The construction sector is one of the most resilient and lucrative industries. However, it is also highly susceptible to disruptions, and many factors can derail projects. Two crucial factors include cost management and value engineering.
As a construction company, your task is not just delivering projects on time but also within budget. Due to several factors, construction costs can easily increase, especially after the disruptions caused by the pandemic.
Efforts aimed at keeping construction costs at a minimum should not compromise the value of the project. This is why cost management and value engineering should go hand in hand.
What Is Value Engineering?
Value engineering has been a mainstay concept in construction since 1947 when it was developed out of necessity by Lawrence Miles. There were significant shortages after being tasked with purchasing raw materials for General Electric during World War II. He then decided to seek suitable alternatives that offered similar functionality.
In his pursuits, he realized that some materials were not only better but also cost-efficient. This is where the idea of ‘value analysis,’ popularly known as value engineering, was born. In essence, it is a method used in construction that aims to keep costs low while delivering maximum value. If applied, it offers significant benefits to developers and end-users.
Stages of Value Engineering
Though value involves keeping costs at a minimum, it should not be confused for a cost-cutting measure or one aimed at:
- Reducing the scope of the project
- Forcing redesign
- Reducing quality
It is a deliberate and creative effort to ensure projects offer optimum initial and long-term value. In some cases, it may even increase construction costs if the long-term value is greater. For instance, when building residential apartments, amenities such as swimming pools are not necessities, and adding them comes at an extra cost. However, by adding them, the apartments may attract higher rent income, increasing their long-term value.
There are three main stages involved in value engineering:
1. Planning
Value engineering requires a team effort in order to draw maximum value. When done during the early stages of a construction project, it increases the chances of identifying barriers and opportunities while affording you enough time to implement ideas.
Have the team come together for the planning phase. This allows every party to communicate their ideas and concerns, ensuring that the materials, budget, schedule, and resources are agreed on. This phase aims to identify opportunities for saving time and money and increasing value without any interruptions to the project.
2. Design
At this stage of the value engineering process, the design has reached the schematic stage. The design phase is crucial and is where most participants are involved. Most government agencies mandate at least one value engineering session for projects that exceed a certain dollar value. The client and the design team come together via a VE workshop which typically lasts 40 hours.
The proposed design solutions, implementation schedule, approach, and cost estimates will be reviewed during the workshop. The goal is to assimilate ideas that will deliver the best possible outcome for the project. Depending on the client and project, the things that offer good value will differ. As such, this process is essential for all projects, regardless of similarities.
3. Methodology and Approach
To ensure desired outcomes are achieved, value engineering workshops have several phases.
Information Phase
Value Engineering workshops kick off with an information phase to ensure everyone understands the background and decisions influencing the design. The architect or engineer will conduct a formal design presentation. Any functional issues will then be analyzed in relation to the cost and impact on that function. While defining value, it should be done from the owner’s perspective of value.
Speculation Phase
This is also known as the creative phase, where ideas are presented and assessed based on quantitative value, but no determination is made.
Evaluation (Analysis) Phase
In conjunction with the client users, the VE team will determine the criteria for evaluating value. The ideas are then analyzed, and the impractical ones are discarded. Those that show significant potential are developed further.
Development Phase
During this phase, ideas are expanded into workable solutions. There must be a description of the design change recommended accompanied by the advantages and disadvantages it offers. A brief narrative along with sketches and design calculations are presented with the original design.
Presentation Phase
A written report on the value of the recommendations and rationale used is presented to all the stakeholders.
Why Value Engineering Is Essential for Your Projects
There are many elements that can disrupt the progress or even success of a construction project. Value engineering allows you to identify and address potential obstacles and address them. An essential aspect of successful value engineering is performing a pre-construction analysis.
At Build Analysis, we offer pre-construction analytics and construction management services based on reliable data. Reach out to us today to get crucial insight on your project that will help with value engineering.
