United States
Department of Energy
Value Engineering
CONTRACTOR PERSPECTIVES
Bruce Lenzer, CVSL, FSAVE
Richard Harrington, CVSL, CH2MHill
HISTORICAL PERSPECTIVE
 1980 – 1987 Programs started at Field Office Levels, little or
no central coordination or reporting
 Some contractor initiated VE due to VE Clauses in
contracts
 1987 – 1992 Program expanded with HQ coordination and
support
 1990 Some Field Offices implemented VE policy, procedures,
and requirements with their prime contracts
 1992 High visibility at the Superconducting Super Collider,
invigorated focus of VE use in Scientific R&D
HISTORICAL PERSPECTIVE
 1993 – 1996 Office of Field Management, (now Office of
Engineering and Construction Management) issues DOE
Orders:
 413.3B “Program and Project Management for Acquisition
of Capital Assets” (includes requirement to perform VE as
part of Stage Gate Process at Critical Decision 2)
 DOE O 430.1A “Life Cycle Asset Management”
 DOE P 413.2 “Value Engineering Policy”
 For implementing PL 104-106
HISTORICAL PERSPECTIVE
 1996 – 2000
 Energy Facilities Contractors Group (EFCOG) published
Value Management guide
 HQ VE website developed for DOE Office of Engineering
and Construction Management
 Website included links of project reports and cost
savings or avoidance summary data
 A DOE HQ Champion utilized CVS VE Specialist to
gather historical reports from 5 – 7 years
 ~ $750M Savings & ~ $2B in LLC cost avoidance
 Several high visibility and successful VE studies
 Al Gore Golden Hammer Award
 Customer Partnering Awards from Deputy Secretary for
Facility Management
HISTORICAL SUCCESS
 Hanford Nuclear Reservation:
 1990 – 1996
 Average 48:1 ROI
 Completed VE Projects contributed to ~$30M
additional contractor award fees
 1996 – 2002
 Completed VE Projects contributed to ~$1B
additional contractor award fees
HISTORICAL SUCCESS
 VE Applications:
 Design and Construction
 New and Existing Facility & Systems
Renovations/Upgrades
 Scientific Equipment, Decision Analysis, R&D
HISTORICAL SUCCESS
 VE Applications – Continued -:
 Processes (Soft VE) including:
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Contract Requirements
Supply Chain
Configuration Management
QA – Corrective Action Management
Calibration Program
Engineering & Design Processes & Standards
Information Systems
Project Delivery Systems
Work Management
Maintenance
Fabrication
Materials Management
Telecommunications
SOFT VE – BUSINESS PROCESS RESULTS
 Supply Chain Optimization 2000
$ 58M (5yr)
 Supply Chain Validation 2001
$ 14M/Year
 Integrated:
 Materials & Supply Chain Mgmt.
$ 100M/(5yr)
 Work Management & Work Control
$ 10M (5 yr)
 Predictive, Preventive Maint. & Calibrations
$ 30M (5yr)
 Quality Corrective Action Mgmt.
$ 20M (5yr)
 Contract Requirements Value Analysis
 Contract Cost Avoidance
$ 53M (18yr)
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ALL RIGHTS RESERVED  2004 Synergy Value Solutions, LLC
HISTORICAL SUCCESS
 VE Applications – Continued -:
 Hybrid Function Diagram:
 FH MATERIALS MGMT COMBINED.pdf
PROGRESSIVE STATUS
 1996 – Present
 Decline in VE contract requirements and reporting & use
except:
…..for use on projects subject to DOE O 413.3B
“Program and Project Management for Acquisition of
Capital Assets”
 VE Process watered down to punch the ticket
 Example….one project used VE on Civil & Facility
Engineering, but not technical components. Tech.
components comprised 80% of project cost
 Required by some contracts, but not as much
 Few if any voluntary uses
PROGRESSIVE STATUS
 Perception of Project Managers that projects will lose
budgets if VE used
 Fewer VE professionals around the complex
 1996 Sunset of OMB Circular
 OMB Auditing stops
 Diminished HQ support
 Untrained, unqualified, uncertifed personnel have
allowed VE to become synonymous with cost cutting
 1997 – 2011 VE became synonymous with other
improvement techniques
 Non-certified consultants are performing similar
processes, but not VE….Some titled the work as VE
PROGRESSIVE STATUS
 Focus on using flavor of the month e.g. SixSigma
 Cases where certified VE consultants not using function
analysis
 Performing 1 and 2 day studies doing brainstorming
and evaluation only ….. Not true VE Studies
 DOE Office of Engineering and Construction Management
eliminated VE Website
 Loss of champion at DOE HQ and Field Offices…. No
succession planning to continue VE program
FUTURE OF DOE VE/VM PROGRAM
 2006 EFCOG Executive & DOE Management awarded
DOE Complex Best in Class VE Study & Results
 2012 recent VE success in DOE Department of
Environmental Management has drawn attention to the
need re-educate DOE Complex on how VE can make a
difference to reduce schedule risk, reduce worker
exposure, and saving $millions
 Re-issuing VE expectations in Public Law 111-350
 Re-establishment of OMB A-131
 Leverage Federal Acquisition Regulation
 Part 48 & 52
FUTURE OF DOE VE/VM PROGRAM
 Federal Budgets are tight, and expected to be tight, for the
foreseeable future
 These facts give impetus for resurrecting a complex wide
DOE VE program
 Timing is good for DOE to reestablish an effective
program
FUTURE OF DOE VE/VM PROGRAM
 Lawrence D. Miles Value Foundation
 New Website
 http://www.valuefoundation.org/
DOE Process Example