National Academies Press: OpenBook

Value Engineering Applications in Transportation (2005)

Chapter: Chapter One - Introduction

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Suggested Citation:"Chapter One - Introduction." National Academies of Sciences, Engineering, and Medicine. 2005. Value Engineering Applications in Transportation. Washington, DC: The National Academies Press. doi: 10.17226/13869.
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Suggested Citation:"Chapter One - Introduction." National Academies of Sciences, Engineering, and Medicine. 2005. Value Engineering Applications in Transportation. Washington, DC: The National Academies Press. doi: 10.17226/13869.
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Suggested Citation:"Chapter One - Introduction." National Academies of Sciences, Engineering, and Medicine. 2005. Value Engineering Applications in Transportation. Washington, DC: The National Academies Press. doi: 10.17226/13869.
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5BACKGROUND State highway and transportation agencies are confronted by many complex problems. Foremost among these is that during the past few years, financial resources have become increasingly scarce in relation to existing and [future] needs. It is widely believed that this condition will persist through the [next decade] and perhaps beyond. Turner and Reark (1) These words, written almost a quarter of a century ago, intro- duced NCHRP’s initial look at value engineering (VE) in transportation. NCHRP Synthesis of Highway Practice 78 summarized key observations and forecast transportation agency expectations at the time. State transportation agencies (STAs) continue to face and overcome these challenges today. In many instances, STAs have developed successful VE programs, as one approach, to help them cost-effectively deliver needed infrastructure and satisfy their customers and key stakeholders. VE is the systematic review of a project, product, or process to improve performance, quality, and/or life-cycle cost by an independent multidisciplinary team of specialists. The VE process, referred to as the Job Plan, defines a sequence of activities that are undertaken during a VE study, before, dur- ing, and following a workshop. During the VE workshop, the VE team learns about the background issues, defines and clas- sifies the project (or product or process) functions, identifies creative approaches to provide the functions, and then evalu- ates, develops, and presents the VE proposals to key decision makers. It is the focus on the functions that the project, prod- uct, or process must perform that sets VE apart from other quality-improvement or cost-reduction approaches. In the United States, VE, or more accurately, the value methodology (VM), has been used to improve transportation projects for more than 30 years (2). Traditionally, VE has been used by transportation agencies and municipal organi- zations to reduce or avoid excess capital construction ex- penditures. However, VE can play a broader role to support effective decision making for transportation projects to increase project performance and quality, balance project objectives, and manage community expectations. The application of VE on transportation projects has evolved substantially since the publication of NCHRP Syn- thesis of Highway Practice 78 (1). In the United States, fed- eral and state policies have been developed and implemented requiring value studies for high expenditure projects. Many transportation agencies now have project delivery strategies in place that incorporate VE and, in some cases, project fund- ing approvals that are selectively tied to the completion of VE studies. The use of VE as a project management tool con- tinues to grow and could be further enhanced by sharing information on the application and management of current VE practices and programs in North America. OBJECTIVES AND FOCUS The purpose of this report is to summarize the current prac- tices in VE in highway transportation agencies in the United States and Canada. VE is used by many of these agencies during the planning, design, and construction phases of their projects. Some agencies have expanded the application of VE to standards and processes as well. This synthesis identifies the reported best practices, key strengths, and challenges of current VE study processes and agency programs. The report is intended to serve as a guide to those agencies interested in applying VE and/or improv- ing the effectiveness of VE in their projects and programs. Key topics discussed in this report include • Policies, guidelines, and selection; • Education and awareness; • Applications; • Implementation; • Monitoring; and • Future needs. SCOPE AND CONTENT This synthesis is based on information collected during a detailed literature search and from documents made avail- able by selected transportation agencies and municipalities in North America. In addition, a survey exploring VE policy, guidelines and applications, project selection, implementa- tion and monitoring issues, industry preparedness, and future opportunities, was distributed to transportation agencies in the United States and Canada. Additional insight, gained from the author’s personal experiences and through contacts, is also shared, where appropriate. CHAPTER ONE INTRODUCTION

The survey was distributed to 53 transportation agencies in the United States, including all 50 states, the District of Columbia, Puerto Rico, and FHWA’s Central Federal Lands Highway Division (FLH). The survey was also distributed to the 13 senior Canadian transportation agencies (provinces and territories) and major municipalities by the Transporta- tion Association of Canada (TAC). Fifty completed survey responses were received from 42 states, FLH, four provinces, and three cities. The Nebraska Department of Roads indicated that the survey questionnaire was not applicable to their organization. The province of Newfoundland and Labrador also responded, but indicated that it does not have a VE program at this time. Responding Canadian provinces were British Columbia, New Brunswick, Ontario, and Saskatchewan. New York City (New York), the Canadian cities of Winnipeg (Manitoba) and Ottawa (Ontario), and FLH also completed the survey. This synthesis report is intended to serve as an extension to NCHRP Synthesis of Highway Practice 78 (1), document- ing the continued and evolving application of VE on high- way projects in the United States and Canada. The organiza- tion and content of the report are discussed here. Chapter one presents the background for the synthesis including the material generated by the Topic Panel. The genesis of the synthesis as well as the objectives and scope of work are included. Different users and organizations may have variations of the VM definitions. One set of definitions is provided in the Glossary to facilitate reviewing this report. Chapter two includes a brief history of VE and traces the developments of VE applications in transportation projects, from its early beginnings in the 1960s to the present. Empha- sis has been placed on the motivation for transportation agen- cies to use this management tool in their infrastructure devel- opment programs and the eventual development of policies to mandate VE on major projects. The role of SAVE Inter- national (SAVE), the U.S.-based international professional society promoting the worldwide use of VM, which influ- ences the value industry and how transportation agencies apply VE, is also presented. Chapter three presents the observed current VE practices in transportation, gained from the literature search results and the detailed survey. A portion of the chapter presents how trans- portation agencies initiate VE studies and why. Also included are the approaches and procedures used to select VE team members, and who is typically responsible for their selection. A discussion of the required skill sets of the VE Team Leader and the technical specialists is presented as well. FHWA cur- rently tracks the specifics of VE studies performed by the STAs on the National Highway System (NHS). This is sum- marized to provide a counterpoint to the total number of VE studies being done by the transportation agencies to reflect 6 the influence and impact that the federal government has on VE activities in the United States. The activities of the Cana- dian provincial DOTs and the three cities are also compared. The VE Job Plan for most STAs uses elements of SAVE International’s Value Methodology Standard (3) issued in 1998, or AASHTO’s slight variation of it. Several states and provinces have, or are in the process of developing or modi- fying, the tools in the Value Methodology Standard to be more specific to transportation projects and the related issues to improve the outcome of VE reviews. An example of this is the recent interest by some STAs to use project-performance measurement to evaluate the effectiveness of proposed VE alternatives. Several agencies are using VE to manage stake- holder expectations to improve public or stakeholder buy-in and project commitment. These aspects are discussed as well. Training practices and the level of financial commitment that appears to be necessary to sustain value expertise are pre- sented in this chapter. The VE Job Plan establishes a successful sequence of activ- ities to understand the study subject (project, process, or prod- uct), define the project functions, generate and evaluate ideas, and eventually develop and present the VE proposals during the workshop stage. However, no universally accepted process currently exists to implement the VE proposals. Consequently, some STAs have developed their own approaches to ensure that the VE proposals are systematically and fairly reviewed for implementation. The effectiveness of the VE programs is also of interest for two reasons: (1) to be compliant with fed- eral VE program reporting requirements and (2) to attract adequate funding to operate the program. These aspects are also discussed in chapter three. Chapter four presents the current implementation chal- lenges and how several transportation agencies have attempted to overcome these challenges. Key implementation issues, including the development and maintenance of core agency VE expertise and sustainable program funding, are discussed. This chapter also presents evidence that the traditional moti- vation to reduce project costs may be, in part, giving way to a broader appreciation and emphasis on the opportunities to increase project value and performance. This improvement typically has a far reaching social benefit, although trans- portation agency expenditures to achieve this benefit do not always provide a direct and immediate return on investment. Chapter five focuses on the identification of potential future opportunities and research needs related to the appli- cation of VE in transportation. Critical to the sustained suc- cess in VE is the ability and readiness of the value community to support the VE programs operated by the transportation agencies. This chapter includes a discussion on how the value community can meet the expectations of the STAs. Chapter six presents the concluding remarks that reflect on the issues identified and discussed in the synthesis report.

7Following the References, Bibliography, and Glossary are these three appendices: • Relevant Federal Value Engineering Requirements (Appendix A), • Survey Questionnaire (Appendix B), and • Summary Responses to Questionnaire (Appendix C). TERMINOLOGY USED IN THIS REPORT VM has been used for almost 60 years. During this time, the terminology used to describe aspects and process steps of the methodology has varied to the point that clear and consistent definitions do not exist between agencies and others in the value community. The terms value analysis, value engi- neering, value planning, value management, and other value variants refer to the same methodology, and are often used interchangeably (2). The debate on the “proper” methodology name has raged for decades. Resolving the terminology issue is well beyond the scope of this synthesis. However, for the purposes of this report, the following definitions will apply: • Job Plan—structured agenda or plan describing the sequence of value study activities. • Pre-workshop stage—preparatory activities that precede a value workshop, including scope refinement, data col- lection, VE team member selection, and resolving venue logistics. • Post-workshop stage—follow-on activities after the value workshop, including implementation review and deci- sions, presentations, report preparation, and monitoring. • Value analysis, value engineering, value management, and value planning—all refer to value methodology. • Value community—practitioners and academics in agen- cies, educational institutions, not-for-profit societies that promote VM [such as SAVE, Canadian Society of Value Analysis (CSVA), and Miles Value Foundation (MVF)], and the consulting industry specializing in value work. • Value methodology—systematic (and structural) ap- plication of recognized techniques by a multidisci- plined team to identify the functions of a (project), product, or (process), establish a worth for that func- tion, generate alternatives through the use of creative thinking, and provide the needed functions to accom- plish 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 (also referred to as value analysis, value engi- neering, value planning, and value management). • Workshop stage—activities undertaken during a value workshop following the six-phase Job Plan, including the Information Phase, Function Analysis Phase, Cre- ativity Phase, Evaluation Phase, Development Phase, and Presentation Phase (3). The Glossary includes a broad range of VE-specific terms that have been taken from SAVE’s Value Methodology Standard (3).

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TRB’s National Cooperative Highway Research Program (NCHRP) Synthesis 352: Value Engineering Applications in Transportation examines the current value engineering (VE) practices of highway transportation agencies in the United States and Canada. Value engineering (VE) is the systematic review of a project, product, or process to improve performance, quality, and/or life-cycle cost by an independent multidisciplinary team of specialists. The report identifies the reported best practices, key strengths, and challenges of current VE study processes and agency programs, and offers guidance on applying and improving the effectiveness of VE in projects and programs.

NCHRP Synthesis 352 was published on December 8, 2005. An incorrect version of Figure 14 was included on page 33. This has been corrected in the on-line version of the report.

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