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Value Engineering Change Proposals (VECP)

VECPs document a contractor's voluntary recommendation of a design revision to a client which must include an incentive clause which define how the contractor will be rewarded if the change is adopted. Can happen at any time in a project.

Informal Approach

Informal AVE focuses on areas where difficulties in the design and construction aspects of a project are often encountered.

These difficulties may arise from problems with design coordination or aspects of the design which commonly 'go wrong'.

Contractor's knowledge of these common difficulties mean they often spontaneously perform AVE studies so VECPs can be made.

A common instance of informal AVE is the Contractor's provision of a Value Engineering Report alongside their tender submission.

Formal Approach

Contractor's prefer to offer VECPs as part of a formal mechanism in a contract.

The contract will provide clarity on the grounds which proposals can be developed & submitted and how they will be reviewed and how the benefit will be split between contractor and client (i.e. an incentive clause for the contractor).

VECPs provide a formalised process by which the contractor can suggest changes to add value.

Content of a VECP

Description of the proposed change.

Listing of benefits and disadvantages of the change.

List of changes required to the contract.

Estimate of consequences on functionality.

Estimate of consequences on resources (cost, time)

Must provide sufficient information to allow the client to decide if the variation is appropriate.

Requirements for a VECP to US Government

VECP must be permitted by the contract.

Requires the contract to be changed.

Must reduce costs.

Must maintain essential functions or characteristics.

Must include sufficient information for the client to make a decision.

Describe time implications.

Must NOT change the purpose or capacity of the building!

Production of a VECP

Clarify the the technical problem.

Convene a workshop with stakeholders of the right technical expertise.

Include client body representatives if the problem is 'client-touching'.

Examine the functionality that the design element must provide and then think of alternative ways to provide that function.

Note - These workshops are an opportunity to follow the Job Plan!

Value Engineering 'Incentivisation Clauses'

An incentive clause provides a mechanise, & reward to the contractor to develop VECPs.

They ensure the client and not just the contractor benefits from AVE.

Incorporating an incentive clause creates a strong commercial incentive for the practice of AVE by contractors.

Can cause Contractors to focus on cost alone and forget the role of functionality and the need to reflect the client's values.

Value Management Improvement Programmes (VMIP)

VMIPs extend the contractors ability to make VECPs in the earlier stages of design development (i.e. VM2 onwards)

Therefore not suited to traditional procurement as the contractor would be brought in too late.

VMIPs provide a contractual incentive for Contractors' to seek suggestions to improve value and how they would be rewarded if incorporated by the client.

Applied Value Engineering Opportunities in Contracts

JCT05 SBC/Q (Revision 2) Schedule 8 - Encourages the contractor to propose changes to the design and specification that may benefit the employer.

NEC3 ECC Risk Reduction Meetings - Undertaken to make & consider proposals for how the effect of the registered risk can be avoided or reduced and what solution would bring an advantages to all those who are affected (AVE workshop is ideal for developing these proposals)

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