Amin Terouhid, Ph.D., CVS
Maryam Mirhadi, Ph.D., MVA
Executive takeaway. A Value Engineering Change Proposal (VECP) should allow an owner to confirm that the alternative preserves functions and performance, produces supportable savings, and can be implemented. The proposal should combine technical evidence, contract revisions, cost and schedule analysis, risks, and life-cycle effects.
Understand what qualifies as a VECP
A Value Engineering Change Proposal, or VECP, is a contractor-initiated proposal submitted after contract award under a value engineering provision. It requires a change to the contract and seeks better value without impairing essential functions or characteristics. The Federal Highway Administration explains that a VECP may improve performance, value, or quality; reduce construction cost; or shorten delivery time while considering life-cycle cost and other applicable factors. [1]
A function characterizes what the project must accomplish. Performance defines how well that function must be delivered through measurable requirements. Resources include cost, time, labor, equipment, materials, and energy. Life-cycle value considers performance and resource use during construction, operation, maintenance, and replacement. These characteristics distinguish a VECP from a routine product substitution, correction of a contractor error, change in quantity alone, construction claim, or request for payment for work already required by the contract. The contract governs whether a proposal qualifies, what the contractor must submit, how long the owner has to review it, how proposal data may be used, how savings are shared, and how payment is made. For example, Federal Acquisition Regulation clause 52.248-3 establishes minimum content and a savings-sharing method for federal construction contracts that contain the clause. State, local, and private contracts may differ. Both parties should therefore review the applicable provision before developing the VECP. [2]
Build a decision-ready proposal
The proposal should begin with a concise comparison of the existing requirement and proposed change. It should identify the drawings, specifications, contract sections, permits, and approvals requiring revision, then explain the reasons, advantages, and disadvantages. The owner should be able to see what would change and what would remain unchanged.
The contractor should then demonstrate functional equivalence, meaning that the alternative provides the same required functions or some level of enhancement to the functions at the required level of performance. A function matrix is a compact table that compares those functions and performance criteria for the existing and proposed solutions. Appropriate support may include design calculations, product data, test results, code analysis, prior-use information, quality-control requirements, and required professional approvals. SAVE International’s Value Methodology supports evaluating required functions rather than favoring a particular solution. [4]
The proposal should next explain how the change will be implemented. It should address design responsibility, submittals, permits, procurement, temporary work, installation, inspection, testing, warranties, operations, maintenance, and training. If commissioning is required, the documented testing and verification that systems are ready for service, it should also be included. The contractor should state when written authorization is needed and show the effect on the current project schedule. Until authorization is issued, the existing contract requirements remain in effect. [2]
Present cost and schedule effects transparently
The cost analysis should present separate estimates for the affected existing work and the proposed work using consistent quantities, pricing dates, labor and equipment rates, markups, and assumptions. It should identify contractor development and implementation costs, subcontractor effects, owner review or testing costs, and changes to operating and maintenance costs. The difference between two supplier quotations is not the total saving when the change transfers or adds other costs. The schedule analysis should identify the activities and logic relationships added, removed, or revised by the proposal to determine if any adjustments need to be made to the schedule, and if it is justified.
Use a disciplined owner review
The owner should first screen the proposal for compliance with the contract and for completeness. Technical reviewers should then verify function, performance, code compliance, constructability, the practical ability to build the alternative—safety, quality, schedule, and operational effects. Estimators should reconcile quantities, rates, exclusions, development costs, owner costs, and life-cycle consequences. Questions, assumptions, revisions, and the final decision should be recorded in a controlled decision log.
Owners typically appoint one review lead and establish a response schedule; involve design, construction, estimating, scheduling, operations, maintenance, procurement, legal, and funding representatives as needed; separate documented savings from uncertain benefits; and identify or assess risks. An accepted VECP should be implemented only through the written contract modification required by the contract. A complete proposal makes value visible, testable, and auditable for both parties.
References
[1] Federal Highway Administration. Value Engineering Change Proposals.
[2] Federal Acquisition Regulation 52.248-3. Value Engineering-Construction, October 2025.
[3] Electronic Code of Federal Regulations. 23 CFR Part 627, Value Engineering.