Category HIGHWAY ENGINEERING HANDBOOK

Objective. The VE manager must ensure that approved recommendations are converted into actions. Until this is done, savings to offset will not be achieved. Three major objec­tives of this phase are:

1. To provide assistance, clear up misconceptions, and resolve problems that may develop in the implementation process

2. To minimize delays encountered by the proposal in the implementation process

3. To ensure that approved ideas are not modified during the implementation process in such a manner as would cause them to lose their cost-effectiveness or basis for original selection

Implementation Investment. The need to invest in order to save must be emphasized when submitting VEPs. Some degree of investment is usually required if a VE opportu­nity is to become a reality. Funds and/or personnel for implementation have to be pro­vided. The key to successful implementation lies in placing orders for the necessary actions into the normal routine of business. Progress should be reviewed periodically to ensure that any roadblocks that arise are overcome promptly.

Expediting Implementation. One of the fastest ways to achieve implementation of an idea is to effectively utilize the knowledge gained by those who originated it. Whenever possible, the VE team should be required to prepare first drafts of documents necessary to revise handbooks, specifications, change orders, drawings, and contract requirements. Such drafts will help to ensure proper translation of the idea into action and will serve as a baseline from which to monitor progress of final implementation. To further ensure proper communication and translation of the idea onto paper, the VE team should review all implementation actions prior to final release.

Monitoring Progress. Implementation progress must be monitored just as systematically as the VEP development. It is the responsibility of the management or the VE manager to ensure that implementation is actually achieved. A person should be designated by name with responsibility to monitor all deadline dates in the implementation plan.

Objective. The last phase of the job plan has several objectives; these might seem quite diverse, but when achieved in total, they will serve to foster and promote the success of subsequent VE efforts:

1. Obtain final copies of all completed implementation actions.

2. Compare actual results with original expectations.

3. Submit cost savings achievement reports to management. This will allow calculation of the total return on investment (ROI) of the VE effort.

4. Submit technical reports to management for possible use elsewhere.

5. Evaluate conduct of the project to identify problems that arose and recommend corrective action for the next project.

6. Initiate recommendations for potential VE study on ideas evolving from the study just completed.

7. Screen all contributors to the VEP for possible receipt of an award and initiate rec­ommendations for appropriate recognition.

Discussion. A VE project is not completed with implementation of an idea. Full benefit is not derived from a VEP until the follow-up phase is completed. Until then, the records on a project cannot be closed. It is the responsibility of the VE manager to designate some individual to complete this phase. Certain key questions must be answered to assess accomplishments:

1. Did the idea work?

2. Did it save money?

3. Would you do it again?

4. Could it benefit others?

5. Has it been forwarded properly?

6. Has it had proper publicity?

7. Should any awards be made?

Objective. The presentation phase involves the actual preparation and presentation of the best alternatives to persons having the authority to approve the VE proposals. This phase of the VE job plan includes the following steps:

1. Prepare and present the VE proposals.

2. Present a plan of action that will ensure implementation of the selected alternatives.

3. Obtain a decision of positive approval.

Discussion. A value engineering proposal (VEP) is almost without fail a challenge to the status quo of any organization. It is a recommendation for change. The recommendation was developed through a team effort, and its adoption is dependent upon another team effort. The success of a VE project is measured by the savings achieved from implemented proposals. Regardless of the effort invested and the merits of the proposal, the net benefit is zero, or is negative, if the proposals are not implemented. Presenting a proposal and sub­sequently guiding it to implementation often requires more effort than its actual genera­tion. We review here some principles and practices that have been successfully used to facilitate the approval of VEPs:

1. Form. Presentation of a VEP should always be written. Oral presentation of study results is most helpful to the person who is responsible for making the decision; however, it should never replace the written report. A written report normally demands and receives a written reply, whereas oral reports can be forgotten and over­looked as soon as they are presented. In the rush to wrap up a project, promote a great idea, or save the laborious effort of writing a report, many proposals have fallen by the wayside because the oral presentation came first and was inadequate. The systematic approach of the VE job plan must be followed all the way through to include the sys­tematic, meticulous, careful preparation of a written report. From this will evolve a more concise and successful oral presentation.

2. Content. Management responsible for review and approval must base its judg­ment on the documentation submitted with a proposal. The proposal and supporting documentation should provide all of the data the reviewer will need to reach a deci­sion. Top management is primarily concerned with net benefit and disposition. A manager either may be competent in the areas affected by the proposal or may rely on the advice of a specialist. In either case, completely documented proposals are far more likely to be implemented. Generally, proposals should contain sufficient discus­sion to ensure the reviewer that performance is not adversely affected, supporting technical information is complete and accurate, potential savings are based on valid cost analysis, and the change is feasible.

3. VEP acceptance. There are many hints that may be offered to improve the probability of and reduce the time required for acceptance and implementation of pro­posals. Those that appear to be most successful are as follows:

a. Consider the reviewer’s needs. Use terminology appropriate to the training and experience of the reviewer. Each proposal is usually directed toward two audiences. First is the technical authority, who requires sufficient technical detail to demonstrate the engineering feasibility of the proposed change. Second are the administrative reviewers, for whom the technical details can be summa­rized while the financial implications (implementation costs and likely benefits) are emphasized. Long-range effects on policies, procurement, and applications are usually more significant to the manager than to the engineer.

b. Prepare periodic progress reports—“no surprises.” The manager who makes an investment in a VE study expects to receive periodic progress reports with esti­mates of potential results. Reporting is a normal and reasonable requirement of management. It helps ensure top management awareness, support, and participa­tion in any improvement program. There are very few instances where managers have been motivated to act by a one-time exposure at the “final presentation,” no matter how “just” the cause. Therefore, it is advisable to discuss the change with the decision makers or their advisors prior to its submittal as a formal VEP. This practice familiarizes key personnel with impending proposals, and enables them to evaluate them more quickly after submittal. No manager likes to be surprised. Early disclosure may also serve to warn the originators of any objections to the proposal. This “early warning” will give the originators opportunity to incorporate modifications to overcome the objections. Often, the preliminary discussions produce additional suggestions that improve the proposal and enable the decision maker to contribute directly. If management has been kept informed of progress, the VEP presentation may be only a concise summary of final estimates and pro and con discussions, and perhaps trigger formal management approval.

c. Relate benefits to organizational objectives. The VEP that represents an advancement toward some approved objective is most likely to receive favorable consideration from management. Therefore, the presentation should exploit all of the advantages a VEP may offer toward fulfilling organizational objectives and goals. When reviewing a VEP, the manager normally seeks either lower total cost of ownership, or increased capability for the same or lesser dollar investment. The objective may be not only savings but also the attainment of some other mission-related goal of the manager.

d. Support the decision maker. The monetary yield of a VEP is likely to be improved if it is promptly implemented. Prompt implementation, in turn, is

dependent upon the expeditious approval by the decision makers in each organiza­tional component affected by the proposal. These individuals should be identified and the entire VE effort conducted under their sponsorship. The VE group becomes the decision maker’s staff, preparing information in such a manner that the risk against the potential reward can be weighed. Like any other well-prepared staff report, each VEP should

• Satisfy questions the decision maker is likely to ask

• Respect the decision maker’s authority

• Permit the decision maker to preserve professional integrity

• Imply assurance that approval would enhance image

• Include sufficient documentation to warrant a favorable decision with reason­able risk factors (both technical and economic)

e. Minimize risk. If VE proposals presented to management are to be given serious consideration, they should include adequate evidence of satisfactory return on the investment. Often, current or immediate savings alone will ensure an adequate return. In other cases, life cycle or total program savings must be considered. Either way, evidence of substantial benefits will improve the acceptability of a proposal.

The cost and time spent in testing to determine the acceptability of a VE pro­posal may offset a significant portion of its savings potential. Committing such an investment with no guarantee of success constitutes a risk that could deter accep­tance of a VEP. In some cases this risk may be reduced by prudent design and scheduling of test programs to provide intermediate assurances indicating the desirability of continuing with the next step. Thus, the test program may be termi­nated or the proposal modified when the concept first fails to perform at an accept­able level. Major expenditures for implementing proposed VE actions should not be presented as a lump sum aggregate, but rather as a sequence of minimum risk increments. A manager may be reluctant to risk a total investment against total return, but may be willing to chance the first phase of an investment sequence. Each successive investment increment would be based upon the successful com­pletion of the previous step.

f. Combine testing. Occasionally, a significant reduction in implementation investment is made possible by concurrent testing of two or more proposals. Also, significant reductions in test cost can often be made by scheduling tests into other test programs scheduled within a desirable time. This is particularly true when items to be tested are part of a larger system also being tested. However, care must be exercised in instances of combined testing to prevent masking the feasibility of one concept by the failure of another.

g. Show collateral benefits of the investment. Often VE proposals offer greater benefits than the cost improvements specifically identified. Some of the benefits are collateral in nature and difficult to express in monetary terms. Nevertheless, collateral benefits should be included in the calculations. The likelihood of accep­tance of the VEP is improved when all its collateral benefits are clearly identified and completely described.

h. Acknowledge contributors. An implemented VE proposal always results from a group effort. There is a moral obligation to identify all individuals and data sources contributing to a proposal. Identification of contributors also provides the reviewers with a directory of sources from which additional information may be obtained. Individuals, departments, and organizations should be commended whenever possible. This recognition promotes cooperation and participation essential to the success of subsequent VE efforts.

i. Prepare the oral presentation. The oral presentation can be the keystone to sell­ing a proposal. It gives the VE team a chance to ensure that the written proposal is

correctly understood and that proper communication exists between the parties concerned. Effectiveness of the presentation will be enhanced if

• The entire team is present and is introduced

• The presentation is relatively short with time for questions at the end

• The presentation is illustrated through the use of visual aids such as mock-ups, models, slides, or flip charts

• The team is prepared with sufficient backup material to answer all questions during the presentation

Objective. In the development phase, the alternatives that have survived the selection process are developed into firm, specific recommendations for change. The process involves not only detailed technical and economic testing but also an assessment of the probability of successful implementation.

Key Questions. Several questions must be answered about each alternative during the development of specific solutions:

Will it work?

Will it meet all necessary requirements?

Who has to approve it?

What are the implementation problems?

What are the costs?

What are the savings?

Procedures

1. General. To satisfy the questions above, each alternative must be subjected to:

a. Careful analysis to ensure that the user’s needs are satisfied

b. A determination of technical adequacy

c. The development of estimates of costs and implementation expenses, including schedules and costs of all necessary tests

d. Consideration of changeover requirements and their impact

2. Develop convincing facts. As in the information phase, the use of good human relations is of considerable importance to the success of the development phase. In developing answers to the questions above, the VE team should consult with personnel knowledgeable about what the item must do, within what constraints it must perform, how dependable the item must be, and under what environmental conditions it must operate. Technical problems related to design, implementation, procurement, or

operation must be determined and resolved. Consideration must also be given to impact in areas such as safety, fire protection, maintenance, and supply support.

3. Develop specific alternatives. Those alternatives that stand up under close tech­nical scrutiny should be followed through to the development of specific designs and recommendations. Work on specifics rather than generalities. Prepare drawings or sketches of alternative solutions to facilitate the identification of problem areas remaining in the design, and to facilitate detailed cost analysis. Perform a detailed cost analysis for proposed alternatives to be included in the final proposal.

4. Development implementation plans. Anticipate problems relating to implementa­tion, and propose specific solutions to each. Particularly helpful in solving such problems are conferences with specialists. Develop a specific recommended course of action for each proposal that details the steps required to implement the idea, who is to do it, and the time required. Ask for ideas from the office that will approve or disapprove the recommendation.

5. Testing. When testing is involved, the VE team may arrange the necessary testing and evaluation, although normally this will be done by other appropriate personnel in the organization. This testing and evaluation should be planned for and scheduled in the recommended implementation process.

6. Select first choice. Finally, one alternative should be selected for implementation as the best-value (best overall cost reduction, usually) alternative, and one or more other recommendations selected for presentation in the event the first choice is rejected by the approval authority. The implementation schedule that will yield the greatest cost reduction should also be indicated.

Objectives. The purpose of this phase is to select the most promising alternatives from among those generated during the previous phase. During the creativity phase there is a conscious effort to prohibit any judicial thinking so as not to inhibit the cre­ative process. But in the evaluation phase, all the alternatives must be critically evalu­ated because many of them may not be feasible. The alternatives are studied individu­ally and/or grouped for the best solution. Identifying function may seem like a simple process—so simple, in fact, that it seems only a “simple” mind would be required to get the job done. In some ways this is true; a mind that can work in a simple, direct way is required—a mind with the ability to reduce concepts, ideas, and analyses to their best common denominators. The emphasis on function in this phase is what makes the VE approach radically different from any other cost reduction effort.

Key Questions. The following questions must be answered about all alternatives being developed during this phase:

What does each alternative cost?

Will each perform the basic functions?

Techniques. Several techniques are available by which alternative ideas can be evaluated and judged. Comparisons can be made between the various advantageous and disadvantageous features of the alternatives under consideration. Advantages and dis­advantages of each alternative can be listed and then the ideas sorted according to the relative numbers of advantages and disadvantages. A system of alternately using creative

TABLE 10.2 Questions to Stimulate Ideas

A. Idea stimulators

Eliminate—combine:

Can it be eliminated entirely?

Can part of it be eliminated?

Can two parts be combined into one?

Is there duplication?

Can the number of different lengths, colors, types be reduced?

Standardize—simplify:

Could a standard part be used?

Would a modified standard part work?

Does the standard contribute to cost?

Does anything prevent it from being standardized?

Is it too complex?

Can connections be simplified?

Challenge—identify:

Does it do more than is required?

Does it cost more than it is worth?

Is someone else buying it at lower cost?

What is special about it?

Is it justified?

Can tolerances be relaxed?

Have drawings and specifications been coordinated? Maintain—operate:

Is it accessible?

Are service calls excessive?

Would you like to own it and pay for its maintenance?

Is labor inordinate to the cost of materials?

How often is it actually used?

Does it cause problems?

Have users established procedures to get around it? Requirements—cost:

Are any requirements excessive?

Can less expensive materials be used?

Is it proprietary?

Are factors of safety too high?

Are calculations always rounded off on the high side?

Would a thinner material work?

Could a different finish be used?

B. Analysis techniques

Review all phases of the program being evaluated (speculation phase).

Designate the subordinate problems requiring solution (analysis phase). Determine the data that might help with the evaluation (speculation phase). Determine the most likely sources of data (analysis phase).

Conceive as many ideas as possible that relate to the problem (speculation phase). Select for further study ideas most likely to lead to a solution (analysis phase). Consider all possible ways to test the ideas chosen (speculation phase).

Select the soundest ways of testing the ideas (analysis phase).

Decide on the final idea to be used in the program (analysis phase).

(Continued)

TABLE 10.2 Questions to Stimulate Ideas (Continued)

C. Analysis criteria

Will the idea work?

Can it be modified or combined with another?

What is the savings potential?

What are the chances for implementation?

What might be affected?

Who might be affected?

Will it be relatively difficult or easy to make the change? Will it satisfy all the user’s needs?

and judicial thinking processes for each basic idea to be evaluated can be applied according to the steps shown in the Analysis Techniques portion of Table 10.2.

Procedure. Evaluation may be accomplished either by the generating group or by an independent group. Authorities disagree upon which approach is better. The disagree­ment grows out of the question of whether people who generate ideas can be objective enough in evaluating them.

1. Establish criteria. The first step is to develop a set of evaluation criteria or standards by which to judge the ideas. In developing these criteria, the team should try to anticipate all effects, repercussions, and consequences that might occur in trying to accomplish a solution. The resultant criteria should, in a sense, be a measure of sensi­tivity to problems (which might be inherent in changes caused by the new idea). In Table 10.3, three sets of criteria that could be used in the analysis phase are presented under Possible ratings. Factors such as these are really the yardsticks by which the effectiveness of each idea can be tested.

2. Screen ideas. The next step in the procedure is the actual ranking, or rating, of ideas according to the criteria developed. No idea should be summarily discarded; all should be given this preliminary evaluation as objectively as possible. In Table 10.3, a three-part system that can be used to rate ideas is presented under Alternative idea. Ratings and their weights are based on the judgment of persons performing the evalua­tion. This initial analysis will produce a shorter list of alternatives, each of which has passed the evaluation standards set by the team.

TABLE 10.3 Typical Analysis Rating System

Possible ratings

Excellent

Good

Fair

Poor

Use now

Modify

Hold

Reject

Simple idea

Moderately complex

Complex idea

3. Define alternatives. The remaining alternatives can be ranked according to an estimate of their relative cost reduction potential. The ranking may be based on nothing more than relative estimates comparing the elements, materials, and processes of the alternatives and the original or present method of providing the function. The surviving alternatives are then developed further to obtain more detailed cost estimates. The cost estimating for each alternative proceeds only if the preceding step indicates it still to be a good candidate. Although the analysis phase is the responsibility of the VE team, authorities and specialists should be consulted in estimating the potential of these alternatives. Cost estimates must be as complete, accurate, and consistent as practicable to minimize the possibility of error in assessing the relative economic potential of the alternatives. Specifically, the method used to determine the cost of the original should also be used to cost the alternatives.

4. Make final selection. After the detailed cost estimates are developed for the remaining alternatives, one or more are selected for further study, refinement, testing, and information gathering. Normally, the alternative with the greatest savings poten­tial will be selected. However, if several alternatives are not decisively different at this point, all should be developed further.

Objective. The objective is to generate, by creative techniques such as brainstorm­ing, numerous alternative means for accomplishing the basic function(s) identified.

Key Question. Accomplishing this phase should result in answering the question “What else will do the job, that is, perform the basic function(s)?” The completeness and comprehensiveness of the answer to this question determine to a very high degree the effectiveness and caliber of value work. The greater the number and quality of alterna­tives identified, the greater the likelihood of developing an outstanding solution. Additional alternatives that have not been considered will usually exist regardless of the skill and proficiency of the study team.

Procedure. Consideration of alternative solutions should not formally begin until the problem is thoroughly understood. All members of the VE study team should partici­pate, for the greater the number of ideas conceived, the more likely that really effective, less costly alternatives will be among them. A proper frame of mind is important at this stage of the study; creative thinking should replace the conventional. It should be a unique flight of the imagination, undertaken to generate numerous alternative methods of providing the necessary function(s).

Judicial thinking does not belong in this phase. As an aid to speculative thought, the techniques of creative thinking, such as brainstorming, should be employed. Every attempt should be made during this phase to depart from ordinary patterns, typical solu­tions, and habitual methods. Experience indicates that it is often the new, fresh, and radically different approach that uncovers the best-value solution. The individual or group members may supplement their ideas with those of others—everyone is expected to make a contribution.

The best solution may be complete elimination of the present function or item. This possibility should not be overlooked during the initial phases of this step. Perhaps some aspect can be modified which will permit elimination of the function under study. Only after determining that the function must remain should the study group look for alterna­tive ways to perform the same function at the lowest conceivable cost. Free use of imagination is encouraged so that all possible solutions are considered.

A partial list of questions that can be used to stimulate and trigger ideas is given in Table 10.2. The questions shown can be rephrased by substituting terms like project, system, item, or procedure for the words it or part when appropriate.

Techniques

1. Blast, create, and refine. This theme has often been used by value engineers. Blast—get off the beaten path. Create—rally for an unusual idea; reach way out for another approach. Refine—strengthen or add to develop an idea to perform basic functions in a new or unique manner.

2. Functional comparison. Conduct a creative problem-solving session (brainstorming) in which new and unusual contributions of known things or processes are com­bined and/or rearranged to provide different ways to perform basic functions.

3. Simple comparison. Conduct a thorough search for other items that are similar in at least one significant characteristic to the study item. Determine whether they can be modified to satisfy basic functions.

4. Scientific search. Conduct a search for other scientific disciplines capable of per­forming the same basic function. This often involves interviewing specialists in disciplines that did not previously contribute to solving the problem. An industry (or its representatives) that specializes in some highly skilled technique can often make a substantial contribution when called upon for technical assistance.

Objectives. The first phase of the job plan has two basic objectives:

To obtain thorough understanding of the project, system, operation, or item under study by a rigorous review of all of the pertinent factual data

To define the value problem by means of functional description accompanied by an estimate of the cost and worth of accomplishing each basic function

Key questions. During this phase, the following key questions must be answered:

What is it?

What does it do?

What must it do?

What does it cost?

What is it worth? (What is the least the function could cost?)

Procedure

1. Use good human relations. The matter of human relations is of utmost impor­tance to the success of any VE study. “People” problems are sometimes more difficult to resolve than technical problems. The effectiveness of a VE team leader’s efforts depends upon the amount of cooperation the leader obtains from the engineers, designers, estimators, managers, etc. If one is skillful in approach, diplomatic when resolving opposing viewpoints, and tactful in questioning a design requirement or specification, one will minimize the problems of obtaining the cooperation necessary to do the job effectively.

2. Collect information. All pertinent facts concerning the project, system, operation, or item must be drawn together. Getting all the relevant facts and getting them from the best sources are of paramount importance. The VE team should gather complete infor­mation consistent with the study schedule. All relevant information is important, regard­less of how disorganized or unrelated it may seem when gathered. The data gathered should be supported by tangible evidence in the form of copies of all appropriate documents. Where supported facts are not obtainable, the opinions of knowledgeable persons should be documented.

In addition to specific knowledge of the item, it is essential to have all available information concerning the technologies involved, and to be aware of the latest technical developments pertinent to the subject being reviewed. Knowledge of the various con­struction processes that may be employed is essential. The more information brought to bear on the problem, the more likely the possibility of a substantial cost reduction. Having all the above information would be the ideal situation, but if all of this informa­tion is not available, it should not preclude the performance of the VE effort.

10.4.1 Function Analysis Phase

The determination of functions is a requisite for all value studies. The decision to pursue the project through the remaining phases of the job plan can be made only by determin­ing function, placing a worth on each required function, and then comparing worth against actual or estimated cost. The determination of function should take place as soon as sufficient information is available to permit determination of true requirements. All members of the VE study team should participate in this exercise because the determina­tion of required function is vital to subsequent phases of the job plan.

The VE job plan outlines those tasks or functions necessary to properly perform a VE study. Adherence to a definite plan is essential to achieving optimum results. Good results come from a good system, and a good system is one that covers all aspects of a problem or situation to the necessary degree. Use of the job plan provides

1. A vehicle to carry the study from inception to conclusion

2. A convenient way to maintain a written record of the effort as it progresses

3. Assurance that consideration has been given to facts that may have been neglected in the creation of the original design

4. A logical separation of the study into units that can be planned, scheduled, budgeted, and assessed

5. Assurance that proper emphasis is given to the essential creative work of a study and its analysis so that superior choices can be made for further development

The job plan attempts to generate, identify, and select the best-value alternative(s) by making specific recommendations supported with the proper data and identifying the actions necessary for implementation. Further, it provides a proposed implementation schedule and a summary of benefits to the user. The VE job plan is a planned program that has been tested, is being used, and has been proved to work.

The VE effort must include all phases of the job plan. However, the proper share of attention given to each phase may differ from one application to another. Judgment is required in determining the depth to which each phase is performed, with consideration given to the resources available and the results expected.

An orientation (pre-workshop stage) is usually conducted by a VE manager prior to the assembling of a VE task team. This activity relates to the selection of ideas for VE projects and their planning and authorization. The VE team follows the VE job plan starting with the information phase after the item to be studied has been selected. The number of members of the VE team varies considerably, but usually the job plan is completed by a team of at least five persons.

As discussed by Wilson (see David C. Wilson, “Value Engineering Applications in Transportation,” NCHRP Synthesis 352, Transportation Research Board, 2005), the VE process may be referred to as the job plan, a defined sequence of activities that are undertaken before, during, and after a VE workshop. During the VE workshop, the VE team learns about the background issues, defines and classifies the project (or product or process) functions, identifies creative approaches to provide the functions, and then evaluates, develops, and presents the VE proposals to key decision makers. It is the focus on the functions that the project, product, or process must perform that sets VE apart from other quality-improvement or cost-reduction approaches.

The job plan consists of three work streams that are performed sequentially: the pre-workshop stage, workshop stage, and post-workshop stage. As defined by the SAVE Value Methodology Standard (see “Value Standard and Body of Knowledge,” SAVE, 2007), the workshop stage includes the following six sequential phases. The terminology may differ from that used by some agencies.

• Information phase. The team collects and reviews project information to gain an appreciation of issues, concerns, and opportunities. This typically includes developing data models that will highlight high-cost or poor-performing aspects of the project.

• Function analysis phase. The team determines and classifies functions that the pro­ject, product, or process being studied must deliver. The team defines the project functions using a two-word active verb/measurable noun context. The team reviews and analyzes these functions to determine those that need improvement, elimina­tion, or creation to meet project goals.

• Creativity phase. The team generates a broad range of ideas to achieve functional performance, typically using brainstorming techniques.

• Evaluation phase. Following a structured evaluation process, the team reviews and selects the ideas that offer the best potential for value improvement. Proper atten­tion must be paid to determining project functions, performance requirements, and resource limits.

• Development phase. The team prepares VE proposals based on one or more ideas. Each proposal should provide an overview of how the idea is anticipated to work, a balanced assessment of its characteristics, and usually some measure of cost impacts (first or life cycle costs).

• Presentation phase. The team develops a report and presentation that documents the alternative(s) developed and the value improvement opportunity.

As described by AASHTO, VECP programs differ from other VE programs in that the construction contractors develop the recommendations. The contractors choose whether or not to participate, with the incentive for sharing in any cost savings realized. Thus, the states must create and manage a program that will be attractive to the contractors. This program is called by different names in various states, for example, Value Engineering Incentive Provision (VEIP), Value Engineering Incentive Clause (VEIC), and Cost – Reduction Incentive Proposal (CRIP).

A contractor’s participation in a VECP program involves a certain amount of risk. It costs money to search for realistic savings that will be shared by the state, and the contractor cannot expect all proposals to be accepted. However, the program offers an opportunity for contractors to demonstrate ingenuity, innovation, and construction excel­lence, and to receive financial benefit.

Care should be taken to ensure that a VECP does not compromise any essential design criteria or any preliminary engineering commitments such as environmental mitigation measures. Specific construction elements, such as bridge-span lengths or type of noise barriers, may be excluded from consideration for a VECP, but such exclusions will limit potential savings opportunities. Any exclusions should be delineated in the specifications or other contract documentation.

Benefits. The VECP must not result in impairment of essential functions and character­istics of any part of the project including, but not limited to, service life, reliability, econ­omy of operation, ease of maintenance, desired aesthetics, and safety. The VECP program offers benefits to the state when it (1) enhances the design at reduced cost to the state, (2) results in a net savings over the contract cost, or (3) advances the project completion date. The program offers a low-cost opportunity to use the experience and creative talents of the contractor. Contractors participating in the VECP program take pride in contributing actively to the final development and construction of the project.

Contract Documents. To invite proposals from the contractors, the state should include in the contract document a VECP section, specifically defining basic requirements and evalua­tion criteria. Before initiating a VECP program, a state may want to secure an interpretation from the attorney general or other appropriate source as to the legality of their VECP provi­sions. VECP specifications and requirements are described in Section 104.07 of the latest version of AASHTO’s Guide Specifications for Highway Construction (visit the website www. aashto. org for information on how to obtain a copy). In an effort to promote a higher VECP participation, some states are studying the application of the VE job plan (see Arts. 10.3 and 10.4) in facilitated sessions with contractors that can include state employees.

Review Process. The review process for a VECP should include the development of a review schedule to ensure the reviewing agency can meet the contractor’s time frame. VECPs occur during the construction phase of a project and time is usually short. A schedule must be developed for those offices and/or persons who must review and com­ment on the VECP before final disposition. There should be a single point of contact for each state, to ensure no required office or person is omitted from the review process. The single point of contact also can act to enforce the review schedule. All comments resulting from the review should be compiled and resolved, with a final accept/reject recommendation to management. Proper documentation is essential. Complete and accu­rate estimates are required for correct savings calculations. The final step in the review process is justification. This is not a trivial step. Timely, accurate notification of all parties involved may reduce confusion and litigation, which also can be avoided by adding language to the state’s VECP provision.

Securing Adequate Contractor Participation. The first step in securing adequate contractor participation is to be certain the VECP program encourages, rather than dis­courages, such participation. For instance, the sharing percentage must be equitable. The VECP requirements, policies, and procedures should not be so legalistic, stringent, or cumbersome as to discourage contractors from participating, and there should be flexibility to meet changing conditions. Past experience indicates contractors need to be oriented to the VECP program and educated about VE methodology and procedures. A state initi­ating a VECP program should do what is necessary to ensure an effective contractor orien­tation and education program is developed and conducted. Otherwise, many contractors probably will be reluctant to participate. AASHTO suggests the following approaches to contractor orientation and education:

• The state should work closely with contractor organizations during the whole of the VECP program planning process. It is important to allow contractors the opportunity to review all elements of the program and provide input. The payoffs from this kind of a joint effort, in contractor support and participation, can be considerable.

• The state should encourage contractors to develop and conduct VE training courses. Where the state is conducting VE training for its own staff, contractor staff also could attend such programs.

• The contractor orientation, education, and promotion program should be a continuing one. Continuing efforts could include regular and periodic distribution of VE infor­mation and discussion of VE during preconstruction conferences.

Most of these approaches are obvious, and certainly many others could be developed to fit particular conditions. It is important to provide a well-planned, aggressive, and imaginative contractor VE program to enhance the probability of the success of the VECP effort.

Even though initial contractor participation is secured through this type of promo­tion, the VECP program will not be successful unless a high level of participation is maintained. AASHTO offers the following considerations for maintaining contractor participation:

• The state must ensure adequate opportunities for participation by providing a broad incentive clause in contractors’ standard specifications.

• Contractors must be assured of a fair and objective evaluation of their proposals. The state should take all reasonable measures to create positive attitudes toward contractor change proposals. It may be beneficial to involve the VE administrator in the day-to­day VECP.

• Contractors must be assured of timely processing of change proposals. To satisfy this requirement, the state must allocate adequate resources to the program. Additionally, to reduce the time and effort required by a contractor to submit a proposal, the proposal may be submitted first for evaluation. This initial proposal would outline the general technical concepts and the estimated savings.

AASHTO gives the following guidance on structuring the VE team. A team of five to seven persons with diverse areas of expertise usually produces the best results. A team of fewer than five tends to limit the amount and variety of creative input, and a team of more than seven can be unwieldy. Teams should be structured so there is appropriate expertise to evaluate the major problem areas anticipated within the project, e. g., traffic, right-of-way, structures, soils, paving, etc. Including general expertise from the areas of design, construction, right-of-way, maintenance, or traffic operations makes for a good team balance.

Team Leader. One individual should be appointed as team leader to guide the team in its efforts and be responsible for its actions during the study. The team leader should be an individual who is very knowledgeable of, and proficient in, the VE process and able to direct the team’s activities toward its goal. Additional training in motivation and lead­ership techniques may be warranted for team leaders. A VE consultant serving as team leader should be a certified value specialist with highway experience.

Team Members. Representatives from disciplines other than engineering can provide greater objectivity to a team effort. Expertise from outside the state organization (e. g., local agency, citizen groups, United States Forestry Service (USFS), FHWA, consultants, etc.) may be appropriate on certain projects. Federal law prohibits individ­uals directly involved in the design of a project from being on the VE team analyzing the project; however, the original designer is an excellent resource individual for the team to consult. Specific training in the concepts, application, and techniques of VE is highly desirable for those working as VE team members. Occasionally, a team may include one or two members who are untrained in VE, but highly skilled in disciplines that are vital to the study.