Value Engineering

Value Engineering (VE) is defined as the systematic application of recognized techniques by a multi-disciplined team to identify the function of a product or service, establish a worth for that function, generate alternatives through the use of creative thinking, and provide the needed functions to accomplish the original purpose of the project, reliably, and at the lowest life-cycle cost without sacrificing safety, necessary quality, and environmental attributes of the project. The successful application of the VE process can contribute measurable benefits to the quality of the surface transportation improvement projects and to the effective delivery of the overall Federal-Aid Highway Program.

This web site describes the FHWA's VE program; discusses many subjects crucial to the administration of a successful VE program; and attests to the program's benefits through the compilation of annual accomplishment reports and descriptions of successful practices and VE studies. The web site also addresses a series of Frequently Asked Questions on VE and the Federal VE requirements.

Background. The FHWA's VE program applies to the Federal-aid program under which the funds authorized in Federal-aid highway acts are distributed to States for projects developed and administered by State Departments of Transportation (DOT). This program is designed to:

• encourage State DOT's to use VE,
• assure the projects required by law and regulation receive VE reviews,
• encompass a variety of VE activities focused on technical assistance, liaison with industry (such as the American Association of State Highway and Transportation Officials' (AASHTO) Value Engineering Technical Committee ) and the States , promotional activities, and active participation in studies, and
• focus on education and training of Federal, State, and local highway employees through the presentation of the National Highway Institute's VE workshop.

History of VE in the Federal-aid Program. VE has long been applied both within the Federal Government and in the transportation industry. The Federal-aid Act of 1970 required VE and cost reduction analyses on Federal-aid projects. The Office of Management and Budget (OMB) Circular A-131 http://www.whitehouse.gov/omb/circulars/a131/a131.html, issued in May 1993, required all Federal agencies to use VE and report on VE practices on an annual basis.

In late 1995, Congress passed the National Highway System (NHS) Designation Act which included a provision requiring the Secretary to establish a program that would require States to carry out a VE analysis for all Federal-aid highway funded projects on the NHS with an estimated total cost of $25 million or more. On February 14, 1997, the FHWA published its VE regulation in part 627 of title 23 of the Code of Federal Regulations (23 CFR 627) that formally established the program.

Recent years have seen adjustments to the legislation and regulations established for VE. After the FHWA published the final rule establishing regulations for the design-build project delivery method in December 2002, the VE regulations in 23 CFR 627 were amended accordingly to require VE on qualifying design-build projects.

In 2005, the language contained in Section 1904 of the SAFETEA-LU authorizing legislation brought further changes. In addition to the requirements previously established for projects requiring studies (which now reference the Federal-aid System), VE studies were additionally required for:

• a bridge project with an estimated total cost of $20 million or more
• any other project designated by the Secretary of Transportation

The Secretary of Transportation may require more than one study for a major project (estimated total cost of $500 million or more).

Savings Achieved with VE. The FHWA annually collects information on VE accomplishments achieved within the Federal-aid Highway Program. The following table summarizes recent savings realized by conducting VE. Additional details are available by reviewing the complete versions of the FHWA VE Summary Reports.