By Michael Pearsall, P.Eng., CVS, CVM, FICE, FEC
As promised in the last column, I have twisted his arm and my friend Warren Knoles (ever the gentleman) graciously agreed to author most of this month’s column to follow up on his presentation at the SAVE International 2017 Value Summit, Post-Award Value Engineering (PAVE) Workshop – Last Opportunity for Value Savings.
I see a lot of potential in using this method in my own agency to increase the quantity and quality of Value Engineering Change Proposals (VECPs) and I encourage you all to take a closer look at it.
The following is by my guest columnist, Warren Knoles, VMA.
Introduction: Following the 2014 SAVE VM Summit in Chicago, I decided to take some action to address the national decline of value engineering change proposals (VECPs) within state Departments of Transportation (DOTs). Among the many reasons for the decline, are two key ones: 1) DOTs often take too much time to approve proposed VECPs (which can delay construction), and 2) DOTs often resist VECPs because they don’t demonstrate equivalent performance.
Pilot Program. After conferring with several DOT engineers and contractors, I developed a process now called the Post Award Value Engineering (PAVE) workshop that would attempt to address these impediments, and I proposed that the nation’s leader in accepted VECPs, the Missouri Department of Transportation (MODOT), test it on a few projects. MODOT subsequently authorized a six-project pilot program that employed the proposed PAVE workshop process. The six projects varied in size and complexity and ranged in cost from approximately $3 million to $60 million in bid construction cost.
PAVE Workshop Process. Some of the key features of the PAVE-workshop process included:
- The one-day workshops were conducted 2-3 weeks following award to the contractor to utilize the time prior to the notice to proceed for VECP identification, development, and approval.
- Workshops were facilitated using the value methodology.
- The workshop team was comprised of the contractor, MODOT, design consultants, utility companies and local agencies in the morning session, which covered the information, function analysis, and creative phases. The afternoon-session team was comprised of MODOT senior engineers, who evaluated the list of alternative ideas generated by the workshop team using performance criteria developed pre-workshop.
- The output from the afternoon session was a screened and evaluated list of ideas with dispositions of each idea: accepted for development (AFD), rejected (R), or pending third-party review or additional information needed (P), along with commentary that described the conditions for approval and/or reasons for rejection.
- The screened list of ideas and accompanying commentary were sent to the contractor two or three days following the workshop. The contractor then selected those ideas that offered sufficient shared cost savings to justify submittal of VECPs.
Results. The six pilot program projects yielded 16 accepted VECPs totaling $1.225 million in cost savings. The final VECP costs for three of the projects had not been finalized as of the date of the paper and thus, the cost-savings total is expected to increase, as is the return on investment for the six workshops, which was approximately 11:1.
VECP Example No. 1. This example VECP revised the design of the baseline I-44 Bridge over the BNSF Railroad that consisted of a 410’-long, 3-span, continuous steel-plate, curved-girder superstructure with integral concrete bents on 48” drilled shafts to be constructed during very limited gaps in railroad traffic. The contractor’s accepted VECP featured several constructability-related changes listed as follows:
- Single-span bridge with straight girders; one less expansion joint.
- Elimination of bridge approach spans; utilization of aggregate embankment, concrete wall abutments & wingwalls.
- One splice per girder line (18) vs. four per girder line (18 vs. 72 total splices).
- Westbound bridge: shallower girder; one additional girder line.
- Eastbound bridge: deeper girder utilizing super-elevation-caused, 5’-2” excess clearance; one less girder line.
The dialogue between the contractor’s superintendent and the design engineers regarding the challenges and costs of erecting and bolt-torqueing eighteen, 4-splice girder lines in gaps of railroad traffic was very educational.
This VECP illustrated that the most material-efficient baseline design was not the lowest cost to perform the basic function (span/clear RR requirements). The VECP reduced a required secondary function “connect [girder] segments” and eliminated the non-essential secondary function “span [approach] fill,” thereby performing the basic function at a net $715K cost savings and nine percent increase in the value index.
VECP Example No. 2. This VECP revised the method of constructing the proposed two-lane NB I-55 ramp (Ramp 2) onto the Poplar Street Bridge over the Mississippi River from one-half at a time under traffic to closing the ramp and detouring traffic. Complicating the two-phase method was the fact that Ramp 2 passed under two railroads and passed over a second railroad and a city street. Thus, construction safety was a major concern of the contractor.
Interestingly, this concept was the recommendation of a VE study during design, but the estimated closure time of 12 months was considered too long, so it was rejected. The contractor’s original VECP proposed a 6-month closure with a $600K cost savings. The final accepted VECP was a 4-month closure with no cost savings. However, the VECP offered substantial performance benefits: 1) improved construction and motorist safety; 2) opening of the EB Poplar Street bridge to four lanes much sooner; 3) shortening of construction time 4-6 months; 4) nine-month earlier opening of two lanes on Ramp 2; 5) no bridge construction joint; 6) twenty-two percent increase in the value index.
This VECP illustrated that a constructability/safety-related VECP can improve project performance even with no cost savings, and that this performance improvement would not have been possible without having the awarded contractor and a post-award VECP.
Applicability. The pilot program suggested that PAVE workshops are especially applicable to projects with complex phasing and/or traffic control, projects with severe adverse impacts on stakeholders, reconstruction projects in urban/suburban settings, or projects where the bid cost is significantly over the programmed construction cost. In each of these project categories, direct dialogue between the awarded contractor and the DOT/owner prior to start of construction may yield value savings in how the project is constructed.
Benefits. The pilot program also demonstrated that many benefits may accrue to the DOT/owner from PAVE workshops. They include:
- Screening of un-approvable VECP concepts, preventing wasted contractor development time and wasted DOT/owner review time.
- Utilization of pre-notice-to-proceed (pre-NTP) time to solicit, develop and evaluate potential VECPs, thereby reducing the possibility construction delays.
- Constructability education for designers from contractors and design-decision education for contractors from the DOT/owner decision-makers.
- Starting a job in a collaborative, partnership environment with the contractor.
- One last opportunity for value cost and/or time savings.
Additional details can be found in the paper and presentation slides, which are (or will be) posted in the conference proceedings on the SAVE International website.
So, in closing, I offer that the basic function of the PAVE workshop is: “solicit [VECP] concepts.”
The higher-order functions in left-to-right order are: “increase [project] value” via “increase performance” and “maintain cost/time,” OR, “maintain performance” and “decrease cost/time,” OR, “increase performance” and “decrease cost/time.”
Same-time functions with the basic function are: “utilize [pre-NTP] time,” “synergize experience,” and “foster teamwork.”
Required secondary functions in left-to-right order are: “apply VM,” “facilitate [PAVE] workshop,” “engage [VE] facilitator.”
The lower-order function is: “solicit proposal.”
-Warren Knoles, VMA
Now, let’s have some fun here…I always believe in reinforcing a concept with doing an exercise (I’m also curious to see who may be enjoying this column). Warren and I would like you to try placing the functions above into your own FAST diagram and perhaps improving or expanding them.
Warren’s FAST diagram will be provided in the next issue of Value World for everyone to enjoy. I have a couple small prizes here in my office, which I will personally mail out to some lucky readers – such as the first person to email me at email@example.com their FAST diagram and the best overall FAST diagram that I receive before October 20, 2017.
I hope you have fun with the FAST diagram exercise above and that some of you enjoyed my last challenge of considering how the basic function of the Liberty Bell has changed over time.
Until the next issue, I would like to continue to encourage any transportation professional out there who would like to share their stories to contact me at firstname.lastname@example.org.