Independent Engineering Review of the
U.S. Army Corps of Engineer's Mainstem Capital Construction Program
May 12, 1998 | document 98-6
Links:
Introduction
One of the major policy issues identified in the scope of work as part
of the Council review of Corps of Engineers? (Corps) mainstem fish
passage capital construction program is "What means are available to
obtain independent engineering review of the Corps? engineering design,
scheduling, cost estimation and construction practices for mainstem
capital fish passage improvement projects?" Put another way, are
there efficiencies and cost savings that can be effected both in the
design and installation of mainstem fish passage facilities? This issue
paper explores the Corps? engineering review processes to identify ways
to further improve fish passage project design and function while helping
to control or reduce project costs, maintain schedules and enhance
oversight.
Background
To begin addressing this issue, central and some state staff have met
several times with representatives from engineering consulting firms in
Portland to scope and refine this issue. In addition, the Council's Fish
and Wildlife Committee began an initial discussion of this issue with
Corps of Engineers? representatives on February 12, 1998.
As a result of the Fish and Wildlife Committee meeting, staff was
directed to prepare an issue paper reviewing the Corps? existing
processes for independent technical/engineering review, value engineering
and project partnering concepts, including suggestions, if any, to improve
such processes. Over the last three years, the Corps has spent an average
of $83 million of Congressionally-appropriated funds to implement its
Columbia River Fish Mitigation Program (CRFM Program). The overall
objective of these engineering review processes is to improve fish passage
project design and function while helping to control or reduce project
costs, maintain schedules and enhance oversight.
Council staff has received background information on this issue from
both engineering consulting firms and Corps of Engineers staff. The
consultants provided information on current engineering industry review
standards and processes, and how these processes are used to provide
independent review of capital construction projects for clients. In
addition, they provided insight on where Corps review processes may
diverge from industry norms.
The Corps identified and provided detailed information on three
different review processes they utilize currently to provide quality
control in the review of their engineering products (design memoranda,
plans and/or specifications, engineering cost estimates, etc.) prepared
for the mainstem fish passage capital construction program. These three
processes, Value Engineering, Technical Review and Project Partnering,
are currently applied to all Corps decision and implementation documents
whether prepared in-house by Corps engineers or by private consulting
engineers. These review processes, as used by the Corps and others, are
described in more detail below.
Discussion
Value Engineering
The first review process used by the Corps is called value engineering
(VE). VE is an engineering review process where a small team of
independent, objective and qualified engineers evaluates the initial
design work, cost estimates, and functionality of a project developed by
the design team for a specific project or process. It is used by the Corps
(or clients of private consultants) to improve project efficacy and reduce
costs. The objective of a VE study is to maintain the required project
function at a minimum of cost, without sacrificing the necessary quality
of the end product.
Value engineering is a standard and accepted engineering review
practice that is used extensively in the private sector and by federal,
regional and local governmental agencies including the Corps of Engineers,
U.S. Department of Transportation, U.S. Bureau of Reclamation, U.S.
Environmental Protection Agency, Tri-Met and the City of Portland, among
others. The VE concept originated in the 1940s at the General Electric
Company; the Corps initiated its own VE program in 1964, and has been
implementing its version of VE for 34 years. Value engineering has
national and international standards, including training and certification
of VE engineers and VE team leaders.
In the private sector, VE is typically used in the following manner. A
"client," such as the City of Portland, contracts with an
engineering firm to design a particular construction project. Once the
project design is at the 30 percent completion stage, the City hires a
different engineering firm to perform VE on the preliminary design. This
firm then works with the design firm to analyze and incorporate the design
changes and cost savings identified in the VE study, as needed.
The following questions and answers are intended to provide additional
background information on the VE process.
What is a value engineering study?
A VE study is an assessment of a proposed engineering design solution
of a project to determine whether alternative design options or revised
project requirements will lead to design options for that project which
are more practical and feasible. A VE study of a project is typically
conducted at the 30 percent (preliminary) engineering design phase to
allow investigation of alternative design options before a project
progresses into the more detailed engineering plans and specifications
phase.
What criteria are used by the Corps to trigger a VE study?
Corps policy requires a formal VE study on all construction projects
with an expected construction estimate of $2 million or more, and on
supply, service and O&M projects with a cost estimate exceeding $1
million. The Division Commander must approve exceptions to this
requirement. For comparison purposes, VE reviews for the City of Portland
are mandatory for all construction projects with an estimated construction
cost of $5 million or more.
A VE review is a process used to determine if a VE study is warranted
on a project. The Corps states a brief VE review is done on projects over
$2 million to assure that a VE study should be performed. If the Corps
determines that a VE study is not warranted, the project file is
documented stating the reasons. A VE review may also be done on Corps
projects estimated to cost under $2 million to determine if a VE study is
warranted. Corps VE reviews typically are accomplished informally by
experienced Corps VE staff.
What are the steps in a typical VE study process?
The steps in a typical VE study process include: 1) decide what project
is going to be designed; 2) select the design team and begin the
engineering design process; 3) at about 30% completion of the design
phase, an independent VE team leader and team are selected and a VE study
of the project is performed; 4) the VE team reviews the preliminary design
drawings and cost estimates and holds a workshop to discuss the 30% plans
and specifications with the design team; 5) the VE team develops its own
list of engineering assumptions, design alternatives, and estimated cost
savings and submits its report to the project owner and the lead design
engineer; 6) the design team engineers review and develop their responses
to VE findings, issues and recommendations and submit their responses to
the VE study team leader; 7) the design team responses are reconciled by
the VE study team working with the design team; and 8) an action plan for
future design work on the project is then prepared from the final VE study
report.
How long does it take to complete a VE study? How much does a VE
study cost?
As can be seen from Attachments 1 and 2
provided by the Corps, it usually takes between 3-5 working days to
complete a Corps VE study. Depending on the detail and scope of the review
process, VE studies for recent CRFM projects range in cost between about
$10,000 and $76,400, for projects budgeted from $175,000 up to $28
million. For comparison purposes, VE was performed on the Portland area
westside light-rail construction project (excluding the tunnel) in 10
working days at a cost of $75,000, for a project budgeted at $300 million.
What is the Corps? overall VE cost savings goal?
Both Walla Walla and Portland Districts? VE savings goal is to
achieve 6 percent savings annually on each District's entire
construction general budget. The Walla Walla District also has a goal of
achieving a 10:1 net return on investment [ Net return on investment is
defined by the Corps as net project VE savings divided by the cost of the
VE study.] for its VE studies. According to the Corps, this savings goal
has been met or exceeded in 4 of the last 5 years in the Walla Walla
District, and in each of the last 5 years in the Portland District.
According to the engineering consulting firms contacted, the private
sector usually achieves VE savings ranging from 8 to 12 percent per
project. One consulting firm quoted an average VE savings of 13 percent.
While the attachments provided by the Corps attribute large VE cost
savings, it is unclear where the savings on some projects may have been
achieved. For example, the John Day Dam smolt monitoring facility was
originally budgeted by the Corps to cost about $8 million, but due to the
use of inaccurate foundation test borings, the cost jumped by an
additional $8 million. Also, the juvenile fish bypass improvements at
Bonneville Dam first powerhouse, including the outfall, were originally
budgeted at about $46 million, but omission of contingency costs and
inaccurate project cost estimates found just prior to awarding the
contract escalated these costs to $62 million, delaying some of the work
into out-years.
What is the difference between VE during design and VE during the
construction phases of a project?
VE can be used to evaluate the design or construction phases of a
project or it can also be used to evaluate a process [ An example of VE
used to evaluate a process is the June 1997 SAIC/HDR engineering review
report of Corps? processes for constructing fish passage projects.] . In
a VE review during the design phase, it is an assessment of a proposed
engineering design solution of a project to determine whether alternative
design options or revised project requirements will lead to design changes
for that project which are more practical and feasible. In the
construction phase, in a typical Corps construction contract, there is a
VE Change Proposal clause. In essence, this clause allows the construction
contractor to propose changes to the contract that provide the same
function as the original contract, but result in an "instant"
contract savings. The Corps states these changes are typically
substitution of less expensive materials. Usually, VE methodology is not
used, and it is difficult to make major changes that have significant cost
savings during construction.
What are the advantages of conducting VE studies?
Besides the obvious advantages of improving efficacy and incurring
significant cost savings in designing and constructing a project as noted
above, additional value is realized by reducing project risk, project
schedule slippage and cost overruns. As project risk is reduced, the level
of contingency cost assigned to a project can also be reduced. Private
engineering consulting firms maintain that contingency costs in the 10-20
percent range are typical during the preliminary design stages of a
project. However, as a project moves through detailed design and is ready
for construction bid, contingency costs should decrease. Industry
standards typically identify contingency costs of less than 10 percent.
High contingency costs in the 40-50 percent range are an indication that a
project has not been well planned or understood. Contingency costs for
Corps projects vary widely; Corps staff provided figures ranging from 6 to
25 percent.
What teams are used to conduct Value Engineering studies?
VE reviews are usually conducted by a team of independent, certified
value engineers from a variety of engineering disciplines. A VE team
typically consists of a certified VE team leader, who assembles the team
from engineers with the appropriate training/expertise necessary to review
the proposed project. This could include engineers experienced in
operations, construction, project cost estimation, as well as all the
major engineering design disciplines.
The Corps uses a variety of teams, including in-house engineers,
private engineering consultants, Office of the Chief Value Engineering
Study Team (OVEST), or any combination of experienced professionals having
specific knowledge in the type of project being evaluated. The Corps
maintains that project customers, users and other stakeholders should be
included in the VE study, if feasible. A VE study is facilitated by the
team leader, and the results of the VE study are recorded in a VE report
on the project, which typically averages 30 to 50 pages in length. VE
studies that have been accomplished on CRFM Program projects by both the
Walla Walla and Portland Districts over the last 5 years are shown on the
attached spreadsheets (see Attachments 1 and 2).
Technical review
The second process used by the Corps, called technical review, is an
independent review of an engineering product by a team of technical
experts. Technical reviews are conducted by Corps District personnel as
part of the Corps? normal business practices on all planning,
environmental and engineering design products produced by the Planning and
Engineering Division, which includes all CRFM Program work. Technical
review is a relatively new practice required by the Corps as part of its
quality control procedures. It is typically conducted at the later stages
in the project design phase, such as at the 90 percent completion level.
It is used to confirm the proper selection and application of established
criteria, regulations, laws, principles, and professional engineering
procedures have been applied to a project to ensure a quality product is
produced. Technical review is also intended to confirm the
constructability and effectiveness of the final engineering product, as
well as the use of clearly justified and valid assumptions for a project
that are consistent with established Corps policy.
Technical reviews conducted by the Corps are performed by teams
comprised of various resource options (or combinations thereof) as
follows: a) in-house (District) personnel; b) Division office personnel;
c) other District/Division personnel; d) Designated Centers of Expertise
within the Corps; e) other sources throughout the Corps including labs,
research facilities, etc.; and f) engineering consultants or industry
experts. Selection of a technical review team depends on the nature of the
work to be evaluated, staff availability and schedule. The technical
review team is usually comprised of professional engineers having the same
design disciplines as the project design team, i.e., engineers with
training/expertise in hydraulic, structural, mechanical, electrical,
geotechnical, etc. disciplines. Technical review includes both an
in-progress review of a project as well as a review of the final product.
The Corps maintains that whenever in-house staff is used for a
technical review, independence of the review is assured by using team
members that have not been involved in the project development or design
process. Technical review team findings are typically documented in
writing by the Technical Review Team leader and supplemented by signature
concurrence of the District's senior management. The Technical Review
Team leader forwards the review findings and comments on the project
design to the design team leader. The design team leader, together with
the design team, must then respond to all comments prepared by the
technical review team. This is typically a 3-week process. At the
completion of this process, a technical review certification document is
prepared. This document certifies that a technical review has been
accomplished for a particular project. Attached to this document are all
of the issues that were raised and resolved during the technical review
process.
Most large capital construction projects, public or private, call for
some version of technical design review at the 90 percent completion point
of the design phase.
Project parenting
The concept of partnering was developed by the Corps to save costs on
projects by improving communication and reducing conflict between the
project owner/engineer and the architectural/engineering firm (AE) or
construction contractors. Partnering is a process whereby the stakeholders
in an endeavor agree to set personal interests aside for the benefit of
the project as a whole.
It is not a contractual or legal agreement, rather it is a
relationship-based process. Each stakeholder in a project strives to
understand the interests of the others and all seek a mutually acceptable
outcome. In essence, it creates a means to resolve conflicts through
development of a partnering agreement as opposed to using litigation. It
is a successful technique and one the Corps uses routinely.
Partnering has focused on relationships between the District and AE
contractors during the design phase and between the District and
construction contractors during the construction phase. As the Corps
Operations Division is typically the "operator" of completed
civil works projects, that division also participates in the partnering
process. When AE firms are involved in the design of a project, they are
also included in the partnering process during project construction.
Rather than the fishery managers, Corps personnel responsible for
coordination and communication with the regional fishery agencies and
tribes represent the interests of the resource in this process.
Once a project enters the construction phase, partnering allows early
visibility of potential schedule changes and cost impacts and the
opportunity to pursue alternatives that may mitigate for those changes or
impacts. However, project partnering does not waive nor supersede
contractual requirements or remedies. If the construction contractor is
entitled to additional compensation or time under the provisions of the
contract, the Government is obligated to make an equitable adjustment to
the contract.
The Corps' experience with partnering confirms its positive benefits.
Litigation, with its expense, time and risks, has been avoided and
contracts are typically completed to the satisfaction of regional
stakeholders. In numerous cases, partnering has offered the opportunity to
develop alternatives that have mitigated significant delays and cost
growth in contract performance.
Issues for consideration and comment
1. How to obtain regional agreement on project scope and schedule
early in the process.
Annual prioritization of, and identification of biological criteria
for, CRFM Program projects is the subject of extensive discussions between
the Corps and regional fishery agency personnel in regional forums such as
the System Configuration Team (SCT) and the Corps? Fish Facility Design
Review Work Group (FFDRWG) which focus on these issues, respectively. Once
a particular project is identified and selected for funding and execution,
usually in the SCT forum, the Corps asserts that lack of regional
agreement or buy-in on a project's scope and/or schedule can be a major
stumbling block during the design process. The Corps maintains that
considerable time can be lost and increased design costs incurred because
regional interests fail to participate fully in the FFDRWG and SCT forums
and/or continue to revise the project scope or schedule during the design
phase.
Unfortunately, many of the fish and wildlife management entities do not
have the resources or the appropriate technical staff to participate in
the FFDRWG and SCT forums in a meaningful way, if at all. Few, if any,
have enough engineers on staff or the resources to employ more on a
regular basis. This inability to participate on an equal basis with the
Corps has frustrated many of the fish and wildlife managers; the lower
river tribes no longer participate in the SCT forum.
The Corps proposes to use the Charrette process to address this
problem. This is a process which attempts to seek consensus among regional
stakeholders in establishing a project's scope and schedule before
beginning project design. Under this process, all stakeholders in the
region would be more fully involved in developing the project scope and
schedule. This should result in reducing the lost time and cost of design
caused by revising the scope and schedule during the design process.
Under this proposal, once a CRFM project has been identified for
design, regional interests could enter into a "partnering
agreement," which would attempt to develop mutually agreed-upon
project objectives, identify each parties? objectives, at what level
various conflicts will be resolved, and how to communicate progress on the
project. Such agreements have the potential to enhance communication among
parties, provide a forum to resolve disputes, and should allow the
regional oversight and technical coordination teams (the SCT and FFDRWG)
and design teams to better understand issues that arise in a timely
manner.
A potential disadvantage to this process is that it requires additional
participation of limited agency staff resources and a greater time
commitment from all regional parties in the conceptual development of
projects. To obtain greater agency participation and buy-in in this
"partnering agreement" process, one option might be for regional
fishery agency and tribal representatives to charge their time against a
particular project during development of that project's scope and
schedule. Such charges could be offset by potential savings in design
costs and schedule slippage due to implementation of the partnering
process.
2. How to provide truly independent engineering review of Corps CRFM
projects.
As stated above, both the VE and technical review teams should be
comprised of a small group of independent, objective and qualified
engineers to evaluate the work done by design engineers on a specific
project. It has been suggested the key to successful VE and technical
reviews is to have a reviewing team that is not influenced by the policies
or organizational constraints of either the design team or the
organization. Not only does the reviewing team need to feel free to test
all of the engineering assumptions being used by the design team, but it
also should be outside the institutional influence and policies of the
design team's organization.
The Corps maintains that whenever in-house staff is used during a VE or
technical review, independence of the review is assured by using team
members that have not been involved in any way in the project development
or design phases. However, based on the information provided in
Attachments 1 and 2 by both Corps Districts concerning recent VE studies,
most (58-78 percent) of the VE team members have been in-house Corps
personnel from the Portland and Walla Walla Districts, and another 19-24
percent were in-house Corps VE officers or from the Corps? OVEST office.
In other words, the vast majority of recent VE team members have been
Corps of Engineers personnel. In the Portland District VE studies, only 17
percent of VE team members were selected from outside the Corps or from
engineering consulting firms, while only two team members in all the Walla
Walla studies were non-Corps ? one from the Bureau of Reclamation and
the other from an engineering firm.
One alternative to ensure independence in VE and technical review
processes is for the review teams to be selected by an outside agency such
as the Council or NMFS, not by the Corps. Under this option, the
overseeing agency would, with the assistance of the Corps, prepare and
send out RFPs to accomplish a VE or technical review of a Corps fish
passage project. After receiving proposals from interested engineering
firms and the Corps, the overseeing agency would review the proposals, the
team member composition and qualifications, and then rank and select the
review team.
A second option is the review teams could be selected by a team of
project customers, including the Corps. Under this option, a team of
project customers, including members with engineering experience from such
parties as NMFS, the Council and/or the fishery agencies and tribes, would
work with the Corps and/or the private sector to develop and send out the
RFPs. Then, after receiving proposals from interested engineering firms
and the Corps, the team of project customers would review the proposals,
team composition/qualifications, and participate in the review team
ranking and selection process.
A third option is to continue with the status quo procedure, whereby
the Corps puts together and selects its own VE and technical review teams,
comprised of engineers from both within and outside of the Corps District
offices. While this option has the advantage of not having to develop a
revised contracting process, some parties have questioned the independence
of the VE and technical review teams.
Public comment
[The comment period ended July 24, 1998.] The
Council invites comment on the issues raised in this paper. Written
comment may be submitted to Mark Walker, Director of Public Affairs,
Northwest Power Planning Council, 851 SW Sixth Avenue, Suite 1100,
Portland, OR 97204-1348, or fax comments to (503) 795-3370. Opportunities
for oral comment will be provided at the Council's June 10 work session
in Spokane, the June 30-July 1 Council meeting in Helena, and the July 22
work session in Portland. Please call the Council's Public Affairs
Division at 1-800-452-5161 or (in Portland) 222-5161 to arrange a time for
oral comment. All comments should be submitted by Friday, July 24, 1998.
The Council plans to compile the comments
received on this paper, and use the comments to identify issues and
options that merit further exploration. The Council welcomes reactions and
comments related to the two issues identified above, as well as the
options proposed.
See attachments 1 and 2
(both 10k PDFs)
^ top
 |
Documents in Acrobat PDF format
require the Acrobat reader plugin |
|
home