Value Engineering Has the Potential To Reduce Mass Transit Construction Costs

RCED-83-34: Published: Dec 29, 1982. Publicly Released: Dec 29, 1982.

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Millions of dollars in federal, state, and local construction funds can be saved by applying value engineering (VE) to the designs of construction projects funded by the Urban Mass Transportation Administration (UMTA). GAO conducted this review to determine: (1) how effective VE would be when applied to heavy rail and bus construction projects; and (2) whether VE could produce greater savings than the UMTA peer review on one aspect of a proposed subway station.

Most transit authorities that receive UMTA funds lack the technical expertise to design projects. To obtain this capability, they hire architectural/engineering firms. Because the firms design facilities to satisfy the requirements of transit authorities, the cost to construct the facilities may be greater than necessary. The design plans are evaluated by UMTA regional engineers for cost effectiveness, safety, and technical feasibility. However, UMTA officials and architectural/engineering representatives acknowledge that UMTA does not have enough engineers to adequately review designs. Unlike VE, peer review does not include use of a job plan, analysis of the functional requirements of a system before recommendations are made, or use of formal criteria and guidelines. UMTA believes that peer reviews held during the conceptual and informational stages of project development have saved millions of dollars in construction costs. For fiscal years (FY) 1965 through 1981, UMTA has provided about $18 billion in capital grants to local transit authorities to construct and rehabilitate rail and bus facilities, which included $7.5 billion for rail and $1.5 billion for bus projects. The remaining funds were used to purchase rolling stock and equipment and for similar purposes. In FY 1981, obligations for UMTA capital programs totalled about $2.9 billion; $866 million was used for bus and $2 billion for rail projects. GAO believes VE can significantly reduce construction costs as demonstrated in VE workshops and by other federal agencies.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOT issued guidance in April 1987 with the release of the DOT Value Engineering Order.

    Recommendation: The Secretary of Transportation should direct the Administrator, UMTA, to ensure that construction contracts include a VE incentive clause when implementing the program.

    Agency Affected: Department of Transportation

  2. Status: Closed - Not Implemented

    Comments: UMTA believes that the grantee is in the best position to determine which VE recommendation should be implemented.

    Recommendation: The Secretary of Transportation should direct the Administrator, UMTA, to retain final authority for approving and disapproving VE recommendations when implementing the program.

    Agency Affected: Department of Transportation

  3. Status: Closed - Implemented

    Comments: The Office of the Secretary approved a contract for development of VE guidelines. VE work will be done by firms not participating in the project.

    Recommendation: The Secretary of Transportation should direct the Administrator, UMTA, to ensure that VE is performed by a private architectural/engineering firm not participating in the project when implementing the program.

    Agency Affected: Department of Transportation

  4. Status: Closed - Not Implemented

    Comments: The Office of the Secretary approved a proposed contract for development of VE guidelines. UMTA will obtain the benefits. It has no intention of sharing the benefits with grantees.

    Recommendation: The Secretary of Transportation should direct the Administrator, UMTA, to share with the grantee the cost and savings of VE in proportion to its participation in project costs when implementing the program.

    Agency Affected: Department of Transportation

  5. Status: Closed - Not Implemented

    Comments: VE will be used on projects exceeding $150 million. This recommended change will not be adopted.

    Recommendation: The Secretary of Transportation should direct the Administrator, UMTA, to apply VE early in a project's design on all UMTA-funded construction projects exceeding $2 million.

    Agency Affected: Department of Transportation

  6. Status: Closed - Implemented

    Comments: The Secretary of Transportation has approved a contract that provides for developing specific VE guidelines.

    Recommendation: The Secretary of Transportation should direct the Administrator, UMTA, to implement a VE program for construction projects.

    Agency Affected: Department of Transportation

  7. Status: Closed - Not Implemented

    Comments: UMTA believes that it does not have the resources to implement this recommendation.

    Recommendation: The Secretary of Transportation should direct the Administrator, UMTA, to appoint a full-time program manager for VE activities who reports to the UMTA Administrator when implementing the program.

    Agency Affected: Department of Transportation

  8. Status: Closed - Implemented

    Comments: DOT issued guidance in April 1987 with the release of the DOT Value Engineering Order.

    Recommendation: The Secretary of Transportation should direct the Administrator, UMTA, to limit its peer review program to the conceptual and informational phases of major construction projects and complement it with VE during the early design and construction phases of such projects.

    Agency Affected: Department of Transportation

 

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