[Federal Register Volume 59, Number 220 (Wednesday, November 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28290]


[[Page Unknown]]

[Federal Register: November 16, 1994]


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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration

23 CFR Part 627

[FHWA Docket No. 94-12]
RIN 2125-AD33

 

Value Engineering

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The FHWA proposes to issue a regulation on value engineering 
(VE) that would require its application to selected Federal-aid highway 
projects, when funded under the FHWA's grant-in-aid process. The 
proposed regulation would require State highway agencies (SHA) to 
establish and administer VE programs; it outlines minimum VE program 
requirements and provides guidance in establishing, administering, and 
monitoring a VE program. This proposed regulation is considered 
necessary to implement 23 U.S.C. 106(d), which provides that, in such 
cases as the Secretary deems advisable, the Secretary may require a 
value engineering or other cost reduction analysis of plans, 
specifications, and estimates for proposed projects on any Federal-aid 
highway.
DATES: Comments must be received on or before January 17, 1995.

ADDRESSES: Submit written and signed comments to the Federal Highway 
Administration, HCC-10, FHWA Docket No. 94-12, Room 4232, 400 Seventh 
Street, SW., Washington, D.C. 20590. All comments and suggestions 
received will be available for examination at the above address between 
8:30 a.m. and 3:30 p.m., e.t., Monday through Friday, except for 
Federal holidays. Those desiring notification of receipt of comments 
must include a self-addressed, stamped postcard.

FOR FURTHER INFORMATION CONTACT: Keith Borkenhagen, Office of 
Engineering, 202-366-4630, or Wilbert Baccus, Office of Chief Counsel, 
202-366-0780, Federal Highway Administration, 400 Seventh Street, SW., 
Washington, D.C. 20590. Office hours are from 7:45 a.m. to 4:15 p.m., 
e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION: The FHWA recognizes VE as an effective and 
proven technique for reducing cost, increasing productivity, and 
improving quality when applied in the development of highway projects. 
This document solicits public comments regarding the VE requirements 
being considered by the FHWA.
    In 1991, the Congress required the FHWA to study its VE program. 
Section 1091 of the Intermodal Surface Transportation Efficiency Act of 
1991, Public Law 102-240, 105 Stat. 1914 (Dec 18, 1991), required the 
Secretary of Transportation to ``study the effectiveness and benefits 
of value engineering review programs applied to Federal-aid highway 
projects,'' and to ``report to Congress on the results of the study * * 
* including recommendations on how value engineering could be utilized 
and improved in Federal-aid highway projects.''
    The FHWA's evaluation of the effectiveness of its VE program, as 
described in a report submitted to Congress in June 1993,1 
concluded that the application of VE in the development of highway 
projects has the potential to result in substantial cost savings 
without adversely affecting any of the highway projects' design, 
aesthetics, or construction standards while assuring that environmental 
and ecological goals are maintained. During the study made to prepare 
this report, the FHWA examined VE data covering fiscal year (FY) 1988 
to FY 1991 and found that only a limited number of States had active 
and effective VE programs.
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    \1\``Value Engineering on Federal-aid Projects,'' a report to 
Congress by the Secretary of Transportation is available for 
inspection and copying as prescribed in 49 CFR part 7 appendix D. A 
copy is in the file for FHWA Docket No. 94-12.
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    The study found that FHWA's policy of the past 20 years of 
promoting VE through education, encouragement, and technical assistance 
has had limited success in persuading all States to implement VE 
programs on a continuing basis. This finding is despite overwhelming 
evidence that VE can be a very effective way to improve projects and 
control costs from States with active VE programs. The FHWA has, 
therefore, concluded that in order to improve the effectiveness of the 
VE program nationwide, all States need to have active VE programs. As a 
result, the FHWA proposes to require the use of VE in all States on 
selected Federal-aid highway projects.
    This regulation, if promulgated, would significantly improve the 
effectiveness of VE in the Federal-aid highway program by requiring VE 
to be applied in all States, thereby ensuring that the requirements of 
23 U.S.C. 106(d) are met. The regulation would provide nationwide 
application of VE to the FHWA's grant program in the same way that the 
FHWA's direct federally funded VE program is covered by the Office of 
Management and Budget (OMB) Circular A-131 (Revised June 8, 1993, 58 FR 
32964 (June 14, 1993)). The OMB Circular A-131 requires ``Federal 
Departments and Agencies to use value engineering (VE) as a management 
tool, where appropriate, to reduce program and acquisition costs.''

Discussion of Major Sections

    The regulation would require States to establish, administer, and 
monitor VE programs. Each State would determine the administrative 
details of its VE program and institute VE program requirements to 
carry out the VE program. States would have up to 1 year from the 
effective date of the final rule to establish VE programs.

Section-by-Section Analysis

Section 627.1  Purpose and Applicability

    The purpose of this regulation is to improve project quality and 
productivity, foster innovation, eliminate unnecessary and costly 
design elements, and ensure economical costs by requiring the 
application of VE in the design and construction of selected Federal-
aid highway projects. The regulation would apply to contracts for early 
project development, design, and construction of selected projects 
funded with Federal-aid highway funds and may include studies of 
project elements, project procedures, specifications, and standard 
plans.

Section 627.3  Definitions

    This section would define the VE terms of ``Function,'' ``Life-
Cycle Cost,'' ``Total Quality Management,'' ``Value Engineering,'' 
``Value Engineering Change Proposal,'' ``Value Engineering Incentive 
Clause,'' ``Value Engineering Job Plan,'' and ``Worth.''

Section 627.5  General Principles and Procedures

    This section would require States to establish VE programs which 
meet minimum VE program requirements and to develop procedures to 
administer and monitor their VE programs. This section would require 
States to be adequately staffed to effectively manage and monitor their 
VE programs, allow States to employ VE consultants to perform VE 
studies, and authorize the cost of the VE studies as eligible for 
Federal-aid participation. In addition, this section would require VE 
program staffs to receive VE training. Value engineering training is 
available through courses and workshops offered by the National Highway 
Institute (NHI), various VE consulting firms, and some SHAs with active 
VE programs.

Section 627.7  Reports

    This section would require States to report to the FHWA the yearly 
results achieved through the application of VE to projects financed 
with Federal-aid highway funds. This information should be readily 
available from the SHA's internal tracking and documenting of its VE 
program. The FHWA is required to report certain data and other 
information about its VE program to the Department of Transportation 
(DOT), which then forwards the information to the OMB. The information 
provided in the State reports would provide the data and information 
needed for FHWA's report and would help the FHWA and States monitor the 
effectiveness of State VE programs. The information contained in the 
report will be made available to FHWA field offices and State agencies.

Rulemaking Analyses and Notices

    All comments received before the close of business on the comment 
closing date indicated above will be considered and will be available 
for examination in the docket at the above address. Comments received 
after the docket closing date will be filed in the docket and will be 
considered to the extent practicable, but the FHWA may issue a final 
rule at any time after the close of the comment period. In addition to 
late comments, the FHWA will also continue to file relevant information 
in the docket as it becomes available after the closing date, and 
interested persons should continue to examine the docket for new 
material.

Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    The FHWA has determined that a savings of more than $100 million 
per year is likely to occur as a result of the implementation of the 
regulation. Therefore, this action is a significant regulatory action 
within the meaning of Executive Order 12866 and significant within the 
meaning of DOT regulatory policies and procedures. Because it is 
anticipated that the economic impact of this rulemaking will be 
significant, the FHWA has prepared the following regulatory evaluation.
    The FHWA collected and evaluated considerable amounts of VE data in 
1992 while preparing and writing its VE Report to Congress. During 
FHWA's 1992 evaluation of the effectiveness of its VE program, the FHWA 
analyzed data for all SHAs (50 States plus Puerto Rico and the District 
of Columbia) describing their VE usage for the 4-year period from 
fiscal year (FY) 1988 to FY 1991. The data showed that the SHAs 
performed over 1500 VE studies, recommended an accumulative $3.6 
billion in VE savings, and implemented VE savings worth $615 million. 
The majority (71 percent) of these 1,500 VE studies were made by just 
seven States. These seven SHAs, with ``active'' VE programs, averaged 
39 studies per year. Nearly all of the remaining VE studies were made 
by 27 other SHAs, an average of only 4 VE studies per year, with the 18 
remaining SHAs performing only 12 VE studies over the 4-year study 
period. The overall results showed the SHAs implementing an average of 
$154 million per year in VE savings.
    In order to evaluate the reported VE savings, the FHWA analyzed the 
FY 1991 bid information reported and published in its Bid Opening 
Report (Pub. No. FHWA-PD-92-017). In FY 1991, the SHAs accumulatively 
awarded $10 billion worth of Federal-aid highway construction projects. 
The seven ``active'' VE States awarded construction contracts worth 
$2.5 billion, the 27 ``limited'' VE States awarded construction 
contracts worth $5.0 billion, and the 18 ``inactive'' VE States awarded 
construction contracts worth $2.5 billion.
    The FHWA has concluded that because the seven SHAs (accounting for 
25 percent of FHWA's construction program) with ``active'' VE programs 
and the 27 States (accounting for 50 percent of FHWA's construction 
program) with ``limited'' VE programs were able to save $154 million 
per year, that an opportunity exists to save significant additional 
Federal-aid highway funds if all SHAs develop ``active'' VE programs. 
With 25 percent of FHWA's $10 billion construction program not exposed 
to any VE analysis and 50 percent of its program having only a 
``limited'' exposure to the VE process, the FHWA believes that 
additional savings of more that $100 million would occur by requiring 
all States to develop and administer VE programs as proposed in this 
regulation.
    The additional annual savings that would result from the 
implementation of this regulation would remain with the affected SHAs. 
The funds saved through VE could then be used to design or construct 
additional highway projects, thereby allowing SHAs to get additional 
work accomplished each year with the same overall amount of Federal-aid 
highway funds. By being able to expand the amount of work accomplished 
with their Federal-aid highway funds, SHAs would also be able to save 
or free-up State funds for other projects.
    Based on more recent VE information collected by FHWA field offices 
for FY 1993, the FHWA found that during FY 1993, 27 SHAs had performed 
at least 1 VE study, while 18 of these 27 SHAs performed at least 5 
studies, and 9 of the 27 SHAs performed 10 or more studies. The FHWA 
believes that these States either have VE programs in place or are 
familiar with the VE process that would be required under this 
regulation.
    This rule will not significantly increase the burden upon State 
governments. This regulation would require SHAs to develop VE programs 
where a sufficient number of projects, representing at least 50 percent 
of the Federal-aid highway funds expended by the State, will be 
identified for VE studies each year. An average VE study takes 4 to 5 
days to complete and requires a 4 to 6 person team. In FY 1993, 349 VE 
studies of various highway projects were made by 27 SHAs. According to 
the information provided to the FHWA, the average cost per project for 
the 349 VE studies was $9,600 while the recommended savings (if all 
recommendations were accepted) was $3.4 million per project. Assuming a 
recommendation acceptance rate of 25 percent, implementation of the VE 
recommendations would result in a cost savings of approximately $0.86 
million per study. The VE cost savings should more than offset any VE 
study or redesign costs to the agency.
    In the past, some State highway agencies have resisted establishing 
VE programs for various reasons. Many were concerned about the 
additional staffing requirements and potential delays to projects. Some 
considered the application of VE to be superfluous in light of the 
review processes already applied in developing projects. These concerns 
have been considered and addressed in this rulemaking.
    Under an established VE program (which operates on a continuing 
basis), the application of VE to the highway projects need not 
adversely affect or delay any project because the VE studies are 
normally performed in the early project development phase, where they 
can be integrated into the process. In addition, the overall effect of 
employing VE is generally positive, rather than duplicative of the 
engineering analysis already completed on any project, because VE uses 
a multi-disciplinary team, creative thinking, and functional analysis 
to improve quality and productivity, foster innovation, eliminate 
unnecessary and costly design elements, and ensure that projects are 
cost effective. The regulation may affect staffing levels in SHAs that 
do not currently utilize VE. Establishing, administering, and 
monitoring a VE program will require each SHA to assign staff to carry 
out specific VE functions, although it is expected that staffing 
assignments will be minimal. States with existing VE programs probably 
already have adequate staff assigned to carry out the VE functions. 
Individuals serving as VE study team leaders or members should be 
selected from existing SHA staffs that are trained in VE. Agencies may 
also hire VE consultants to perform the VE studies. In either case the 
study costs are eligible for reimbursement with Federal-aid funds at 
the appropriate pro-rata share for the type of project studied.
    Historically, any additional costs due to the need to hire or 
reassign staff to manage the VE program have been more than offset by 
the overall monetary savings resulting from the application of VE 
studies to highway projects. In general, States with active VE programs 
report return on VE investments of between 30 to 1 and 50 to 1, giving 
the opportunity for substantial overall savings. In 1993, California, 
Florida, and Massachusetts reported savings in excess of $100 million 
as a result of VE study recommendations.
    Since VE programs would be geared primarily toward analyzing the 
larger and more complex projects, most local agencies (those receiving 
small amounts of Federal-aid highway funds) would find themselves 
exempt from the process. Large local agencies receiving substantial 
amounts of Federal-aid highway funds would have to apply VE to some of 
their larger projects in the same manner as the SHAs and would achieve 
analogous benefits. Like State highway agencies, local agencies that 
are required to perform VE studies may perform the studies themselves 
or hire a VE consultant to perform the study. The cost to local 
agencies of performing VE studies is project related and is therefore 
eligible for reimbursement with Federal-aid highway funds, as stated 
above.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the FHWA has evaluated the effects of this rule on small 
entities. Based on the evaluation, the FHWA hereby certifies that this 
action will not have a significant impact on a substantial number of 
small entities. The FHWA has determined that most small entities (those 
receiving small amounts of Federal-aid highway funds) will probably not 
perform VE studies because their projects are small and do not fit the 
project selection criteria set forth in this proposal for performing VE 
studies. Still, due to the many benefits that accrue through applying 
the VE process, States should encourage local agencies to use VE in the 
development of Federal-aid highway projects.

Executive Order 12372 (Intergovernmental Review)

    Catalog of Federal Domestic Assistance Program Number 20.205, 
Highway Planning and Construction. The regulations implementing 
Executive Order 12372 regarding intergovernmental consultation on 
Federal programs and activities apply to this program.

Executive Order 12612 (Federalism Assessment)

    This action has been analyzed in accordance with the principles and 
criteria contained in Executive Order 12612. Under the Federal-aid 
highway program, the FHWA reimburses States for costs incurred in 
highway construction projects. This regulation would simply provide 
that, as a condition of receiving such grants, States must ensure that 
project costs are controlled and project quality is maintained. This 
regulation recognizes the role of the States in employing VE. It gives 
States wide latitude in establishing, administering, and monitoring 
their VE programs and in selecting projects to be constructed using VE. 
Therefore, the FHWA has determined that this action does not have 
sufficient federalism implications to warrant the preparation of a 
separate federalism assessment.

Paperwork Reduction Act

    This action contains a collection of information for the purpose of 
the Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq.
    The reporting and recordkeeping requirement associated with this 
rule is being submitted to the OMB for approval in accordance with 44 
U.S.C. Chapter 35 under DOT NO: ______; OMB NO: ______; Administration: 
Federal Highway Administration; Title: Value Engineering; Proposed Use 
of Information: Project data and cost information representing the 
outcome of the VE studies will be used for determining if the 
respondents are in compliance with the legislative requirements and to 
report VE savings to the Department of Transportation, which then 
forwards the information to the OMB; Frequency: Yearly; Burden 
Estimate: 1,248; Respondents: 52; Form(s): Appendix A to Part 627; 
Average Burden Hours per Respondent: 24.
FOR FURTHER INFORMATION CONTACT: The Information Requirements Division, 
M-34, Office of the Secretary, 400 Seventh Street, S.W., Washington, 
D.C. 20590, (202) 366-4735 or the FHWA desk officer, Office of 
Management and Budget, New Executive Office Building, Room 3228, 
Washington, D.C. 20503, (202) 395-7340. It is requested that comments 
sent to the OMB also be sent to the FHWA rulemaking docket for this 
action.

National Environmental Policy Act

    The agency has analyzed this action for the purpose of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and has 
determined that this action would not have any effect on the quality of 
the environment.

Regulation Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in April and October of each year. The RIN contained in the heading of 
this document can be used to cross reference this action with the 
Unified Agenda.

List of Subjects in 23 CFR Part 627

    Government procurement, Grant programs--transportation, Highways 
and roads, reporting and recordkeeping requirements.

    Issued on: November 9, 1994
Rodney E. Slater,
Federal Highway Administrator.
    In consideration of the foregoing, the FHWA proposes to add part 
627 to 23 CFR chapter I to read as follows:

PART 627--VALUE ENGINEERING

Sec.
627.1 Purpose and applicability.
627.3 Definitions.
627.5 General principles and procedures.
627.7 Reports.

Appendix A to Part 627--Annual Federal-aid Value Engineering (VE) 
Summary Report

    Authority: 23 U.S.C. 106(d), 302, 307, and 315; 49 CFR 18.


Sec. 627.1  Purpose and applicability.

    (a) This part will improve project quality and productivity, foster 
innovation, eliminate unnecessary and costly design elements, and 
ensure efficient investments by requiring the application of value 
engineering (VE) to selected highway projects financed with Federal-aid 
highway funds. This part requires each State highway agency (SHA) to 
establish a VE program, outlines minimum VE program requirements, and 
provides guidance on establishing, administering, and monitoring VE 
programs. State programs shall be in effect no later than [one year 
after the effective date of the final rule].
    (b) This part applies to contracts involving the early development, 
design, and construction of selected Federal-aid highway projects. 
States shall develop VE programs that will apply the VE review process 
to selected highway projects. States may exempt certain projects, such 
as railroad and utility work, projects financed with highway planning 
and research funds, certain projects authorized under the State's 
highway safety program, and emergency relief projects from the VE 
project selection phase.


Sec. 627.3.  Definitions.

    Contractor. The individual or firm providing material, supplies, 
personal property, nonpersonal services, or professional services as a 
party to the design or construction contract.
    Function. Any performance characteristic that a product or service 
accomplishes.
    Life-cycle cost. The total cost of an item's ownership, computed 
over its useful life. This includes initial capital costs (right-of-
way, planning, design, construction), user costs, and the cost of 
operation, maintenance, modification, replacement, demolition, 
financing, taxes, and disposal associated with the facility as 
applicable.
    Value engineering. The systematic application of recognized 
techniques by a multidisciplined team to identify the function of a 
product or service; establish a worth for that function; generate 
alternatives through the use of creative thinking; and provide the 
needed functions, reliably, at the lowest life-cycle cost without 
sacrificing safety, necessary quality, and environmental project 
attributes.
    Value engineering change proposal (VECP). A proposal submitted by a 
contractor under a VE incentive clause included in the provisions of a 
construction contract that, through a change in the plans, design, or 
specifications would yield an improved or equal product and reduce the 
project cost (initial and/or life-cycle) to the contracting agency. The 
net savings from the proposal are shared with the contractor in 
accordance with the distribution provided in the VE or cost reduction 
incentive clause.
    Value engineering incentive clause. A construction contract 
provision which encourages the contractor to propose changes in the 
contract plans and/or requirements which will accomplish the project's 
functional requirements at less cost (without adversely affecting the 
project) and allows the contractor to share in the resultant cost 
savings.
    Value engineering job plan. An organized plan of action for 
accomplishing a VE study that divides the study into a distinct set of 
work phases. The phases normally found in a VE job plan include: 
Project selection, investigation, speculation, evaluation, development, 
presentation, implementation, and audit.
    Worth. An estimate of the least expensive way of performing a 
function, irrespective of its application to the project.


Sec. 627.5  General principles and procedures.

    (a) State VE programs. Applying the VE process to projects will 
improve project quality and productivity, foster innovation, eliminate 
unnecessary and costly design elements, reduce impact costs on users, 
ensure the safe operation of the facility, advance environmental and 
ecological interests, and ensure economical construction costs on 
selected highway projects financed with Federal-aid highway funds. 
State highway agencies shall prepare written procedures establishing 
continuing VE programs. These procedures shall be acceptable to the 
FHWA and consistent with the American Association of State Highway and 
Transportation Officials (AASHTO) ``Guidelines for Value 
Engineering.''1
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    \1\ AASHTO's ``Guidelines for Value Engineering,'' 1987, is 
available for inspection as prescribed in 49 CFR part 7, appendix D 
and may be purchased by writing to the American Association of State 
Highway and Transportation Officials, 444 N. Capitol Street, NW., 
Suite 225, Washington, DC 20001.
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    (1) The VE program shall include procedures to insure that the VE 
process is actively applied to applicable Federal-aid highway projects. 
The VE procedures shall require the identification of candidate 
projects for VE studies early in the development of the State's annual 
Federal-aid program. As a minimum, a sufficient number of projects 
representing at least 50 percent of the Federal-aid highway funds 
expended by the State shall be identified for VE studies each year.
    (2) The VE program should establish specific criteria and 
guidelines for selecting Federal-aid highway projects for a VE review. 
Consideration should be given to projects that have shown recent 
substantial cost increases; projects with complex designs or 
construction phases; projects involving major structures; projects with 
unique specifications, standards, or processes; multi-modal projects; 
projects with repetitive work elements; projects with high right-of-way 
costs; projects with unique or experimental features; projects with 
high maintenance, user impact, or traffic control costs; and projects 
specifically requested for review by State agency program offices or 
management.
    (3) The VE program should establish specific criteria and 
procedures for granting waivers of the VE study requirement on certain 
types of projects or programs. The agency's procedures may allow for 
certain types of projects to be eliminated from consideration for VE 
when there is little likelihood that they would yield any opportunity 
for improvements or savings.
    (4) Value engineering studies should follow the systematic problem-
solving process defined by the VE job plan. Value engineering studies 
should be performed using a team consisting of individuals from 
different disciplines, such as: Design, construction, environment, 
maintenance, planning, right-of-way, and other specialty areas 
depending upon the project being reviewed. Individuals from the public 
and other agencies may also be included as team members when their 
inclusion is found to be in the public interest. The study leader 
should be trained in VE, understand the VE process, and be able to 
serve as the coordinator and facilitator of the VE team.
    (i) Studies should be employed as early as possible in the project 
development or design process so that valid VE recommendations can be 
implemented without delaying the progress of the project.
    (ii) Each study should conclude with a formal report outlining the 
study team's recommendations for improving the project and reducing its 
overall cost. As a part of the formal report process, a presentation of 
the VE team's recommendations should be made to upper management and 
documentation of the presentation included with the final report.
    (5) The VE program should include procedures to ensure that the VE 
recommendation approval process involves appropriate reviews and 
concurrences from applicable staff offices, such as: Design, 
construction, environment, air quality, safety, materials, traffic 
operations, right-of-way, and other offices when the proposed VE change 
impacts their specialty areas. All reviews by external staff offices 
should be performed promptly to minimize delays to the project.
    (6) The VE program should promote the development and submission of 
VECPs by construction contractors, provide for their prompt review, 
assure their prompt approval or disapproval and, if approved, assure 
the implementation of the proposed changes. State highways agencies 
shall include a VE or cost reduction incentive clause in their standard 
specifications or project special provisions that clearly allows 
construction contractors to submit VECPs. This clause should include a 
provision allocating, by percentage, the cost savings that is to be 
shared between the agency and the contractor. States should retain the 
right to accept or reject all VECPs and acquire the rights to use 
accepted VECPs in current and future projects without restrictions.
    (7) The VE program should include procedures for monitoring the 
implementation of the recommendations to ensure that proper 
documentation is maintained for accepted and rejected VE and VECP 
recommendations, the projected or actual cost savings associated with 
the recommendations, and the total costs involved in performing the VE 
studies. The monitoring procedures should also include a mechanism to 
assure that applicable VE alternatives employed on one projects are 
included in other similar projects.
    (b) State VE coordinators. Each State highway agency shall be 
adequately staffed with individuals knowledgeable in VE to effectively 
coordinate and monitor its VE efforts. Individuals assigned to 
administer and monitor the VE program should have sufficient authority 
to insure the vigorous implementation of the VE program and be actively 
involved in all phases of the VE program including the development of 
the agency's annual VE plan.
    (c) VE training. The VE program should include procedures for 
identifying formal VE training needs and for coordinating training 
efforts to ensure that an adequately trained staff is available to 
perform the number of VE studies required in the annual VE plan and to 
assure a continuing VE program. Key VE program managers, VE team 
leaders and members, and individuals involved in the VECP review and 
approval process shall receive VE training.
    (d) Use of consultants. Consultants that have experience in VE may 
be retained by SHAs to conduct VE studies on Federal-aid projects or 
elements of Federal-aid projects. Members of consultant VE study teams 
should be experienced in VE, have completed a recognized VE course or 
workshop, and have participated in previous VE studies. A consultant 
firm should not be retained to conduct a VE study of its own design 
unless the firm maintains separate and distinct organizational 
separation of its VE and design sections.
    (e) Funding eligibility. The cost of performing VE studies is 
project related and is therefore eligible for reimbursement with 
Federal-aid highway funds at the appropriate pro-rata share for the 
project studied.


Sec. 627.7  Reports.

    Each SHA shall report yearly the results it achieved through the 
application of VE to selected highway projects financed with Federal-
aid highway funds. States should report data for the Federal fiscal 
year, the twelve month period beginning October 1 and ending September 
30. States should submit these reports to the FHWA division office by 
November 10 of the calendar year. This information may be transmitted 
to the FHWA electronically. The suggested report format is provided in 
appendix A of this part.

(Approved by the Office of Management and Budget under control 
number 2125-______.)

   Appendix A to Part 627.--Annual Federal-Aid Value Engineering (VE)   
                             Summary Report                             
[Report only Federal-aid funded projects--State: __________ Fiscal year:
                              __________ ]                              
1. Total dollars invested in VE Studies by the SHA                      
 this fiscal year (include in-house costs only, such                    
 as, VE coordinator and staff salaries; study costs;                    
 salary, travel and incidental costs for persons                        
 making studies).....................................         $________M
2. Total dollars paid to VE contractors for                             
 performing VE Studies this fiscal year (include such                   
 costs as VE staff salaries for monitoring contractor                   
 and VE study costs).................................         $________M
3. Total dollars invested in VE Training by the SHA                     
 this fiscal year (include in-house costs for VE                        
 coordinator and staff salaries for organizing and                      
 monitoring; NHI training costs; salary, travel and                     
 incidental costs for persons attending training)....         $________M
4. Total dollars paid to VE contractors for VE                          
 Training usedthe SHA this fiscal year (include                         
 training costs; salary, travel, and incidental costs                   
 for persons attending training).....................         $________M
5. Total number of individuals trained in VE during                     
 this fiscal year.                                                      
    Over 8 hours FHWA ______ State ______ Other                         
     ______                                                             
    Under 8 hours FHWA ______ State ______ Other                        
     ______                                                             
                                                                        
Project Development and Design Phase                                    
                                                                        
6. Total number of VE studies completed this fiscal                     
 year................................................           ________
    a. Total number of VE recommendations made.......           ________
    b. Total number of VE recommendation approved....           ________
7. Total estimated construction cost of all the                         
 projects before the VE studies were performed.......         $________M
    a. Total dollar value of the VE recommendations                     
     made............................................         $________M
    b. Total dollar value of the VE recommendations                     
     approved for implementation.....................         $________M
8. Total estimated construction cost of all the                         
 projects after the VE studies were performed and the                   
 VE recommendations were approved for implementation.         $________M
                                                                        
Project Construction Phase                                              
                                                                        
(Value Engineering Change Proposals)                                    
                                                                        
9. Total number of VECP received this fiscal year....           ________
10. Total value of VECP received this fiscal year....         $________M
11. Total number of VECP approved this fiscal year...           ________
12. Total value of VECP approved this fiscal year....         $________M
13. Total amount of VECP approved savings provided to                   
 contractors.........................................         $________M
                                                                        
Life-Cycle Cost Savings                                                 
                                                                        
14. Total estimated value of life-cycle (cost                           
 avoidance) cost savings for approved VE and VECP                       
 recommendations this fiscal year....................         $________M
                                                                        


[FR Doc. 94-28290 Filed 11-15-94; 8:45 am]
BILLING CODE 4910-22-P