Editor and Publisher
Value Engineering and Management Digest
Washington, D. C.
Value engineering (VE) may be defined as a systematic method for identifying the function of a product or service, establishing its worth, and generating alternatives to provide the required function at the least life cycle cost. A discipline that evolved out of the necessity for finding alternative materials for manufacturing during the 1940s, it was originally applied to projects in the Department of Defense and in industry. First adopted for highways in California and Florida in the early 1970s, it has been used with increasing success for highway projects nationwide. Virginia’s pioneering VE legislation in 1990 set a standard that resulted in a savings of over $565,000,000 over the next 17 years.
The impetus for using VE increased in 1995 when Congress passed the National Highway System (NHS) Designation Act, which included a provision requiring the Secretary of Transportation to establish a program that would require states to carry out a VE analysis for federal-aid projects of $25,000,000 or more. The Federal Highway Administration (FHWA) subsequently published its regulation (23 CFR Part 627) establishing the program on February 14, 1997.
Life cycle costing, or least-cost analysis, is an integral part of VE. It provides a rational means of comparing the costs of alternatives in terms of today’s dollars, including the effects of initial cost, maintenance cost, and rehabilitation cost.
This chapter reviews the policies of the Federal Highway Administration on VE, and guidelines offered by the American Association of State Highway and Transportation Officials (AASHTO). It also explains the fundamentals of the process, provides detail on implementation methods, and cites examples of successful VE programs.
