Value Engineering

Value engineering is an approach to analyze and improve design and construction projects in order to achieve the maximum balance between cost, safety, quality and performance-function of an entire assembly-final product.

It requires gathering required information to understand the concept, define, clarify, and come up with means and methods of realizing the concept, compare and select the best feasible alternatives to improve the value- possibly decrease the cost,  without compromising the quality, reliability and safety.

Value engineering is a team effort , a team of experienced professionals, each within his/her expertise field. It is an organized effort to analyze designed features, assemblies, equipment , finish materials in order to achieve the lowest feasible cost by at the least -maintaining , or better- improving the project outcome.

Value engineering is NOT simply a "cost-cutting" practice, but it is giving experienced and expertise consideration to alternatives with the project value in mind. It is finding the most cost effective way to accomplish a result that will meet or exceed the needs , desires, expectations of a project.

Different type of project will have different levels of complexity and detail. Smaller the project in terms of total square foot , higher the per square foot will be.

What does  a cost-effective building mean? In many respects the interpretation is influenced by owner's interests and objectives, and how they define "cost-effective".
  • Is it the lowest first-cost structure that meets the program?
  • Is it the design with the lowest operating and maintenance costs?
  • Is it the building with the longest life span?
  • Is it the facility in which users are most productive?
  • Is it the building that offers the greatest return on investment?

The following three overarching principles associated with ensuring cost-effective construction reflect the need to accurately define costs, benefits, and basic economic assumptions.

•Utilize Cost and Value Engineering Throughout the Planning, Design, and Development Process

As most projects are authorized/funded without a means of increasing budgets, it is essential that the project requirements are set by considering life-cycle costs. This will ensure that the budget supports any first-cost premium that a life-cycle cost-effective alternative may incur. Once a budget has been established, it is essential to continually test the viability of its assumptions by employing cost management throughout the design and development process. An aspect of cost management is a cost control practice called Value Engineering (VE). VE is a systematic evaluation procedure directed at analyzing the function of materials, systems, processes, and building equipment for the purpose of achieving required functions at the lowest total cost of ownership.

•Use Economic Analysis to Evaluate Design Alternatives

In addition to first costs, facility investment decisions typically include projected cost impacts of, energy/utility use, operation and maintenance and future system replacements. At the beginning of each project, establish what economic tools and models will be used to evaluate these building investment parameters. The methodologies of life-cycle cost analysis (LCCA) will typically offer comparisons of total life-cycle costs based upon net present values. Other methods usually used as supplementary measures of cost-effectiveness to the LCCA include Net Savings, Savings-to-Investment Ratios, Internal Rate of Return, and Payback.

•Consider Non-Monetary Benefits such as Aesthetics, Historic Preservation, Security, and Safety

Most economic models require analysts to place a dollar value on all aspects of a design to generate final results. Nevertheless it is difficult to accurately value certain non-monetary building attributes, such as formality (for example, of a federal courthouse) or energy security. The objective of a LCCA is to determine costs and benefits of design alternatives to facilitate informed decision-making. Costs can be more readily quantified than benefits because they normally have dollar amounts attached. Benefits are difficult because they often tend to have more intangibles. In some cases, these non-monetary issues are used as tiebreakers to quantitative analyses. In other instances, non-monetary issues can override quantitatively available cost comparisons, for example, renewable energy application. These cost-effectiveness principles serve as driving objectives for cost management practices in the planning, design, construction, and operation of facilities that balance cost, scope, and quality. Analyzing the environmental costs through Life Cycle Assessment (LCA) can be complementary to the dollar cost implications of the design, materials selection, and operation of buildings. The LCA methodology, which can enhance information gleaned from an LCC, includes definition of goal and scope, an inventory assessment, life-cycle impact assessment, and interpretation-an iterative process.