Is There Real Value in Value Engineering ?

Can value engineering really increase value or save money on a construction project? Does it actually reduce unnecessary costs or does it simply substitute cheaper materials and methods for more costly ones?

At times, questions like these have sharply divided the industry While value engineering can be misused, the real question should focus on how it can be employed to the project's greatest advantage.

Definitely, Say Some
Architect Steven J. Kirk, a vice president of Smith, Hinchman & Gryllis Associates in Detroit, and a board member of SAVE (Society of American Value Engineers), sees no conflict between good design and value engineering.

kirk says, "we define what the objectives of a client are in our value engineering study and if one of those functions is historical, architectural or aesthetic character, then that is the 'given'. those values won't be sacrificed. rather, the savings would come from other areas, like finding the best life cycle mechanical systems."
He maintains that, if used properly, value engineering can save between 10 and 30 percent of the initial construction cost and significantly reduce life cycle costs.

Not Necessarily, Say Others
Not everyone would agree. Some see value engineering as merely a euphemism. For them, "value" simply means lower cost while "engineering" implies a level of expertise that's often not provided, since value engineers are not required to be actual engineers.

Judy Selwyn, principal of Preservation Technology Associates in Boston, says she almost regards value engineering as "a dirty word." She says, "It almost implies that there's a cheaper way to get the job done than the way the designer designed it."

Selwyn cites as an example a $20 million government renovation project in which value engineers had the upper hand without the designers even being consulted.

The designers recommended that certain columns be replaced either with cast iron or a similar material, such as aluminum. Such a choice would emulate the physical and aesthetic characteristics of the original design closely enough as to make the change inconspicuous.

"Instead, wood was used," says Selwyn, as recommended by the value engineers. This was a poor choice in her judgment since wood has neither the look nor the feel of the original material, and wood joints also tend to open up over time.

On another project, Selwyn explains that value engineers functioned like a shadow team. Conferences were kept separate from the design process, preventing the designer from defending his ideas and instead making them subject to change by non-designers.

Three Key Words Make All the Difference
What separates the views represented by Kirk and Selwyn is perhaps best expressed in Kirk's qualifier:  "if used properly…" Value engineering must be a joint effort.

Sometimes there may be a tendency not to fully explore available materials and methods. Often there are alternatives available which are not well known but are more than adequate and less costly. Different points of view can help identify a greater range of viable options.

It's also crucial to understand that much more is involved than the apparent cost of one alternative over another. For example, the cost of a waterproof coating must be weighed against its volatile organic compounds (VOC) compliance and whether it calls for special respiratory equipment for workers, or other requirements to protect the public. Measured by its cost per gallon, one product may be cheaper than another, but overlooking its associated costs can be counterproductive

Operating costs must also be evaluated. Materials, methods and systems that reduce maintenance expenses should not be sacrificed just to decrease construction costs. Initial savings can often come back as a larger cost in the long run.

Our Point of View

• Value engineering decisions should be part of an interactive process involving all members of the construction team. It should be ongoing throughout the design and should involve the architect/engineer, construction specialists and the project owner.
• Value engineering must consider constructability and contractability as well as building materials and systems. The sequence of installation, weather conditions, and time requirements involve more than can be revealed in data or spec sheets. The addition of other trades or subcontractors may have significant cost impacts, either favorable or unfavorable, when measured in the short and long term.
• Value engineering should define all the objectives of a project, including historic, architectural and aesthetic character, and it should respect these elements in harmony with efficiency and quality
• Value engineering must include life cycle costing to properly match the materials, methods and installed equipment with the planned useful life of the building. The consideration given to alternate materials and equipment under a life cycle approach will contribute significantly to the impact of all cost-vs.-quality decisions made by the project team.

For example, if project funds are tight, long-term savings may be secondary to getting the project off the ground. Thus, a very efficient HVAC system may have to be sacrificed for a smaller, less efficient system, one that may even cost more over time. Without certain tradeoffs, some projects would never be completed. All such decisions should be made with complete information and consideration of alternatives.

Confrontations over value engineering can arise when the designer feels compromised. The real value in value engineering can only be realized when the project team members are all committed to the same common goal.