Value Engineering at MTA New York City Transit
NYC Transit’s Value Engineering (VE) Program lowered estimated capital construction expenditures by $78 million by identifying costsaving alternatives to the agency’s planned building methods, material specifications and labor allocations. While acknowledging these past accomplishments, our audit found that the agency missed several opportunities for even greater savings.
NYC Transit mandates that capital projects estimated to cost $10 million or more undergo a Value Engineering review prior to contract award. Our audit found, however, that between 2005 and 2007 NYC Transit’s in-house design managers had inappropriately excluded from the VE Program 15 of 40 projects that met this threshold. After examining the projects, NYC Transit’s Value Engineering Officer determined that six of them, collectively worth $187.3 million, involved the type of complex construction designs that could have benefited from VE reviews. Using the average savings rate obtained by the VE Program, NYC Transit might have achieved as much as $6.5 million in capital cost reductions if Value Engineering had been performed on these six projects.
NYC Transit has accepted all of our recommendations, and has since adopted several procedural changes to ensure that all appropriate construction projects are referred to the VE Officer for possible inclusion in the VE Program.
Our audit also offered several suggestions for expanding the effectiveness of the current VE Program. Specifically, we noted that additional construction savings could be identified if NYC Transit expanded VE Reviews to more projects based on the complexity of their scope of work rather than on a specific dollar threshold. We further suggested that the agency consider re-evaluating its operational and construction standards that in the past have resulted in high rates of rejection of VE cost-saving proposals.