Value engineering is more than lowering cost

Posted on Thursday, February 13, 2020 in eNewsletters, Hemmer Way.
  • The term “value engineering” is often used synonymously with “cost cutting”.  While that is partially true, the actual goal of value engineering is to lower long-term cost AND maintain function.  A successful value engineering effort will analyze the building features, systems, equipment, and materials while providing the essential functions at the lowest life cycle cost

    There is not one tried and true value engineering solution for every project.  Buildings are dynamic.  Changing one component affects other systems and can also potentially impact company operations.  Bay spacing and building height, for example, can impact efficiency and lower unit costs, but it will also impact the building’s mechanical systems, as well as the building floor plan and layout. 

    Nevertheless, there are some key strategies for making the most of a value engineering effort. They include:

    • Start early and question the assumptions.  The greatest ability to impact the value is on the first day of the planning process.
    • Focus on the main elements first.  As primary components, they are likely to represent a majority of the costs.  There may be alternative solutions or materials that can achieve the same goals.
    • Keep the KISS principle in mind.  The more complex the design, the greater the opportunity to affect value and performance. 
    • Consider the time value of money.  Long lead items or complex construction processes delay occupancy and can increase interest carry costs.  Design standardization can also shorten the length of the project.  The goal with any building should be to make it productive as soon as possible. 
    • Utilize the expertise of the subcontractor team.  Subcontractors live and breathe in the trenches.  They understand the pros and cons of potential alternatives and solutions and are a wealth of knowledge and ideas.
    • Take advantage of economies of scale.  Unit costs typically lower as buildings get larger.  On the other hand, the unit cost for smaller buildings may be higher, but the overall cost is less. 
    Perhaps most importantly, develop a list of what is important early in the process.  Separate wants from needs.  Identify and prioritize those items that are not negotiable.  As choices get tough, a prioritized list could become a valuable tool in the decision-making process. 

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