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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2017. Applying Risk Analysis, Value Engineering, and Other Innovative Solutions for Project Delivery. Washington, DC: The National Academies Press. doi: 10.17226/24851.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2017. Applying Risk Analysis, Value Engineering, and Other Innovative Solutions for Project Delivery. Washington, DC: The National Academies Press. doi: 10.17226/24851.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2017. Applying Risk Analysis, Value Engineering, and Other Innovative Solutions for Project Delivery. Washington, DC: The National Academies Press. doi: 10.17226/24851.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2017. Applying Risk Analysis, Value Engineering, and Other Innovative Solutions for Project Delivery. Washington, DC: The National Academies Press. doi: 10.17226/24851.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2017. Applying Risk Analysis, Value Engineering, and Other Innovative Solutions for Project Delivery. Washington, DC: The National Academies Press. doi: 10.17226/24851.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2017. Applying Risk Analysis, Value Engineering, and Other Innovative Solutions for Project Delivery. Washington, DC: The National Academies Press. doi: 10.17226/24851.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2017. Applying Risk Analysis, Value Engineering, and Other Innovative Solutions for Project Delivery. Washington, DC: The National Academies Press. doi: 10.17226/24851.
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1 S u m m a r y NCHRP Research Report 850 summarizes the results of the research conducted for develop- ing integrated methods, techniques, and tools for the application of Value Engineering (VE), Risk Analysis/Risk Management (RA), Constructability Review (CR), and other innovative methods to improve project delivery for transportation projects. The primary focus of this research report is to summarize the research performed, present the conclusions drawn from the research, and present the tools and techniques developed. Summary of Research Activities The research team conducted an extensive review of the following focus areas: • Value Engineering • Risk Analysis • Constructability Review • Other Innovative Methods • Project Delivery Methods A detailed summary of the research results for each of these focus areas is included in this research report. The following list contains the highlights of the research: • Over 215 individual pieces of literature were reviewed including technical reports, DOT guidance, academic papers, and research results (see Figure 1). • Four surveys covering VE, RA, CR, and Project Delivery were sent to over 203 public officials. The results are shown in Figure 2. • FHWA annual VE reports for the years 2009 through 2013 were compiled and analyzed. Major Findings and Conclusions If the research team were asked to summarize these findings using only one word, that word would be communication. Virtually all the methods, techniques, and processes analyzed as part of this research improve project delivery performance by facilitating team communication in some way, shape, or form. Through the surveys and review of DOT guidance related to VE, RA, and CR, a very clear picture emerged regarding the practice of these project-improving practices within public transportation agencies: • They are performed as separate, distinct processes that occur at specified points in time, assuming they occur at all. A random sampling of VE reports indicated that 15% either Applying Risk Analysis, Value Engineering, and Other Innovative Solutions for Project Delivery

2 applying risk analysis, Value Engineering, and Other Innovative Solutions for Project Delivery Figure 1. Summary of the literature review. 26 15 23 13 40 5 1 58 1 12 19 8 0 10 20 30 40 50 60 70 80 Value Engineering Risk Analysis Constructability Review Project Delivery Other Innovative Methods Type of Documents Reviewed N um be r of D oc um en ts DOT Guidance Technical Reports Academic Papers Research Reports Figure 2. Summary of the survey results. 47 85 30 41 18 38 14 19 11 34 13 17 0 10 20 30 40 50 60 70 80 90 Project Delivery Value Engineering Risk Analysis and Risk Management Constructability Reviews # of Distribution # of Responses # of Completed Survey Results: Distributed, Received, and Completed N um be r of S ur ve ys

Summary 3 directly incorporated or immediately followed an RA activity. The survey results further support this finding: – Of the survey respondents, 8% indicated that RA was always performed in conjunction with VE. – CRs are performed in conjunction with VE 27% of the time. – CRs are performed in conjunction with RA 31% of the time. • They are most often performed because of internal or external policies or requirements. CRs are the notable exception: 59% of respondents stated there was no formal policy for their agency. • They are activities that are performed by individuals outside the project delivery team, ostensibly to maintain the objectivity of the processes. • They result in findings that recommend changes to a project that must be implemented by the project delivery team. • There is little regular formal training. The survey results indicate the following: – 58% indicated that they never provide VE training. – 23% indicated they never provide RA training, while 38% indicated they provide some training on a case-by-case basis. – 60% indicated they never provide CR training. Of the three processes, VE was the most accessible in terms of data availability. The research team performed an analysis of the FHWA annual VE reports from 2009 through 2013. In addi- tion, over 40 VE reports from 18 different DOTs were analyzed. From this information, there was a very clear difference between states that had predominately consultant-led VE studies and those that had in-house-led VE studies. In reviewing the DOTs that had performed more VE studies, the research team compared data for programs that were led by consultants with those conducted in-house. Comparisons were made on the number of studies, the VE proposals reported, the VE proposals accepted, and the overall acceptance rate of proposals. The research team tested the hypothesis that VE studies that adhere to the formal VE process (including function analysis) and spend an appropriate amount of time performing a VE study will produce better outcomes. The data is presented in Table 1. Predominately consultant-led programs are highlighted in yellow, while predominately in-house-led programs are highlighted in blue. Note that Texas was predominately in-house-led between 2009 and 2011 and predominately consultant-led between 2012 and 2013. From the FHWA data, the following observations were made: • The number of VE Proposals is an indication of the quantity of recommendations gener- ated during the effort. Consultant-led programs performed 32% higher than in-house-led programs. • The number of accepted VE Proposals is an indication of the quality of the recommen- dations. Consultant-led programs performed 55% higher than in-house-led programs. • The acceptance rate of VE Proposals is an indication of the efficiency of the VE effort. Consultant-led programs performed 17% higher than in-house-led programs. From the analysis of the 40 VE studies from state DOTs, the following observations were made: • Consultant-led studies were typically 5 days long, while in-house-led studies were 1 day long. • Consultant-led studies were led by individuals with SAVE International® credentials, while in-house-led studies were not.

4 applying risk analysis, Value Engineering, and Other Innovative Solutions for Project Delivery • Consultant-led studies demonstrated much higher levels of the correct application of VE techniques than in-house-led studies did. If the observations from the FHWA data are correlated with the analysis of the DOT VE study reports, the following conclusions may be drawn: • DOTs that perform VE studies of longer duration, led by credentialed facilitators apply- ing the proper technique, generate more proposals and have higher acceptance rates. • DOTs that perform VE studies of shorter duration, led by non-credentialed facili- tators not applying the proper technique, generate fewer proposals and have lower acceptance rates. • Clearly, applying good facilitation, using the proper technique, and ensuring adequate study time result in improved innovation and value. However, the results of in-house-led VE programs should not be discounted; their results were still significant. This finding suggests that the simple act of having multi-discipline teams of transportation professionals collaborating for 1 day is well worth the time invested. The research team emphasizes that consultants are not superior, but rather that the appli- cation of proper technique coupled with an appropriate amount of VE study time led to enhanced innovation and better results—thus, a worthwhile investment. Communication and collaboration have significant benefits for projects. These benefits are further enhanced when more time is spent in a structured environment using the proper technique. It can therefore be assumed that the benefits would be significant if multiple methods, such a VE, RA, and CR, were integrated, used the proper technique by trained personnel, and were conducted throughout the project delivery process. Predominately Consultant-Led VE Programs State In-House Studies Consultant Studies Total # of Proposals # Accepted Proposals per Study Avg. Accepted Proposals per Study Acceptance Rate California 0 221 221 1,146 595 5.2 2.7 52% Florida 24 85 109 624 325 5.7 3.0 52% Georgia 36 151 187 1,570 771 8.4 4.1 49% Minnesota 0 49 49 443 308 9.0 6.3 70% Texas 0 29 29 291 120 10.0 4.1 41% TOTAL 60 535 595 4,074 2,119 6.8 3.6 52% Predominately In-House-Led VE Programs State In-House Studies Consultant Studies Total # of Proposals # Accepted Proposals per Study Avg. Accepted Proposals per Study Acceptance Rate New Jersey 38 5 43 129 78 3.0 1.8 60% North Carolina 106 4 110 1,038 378 9.4 3.4 36% Texas 20 2 22 151 52 6.9 2.4 34% Virginia 151 1 152 374 241 2.5 1.6 64% TOTAL 315 12 327 1,692 749 5.2 2.3 44% Change in Performance of Consultant-Led versus In-House-Led VE Programs. +32% +55% +17% Table 1. Comparison of the performance of consultant-led VE programs with that of in-house-led VE programs.

Summary 5 The research summarized above led the research team to consider tools and techniques that could address the following objectives: • Develop ways of integrating the commonly understood practices of VE, RA, and CR to make them more efficient and effective. • Develop tools and techniques that will enable project delivery teams to apply these prac- tices properly in a structured, integrated way. • Identify and integrate other innovative tools and techniques that could further enhance and augment these common practices. • Deliver the tools using a widely available platform accessible to all DOTs. • Provide relevant transportation examples in an easily accessible educational format. Tools and Techniques to Improve Project Delivery and Innovation The research team developed an integrated process that incorporates VE, RA, and CR along with additional tools and techniques to enhance communication, collaboration, and innovation for project delivery teams. Because the focus is on total value improvement, the research team calls this process Integrated Value Management. Figure 3 provides a visual outline of how this new process aligns with a generic project delivery life cycle for transportation projects. It highlights key elements and provides a basic blueprint to guide and assist project delivery teams in maximizing the value of their projects. This overarching process is supported by the Value Management System Tool, which has been developed using Microsoft Excel® (MS Excel). This integrated MS Excel workbook includes the following value enhancing processes: • Stakeholder Analysis • Decision Analysis • Risk Analysis • Constructability Review • Value Engineering • Project Delivery Method Selection The MS Excel workbook is designed to allow any combination of the processes to be used for a project. Further, it is customizable to allow some worksheets to be modified to better align with individual agency standards. Instruction on the use of the Value Management System Tool is provided through a series of seven instructional videos that walk users through a completed example transportation project. The videos include the following: 1. Introduction (6:49) 2. Stakeholder Analysis (9:58) 3. Decision Analysis (18:21) 4. Risk Analysis (13:27) 5. Constructability Review (4:55) 6. Value Engineering (9:59) 7. Project Delivery Method Selection (6:35) The example transportation project, titled the Davis Road Bridge Replacement Project, considers an actual project that includes pavement, bridge, and traffic-control elements. Users should easily be able to relate to this example and to the way the tool is used to improve project value and develop innovative solutions.

Figure 3. Generic transportation project life cycle. Integrated Value Management Conceptual Design • Project Initiation • Need & Purpose • Stakeholder Outreach • Project Delivery Planning Preliminary Design • Engineering Studies • Environmental Analysis • Options Analysis Final Design • Plans, Specifications & Estimates • Right-of-Way Acquisition • Utility Relocation Construction • Advertise, Bid & Award • VECPs • Change Orders & Claims • Project Closeout Value Planning • Key Elements • Focus on defining value and aligning project team with project outcomes • Project decision tools • Scope Planning - Project Functions / Performance • Stakeholder Analysis • Risk Analysis • Constructability Planning • VE Study • Delivery Method Selection Value Analysis • Key Elements • Focus on improving major design options and selecting the best ones • Stakeholder Analysis • Risk Analysis • Constructability Checklist • VE Study • Options Analysis Value Engineering • Key Elements • Focus on improving technical engineering, materials, and methods • Risk Analysis • Constructability Review • VE Study Value Alignment • Key Elements • Focus on leveraging contractor knowledge and experience to improve project value • Partnering • Risk Analysis • VECP Program • ATC Program

Summary 7 Research Report Structure NCHRP Research Report 850 includes the following sections that provide more detailed information on the research findings and results: • Value Management System Tool • Value Engineering Research Results • Risk Analysis Research Results • Constructability Review Research Results • Innovative Methods Research Results • Project Delivery Methods Research Results

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TRB's National Cooperative Highway Research Program (NCHRP) Research Report 850: Applying Risk Analysis, Value Engineering, and Other Innovative Solutions for Project Delivery examines the state of the art in managing project development and delivery through application of Value Engineering (VE). VE is a systematic process that combines creative and analytical techniques to achieve a common understanding of project requirements. At the project level, the goal of VE is to achieve balance between project needs and resources.

A set of seven training videos, an Excel-based Value Management System Tool, and a sample project application of that tool accompany the report.

Disclaimer - This software is offered as is, without warranty or promise of support of any kind either expressed or implied. Under no circumstance will the National Academy of Sciences, Engineering, and Medicine or the Transportation Research Board (collectively "TRB") be liable for any loss or damage caused by the installation or operation of this product. TRB makes no representation or warranty of any kind, expressed or implied, in fact or in law, including without limitation, the warranty of merchantability or the warranty of fitness for a particular purpose, and shall not in any case be liable for any consequential or special damages.

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