When a project estimate comes in over budget, one of the first terms you’ll hear is “value engineering” (VE). In recent years, it has received a bad rap as a way to drastically cut both costs and quality. The truth is, when done right, it can lead to better projects, better buildings, and happier owners.
What is Value Engineering?
“VE is a creative, organized effort, which analyzes the requirements of a project for the purpose of achieving the essential functions at the lowest total costs (capital, staffing, energy, maintenance) over the life of the project. Through a group investigation, using experienced, multi-disciplinary teams, value and economy are improved through the study of alternate design concepts, materials, and methods without compromising the functional and value objectives of the client.” Whole Building Design Guide
Most professionals in the construction industry will tell you that value engineering is a way to cut construction costs, and it is. Often it means lowering the quality of the building materials and construction methods. However, the true meaning of value engineering, as it was intended when it was first used at General Electric, is the reassessment of the building and its systems to see if they meet the owner’s values, at the lowest possible cost.
For example, if energy efficiency is an important value to the client, then all systems, including HVAC, electrical, windows, insulation, and framing, need to be evaluated for their contributions to this value. If the exterior walls are designed for 2×4 studs, changing them to 2x6s will increase the amount of insulation that can be installed, increasing efficiency. After several building systems are changed to increase efficiency, the overall construction cost of a project may go up. The owner may not be concerned about this however, as they are looking at life-cycle costs and can use the energy savings over time to pay for the increase. The important point for the owner is that the project better reflects their values.
The best time for value engineering is early in the project. Making decisions about the building in the early phases of design will have very little cost impact over the life of the project. Once construction has started, however, it becomes exponentially more expensive and difficult to make changes.
Holding a value engineering meeting with the design team, construction manager, and main contractors for the project is the best way to review building design options. It is important to include contractors in this meeting, as they have hands-on knowledge of how the building systems work and they are often able to come up with ingenious ideas based on their experience.
Value Engineering Process
The value engineering process takes place in a project team meeting. All team members are there to share their knowledge and work together to provide the owner with the best project possible. There are four primary stages to the meeting:
- Define the owner’s values, identify the main elements of the project, and analyze the functions of those elements.
In this preliminary stage, the team works to define the owner’s primary values for the project, including objectives and key criteria that will make the project a success. Then they identify the main elements of the project and analyze the key functions of those elements. This discussion forces the team to think in terms of function, and the cost and impacts associated with that function.
- Develop alternative solutions for delivering those functions.
The team brainstorms ideas to provide the necessary functions within the project, while lowering the initial or life-cycle cost. During this phase judgment of ideas is prohibited. The team is looking for a variety of options, playing off each other to come up with new and different solutions.
- Assessing the alternative solutions.
Next the team defines the criteria to be used for evaluation and analyzes the alternatives from the brainstorming session. Ideas that have the greatest potential for cost savings and value improvement are developed further. A weighted evaluation method may need to be used in cases where there are impacts other than costs, such as schedule , aesthetics, etc.
- The selected ideas are flushed out further by the project team and costs are estimated for each solution. Final selections are made after careful review.
The design team takes the most promising ideas and prepares the necessary documents (drawings, specifications, calculations) so the contracting team can provide pricing. The documents include a description of the recommended design change and an evaluation of the advantages and disadvantages of the change. The contractors prepare construction cost estimates and life-cycle costs are estimated. The team then makes its final decisions after careful consideration of the alternatives.
Benefits of Value Engineering
When implemented early in the design process, changes to the project have very little if any impact on schedule and redesign costs. With advances in technology, alternatives can be modeled and tested in the virtual space at little to no cost. This allows the free exploration of ideas, even those that sound farfetched.
If all project team members are involved in the process, there will be fewer changes and redesigns as the project progresses through construction. The whole project team will have a greater understanding of what the final function of the project is, and they will be more tuned in to what is important to the owner.
Bringing in a variety of project team members, including contractors, can bring outside views with alternative solutions from similar projects. Brainstorming ideas requires that team members think outside the box, and often the best ideas come from those who work in the field.
Costs can be reduced by increasing efficiencies and looking at each system in the building in light of the owner’s values. The initial design may focus on only certain features or space planning. Once the owner’s values are revealed and taken into consideration, there may be ways to significantly cut costs by focusing the design on those values.
Building a Better Building
How does looking to cut costs lead to a better building or project? In most bid-build projects, the contractor builds what the design team has drawn up. There is no conversation about what would be better for the owner. In fact, in some cases, the contractor doesn’t even communicate with the owner about the project, as the design team acts as a middleman. Without communication about the project’s objectives and the owner’s values, the contractor cannot add value to the project. Their experiences in the field and with other projects may give them a perspective that the design team may not be aware of. When all members of the project team are working together, the outcome is better for everyone.
With direct knowledge of the owner’s values, the project team can focus the design to better meet them and spend less time and money on features that aren’t as important. For instance, the owner may not be as concerned about energy efficiency, but feels the aesthetics of the space are more important. With this knowledge, the team can design for HVAC equipment that meets the needs of the space at a lower price, saving money so that more can be spent on finishes or furniture.
Since a building is more than the sum of its parts, the interactions between the various systems can lead to a better building as a whole. The best building for a project is the one that meets all the owner’s needs, including cost, and value engineering is a valuable tool to help get there.