1. Value Management Joseph F. Otero, Jr. CVS
Value Methodology Integration Leader
(& SAVE International Vice President, Education)

2. Main Message

3. Pratt & Whitney Success Stories
Over 14,000 ideas for F135 jet engine for Joint Strike Fighter
Commercial engine: $1/2 Million savings without weight increase
Driving to do VM earlier in Design

4. Design Influence on Value
Since up front decisions impact value the greatest, it’s imperative to address affordability in concept stage. Create performance/cost/weight relationships & link to Affordability initiatives.
Material
50%
Labor
15%
Burden
30%
Design 5% 10 20 30 40 50 60 70 80 90
100
70%
20%
Traditional Cost Accounting
Percent
Influence
On Total
Cost

5. Applying Value Management
Conceptual Design
Preliminary Design
Detail Design
Development
Production
Year 1999
F135 in 2002
Future Programs
Year 1995
Customer Satisfaction
Business Requirements VM
Deliver essential functions in the most profitable manner.

6. Intellectuals solve problems;
geniuses prevent them.
--Albert Einstein
We think we’ve discovered how to be geniuses relative to affordability.

7. Product Learning Curve Effect
1 yr of savings/cost avoidance on major engine development
Effect of Affordability Plan
Predicted Estimated Cost
Start Lower
Learned out sooner
Effect of Affordability Plan & VM
PRODUCTION ENGINE UNIT 11 11

8. Failures (seeds of Opportunity)
Resistance toward VM in a few programs
Not invented here?
A VM group disbanded when its executive retired
Process shortened until it didn’t deliver.
Grasshopper without legs is deaf?
Lesson learned: match length of study to magnitude of problem.

9. Recommended Improvements
Pull VM into conceptual design.
Avoid problems instead of fixing them.
Use ranges of acceptability (versus hard points).
Increase potential to balance business needs with customer expectations
Continue VM throughout product development
Promote use of VECP’s

10. Back-up Slides

11. Encountered Barriers Organizational Culture
Metrics drive behavior
resistance at different tiers
(embracing change: easier said than done)
Failure to implement opportunities
inadequate resources
risk aversion
schedule constraints

12. Balancing Design
Deliver essential functions in the most profitable manner.
Ensuring stakeholders & requirements are working together to satisfy customer needs.
COST
DURABILITY
OPERABILITY
WEIGHT
RELIABILITY
MAINTAINABILITY
LEAD TIME
PERFORMANCE
WILD CARD
DESIGN
CUSTOMER
MFG
SUPPLIER
FINANCE
PROJECT

13. Why VM Works
“The mere formulation of a problem is far more often essential than its solution, which may be merely a matter of mathematical or experimental skill.
To raise new questions, new possibilities, to regard old problems from a new angle requires creative imagination and marks real advances in science.”
- Albert Einstein
Function analysis via FAST modeling is all about understanding problems with new perspective.

14. Value Management Process Conventional Problem Solving
versus
Value Management Process
Conventional Problem Solving
2-3 days analyzing the problem
full day brainstorming
2 days sifting ideas
1 day packaging and analyzing
Weeks implementing ideas
A couple of hours deciding what to work on
a half hour brainstorming
Weeks to try to make the ideas work, revisiting brainstorming

15. Key Function of Customer Input
Communicate Ranges of Acceptability
Minimum Acceptable values
Maximum desired values
Perception of value delivered by competing products
Communicate Requirements
Single data points
Only know customer ideal
--Vs.--
Several Alternatives
Limited Choices
Make Balanced Trades Possible