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Overview of Value Engineering

  • MBP 3040 Williams Drive, Suite 300 Fairfax, VA 22031 (map)

The Office of Management and Budget (OMB), is in the process of finalizing a revision to OMB Circular A-131 (published December 26, 2013 in the Federal Register). In the revised circular, OMB has indicated that it will require agencies to apply value engineering (VE) to programs costing more than $5 million -- an increase from the current $1 million. Further, it requires that agencies name an official to be accountable for embracing the concept.

In the December 26, 2013 Federal Register notice, OMB describes VE as: organized effort to analyze functions of systems, equipment, facilities, services, and supplies for the purpose of achieving an agency's essential functions at the lowest life-cycle cost, consistent with required levels of performance, reliability, quality, and safety. VE challenges agencies to continually think about their mission and functions—in the most basic terms—in order to determine if their requirements are properly defined and if they have considered the broadest possible range of alternatives to optimize value.

OMB’s revision to A-131 will likely affect not only cost estimation in general, but also acquisition, resource management and Capital Planning and Investment Control (CPIC).

This presentation will provide an overview of the key guidance, examples of VE application and the broader implications of OMB’s renewed emphasis on VE.

About the Presenter

Bob Keener is a Principal Economics and Business Analyst with the MITRE Corporation. He has over 20 years of experience in the areas of Cost Estimating, Activity Based Costing, and Performance Management. He has supported numerous government agencies including the Department of Homeland Security, the Department of Energy, the Federal Bureau of Investigation and the Bureau of Land Management. Mr. Keener has also worked on international development projects sponsored by the World Bank, the Japan International Cooperation Agency and the Overseas Economic Cooperation Fund (Japan) in the Philippines and Bangladesh.