Minnesota Department of Transportation

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Value Engineering

 

What is Value Engineering?

In accordance with the Federal Highway Administration Federal-aid Highway program, MnDOT is required to establish a program to assure that Value Engineering studies are performed on all federal-aid highway projects; and that all resulting, approved recommendations are incorporated into the plans, specifications and project estimate.

The FHWA defines VE as:

"The systematic application of recognized techniques by a multi-disciplined team to identify the function of a product or service, establish a worth for that function, generate alternatives through the use of creative thinking, and provide the needed functions to accomplish 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.  The successful application of the VE process can contribute measurable benefits to the quality of the surface transportation improvement projects and to the effective delivery of the overall Federal-Aid Highway Program."

Federal regulations

Federal Regulation 23 CFR Part 627--Value Engineering, requires that states apply VE to all federal-aid highway projects on the National Highway System (NHS) with an estimated total project cost of $25 million or more. In 2005, an additional requirement was added to include VE studies for bridge projects with an estimated total cost of $20 million or more.

Projects are defined as "a portion of a highway that a state proposes to construct, reconstruct, or improve as described in the preliminary design report or applicable environmental document".  A project may consist of several contracts or phases over several years and applies to Design-Build projects as well.

Project estimated cost

When calculating project costs for determining federal VE requirements please use the Total Project Cost Method developed by the MnDOT Project Scope and Cost Management Office.

The FHWA can withhold Federal-aid highway funds on any eligible project that did not receive a VE study. It is strongly recommended that projects approaching the above project regulatory thresholds have a VE study done. It is likely that project costs will creep up beyond the threshold amount once all totals are in.  If this occurs at the end of the project, it may be too late to conduct a viable VE study.

Funding eligibility

The cost of performing VE studies is project related and is, therefore, eligible for reimbursement with Federal-aid highway funds at the appropriate pro-rata share for the project studied. 

Project managers' responsibility

Project Managers must ensure that a VE Study is performed on all projects meeting the Federal requirements. Project Managers may also consider a VE Study on lower cost, unique projects that they feel could benefit from a VE study. 

Project Managers are responsible for informing the State Value Engineer of all VE recommendations that were implemented and their cost savings, no later than September 30 of each year.

It is essential that the VE study begin as soon as the Draft Environmental Documents are close to being completed. VE studies take a considerable amount of time to arrange; therefore, early notification and coordination are essential so that sound VE recommendations can be implemented without delaying the progress of the project. As a general guideline, allow 6 months to arrange for the VE study. 

Use of consultant VE facilitators

MnDOT contracts with qualified VE consultants to conduct the VE studies. Consulting firms cannot facilitate VE studies on their own designs without an adequate internal firewall. 

Facilitators must be qualified VE practitioners, experienced in performing and leading VE studies (have participated in several VE studies as a team member and as a team leader), and have sufficient VE training, education, and experience to be recognized by SAVE International as meeting the requirements for certification. Please refer to the Pre-Qualification Program Overview webpage for more information. 

Use of consultant VE team members

MnDOT does contract with qualified consultants (with specific expertise) for the role of VE team member. Consulting VE team members cannot participate on VE study teams when their firm had involvement with the design project under study. 

Design-build projects

In the case of Federal-aid design-build projects meeting the above project cost threshold criteria, a VE study must be performed prior to the release of the Request for Proposals document. 

State value engineer’s responsibility

The Office of Project Management & Technical Support currently manages MnDOT’s VE program. The State Value Engineer is responsible for documenting the results of VE studies (both workshop and change proposals) for inclusion in the annual VE status report that is submitted to the FHWA at the end of the Federal Fiscal year (September 30). The State Value Engineer provides all necessary VE related assistance to the Project Managers.

The annual FHWA reports are listed at http://www.fhwa.dot.gov/ve/vereport.cfm.