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Integration of Value Engineering (VE) and the Five-Year Planning Process

Office of Acquisition and Property Management

Presentation Overview
Quick review of Value Engineering (VE) requirements and benefits Summarize DOIs Current VE requirements List potential revisions to DOI requirements Summarize integration of VE into Five-Year planning process
Department of the Interior
December 2007

Background VE Requirements
Public Law 104-106 (1996) requires all agencies establish a VE program OMB Circular A-131 requires VE to reduce nonessential procurement and program costs
Threshold is $1 million for projects and programs

DOI submits annual VE accomplishment report submitted to OMB by December 31 of each year DOIs requirements are in Department Manual 369

Department of the Interior


December 2007

Background - Value Engineering Presentation Overview


Public Law 104-106 defines VE as: An analysis of the functions of a program, project, system, product, item of equipment, building, facility, service, or supply of an executive agency, performed by qualified agency or contractor personnel, directed at improving performance, reliability, quality, safety, and life cycle costs.''
Department of the Interior
December 2007

Background - Value Engineering


VE applies to all projects, programs, equipment Studies can be performed by in-house or contractor personnel

VE can be applied at any point in project or program life cycle


Department of the Interior
December 2007

Background - Value Engineering


Construction projects
VE usually applied at conceptual and design stages May be applied more than once on an individual project

Objective is to:
Ensure all viable alternatives have been examined Avoid cost and realize cost savings Improve quality of completed project Facilitate the government receiving best value

Department of the Interior


December 2007

DOIs Current VE Requirements


VE program is mandatory for all bureaus and offices and programs, projects, and activities

Applies to: Construction, repair, rehabilitation, and renovation projects with estimated cost $500,000 or greater
Department of the Interior
December 2007

DOIs Current VE Requirements


VE is performed when concept and estimated cost is detailed enough for comparison of alternatives Goal is to achieve saving equal to or greater than 4 percent of a bureaus aggregate annual construction budget

Department of the Interior


December 2007

Objective of VE Integration
The two primary objectives of integrating VE and the Five-Year planning process are: 1) Foster thorough planning and analysis to complete high quality construction and repair projects at an appropriate cost

2) Use VE as a tool to limit project cost and schedule variance


Department of the Interior
December 2007

Potential Revisions to DOI Requirements


The below revisions will be discussed by bureau

VE coordinators. Additional items may be added.


1) Define the project stage at which VE results are reported. 2) Clearly define the stage in project development at which VE is performed.
Department of the Interior
December 2007

Potential Revisions to DOI Requirements


3) Ensure construction Capital Planning and Investment Control (CPIC) guide identifies points in project life cycle to perform VE. 4) Define application of VE to design/build projects. 5) Consider raising the VE threshold to $1 million from $500,000 - $1 million is minimum threshold per A-131
Department of the Interior
December 2007

Potential Revisions to DOI Requirements


6) Define how VE is applied to dam projects 7) Acknowledge that sustainable building practices may justifiably increase some project costs to create environmental benefit

8) Consider whether VE should be applied more rigorously to non-project work


Department of the Interior
December 2007

Revision of Appendix Q
Appendix Q is the VE section of the construction CPIC guide

Core of the Appendix is Department Manual 369 (VE)

Department of the Interior


December 2007

Integration Process
Revise Department Manual Part 369 (VE) Goal is for final revision June 1, 2008 Revise Appendix Q of the Construction CPIC Guide Goal is for final revision June 1, 2008 Bureau VE coordinators will submit proposed revisions to both documents by January 22, 2008
Department of the Interior
December 2007

Integration Process
Include revised VE requirements in Attachment G for the FY 2011- FY 2015 Five Year Plan This guidance will be issued in FY 2008

Add a VE data field to the Project Data Sheet included in the FY 2011- FY 2015 Five Year Plan

Department of the Interior


December 2007

Bureau VE Program Coordinators


DOI Bill Hamele BIA Alan Roit BLM Linda Force, Ed Giagni BOR Norman Hyndman FWS Marshall Wright NPS Rich Turk USGS Clarence (Bill) Fulk Contact your coordinator with questions
Department of the Interior
December 2007

Questions, Comments?

Department of the Interior


December 2007

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