1 Introduction to Value Analysis Caltrans Delivers Value By Renee Hoekstra, CVS RH & Associates, Inc. for Caltrans

2 Today’s Objective What is Value Analysis (VA) all about? Why Caltrans Uses VA? Caltrans VA Policy How to Effectively Apply VA

3 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.

4 Typical Caltrans VA Job Plan Pre-Study Information* Function Analysis* Speculation* Evaluation* Development* Presentation* Implementation * Also referred to as “Workshop” 8 Step Process:

5 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!!

6 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?

7 Performance Improvements –Schedule and Delivery –Environmental impacts –R/W impacts –Constructability –Maintainability –Traffic Control –Others? How Do We Define Value?

8 Why Caltrans Uses VA? Meeting Caltrans’ Goals Providing Better Projects to our Clients, the Traveling Public Being Fiscally Responsible

9 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

10 Why Caltrans Uses VA?

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%

12 Caltrans VA Policy Satisfying Requirements Responsibilities Caltrans Role

13 Caltrans 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.

14 VA 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…)

15 VA Study Responsibilities Who 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

16 Caltrans 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

17 Caltrans 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.

18 Caltrans 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.

19 Satisfying Caltrans Requirements 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)

20 Satisfying Caltrans Requirements 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)

21 How to Effectively Apply VA Study Timing Study Length Team Members Team Leaders

22 VA Study Timing Cost Savings / Study “The Earlier The Better” All Following Charts Source: 286 Completed Caltrans Studies

23 VA Study Timing Return on Investments / Study

24 Typical 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:

25 The 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)

26 VA 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

27 Typical Study Duration Preparation2-4 weeks VA Study Segment 13 days VA Study Segment 23 days Implementation –Prepare Draft Report2 weeks –Review Report2-6 weeks –Resolve Disposition1 day Report –Prepare Final Report3 weeks –Close out open items3 months

28 Typically 7-9 Cross Functional, Experienced Team Members Design Construction Environmental Landscape Traffic Ops Maintenance Planning Right of Way Structures It’s All About the Team! Quality Team = Quality Results

29 It’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

30 It’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

31 Caltrans VA Website: FHWA VE Website: SAVE International Website: Additional Information

32 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 Champions

33 Questions????