Frequently Asked Questions
Section 1904 of the SAFETEA-LU authorizing legislation modified Federal law (23 USC 106) to state that VE analyses are required on all projects on the Federal-aid system with an estimated total cost of $25 million or more, and all bridge projects with an estimated cost of $20 million or more. In addition, the FHWA may require more than one VE analysis be performed on major projects with an estimated cost of $500 million or more, and any other Federal-aid project the FHWA determines to be appropriate.
This web page responds to frequently asked questions about the VE requirements.
Question 1: What costs should be included to determine whether or not a project meets the $25 million threshold requiring a VE analysis for a project on the Federal-aid system?
The law indicates that VE analyses are to be performed during the project concept or design process, therefore, all costs associated with environmental studies, preliminary engineering, final design, ROW, and construction should be used to determine a project's overall cost. Funding provided by State and/or local agencies should also be counted in the calculation.
Question 2: Who has the final say on whether or not a "project" has a $25 million cost, the State or FHWA?
FHWA's VE regulation requires State DOTs to identify projects requiring a VE analysis early in the development of their Statewide transportation improvement program. When identifying projects, State DOTs must consider the total cost for all phases described in Question 1 above.
Question 3: When is the best time to perform a VE analysis? Before the Record of Decision, after the Record of Decision, during PE or final design?
There is not a universal "best time" to conduct VE analyses that would apply to each and every project. The simplest answer is that a VE should be conducted as soon as sufficient information is available to perform an analysis. Even though the law only requires that one analysis be conducted during the design or concept phase, projects can benefit from two studies during the life of the project. The first analysis should be done early in the development phase and can be carefully coordinated with the environmental process to help minimize project impacts, decide the best type of facility to build, and pinpoint its location. A second analysis could then be performed during the final design phase to address design issues (geometrics, final vertical and horizontal alignments, drainage, construction staging, traffic control, signalization, pavement and structure details, etc.) and "fine tune" the project before letting it to construction.
Refer to the "Best Practices" section of the FHWA's VE Accomplishment Report for FY 2007 and 2008 for more information about how certain states schedule and coordinate the timing of their VE studies to achieve maximum benefit.
Question 4: What is the proper team size for a VE team, and how long should a VE analysis take?
There are no set rules regarding the number of participants in a VE analysis team or the amount of time required to complete an analysis. The VE process provides flexibility to best meet the objectives of each project being analyzed, and these considerations should be carefully evaluated during the planning and coordinating activities for the VE analyses. Generally, a team of 5 to 8 persons with diverse backgrounds suited to the scope and complexity of the project seems to work best. The length of time required for a study varies and is also dependent upon the complexity of the project.
Question 5: How can VE be done during the development or environmental phase without negatively impacting the environmental agreements, especially when some of these agreements to make the project viable have resulted in a more costly project?
VE studies are performed to add value to and enhance the quality of a project, not simply to reduce costs. VE studies should question project decisions that add cost to a project without improving its overall function. As stated in the law, VE studies are made "to provide suggestions for reducing the total cost of the project and providing a project of equal or better quality."
Decisions and/or agreements from environmental studies and public hearings can be questioned. Of course, the VE team must realize that suggestions negatively impacting environmental or public hearing agreements could place the delivery schedule of the entire project at risk, since they may require supplemental studies or hearings. Still, all valid suggestions should be included in the analysis report. Management must determine what impact the VE suggestion may have on the environmental or public hearing agreement before deciding whether or not to approve the suggestion.
Question 6: If a State DOT uses the design build approach to deliver a project, what is available to value engineer?
A State's decision to use design-build as their method to design and construct a project does not remove the VE requirement for that project. The regulations state that State DOTs shall fulfill the VE requirement by conducting an analysis prior to the release of the Request for Proposal document to prospective vendors.
In many ways, conducting a design-build VE analysis is quite similar to a analysis conducted early (e.g., 30% design) in the development of a project delivered by the design-bid-build approach.
The "Best Practices" section of the FHWA's VE Accomplishment Report provides more information about how certain states have conducted their VE analyses for design-build projects.
Question 7: Is there a shelf life to a VE analysis, or does a VE analysis need to be reevaluated or redone after a certain amount of time has passed?
Once a VE analysis has been performed, the "letter of the law" has been met and no additional VE studies need to be performed on that project. If, after being delayed for an extended time period, the scope of the project is to be changed significantly, or opportunities are newly available to incorporate innovations or technologies into the functionality of the project, the "spirit of the law" would indicate that the State DOT should consider conducting another VE analysis.
Question 8: Does performing a VE analysis also qualify for meeting the requirement to perform a Life-Cycle Cost analysis? Likewise, does performing a life-cycle cost analysis or benefit/cost analysis qualify as a VE review?
Properly conducted VE studies evaluate the Life-Cycle cost impacts of the general project and all VE recommendations made to the project and would qualify as a Life-Cycle cost analysis. However, neither a life-cycle cost analysis nor a benefit/cost analysis qualifies as a VE review because these analyses do not evaluate a project's design using the method discussed above.
Question 9: What if any penalties can and should be assessed against a State DOT if an applicable project does not receive a VE analysis?
If a State DOT does not conduct a required VE analysis on the applicable projects, the FHWA can withhold Federal-aid highway funds on any eligible project that did not receive a VE analysis. Hopefully, before the FHWA would enforce such a sanction, the FHWA Division office and the State DOT would work jointly to assure that all required projects would receive a VE analysis, and the State would adjust their VE Program of projects accordingly.
Question 10: Are all the different VE/VA methods (recognized techniques) acceptable to FHWA, since no specific requirements are mentioned in the law?
VE emerged as a practice in the United States in the 1940s and has been called different things (value engineering, value analysis, value management, value methodology, etc., etc.). Still, the basic concept/process is very similar. In 1997, SAVE International published a "Value Methodology Standard" in an effort to provide a generic description of the overall process for everyone to use. This standard allows for interpretation by VE practitioners. The FHWA should accept any true VE process (systematic application of recognized techniques) and not focus on slight differences in how VE is taught or performed.
Value analyses must incorporate the VE concept/process. Other project development review techniques such as Accelerated Construction Technology Transfer (ACTT), Constructability Reviews are beneficial to project development, but they do not substitute for VE. These other techniques, however, can be successfully coordinated with the VE process for maximum benefit.
VE analyses are conducted by multi-disciplined teams whose objective is to: (1) investigate/analyze the design of an existing project, (2) analyze project functions and costs, (3) creatively speculate on alternative ways to perform the various functions, (4) evaluate the best and/or least life-cycle cost alternatives, (5) develop acceptable alternatives into fully supported recommendations, and (6) present the team's recommendations to management.