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Got a Federal or state value study to perform? We can help.
The Federal government saves billions each year through use of Value Engineering. Yet little of the overall budget is value studied.
In 1995-1997, less than 5-percent of all Federal activities were value studied. Take a look at the results of this period and think of how much money we would have for other programs, including tax relief, if just 50-percent were studied. That would be like
getting another $200 billion in the bank. Yet, the amount studied appears to actually be reducing over the last few years.
1997
Federal Agency Savings
In fiscal year 1997, October 1996 to September 1997, the following Federal agencies savings were reported to the Office of Management and Budget:
| Federal Department/Agency |
Dollars Saved Through
Use of the Value Method |
Department of Defense
(Excluding Corps of Engineers and VA) |
$697,800,000 |
| Department of Transportation |
$3,210,000 |
| General Services Administration (est.) |
$27,543,000 |
| US Army Corps of Engineers |
$84,597,000 |
| Department of the Interior |
$32,313,000 |
| Department of Agriculture |
$2,990,000 |
| Justice Department |
$16,547,000 |
| Veterans Affairs (VA) |
$3,227,000 |
| Heath and Human Services |
$4,747,000 |
| Agency for International Development (AID) |
$4,397,000 |
| State Department (excluding AID) |
$1,065,000 |
| Treasury |
$0 |
| NASA |
$2,665,000 |
| National Archives and Records Administration |
$379,000 |
| Total Reported |
$978,475,000 |
Source: FY1997 OMB Report Summary to Congress And SAVE International
1996
Federal Agency Savings
In
fiscal year 1996, October 1995 to September 1996, the following
Federal agencies savings were reported to the Office of Management and Budget:
| Federal Department/Agency |
Dollars Saved Through
Use of the Value Method |
Department of Defense
(Excluding Corps of Engineers and VA) |
$766,000,000 |
| Department of Transportation (est.) |
$300,000,000 |
| General Services Administration (est.) |
$120,000,000 |
| US Army Corps of Engineers |
$78,521,000 |
| Department of the Interior |
$25,383,000 |
| Department of Agriculture |
$5,156,000 |
| Justice Department |
$3,635,000 |
| Veterans Affairs (VA) |
$7,745,000 |
| Heath and Human Services |
$818,000 |
| Agency for International Development (AID) |
$33,000 |
| State Department (excluding AID) |
$3,947,000 |
| Treasury |
$210,000 |
| Total Reported |
$1,191,448,000 |
Source:
FY1996 OMB Report Summary to Congress
1995
Federal Agency Savings
In fiscal year 1995, October 1994 to September 1995, the following Federal agencies savings were reported to the Office of Management and Budget:
| Federal Department/Agency |
Dollars Saved Through
Use of the Value Method |
Department of Defense
(Excluding Corps of Engineers and VA) |
$734,385,000 |
| Department of Transportation |
$686,374,000 |
| General Services Administration |
$109,608,000 |
| US Army Corps of Engineers |
$59,554,000 |
| Department of the Interior |
$22,428,000 |
| Department of Agriculture |
$8,764,000 |
| Justice Department |
$5,990,000 |
| Veterans Affairs (VA) |
$2,271,000 |
| Heath and Human Services |
$1,884,000 |
| Agency for International Development (AID) |
$800,000 |
| State Department (excluding AID) |
$92,000 |
| Total Reported |
$1,632,150,000 |
Source:
Interactions, SAVE International, June 1996, page 5
and FY1995 OMB Report Summary
Specific
Agency Example
At
one Federal bureau (a part of an agency),
the results of the application of the Value Method in studies
was examined for two years. Less than 25-percent of the
operations were subjected to the selection process. This
constituted about 80 activities ranging from $0.5 million
to more than $70 million in projected cost. Projects were
classified as selected for study and studied, selected for
study and not studied for cause (such as management decision
that selection for a value study was incorrect), and selected
but not studied (study refused without cause specification).
More
than 70-percent of the projects flagged for study during
the selection phase were value studied. The results were
sobering. Of the projects value studied, over 60-percent
were completed within 10-percent of their original budget,
less than 5-percent exceeded their original budget by more
than 10-percent, and over 30-percent were completed at a
cost under 10-percent of the original budget. Of the projects
where management did not agree that the results of the study
would be worth the study cost, more than 40-percent was
within accepted budget limits and more than 10-percent were
completed at a cost of 10-percent under the original budget.
However, more than 40-percent had a final cost that was
more than 10-percent above their budgets. For projects where
no formal decision was made, more than 20-percent were within
budget limits and nearly 50-percent exceeded their budgets
by more than 10-percent. Surprisingly, about 20-percent
were completed more than 10-percent under budget.
Source: Paper written by SAMI staffer and published in SAVE
1997 International Conference Proceedings, Volume XXXI
The
cost for the projects value studied were reduced an average
of more than 25-percent. Thus, even when considering the
projects that were not studied, some of which had completion
costs that were as much as twice over their original budget,
the final combined cost for all the projects was nearly
8-percent below original estimates. Thus, using the Value
Method in their operations helped them meet their overall
budget limit.
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