Conduct Interview Pre Study Value Study Post Study

9. VM SAVE International providing value ….. to the world VM Briefing Value Study Function Analysis Phase  Identify Functions Verb / Noun  Classify Functions Basic, Secondary  Model Functions FAST, Hierarchy  Establish Function Worth  Determine Function Costs  Establish Value Index  Select Functions for Study Pre Study Value Study Post Study

10. VM SAVE International providing value ….. to the world VM Briefing Define Functions Basic Function  Defines a performance feature that must be obtained  Satisfy only user’s needs not desires - What must it do ? Secondary Function  Defines performance features other than those that must be accomplished  Are user’s desires rather than needs - What else can it do ?

11. VM SAVE International providing value ….. to the world VM Briefing Value Study Creativity Phase  Reduce Roadblocks  Brainstorming, Check Lists, & Other Techniques  Produce Solutions, QUANTITY of ideas to accomplish FUNCTIONS in alternative ways  Synthesize Ideas Pre Study Value Study Post Study

12. VM SAVE International providing value ….. to the world VM Briefing Value Study Evaluation Phase  Rank & Rate IDEAS Functional Compliance Eliminate Nonsense Cost Impacts Schedule Changes Project Objectives Study Goals  Select IDEAS for Development Pre Study Value Study Post Study

13. VM SAVE International providing value ….. to the world VM Briefing Value Study Development Phase  Create Benefit Analysis  Review Technical Criteria  Complete Descriptions Original and Proposed  Produce Support Material Charts, Graphs, Drawings  Perform Cost Analysis Original and Proposed  Determine Life Cycle Costs  Generate Implementation Plan Pre Study Value Study Post Study

14. VM SAVE International providing value ….. to the world VM Briefing Value Study Presentation Phase  Present Study Results  Issue Report  Determine Next Steps  Obtain Commitments to Implement Alternatives Pre Study Value Study Post Study

15. VM SAVE International providing value ….. to the world VM Briefing Post Study Complete Changes Implement Changes Monitor Status Pre Study Value Study Post Study

16. VM SAVE International providing value ….. to the world VM Briefing Example Applications: Construction Criminal Court Complex New York, NY  Improved Function  Reduced Required Area  Enhanced Operations  Added New Technology  Improved Master Planning  $412 million LCC savings Veterans Administration Hospital, Dayton, Ohio  Improved Layout  No Functional Reduction  $3.8 million LCC savings

17. VM SAVE International providing value ….. to the world VM Briefing Example Applications: Manufacturing / Industry Heat Pump Project  Changed design so that all parts were at 90 o to others  $229,655 savings  Reduced material needed Catenary Anchor Leg Moored (CALM) Oil Transfer Buoy  Survive Accidents Better  $17,000 savings per unit  Doubled no. of bulkheads

18. VM SAVE International providing value ….. to the world VM Briefing Example Applications: Transportation U.S. Highway 31, Miles, Michigan  Eliminated Unnecessary Functions  Reduced Costs of Required Functions  Made Design more Cost Effective  $1,000,000 savings

19. VM SAVE International providing value ….. to the world VM Briefing Example Applications: Government Targeting Navigation System for U.S. Army’s Apache Helicopter  Reduced Maintenance  Simplified Assembly  Improved Durability  $390 million savings Patriot Missile  Improved Reliability  Enhanced Useful Life  $134 million savings

20. VM SAVE International providing value ….. to the world VM Briefing International Affiliates Japan  40 year History  Industry, Management, Construction, Electronics India  25% of Companies use VM Hungary  Newest Affiliate Additional Members in 30 countries

21. VM SAVE International providing value ….. to the world VM Briefing Reasons for Low Value: Pride Built-In Resistance Lack of Time Habits (comfort factor) Customers Priorities Lack of VM Budget

22. VM SAVE International providing value ….. to the world VM Briefing Improving Value Increase Awareness of VM Involve all Participants Schedule VM as Routine Activity 20:1 Improvement Innovative Solutions

23. VM SAVE International providing value ….. to the world VM Briefing VM in the Next Millennium: Expanded Role Technological Advancements More Strategic Applications Expanded Focus on New Markets & Businesses Worldwide Team of Experts Comprehensive Use Improved Customer Communications Goal: World Class Value

24. VM SAVE International providing value ….. to the world VM Briefing VM in the Next Millennium: “VM is moving into a new cycle of high visibility, and we (SAVE International) must be proactive rather than reactive to this move.” Joe Lambert, CVS, President, SAVE International

25. VM SAVE International providing value ….. to the world VM Briefing Closing Statement Value Methodology is a Value Added service that demonstrates your organization’s commitment to be: “Customer Focused” and “Responsive to Emerging Needs”