The requirement for the DoD Value Engineering (VE) program is codified in 41 U.S.C. 432 Value Engineering and 41 U.S.C. 1711 Value Engineering. The VE program is intended to reduce costs, increase quality, and improve mission capabilities across the entire spectrum of DoD systems, processes, and organizations. It employs a simple, flexible, and structured set of tools, techniques, and procedures that challenge the status quo by promoting innovation and creativity. Furthermore, it incentivizes government participants and their industry counterparts to increase their joint value proposition in achieving best value solutions as part of a successful business relationship. Where appropriate, program managers should engage in a broad and rigorous application of the VE methodology.
Program managers should be receptive to Value Engineering Change Proposals made by contractors as a way of sharing cost savings and should also ensure that implementation decisions are made promptly. VECPs are applicable to all contract types, including performance based contracts.
A common misconception is that VE applies only to production. The most opportune time to apply the VE methodology is early in the life cycle, before production begins, before field or technical manuals are drafted, and before logistic support plans are finalized. Some of the more important benefits are as follows:
- Savings can be applied to all production units,
- Reductions to the high cost of development, the subsequent cost of production, and the consequent costs related to operation and support may be realized,
- Fewer modifications to production lines, tooling, processes, and procedures will be required,
- Fewer drawing changes will be necessary, and
- Fewer post-production changes to logistic and support elements such as manuals, maintenance facilities, and spare parts requirements will be needed.
Also, in today's acquisition environment, many systems remain in inventory for a long time because of major modifications or upgrades (e.g., block changes or preplanned product improvements). Therefore, opportunities for large VE savings begin in early program phases and extend late into sustainment.
Additional VE resources are available as a Defense Acquisition University (DAU) Continuous Learning Module (click on CLE 001) and on the Institute for Defense Analyses website and the DAU website.
Value Engineering (VE) in Materiel Solution Analysis
VE can have a significant role in the systems engineering activities during Materiel Solution Analysis. The analysis of alternatives and associated cost-effectiveness studies can use VE to analytically evaluate functions and provide a mechanism to analyze the essential requirements and develop possible alternatives offering improved value.
Value Engineering (VE) in Technology Maturation & Risk Reduction
In support of the process to transition technology from the technology base into program-specific, preliminary, design efforts, VE can be used to analyze the value of each requirement and the specifications derived from it by comparing function, cost, and worth.
Value Engineering (VE) in Engineering and Manufacturing Development
As part of the development and refinement of the functional baseline, VE should be used for: 1) identifying the necessary top-level functions for each of the missions considered, 2) identifying technical approaches (i.e., design concept) to the missions, 3) identifying necessary lower level functions for each technical approach (the value engineer should place emphasis on eliminating unnecessary design restrictive requirements), 4) evaluating each function in terms of technical feasibility, and 5) estimating the cost of various functions.
Value Engineering (VE) in Production and Deployment
VE contributes to the systems engineering activities during production and deployment by devising alternative means for achieving required functions and developing alternative designs to meet functional needs. VE has been extensively applied to evaluate and improve manufacturing processes, methods, and materials.
Value Engineering (VE) in Operations and Support
After fielding, opportunities for VE may exist for a long time. Product life cycles are being extended; for consumables, there is no sure way to determine the total quantity that will be purchased. Also, in the past, many items that entered the defense inventory were never subjected to a VE analysis. The potential for VE savings on these items is real. Advances in technology or changes in user requirements provide a basis for potential savings.