The U.S. Department of Energy`s Value Engineering Program: Audit report

Value Engineering (VE) is defined as the organized analysis of the functions of a program, project, system product, item or equipment, building, facility, service, or supply of an executive agency. This analysis reduces these functions to their most basic elements and then looks for cost-efficient alternatives. VE contributes to the overall management objectives of streamlining operations, improving performance, reliability, quality, safety and reducing life-cycle costs. Further, it can result in the increased use of environmentally-sound and energy-efficient practices and materials. VE benefits have been documented by the General Accounting Office, which reported that VE usually produces a net savings of 3 to 5 percent of project costs. The Department of Energy (Department) used the VE methodology primarily in construction related processes, including design reviews, and reported savings of $31.3 million for Fiscal Year 1996. The VE program was primarily executed by the Department`s management and operating and other prime contractors. The objectives of this review were to assess the effectiveness of the Department`s VE program and test the validity of VE savings reported for FY 1996