Yes. Value Engineering is a thing. In the corporate world it’s called getting more “bang for your buck”. In the Federal Government, it’s a bit trickier.
Every year, Congress “appropriates”, or sets aside funds to go to specific programs or projects. Therefore, funds are limited, and by law they must be used for what their intended purpose is. A value engineer’s job is to work with a project design team to find ways to maximize the benefits of a project without overextending the project’s budget. In other words, they look for the best strategy to stretch those dollars in a meaningful way.
The Office of Federal Procurement Policy Act (41 U.S.C. 1121, 1711), requires each executive agency to establish and maintain cost-effective VE procedures and processes. The Office of Management and Budget (OMB) Circular A-131 requires Federal agencies to apply VE procedures to all new projects and programs with estimated costs of at least $5 million or such lower dollar threshold as determined by the Senior Accountable Official and identified in the agency's VE guidelines. For USACE, any project of $2 million or above must go through the VE process.
Value Engineering is not a new concept.
According to Asgari (2016), VE “is defined as a set of systematic techniques, based on creativity and teamwork to solve problems that are applied to reduce costs and performance improvements and quality of the project, products and processes.” In his study, Asgari compares six different VE methodologies from around the globe. While the terminology may have evolved over time, the concept of maximizing limited resources is ancient. Academic studies using the term ‘Value Engineering’ started to appear more frequently in the 1960 and 70s, though the VE concept appeared as early as the 1950s.
The USACE VE Program has been a leader in applying the Value Engineering Methodology to construction projects since 1964, solidly demonstrating Corps cost effectiveness. The program has resulted in construction of over $6.2 billion in additional facilities, without additional funds requests. USACE Headquarters maintains a detailed historical timeline of the evolution of VE in the organization.
The objective of the VE program is to increase project value by proactively searching for and resolving issues through very open, short-term workshops, and to stretch taxpayer resources by providing the required function(s), most amenities, and the highest quality project(s), at the lowest life cycle cost.
The USACE Buffalo District has been on board with VE for decades. In fact, the District has been hired by other federal and local organizations as experts in VE. This past year, Value Engineering Officer Andrew Gang facilitated an interagency VE workshop with the Environmental Protection Agency regarding a project along Otter Creek in the state of Ohio.
“We follow the ‘SAVE’ international process when it comes our Value Engineering methodology, and along with the EPA project this past year, we’ve also done Value Engineering workshops for some local projects like the CAP [Continuing Authority Program] project on Unity Island and Broderick Park right here in Buffalo” said Gang. “We also did a workshop for the Harpersfield Dam and Lake County projects in Ohio.”
SAVE is the global standard for Value Engineering methodology and VE officers like Gang have to get certified with professional credentials to do this type of work. One of the main duties of a VE officer is to organize cross-sectional teams and facilitate feedback-centered collaborative workshops. For USACE, VE officers may facilitate workshops for projects under $10 million with a “Value Management Associate” certificate, and any projects above that threshold require the officer to hold a “Certified Value Specialist” certificate.
Gang noted that a typical project requires a VE workshop of up to 5 dedicated days, which generally have about 6 to 10 people in attendance. These attendees can include USACE personnel—both familiar with and new to the project, outside experts, and stakeholders vested in the project.
“Value Engineering workshops typically take place in the early stages of design, at around 35 percent. This is an ideal time because the project objectives and constraints are well defined, but we still have the freedom to make changes in our strategy without substantial re-work or added costs,” said Gang.
Once the workshop is complete, the workshop facilitator draws up a comprehensive report of the group’s findings, which may take up to a month, considering the time to draft and integrate comments from the team once they have reviewed it.
A challenge for VE officers, according to Gang, is helping new and sometimes even seasoned project personnel understand the importance of Value Engineering.
“There’s the Federal mandate”, said Gang, “but I want to see that people are considering how maximizing taxpayer dollars is good for all of us.”
Organizations like the EPA who have contracted with USACE to do VE work are seeing the benefits of these types of engagements. In addition to saving money, stakeholders see the intrinsic value of being a good financial steward.
Gang said that in the recently completed Otter Creek VE workshop, a team of USACE, EPA, and other project stakeholders were able to identify a number of cost saving measures, resulting in a potential reduction of $2.8 million on a $9.9 million project. The EPA has since scheduled another VE workshop with LRB, to take place in February 2018.
According to Dell’Isola, author of “Value Engineering in the Construction Industry”, formal VE programs can increase savings, provide positive means for future investments, improve the image of an organization, and improve the internal operations and communications. As stewards of taxpayers’ dollars, federal organizations have an established method to realize these benefits.
For more information about VE, visit the USACE Headquarters Value Engineering page, which was the primary resource for this article.