This is a familiar statement in design and construction – “Every time we are asked to do “Value Engineering” it was to lower the cost!”
VE is a process to find ways to reduce costs and improve performance, but is often mistaken solely for cost savings. In construction, Value Engineering is applied to eliminate or re-engineer design and construction features that add cost but not value.
VE is typically measured as improved quality, functionality, lifecycle, utility and appearance. Design concepts, specifications, construction techniques, materials, building systems, building types, and upfront versus lifecycle costs are analyzed to achieve the best value for the owner.
A VE session without a Life Cycle Cost Analysis (LCCA) is just a self-serving cost slashing and really is short-sighted. LCCA reviews a building system and its maintenance in today’s dollars over a longer period of time and identifies the cost impact as well. This is the fundamental reasoning behind the LEED process we prominently now use which reflect prudent design.
Quality architects, engineers and construction firms found when the LEED process was applied to projects already designed and built that they in turn met Silver and Gold ratings without extreme means of mechanical system upgrades to do so. The features and benefits of various alternate designs and materials should also be reviewed for their local market effect, i.e. rent ability, rent rates, tenant attraction/retention.
When triple net leases are involved, the tenants seem to have a different attitude. VE usually means lowest upfront cost as possible, no matter what the long term consequence. If you aren’t paying utility bills, the management company or maintenance costs, you just want the building fast and cheap.
Owners who are more long term orientated see VE differently. More sophisticated owners will challenge their designers and contractors to dig deeper. Instead of typical building designs or building materials, they may request alternate designs or pay more if there is “value” somewhere other than lower upfront construction costs. Value could be defined as long term utility cost savings, building depreciation implications, using new materials or materials in a non-traditional way, recycling construction waste, more efficient work layouts, employee comforts which would lead to higher outputs, etc.
VE is not a design review or a cost-cutting exercise. It is a creative and organized analysis of a project for the purpose of achieving the essential functions at the lowest total costs (capital, staffing, energy, maintenance) over the life of the project.
Performed correctly, VE can provide cost savings and efficient systems. Performed incorrectly, however, VE can add costs, time and liabilities.