Construction Program Guide
Value Engineering Change Proposals (VECPs)
23 CFR 627.3 defines Value Engineering (VE) as "the systematic application of recognized techniques by a multi-disciplined team to identify the function of a product or service, establish a worth for that function, generate alternatives through the use of creative thinking, and provide the needed functions to accomplish the original purpose of the project, reliably, and at the lowest life-cycle cost without sacrificing safety, necessary quality, and environmental attributes of the project."
Value Engineering applications can be used during either the pre-award or post-award phases of a project. For more information on pre-award value engineering, refer to http://www.fhwa.dot.gov/ve/.
Value Engineering Change Proposals (VECP) are post-award value engineering proposals made by construction contractors during the course of construction under a value engineering clause in the contract. In the Federal-aid Policy Guide, FAPG G011.9, a Value Engineering Change Proposal is defined as "a construction contract provision which encourages the contractor to propose changes in the contract requirements which will accomplish the project's functional requirements at a less cost or improve value or service at no increase or a minor increase in cost. The net savings of each proposal is usually shared with the contractor at a stated reasonable rate."
Authority/Legal Basis
Laws
While VE applications are required at the preconstruction phase for certain projects, there is no specific requirement in federal highway law for the use of value engineering clauses in construction contracts.
23 USC 106 (e) and (g) - Address value engineering in general, but do not address VECPs during construction. In fact, the definition of value engineering specifically refers to design only. (This is different than the definition of VE contained in 23 CFR 627.3 and as shown above, which is not limited to design.)
Regulations
23 CFR Part 627 - Establishes a Value Engineering Program and requires the use of VE applications on all Federal-aid highway projects on the NHS with an estimated cost of $25 million or more.
- 23 CFR 627.5 (a) (4), Incentives - Allows VE clauses in contracts. It states: "The program may include a VE or cost reduction incentive clause in a SHA's standard specifications or project special provisions that allows construction contractors to submit change proposals and share the resulting cost savings with the SHA."
- 23 CFR 627.5 (a) (5), Monitoring - states: "The program may include procedures for monitoring the implementation of VE study team recommendations and VE change proposal recommendations submitted by construction contractors."
Orders
DOT Order 1395, Paragraph 6.b(2).1, A use of Value Engineering in the Department of Transportation, dated May 8, 1992, provides: "Each DOT Operating Administration should strongly encourage the use of VE in its grant awards or Federally assisted programs for major transportation projects throughout the planning, design and/ or construction phases. This may include the use of VE proposals as a result of VE studies/analyses as well as VE incentive clauses in construction contracts."
Circular No. A-131 - Requires Federal Departments and Agencies to use VE as a management tool, where appropriate, to reduce program and acquisition costs. The Circular recognizes VECPs as a VE provision under the Federal Acquisition Regulations, and identifies VECPs as information that should be included in each agency's VE Program.
Policy
FAPG G6011.9 - States as policy that "the FHWA will assure that a VE study is performed on all Federal-aid funded NHS projects with an estimated cost (includes design, right-of-way, and construction costs) of $25 million or more, and on other Federal-aid projects where its employment has high potential for cost savings. In addition, FHWA will strongly encourage State Departments of Transportation to use VE throughout highway project development, design, and construction."
STAs are strongly encouraged to include VECP clauses in construction contracts to encourage contractors to propose changes during construction which will result in a product of better value at the same or lesser cost with an appropriate sharing of costs with the STA.
Guidance
General Information
Administering VECPs
Links to Example VECP Clauses for Construction Contracts
Federal
- FAR, Part 52 - Solicitation Provisions and Contract Clauses (52.248-3)
- FHWA FP-96 , Subsection 103.01
State
Training
The following training courses include coverage of value engineering during construction:
Links to other VE Web sites
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