Project Management: Value Engineering

  • 24 March, 2020

A building project has undergone a substantial design process; however, when it comes to the bidding and negotiation phase, it is discovered that the project is grossly over budget. Uh oh. First of all, contractually, it is the architect's responsibility to keep track of costs with each phase. During schematic design, these costs may be square footage or unit costs, which are very general. Design development adds more detail and costs may be associated with the quantity of square feet for specific materials or assembly costs-the cost of a certain assembly per linear foot.

The bidding and negotiating phase is when a prospective contractor assigns actual costs to compile the cost of work. This is the most accurate cost for the work; however, the architect should always track costs throughout the process.

So, the costs come in grossly over budget. What to do? It is the responsibility of the architect to be mindful of budget. The architect can solicit the owner for additional funding, or else they turn to value engineering. Value engineering often has a negative connotation because it is commonly associated with replacing a material or system with an often-inferior material or system due to cost. However, that is not how value engineering should be perceived.

Value engineering is a concept in which, by definition, a substitution occurs embodying a relationship to the value of function and cost. Although part of the equation with value engineering is to provide a substitution at a lower cost, that cost cannot and should not compromise the function of the material or system to be substituted.

A poor model of value engineering would be the example of replacing a wall system in an acoustically sensitive area. Should a particular wall assembly be replaced with one that is substantially less expensive but does not manage acoustics as well as the original proposed assembly, the assembly sacrifices functionality, which can greatly affect the use of the space. This is not conducive to the original intent and can require extra, future costs to remedy the inefficiency.

A good model of value engineering would seek solutions to balance cost, value, and function. Value is somewhat hard to define as it contains varying objectives but, most often, it connects cost and function. For example, the value, which could attach an extra cost, is necessary due to the function it provides for that extra cost. In that case, it may not be best to value engineer that assembly out of the project. An element that may not have such a weight on function and be more aesthetic is a good place to start with value engineering. Costly marble may be substituted with a less costly engineered stone.

Whatever the change, the process necessitates that the contractor provides substitutions for approval by the architect. The contractor cannot perform the value engineering as it is the responsibility of the architect to confirm-and subsequently approve-the appropriateness of the substitution, which should be value based, not strictly based on cost.

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