United States Department of Energy Value Engineering CONTRACTOR PERSPECTIVES Bruce Lenzer, CVSL,...
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Transcript of United States Department of Energy Value Engineering CONTRACTOR PERSPECTIVES Bruce Lenzer, CVSL,...
United StatesDepartment of Energy
Value Engineering CONTRACTOR PERSPECTIVES
Bruce Lenzer, CVSL, FSAVERichard 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 dataA 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 SUCCESSVE Applications – Continued -:
Processes (Soft VE) including: 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
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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 $ 53M (18yr) Contract Cost Avoidance
ALL RIGHTS RESERVED 2004 Synergy Value Solutions, LLC
HISTORICAL SUCCESS
VE Applications – Continued -:Hybrid Function Diagram:
FH MATERIALS MGMT COMBINED.pdf
PROGRESSIVE STATUS1996 – 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 muchFew 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 stopsDiminished HQ supportUntrained, unqualified, uncertifed personnel have
allowed VE to become synonymous with cost cutting 1997 – 2011 VE became synonymous with other
improvement techniquesNon-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
analysisPerforming 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 & Results2012 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 $millionsRe-issuing VE expectations in Public Law 111-350Re-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 FoundationNew Website
http://www.valuefoundation.org/DOE Process Example