United States
Environmental Protection
Agency
Office of
Solid Waste and
Emergency Response
i
Publication 9355.5-03FS
May 1990
& EPA VALUE ENGINEERING
Office of Emergency and Remedial Response
Hazardous Site Control Division OS - 220
Quick Reference Fact Sheet
Circular No. A-131, issued by the Office of Management and Budget on January 26.1988, requires the
use of Value Engineering (VE). when appropriate, by Federal Departmentsland. Agencies to Identify and
reduce nonessentlal procurement arid program costs. Value Engineering; Is;aJspecialIzed cost-control
technique that uses a systematic and creative approach to identify and reduce unjustifiably high costs
in a project without sacrificing the reliability or efficiency of the project or iaffecting the Record of
Decision (ROD) or basis of design. . • _
VALUE ENGINEERING DURING DESIGN
It is the responsibility of EPA's Remedial Project
Manager (RPM) to assure that VE screening, and
VE study If appropriate. Is conducted on each
fund-financed remedial design. Typically, the
designer should be awarded the VE study task if
the screening conducted during preliminary de-
sign indicates the need for the study, and an In-
dependent and objective study can be conducted
within the design firm. For some designs, the
Bureau of Reclamation, the Corps of Engineers.
or a firm with the requisite expertise should con-
duct the study.
The VE study Is different from design reviews. The
tieslgn reviews concentrate on functional aspects
such as whether the design works. Is sufficiently
reliable, and meets the designer's contractual ob-
ligations. VE. on the other hand, is focused on
reducing the investment necessary to achieve
these functions. It should be noted that the focus
of VE does not preclude the VE team from Identi-
fying technical errors or omissions and alerting
the designer so these problems can be taken Into
consideration during the design reviews.
The VE study should be scheduled so as to mini-
mize the impact on the design schedule. IftheVE
workshop and decision-making process are struc-
tured to avoid adding time to the schedule (Le..
not on the critical path), then the only potential
schedule Impact would be caused by a design
change resulting from the VE process and not
from the process itself. A design change and Its
associated cost are part of the decision-making
process of accepting or rejecting the VE recom-
mendation. .
When planning a design project, the party con-
tracting for design must Include VE in the design
tasks. This begins with an initial VE screening
during preliminary design to determine if the proj-
ect will include any high-cost, non-industry stan-
dard items and unusual design. If the screening
task identifies a potential cost savings, a VE study
must be initiated.
To perform this study, a VE study team leader
selects a multidisdplinary team with VE experi-
ence and technical knowledge to conduct the re-
view. Guided by the team leader and possibly a
team coordinator, this group of technical experts
completes a prescribed six-phase process that
culminates in the presentation of cost saving alter-
natives first to a review board and later, if ac-
cepted, to the original project design team. These
six phases are: information, creative analysis, de-
velopment, presentation, and implementation.
The primary activities of this six-phase process
have been standardized and typically take the
form of a one-week workshop. Projects can often
be reviewed in less time, however, depending upon
their complexity. A VE study may not be appropri-
ate for a simple design, whereas a complex design
may require a level of effort between 200 and 500
hours.
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VALUE ENGINEERING DURING REMEDIAL ACTION
The VE Incentive clause, found In the Federal Acquisition Regulation (FAR) at 52.248-3. is generally
included In federal remedial action contracts over $100,000. REM and ARCS firms may choose to
include the clause In their subcontracts for remedial action, even If not directed to do so by EPA's
contracting officer. States and claimants under mixed funding may also choose to use a similar clause
in their remedial action contracts;
Ihe VE Incentive clause provides the opportunity to the remedial action (RA) contractor to use Its
unique knowledge and experience as a basis for submitting a Value Engineering Change Proposal
(VECP). The VECP Is the RA contractor's proposal to change contract requirements In such a way that
the price of the contract is reduced. To have a valid VECP. the RA contractor must submit the following
information:
• A description of the proposed change and the contract requirement.
• An Itemlzatlon of the contract requirements that must be changed.
• An estimate of the performance costs that will be reduced If the proposal Is .adapted.
• A prediction of any saving the change may have on operations, maintenance, or equipment.
• A statement of time by which the proposal must be Implemented by the party contracting for
remedial action. . '
To ensure the program's effectiveness and Integrity, individuals and firms who have prior involvement
In the project design or in other value engineering activity prior to remedial action are not eligible to
participate, directly or indirectly, in the development and preparation of a. VECP or monetary sharing
of any resulting savings, : .'•'..
While the VECP is being prcwessed;; the RA^^ contractor should cbhltouethfeconstruc^on:activity as
scheduled. As a minimum, a VECP ;6houldresult In a net capital cost reduction while causing no
increase In the total life cycle cbst'ofthe project and meeting the following conditions:
• The required function, reliability, and safety of the project will be maintained.
• The proposed change will not result in any contract ^solicitation.
• The proposed change will hot cause undue Interruption of the contract work.
Savings resulting from the change proposal are normally shared between the RA contractor and the
Ze. Prior
to approval of tte|/3E>GP. the party contracting for remedial action must consult the designer regarding
any impact on *^?^*i'i*'"
RPM CONSULTATION AND REPORT
EPA's RPM must be consulted during the VE
study and VECP review if there will be a delay in
the completion of the design or construction, an
increase In cost, or an Impact on the environ-
ment or public health. Record of Decision (ROD).
or basis of design. The VE study t earn leader and
VECP reviewer must prepare, for EPA's RPM. a
final written report containing the cost of the
study or review, findings and recommendations.
estimated cost savings, and reasons for rejection
of any recommendations. The RPM must for-
ward this report to HSCD's VE Coordinator (OS-
220). Washington. D.C. 2046O. for inclusion in
an annual EPA report.
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TATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
•
JUN 27 1990
O.-FICE OF
SOLID WASTE AND EMERGENCY RESP(Jf4SH
ME'l
MEMORANDUM
Implementation of Value Engineering for Corps of
Engineer Managed Superfund Remedia/1 Design and Remedial
Action Projects * '
SUBJECT:
FROM: Henry L. Longest II, Director
Office of Emergency and Remedial Response (CJ^-200)
TO: Waste Management Division Directors
Regions I-X
Purpose;
This directive defines value engineering and its use in
Superfund Federal lead remedial design (RD) and remedial action
(RA) projects managed by the Corps of Engineers, the roles of the
Environmental Protection Agency (EPA) and the U.S. Army Corps of
Engineers (USAGE) in value engineering reviews, and requirements
for reporting related actions and activities.
Background;
Value Engineering (VE) is a highly beneficial technique to
reduce unnecessary cost in engineered projects. Value Engineering
uses systematic and creative approaches without sacrificing the
reliability, efficiency, or original objectives of the project.
These techniques are widely recognized and are required by the
Office of Management and Budget (OMB Circular No. A-131, issued
January 26, 1988) to be implemented by Federal departments and
agencies, when appropriate.
Value Engineering has been effectively used at Superfund
sites, and some of the best examples are Regions II and VI
projects conducted for EPA. In three sites, Marathon Battery,
Helen Kramer, and Bayou Bonfouca, VE during the RD phase resulted
in potential savings of approximately ?65 million. VE during
remedial actions, known as a value engineering change proposal
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(VECP), was also used at the Bridgeport Rental and Oil Services
site with an estimated savings of $550,000.
While there have been some excellent success stories with VE,
experience suggests that confusion exists over the roles of EPA
and USAGE personnel in implementing VE. The majority of the
technical decisions needed to implement VE proposals have no
adverse impacts on project objectives or schedules, and can result
in substantial cost savings. For USAGE RD and RA projects,
clearer definition of authority for the USAGE project manager (PM)
would result in more timely and efficient implementation. For
those situations where VE recommendations adversely impact project
schedules, the Record of Decision (ROD), or environmental or
public health matters, better definition of EPA approval roles and
timeframes for making decisions are needed. For example, VECP
proposals by remedial action contractors usually have evaluation
schedules specified in the contract, and timely decisions are
necessary in order to realize the full savings and avoid delay
claims.
State roles in Federal lead projects will require special
attention so the process can function in a smooth and timely way.-
States will have a special interest in impacts on operation and
maintenance costs since they are normally responsible for these
costs while their remedial action cost share is usually 10
percent. . " .,,
The OMB Circular on VE establishes requirements for Federal
agencies to report VE savings. USAGE has existing reporting
systems, but the EPA Superfund program has not yet formalized a
system. The VE results and benefits will become better understood
and OMB requirements will be met if both agencies coordinate
effectively on VE reporting.
A Quick Reference Fact Sheet on Value Engineering is
attached. This fact sheet provides a more comprehensive
description of the VE process.
Implementation;
1. All remedial designs conducted by either USAGE or EPA for
projects with an estimated RA value of $2 million .or greater will
include a formal VE screening and, if deemed appropriate by the
screening process, a formal VE study. For lower cost
projects, an informal VE screening should be performed, but formal
VE studies are usually not required.
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2. All USAGE conducted RAs greater than K100,OOoill
include the VE incentive clause which provides vthe^eofTtr actual
mechanisms for the VECP process. These clauses provide a
specified time period (45 days) for the government to conduct
technical reviews and decide on the VE change proposals made by
the RA contractor. USAGE PMs and EPA RPMs will establish project
schedules and operating plans that will allow the VECP process to
function within the contract schedules.
3. For USAGE conducted RDs and RAs , technical reviews and
approvals/concurrences for recommendations from VE, VECP, will be
made in accordance with the following guidelines:
A. Review and approval of the EPA RPM must be obtained
if implementing the recommendations would do the following:
(1) Have an environmental or public health impact,
(2) Propose a change or variation to the remedy
specified in the ROD, [
(3) Increase the cost or delay the completion of the
RD or RA beyond that specified in the IAG,
(4) Increase operating and maintenance costs, or
(5) Exceed the constraints of the project IAG.
B. If the recommendations are not affected by the
conditions stated in A above, USACE has the authority to implement
the recommendations. As with all activities in USACE conducted
projects, the EPA RPM will be kept fully informed of all actions.
C. In order to provide consistent and efficient project
management, State reviews and approvals/concurrences will be
limited to the conditions and circumstances described in A above.
EPA RPMs will keep appropriate State officials fully informed of
project activities.
4. USACE districts will provide reports on projects with
implemented value engineering recommendations in accordance with
the following:
A. Reports will include the following information.
(1) Cost of the VE study or VECP review,
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(2) Findings and recommendations,
(3) Estimated cost savings,
(4) Reasons for rejecting any recommendation.
B. USAGE design and construction districts will
provide copies of final written reports to the appropriate EPA
RPMs and the Office of Emergency and Remedial Response (OERR),
Design and Construction Management Branch, Superfund VE
coordinator (OS-220) within 45 days of a decision to implement
value engineering recommendations. \
C. EPA's Superfund VE Coordinator (OS-220) will
coordinate with the Office of Water, EPA Regions, and USAGE
Headquarters to prepare an annual consolidated report on Superfund
VE savings. EPA's Office of Water VE Coordinator may also solicit
information directly from the Regions.
For additional information, contact Tom Whalen of my staff at
(202) 475-9755.
Attachment
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