Value Engineering

What is Value Engineering?

Definition of Value Engineering in Construction

The process by which the contractor, engineer, architect and contractor, offer cost saving suggestions, and alternates to the owner of a project in an effort to reduce the cost. These cost saving suggestions may include material substitution, equipment alternates, re-designed components, elimination of square footage, changing in the facade construction and or trim work, or even revisions in the structural design of the building, etc. Any idea is thrown into the mix, to be considered, and the entire focus of this exercise is to reduce the cost of the project. Value engineering is a process that can involve substantial time and money for the contractor. It is imperative that a contractor is compensated for the time and effort placed into value engineering. In many situations, the value engineering of the project is performed during the design and development of the project when both the architect and engineer have signed and documented contracts, however the contractor remains in the sales position, with no contract and only the opportunity to be awarded the project. If this is the case, the contractor must establish an hourly rate or other method of compensation for the labor and time required to properly perform value engineering on a large project. If the contractor has not been officially awarded the construction project, the cost of the value engineering can be used as a negotiating tool to obtain the project. If the contractor is not awarded the project, then the cost of the value engineering must be compensated for.

Value engineering can be an interesting process on a large project. The initial desires and dreams of the owner, together with the architect, are in many instances, eliminated to save money. The stone facade of a structure becomes an EIFS product, the entry water wall is eliminated and sheetrock is substituted. The gobble stone entry to the project is changed to either concrete or even, less money, asphalt. The granite curbs are reduced to concrete and again reduced to asphalt curbs. To properly interact and contribute when value engineering, both experience and knowledge of cost is essential.

There are many times, when the value engineering of a project, is simply the realization of the true cost of products and construction activities. Architects and engineers have a tendency to offer extremely high end, and high tech solutions to the owners of a project, to secure award of the project. However, the true costs of such ideas and concepts are in many instances the first realization that all new concepts and exciting ideas cost money. It is during the value engineering that all the new and exciting items within the structure that cost substantial money are modified or eliminated. Value engineering of projects has taken some of the most creative, unique designs and structural systems and reduced them to the commonplace due to cost and efficiency. Buildings are common for a reason, and the strongest of that is the cost per square foot.