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Introduction to Introduction to Value AnalysisValue Analysis

Caltrans Delivers Value

By Renee Hoekstra, CVS

RH & Associates, Inc.

for

Caltrans

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Today’s ObjectiveToday’s Objective

What is Value Analysis (VA) all about?

Why Caltrans Uses VA?

Caltrans VA Policy

How to Effectively Apply VA

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What is Value Analysis?What is Value Analysis?

Value Analysis (or Value Engineering) is a function-oriented, structured,

independent multi-disciplinary team approach to identify improvements

in a project, product or service.

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Typical Caltrans VA Job PlanTypical Caltrans VA Job Plan

• Pre-Study

• Information*

• Function Analysis*

• Speculation*

• Evaluation*

• Development*

• Presentation*

• Implementation

* Also referred to as “Workshop”

8 Step Process:

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What is This VA Stuff Any How?”What is This VA Stuff Any How?”

• It’s About Improving a Project, Process or Item of Work

• It’s Not Just About “Cutting Costs” or “Taking Away”

• It’s Not About a Poor Design

IT’S ABOUT ADDING VALUE!!

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• Stakeholder Satisfaction– Building consensus among project stakeholders – Better understanding of a project’s goals and objectives– Developing a better understanding of an alternative concept’s

affect on project performance– Developing a deeper understanding of the relationship

between performance and cost in determining value– Using value as the basis for selecting the best project, design

concept or approach

How Do We Define Value?How Do We Define Value?

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• Performance Improvements– Schedule and Delivery– Environmental impacts– R/W impacts – Constructability – Maintainability– Traffic Control– Others?

How Do We Define Value?How Do We Define Value?

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Why Caltrans Uses VA?Why Caltrans Uses VA?

• Meeting Caltrans’ Goals

• Providing Better Projects to our Clients, the Traveling Public

• Being Fiscally Responsible

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Why Caltrans Uses VA?Why Caltrans Uses VA?

It Makes Good Business Sense!• Use it to streamline the decision-making process• To resolve issues with project stakeholders• To find Innovative solutions to complex project issues• Typical savings is greater than 5%• Typical Return on Investment is over 100:1

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Why Caltrans Uses VA?Why Caltrans Uses VA?

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2009 VA Results2009 VA Results• 2009 reported results: 48 VA Studies

Saved $171 Million Dollars

• 5% project savings

• ROI in 2009: 79:1

• Implementation Rate in 2009: 68%

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Caltrans VA PolicyCaltrans VA Policy

Satisfying Requirements

Responsibilities

Caltrans Role

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Caltrans VA PolicyCaltrans VA Policy

• DD-92 Value Analysis Policy– All projects on the Federal-aid system (Interstate and the

National Highway System) with a total project cost (right of way, construction and support) of $25 million or more.

– All bridge projects totaling $20 million or more.

– Although the VA study is most effective in the early stages of project development, a VA study can be conducted at any phase of the project prior to the start of construction.

– Requirements apply regardless of the funding source, or whether the Department’s employees, local agencies, consultants, or others are accomplishing the work.

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VA Study ResponsibilitiesVA Study Responsibilities

Who pays for the VA Study?

Project Sponsors secure funding for projects and serve as project advocates.

– Team Leader cost– Team Member cost– Study cost (facility, equipment, paper, etc…)

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VA Study ResponsibilitiesVA Study ResponsibilitiesWho is responsible for performing the VA Study?

The Implementing Agency is the entity charged with the successful completion of each project component:

– Project Initiation Document– Completion of all permits and environmental studies.– Preparation of plans, specifications, and estimates.– The acquisition of right-of-ways, including, but not limited to, support activities. – Construction, construction management, and engineering; including surveys and

inspection.

- Caltrans DD-90 and 23

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Caltrans Involvement in VA StudyCaltrans Involvement in VA Study

Three Basic Levels of Involvement:

1. Hire Caltrans as the Implementing Agency to design the project and perform the VA Study.

2. Team Member Participation

3. Oversight Responsibility

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Caltrans Involvement in VA StudyCaltrans Involvement in VA Study

Team Member Participation vs Oversight

Team members are actively involved in the workshop as SME’s to create and develop viable alternatives to the baseline design.

This work would be considered as “reimbursable” work. Typical workshops are 40 hours, and Caltrans typical VA studies resource about 500 hours of staff time. 

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Caltrans Involvement in VA StudyCaltrans Involvement in VA Study

Team Member Participation vs Oversight

Stakeholder and Decision Making Participation includes attending Pre and Post meetings (Kick-off and presentation phases), perform technical reviews on alternatives, review for federal compliance, and make recommendations for acceptance or rejection of alternatives.

This participation would be considered as a project’s Independent Quality Assurance (IQA) at no cost to the project.  

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Satisfying Caltrans Satisfying Caltrans RequirementsRequirements

• Use Caltrans VA Process and Techniques• Establish Proper Timeframe for Study• Provide Sufficient Time to Perform the VA

Study• Use Independent Team and Team Leader

(CVS)

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Satisfying Caltrans Satisfying Caltrans RequirementsRequirements

• Involve Caltrans - HQ Reviewers in Technical Review

• Act on VA Alternatives– Implementation Meeting –Caltrans and Key

Stakeholders– Determine Disposition of Each Alternative– Follow Up when Final Decisions are Made

• Properly Document Results – VA Report Guide – Preliminary Reports – Final Reports (include Caltrans HQ VA Program)

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How to Effectively Apply VAHow to Effectively Apply VA

Study TimingStudy Length

Team MembersTeam Leaders

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VA Study Timing VA Study Timing Cost Savings / StudyCost Savings / Study

“The Earlier The Better”

All Following Charts Source: 286 Completed Caltrans Studies 2002-2009

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VA Study Timing VA Study Timing Return on Investments / StudyReturn on Investments / Study

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Typical Caltrans VA Job PlanTypical Caltrans VA Job Plan

• Pre-Study

• Information*

• Function Analysis*

• Speculation*

• Evaluation*

• Development*

• Presentation*

• Implementation

* Typical study is 6 days (40 hrs) divided into two weeks

8 Step Process:

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The Length of the WorkshopThe Length of the Workshop

• 6 DAYS, WHY DO WE NEED 6 DAYS!!– Scheduling adequate time to meet each of the steps

is critical– Allowing team members time to do their other job is

even more critical– Commitment by team members to stay engaged is

key to the study’s success– Each study is unique (maybe 5 days are enough)

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VA Study LengthVA Study Length

• 6 Day Caltrans Standard (40 hr workshop)– Ideally – two 3-day sessions– 5 Day acceptable for many smaller projects

• Exemption Process For Number of Days– See PDPM Chapter 19 for Process– Requests are being Denied by HQ

• 2 Days or Less are not acceptable– 3-4 days for minor improvements within

R/W

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Typical Study DurationTypical Study Duration

• Preparation 2-4 weeks• VA Study Segment 1 3 days• VA Study Segment 2 3 days• Implementation

– Prepare Draft Report 2 weeks– Review Report 2-6

weeks– Resolve Disposition 1 day

• Report – Prepare Final Report 3 weeks– Close out open items 3 months

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Typically 7-9 Cross Functional, Experienced Typically 7-9 Cross Functional, Experienced Team MembersTeam Members

• Design

• Construction

• Environmental

• Landscape

• Traffic Ops

• Maintenance

• Planning

• Right of Way

• Structures

It’s All About the Team!

Quality Team = Quality Results

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It’s All About the TeamIt’s All About the Team• Commitment of team members to

participate and engage is essential• Multi-disciplines are important to creativity• Removing personal and institutional

barriers aides in the creativity and evaluation process

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It’s All About the TeamIt’s All About the Team• Team Leaders should be trained in the

Value Engineering process and not meeting facilitation– Recommend Certified Value Specialist

(CVS) from Society of American Value Engineers (SAVE) International

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Caltrans VA Website: www.dot.ca.gov/hq/oppd/value/index.htm

FHWA VE Website: http://www.fhwa.dot.gov/ve/index.cfm

SAVE International Website: http://www.value-eng.org

Additional InformationAdditional Information

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Troy Tusup, HQ VA Program Manager

Richel Espinoza-Noss, HQ VA Program Administrator

Naghi Ghafari, North Region

Hamid Khorram & Binh Dang, District 4

Habib Sabzehzar, Central Region

Jamal El-Jamal & Duke Nguyen, District 7

Anthony Robinson & Jason Ahlswede, District 8

Chili Cilch, District 11

Christopher Le, District 12

Caltrans VA ChampionsCaltrans VA Champions

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Questions????