Companion Guide to Video August 2013

www.fhwa.dot.gov/federal-aidessentials

Project Development

Design

Value Engineering Requirements for 

Federal-aid Projects

Value engineering requirements on Federal-aid projects help 

reduce costs and improve quality

Imagine you are back in time and responsible for 

designing one of the most impressive 

transportation engineering icons -- the Golden 

Gate Bridge. It is a massive and complex project, 

and there are teams assigned to various 

components and 

deadlines to meet. Each 

team is working hard to 

make the design 

decisions that will 

eventually be used in 

construction. 

Let’s examine this project more closely and focus 

on the decisions and recommendations that the 

design teams came up with. If you invited an 

independent team to evaluate those 

recommendations and suggest ways to improve, 

you stand a good chance of adding value to the 

project. For example, the foundations of the 

Golden Gate Bridge are planted deep under water 

in the San Francisco Bay, making them a 

challenge to construct. They make great 

candidates for this independent team to review 

and find better, faster or cheaper ways to build 

these massive foundations. This independent 

team is doing something called “value 

engineering,” a process proven to produce huge 

benefits for projects both large and small. 

The Federal-aid 

Highway Program 

has requirements for 

value engineering. 

In this short 

presentation we will 

define what value engineering is and when it is 

required, explain how it works, and illustrate its 

benefits. Value engineering has proven to be a 

sound approach that can reduce project costs, 

improve project quality, eliminate unnecessary 

design elements, foster innovation, and improve 

productivity. Value engineering is a process that 

can reap hefty benefits for your organization, 

customers, and stakeholders. 

In general, value engineering, or VE for short, is 

the systematic application of recognized 

techniques by an independent, multi-disciplined 

team to identify the function of a product or 

service, establish a worth for that function, and 

generate alternatives. We’ll go into details to make 

this easier to understand, so let’s start by looking 

at what the value engineering study process can 

accomplish. 

There are several objectives that the value 

engineering study process focuses on beyond 

achieving the desired level of quality at the lowest 

cost. The value engineering study process may 

also look for ways to reduce construction time or 

make construction easier to accomplish. This 

process considers all project objectives, such as 

safety, operational, and environmental 

commitments, while trying to reduce total 

ownership costs. Value engineering 

recommendations may suggest using innovative 

technologies 

that improve the 

finished quality 

and should 

consider longterm or life-cycle 

costs. 
Federal-aid Essentials for Local Public Agencies

The value engineering study process can be 

broken down into four core components: 

• When a value engineering study is 

required

• Who makes up a value engineering 

team

• Following a procedure called the VE Job 

Plan

• Reporting recommendations 

Let’s look at each of these in more detail. A 

value engineering study is required on any 

Federal-aid project under the following 

circumstances:

• The project is located on the National 

Highway System and has an estimated 

total cost of $50 million or more. 

• The project is considered a bridge 

project, located on or off the National 

Highway System, with an estimated total 

cost of $40 million or more. 

• The project is considered a major 

project, located on or off the National 

Highway System with a total cost of 

$500 Million or more. 

• A change in project scope or design 

after the final design and prior to letting 

for construction causes the project cost 

to exceed the $50-million threshold for 

projects on the National Highway 

System, or $40-million threshold for 

bridge projects on the National Highway 

System, or the $500 – million major 

project threshold. 

• Or any other project the Federal 

Highway Administration (FHWA) 

determines to be appropriate. 

The value engineering team is comprised of:

• A multi-disciplinary group of individuals 

who are not directly involved in the 

planning or design of the project

• Someone trained and knowledgeable in 

value engineering techniques to serve 

as the facilitator and coordinator

The value engineering team follows a 

procedure, called a Value Engineering Job Plan, 

which has seven phases:

• In the Information Phase, project 

information is gathered, including project 

commitments and constraints. 

• The Function Analysis Phase analyzes 

the project to understand the required 

functions. 

• In the Creative Phase ideas are 

generated on ways to accomplish the 

required functions, improve the project’s 

performance, enhance its quality, and 

lower project costs. 

• The Evaluation Phase involves 

evaluating and selecting feasible ideas 

for development.

• The Development Phase takes these 

selected ideas and turns them into fully 

supported recommendations. 

• The Presentation Phase presents the 

value engineering recommendations to 

the project stakeholders. 

• The Resolution Phase is when these 

recommendations are evaluated, 

approved or denied. These decisions 

are documented and all approved 

recommendations are then 

implemented. 

The value engineering study culminates with a 

formal written report documenting the following:

• The analysis approach following the 

Value Engineering Job Plan 

• The proposed recommendations and 

decisions made
Federal-aid Essentials for Local Public Agencies

A value engineering study normally takes three 

to five days to complete, depending on the 

project’s complexity, followed by a formal report 

documenting the study team’s 

recommendations. The study should be 

conducted as early in the design process as 

possible to maximize potential value engineering 

recommendations. Being prepared to review and 

then approve or reject recommendations in a 

timely manner will help ensure changes to the 

project can be quickly incorporated into the 

project design. Once these decisions have been 

made, maintain a copy of the report for at least 

three years after the project has been closed 

out. 

Whether your Federal-aid project barely 

exceeds the monetary threshold for a value 

engineering study or is as large as the Golden 

Gate Bridge, the value engineering process can 

help improve quality and value.

Remember, if your agency has a Federal-aid 

project and a value engineering study is 

required, start the process early, consider the 

recommendations we’ve just outlined in this 

presentation, and make sure you comply with all 

Federal regulations.

The content of this 

document is not a 

substitute for 

information obtained 

from State departments 

of transportation, 

appropriate FHWA 

Division Offices, and 

applicable laws. 

Scenarios have been 

simplified for emphasis 

and do not necessarily 

reflect the actual range of 

requirements applicable 

to the scenario or this 

topic. This document

was created under 

contract number 

DTFH61-11-D-00024 by 

the Federal Highway 

Administration, U.S. 

Department of 

Transportation, and is 

offered to the public to 

heighten and focus 

awareness of Federal-aid 

requirements within the 

local public agencies 

community and 

reinforces the

importance of these 

necessary policies, 

procedures, and 

practices.

This companion resource 

is the script content for 

the video production of 

the same name. 

Additional Resources

• FHWA regulation and policies on value engineering and other helpful 

guidance

http://www.fhwa.dot.gov/ve/

• FHWA's policy on value engineering

http://www.fhwa.dot.gov/legsregs/directives/orders/13111a.htm

• Questions and answers about FHWA's new value engineering regulation in 

effect since April 16, 2012

http://www.fhwa.dot.gov/ve/finalruleqa.cfm 

• MAP-21 – Moving Ahead for Progress in the 21st Century Preconstruction 

Provisions Question and Answers on Value Engineering

http://www.fhwa.dot.gov/map21/qandas/qapreconstruction.cfm