VALUE ENGINEERING CHANGE PROPOSALS

Value Engineering Change Proposals (VECPs)

Value Engineering Change Proposals (VECPs) incentivize federal construction contractors to voluntarily submit proposals to the Federal Government that identify ways the Government can reduce costs. In turn, if the government accepts the proposal, the contractor is entitled to share in the net savings on the contract with no reduction in profit (and possibly an increase in profit margin). Most contracts provide for a set percentage of the net savings, (usually 55 percent), plus whatever reasonable development and implementation costs are expended. Importantly, the contractor may often receive some or the entire portion of the costs they expend in order to develop a proposal. Excell has the knowledge and experience to maximize a contractor’s share of VECP savings.

Additionally, The contractor’s share of VECP savings include not only those savings derived from the instant contract, but also those savings on concurrent and future contracts to which the VECP is applied.

Excell has  a long history of preparing successful VECP proposals over the years by leveraging its deep understanding of both the technical analysis needed to persuade contracting officials, and the presentation of same that will convince contracting officials that the proposed VECP is mutually beneficial.

While the government is not obligated to accept the proposal, VECPs allow a contractor a means of suggesting a cost-saving mechanism to the current or instant contract. In an era where it seems like government is constantly under the gun to do more with less, VECPs provide contractors with a tool to benefit from these practices and increase their profits.

Recently, Excell prepared a VECP proposal for a construction client on a building rehabilitation project. Through the review process at the client’s office, Excell’s team discovered a 10 percent under-estimation of additional costs that directly increased the net cost savings on the VECP effort. The VECP proposal was presented to Government contracting officials and accepted the same day! In fact, the proposal was so comprehensive, persuasive, and intuitive, that the same Government contracting officials subsequently added to the scope of the VECP effort – resulting in more cost savings, and thus adding scope to the client’s bottom line.