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Federal Highway Administration > Publications > Focus > November 2004 > Value Engineering Equals Value Added
November 2004Publication Number: FHWA-HRT-05-021

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Value Engineering Equals Value Added

For State highway agencies, the use of value engineering (VE) methods and techniques produced more than $1 billion in savings in 2003. Looking beyond the savings, VE methods also shortened project times, encouraged innovation, lowered life-cycle costs, and improved quality.

A VE study for a highway project typically takes 4 to 5 days to perform and involves a multidisciplinary team. At the concept stage of the project, the team might include planning and right-of-way staff, private citizens, and environmentalists. For a study done during the project's design phase, the team might be composed of construction, design, traffic, and maintenance staff. A VE project plan usually features several different phases, including:

  • Selecting the project for study;
  • Investigating the project to identify the problem areas and opportunities for innovation;
  • Brainstorming and developing alternatives to the existing design plan;
  • Presenting recommendations to management;
  • Approving and implementing the recommendations; and
  • Auditing the results.

VE techniques have been in use by the highway industry for more than 3 decades, but recent years have seen a tremendous increase in applications. A 1995 congressional regulation mandates the use of VE on all Federal-aid highway projects of $25 million or more. Many States have also established their own VE programs. New Mexico, for example, performs about 8 to 12 VE studies a year. "In addition to those projects over $25 million, we look at other projects and consider whether there are opportunities to improve them using VE," says Carlos Ruiz of the New Mexico State Highway and Transportation Department (NMSHTD). New Mexico aims to perform the studies as early as possible in the project development process, with studies generally being done when the project is about 30 percent along. One project where VE was particularly useful was the reconstruction of the I-25/I-40 Interchange in Albuquerque, known as "The Big-I." Construction costs for the project were originally estimated at $295 million. Three VE studies were conducted, with 15 VE recommendations ultimately adopted for savings of $73 million. Recommendations adopted included rehabilitating bridges with prefabricated segmental portions of prestressed concrete instead of reconstructing the bridges.

NMSHTD also applied VE to a 193-km (120-mi), four lane reconstruction project on NM 44/US 550. Three VE studies were conducted at different design stages of the project, which had an estimated construction cost of $244 million. Almost 100 VE recommendations were made and 30 were adopted, reducing the estimated project cost to $212 million. The project was ultimately bid at $184 million.

The Washington State Department of Transportation (WSDOT) saved more than $60 million as a result of its VE studies in 2003. WSDOT typically performs one VE study per month. Projects selected for study generally cost more than $2 million or involve complex factors, such as structures or traffic control measures. WSDOT uses performance measures to track cost savings and other benefits, including VE recommendations implemented, improved constructibility, minimizing of right-of-way or environmental impacts, compressed development or construction schedule, enhanced operational performance, and development of partners and consensus building.

One of WSDOT's multidisciplinary VE teams at a project site

One of WSDOT's multidisciplinary VE teams at a project site.

One new aspect of WSDOT's VE program this year is that the agency's regional administrators will be evaluated on how well they meet the stated criteria for performing VE studies as part of their annual performance reviews. "We're taking a proactive, top-down approach to encourage VE studies," says Ken Smith of WSDOT. The agency is also developing a risk analysis process to include as part of its VE studies. "We're looking at quantifying the risk for project schedules and budgets. If we can deliver a project on time or sooner, for example, that definitely adds value," says Smith.

The Federal Highway Administration (FHWA) offers VE training and technical assistance to States, including a 4 to 5 day course for highway agencies. The course provides an overview of the VE process and the opportunity for course participants to analyze actual highway projects in their State, using the VE principles they have learned. The course also highlights the Choosing by Advantages (CBA) decision-making system. The CBA system looks strictly at the advantages of various options when a choice is being made.

"We are seeing an increase in the number of States doing VE studies," says Donald Jackson, VE Coordinator for FHWA. "We continue to look at how to improve our outreach in terms of providing information and assistance, including getting academia involved in making VE part of their course curriculum."

Highway agencies and others will have the opportunity to learn more about State experiences with VE at the 2005 Value Engineering Conference, to be held July 20-22, 2005, in San Antonio, Texas. The conference is sponsored by the American Association of State Highway and Transportation Officials (AASHTO), Texas Department of Transportation, and FHWA. Sessions will cover such topics as constructibility issues, value engineering and design/build, process improvement, and program implementation issues. FHWA will present its Value Engineering Outstanding Achievement Awards to State departments of transportation that have demonstrated exceptional accomplishments in applying and promoting VE. The AASHTO Value Engineering Technical Committee will also present its National Value Engineering Awards.

For more information on VE or the 2005 Value Engineering Conference, contact Donald Jackson at FHWA, 202-366-4630 (fax: 202-366-3988; email: donald.jackson@fhwa.dot.gov), or visit the FHWA VE Web site at www.fhwa.dot.gov/ve/index.htm. To learn more about New Mexico's VE program, contact Carlos Ruiz at 505-827-5475 (email: carlos.ruiz@nmshtd.state.nm.us). For more information on Washington State's VE studies, contact Ken Smith at 360-705-7233 (email: smithk@wsdot.wa.gov).

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Updated: 04/07/2011

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