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FY 2010 Value Engineering Summary Report
The following is a presentation of value engineering (VE) best practices as reported by the State Departments of Transportation (DOT) in the FY 2010 Accomplishment Report. Hyperlinks have been inserted in order to assist the reader in further research of a State's VE program.
Program Management and Monitoring involves a holistic approach towards ensuring the VE program is running efficiently and effectively. This holistic approach actively controls the performance of the program through a focus on the interdependent critical elements of project selection, study timing, study scope, team makeup, recommendation development, resolution, implementation and program reporting. A number of states have developed this holistic approach towards VE Program Management. For instance, according to the 2010 data, the Georgia DOT:
Another example of this holistic approach is the Florida DOT. According to their 2010 data Florida best practices include:
A number of states indentified strong Executive and Upper Management support as a key factor in the success of their VE program.
States continue to move toward gaining better control over their VE program as exemplified by the development of controlling documents, for instance, Kentucky Transportation Cabinetdeveloped their VE Guidance Manual in 2010 and the North Carolina DOT Value Management Guidelines were adopted in September 2010. According to the 2010 performance data nearly 80% of all states have documented VE Program Guidance.
In addition to this comprehensive approach towards program management, many states exhibited exceptional performance within a particular area. The following provides some examples of these high performers as demonstrated in the 2010 VE performance data.
The first phase of the VE Job Plan is project selection. States are encouraged to establish processes for the identification and scheduling of candidate VE projects. Most states use the thresholds identified in federal regulations as their requirement for a VE study. However, there are a few states that are capitalizing on the value of VE by lowering the threshold. For example Arizona, Georgia and Nevada stated that all projects valued over $10 million are required to have a VE study. The following are a few examples of states that have identified effective project identification processes intended to capitalize on the value of VE.
A number of states identified the need for additional VE studies for Major Projects, those costing $500 million or greater. The following are just a few examples.
As reported in FY 2010, a total of 496 professionals received training in Value Engineering - 370 State DOT representatives; 20 FHWA representatives; and 106 professionals from other organizations. The most commonly described approach to conducting training was either through the National Highway Institute's VE workshop, or through short-duration orientation presentations for technical staff and short-duration workshops. Several states indicated that these workshops are regularly scheduled (annually or biennially) to maintain a substantial list of trained VE participants.
Composition of the team is vital for a successful VE study. Several factors need to be considered in the formation of the VE Team. First the Team Leader should be a seasoned VE practitioner experienced in transportation project delivery. Second the team needs to be independent of the project and multi-disciplinary, specifically suited for the project with considerable experience within their field. There are a number of ways states assemble their teams. States identified benefits of using both consultants and in-house resources to conduct VE analyses, approximately 60% of the analyses conducted nationally in 2010 utilized consultants.
Consultants can provide a host of benefits in the management of a VE program. States contract with consultants to provide experienced VE practitioners to serve as team leaders. A number of states declared they require the VE Team Leader to be a Certified Value Specialist (CVS). Use of consultants can also help to round out a team by providing experienced personnel for disciplines missing from the team. Mixing consultant and state personnel on a team provide further training and exposure to state personnel while ensuring unique state issues are understood by the team. Finally, some states maintain on-going VE consultant contracts to meet the needs of the VE program. In this manner, consultants can be deployed quickly to meet ever changing project schedules and requirements.
Washington DOT has an on-call consultant list of facilitators so a project request-to-study queue time is decreased. This allows multiple studies to be scheduled based on need.
Most states identified timing of studies as a critical factor in the success of a VE study. Studies have shown that VE Studies done in the early phases of a project yield higher performance results than those done later in the project delivery cycle. However, there are some drawbacks to studying a project too early. For instance, project costs may not be accurate or available, and project issues may not be defined.
Most states believe that studies should be completed prior to the 30% plans phase. For instance, North Carolina completed a study on their VE program and concluded: 'The primary lesson learned from a review of VE Studies completed in FY 2010 is the recognition that the NCDOT Value Management Program needs to increase the percentage of VE Studies performed in both the planning and conceptual development phase and the preliminary design phase. By doing so, this will increase the opportunity for recommendations to be implemented into the project design.'
Pennsylvania DOT stated, 'One of the findings from the 2009 IOP Review on VE found that the studies were held too late in the process. The Department responded by including a task for VE in their scheduling software right after the NEPA clearance.'
Under certain circumstances and special projects, some states have recorded successful results when conducting VE during later stages in the project delivery cycle. For instance, large resurfacing projects have been studied later than 30% design plans with good results.
States provide a wide array of comments regarding the timing and effectiveness of VE on D/B projects. Some states have commented there is not enough information available at the RFP stage to conduct an effective VE study. Others have stated they have had good results and teams have enough information to develop recommendations. Still others have stated they conduct the study and provide the VE report with recommendations to all D/B proposers. The concept is that contractors will further develop VE recommendations and incorporate them into their proposal thus providing project savings to the state.
Probably, the most important factor regarding the effectiveness of D/B VE studies is the amount of information available for the project team. A number of states have modified their VE process to fit in line with the D/B schedule. The following are a few examples of how states are incorporating VE into D/B.
The cornerstone of the VE program is to provide the required functions of a project at a reduced cost. There are instances where a project's function can be greatly improved with little to no cost increase. The FHWA's VE Accomplishment Report highlights the number of approved recommendations that directly benefit typical performance indicators such as Safety, Operations, Environment, and Constructability. In 2010 states were asked to tabulate the approved VE recommendations according to their functional benefit. States identified the majority of recommendations, 63%, improved the operations and construction of the project.
States identified performance monitoring as a key component of their VE program. Additionally, states are looking for better performance measures to capture the value of the program. For example:
A number of states identified a benefit of the VE Process is to 'reign in scope creep'. In a period where funding is not adequate to meet transportation demands, it is of utmost importance to stretch the transportation dollars and reduce unnecessary costs. VE has been proven as an effective tool to meet this need. The following are a few specific examples.
The FHWA VE Accomplishment Report for 2010 identified a number of states that were integrating the VE technique with other project quality and cost review processes. As was reported at that time, the Washington DOT continues to experience success with the combining of Cost Risk Assessments and Value Engineering Analyses. Other agencies including the Florida, Louisiana, North Carolina, and Utah DOTs are each employing risk analyses to support VE analyses.
Two agencies identified unique benefits to integrating VE and Risk Assessments.
A controversial issue for VE is in regards to the value of conducting VE studies on simple straight forward projects such as resurfacing or 3R projects. A number of states indicated successful results on these types of projects during the 2010 reporting period. For instance Nevada reported 'The PM was convinced that no additional value could be obtained from a 3R project. However, many good ideas emerged from the study and this analysis will be used as a prototype for all 3R projects.'
Traditionally, FHWA's focus for the VE program is to improve transportation project functions and reduce project costs. However, VE is a proven technique that can be used to evaluate much more than transportation projects. Many states used the VE technique to evaluate and improve State and Federal-aid programs and processes. The 2010 Accomplishment Report provides examples from several states that demonstrated the successful application of VE to a variety of programs, processes and standards. Each of these applications can have a broader positive influence on the successful delivery of the Federal-aid Program.
In 2010, California conducted several VE analyses to streamline their business practices. VE was used as an effective tool to break down the function of the following processes and find ways to improve communication and streamline their decision making processes.
Florida DOT used the VE process to study and map the internal process to allow the elimination of a lane or lanes from a state road. There was no formal process for these lane elimination requests to basically convert a lane for another use, and the district was beginning to see an increase in these requests especially on state roads in downtown areas. The desire is to develop a standardized process for handling these applications when they are submitted. The VE study resulted in a documented process that the district can follow to handle these requests.
In 2010, Kentucky developed a VE lessons learned and tracking database using GIS. FHWA Kentucky Division's VE Coordinator and KYTC's VE Branch meets monthly to work on an ongoing agenda and task list. Items and tasks completed are recommended revisions to the stewardship plan, VE Process Review by FHWA scheduled for spring 2011, development of a formal training plan and approval of performance goals.
States have also conducted programmatic type studies for a group of similar projects. This is an effective application when individually each project doesn't rise to the level of requiring a VE study, however, when added together may result in a significant amount of funding. Virginia identified one such study where they conducted a special study on culvert replacements throughout the State. The effort included $52 million in ARRA funding.
In concert with sharing nationwide best practices and success in implementing VE during project development, the States were again asked to share information regarding their successful practices that encourage effective implementation of Value Engineering Change Proposals (VECP) after award of the construction contracts.
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