Value Engineering: How to Reduce Costs without Sacrificing Project Vision

At SitelogIQ, we understand vision and design often drive a project, particularly for school districts and other organizations who want to increase comfort and improve aesthetics in new and renovated buildings. New trends in design, combined with the integration of technology into buildings and advances in building materials, though, can sometimes add to overall costs and expenses, putting projects over budget. This can often lead to frustration and anxiety for owners, as they may feel they have to sacrifice their vision and reduce the scope of the project in order to complete a project on-budget (and even on-time).

Rather than immediately scaling back on scope and building program, or reactively cutting costs that may impact the overall value and the architect’s Design Intent, SitelogIQ works with our clients and design team partners to identify ways to achieve project success without sacrificing the project vision through a process called Value Engineering.

What Is Value Engineering?

Value Engineering, or VE, is a method of evaluating the components of a construction project to identify ways to provide for the intended design, use (program)– or vision – by using alternative materials and systems to reduce the overall costs.  Importantly, the intention of the Value Engineering process is that the overall scope is not reduced while the performance is maintained. Value Engineering, in its purest form, is not meant to simply reduce costs of a building by taking things from the project, reducing square footage of the building, or using inferior materials. Some owners hear the words “Value Engineering” and remember projects where scope items were removed to reduce costs, leaving them with a project of lesser quality than they desired. Those exercises are not Value Engineering, but really Scope Options or Scope Reduction to cut costs. Interesting fact: in industry, the process was created out of necessity during World War II by Lawrence Miles, a purchasing engineer with General Electric (GE). Miles was tasked with purchasing materials for GE, however because of the war, there was a shortage of both materials and labor. Miles and his colleague, Harry Erlicher, looked for acceptable substitutes for materials. Often, the substitutions reduced overall costs without impacting the end product. This process, originally called “value analysis,” has been refined over the years and now is a formalized methodology utilized in many industries including construction. The original intent of Value Engineering was not scope reduction, but over time, the terms have tended to be used synonymously in the construction industry.

SitelogIQ’s Approach to Value Engineering

Our team of Value Engineering professionals identifies ways to build and renovate in a more economical fashion while still meeting the architect’s Design Intent. During this process, construction methods, materials, equipment and systems are considered. SitelogIQ will evaluate the building and site design, structural systems, mechanical and electrical systems, exterior wall and roofing systems, building finishes, building materials, sole or limited-specification sources, methods of construction, and phasing of construction activities for cost-savings opportunities. At design team meetings, cost-saving suggestions and recommendations will be provided for discussion and resolution to assist the owner in making selections.

It is important any “non-negotiable” selection of materials, equipment, finishes, etc., are not inadvertently removed from the scope during this effort. SitelogIQ can document these items to ensure that owner’s requirements are included throughout the process. An example is when an owner has a single-source controls vendor for building automatic temperature controls, which must be used in the project.  The challenge on items like this is to find the best procurement process to ensure that the sole-source scope can be bought at the fairest price.

SitelogIQ will prepare a summary report of the Value Engineering suggestions and will meet with the architect and owner to review for final input and, where appropriate, incorporation into bid documents. Some items in the report may be better suited as add or deduct alternates and decisions on those items can be made during this meeting as well. Common Value Engineering solutions include:

• Balancing of the earthwork on a site to minimize any additional fill to be brought from other locations or minimize the amount of fill to be removed from the site
• Evaluation of foundation systems to select the most cost-effective solution
• Evaluation of mechanical systems to select the most cost-efficient solution when in a narrow range of energy performance
• Reduction in building square footage where corridor/stair/entry space is made to be more efficient if program space is not adversely impacted
• Use of modular vs. utility size brick to reduce the labor for mortar joints while providing the intent of the design “look and feel” of the masonry
• Eliminating single-source materials, equipment or systems in the specifications to provide for competition in pricing and reduction in costs

Owners should be clear when asking for Value Engineering items, Scope Reduction options, or information for Life-Cycle Costing Decisions.  Some examples of the latter two categories are noted below:

Scope Reduction Options:

• Reduction in building square footage affecting program space
• Reduction in window sizes and quantity
• Reduction in canopy sizes

Life-Cycle Cost Decisions

• Roofing types, based on first costs, needed replacement timing and maintenance costs
• Flooring types, based on first costs, needed replacement timing and maintenance costs
• Lighting options, based on first costs, replacement/maintenance and energy costs
• Mechanical systems based on first costs, replacement/maintenance and energy costs

Value Engineering is an intentional, strategic process that can help school administrators and other owners going through a construction project save on costs while adding overall value to the project. Cost savings can be the most impactful when VE is started early in the overall project. Do you have questions about how VE (and its scope modifying siblings, Scope Reduction Options and Life-Cycle Cost Decisions) can impact a project at your organization or school district? Reach out to us today to learn more.