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Construction costs can go over budget for several reasons like rising labor rates and material prices. Project stakeholders often need to address these high costs by planning relevant alternatives that can bring the project back on track – this time more cost-effectively than before. Value engineering in construction offers one such solution for all stakeholders. When done right, this technique brings out maximum value – like its name suggests – from the construction process, all the while reducing the overall costs, as we will see below.
Value Engineering In Construction
What It Means
In the construction industry, value engineering refers to a technique designed to target the cost and value aspects of a project. The goal is to reach a scenario where the construction stages deliver a higher value at lower costs. This value-driven process is conducted by designers, engineers, contractors, and other project stakeholders. The teams gather to collaborate on possible alternatives that can help the project converge on the elusive low-cost-high-value point. Increasing the value in this way does not mean that you “cut down” costs or sacrifice quality.
Value engineering helps you avoid paying extra for high-quality results when you can easily get them at much lower costs, so it is all about playing your cards right. The benefits should outweigh the costs through and through. A project’s value increases with features like material longevity, better efficiency, and low operational costs – all of which allow the built structures to last longer and perform better with minimal maintenance/replacement down the road. So, value engineering could entail choosing a different material or building method if it means that your walls will last longer or your construction work will have the least environmental impact. With value engineering in construction, you focus on key areas like:
As a result, the total value within your project’s life cycle increases at the added convenience of low-cost alternatives you chose with your teams.
Why It Is Important
Value engineering in construction allows both stakeholders and clients to maximize returns on their investments by shifting their focus to value-driven ideas. It can help you identify unnecessary or redundant costs and avoid them altogether from the equation. You get to think outside the box and ask questions like: Can I achieve the same results at reduced costs? Will I compromise safety and quality by doing so? Will the final structure last longer and perform better with low-cost resources?
If your proposed alternatives compromise key aspects like safety and quality in construction, then this defeats the purpose of value engineering, and your plans will be rejected by the top tiers. As we saw above, good value engineering aims to improve the functionality, quality, safety, and durability of a project or structure – all of which are important to add “value” to a project. The process helps you make the best of the budget and resources you already have at hand, so you also end up increasing the efficiency of your construction stages.
When It Is Done
Value engineering in construction can be done at any stage of the project’s life cycle, but it is always better to start early on during the planning stage when no work has begun – so nothing will be wasted. Most project owners and stakeholders opt for the planning and design stages of the construction life cycle, as these form critical points for incorporating value engineering ideas just in time. Since value engineering is an ongoing process, it is common for contractors to bring it up even during construction. As long as it does not cause delays or expensive rework, you can initiate the process as required by your project.
- During the planning stage. This is the ideal time to bring value engineering to the discussion table, as no harm will be done to the budget, schedule, or other aspects. Since you will already plan the materials, resources, and target goals for your project, it is smart to go a step ahead and incorporate value engineering side by side. This will help you choose materials that deliver good quality – or value – at lower costs, eliminate unnecessary expenses, consider sustainability, and so on. The result is that you will have a more streamlined project with reduced rework up ahead.
- During the design stage. To conduct value engineering during the design stage, your teams will collaborate on the design plans and their associated costs to discover room for savings without sacrificing value. Usually, when estimates based on initial construction documents are too high, the architects, contractors, engineers, designers, value engineering consultants, etc. get together to revise these documents and see if they can lower the costs. So, the design stage can be pivotal in shaping a good value engineering perspective with all your key stakeholders at the same table.
- During the construction stage. Value engineering can and will continue even during construction based on the contractor’s advice. This may cause major changes to the project, create delays, cause reworks, and also require updating the contract, so value engineering performed this late requires a thorough evaluation before getting the green light.
How It Is Done
As we saw earlier, value engineering in construction is carried out by various stakeholders like contractors, architects, estimators, engineers, designers, etc.
It is a full 6-step process that takes your available construction data and narrows it down until you reach the desired low-cost-high-value possibility. Here are the steps involved in value engineering:
- Information Gathering. The teams gather and study your project’s data, goals, plans, objectives, schedules, drawings, and specifications to fully understand it.
- Function Analysis. This is all about analyzing the primary (high-value, high-priority) functions as well as the secondary (low-value, optional) functions that make up the project. The distinction allows your teams to eliminate costs where possible and let the high-value aspects stand out.
- Brainstorming. Based on the collected information and functions, your teams will brainstorm alternatives that can boost value while reducing costs. This step should be as comprehensive and well-planned as possible to cover the entire construction life cycle – so the experts leave no stone unturned during their hunt!
- Evaluation. Once the alternatives are decided, it is time to evaluate each option and pick a winner (or winners). This also includes making a detailed analysis of the associated costs for materials, equipment, construction activities, etc. All the alternatives must be evaluated individually and as a whole to determine how they can influence the project – and whether they will help build a structure that meets the original scope. The clear winner should have most or all of the boxes checked, and this will be the alternative(s) your teams will take forward.
- Project Development. After successful evaluation, your teams will choose the best construction alternatives that are expected to deliver high value at low costs. They will then develop a proposal that includes these value-driven solutions, explaining their pros and cons and discussing how they will contribute to the project’s success.
- Presentation. Lastly, your teams will present the above ideas for approval. If everything passes the investigation and meets your scope, you have an approved value engineering project to look forward to!
With roots in World War II, the concept of value engineering has spread to multiple industries over time – all of which share the same goal: increased value at lower costs. Remember to get in touch with value engineering consultants if you intend to embark on this huge learning curve.
It is an effective way to stretch your budget and maximize the quality of your product or activity, so make sure to use this long-standing technique to get the best out of your project.