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17 accompanying policies and procedures to augment the fed- operating instructions to conduct and document VE studies. eral policies. About half of the responding agencies indicated Experience has proven this to be a worthwhile investment, that VE guidelines are also sourced from the federal level. because Caltrans has been able to establish a minimum study performance standard and reduce the learning curve for new The respondent agencies identified the following three participants. The manuals have also been used to showcase basic policy and guideline development sources: the Caltrans-developed project performance measurements approach. The agency's website makes these documents Adopt federal policies and guidelines, readily available. This has motivated other agencies to incor- Adopt other agency's policies and guidelines, and porate elements of the Caltrans VA process. Develop policies and guidelines internally. Most transportation projects in the United States are sub- FHWA has prepared policy, guidelines, and procedures to ject to the requirements of the National Environmental Pol- support the VE programs at the STAs (1922). AASHTO has icy Act (NEPA) and/or other state-based environmental also produced similar guideline documents. The FHWA and legislation. Similar environmental acts exist in Canada and AASHTO documents have been adopted directly and/or mod- govern transportation projects there. In most cases, the VE ified as required by many STAs to serve as state policy and procedures for the STAs identify optimal times during proj- procedures. ect development when VE studies should be done. This may vary with project complexity and/or project value (28,29). In some cases, STAs have developed policies and pro- cesses to control their VE activities. For example, Florida has STAs typically present the project planning and design recently prepared a number of process control system charts process separately from the VE process and show the poten- to help manage their business units at the corporate and tial linkage points between the two work streams. Smith (29) department levels (23). An example process control system suggested in his presentation, "Using Value Analysis to Scope chart used to select VE projects is presented in Figure 4. Projects," that the VE process could be integrated into the Florida's process control system establishes the interrela- NEPA process. Ohio took this a step further. In 2003, the tionships of the state and district value engineers, identifies Ohio DOT (ODOT) developed its "Strategic Initiative Six: key activities, and defines the quality assurance and quality ODOT Will Improve the Quality of Its Construction Plans" control responsibilities. At the time of the survey, Nevada (30). It accomplished this by merging the nine-step NEPA was just finalizing its draft VE policy (24). The draft policy, process with the five-step planning process, design process, using a decision chart that establishes the functions and VE, and constructability reviews into a unified/integrated responsibilities of staff associated with the VE program, is project development process (31). ODOT's project develop- presented in Figure 5. ment process for major projects is presented in Figure 6. A number of transportation agencies have also developed VE manuals or procedures. Several manuals were reviewed as part of the literature work, including submissions from SELECTING SUITABLE PROJECTS California, Florida, New Mexico, New York, Ontario, and Washington State. The documents prepared by Florida, New Most transportation VE studies done in the United States are Mexico, New York, Ontario, and Washington State are gen- being undertaken because the projects under review are on erally similarly sized and provide selective VE background the NHS or cost more than $25 million, as required by regu- and concepts, in addition to their respective VE procedures, lation. The $25 million project cost threshold was identified reporting formats, and anticipated meeting and scheduling most often as a key statutory trigger to warrant a study. Of expectations. The New York State DOT provides VE pro- the responding agencies, 66% identified the statutory require- gram guidance in their design manual. ment as the primary motive to complete the study. Nevada reported that they plan to lower the threshold from $25 mil- To date, of all STAs contacted, Caltrans has developed the lion to $10 million when their draft VE policy is enacted. most extensive suite of VA documents. It has prepared a broad Florida, Pennsylvania, and Ohio reported cost thresholds of range of VA policy and guideline documents for use in its VA $20 million. New Hampshire indicated that their cost thresh- program, similar to those discussed earlier, including a draft old was $50 million, whereas Virginia and Alaska use $5 mil- VA chapter included in the Project Development Procedures lion and $4 million thresholds, respectively. Manual. However, what sets Caltrans apart from the other STAs is its companion VA team and report guides (25,26). In her thesis, Value Engineering for Small Projects (32), Clarke presented a selection methodology for VE studies of In the paper, "Lessons Learned from the California Depart- small transportation projects. She defines small projects as ment of Transportation's Value Engineering Experience in being federally or state funded, non-transit projects with the Transportation Sector" (27), Hunter acknowledged that costs of less that $10 million. Suggested factors include cost, the two manuals were written to create a consistent set of complexity, and impacts.

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18 FIGURE 4 Florida DOT VE project selection process (23).

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19 FIGURE 5 Value analysis policy development in Nevada (24). The selection criteria are presented in Table 4 and are sim- done. Although there is nothing precluding VE on small proj- ilar to criteria used by New Jersey. Clarke developed this cri- ects, transportation agency resources are likely limited or teria based on suggestions from a variety of sources. A review might be better deployed on large projects. Not only are they of 51 VE studies in Hungary by Fodor (33) revealed a some- usually mandated to do so, it also might be a better use of what similar list of possible value targets. skilled resources. This is because larger projects typically have more potential for improvement owing to the larger Robinson (14) noted that one way for STAs to increase scope and expenditure threshold. However, in some cases, it the number of VE studies performed was to focus on projects may be appropriate to apply VE to a smaller project when the that do not receive federal-aid or have costs of less than agency is unsure of the scope or to build consensus with $25 million. However, currently, the agencies rarely embrace stakeholders. this strategy. The situation is much different for the Ontario Ministry According to many of the agencies responding to the sur- of Transportation (MTO). In Canada, transportation funding vey, the application of VE on small projects is rarely or never is generally dealt with at the provincial level. As such, the

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20 FIGURE 6 Example project development process integrating VE (31).

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21 TABLE 4 suitable for VE studies in their Region based on [defined] selec- SUGGESTED SELECTION CRITERIA FOR tion criteria and their project specific knowledge (34). SMALL PROJECTS (32) Factor Criteria It is generally desirable to perform VE studies as early as Cost Roadway work over 25% of total possible and this is often cited in value-oriented documents. project cost This is because "the [planning and] design phase accounts for Bridge work over 25% of total project 80% to 90% of the impact on [project] quality and cost" (35). cost Right-of-way impacts over 10% of total This is illustrated in Figure 7. The rationale for this relates to project cost how design decisions are made throughout a project. Typi- Utility cost over 10% of total project cally, an initial concept is developed, or emerges as a modi- cost fication of a previous design, to satisfy what the designer ini- Project costs that exceed the budget tially believes to be the expectations of the stakeholders (this usually includes the owner). Resistance to the initial design Complexity Major changes to existing structures concept is generally overcome in time by introducing incre- such as new alignment of roadway, bridge(s), or by-pass sections; widening mental changes that address individual stakeholder concerns existing highways for capacity throughout the design phase. Each modification accepted improvements; adding or altering increases the design team's resistance to changing (or revert- interchanges on multilane facilities; or ing to earlier) designs. Consequently, the opportunity to change major reconstruction of existing the project diminishes rapidly as the project is developed highways through the policy and standards, planning and design, con- Expensive solutions such as a component or material that is critical, struction, and operations phases (see Figure 8). exotic, hard-to-get, or expensive; overly long material haul (excessive Other aspects of a project may trigger an STA to initiate borrowing, excessive waste); long a VE study. For example, reducing or avoiding cost and foundation piles; excessive improving safety were often cited as key reasons to initiate a reinforcement; cofferdam de-watering; VE study. Improving project performance, which was inter- architectural embellishment; curbs, gutters, and sidewalks (rural); non- preted to mean improving transportation operations, reducing standard items; sole-source materials or impacts, increasing durability, or other measures, was also equipment; highly skilled or time- highly rated. consuming labor; or difficult materials requirements or inferior material sources 100% Accelerated design (tight design Level of Influence schedule) Expensive construction traffic control Multiple construction stages Night work construction required Impacts Statewide or districtwide impact Wetland mitigation Design Const. Operations Hazardous waste cleanup 0% Extensive/expensive environmental or Project Phase (Life Cycle) geotechnical requirements FIGURE 7 Level of influence on cost throughout project development (35). Opportunity for Change federalstate relationship between FHWA and the DOTs that Standards governs the technical and financial aspects of most projects and Policy simply does not exist. MTO does not have a mandatory ex- ternally imposed VE program requirement. Nevertheless, Planning MTO's VE program is viewed as being successful by many & Design transportation agencies: SAVE, CSVA, and AASHTO. MTO Construction implements a flexible policy to support its noncompulsory VE Mtce. and Ops. program: Project Phase (Life Cycle) Value Engineering is to be applied to suitable projects to the maximum extent that time and resources will allow. Regions FIGURE 8 Opportunity to implement change should provide an annual plan that outlines which projects are throughout project development.