Value Engineering at FHWA

1. Value Engineering at FHWA Ken Leuderalbert, P.E., PMP FHWA VE Program Manager SAVE International® 2012 Annual Conference Government Value Management Conference June 14, 2012

2. PresentationAgenda • Overview of FHWA/State DOT Program • VE Program Performance • Overview of FHWA VE Regulations • Future VE Initiatives/Goals

3. FHWA/State DOT Overview

4. FHWA’s Interest with VE • 1784 studies resulting in nearly $10 billion in project cost savings or avoidance over the last five years.

5. FHWA’s Interest with VE On average the VE program has produced the following benefits: VE teams recommend ~ 10% project savings State DOTs implement ~50% of all VE recommendations VE recommendations save ~5% of projects construction costs For every dollar spent on VE analyses, agencies realize a $165:1 return on investment

6. FHWA’s Interest with VE VE Program 2016 Goals: http://www.fhwa.dot.gov/ve/measures.cfm • Maximize VE effect of project cost and performance • 55% of VE Recommendations Implemented • 8% of Project Construction Costs Saved • Enhance Quality of State VE Program • All States have established VE Program and Policy • 50% of all VE studies conducted prior to 30% plans • Improve FHWA’s Stewardship of VE Program • Division engaged in VE Studies • Divisions verifying required VE Studies are Conducted

7. Overview of FHWA VE Regulations Previous update to VE regulation was 1997 Jun 23, 2011 – NPRM Published Aug 22, 2011 – end of public comment period Mar 15, 2012 Final Rule Published in Federal Register http://www.gpo.gov/fdsys/pkg/FR-2012-03-15/pdf/2012-6244.pdf April 16, 2012 Implementation Date of Final Rule

8. Changes to VE Regulation There are now five section to VE Regulation: 627.1 Purpose and Applicability 627.3 Definitions 627.5 Applicable Projects 627.7 Programs 627.9 Conducting a VE Analysis

9. Overview of 2012 VE Regulation Section 627.1 Purpose and Applicability • Prescribes programs, policies and procedures to ingrate VE into project planning and development • Establish and sustain policies and procedures to monitor, assess and report on VE program and analyses conducted

10. Overview of 2012 VE Regulation Section 627.3 Definitions Added definitions for: • Bridge Project • Project • Total Project Costs • VE Analysis • VE Job Plan • VECP

11. Overview of 2012 VE Regulation VE Job Plan Structure for conducting and documenting results of VE analysis • Information Phase • Function Analysis Phase • Creative Phase • Evaluation Phase • Development Phase • Presentation Phase • Resolution Phase

12. Overview of 2012 VE Regulation Section 627.5 Applicable Projects • All FAHP NHS Projects >$25M • All FAHP Bridge Projects >$20M • All Major Projects on or off the NHS • Projects with delayed construction that undergo a scope or design change resulting in meeting threshold • Any FAHP projects FHWA determines appropriate

13. Overview of 2012 VE Regulation Section 627.7 VE Programs • State DOTs must establish and sustain a VE program • Document Policies and Procedures • Identify, Schedule and Conduct VE Analysis • Ensure VE analysis follows VE Job Plan • Resolve and implement approved recommendations • Monitor and Assess VE Program • Submit annual report to FHWA

14. Overview of 2012 VE Regulation Section 627.9 Conducting a VE Analysis • Independent, multi-disciplined team • Team leader with VE expertise • Use of consultants • Timing of VE analysis • Consider all project objectives/commitments • Follow the VE Job Plan

15. State Actions to Implement the VE regulation Simple, do everything we just talked about. • Identify a VE Coordinator • Develop a VE Policy/Procedure • Develop an Annual List of Projects • Identify VE analysis resources for each study • Follow VE Job Plan • Resolve Recommendations • Report on Program Performance

16. Division Stewardship of VE Program • Review and Approve VE Policies and Procedures • Review of Annual List of VE Projects • Ensure VE analysis is conducted on all required projects • Monitor and participate in VE analyses • Monitor Recommendation Resolution Process • Annually Report on VE Program Results

17. FHWA Future Activities • Release 2011 VE Performance Report - Spring • Update the VE Order (Policy) – Summer/Fall • Initiate Development of VE Stewardship & Oversight Tool Box for FHWA Divisions – Summer • Enhance consistency of FHWA efforts • Provide guidance and resources to assist divisions with carrying out specific VE tasks or functions

18. FHWA VE Program Website • Share Successful VE Practices:http://www.fhwa.dot.gov/ve/ • VE Training: http://www.nhi.fhwa.dot.gov/ • Recording of VE Webinar Outreach: http://www.fhwa.dot.gov/ve/ • VE regulations and policies: http://www.fhwa.dot.gov/ve/vepolicy.cfm

19. Other VE Resources • AASHTO VE Technical Committee: http://design.transportation.org/Pages/ValueEngineering.aspx • AASHTO VE Guide: https://bookstore.transportation.org/collection_detail.aspx?ID=43

20. Questions and Answers Questions on VE regulations and policies: Ken Leuderalbert VE Program Manager 317-226-5351 ken.leuderalbert@dot.gov VE Website: http://www.fhwa.dot.gov/ve/