War has many side effects. This may not be a suspected construction blog opening line, but we trace back to World War II for the history behind this post’s topic. Among the side effects of WWII were shortages of skilled labor, raw materials, and components.
As General Electric Company engineers Lawrence Miles and Harry Erlicher worked to overcome the scarcity, they substituted materials and components. They discovered that some of the substitutions reduced costs, improved the overall product, or both. This fortunate accident led to their continued use of what they termed “value analysis.”
Miles and Erlicher’s “value analysis” is deemed today as “Value Engineering” or “VE.” What began as a necessary exercise at GE has morphed into an important and beneficial process in the construction industry.
What is Value Engineering?
Often, when someone says “Value Engineering,” our minds immediately think of cutting costs at the expense of quality or quantity. But is that the true value of VE?
WBDG defines VE as a conscious and explicit set of disciplined procedures designed to seek out optimum value for both initial and long-term investment. In simpler terms, VE is the process of analyzing all project factors to improve the overall value.
By examining the costs, essential functions and goals, energy efficiency, and long-term maintenance and upkeep requirements of each material, system, and feature of a project, the construction team has the opportunity to make changes that will enhance value.
A project’s upfront costs are essential, but there’s more to determining the overall value. Engaging in Value Engineering will automatically cause you to ask a couple of pivotal questions in establishing what “value” actually means to you: What is/are the most important aspect(s) of the project, and what is the project’s primary goal? The answers to these questions form the foundation for the VE process on each project. Once these items are identified, the VE team can propose suggestions that add value without sacrificing your project goals.
Why Utilize Value Engineering?
The answer to this question seems pretty straightforward. What owner doesn’t want to add value to their new building or site project? But what are some specific reasons to implement VE on every project?
Reducing costs is not the full extent of VE, but it is undoubtedly an aspect that forms the basis of many Value Engineering processes. Less expensive materials, equipment, and systems can directly impact the project’s bottom line, but VE would just be called cost-cutting without considering the following reason.
Before proceeding with cheaper materials, equipment, or systems, you must consider quality. Do the substituted products come with diminished quality? Or do the costlier products add value and quality to the design that isn’t worth giving up? Some design elements may come with a higher price tag but have more overall value than a low-cost product.
Product availability is another reason to implement VE, perhaps especially in the current climate. Wars have side effects, and so do global pandemics. Just as General Electric faced shortages during WWII, contractors worldwide are currently facing shortages caused in part by COVID-19. Material delays caused by supply chain logjams may require choosing other products simply to ensure products arrive on time. Navigating these delays is a notable reason to enter into VE right now.
When Does Value Engineering Happen?
An owner can request Value Engineering at any time during the construction process, but making changes early on is the most beneficial.
From a birds-eye view, there are three main phases of construction in which Value Engineering takes place: planning, design, and construction.
The planning phase is typically the best time for VE - the cost to make changes is low, and the project schedule is least affected. During planning, the VE team dives into the project with you to ascertain your overall vision and goals. Then they offer options that will fulfill those visions while also considering costs, quality, product availability, and more. The list of VE items is almost always the longest during the planning phase, as all items are on the table.
The second phase of the VE process is the design phase, and most traditional projects incur the most VE at this phase. As the architect and design team develop the construction documents, snapshot estimates are provided by the contractor, typically at 30% design drawings, 60%, 90%, and full design drawings. These estimates gauge overall cost and value and allow the team to ensure the design aligns with the project’s overall vision.
Once planning and design are completed, you’re finally entering the construction phase and seeing your project come to life. It is not too late to implement VE changes, and as already mentioned above, product availability may require additional Value Engineering measures. A good contractor is always looking for ways to add value to the project, but as materials are actively procured, making changes during construction usually carry a higher associated cost. Still, it is never too late to look critically at all aspects of the design.
What is the True Value of Value Engineering?
At CDO Group, we recognize that every new construction project is different from the last one and comes with new visions, objectives, and challenges. We utilize Value Engineering as a critical element to successfully delivering a project that meets and exceeds your goals and rises to the challenges presented.
The true value of Value Engineering is that it pinpoints specific goals and needs of your new project and works extensively to ensure all aspects of the design work for those goals and needs. We may cut your costs through VE, but we will not cut corners and will always add value!. Everything is on the table because at the end of the day, you deserve to receive a project with the highest value. Contact us today to discover how CDO Group can deliver value to your next project!
October 19th, 2021 | best practices