What is Value Engineering in Construction?
What is Value Engineering in Construction? [+ the 8 Stages]
Many project owners misconstrue "value engineering" to mean extreme cost cutting — leading to redesigns and quality loss.
However, value engineering is just as the name implies; it's about increasing the value of your project.
This article will cover value engineering, the phases of value engineering, and its role in the construction industry.
What Is Value Engineering?
Value engineering is the process of analyzing a project to see how you can improve it by weighing the cost-to-benefit ratio of each element.
To put value engineering into practice, you determine whether you can try alternate methods, raw materials, or designs.
According to GSA, value engineering is:
“an organized effort directed at analyzing designed building features, systems, equipment, and material selections for the purpose of achieving essential functions at the lowest life cycle cost consistent with required performance, quality, reliability, and safety.”
Origin of Value Engineering
During World War II, Lawrence Miles, of General Electric, had to find a cheaper source of material for projects due to budget constraints.
He discovered “value engineering” by noticing that some alternative solutions were not only more affordable — they were more effective.
How to Determine Value
Every project owner has a different definition of “value, " so value engineering looks different for each project.
Achieving the best possible value for your project can include:
Improving quality
Improving function
Cost reduction
Optimizing investment
Solving problems
Value = Function Performance / Resources
Function Performance is the ability to provide key customer or user functions.
Resources might be monetary resources, physical resources, or time needed to invest for completion.
You may also like: Do You Need to Hire a Structural or Civil Engineer? Or Both?
The 8 Stages of Value Engineering
The implementation of the value engineering process consists of eight different stages. Each phase has several processes that help the project team to find ways to identify possible value engineering changes.
1. Preparation Phase
In this phase, stakeholders will outline the project's scope, identify team members, and decide on a budget and schedule.
They'll decide who's responsible for the value engineering process and when it will happen during project management.
2. Information Phase
This phase consists of gathering all the information available on:
Possible materials
Potential construction costs
Schedule
Specs
Project scope
It is also important to identify the project's elements, use, and expectations during this stage. Then share that info with the entire value engineering team.
3. Function Analysis Phase
In this phase, the VE team will identify the function of each component.
Each element provides a primary function, which is the vital function of the element, and then most have a secondary function.
A secondary function is not necessary but it’s beneficial.
The team identifies how each component contributes to the function of the project as a whole. Then they can proceed with conducting a value analysis for each component.
Based on these analyses, the VE team will discover where making substitutes will lead to advancements in value.
These substitutes will provide better quality, cut costs, or increase the project's total worth.
4. Creative Phase
The creative phase is for brainstorming ways to improve the value of the problems identified in the function analysis phase.
Those involved will work as a team to generate lists of all the possible solutions to increase the value of the project.
No idea is dismissed at this stage, but the largest and most expensive components will be the focus.
5. Evaluation Phase
More research is done on the lists generated by the creative phase to evaluate each solution and find the best one.
Typically, a table of pros and cons is drawn out for clear visual representation. Followed by cost vs. benefit measurements to see whether the solution is, in fact, cost-effective.
It's crucial to compile construction cost data during this phase to determine three possible solutions.
The first is the original design. The second will require a larger investment but save money throughout the project's life cycle, and the third will be a design with the lowest cost.
Next is an evaluation of each of the three at a large-scale level to see if they would affect any other project areas.
6. Development Phase
With all the data accumulated in the first five phases, the team creates a plan of action using the best solutions.
Cost estimates, sketches, and all relevant data get compiled in a thorough value management proposal.
7. Presentation Phase
This VM proposal is presented to the project owner or final decision-making individuals.
Team members/VE specialists explain how they came to their conclusions.
Discussions or questions proceed until the project owner understands all information presented and gives the go-ahead.
8. Implementation Phase
This VM proposal serves as a guide for all workers on the project to implement the solutions discovered in the design process and other phases.
See also: A Project Owner's Quick and Easy Guide to Industrial Architecture
How Is Value Engineering Used in Construction?
Value engineering applies to many industries, but in the construction industry, it follows three stages.
1. The Planning Stage
The planning stage typically includes the first three phases of the value engineering process: preparation, information, and function analysis.
Before construction begins, the scope and function of the project needs defining. Identifying any potential problems is a key part of the planning process too.
This stage also includes outlining a budget and schedule as well as reviewing all available resources.
2. The Design Stage
During this phase, team members get together to hold a value engineering workshop. This workshop will allow parties to propose a design and review all components.
Alternative materials or designs are assessed for sustainability and cost savings.
Both the creative phase and evaluation phases occur during the design stage.
3. The Methodology Stage
The purpose of the methodology stage is to carefully review the information provided in the first two stages to develop a plan. This plan will include the cost estimate and expected completion date.
The last three value engineering phases come into practice during this stage. First, is the development of a viable plan, then a written proposal is presented to the project owner.
Lastly, when this plan is approved, it is implemented during construction.
The proposal will explain all materials, designs, and procedures in detail for all team members to follow.
VE Change Proposals
A contractor may suggest a change to the value engineering proposal after construction has begun if they see a potential problem. To limit budget or overtime risks, the contractor should provide a potential solution to their proposed problem ASAP.
Since contractors are dealing with the materials up close, it is wise for VE specialists to value their feedback in these dealings. Most contractors wouldn’t waste their time suggesting a change if they didn’t see a significant problem.
Benefits of Using Value Engineering for Your Project
VE can help the design team to identify new materials and innovative design ideas that will lower initial and future investments.
Saves Time and Money
VE can identify and solve problems in the construction process before you begin construction. Solving problems early saves you both time and money during project completion. With inflation on a steady rise, finding ways to save money without sacrificing quality is priceless.
Makes Use of Sustainable Practices
New developments are made every day in creating sustainable products of which your company can take advantage. The same is true of civil engineering.
Staying up to date on the new discoveries in construction materials and designs will add more solutions to the problems found during your value engineering process.
VE can limit environmental risks and other stressors. Green construction is a fast-growing trend. It puts less stress on future generations by using sustainable materials and lowering the project's energy needs.
Improves Scheduling & Reduces Stress
VE can improve scheduling and limit stress on all team members. When one task holds the entire project back, everyone is on a time crunch. A well-coordinated schedule allows all workers to perform at their best with less pressure placed on them to complete their tasks.
Makes Your Company Look Good
VE can give your company a reputable name. Your projects will be constructed with such a high standard that other businesses recognize your ability to produce this level of structure.
VE can help construct a project that increases the value of the entire community. The result is a beautiful building designed to improve its surroundings — not detract from them.
When Should Value Engineering Be Carried Out?
One common question that many people consider when implementing value engineering in their project is when is the best time to carry it out.
When it comes to VE, the earlier you put it into practice, the better. This graph shows the potential savings according to the phase it occurs in.
As you can see from the graph, if you implement value engineering too late, it starts to cost money instead of saving it. This is because the cost of a redesign for improving value can offset the potential savings presented.
It is best to implement VE in the planning or design stage for optimal cost savings, but VE is not a one-and-done. It is a continual process that needs assessment during every step of construction.
While it will require more time to consider value engineering in the planning stage, it's worth it to save on scheduling and redesign later.
What Do Value Engineers Do?
Value engineers are professionals with a background in engineering, project management, or construction who have pursued extra education to become certified in this field.
SAVE International, an international society recognized as the industry standard in value methodology, offers certification programs.
A certified value engineer will analyze each component of the project. They ensure the best material, process, and products to use for the best function and project costs.
A value engineer needs to be creative and able to think outside of the box to discover unique ways to improve a project’s value. They must stay tuned to all technological advancements and the industry’s current trends.
Innovation and critical thinking are necessary to succeed in this field.
The engineer stays with the project team to help install this methodology from pre-construction to closeout.
Are Value Engineers in Demand?
The worth of value engineering is becoming a widely accepted and sought-after addition to projects. According to Zippia, the demand for this career path will continue to rise across the U.S.
Value engineering was developed during a time period when resources were scarce due to a global war. The need for value engineering has resurfaced now that resources are once again scarce due to the global pandemic.
Related: Top Reasons Your Project Needs a Commercial Engineer
Conclusion
Value engineering is beneficial for all construction projects, provided it happens:
At the proper time
With the correct methodology
And with the right goal in mind
Ready to put the value engineering process to work in your next commercial construction project? Schedule your free consultation with ZP Architects to find out how.
