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CASE STUDIES: Cost Savings

Case Studies: Cost Saving
Companies across the nation rely on standards and conformance to increase efficiency, reduce cost, and boost market access for their products and services. Here are a few examples of how standards and conformance provide significant cost savings:
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When Congress was initially working to pass the Pipeline Safety Improvement Act of 2002 (PSIA) they wanted to apply the liquid integrity rule used for liquid pipelines to gas pipelines, which would require in-line inspection of the entire system every five years.  However, gas pipelines transport a compressible fluid, may have significant diameter restrictions, and are more challenging to maintain than liquid lines.  A gas rule similar to the liquid rule would have cost the industry many billions of dollars to retrofit the pipelines and would have resulted in untold numbers of customer shut-offs to modify and inspect the lines.

In response, a coordinated public-private effort including pipeline operators, manufacturers, suppliers, consumers, and federal and state regulators bought about the development of ASME B31.8S, Managing System Integrity of Gas Pipelines ASME Code for Pressure Piping. After thorough technical studies and research, Congressional staff found this American National Standard (ANS) vital to the success of the PSIA. The standard has become a cornerstone of the Act and has since aided in improving the safety and integrity of pipelines, reducing accidents and injuries to workers, increasing regulator and consumer confidence in pipelines, and enhancing current and future infrastructure.  The net cost for the gas pipeline industry to implement PSIA utilizing ASME B31.8S is $4.7 billion over the next 20 years as compared with the initial estimated cost of $10.9 billion over the same period – a $6.2 billion savings to industry and consumers.

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– ASME (the American Society of Mechanical Engineers)

The Virginia class attack submarine is one of the most powerful and complex naval combatants ever created. But firepower and enhanced stealth were not the only considerations facing the U.S. Navy when it needed to update the fleet with the post-Cold War security environment in mind. The cost of building nuclear powered submarines is vast, each ship running into the billions of dollars. At the same time, budgetary pressures are significant. Obviously, developing new efficiencies in design, production, and ongoing maintenance offers the potential for tremendous cost savings on such large-scale projects.

Historically, nuclear submarine shipbuilding development and construction focused on custom designs because of the relatively limited number of ships being built in this category. Over time, this practice resulted in a proliferation of functionally similar or nearly identical parts and specifications. In a major cooperative initiative, the U.S. Department of Defense, the Navy, the industrial shipbuilding community, and academia identified two key areas to improve: parts standardization and process standardization.

The bottom line: over the life of the Virginia class program, an investment of $27 million in parts standardization is projected to lead to $789 million in cost avoidance. The number of procured parts was reduced by 60 percent. The USS Virginia lead ship was launched ahead of her threshold delivery requirement determined ten years earlier. Moreover, the USS Virginia is already showing a marked improvement in crew readiness and cost-effective onboard parts support.

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– U.S. Department of Defense

Since 1938, luxury automaker Bentley has housed their entire operations – from design to production to sales – in one historic location in Crewe, England. Throughout the years Bentley has faced the challenge of updating their famous plant to meet the standards of modern motor manufacturing, while at the same time leading the industry in engineering, skills, employment, and environmental performance.

To develop an energy monitoring system through a measurable, systematic approach, Bentley implemented ISO 50001: 2011, Energy management systems – Requirements with guidance for use, a voluntary international standard that establishes a framework for small and large industrial plants, and commercial, institutional, and government facilities to improve the way they manage energy, including energy performance, efficiency, use, and consumption.

By implementing ISO 50001, Bentley has been able to establish sophisticated energy monitoring systems, target areas of energy fissures, and create strategies for improvement in areas covering the use of their boiler and compressed air systems, technology, heating and lighting, insulation, and more efficient variable speed drives on new cars. As a result, Bentley reduced energy usage by two-thirds for each car produced and by 14% overall for the entire plant, delivering savings of 230 GWh of energy – enough to power 11,500 houses for a year.

– International Organization for Standardization (ISO)

ASME (the American Society of Mechanical Engineers) has developed codes, standards and conformity assessment programs for over 125 years to guide engineers and regulators in creating more efficient and safer production and work environments. One code in particular, the ASME Boiler and Pressure Vessel (BPV) Code, is often utilized at nuclear power plants and contributes to safer, cleaner and more profitable energy production. By following the ASME BPV Code, many companies, including Dominion Resources, have saved millions of dollars by enhancing safety protocols and keeping their equipment running at high efficiencies.

One of the nation's largest producers and transporters of energy, Dominion has saved tens of millions of dollars in avoiding unwanted repairs, time delays, outages, and lost revenue by implementing Section XI of the ASME BPV Code, which focuses on in-service inspection of nuclear power plant components. And every ten years Dominion saves $2.6 million from a nuclear safety innovation called Risk-Informed ISI that was generated for the code specific to piping welds. Section XI has changed the way inspections are performed on piping welds, making the process more efficient and less time consuming. This has not only saved Dominion millions of dollars, but has enhanced productivity and safety throughout the nuclear industry.

Dominion has seen significant cost savings, increased efficiencies, and improved safety measures through its use of the ASME BPV code. By following these requirements and guidelines, Dominion is able to help keep their employees safe and provide a more efficient work environment.

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– ASME; Dominion Resources

While our products feature unique components that differentiate us from our competitors, we also rely on enabling components like fittings and fasteners that can be produced to standards and be available “off the shelf.”

Contributing our knowledge to develop these standards made good sense. The more standardized components we can use to deliver reliable functionality, the less we, and our customers, have to pay.

– Deere & Company

Gerfor is a Colombia multinational company serving the plastics and synthetic fibers sector of the petrochemical industry. It is one of the leading South American companies in the production and commercialization of PVC and CPVC pipings and fittings for the construction and sewerage industries including tiles, covers, faucets, and solvent cement.

On a daily basis, Gerfor uses over 200 technical standards and management systems in the areas of research and development, product design, engineering, production, procurement, sales, purchasing, and marketing from national and international standards organizations like the Colombian Institute of Technical Standards and Certification (ICONTEC), the International Organization for Standardization (ISO), ASTM International, and the American Society of Mechanical Engineers (ASME).

Participating in standards development for more than 20 years has led Gerfor to achieve savings of over five million dollars annually. Using standards allows Gerfor to expand their domestic market, meeting and driving demand for quality products; access international markets by fulfilling market entry conditions; optimize internal operations increasing productivity and efficiency through continuous improvements of systems and processes; ensure the quality of supplies; and, build consumer confidence.

Gerfor CEO Jose María Escova explains, “Standards implementation has put us at the vanguard, and at the forefront of our competition. At an international level we could not be competitive if we did not comply with standards. We are sure that the application of standards opens us the doors of new markets. The benefits far exceed expectations.”

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– Gerfor; International Organization for Standardization (ISO)

The Army Materiel Command (AMC) develops, acquires, maintains, and distributes materiels needed by warfighters from idea to factory to foxhole, including meals, uniforms, ammunition, communications, and weapons systems.

In 2007, a central library was created to consolidate all standards-related information to be managed by a single office and accessible to the entire AMC enterprise through a web-based portal, supporting a buy once but use often approach to standards and specifications. The program is now serving more than 20,000 engineers and scientists.

Not only are quality, access, and oversight greatly improved, but a substantial $3.5 million per year in cost avoidance is achieved. Furthermore, the significant reduction in cost and the improved management of government-owned intellectual property increased the stability, security, access to, and use of standards-related information across the AMC enterprise. In addition to cutting its costs, AMC cut research time reducing the users’ need for the services of scientists and engineers, an additional cost avoidance of more than $2.5 million per year.

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– Army Materiel Command

From 1999 to 2002, approximately 15,300 fires occurred annually where the first item ignited was a mattress and its bedding.  These fires resulted in an annual average of 350 deaths, 1,750 injuries, and $295 million in property loss.  In an effort to reduce deaths and property damage, the U.S. Consumer Product Safety Commission (CPSC) and the National Institute of Standards and Technology (NIST) joined forces to establish flammability standard 16 CFR Part 1633 .

The mandatory standard is designed to reduce the severity of mattress fires ignited by open flame sources such as candles, matches, lighters, and cigarettes.  The CPSC estimates that 16 CFR Part 1633 prevents as many as 270 deaths, 1,330 injuries, and millions of dollars in property damage every year.

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–– National Institute of Standards and Technology, U.S. Department of Commerce

CCP Composites is a world leader in the production and distribution of gel coats, composites polyester resins, coatings resins, and emulsions.  Between 1998 and 2005, the company’s Houston, Texas synthetic resin manufacturing plant experienced a dramatic increase in energy expenditures, with an escalation of more than 100% in annual energy costs.  And in 2008, energy was the second largest cost for the plant, accounting for about 20% of the plant’s operating budget.

To help control these exorbitant costs, CCP Composites partnered with the U.S. Department of Energy’s Advanced Manufacturing Office (formerly the Industrial Technologies Program) to implement a management system for energy in accordance with the Superior Energy Performance (SEP) program.  SEP provides facilities with a roadmap for achieving continual improvement in energy performance while maintaining competitiveness by use of a transparent system for verifying energy performance improvement and energy management practices through the application of ISO 50001: 2011, Energy management systems – Requirements with guidance for use.

CCP Composites’ Houston plant achieved a 14.9% improvement in energy efficiency over a two-year period; 31,700 million British thermal units of energy saved; and $250,000 in cost savings per year.  The Houston plant became an SEP Gold Certified Partner in 2010 using ANSI/MSE 2000:2008, an American National Standard for Energy Management Systems, and has a management system in place to proactively manage the facility’s energy resources in the future so it will continue to sustain improvements in energy performance.  CCP plans to become recertified using ISO 50001.

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–– U.S. Department of Energy (DOE) Superior Energy Performance (SEP)

InfoComm International serves the AV communications industry through education, certification, and other activities that enhance the AV industry and foster competent technicians. Through the InfoComm Certified Technology Specialist (CTS) credentialing program, the only AV certification recognized by ANSI and ISO, companies that employ CTS staff can save money on their liability insurance.

While the amount of savings that a company can achieve varies based on the percentage of certified staff and the positions they hold, companies that employ staff with CTS credentials could earn up to a 25% reduction on insurance rates. Because the CTS exam has been recognized as a fair assessment of an individual’s audiovisual knowledge based on peer-developed standards of competencies, insurance companies are willing to extend lower rates to companies who utilize the CTS program.

Investing in the CTS program offers a return on investment when purchasing insurance, and discounted insurance provides further proof that more industries are becoming aware of the benefits and cost savings of credentialing.

– InfoComm International

The U.S. Constitution mandates that the population of the United States be counted once each decade in order to equitably disseminate federal funding for infrastructure, programs, and services, and ensure electoral district boundaries are accurate.  There are unprecedented challenges facing the U.S. Census Bureau as it plans for the 2020 Census: it must consider the unique challenges of the era while utilizing information technology to count an increasingly diverse and growing population of around 330 million people in more than 140 million housing units. 

The Census Bureau is tasked with obtaining an accurate count that is less costly and achieves more accurate results than previous censuses.  In order to achieve those goals, the Census Bureau must build an address list of every street, house, farm, apartment unit, or other domicile.  To provide guidance to reporting agencies on address formats, coalesce geospatial data submissions, and establish business processes for address and spatial data management between data providers and the Census Bureau, the Bureau published guidelines, based on existing American National Standards (ANS).

The use of data submission guidelines using ANS is improving efficiencies in handling data, aiding in better understanding partner-provided data formats, and helping to normalize disparate data.  As the Bureau continues to prepare for the 2020 Census, its biggest challenge is ensuring that data submissions meet minimum guidelines and that other cost- and time-saving standards-driven technologies are employed to obtain the most accurate Census ever recorded.

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– U.S. Census Bureau and INCITS (the InterNational Committee for Information Technology Standards)

Standards are a vehicle of communication for producers and users. They serve as a common language, defining quality and establishing safety criteria.

Costs are lower if procedures are standardized; training is also simplified.


In March 2003, the U.S. Department of Commerce (DOC) announced its Standards Initiative in response to industry concerns that standards are among the greatest barriers to expanding imports. The DOC estimated that standards-related issues impacted 80% of world commodity trade. Given that the world trade in petroleum was about 44 million barrels per day in 2003, the impact of standards is clear.

In addition, the German National Standards Body (DIN) recently studied the direct economic benefits of standardization. In this study published in 2000, the direct economic benefit of standardization was found to be 1% of Gross Domestic Product (GDP). For the oil and natural gas industry, the estimated capital expenditure, or CAPEX, is between $150-200 billion annually. Using the DIN value, this translates into an annual savings attributed to standardization of $200-$500 million.

- American Petroleum Institute (API)

Following the terrorist attacks of September 11, 2001, there was an increased focus on using x-ray and gamma-ray screening technologies for homeland security applications.  However, the international community found itself at a loss for comprehensive performance standards against which these technologies could be evaluated.

In 2005, the Department of Homeland Security (DHS) and the National Institute of Standards and Technology (NIST) launched an effort to identify and develop national voluntary consensus standards for the use of x-rays and gamma rays in the screening of carried items and human subjects at airline checkpoints, airline checked baggage, air cargo, and other venues, as well as the associated radiation safety concerns.  The result was the development, renovation, and promulgation of x-ray safety (i.e., IEC 62523-2010, HPS N43.17-2009) and image performance (i.e., IEEE N42.44-2008, ANSI N42.46-2008) standards that significantly benefit passengers and users of air transportation services, government agencies, equipment manufacturers, and the international community – creating a safer air transportation infrastructure for all.

A conservative, rough-order-of-magnitude (ROM) estimate of the economic benefits associated with x-ray screening standards is in the hundreds of millions of dollars.  For example, it is estimated that x-ray screening machines would be 40% more costly in the absence of consensus standards.  If the average cost of an x-ray screening device is $300,000, and there are 6,000 in usage, an ROM estimate of savings to manufacturers is $720 million.  And the total social benefits of air transportation security standards are higher since the ROM estimate only considers the direct beneficiaries of increased airline travel security. 

The economic benefits of air transportation security also extend to indirect beneficiaries whose lives and business are more secure because air transportation is more secure, such as other potential terrorist targets like highrise buildings, nuclear power plants, and government buildings.  In addition, significant efficiencies and savings are achieved by a reduction of the number of design versions of x-ray equipment as a result of common requirements, common measurement language, and common configuration controls provided by the standards.

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– National Institute of Standards and Technology, U.S. Department of Commerce

NAVSTAR GPS (Navigation Satellite Timing and Ranging - Global Positioning System), the largest avionics procurement and installation program in the history of the Department of Defense (DoD), illustrates how strategic standardization can have global impact and revolutionize the way the world functions.

By using a standard radio navigation signal and code provided by the Air Force, the U.S. and its allies realized significant economies of scale through buying, leveraging, and lowering total ownership costs, and reducing acquisition costs while supporting interoperability and logistics readiness. GPS transformed military strategy and logistics, affected many commercial industries, and became the worldwide standard for navigation.

Initiated in 1983 and launched in 1989, GPS cost over $12 billion to develop and deploy. The current annual cost for DoD to operate, sustain, and modernize the GPS is about $500 million. However, the cost of strategic standardization that enabled a single technological solution to a shared problem was infinitesimal compared to the benefit. By making the GPS interface standard available to the entire world, the GPS program produced a global economic impact too large to calculate, and total dollar savings unknowable, but the benefits and potential for GPS is infinite.

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– U.S. Department of Defense

Managing the business of standards helps avoid the heavy start up and recovery costs to repair or replace an [internal] standards system, helps prevent costs incurred through incorrect or non-current standards, and allows standards to more readily function as enablers for other major business processes.

– "A Corporate Executive’s View: Standards–How to Break the Love/Hate Cycle" By Laura Hitchcock of The Boeing Company, excerpted from Standards: The Corporate Edge, an ASTM International publication

During the 1980s, the Army was using more than 350 different types of 1.5-volt to 30-volt batteries, consuming nearly 20% of a typical Army unit’s annual budget. In 1996, the Army spent $100 million on batteries and battery expenditures, and portable power requirements of the digitized battlefield were increasing the demand for more powerful primary and rechargeable batteries. A 1996 audit cited that, during a three year period, the Army could reduce expenditures 66% by using rechargeable batteries for training, and could save another $1.9 million if five selected units switched solely to rechargeable batteries.

Through standardization of primary and rechargeable batteries, the Army achieved a higher level of battery interchangeability and unit readiness within military units and across joint and combined operations. The Army decreased battery types used from more than 350 to 35, with a goal to standardize to 25. The Army now spends $75 million a year on battery purchases for all applications, a 25% reduction from its 1996 baseline. During the first four years alone, the Army saved more than $43 million, of that more than $30 million was related to rechargeable batteries. In the end, the Army met audit expectations by reducing expenditures on batteries by 66% over a three year period.

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– U.S. Army

In the 1980s, a new pipe-joining technology called a mechanically attached fitting (MAF) was developed, promising substantial improvements including easier fabrication, higher reliability, and lower costs over existing pipe-fitting technologies such as welding and brazing. But the Navy needed a universal test standard to verify the integrity of MAFs before authorizing their use in the fleet.

The Navy chose to work with industry to develop a non-governmental standard (NGS) for MAF testing: ASTM F1387, Standard Specification for Performance of Mechanically Attached Fittings, a flexible but stringent commercial performance standard that addresses all potential MAF designs. These efforts enabled the Navy to adopt and use many MAF designs early and successfully with substantial savings, improved quality and safety, and increased productivity. By 1993, the Navy had used many approved MAFs with excellent results and saved millions of dollars in the first few years.

Several different cost studies show that the use of MAFs saves up to 50% of the installed cost compared with the use of welded or brazed fittings. A fitter/helper team can routinely install 50 to 60 fittings in a single shift, more than double the rate at which welded piping systems typically are shop fabricated. By eliminating welding, many overhead costs relating to safety, personnel, equipment and supplies, inspections, rework, and monitoring are eliminated or substantially reduced.

By expediting the development of the ASTM standard and engaging industry in validation, the Navy brought the new technology to the fleet faster, better, cheaper, and with greater choice of products. The Navy was able to leverage the industry resources rather than conducting the research, testing, and validating using its own resources resulting in a $1 million savings. As the Navy continues to qualify new MAFs and add new applications for MAFs, the recurring savings and cost avoidance continues to grow.

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– U.S. Navy

Beginning in 1979, the DoD began to address two interrelated aircraft battery issues: first, the inefficiency of the development and acquisition process meant that procurement costs for batteries were higher than necessary; and, second, many of the batteries that resulted from this process were poorly designed. This problem was particularly evident in military aircraft, whose batteries required extensive maintenance and frequent replacement. Moreover, other flaws in these batteries were causing damage to the surrounding battery compartment and other aircraft components due to leaking electrolyte.

To combat these issues the DoD standardized government designed batteries that incorporated technological improvements, cost lest to acquire, lasted far longer, and had requirements for life-cycle, service life, transportation, handling, and environmentally sound manufacturing and disposal.

Standardization afforded an opportunity to improve design and performance while lowering costs. Total reported cost avoidances for the DoD’s battery standardization initiative amounts to $454,717,000, from an investment of $9,341,000 – a return ratio of 49 to 1. About 45% of the savings came from lower procurement costs (i.e., buying fewer and cheaper batteries and parts), and about 55% from reduced maintenance costs (i.e., less frequent and faster scheduled maintenance, and fewer unscheduled repairs), reducing the maintenance performed on aircraft engine batteries by 50%. In addition, major cost avoidances resulted from reduced damage to the battery compartment and aircraft structure.

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– U.S. Department of Defense

In the post-9/11 environment, the U.S. Department of Homeland Security (DHS) faced public fears that a dirty bomb attack could cost billions of dollars, cause extensive environmental contamination, result in hundreds of fatalities and injuries, and take years of recovery.  In response, DHS dramatically increased efforts to screen the vast amounts of cargo entering U.S. ports daily.  While some of the equipment needed to monitor cargo was already on the market, it was not able to handle use in diverse settings, nor was it designed for use by non-specialists or first-responders.

In collaboration with DHS, industry, and other national laboratories, the National Institute of Standards and Technology (NIST) coordinated and integrated the work of the Institute of Electrical and Electronics Engineers (IEEE) Radiation Detection Standards Program N42 Committee to address radioactivity measurements, homeland security, and protection instrumentation for increased port security.  The N42 Committee developed a suite of standards for radiation detection equipment from small, handheld detectors to massive, port-screening monitors that could be used easily by non-specialists and first responders to scan massive amounts of cargo for nuclear-radiological threats.

Today, users and vendors have access to standards that set performance requirements for radiation detection equipment based on homeland security needs; increase the effectiveness and efficiency of cargo, vehicle, and other screening processes; and reduce the risk of terrorist attacks on U.S. soil.

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– National Institute of Standards and Technology, U.S. Department of Commerce

Health care information standards enable pathologists to create and share information in a manner that is cost-effective and of high quality, promoting patient safety and re-use of health care information.

– College of American Pathologists
Beyond the bottom line: standards impact quality, lead-time, factory flexibility, and supply chain management.
Standardization and conformity assessment activities lead to lower costs by reducing redundancy, minimizing errors, and reducing time to market.
Demonstrating compliance to standards helps your products, services, and personnel to cross borders. Standards also make cross-border interoperability possible, ensuring that products manufactured in one country can be sold and used in another.
Businesses not only reduce the economic risk of their research and development activities by participating in standardization, they can also lower their overall R&D costs by relying on previously standardized technologies and terminologies.