In the design phase of federal building development, properly applied value engineering considers alternative design solutions to optimize the expected cost/worth ratio of projects at completion. Value engineering elicits ideas on ways of maintaining or enhancing results while reducing life cycle costs.

In the construction phase, GSA PBS contractors are encouraged through shared savings to draw on their special 'know-how' to propose changes that cut costs while maintaining or enhancing quality, value, and functional performance.

GSA applies value engineering to new construction and major modernization projects. Value engineering practices are formally structured in the design phase and depend on contractor initiative in the construction phase.

GSA generally contracts for two value engineering studies - one at completion of concept design and the second at completion of design development. In each, GSA asks a value engineering consultant to identify and evaluate changes that could result in increased functional value (including customer satisfaction) in the completed facility while reducing construction or operation and maintenance costs. The value engineering effort is scaled to the project size, complexity, and status.

GSA concentrates value engineering efforts in the early stages of project design because early review affords greater savings and allows a change of direction, if appropriate, without affecting project delivery schedules. Emphasis is on obtaining maximum life cycle value for 'first-cost' dollars- the dollars budgeted for the project. If savings are identified, the project budget may be reduced, or the money may be reallocated, if justifiable, for features that would lend greater life cycle value to the building.

GSA continues value engineering during construction because a contractor's practical experience and purchase options can often generate substantial savings. When a construction contractor proposes a value engineering change to construction requirements, materials, or methods, the contractor shares in the savings. The change may reduce the cost of construction or the life cycle cost of the building, but must not lessen building performance, design quality, safety, appearance, or ease of upkeep. GSA evaluates proposed changes and, if approved, modifies the contract and makes an incentive payment to the contractor. The contractor's share of construction cost savings is 55 percent for fixed price contracts, but can be different for incentive-based contracts.

Value engineering goals for individual projects are often addressed in partnering agreements among GSA, the various consultants, the construction contractors, and the end users.

Value engineering consultants may be single firms or joint ventures of two or more firms. GSA expects participants in a joint venture to have a track record of working together effectively to perform similar services. GSA also prefers that the value engineering consultant for a project not be affiliated or otherwise involved in current business associations with the project's design firm. If such a connection exists, GSA may exclude a consultant due to a potential conflict of interest.

Consultants must demonstrate the necessary resources and experience to conduct the studies called for, including skill and experience in construction projects of similar complexity. Value engineering of building construction must represent a significant portion of a firm's overall business.

GSA generally procures value engineering services through professional services, indefinite quantity contracts, which may also address construction management support.

Source selection procedures involve a Request for Proposals followed by an evaluation/selection based on qualifications and offered services. When an indefinite quantity contract is the source of Value Engineering services, a work order defines the scope of work for each specific value engineering study and is negotiated for a fixed price.

Value engineering consultant contract opportunities are publicized on the web through FedBizOpps.

Value engineering can be defined as an organized effort directed at analyzing designed building features, systems, equipment, and material selections for the purpose of achieving essential functions at the lowest life cycle cost consistent with required performance, quality, reliability, and safety.