Total Value Management Program

This document presents a competitive management approach developed by
Jim Kendrick at Kendrick & Company (KENCO).

Total Value Management Is a Competitive Advantage

Kendrick & Company (KENCO) implemented a detailed methodology for helping its customers gain the greatest value from KENCO contract services. Known as the KENCO Total Value Management Program, this initiative helps leverage results and gain the maximum possible benefit for customers from contract dollars. This is KENCO's well-developed, systematic way of taking action to:

Work smarter
Organize work more efficiently
Get better results that benefit our customer
Increase our work output by using productivity tools
Provide and support personnel who can do a better job
Increase the quality and responsiveness of our work
Find ways to use KENCO contract dollars better
Find ways to help save customer personnel time and hassle
Find ways to reduce the customer's other expenses, such as travel, telecommunications, training, equipment maintenance costs, down time, etc.

KENCO first initiated this approach to service management in 1983, when it helped a customer at the Federal Aviation Administration save $300,000 a year in computer timesharing costs by downsizing many applications to a PC-based local area network (LAN). Many applications were converted to the LAN, and, even for systems that needed to remain on the IBM mainframe, most programmers and database managers were able to maintain their applications and data off-line, dramatically reducing connect charges to the timesharing service.

Since then, we refined, systematized, and fine-tuned its approach to value management. This experience has resulted in the proprietary KENCO Total Value Management Program.

How KENCO Delivers More Value for Contract Services

KENCO has taken actions to assure its customers of the best possible value for contract dollars. KENCO uses a broad range of proven techniques for increasing the value of its work for customers, including:

Development of project strategies and methods that carefully focus our contract work to support the customer's management goals, results, and cost efficiency targets--assuring that every dollar of contract effort contributes fully to the performance and success of the customer
Regular communications and advance planning with the customer to make certain that every service delivered is exactly what the customer wanted to buy.
The interchange of electronic data in popular formats, thereby eliminating the re-keying of information whenever possible.
Use of productivity technology for software engineers and programmers, such as CASE tools, systems analysis aids, and program generators, thereby reducing the labor needed for software development and maintenance.
Use and integration of commercial, off-the-shelf software to minimize the need for and cost of custom software development.
Implementation of rapid prototyping techniques for computer based training (CBT), particularly the use of Bricklin's Demo, to reduce development time and test concepts quickly with the customer.
Use of competitive bidding processes for purchasing contract-required materials, systems, and components, to reduce contract costs.
Customization of computer classroom training, to increase the productivity of customer personnel.
Upgrading of project methods and strategies when long-term contracts become "middle aged," to interject better ideas based on recent experience, emerging technology, and methods for increasing value.
The ability to plan and track the cost of work by task and phase, so that the level of effort matches the budget priority assigned by the customer to the specific work activity or deliverable.

Quality of Personnel: A Dimension of Value Management

We reject the notion that professional and technical services are a commodity. The results of an hour's or day's worth of work varies from contractor to contractor. To assume that the results of an hour of effort by any curriculum developer, software engineer, or computer operator is a commodity is like believing that any graduate of an art school can attain the same results as a Michelangelo or a Dali. An essential ingredient of our approach to increasing the value of our services is to recruit, develop, and support personnel who can achieve more valuable results in an hour or a day than the competition.

Certainly work should be well organized--with senior personnel performing complex tasks and more junior staff members assigned to routine duties. However, we found that small teams of reasonably-paid top performers can usually accomplish better work with better results--more quickly and for fewer total dollars--than large teams of average personnel who are available at lower hourly rates.

Thus, our approach is to be competitive in the marketplace on the basis of total value and total cost, delivering the highest ratio of benefits to costs. It welcomes comparisons with the competition on the basis of these standards. However, offering the lowest hourly rates or the lowest paid employees is seldom part of a winning strategy.

How Value Management Works During Contract Performance

KENCO implemented a systematic approach to value management, complete with a systems approach and forms for tracking results. Our goal is to deliver the most valuable results possible. Following are key elements of our approach:

We always involve the customer (usually the designated Contracting Officer's Technical Representative) in our Total Value Management Program--so that our initiatives focus on value gains that are important to the customer
Initiatives should result in practical benefits for the customer.
We consider many options for enhancing value, assess realism and potential for real-world gains, set priorities, and concentrate on select initiatives that promise the greatest potential for increasing the value and impact of KENCO's contract services.
We define, in advance, how we plan to measure the results of the initiative.
We monitor progress and evaluate the results of each initiative.
We document what works and what doesn't--so that both KENCO and the customer will be able to assess the benefits of the value added initiatives.
This is an investment approach to managing contract services. We believe that this is an important methodology, because many of our customers make major investments in contract services. They need and deserve proof that these services are the best investments possible.

Examples of Value Management Results

The following illustrate how KENCO has achieved real results in support of real customers.

Naval Sea Systems Command. We assisted the ship cost estimating section of NAVSEA in migrating cost estimating programs from a Digital VAX environment to a DOS/LAN environment. Providing full lifecycle support from network design and software conversion to user training and software maintenance, KENCO helped NAVSEA eliminate the costs related to operating and maintaining the VAX.

Farmers Home Administration. We developed dozens of self-instructional training packages for FmHA on loan management, field office administration, and computer systems applications. KENCO's approach has saved the agency millions of dollars in travel costs--by reducing the amount of time needed in classroom training and increasing the amount of skill-building support feasible on-site in field offices. Our highly focused approach to job-related training has also supported the agency training office's goals of enhancing job performance and reducing error rates.

Federal Aviation Administration. KENCO developed a major COBOL system on PCs, even though the targeted production systems were regional Data General minicomputers. Our approach was critical, because the Data General CPUs were already operating near maximum capacity, and adding a new system to support software development would have been expensive. KENCO selected a version of PC-based COBOL that was a subset of Data General COBOL, and the transition from PCs to implementation on the Data General systems proceeded flawlessly.

Federal Aviation Administration. We conducted a $500,000 computer procurement for the Federal Aviation Administration--in support of implementing a large LAN for Air Traffic. Services encompassed defining requirements; writing specifications; conducting a competitive bidding process for LAN cards, file servers, data communications components, cable, and software; negotiating with vendors; purchasing the equipment; testing and accepting qualified deliveries; and implementing the LAN. KENCO saved $45,000 by unbundling the procurement and purchasing components from five different vendors. (No vendor consistently had the lowest prices on all of the bid's line items.)

U.S. Department of Education. We were a partner in the Federal campaign against drug abuse. It has operated and managed information clearinghouse-related services to Challenge, the Schools without Drugs Program. The focal points were a nationwide hotline service (serving up to 1,000 callers a day), database management, publications management, and distribution and shipment of information. Federal representatives and KENCO cooperated to find a means for reducing costs (including KENCO's contract costs): The largest-quantity orders were shipped to the schools and other institutions directly from the printer in Texas. This eliminated the costs of shipping several truckloads of publications to KENCO as well as the cost of KENCO re-shipping the boxes to the user organizations. KENCO restricted itself to shipping for smaller-quantity orders (numbering in the tens of thousands), for which the printer has no facilities.

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