How Value Engineering is Used in Construction Projects
Value Engineering is used in construction projects to provide a clear and detailed analysis of how best to meet the goals of the construction project.
Value Engineering, when used with cost estimating, allows for an independent review of the entire construction project. This review process, typically completed within a Value Engineering workshop, is focused on one common goal: to provide the highest value at the lowest cost.
However, this does not mean that Value Engineering is all about cost-cutting.
Rather through an established set of industry guidelines and procedures, Value Engineering gives all parties involved the confidence that the maximum performance and highest value construction project can and will happen.
The ultimate goal of every construction project is to remain on scope, within budget, and on-time. This requires a concerted and professional independent review of every aspect of the construction project.
The materials used, architectural design, budget, environmental factors, community and government standards/regulations, planning, and contingency plans.
Admittedly there is a lot of negative messaging around Value Engineering. My goal with this post is to help you better understand how and why Value Engineering is critical to your construction project success.
It’s important to emphasize that Value Engineering is not about:
- Cost cutting.
- Scope reduction.
- Loss of quality.
- Forced redesign.
Whether you’re responsible for materials purchase, architectural design, project management, or environmental assessment – Value Engineering can and will help you do your job better.
Working with an independent review team, like PCS gives you the confidence that bias and influence are not part of the Value Engineering and cost estimating process. Know that when you’re ready to dig, you’ve checked all the boxes, crossed all the t’s, and dotted all the i’s.
What is Value Engineering?
Value Engineering is defined by National Institute for Building Sciences as:
Value Engineering is a conscious and explicit set of disciplined procedures designed to seek out optimum value for both initial and long-term investment.
Value Engineering (VE) is not a design/peer review or cost-cutting exercise. 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 team, value and economy are improved through a study of alternate design concepts, materials, and methods without compromising the functional and value objectives of the client.
Vale Engineering was first coined and introduced during World War II via the manufacturing industry. General Electric was dealing with labor shortages, a lack of materials, and scant availability of components needed to fulfill contracts.
This real-life challenge forced Lawrence Miles and Harry Ehrlicher of General Electric to look for alternatives to how they had traditionally designed, sourced, and manufactured their products. These two manufacturing leaders learned that material and process changes can both reduce costs and produce a better final product.
Miles and Ehrlicher coined this review and evaluation process as value analysis. Today, value analysis has been transformed into value engineering. And has become a key component of every cost estimator’s toolkit.
In fact, Value Engineering is so valuable to the industry that there are a number of certifications and licenses levels available.
How is Value Engineering Used in Construction Projects?
Value Engineering can be used at any phase of the construction project to ensure the best possible value with the lowest cost to resources, budgets, scheduling, and success.
It is best to take advantage of Value Engineering before the constructions starts. However, many construction teams turn to Value Engineering when, it’s obvious that the project cannot succeed with the initial plans, resources, budget, and scope.
My preference obviously is that you take advantage of Value Engineering before you sign any contracts and get started with digging.
I know that Value Engineering can help you avoid problems that plague every type of construction project, regardless of size and scope:
- Last minute design and scope changes to save money and time.
- Architectural redesign mid-project, forcing delays, cost overruns, and a change in vision.
- Stress on general contractors to build within the agreed upon budget.
- All people working on the project are maxed out – time, abilities, skills, resource, logistically, and financially.
To accomplish the ultimate goal of Value Engineering: optimum value for both initial and long-term investment, a three stage Value Engineering process is used:
The more planning and analysis done at the early stage of the construction project – the better for everyone. Value Engineering is valuable in identifying early-on where the barriers in the project are and areas for improvement.Using a team approach to this planning stage allows every party to communicate their concerns, ideas, and issues, allowing for the right materials, resources, budget, and schedule.This first planning phase can help everyone save time, spend less money, raise ideas and changes, and open the discussion on how best to achieve the goals of the project. All with no interruption to the schedule.
At this second phase of the Value Engineering process, the design is typically at the schematic stage. In fact, it is required by most government agencies to have a Value Engineering session at the design stage.During this stage, the design team and the client come together to review the suggested design, the estimated budget, schedule, and overall approach to the project. The goal is to ensure that the design is aligned with achieving the best possible outcome for the project.
- Methodology and Approach
It is in this third phase, that the Value Engineering workshop can and should be used. SAVE International has outlined 6 key steps that should be followed during the workshop:
- Information Phase: collect all information to fully understand the project.
- Function Analysis Phase: clearly identify the functions and goals of the project.
- Creative Phase: idea generation/brainstorming to best achieve the project.
- Evaluation Phase: evaluate all ideas to determine which offer the best value and outcome success for the project.
- Development Phase: review and determine the best alternatives, with a focus on how to improve the construction project value.
- Presentation Phase: the value decision is presented to all stakeholders and invested parties.
The bottom line is that Value Engineering is focused on giving you the best construction project possible with the least risk to your budget, resources, schedule, material, people, and schedule.
Think of Value Engineering as the process that ensures that your project is completed in the best possible way – including design, materials, building approaches, scheduling, and people.
Why Value Engineering Matters to You
Value Engineering matters to you because you want and need your construction project to succeed.
With Value Engineering you’re able to eliminate stressors, identify potential barriers, bring new and novel design and materials to the project, limit environmental risks, and keep future maintenance costs of the project low.
At PCS, we want you to make Value Engineering part of your independent review process. There is no room for cutting corners, rushing decision-making, or hoping for a good outcome when it comes to construction.
Whether this is a new condo development, shopping center, airport expansion, or transit improvement – everyone is impacted by delays, cost overruns, and lack of oversight.
Be known as the company/team who did it right – delivered a successful construction project that has added value to the lives of everyone involved.
Contact PCS today to learn how we can give you the independent oversight your project needs to be successful.
About the author
Lee Thomas, MBA is the chairman and CEO of Project Cost Solutions. Lee has over 20 years of hands-on operational process experience under his belt. He is deeply committed to seeing your construction project succeed.