Value Engineering Improves Quality, Cuts Costs
Using a process known as value engineering (VE), States are saving
hundreds of millions of dollars each year on highway infrastructure
projects. This process means that when a State is developing a highway
project, the transportation agency and the contractor reviews the project's
features and looks for ways to improve quality, foster innovation, and
control costs. In fiscal year (FY) 2000, States collectively saved approximately
a billion dollars as a result of performing VE studies, up from $880
million in FY 1999.
"Value
engineering fosters teamwork by involving construction, design, and
maintenance staff," says Donald Jackson, Federal Highway Administration's
(FHWA) VE Coordinator. "It allows States to build highway projects at
the lowest cost while still maintaining the desired function and keeping
or improving the quality." A VE job plan typically includes a number
of different phases, including:
-
Selecting
and investigating a project;
-
Analyzing
the project's function and cost;
-
Brainstorming
and developing alternatives to the existing design plan;
-
Presenting
and implementing the alternatives when they are considered advantageous;
and
-
Auditing
the results.
While value
engineering has been around for decades, its use by the highway industry
has greatly increased in recent years. Much of this upswing came from
a 1995 Congressional regulation mandating the use of VE on all Federal-aid
highway projects of $25 million or more. FHWA has also increased the
amount of VE training and technical assistance it provides to States
(see sidebar) and more and more States have established their own VE
programs.
Three States-California,
Florida, and Washington-were recognized by FHWA in 1999 for their "exceptional
accomplishments in applying and promoting value engineering." California
was the first State highway agency to demonstrate the benefits of VE,
having started its program in 1969. From 1994 to 1999, California conducted
more than 200 VE studies, resulting in over $400 million in savings.
The DOT has also put together two guides on VE: Value Analysis Team
Guide and Value Analysis Report Guide. Both guides can be
found on the Web at www.dot.ca.gov/hq/oppd/value/.
A value analysis procedure manual and concept manual are also currently
in the works.
Florida
DOT started its VE program in the mid-1970s and now has the largest
program of any State highway agency. From 1994 to 1999, the State has
conducted more than 320 VE studies and saved in excess of $100 million
each year. Washington State's program, meanwhile, began in 1984. Between
1984 and 1995, Washington State DOT performed 121 VE studies, realizing
a net savings of more than $15 million. Following improvements made
in 1996 to its VE program, the DOT saw a marked increase in VE implementation.
Between 1996 and 1999, the agency conducted 48 studies and saved $132
million. The DOT has also started a Cost Reduction Incentive Proposal
(CRIP) program, which is aimed at increasing the use of VE. Contractors
can submit a CRIP to the DOT for their projects, with those using VE
to achieve cost reductions eligible for 50 percent of the savings generated.
The
American Association of State Highway and Transportation
Officials (AASHTO), in cooperation with the U.S. DOT and California
DOT, will be holding
a Value Engineering Conference on July 10-13, 2001, in San Diego, California.
The conference will feature sessions on starting and maintaining a VE
program and advanced tools and techniques for VE, as well as case studies
from different States. For more information on the conference, contact
Earl Burgess at California DOT, 916-653-4436 (fax: 916-653-1527; email:
earl.burgess@dot.ca.gov).
For more information on value engineering, contact Donald Jackson at
202-366-4630 (fax: 202-366-3988; email: donald.jackson@fhwa.dot.gov).
FHWA,
through the National Highway Institute (NHI), offers a Value Engineering
(VE) course for State highway agencies. This 4 to 5-day course provides
an overview of the VE process, as well as the opportunity for course
participants to split into 5-7 person teams and analyze actual highway
projects in their State, using the VE principles they have learned.
"In many cases the State uses those studies after the course is
over to make changes to projects and realize cost savings," says
Donald Jackson of FHWA. States currently scheduled to host the course
include Missouri in January and New Jersey in March. Highway agencies
that would like to hold the course should submit requests to NHI
through their local FHWA division office. For more information,
contact Donald Jackson at 202-366-4630 (fax: 202-366-3988; email:
donald.jackson@fhwa.dot.gov). |