d:\scanned\services.

tif Page 1
78 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, co-
herent, 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'
VALUE ANALYSIS APPLIED TO HOSPITAL
SERVICES AND EXPENSES

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 79

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 information-
gathering, 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
80 Techniques of Value Analysis and Engineering

b. Running a test every hour

C. -
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 per-
forming 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 admis-
sions 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 to
i nthe
~ doctor the importance of notifying the lab
c . Using preop flags
d. Providing early notification to the operating room when a patient
 Setting and Solving Services Problems 81

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 ad-
mitted 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 "cross-
matches" 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 judg-
ment 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 reduc-
tions developed were $57,000 in labor and material.
82 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 mean-
ings, 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 judg-
ing. 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 prob-
lem-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 83

Steps Taken
1. The city council was provided with 2 hours of orientation and in-
doctrination 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 depart-
ments 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 prob-
lems 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 non-
function operations to speed up services. Many improvements in the use
of their doctors' time reduced client delays and excessive strain on their
doctors.
84 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 manu-
facturers 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 transfer-
ring the unnecessary people to other areas of city government that were
requesting more people but unable to hire them because of budget limi-
tations. 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 sug-
gestions for the city government group, who were hard pressed to meet
the increasing demand for services with insufficient increases in taxes.

Case Study2
VALUE ANALYSIS OF A COMMUNITY SERVICE
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 85

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 handi-
capped 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 un-
profitable.
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-han-
dling 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 deter-
mine 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
86 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 in-
doctrinated with value analysis methodology and are making plans to
utilize it in all of their operations as a standard operating procedure,

SUMMARY
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 re-
ceive 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.