VALUEENGINEERING

WORKBOOK INSTRUCTIONS

GeneralInstructions:

Completeeachpageclearly, legibly,andneatlywithadarkpencilorblackpen. Inmostcasesthisworkbookwillbereproducedas isandnotretyped.

Instructions for Completing VE Study Identification

Thisisoneoftwopagesusedtoidentifytheprojectandserveasan introductiontoit.Byreadingthispage,aninterestedpartyshouldbeabletounderstandthegeneralnatureandscopeofthe project.

  1. VE TEAM MEMBERS
  1. This areaisusedtorecord the name,title,agency,andtelephone number ofeach team member.
  1. PROJECT DESCRIPTION
  1. Length- Infeetormiles
  1. Cost-Estimatedtotalprojectcost
  1. TypeofFunds-ArethereFederal,State,and/orLocalfunds intheproject? Listtheirclassification:construction,maintenance, local,etc.
  1. Design Speed - Miles per hour
  1. ProjectedTraffic-Averagedaily traffic{ADT}anddesign hourlyvolume {DHV}
  1. ProjectedAwardDate-Anticipated lettingdate
  2. MajorProjectElements-Describewhattheprojectenta.ils.Whatis involved? Givea verbal, non-technical description ofwhatis included in this project. This description, followedbyalistingofmajorcomponentsmaybeusefulto individuals reviewingthis workbook. Forexample:Grading,Drainage,Paving,Structures,Utility relocation,etc.
  1. ROUTE CONDITION I GEOMETRY
  1. Itisoftenusefultoknowtheconditionoftheadjacentsegments,andthetotalroute.Forexample: sufficiency rating, tangent section, rolling terrain,roadwaycross-section,lackof shoulders, etc.

INDOT VE - 1 SHEET ___ OF __

Value Engineering - Study Identification

Des & Contract Number:Route Number:

Location:Date:

VE TEAM MEMBERS

Name: / Title: / Organization: / Telephone:

PROJECT DESCRIPTION

Length:Cost:

Design Speed:Projected Traffic:

Projected Award Date:Type of Funds:

Major Project Elements:

ROUTE CONDITION / GEOMETRY

Adjacent Segments: / Overall Route:

InstructionsforCompletingInvestigationPhase–Sources:

  1. AUTHORIZING PERSONS

Listhere the personswhowill havetoapprovetheVErecommendations.Thisinformationwillbeusefulinensuringthattherecommendations are presentedina manner tailoredtothe unique habitsandattitudes thatmaygovernfinal acceptance.

  1. PERSONAL CONTACTS

List here fill thepeoplefromwhomyouseekadviceand informationregardingthestudy. Maintainandaddtothislistasthestudyprogresses. Under "Notes," summarize the informationobtained.

  1. DOCUMENTS/ABSTRACTS

Listallthe referencematerialused inthestudy,i.e.,standardspecifications,AASHTO Guides, Statestandards,Means construction costs,AASHTO Green Book,etc. Briefly notethekindof informationcontained inthem.

INDOT VE - 2 SHEET__ OF __

Investigation Phase - Sources

Des & Contract Number:Route Number:

Location:Date:

APPROVING / AUTHORIZING PERSONS

Name: / Position: / Telephone:

PERSONAL CONTACTS

Name: / Telephone: / Notes:

DOCUMENTS / ABSTRACTS

Reference: / Notes:

InstructionsforCompletingInvestigationPhase-CostModel:

  1. PrepareaCOSTMODELforyourproject.
  2. COST OF SIGNIFICANT BID ITEMS
  3. It isoftentruethat20percentofaproject'selementsconstitute80percentofitscost.
  1. PrepareaCOSTMODELof allofthemajoritemsinyouproject.UsingaBarChartformat,showthecostofeach itemstartingwiththehighestcost itemfirst. Tentotwentyprojectcostelementsare desired. Combine and/orbreakdowncostelementstoachieve this numberof elements.
  1. Drawahorizontallinetoshowthe80percentcostsplitoftheproject items. Thiswill indicatetotheteamthoseprojectelementsdeservingthemostattention.
  1. Ifsome lowcostprojectelementsareusedrepeatedlythroughoutyour organization,theymayproduce positive, organization-widesavings. Listthemon the costgraph,otherwise they will be ignored in the study.

INDOT VE - 3 SHEET __ OF __

Investigation Phase - Cost Model

Des & Contract Number:Route Number:

Location:Date:

Instructions for Completing Information Phase – Function Analysis:

Thisiswherethe conventionallistingofprojectitemsandcostsistransformedintoalistingofprojectFUNCTIONSandtheirrelativecosts. Keepinmindthattheobjectiveofthe investigationphaseistoidentify thosefunctional areasthathavethegreatestopportunityforvalueimprovement. Thelistingonthispageisanotherstep toensurethatthefunctionswiththe"best"potentialforsavingsare examinedfirst. Inthetitle block,identify theFUNCTIONof yourtotalprojectusingoneverbandanoun.

AssignaLETTERtoeachprojectcostitem.Next,entera"Two-Word" definition(ActionVerb& DescriptiveNoun)thatexpressesthefunctionofeachitemlisted. Entertheitem'scostasshownintheCostModel. Inmakingout thislist,itemssatisfyingthesamefunctionshouldbegrouped together.

  1. OTHER ITEMS
  1. Listanyadditionalitemsthatmighthavea potentialforsubstantialsavings.ifconsideredonaprogram-widebasis.Enterthe''Two-Word" definitionthatexpressesthefunctionofeachitemlisted. Entertheitem'scost.
  1. WORTH
  1. WorthistheleastcostthattheVEteambelievescanaccomplishthesamefunction.Considerafunctionalcomparativeforeachitemlisted.Thisshouldbealesscostlywayofperformingthe samefunction,irrespectiveofitsprojectapplication. Usethe"comment"columntoidentifythefunctionalcomparativeorothermeanstakentoachieveworth. Thiswillshowyouifthereisanysubstantialcostdifferencebetweenthedesigncostanditsworth.Someexamplesare:

ITEMFUNCTIONCOSTWORTHCOMMENT

A. / Bridge / Cross Obstacle / $215,000 / $115,000 / UseCulvf3rt
B. / CulvertPipe / ConveyFluids / $100,000 / $20,000 / Useopen ditch
C. / Slopewidening / EnhanceSafety / $125,000 / $55,000 / GuideRail
D. / TrafficLight / ControlVehicles / $75,000 / $10,000 / StopSigns

Thesizedifferencebetween·thedesign costandtheworth ofthefunctionalcomparativeisanindicationofvalueopportunity.

INDOT VE - 4 SHEET __ OF ___

Investigation Phase - Function Analysis

Des & Contract Number:Route Number:

Location:Date:

Item / Basic / Function:
No. / Description: / Verb: / Noun: / Cost: / Worth: / Comments:
1
2
3
4
5
6
7
8
9
10
11
12
13

InstructionsforCompletingInvestigationPhase–FASTDiagram:

TheFAST diagram is a graphic representationofthefunctionallogic applied totheoriginaldesign.TodevelopaFASTdiagram, onehastoaskthequestions,HOW is thebasic function (verb)(noun) actually accomplished,orHOWisitproposedto beaccomplished? Theanswer,expressedasaverbandanouniswritteninthe nextblocktotherightofthescopeline.

Theprocess is continuedto the right byasking HOW.foreachnewfunctionon the diagram. Theprocessisrepeated until theanswerfallsoutside the scopeofthestudy.TochecktheanswerstotheHOWquestions,askthe question WHY asyouproceedbackwardthroughtheFAST diagram, startingontheright sideandproceedingtothe leftuntilyouhaveexceededthescopeofthe study(reachedafunctionwith ahigherorderthanthebasicfunction).

Theline offunctionsyouhavedeveloped iscalledthecriticalpath. IfoneoftheRequiredSecondary functionsistakenaway,theBasicFunction ofthesystemcannotbesatisfied. IfafunctioncanbetakenawaywithoutaffectingtheperformanceoftheBasicFunction,thenthefunctionremoved isnotcritical,butmaybeasupporting function.

  1. SUPPORTING FUNCTIONS
  1. Functions that happenallthetime,atthesametime,orarecausedbythecritical functions are supporting functions. They result fromthe particular method chosenbythedesignerforaccomplishingthe Basic Function. All the time functions areshownabovethe critical pathlineand same time and caused by functions are shown belowtheline.
  1. TheFASTdiagramcanbeusedto identifyandvisualizehigh-costfunctions byincludingthefunctionalcost ineachofthecriticalandsupportingfunctionblocks.

SCOf'E OF STllbV

INDOT VE - 5 SHEET ___ OF ___

Investigation Phase - FAST Diagram

Des & Contract Number:Route Number:

Location:Date:

InstructionsforCompletingSpeculation–Brainstorming:

ThissheetisusedfortheSPECULATIONCREATIVEPhaseoftheVEJobPlan.

BRAINSTORMoneachofthefunctionsfrom theFunctionAnalysissheet. Putdownasmanyideasaspossible. Useas manysheetsasnecessary. Donotlimit yourideas.

Writedownallideas. Rememberthenumber oneruleofbrainstorming,DO NOTJUDGE!

Speculation Phase

Objective:Task:

-Generatelargenumbersofideas- Speculateonfunctions

-Don'tdiscuss

KeyQuestions:Techniques·

-Whatelsewillperformthe function?- List everything

Whereelsemaythe function be done?- Be imaginative

-Howelsemaythefunctionbedone?- Use creative techniques

- Defer judgment

- Do not criticize

- Be courageous

INDOT VE - 6 SHEET ___ OF ___

SPECULATION PHASE - BRAINSTORMING

Des & Contract Number:Route Number:

Location:Date:

Item:Function:

InstructionsforCompletingEvaluationPhase:

ThissheetisusedfortheEVALUATION PhaseoftheVEJobPlan.Considerfirstthosefunctionsthathavethegreatestpotentialsavings.TwoEvaluationmethodswillbeused.

  1. FEASIBILITY EVALUATION
  1. ReviewthecreativeideasyouhavedevelopedinyourBrainstormingsessionandcross out thosealternativesthattheteambelievesare unrealistic and,therefore,unacceptable. CAUTION-Beabsolutelysureeveryoneagreestheideashouldbedropped.
  1. SUITABILITY EVALUATION
  1. Recordalloftheremaining ideasforeachfunctionthathavenot beencrossedoutand listtheiradvantagesanddisadvantages. Listtheideasforthatitemnumberingconsecutively(A-1,A-2,A-3;B-1,B-2,B3;etc.)
  1. Rateeachideafrom"poor"to"outstanding"(1to10).TheratingisusedtoguidetheteamduringtheDevelopmentPhaseensuringthebestideasaredevelopedfirst.

EVALUATIONPHASE

Objective·Task:

-Evaluate alternatives- Speculateonevaluationcriteria

-Evaluatealternatives

-Selectthebestalternatives

Key Questions:Techniques:

-Howmighteachideawork?

-Whatwillbethe cost?

·-Willeachideasatisfy thefunction?

-Whatisthebetteralternative?

-Whatare thechancesofsellingtheidea?

-Weighalternatives

-Chooseevaluationcriteria

-Refineideas

-Placedollarvalueofeachidea

INDOT VE - 7 SHEET __ OF __

Evaluation Phase

Des & Contract Number:Route Number:

Location:Date:

Item
No. / Creative Idea
Listing / Idea
Advantage / Evaluation
Disadvantage / Idea
Rating

Instructions for Completing Evaluation Phase - Matrix Analysis:

Thisis anoptionalworksheetfor theEVALUATIONPhase. It is aMatrixAnalysisFormthatyoucanuseto assign numerical ratingstothe subjective analysisyou carried out onFormVE-7. Itpermitstheteamparticipantstoweighandratevariousaspectsof eachalternative,whileremainingfreeofanybiasor predisposition aboutthe alternativeasawhole.

TheMatrixAnalysis is usedtocompareavarietyofalternativesaffectingasingleprojectfunction. It isespeciallyuseful wherethere isnoclearconsensusamongtheVEteam.

  1. OBJECTIVES OR CRITERIA

Listall the design objectivesorperformance criteria that apply totheproject under study. Weighthemfrom 1to 10accordingtotheirrelevanceorimportance (10 = highand1 = low. Enter this weight in the horizontal line ofboxes.

  1. ALTERNATIVES
  1. ListtheORIGINAL itemandallthealternativesfromFormVE-7thatyouwantto compare. Ratehoweachofthe alternatives satisfieseach objective or criterion, i.e.,1 = poor and 5 = superior. Enter the rating foreachalternativeinthetoppart ofthe box.
  1. TO ELIMINATE BIAS, it is essential to WORK DOWN each column, rating each alternative according to the same objective or criterion.
  1. Multiply the rating by the weight for each combination. Enter the weighted rating in the lower part of the box.
  1. Addtheweightedratingsforeach alternative togetherand enter itstotalscorein the Totals column.
  1. Rankthealternatives accordingtothetotalscore(1 = highest, 2 = secondhighest,etc.). Now determinehow the alternatives shouldbeused and how they might bemodifiedto improvethe product.

INDOT VE - 8 SHEET __ OF ___

Evaluation Phase - Matrix Analysis

Des & Contract Number:Route Number:

Location:Date:

EVALUATION CRITERIA

WEIGH
ALTERNATIVES:
5 Superior
4 Good
3 Average
2 Fair
1 Poor
1 Poor
ALTERNATIVES / WEIGHT / TOTALS

Instructions for Completing Development Phase – Recommendation:

  1. Onceyou identifythe projectelementsand/orfunctionalareasthatcanbemodified,developeachareaintoaworkablealternative solution.Complete FormVE-9for each recommended alternative. Donotshowany calculations orsketchesonthissheet. Attachallbackupcalculationsheetsusedto developthe idea.
  1. Keep inmind;thedecisionmakerswhowillbereviewingthese itemsarenotfamiliarwiththeteam'sworkthisweek.Developyouralternatives ina logicalandcomplete fashion showingallcalculationsfordocumentationandlistingallassumptionsmade.
  1. Thejustificationarea iswhereyoumuststateyourreasonsformakingthechange.Remember,you must"sell"youridea. Becomplete.Useadditionalsheetsofpaper ifnecessary.Anticipatepossiblereasonstorejectyour ideaandprovideadequateresponsesto counter theseobjections.
  1. Costsusedonthissheetshould includeboth initialandfuturecosts. Detailedcostcalculationsshouldbeshownonseparatesheets. Futurecostsarethesumof lines6and8on the life cycle cost analysis worksheet(seeFormVE-9D).

INDOT VE - 9 SHEET ___ OF __

Development Phase - Recommendations

Des & Contract Number:Route Number:

Location:Date:

Original Design (Sketch attached?

Proposed Change (Sketch attached?)

Justification (Describe advantages/disadvantages, reasoning, and compliance with

standards and requirements)

Life Cycle Cost Summary
(Present Worth Method) / Initial Cost / Future Cost / Total Cost
Original Design
Proposed Change
Savings

Instructions for Completing Development Phase – Sketches:

  1. Having identified which functional areas can be changed, make a SIMPLE SKETCH of the project element as designed and as proposed. Be sure to include enough information to clearly identify the proposed changes.

HINT:Aclear,easyto understandsketchisthebestsalestool.

INDOT VE - 9A SHEET ___ OF __

Development Phase - Sketches

Des & Contract Number:Route Number:

Location:Date:

Original Design

Recommended Design

Instructions for Completing Development Phase – Calculations:

  1. Show sufficient calculations to enable all reviewers to analyze your proposed changeand determine that it is a workable and realistic alternative. Calculations should show technical data only. Reserve cost calculations for the cost worksheet. Be sure to identify and explain all assumptions you made if specific data is not available.
  1. Includeasmanysheetsas necessary.

INDOT VE - 9B SHEET __ OF __

Development Phase - Calculations

Des & Contract Number:Route Number:

Location:Date:

Instructions for Completing Development Phase - Cost Worksheet:

  1. Amajorelement in "selling"yourrecommendations involves showingthattheyarenotonlyviable engineering alternatives, but thattheywill result in aCOST SAVINGS. This sheetallowsforacomparisonofthecostsfor the variousproposed alternatives to their original costs.
  1. Beasdetailed in your costsas possible. Usethesame unit costsforboththeoriginalandproposedestimateforeachitemofconstruction.Listany assumptions madeandindicatewhereyourcostswereobtained.
  1. Item: Thisistheitemofconstruction,suchas;fill,concrete,24"RCP,etc.Unit: This iswhat unitsexpresstheitem,suchas;CY,LF,SF,EA,etc.
  1. The unit costs for this worksheet should either be pulled from the Stage 1 estimate, or the average price for the item in Bid Tabs Express

INDOT VE - 9C SHEET __ OF ___

Development Phase - Cost Worksheet

Des & Contract No.:Route Number:

Location:Date:

Construction Element / Orig. / Cost / Prop. / Cost
# of / Cost / / Total / # of / Cost / / Total
Item / Unit / Units / Unit / Cost / Units / Unit / Cost

Instructions for Completing Development Phase - Life Cycle Cost:

This sheet is used to determent an item's LIFE CYCLE COST using the Present Worth method.

This worksheet is NOT required for each alternative, only those that evaluate costs other than initial construction costs.

Single payment factors and uniform series factors can be found in Chapter 50 (Figure 50-2C) of the Indiana Design Manual (IDM).

  1. Estimate the Economic Life for the Item (10, 15, 20, 35, 50, etc. - Years)
  2. Determine the Discount Rate to be Used (4% Interest Table from Figure 50-2C in the IDM)
  1. List Initial Cost
  2. List and Determine the Present Worth of all Future Single Costs
  3. List and Determine the Present Worth of all Future Annual Costs
  4. Sum the Costs to Determine the TOTAL Future Costs Include this Cost on Sheet VE-9

INDOT VE - 9D SHEET __ OF ___

Life Cycle Cost Analysis - Present Worth Method

Des & Contract No.:Route Number:

Location:Date:

Discount Rate:Economic Life: __ Years

Original / Design / Alt. / No.1
Cost / PW / Cost / PW
1. Initial Cost:
Single Expenditures: (i.e., stage
Construction, Major Maintenance)
a. Year ____ PWF ______
b. Year ____ PWF ______
c. Year ____ PWF ______
d. Salvage / Unused Service Life
Year ____ PWF ______
2. Future Single Costs:
Annual Costs:
a. General Maintenance
PWF ______
b. Other Annual Costs
PWF ______
3. Future Annual Costs
4. Total Future Costs: (2 + 3)
5. Total Life Cycle Costs: (1 + 4)

Instructions for Completing Development Phase - Summary of Cost Savings:

  1. This sheet provides a summary of all your recommended alternatives and their cost savings. List each of your proposed alternatives and its cost savings.
  1. The TOTAL projected project savings should also be shown on this sheet to indicate the maximum potential savings. In determining the TOTAL savings, remember that some recommendations may overlap and therefore FULL credit cannot be taken for each. Use an asterisk in the last column to indicate which proposals are included in the TOTAL.

INDOT VE - 10 SHEET ___ OF ___

Development Phase - Summary of Cost Savings

Des & Contract Number:Route Number:

Location:Date:

Original / Proposed / Initial / Future / Total
Idea / Description / Design / Change / Cost / Cost / Cost
No. / Cost / Cost / Savings / Savings / Savings

Instructions for Completing Development Phase - Executive Summary:

Theexecutivesummaryshould includeaconcise,abstractoftheVEstudy. Itshouldbeconfinedtoonepageifpossible. This willserveasa summary document for theprojectandyourrecommendations. Itistheexecutiveactiondocument fromtheteamtothedecisionmakers,highlightingthestudyandrecommendations. Asa minimum itshouldinclude:

  1. General
  1. Project description including thetotalestimatedconstructioncostSiteanddateoftheVEstudy.
  1. Results Obtained
  1. Numberofrecommendations
  2. Totalprojectedsavings
  3. Savingsasapercentoftheprojectcost
  1. Highlights
  1. Summarize significant recommendations (if many)orallrecommendations (if few).
  1. Constraints
  1. Identifyanyconditions(political,social,orsite)that influencedtheteam'srecommendations.

INDOT VE - 11 SHEET ___ OF ___

Development Phase - Executive Summary

Des & Contract No.:Route Number:

Location:Date: :

Introduction:

Study Results:

Constraints:

Highlights:

Resources

Economic Analysis:

FHWA Value Engineering Final Rule: