Value Engineering

Value Engineering (VE) Final Rule. The VE Final Rule was published on March 15, 2012 in the VE Final Rule – Federal Register Notice, March 15, 2012 (.pdf) (Docket No. FHWA-2012-0046). This updated VE regulation has an implementation date of April 16th, 2012.

VE Final Rule Webinar Outreach. FHWA held two identical webinars in April 2012 where over two hundred individuals attended, representing FHWA Divisions, State DOTs, Local Agencies, Consultants and other VE stakeholders. A recording of the April 17th session can be viewed at the following link: https://connectdot.connectsolutions.com/tuucbit.2zcxqt/.

About VE

Value Engineering (VE) is defined as a systematic process of review and analysis of a project, during the concept and design phases, by a multidiscipline team of persons not involved in the project, that is conducted to provide recommendations for:

1. providing the needed functions safely, reliably, efficiently, and at the lowest overall cost;
2. improving the value and quality of the project; and
3. reducing the time to complete the project.

The successful application of the VE process 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.

This web site describes the FHWA's VE program; discusses many subjects crucial to the administration of a successful VE program; and attests to the program's benefits through the compilation of annual accomplishment reports and descriptions of successful practices and VE analyses. The web site also addresses a series of Frequently Asked Questions on VE and the Federal VE requirements.

Background. The FHWA's VE program applies to the 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 analyses,
• encompass a variety of VE activities focused on technical assistance, liaison with industry (such as the American Association of State Highway and Transportation Officials' (AASHTO) Value Engineering Technical Committee) and the States , promotional activities, and active participation in studies, and
• focus on education and training of Federal, State, and local highway employees through the presentation of the National Highway Institute's VE workshop.

History of VE in the Federal-aid Program. 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 http://www.whitehouse.gov/omb/circulars/a131/a131.html, 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 with an estimated total cost of $25 million or more. On February 14, 1997, the FHWA published its VE regulation in part 627 of title 23 of the Code of Federal Regulations (23 CFR 627) that formally established the program.

Recent years have seen adjustments to the legislation and regulations established for VE. After the FHWA published the final rule establishing regulations for the design-build project delivery method in December 2002, the VE regulations in 23 CFR 627 were amended accordingly to require VE on qualifying design-build projects.

In 2005, the language contained in Section 1904 of the SAFETEA-LU authorizing legislation brought further changes. In addition to the requirements previously established for projects requiring studies (which now reference the Federal-aid System), VE studies were additionally required for:

• a bridge project with an estimated total cost of $20 million or more
• any other project designated by the Secretary of Transportation

The Secretary of Transportation may require more than one study for a major project (estimated total cost of $500 million or more).

On May 25, 2010, the FHWA updated its VE Policy to:

• Clarify FHWA's requirements for conducting VE analyses;
• Identify the characteristics of a VE analysis process, including life-cycle cost analyses;
• Influence when VE analyses are conducted to maximize their effectiveness;
• Provide more consistent documentation of the VE analyses;
• Delineate responsibilities for establishing and sustaining VE programs and ensuring VE analysis recommendations receive proper review, approval and are implemented; and
• Ensure the appropriate level of FHWA involvement, monitoring, and oversight.

Savings Achieved with VE. The FHWA annually collects information on VE accomplishments achieved within the Federal-aid and Federal Lands Highway Programs. The following table summarizes recent savings realized by conducting VE. Additional details are available by reviewing the complete versions of the FHWA VE Summary Reports.