Value Engineering

This Value Engineering (VE) web site describes the Federal Highway Administration's (FHWA) external (grant reimbursement) VE program. It discusses many subjects (highlighted in the left margin) crucial to the administration of a successful VE program and attests to the program's benefits through yearly summary reports. The web site also discusses Frequently Asked Questions on VE and the Federal VE mandate.

The FHWA's VE program applies to its 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 education and training, technical assistance, liaison with industry and States, promotional activities, and active participation in studies, and
• focus on education training Federal, State, and local highway employees through the presentation of the National Highway Institute's VE workshop.

The FHWA also works with the American Association of State Highway and Transportation Officials' (AASHTO) Value Engineering Technical Committee to encourage and promote the use of VE by State DOT's. One such activity used by the FHWA is the presentation of State DOT awards for "Excellence in VE" presented at the biennial AASHTO VE Conference. The FHWA was instrumental in helping AASHTO develop its VE policy guide in 1987 and continues to promote and provide funding for AASHTO's biennial VE Conference.

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, 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 23 CFR 627 establishing such a program.

Recent years have seen adjustments to the legislation and regulations established for VE. After the FHWA published the final rule establishing regulations for design-build contracting in December 2002, the VE regulations were amended accordingly to require VE on qualifying design-build projects. Section 1904 of the SAFETEA-LU authorizing legislation brought further changes. In addition to the previously established VE project requirements, bridge projects with an estimated cost of $20 million or more also require VE studies. The Secretary may also require more than one VE analysis be performed on major projects with an estimated cost of $500 million or more, and any other project determined to be appropriate.

The successful administration of the VE program 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. The following table summarizes recent savings realized by conducting VE. More detailed information can be found by clicking on SUMMARY REPORTS in the left margin.