"Value engineering is a proven management tool that can be used by agencies to streamline operations, improve quality and reduce contract costs."

Franklin Rains
U.S. Office of Management and Budget

U.S. government agencies are realizing an average of more than $20 for every dollar invested. These savings increase the funds available to achieve mission objectives.

"Over the past 14 years, VM has saved the city of New York hundreds of millions of dollars, has identified alternative strategic approaches, has confirmed or modified the direction of dozens of major projects, and has identified flaws in poorly conceived projects early enough to adjust them."

Jill Woller
New York City Office of Management and Budget

VM use has long been recognized as an effective technique for lowering government costs while maintaining necessary quality levels. The value methodology is helping to reinvent the U.S. government by:

• Identifying cost-saving alternatives
• Using resources more effectively
• Decreasing project, operation and maintenance costs
• Improving safety programs for major government installations
• Reducing paperwork
• Simplifying procedures
• Improving project schedules
• Streamlining an agency’s organizational structure
• Cutting down on waste

"Having hands-on experience with value engineering, I agree with citizens’ groups that urged Fairfax County, Va., to mandate VE on capital projects."

Stuart Mendelsohn
County Board of Supervisors, Fairfax County

Several U.S. laws mandate VM use in the public sector:

• The Defense Authorization Act (Public Law 104-106) states that each executive agency must establish and maintain cost-effective VM procedures and processes.
• The 1995 National Highway System Designation Act requires states to carry out a VM analysis for all federal-aid highway projects with an estimated total cost of $25 million or more.
• The 1986 Water Resources Development Act (Public Law 99-662) requires a new cost-cutting review (the value methodology) on all federally funded water and wastewater-treatment projects with a total cost in excess of $10 million.
• The Office of Management and Budget’s Circular A-131 requires federal agencies to use the value methodology as a management tool to reduce program and acquisition costs.

"Many school districts have relied on VM to assist them in demonstrating to the school boards and the taxpayers that they are building the most cost-effective facilities. VM is also an important component in helping the governor’s budget office have better credibility with the legislature when submitting budgets for large projects."

Harvey Childs
State of Washington Office of Financial Managemen

A New Value Engineering Regulation for the Corps!
By John L. Robinson, PE, CVS-Life
SAVE International President

As many of you know, the U.S. Army Corps of Engineers has been using value engineering on their capital projects since 1964. They represent one of the largest users of the value methodology in the world and have one of the longest track records (over 40 years). Also, as many of you may remember, a small group including Laurie Dennis, Russ Brzezinski, Mike Holt, and myself met with General Robert Flowers, then Commander of the Corps, at the Annual SAVE International Conference in Denver, Colorado in 2002. In that meeting, we discussed the fact that the Corps has historically been represented as a world leader in VE. However, many aspects of the Corps Value Program over the last decade have not reflected that world leader image. General Flowers took this message to heart and promised to reinvigorate the Corps Value Program.

Throughout the following year, the General made a tour around the U.S. speaking to the Corps personnel within the District offices. In these meetings he always brought up the need to make greater use of value engineering. Concurrent with these meetings, his staff were working on drafting a new regulation to provide direction and expectations for the Value Program. That draft regulation was put out for use and review as an Engineering Circular (EC11-1-114). After two years of review and comment, the EC has been officially transformed to a new Engineering Regulation (ER11-1-321).

The ER requires the development of a value management plan as part of the Project Management Plan that has to be prepared and approved for each project. The Corps Project Management Business Plan (PMBP) further requires that each project have a Project Development Team (PDT) and that the Value Engineering Officer (VEO) is a part of that team. In the past, the responsibility for executing value engineering studies rested on the VEO. Now the responsibility is on the project manager.

Here are a few of the highlights:

• Civil works projects (water resources type projects) require VE on all projects over $2 million. With sufficient justification, the VE study can be waived. However, on projects exceeding $10 million, no waivers will be granted.
• On civil works projects between $2 million and $10 million a VE study should be conducted no later than 35% design. Studies earlier in the project development are encouraged.
• On civil works projects greater than $10 million or any project design feature in excess of $10 million will use value engineering during the feasibility phase prior to final selection of alternatives and again prior to 35% design completion.
• For military projects with an estimated construction cost of $2 million or greater, a value engineering study must be conducted unless waived by the District Commander. The studies can be conducted at any phase of project development including on planning charrettes documents, design charrettes documents, or subsequent phases of design with the objective to identify changes earlier to reduce reprogramming efforts.
• A value based planning or design charrettes can be conducted to influence planning direction; however, this will not fulfill the requirement for VE.
• Value engineering is required on design-build procurements in accordance with the same criteria as design-bid-build procurements. In general, VE is to be conducted in the planning phases and during preparation of the draft request for proposals (RFP) prior to publishing for review.
• All rejected VE proposals or groups of proposals that represent $1 million in savings or more must have District Commander approval and be supported with independent technical review.
• The project manager must certify that value engineering has been incorporated into the project development in accordance with the VM plan portion of the PMP. This certification must be signed by the project manager and accompany the Biddablility, Constructability, Operability, and Environmental (BCOE) document. This document must be approved before the project can be awarded for construction.

While this regulation may not be perfect, it provides significantly more substance and usability than the past regulation that provided too many loop holes for the project managers that did not want to do VE on their projects. Moreover, this document represents a basic function of SAVE International to promote the growth and use of the value methodology. This was initiated as a direct result of the meeting between General Flowers and SAVE International executives. It was created and championed by dedicated Corps personnel, who are also members of SAVE.