2005 AASHTO Value Engineering Conference Using VE in Design Build
Presented by:
Jerry R. Blanding
Innovative Contracting Engineer
FHWA -NRC
July 21, 2005
Sheraton Gunter Hotel
San Antonio, TX
Using VE in Design Build
Regulatory Definitions
DB Final Rule -History & Application
VE & DB A Federal Perspective
Additional Resources
Value Analysis/ Value Engineering
Why is Design-Build different from Design Bid Build?
23 CFR Part 636 – Design Build
Design-bid-build means the traditional project delivery method where design and construction are sequential steps in the project development process.
Design-build contract means an agreement that provides for design and construction of improvements by a contractor or private developer. The term encompasses design-build-maintain, design-build-operate, design-build-finance and other contracts that include services in addition to design and construction. Franchise and concession agreements are included in the term if they provide for the franchisee or concessionaire to develop the project which is the subject of the agreement.
Value Analysis/ Value Engineering
Design Build Final Rule:
23 CFR § 627.5 (e)
In the case of a Federal-aid design-build
project the (State) shall fulfill the requirement by
performing a value engineering analysis
prior to the release of the Request for Proposals
document.
Using VE in Design Build -Florida DOT Example
All projects with an estimated cost of $20 million or more shall have
a minimum of one VE study conducted during project development.
The estimated cost shall includes all costs associated with the
project including but not limited to:
Design
Right of Way
Construction
Administrative Cost.
Using VE in Design Build -Florida DOT example
The VE study shall be conducted during one of the following
phases of project development:
Initial Concepts
Comparison of Alternatives
Final Design
For Design Build Projects, the VE study shall be conducted prior to
the release of the Request for Proposal (RFP) Document.
The greatest potential for improvement is during the Initial
Concepts or Comparison of Alternatives review period.
TRB Task Force A2T51 – Innovative Contracting
January 1988 – 23 representatives of the highway industry participated
Mission of TRB Task Force A2T51
Compile information on contracting practices
Assess how current practices affect quality, progress and cost
Suggest measures for improving contracting practices and promoting quality in construction
December 1991 – TRB Circular #386 -Innovative Contracting Practices
Special Experimental Project No. 14 Innovative Contracting
Initiated 2/13/90
Objective – Evaluate project specific contracting practices which
Maintain product quality
Reduce life cycle cost
Practices proposed for evaluation
Cost-plus-time Bidding
Lane Rental
Warranty Procedures
Design-Build
TEA-21 Design-Build Legislation Section 1307
FHWA implemented the Final Rule in January 2003.
After the final rule, states can use design-build without HQ approval for Qualified Projects
ITS projects > $ 5 million
Other projects > $50 million
SEP-14 will continue for smaller projects unless Congress approves language in the reauthorization bill eliminating this threshold.
In 2005 FHWA will complete the required òReport to Congress’ on the effectiveness of design build.
Existing SEP-14 Design-Build Contracts vs. Qualified Projects
Advantages of Design-Build
Single Point of Responsibility
Quality / Innovation
Potential Time or Cost Savings
Improved Risk Management
Earlier Knowledge of Firm Costs
Lower Incidence of Claims
Reduced Project Administration
Critical Characteristics for Public Sector Design-Build Projects Design-Build Selector Georgia Institute of Technology / University of Colorado www.colorado.edu/engineering/civil/Design-Build/DBS/
Poor DB Projects Don’ t Have:
Well Defined Scope
Shared Understanding of Scope
Owner’ s Construction Sophistication
Adequate Owner Staffing
Established Budget
Established Completion Date
Suitability
NEPA, and major ROW and utility issues must be clear
Should have a Strong design component
Reasons for selection should not be:
Obligation of funds
Compensate for inadequate agency resources
NEPA – RFP Release: Where Does VE Fit?
FHWA Perspective on Using VE in Design Build
VE is a mandate for NHS projects $25 million and over
VE must be performed prior to release of the RFP
Multiple VE’ s may be appropriate for major projects
VE studies are performed to add value to a project, not simply to reduce costs.
All valid suggestions should be included in the study report. Management must determine what impact the VE suggestions may have on the environmental or public hearing agreements.
FHWA Perspective on Using VE in Design Build
VE should be performed on NEPA alternatives or on selected RFP requirements.
FHWA has not objected as long as VE is done prior to release of RFP at a reasonable point with the coordination of the Division Office.
Innovative Contracting Best Practices Web Site
Utah State University
www.ic.usu.edu
Practical information on warranties, A+B, lane rental and design-build contracting
What is it?
Why should you use this?
Criteria for project selection?
Who is currently using it?
Example provisions
Additional Resources on SEP-14 Design-Build Projects
FHWA HIPA-30 web page
www.fhwa.dot.gov/infrastructure/progadmin/contracts/d_build.htm
WSDOT Design-Build Process for Highway Projects
www.wsdot.wa.gov/designbuild/db/dbguidebook.htm