To Value Engineer or Not to Value Engineer — That is the Question – Technically speaking, there’s no wrong time to value engineer. But the closer the process is to the schematic stage, the better. Planning and design are the two stages of the building lifecycle where value analysis creates the most, well, value. There is one area where the design team should never compromise: safety. Any change that would result in a violation of building code or otherwise jeopardize the health and well-being of the people who use the facility should be rejected immediately. It’s important to note that value engineering isn’t simply a knee-jerk reaction to avoid going over budget.
- The goal isn’t to trim the bottom line, but to maximize function at the lowest possible cost.
- Value engineering is a methodology that ensures the owner is not over-paying for quality when an equally effective, less expensive option exists.
- Product quality is the ultimate prize.
- Value engineering is all about making the best use of the available budget.
Doing so requires know-how, teamwork and reliable construction cost data. For a deep dive into how to effectively value engineer, download our free book, “Maximizing Construction Project Budgets with Data-Driven Designs.”
- 0.1 What is value engineering in MEP?
- 1 What is value engineering in BIM?
- 2 What is value engineering and its benefits?
What is meant by value engineering?
Value Engineering Value engineering can be defined as 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.
- In the design phase of federal building development, properly applied value engineering considers alternative design solutions to optimize the expected cost/worth ratio of projects at completion.
- Value engineering elicits ideas on ways of maintaining or enhancing results while reducing life cycle costs.
In the construction phase, GSA PBS contractors are encouraged through shared savings to draw on their special ‘know-how’ to propose changes that cut costs while maintaining or enhancing quality, value, and functional performance. : Value Engineering
What is another word for value engineering?
Value engineering is also called value analysis.
What is value engineering in MEP?
Value Engineering As we strive to create projects of lasting cultural value, we also ensure their economic integrity by focusing on what is important and eliminating what is not. Value engineering exercises are a vital element of our process that helps us understand the long-term costs of a project.
- Through experience and analysis, we’ve learned to make architecture more efficient, effective, and economical without sacrificing the quality or intent of design.
- Omrania’s professional team includes planners, architects, engineers, and project-cost personnel who are all experienced in value engineering techniques.
They work closely with our clients, consultants, and contractors, regularly conducting value engineering activities throughout the course of a project to identify and implement cost-savings solutions. The value engineering process typically comprises the following activities:
Project data gathering Analysis of function, systems, and design Generation of ideas for alternative design solutions Evaluation of alternatives with respect to cost, reliability, and availability Development of preferred solutions Recommendations for implementation
: Value Engineering
Where is value engineering applied?
How Value Engineering is Used in Construction Projects – Value Engineering is used in construction projects to provide a clear and detailed analysis of how best to meet the goals of the construction project. Value Engineering, when used with cost estimating, allows for an independent review of the entire construction project.
- This review process, typically completed within a Value Engineering workshop, is focused on one common goal: to provide the highest value at the lowest cost.
- However, this does not mean that Value Engineering is all about cost-cutting.
- Rather through an established set of industry guidelines and procedures, Value Engineering gives all parties involved the confidence that the maximum performance and highest value construction project can and will happen.
The ultimate goal of every construction project is to remain on scope, within budget, and on-time. This requires a concerted and professional independent review of every aspect of the construction project. The materials used, architectural design, budget, environmental factors, community and government standards/regulations, planning, and contingency plans.
- Cost cutting.
- Scope reduction.
- Loss of quality.
- Forced redesign.
Whether you’re responsible for materials purchase, architectural design, project management, or environmental assessment – Value Engineering can and will help you do your job better. Working with an independent review team, like PCS gives you the confidence that bias and influence are not part of the Value Engineering and cost estimating process.
What is value engineering in BIM?
BIM with Value Engineering Value Engineering is a systematic approach for providing goods, products, and services at the lowest cost. It is a proven technique for cost optimization. VE has been around for more than half a century, and it is actively used in several countries to provide the most effective design solutions at the lowest possible cost.
Value engineering, as a concept, first evolved in the 1940s, during the Second World War; amid the war, purchase engineer Lawrence Miles had to opt for substitution of materials and methods to compensate for the shortage of goods, as an effect of the ongoing war. Surprisingly, the substitutes reduced the costs while managing to perform, in some cases, even better than the original components.
The value of a product is the most cost-effective way of producing it without compromising its original purpose. Miles defined the product value as the ratio of function to cost, which implies that the value of the product can be increased by either increasing its functionality or decreasing the overall cost.
- Having said that, it is important to understand that the cost reduction should not be at the expense of the quality of the product and should not, under any circumstances, compromise the integrity of the project.
- In principle, value engineering is exercised to deliver a quality project at the lowest possible cost.
Value analysis, as VE is otherwise known, is the review of new and different products during the design phase of the project to increase functionality while cutting down on the costs. It involves the integrated management of cost-effective solutions, design alternatives, and performance-driven decisions.
This stage is where BIM comes into the picture. BIM is a tool that facilitates value engineering in the construction industry. Projects that use BIM to optimize value engineering successfully cut down on costs, maintain a strict timeline, and deliver the best quality outputs, while prefabrication ensures minimal material wastage.
Using BIM, we can evaluate different rendered model images and pick the best VE alternative based on the objective of the project. This also means that the objective of the project is evaluated at every stage of the construction project, in real-time, from design through maintenance.
- This process ensures that the project serves its optimum purpose.
- The implementation of VE is much easier with BIM in the picture.
- Value functionality can be increased along with the cost reduction, and clash detection through BIM ensures that no additional costs are incurred towards the end of the project.
So, there we have it: a quality project delivered, right on-time, at the lowest possible cost. BIM with VE is the next big thing in the construction industry, and we can see why. Just to put things in perspective, let’s enlist the benefits of BIM with value engineering:
Cuts down on materials and labor costs Enhances system effectiveness and constructability Reduces installation time Promotes safer construction Resolves constructability issues Ease in access during construction and post-construction stages Hanger support optimization Sheet metal cost optimization Shaft optimization Saves time on RFIs Avoids discrepancies with local codes
BIM with VE is a collaborative effort where all of the stakeholders and disciplines get together to analyze the project for VE opportunities. We can extract and verify quantities from the model, which is then plugged into the estimate, and the cost-effectiveness is realized in real-time.
The benefits are endless, but the reason it remains the underdog in the construction industry is that people are still slow to adopt change, and they cling to what is comfortable. It remains one of the major hurdles to BIM implementation in the construction industry, but people are learning, with time.
It is only a matter of time before it catches on. We, at the Virtual Building Studio, provide value engineering to all of our projects through detailed engineering and quality control using our ample expertise ranging from design to on-site installation.
- Our value engineering experts help clients in identifying and eliminating high-cost areas by re-designing MEPF services and resolving constructability issues.
- Our team has been consistently working towards ensuring on-time project delivery and quality outputs.
- We have successfully handled a wide range of BIM projects with varying complexities for our clients in the USA, the UK, Singapore, Australia, and the UAE.
We are committed to providing our clients with the best of the opportunities that ensure their growth and success. We have been working towards establishing a firm foothold in the BIM industry, and our team of experts is leading the way. : BIM with Value Engineering
What are the three components of value?
Purchasing and Negotiation Training “Shorten your sales cycle & increase your win rate through competitive excellence” Editor’s note: Stu Schlackman is a frequent contributor to this blog. How does the prospect view your solution? Will they buy or decide to wait? Is there a sense of urgency on their part to make a decision? My favorite saying is, “If you can’t price your value, all you can price is your cost.” If that’s the case, the customer will more likely view your solution more as an expense than as an asset which means they can live without it.
Perceived value must always trump the cost of your product or service. Customers buy when it’s obvious to them that the benefits of the gain or alleviation of a pain far outweighs the financial investment. Let me give you an example. Let’s say Joe goes to the doctor for his annual physical and he’s told he needs to lose twenty pounds.
The doctor tells him about a new diet that will help him lose the twenty pounds in six weeks and the cost for the diet is two hundred dollars. Joe weighs the cost versus the benefit of the weight reduction and comes up with the decision to hold off. Why? Well, Joe knows he needs to lose twenty pounds since his doctor has mentioned it the last five years.
- Is it too much money? Can Joe do it on his own (well he hasn’t in five years)? Let’s make one change to this scenario.
- Joe’s doctor says if he doesn’t lose the weight this time he’ll have to start taking medication to get his cholesterol down.
- Joe asks how much the prescription will cost and the doctor says roughly $250 per month until his deductible is met.
Now we have Joe’s attention to take a harder look at the diet for $200. Why? The perceived value of losing the twenty pounds just moved up becoming more important than the $200 for the cost of the diet. Customers buy when they perceive that the value outweighs the cost of the investment.
- What we need to realize is that there are three components of value; economic, business and personal.
- All three have an impact on the customer’s view of the investment.
- Economic value is the financial impact of the investment.
- What will be your return on investment? What will it do for the company financially? Will it cut operational costs, increase inventory turns, increase revenues or cash flow? Economic value is of most importance to the economic buyer – someone who makes decisions based solely on the financial elements of the solution.
Click for Bob’s 2 CD set Business value is the primary consideration to the user of the solution. What can the investment do for the organization and how can it increase productivity, efficiencies and effectiveness for those that use the solution. Even those sold on this value can meet obstacles when they try to convey the value to the C-suite.
- The problem with business value is many times when we sell to the user group that sees great value; they can’t convey that value to the economic decision maker such as the CFO.
- In other words the business value needs to be conveyed in economic terms to other decisions makers involved,
- Personal value is the third type of value that needs to be considered.
This is more of an intangible value. What will the decision do for me personally? Will I get a promotion, a bonus, peace of mind, or improve my influence with other organizations? Personal value is equally as important as the business and economic and sometimes can be the determining factor in the decision.
Why? We need to understand that in the brain emotions always trump logic. We make decisions based on emotion and then back them up logically. Personal value can only be uncovered when there is trust and a strong relationship with the decision maker. We also need to realize that personal value will be different for each person involved in the decision making process since personality styles influence what is valued.
As sales professionals we need to understand each aspect of value and how it impacts each of the decision makers. There is not a “one size fits all” for value. Asking the right questions will help you understand what’s most important to the customer. Here are some example questions that address each type of value:
What do you consider being the most important benefit of this solution? What is the most important financial consideration for this investment? What are the benefits of this solution for you personally?
Good Selling! : Purchasing and Negotiation Training
What is value engineering and its benefits?
How Value Engineering Increases Project Value and Cuts Costs – In any project, the value of the finished product is the ratio of cost to function. Value engineering is the process of looking for ways to reduce cost requirements while providing the same level of function, thus increasing the value of the finished product.
The concept of value engineering has been used since the 1940s when many industries faced shortages of materials. To work around these hold-ups, engineers began successfully finding alternative supplies at lower prices that did not sacrifice the performance of their products. From there, value engineering became a standard operational process across most industries including commercial construction.
So how is it applied in construction projects? In this guide, we look at the process of value engineering and its benefits for commercial construction.
What is value engineering steps?
Design A common response heard when discussing the VE process or the requirements to conduct VE studies is ” we do it all the time, but we just don’t call it VE!” Because the VE process contains many elements and phases, such as team work, functional analysis, “brainstorming”, and cost-worth analysis, unless a review conducted for a particular project includes these and other related elements and phases, it is not considered to be VE.
- providing the needed functions safely, reliably, efficiently, and at the lowest overall cost;
- improving the value and quality of the project; and
- reducing the time to complete the project.
Simply stated, VE is an organized application of common sense and technical knowledge directed at finding and eliminating unnecessary costs in a project. The “systematic application of recognized techniques,” referred to in the above definition is embodied in the VE Job Plan.
- The Job Plan is a systematic and organized plan of action for conducting a VE analysis and assuring the implementation of the recommendations.
- The methodology utilized for any VE analysis shall follow widely recognized systematic problem-solving procedures that are used throughout private industry and governmental agencies.
The Job Plan contains eight phases. The first phase is completed prior to the commencement of the VE analysis, six of which are performed by the VE team, and one that is conducted to “close out” the process. Each phase of the Job Plan includes several tasks.
- Selection of projects for VE analysis
- Investigation (gathering of information)
- Function Analysis (analyzing functions, worth, cost, performance and quality)
- Creative (speculating using creative techniques to identify alternatives that can provide the required functions)
- Evaluation (evaluating the best and lowest life-cycle cost alternatives)
- Development (developing alternatives into fully supported recommendations)
- Presentation (presenting VE recommendations for review, approval, reporting and implementation)
- Close Out (Implementing and evaluating of the outcomes of the approved recommendations)
Selection : The responsibility to select the projects for a VE study is usually outside the control of the study team. Beyond the Federal requirements for conducting studies, some criteria used to select projects include but are not limited to:
- high-cost and/or high-priority projects
- important, but lower priority projects, that fail to meet the transportation agency’s budgetary cut-off
- complex or challenging projects with multiple stages or complicated/costly traffic control and staging
- projects with extensive or costly environmental or geotechnical requirements
- projects that substantially exceed their initial cost estimates
- projects that have encountered “scope creep”
- projects involving multiple stakeholders
- projects that involve the use of other quality and cost review techniques (Road Safety Audits, Context Sensitive Solution workshops, Risk Based Cost and Schedule Estimates)
- corridor or route planning studies;
Investigation : The Investigation (or Analysis) Phase is where the study team first becomes involved. In this phase, the team determines what they know about the project from readily available information and what they must know in order to really define and/or solve the problem.
- It is in this phase of the VE study that the elements that have the greatest potential for value improvement are identified.
- The Investigation Phase immediately brings the three fundamental concepts of VE (function, cost, and worth) to bear on the problem.
- It is these concepts that make the VE process different from all other management and cost control techniques.
This phase requires the team to ask and answer the following basic questions:
- What is it?
- What does it do? (what is the function?)
- What must it do? (is its function basic?)
- What is it worth?
- What does it cost?
Most of the information required in this phase is readily available. The length of the project, its cost estimate, traffic projections, design speeds, and the major elements designed into the project can be easily identified from a review of the plans and other documentation.
- Sometimes the VE team must investigate further for other information necessary to adequately complete the investigation phase.
- Applying Pareto’s Law of Distribution is helpful when beginning to look for potential savings.
- Pareto’s Law states that 80% of a project’s cost will be in 20% of the work.
- Preparing a project cost model will begin to identify targets of opportunity.
Identifying the functions the project and its elements perform is the next step in the Investigation Phase. Function denotes the specific accomplishment to be achieved by an element or combination of elements in the overall design. The value methodology requires that we describe a function by the use of two words – an action verb and a measurable noun (that is acted upon).
For example, the function of a bridge is to “cross obstacle.” The VE study team should not care whether that obstacle is a ditch, river, creek, railroad, another highway or a building. The bridge’s basic function is to provide a means to cross that obstacle. If it does not accomplish that function, we wouldn’t buy it, therefore the cross obstacle function is considered to be basic.
The study team should be as non-specific as possible when describing functions to leave as many options open as possible to perform the generalized problem or function that the project presents. To summarize, the goals of the VE study team by the end of the Investigation Phase are to:
- Identify the project’s high-cost elements
- Conduct a functional analysis of the high-cost elements
- Assess their cost / worth relationships
Creative : The Creative (also referred to as Speculation) Phase follows Investigation and is where the power and the benefits of the VE technique are manifested. The team applies brainstorming techniques to develop viable alternatives to the way the project is currently designed.
- Brainstorming forces people to be creative.
- The mechanism that produces this phenomenon is called synergism -one idea triggers other ideas or thoughts through: similarities or like ideas; contiguous or adjoining ideas; contrasting or opposite ideas; and sound-alikes.
- The value study team applies creativity to the functional statements selected from the previously conducted cost/worth estimates.
The team uses the generic format of the function to speculate on all possible solutions to the problem presented in that functional statement. The VE study team uses brainstorming to generate a large list of potential solutions to the problem described by the two-word function, which prepares the team to enter the next phase, when they are charged with paring down a laundry-list to a manageable few ideas through the feasibility analysis.
Evaluation : During the Evaluation Phase, the advantages and disadvantages of each remaining alternative are listed. Each advantage and disadvantage is described in general terms. The team can perform a weighted matrix analysis to determine which alternative is best based upon the relative importance of each of the desirable criteria which must be addressed.
Of course, if the disadvantages are found to far outweigh the advantages of any alternative, the alternative is dropped from further consideration at this point. Conducting this analysis satisfies the VE objective-to achieve the best blend of performance, cost, and schedule.
Perfection is not the objective of the VE study team. Development : Once the team selects the best alternatives, they are fully developed through sketches, cost estimates, validation of test data, and other technical work to determine if any assumptions made during the study are in fact valid. The Development Phase is the final step before presenting the team’s recommendations to the agency’s management.
The study team formulates an implementation plan which describes the process that the agency must follow to implement any recommendations. Presentation : The final product of a VE study is the formal VE Report and the presentation of the team’s recommendations.
In this phase, the VE team presents their findings to the project decision makers, and strives to convince them that their ideas should be implemented. This formal presentation should be brief but thorough, with sufficient time allocated for discussion and responding to questions. When making the presentation, the study team should exercise care when presenting estimated cost savings or, in some cases, increased costs associated with recommendations.
Overstating or double counting savings should be avoided. For VE studies taking a longer time to complete, it is beneficial for the study team to provide progress updates to the appropriate project management staff. The VE Report serves as a step-by-step record of the work accomplished during the preceding phases.
The report provides documentation to support the team’s recommendations, tracks the team’s deliberations and considerations, and aids in implementation of the recommendations. It can also be a useful reference tool for future projects and VE studies that must address similar topics. Close Out/Implementation : No recommendation for cost savings can achieve savings until it has been implemented.
Although it may not be practicable to implement each and every recommendation proposed, the project decision makers must take the appropriate action to ensure that a fair and serious consideration of the proposed recommendations occurs. A key activity of the Implementation Phase is the information sharing within the transportation agency as the recommendations are implemented – and the associated savings are realized – on projects.
Not only does this activity promote the benefits associated with conducting the VE studies, it will provide benefit to future transportation projects. The final phase of the Job Plan also involves determining the actual amount of savings generated by the VE analysis based on the amount of recommendations implemented in the construction project and evaluating the outcome the recommendation achieved in the project.