Quality + Innovation = Savings
For an increasing number of highway agencies, adding value to projects also means big cost savings, thanks to a process known a
For an increasing number of highway agencies, adding value to projects also means big cost savings, thanks to a process known as value engineering (VE). The VE approach means that when a state is developing a highway project, the transportation agency and the contractor review the projects features and look for ways to improve quality, encourage innovation and control costs. The approach fosters teamwork by involving construction, design and maintenance staff. It also allows highway agencies to build projects at the lowest cost while still achieving the desired function and keeping or even improving the quality. In fiscal year 2000, the collective savings on highway infrastructure projects added up to approximately a billion dollars for states.
A VE job plan usually includes a number of different phases of work, including:
- Selecting and investigating a project;
- Analyzing the projects function and cost;
- Brainstorming and developing alternatives to the existing design plan;
- Reviewing and implementing the alternatives when they are considered advantageous; and
- Auditing the results.
While the VE system has existed for decades, its use by the highway industry has greatly increased in recent years. Much of this increase resulted from a 1995 Congressional regulation mandating the use of VE on all federal-aid highway projects of $25 million or more. Since then, the Federal Highway Administration (FHWA) has expanded the amount of VE training and technical assistance it provides to states.
California, Florida, Missouri, Virginia and Washington have some of the most successful state VE programs. California was the first to demonstrate the benefits of VE with a program that began in 1969. From 1994 to 1999, the California Department of Transportation conducted more than 200 VE studies, resulting in over $400 million in savings. The DOT also has compiled two guidebooks on VE: Value Analysis Team Guide and Value Analysis Report Guide. Both guidebooks can be found on the web (www.dot.ca.gov/hq/oppd/value/).
Washingtons DOT started its VE program in 1984. Between 1984 and 1995, the DOT performed 121 VE studies, realizing savings of more than $15 million. Following improvements made in 1996 to its 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 also has started a Cost Reduction Incentive Proposal (CRIP) program, which is designed to increase the use of VE. Contractors who submit a CRIP to the agency for their projects and use VE to achieve cost reductions are eligible for 50% of the savings generated.
Florida DOT, meanwhile, started its VE program in the mid-70s and now has the largest program of any state highway agency. From 1994 to 1999, the DOT conducted more than 320 VE studies and saved more than $100 million each year.
Value engineering will be in the national spotlight this month at a conference to be held in San Diego, Calif. Sponsored by the American Association of State Highway & Transportation Officials, in cooperation with the U.S. DOT/FHWA and California DOT, the conference will highlight state experiences with VE studies and feature sessions on such topics as starting and maintaining a VE program and the design-build process.
States interested in learning more about VE can schedule a course offered by FHWA through the National Highway Institute. The four- to five-day course provides an overview of the VE process. Participants will learn how to apply VE techniques and to understand the difference between VE and other cost reduction or value added procedures. Participants also are split into teams that then analyze actual highway projects in their state using the VE principles they have discussed. Many times, after the course is over, states use the studies to make changes to projects and realize cost savings. Highway agencies that are interested in hosting the course can submit requests to NHI through their local FHWA division office.