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Using Value Engineering to Reduce Life Cycle Cost

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Journal article

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VE is defined as a systematic effort directed at analyzing the functional requirements of DoD systems, equipment, facilities, procedures, and supplies for the purpose of achieving the essential functions at the lowest total cost, consistent with the needed performance, safety, reliability, quality, and maintainability, according to DoD Handbook 4245.8-H, Value Engineering. Public Law 104-106 requires all government agencies to establish and maintain VE procedures and processes. The Federal Acquisition Regulation requires a VE clause to be included in all contracts exceeding a specified threshold. DoD objectives state its net savings and cost avoidances for VE will be at least 1.5 percent of the total obligation authority. The VE process is typically conducted in eight phases orientation, information, functional analysis, creative, evaluation, development, presentation, and implementation. Although the greatest potential for cost control when applying VE exists in the research and development stage of a new capability, opportunities for the application of VE techniques exist in every stage, especially when considering new available technologies and the experience of actual system deployment and user feedback. There are times when a problem in reliability or maintenance may become the greatest opportunity. Crane Army Ammunition Activity recently used VE principles to great success in a cooperative joint redevelopment with the Naval Surface Warfare Center. CAAA is colocated with Code WXR, the Navy design agent for countermeasure flares, at the NSWC installation at Crane, Ind. The effort turned unusable inventory into good materiel, supporting the warfighter, saving dollars, and easing the environmental impact of the flares.

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  • Economics and Cost Analysis
  • Military Forces and Organizations

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