Importance of Value Engineering in Construction
If you’ve spent some time in the commercial construction industry, you’ve no doubt heard people use the term “value engineering.” Unfortunately, many project managers use value engineering as a recovery method when they’ve exceeded their budget.
What they don’t realize is that applying the principle of value engineering from day one can help to prevent budget overruns later.
What is Value Engineering?
Value engineering entails finding substitutes for expensive materials where possible and streamlining processes. It first started during World War II when raw materials and parts were in short supply.
How is Value Engineering Different to Cost Cutting?
Value engineering and cost-cutting have different goals:
- Value Engineering: The goal is to give the client the best value for their money. This goal helps to ensure that you complete the project to client specifications within budget. The goal is to get the best result possible.
- Cost Cutting: The goal of cost-cutting is to reduce expenses. In construction, this may mean doing away with certain features or options because you’ve run out of money. Cost-cutting is more about recovery than promoting a better result.
Value engineering would start from day one. Any team member might contribute. An architect might, for example, make suggestions about using cheaper materials without compromising the integrity of the building.
Things to Consider When Applying Value Engineering
There are five essential things to consider when applying value engineering:
- Cost: What’s the essential spend to get the results required from the project?
- Function: What must the part or product be able to do? A stairwell, for example, has to durable and able to withstand a lot of abuse.
- Quality: Is it essential to use the best quality materials? Can the same effect be achieved for less?
- Performance: How will the specified project compare to others out there. Is it meant to be similar or unique?
- Safety: Before making any swaps in terms of materials, it’s essential to consider the safety of the end-user. Cut the budget in other places, not with safety precautions.
Value engineering can be beneficial in the construction industry. Not only will you have a handle of the finances from day one, but you stand to improve profit margins too.