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Tools & Programs: SEP-15

Texas Toll Roads Statewide Open-Road Toll Collection System Project (TX Toll Collection System)

Comprehensive Development Agreement TxDot Statewide Open-Road Toll Collection System

SECTION 22. VALUE ENGINEERING

22.1 General

This Section 22 sets forth the requirements applicable to preparation, review and approval of Value Engineering recommendations ("VEs") for the purpose of enabling Developer and TxDOT to take advantage of potential cost savings or provide potential improvements to the Work through changes in the requirements relating to the Work. Developer is encouraged to submit VEs whenever it identifies potential savings or improvement ("Developer-Initiated VE") for the Project, including each Pilot System and/or Project Segment. TxDOT may also request Developer to develop and submit a specific VE ("TxDOT-Initiated VE"). Developer shall have the right to refuse to consider such TxDOT-Initiated VE, provided that nothing herein is intended to alter TxDOT's right to issue TxDOT-Directed Changes in accordance with Section 13.

22.2 Value Engineering Recommendation

A VE is a proposal developed and documented by Developer which: (a) would modify or require a change in any of the requirements of or constraints set forth in the Contract Documents in order to be implemented; and (b) changes the applicable Price without impairing essential functions or characteristics of the Project, including service life, economy of operation, ease of maintenance, desirability and safety, as determined by TxDOT in its sole discretion, and provided that it is not based solely upon a change in quantities, performance, accuracy or reliability or a relaxation of the requirements contained in the Contract Documents.

22.3 Required Information

At a minimum, the following information shall be submitted by Developer with each VE:

(a) A statement that the submission is a VE, and a narrative description of the proposed change;

(b) Description of the existing requirements in the Contract Documents which are involved in the proposed change;

(c) Discussion of differences between existing requirements and the proposed change, together with advantages and disadvantages of each changed item;

(d) Itemization of the requirements of the Contract Documents which must be changed if the VE is approved;

(e) A complete cost analysis including (i) Developer's cost estimate for performing the subject Work in accordance with the Contract Documents compared to Developer's cost estimate for performing the subject Work in accordance with the proposed changes, (ii) an estimate of additional costs that will be incurred by TxDOT, including estimated impact on future maintenance costs; and (iii) costs of development and

implementation of the VE by Developer. The cost of any additional Governmental Approvals, rights-of-way or easements and other costs or impacts to the Project, shall be included in the cost analysis;

(f) Justification for changes in function or characteristics of each item, and effect of the change on the performance of the end item, as well as on the meeting of requirements contained in the Contract Documents, including environmental compliance requirements;

(g) If available, a description of any previous use or tests of the VE and the conditions and results. If the VE was previously submitted on another TxDOT project, indicate the date, contract number and the action taken by TxDOT; and

(h) Date or time by which a Change Order adopting the VE must be issued in order to obtain the maximum cost reduction, noting any effect on the current Project Schedule and most recent approved Draw Request.

Any additional information requested by TxDOT shall be provided in a timely manner. Additional information could include results of field investigations and surveys, design computations and field change sheets.

22.4 TxDOT Review and Approval

22.4.1 TxDOT will determine whether a VE qualifies for consideration and evaluation. VEs that require excessive time or costs for review, evaluation or investigations, or that are not consistent with TxDOT's design and maintenance policies and basic design criteria may be rejected without evaluation. Developer shall have no claim for any additional costs or delays resulting from the rejection of a Developer-Initiated VE, including VE development costs, loss of anticipated profits or increased material or labor costs. TxDOT will consider only proven features that have been employed under similar conditions or projects acceptable to TxDOT. Within ten business days after receipt of the VEs, TxDOT and Developer will meet and confer to determine whether to proceed with further evaluation. If requested by TxDOT, Developer shall conduct an analysis of each such concept and shall provide data to TxDOT within 15 business days after receipt of such request so as to enable TxDOT to determine whether to accept the VE.

22.4.2 Upon receipt of a VE, TxDOT will process it, but shall not be liable for any delay in acting upon any VE submitted pursuant to this Section 22. Developer or TxDOT may withdraw all or part of any VE at any time prior to approval. In the event Developer withdraws a Developer Initiated VE, Developer shall be liable for costs incurred by TxDOT in reviewing the withdrawn VE. In the event TxDOT withdraws a TxDOT Initiated VE, TxDOT shall be liable for costs incurred by Developer in studying and preparing the withdrawn VE. Each Party shall bear its own costs in connection with preparation and review of rejected VEs.

22.4.3 TxDOT may approve, in its sole discretion, in whole or in part, by Change Order, any VE submitted. Designs for approved VEs shall be prepared by Developer for incorporation into the Design Documents or Maintenance Procedures, as appropriate.

Until a Change Order is issued on a VE, Developer shall remain obligated to perform in accordance with the Contract Documents. The decision of TxDOT as to rejection or approval of any VE shall be at the sole discretion of TxDOT and shall be final and not subject to partnering, dispute resolution or appeal.

22.5 Price Adjustment

If TxDOT accepts a VE, the applicable Price shall be adjusted in accordance with the following:

22.5.1 For Developer-Initiated VEs which reduce the Developer's costs, the applicable Price shall be reduced by an amount equal to the sum of (a) 100% of any additional costs incurred by TxDOT resulting from the VE plus (b) 50% of estimated net savings. For TxDOT-Initiated VEs which reduce the Developer's costs, the applicable Price shall be reduced by an amount equal to the sum of (a) 100% of any additional costs incurred by TxDOT resulting from the VE plus (b) 75% of estimated net savings. For VEs that result in a reduction of the Developer's costs, the term "estimated net savings" shall mean (x) the difference between the cost of performing the Work according to the Contract Documents and the actual cost to perform the Work, as modified by the VE, less (y) the actual costs of studying and preparing the VE as substantiated by Developer and approved by TxDOT in writing in accordance with the Change Order procedures set forth herein, less (z) any additional costs incurred by TxDOT resulting from the VE (including the costs incurred in reviewing the VE). Developer's profit shall not be considered part of the cost. For VEs that result in an increase in the Developer's costs, the applicable Price shall be increased by an amount equal to the sum of (a) 100% of any additional costs incurred by Developer and approved by TxDOT in accordance with the Change Order procedures in Section 13 resulting from the VE plus (b) 50% of estimated net savings. For VEs that result in an increase of the Developer's costs, the term "estimated net savings" shall mean (x) the amount of any savings in TxDOT's costs resulting from the VE (taking into consideration the costs incurred in reviewing the VE), less (y) the actual costs of studying and preparing the VE as substantiated by Developer and approved by TxDOT in writing in accordance with the Change Order procedures set forth herein, less (z) the difference between the actual cost to perform the Work, as modified by the VE, and the cost of performing the Work according to the Contract Documents. Developer's profit shall not be considered part of the cost.

22.5.2 Developer is not entitled to share in either collateral or future contract savings. The term "collateral savings" means those measurable net reductions in TxDOT's costs of operation resulting from the VE, including costs of maintenance by TxDOT or any third party, logistics, TxDOT-furnished property and future costs associated with the Project. The term "future contract savings" shall mean reductions in the cost of performance of future construction contracts for essentially the same item resulting from a VE submitted by Developer.

22.5.3 In the event that Developer proceeds with a Developer-requested change that TxDOT believes should be characterized as a VE, and it is later determined through the dispute resolution process that the change meets the technical qualifications for a VE, the applicable Price shall be reduced by an amount equal to the sum of (a) 100% of any additional costs incurred by TxDOT resulting from the VE plus (b) 75% of estimated net savings.

22.6 Implementation of VEs

22.6.1 Designs for approved VEs shall be prepared by Developer for incorporation into the Design Documents or Maintenance Procedures, as appropriate and shall be subject to the same design procedures as other aspects of the Project's design.

22.6.2 Developer's share of any VE cost savings shall be payable at such time as payments would have been made for the Work which is the subject of the VE had the VE not been implemented. If a VE results in a Price increase, payment for the additional construction work will be made in the ordinary course of progress of the Project.

22.7 Use of VEs By TxDOT

All approved or disapproved VEs will become the property of TxDOT, and shall contain no restrictions imposed by Developer on their use or disclosure. TxDOT retains the right to use, duplicate and disclose in whole or in part any data necessary for the utilization of the VE on any other or subsequent projects without any obligation to Developer.

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