1408Value Engineering Incentive

Value engineering provisions provide an incentive to the Contractor to initiate, develop, and present cost reduction Proposals involving changes in the Contract requirements to the Department for consideration. Value engineering provisions only apply if the Contractor specifically submits a P roposal for consideration as a value engineering Proposal. The cost reduction Proposals shall produce a net savings to the Contract by providing less costly items or methods than those specified in the Contract without impairing essential functions and characteristics. The Contractor shall submit value engineering Proposals to the Engineer with the following information:

recommendation of how to make each change

Proposal

the Department

executed to obtain the maximum cost reduction during the remainder of the Contract, and the reasoning for this time schedule

the actions of the Department

Contract The Department will not assume any liability for not meeting the statement of the time described in the Contractor’s value engineering Proposal. The Contractor may withdraw, in whole or in part, any value engineering Proposal not accepted by the Department within the period identified in the p roposal. The Department’s acceptance or rejection decision on a value engineering Proposal shall be final and the provisions of 1517, “Claims for Compensation Adjustment,” will not apply. The Department will notify the Contractor in writing of its decision regarding each value engineering Proposal. Until the Department accepts the Proposal, the Contractor shall continue to perform Work in accordance with the requirements of the Contract. If the Department accepts the Proposal, the Department will execute a Change Order setting forth the terms, conditions, and costs of the Proposal. If the Contractor performs any Work performed in accordance with the value engineering Proposal before the execution of the Change Order, the Department will consider that “unauthorized Work” as specified in 1512, “Unacceptable and Unauthorized Work.” The Change Order will establish the Contract modifications and the agreed net savings . The Department will calculate the net savings by subtracting the Contractor’s value engineering P roposal cost from the Contractor’s original bid price for the work covered in the value engineering P roposal. A - Contractor’s value engineering Proposal cost. B - Contractor’s original bid price for the Work covered in the value engineering Proposal. B - A= Net Savings. The department reserves the right to reject any value engineering Proposal that does not reflect the reasonable costs to perform the Work covered in the value engineering Proposal. The Department will provide a lump sum payment of 50 percent of the net savings from the value engineering Proposal to the Contractor as the Contractor’s share of the value engineering incentive . The Department will not revise the lump sum payment even if the final accepted quantities vary . The Department may include conditions for consideration, approval, and implementation of the cost reduction P roposal in the Change Order. The Contractor shall design and develop the Proposal at no additional cost to the Department. The Department will not include the costs incurred for reviewing, approving, and implementing the Proposal in the net savings calculations. After the Department accepts the cost reduction Proposal, any restrictions imposed by the Contractor on its use or disclosure of the information submitted shall be void, and the Department will have the right to use, duplicate, and disclose any data necessary to use the P roposal.

Control of Work