Potential Exists To Reduce Construction Costs Through More Effective Promotion of the Value Engineering Incentive Program

GAO reviewed the Department of the Interior's Bureau of Reclamation value engineering (VE) incentive program to identify opportunities for the Bureau to increase savings on water project construction costs.

GAO found that the Bureau has not placed enough emphasis on promoting the VE incentive program for its water resource construction contracts. As a result, the cost reduction potential of the program probably has not been fully realized due to limited contractor response. Since the program began, the Bureau has approved 39 contractor VE cost savings proposals, amounting to savings of about $2.1 million, half of which accrued to the federal government. Although these savings are noteworthy, the Army Corps of Engineers, during the same time period, achieved nearly 20 times greater savings to the government with construction appropriations three times that of the Bureau. The Bureau could potentially realize greater reductions in water project construction costs through the VE incentive clause adopting certain Corps practices related to: (1) lowering various dollar limitations placed on participation in the program to encourage greater response; and (2) promoting contractor awareness of the existence of an incentive clause.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Michael Gryszkowiec Team: General Accounting Office: Resources, Community, and Economic Development Division Phone: (202) 275-5489