The National Academies

NCHRP 19-11 [Completed]

Applying Risk Analysis, Value Engineering, and other Innovative Solutions for Project Delivery

  Project Data
Funds: $200,000
Research Agency: Value Management Strategies, Inc.
Principal Investigator: Robert Stewart
Effective Date: 8/25/2015
Completion Date: 1/13/2017


Managing stakeholders and permitting agencies while addressing complex constructability and technical issues requires innovation and a culture that is open to change in order to deliver transportation projects “on time and within budget.” Project planners and decision makers need to understand the range of possible outcomes in a project and/or program to make intelligent decisions, and they also need effective tools and techniques to help guide those decisions. Within the transportation sector in general and the highway sector in particular, innovative strategies aimed at improving the reliability of project planning, development, and delivery include alternative delivery methods, risk-based cost and schedule estimating, value engineering, constructability reviews, and alternative technical concepts. Most of these strategies involve teams thinking differently, generating alternative solutions, estimating costs and benefits, and championing new ideas. All of these strategies involve risk transfer and assignment, but risk has not always been allocated in a logical or deliberative fashion. One significant approach to addressing these concerns is application of Value Engineering (VE), a systematic process that combines creative and analytical techniques to achieve a common understanding of project requirements, thus stimulating innovation and maximizing the use of resources to meet critical needs. At the project level, the goal of VE analysis is to achieve balance between project needs (e.g., quality, safety, operations, environment, etc.), and resources (cost, schedule, materials, etc.). VE follows a structured process that can be integrated effectively with other techniques to stimulate innovation and identify strategies for managing and allocating risk. Budget constraints, increasing project complexity and stakeholder involvement are driving an ongoing need to increase innovation in project development and delivery. A number of processes and tools contribute to stimulating innovation and thinking differently. As the demand for innovation and value for money increases, there is increasing need to identify and use the appropriate tools and processes effectively.

The objective of this research is to develop a guide that identifies available and proposes additional tools and techniques to foster useable and improved practices for key stakeholders to combine risk analysis, constructability reviews, value engineering, and other processes for improving project outcomes.

The proposed work plan should be divided into two phases with discrete tasks for each phase. Phase I will culminate in an interim report that will present the results of the initial components of the research, a detailed, annotated outline of the guide, and an updated work plan for Phase II. A face-to-face interim meeting with the NCHRP panel will be scheduled at the conclusion of Phase I to discuss and approve the interim report. Work on Phase II tasks will not begin until the updated work plan is approved by NCHRP. The project schedule will include 1 month for NCHRP review and approval of the interim report.
The research plan  included the following:
1.     a kick-off teleconference meeting of the research team and the NCHRP project panel, to be held within 1 month of the contract’s execution date;
2.     a literature review that identifies and summarizes key products of previous research;
3.     the aforementioned interim report which presents the output of Phase I, including a preliminary detailed, annotated outline of the guide;
4.     a final version of the guide and associated templates and related tools and techniques that fulfills the project objective;
5.     a final report documenting the research; and
6.     a PowerPoint or similar presentation describing the project background, objective, research method, findings, and conclusions.

To accomplish the project objective, the research plan identified and developed tools and techniques that can be used to stimulate innovative methods to allocate risk effectively while achieving maximum value for money invested. Further, the research plan should incorporate these tools and techniques into a guide for use by any transportation agency, enhancing opportunities for generating and applying innovative and effective project delivery strategies. This guideprovides decision makers, program and project managers, and value engineering practitioners with a consistent approach to integrate value engineering with risk analysis throughout the project planning, development, and delivery process. In preparing these deliverables, the research plan should address a broad range of issues and procedures, such as the following:
1.     How to measure value, i.e., how to integrate quantifiable risk, function analysis, and performance-based decision making;
2.     How to integrate the unique perspective of each member of the core team: owner, designer, and contractor;
3.     How to use performance-based techniques that foster innovation; and
4.     How to use value engineering and risk analysis to foster innovation.

STATUS:  The final report has been published as NCHRP Report 850 and includes the written report, a set of training videos, an Excel based model, and a sample project application.

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