Value engineering is a set of systematic tools and methodologies adopted by construction project teams to resolve constraints in quality, costs, and scope of work. Value engineering presents solutions to manage construction projects to enhance functional performance, optimize total costs, and achieve high-quality output. It can enable project engineers to use the resources within optimum limits and boost market share.
It’s also important to highlight that Value Engineering is not about the following:
- Cost-cutting
- Loss of quality
- Forced redesign
- Scope reduction
Value engineering methods can be applied in the early planning phase of project management for construction as they involve the value planning of the project. Implementing value engineering in construction aims to reduce costs, increase quality, improve crew performance, and solve technical issues that make the project liable to uncertainty in the future.
Where Did Value Engineering Originated?
Value Engineering was first introduced during World War II through the manufacturing industry when General Electric was dealing with a lack of materials, labor shortages, and low availability of components needed to fulfill contracts.
This major challenge forced Harry Ehrlicher and Lawrence Miles of General Electric to look for alternatives on how they traditionally designed, manufactured, and sourced their products. These two manufacturing forerunners learned that changes in materials and processes could reduce costs and create a better final product.
Ehrlicher and Miled coined this evaluation process as value analysis. In present times, value analysis has been revamped as value engineering and has become a vital component of every construction cost estimator’s toolkit. As a matter of fact, Value Engineering is so valuable to our industry that there are various certifications and licenses levels available for the study.
In a nutshell, value Engineering is described as a conscious and explicit set of disciplined systems designed to generate optimum value for initial and long-term investment.
Value Engineering is not a design, peer review, or even a cost-cutting exercise. It is a collectively organized effort that analyzes the requirements of a construction project to achieve the essential functions at the lowest possible costs (capital, energy, staffing, maintenance) over the lifespan of the project.
What are the Benefits of Value Engineering in the Construction Industry?
Some of the benefits of value engineering are:
- It encourages the ability of creative thinking among the project stakeholders, key decision-makers,
- Ensures a seamless flow of project information within the team and certainty for the given date.
- Promotes a spirit of teamwork and effective construction crew management
- Optimizes the project’s expenses while increasing the quality of the final output.
How is Value Engineering Used in Construction Industry?
Value Engineering can be used on various construction project phases to guarantee the best possible output with the lowest cost to budgets, scheduling, resources, and success.
It is urged to take advantage of Value Engineering before the construction starts and before you sign any contracts. However, many contractors turn to Value Engineering as a last resort when it’s evident that the project cannot push forward with the initial plans, budget, resources, and scope.
Rest assured, it is good to know that Value Engineering can help you avoid problems that it common in every type of construction project, regardless of scope and scale:
- Last-minute design change orders and scope adjustments to save time and money.
- Stress on subcontractors and trade contractors to work within the agreed-upon budget.
- Architectural redesign mid-project, cost overruns, forcing delays, and a vision change.
The Role of Value Engineering in Construction Project Lifecycle
As said above, it’s possible to incorporate value management methodologies in all stages of the construction project. However, it’s been observed that the highest benefit can be achieved when value engineering is implemented in the initial planning and designing aspect of a project. This is because the project design is more flexible at this stage and can quickly adapt to changes without costing too much.
Furthermore, more resources are still reserved when value engineering is carried out during the conceptual stage. To accomplish the main goal of Value Engineering, which is an optimum value for initial and long-term investment, a three-stage Value Engineering process is adopted:
1. Planning Stage
The more detailed the analysis done at the early stages of the construction project – the better it is for everyone involved. Value Engineering is beneficial in identifying beforehand what the barriers in the project are and the possible areas for improvement. This is also when the construction inventory list, purchasing schedule, and identifying potential suppliers are made.
A collaborative approach to this planning stage allows every team member to communicate their ideas, concerns, and issues, allowing for suitable materials, budget, resources, and schedule. This phase can help everyone save time and money, raise suggestions and changes, and open a healthy discussion on how best to achieve the project’s objectives- all with no disruption to the schedule.
2. Design Stage
In this phase of the Value Engineering process, the design is usually at the schematic stage. In fact, it is mandated by most government agencies to have a Value Engineering evaluation at the design stage.
At this stage, the design team and the project owner come together to review the conceptualized design, the estimated budget, set schedule, and the general approach to the project. The main goal is to ensure that the design is aligned with reaching the best possible outcome for the construction project.
3. Methodology and Approach Stage
It is in this phase that Value Engineering should be strictly used. SAVE International made a 6-steps framework that should be followed during this stage:
a. Information Phase
This phase includes identifying the project objectives, limitations, constraints and assessing the status quo in general. This phase collects all the mandated reports, maps, documents, and cost details of the projects. Fundamental tools such as Quality Function Development (QFD) are adopted to verify quality.
The project may have numerous strategic issues identified using tools like SWOT analysis (strength, weakness, opportunity, and threat), resulting in increased costs. Moreover, high-cost areas, the risks, and scheduling performance are extensively understood in this phase.
b. Function Phase
This phase is about the functionality of a construction project and the purpose once all the objectives have been achieved. Tools such as cost-function analysis and performance-function analysis are adopted to develop a deeper understanding of the project.
c. Creativity and Speculation Phase
Engineer minds are inclined to evaluate quick solutions to technical construction problems and be creative and innovative as much as possible. This phase is about developing ideas that would streamline the function of the project’s final product at lower costs.
This phase is about developing ideas that can be applied as a substitute to achieve the main objectives of a construction project.
d. Evaluation Phase
This phase is all about the assessment of ideas available for improving construction performance and functionality. The ideas must be feasible in terms of quality, cost, and schedule are decided and implemented practically.
These ideas affect performance and can be depicted using T-charts tools. The potential ideas are selected using life cycle costing (LLC). The construction team would select ideas that would provide enough time to produce value-oriented solutions for jobsite activities.
e. Development Phase
This phase is where shortlisted ideas from the Evaluation Phase are worked into practically workable solutions. These solutions are then become the ‘recommendations’ incorporated in the design plans to optimize the costs and increase quality. These recommendations are decided based on cost-benefit analysis, and alternatives can be applied in the construction phase for improved performance.
f. Presentation Phase
This phase is all about presenting alternative solutions to the construction project stakeholders and other decision-makers associated with the construction project. All the information discussed is propagated within the project team. In this final phase, all the formal reports like cost-benefit analysis, risk analysis, justifying documents, scope, and value analysis are presented to the construction project team.
The Future of Value Engineering in the Construction Industry
Value engineering isn’t just an optional part of construction; every phase, from the planning to methodology to final presentation, has a unique function. Value engineering can be adapted to solve any problem associated with the traditional construction process.
In today’s world, innovative and improved technologies are continually being discovered, broadening the possible solutions options. The construction world is known for its ability to adapt to technological advancements and current trends, shifting much faster than anticipated.
Not only does value engineering offers monetary benefits, but it allows all participants to explore and get creative on a myriad of findings to maximize objectives and functionality. It should improve a construction project’s crew management, profit margins, completion timeline, and inventory management in construction if done successfully.
Overseeing a construction project from start to finish with value engineering implemented will produce the best quality buildings and optimum value for your clients.
