The Value of Value Engineering

20 January 2021

A vital part of any construction project is the work that happens before the shovels go in the ground and that includes the important process of value engineering.

Value engineering is a systematic and explicit set of procedures designed to find the optimum set of parts and methods to deliver on the owner’s vision while providing the best return on investment. Sometimes, value engineering gets a bad reputation as a process of selecting less costly materials at the expense of quality. However, while different materials may be an aspect of a value engineering assessment, it is not an accurate representation of the process.

What is Value Engineering?

At its heart, value engineering is not a cost-cutting exercise but rather an organized, creative effort which analyzes the goals and vision of a particular project against the cost and expectations of the client, with the purpose of achieving the best return on the investment for ownership. Without sacrificing the functional or value objectives of the owner, multidisciplinary teams of experienced builders, designers and engineers investigate the economy of the construction methods, materials and design and develop a list of recommendations for the ownership team to approve or reject.

The Focus VE process

At Focus, our commitment to success lies at the intersection of quality design and sound economics. Our team relies on their years of construction and design experience to evaluate projects and balance the owner and architect’s design vision with the construction costs. The kick-off of any Focus project begins with team members asking 4 questions:

  1. What parts of the building are inefficient and how can we increase efficiency?
  2. Is there a design element which is driving the cost up which can be redesigned while achieving the same design impact?
  3. Is there an opportunity to change the type of construction, i.e. super-structure, masonry, façade, to save money without sacrificing on looks?
  4. Is there a specified material which could be switched out for a less costly material that fits well within the other design elements?

Simultaneously, the Focus construction team develops an estimate of what they would expect the project to cost. This estimate is based on real time numbers for labor and material as well as the past experiences of our staff. From there, teams go through each item identified, starting with the largest line items and vet each for ways to improve the value. This systematic approach results in a list of potential changes along with the potential cost savings for owners to review. Every Focus value-engineering process is transparent and is done in close collaboration with the architect and owner’s representatives. This ensures a level of understanding across teams and that the design remains consistent with the owner’s vision.

“Focus’ team of construction professionals recognize that over the years, value engineering has become synonymous with lower value due in part to a lack of understanding,” says Focus’ Senior Vice President of Construction, Josh Stark. “To address this, Focus’ VE goal is always to optimize the design, not change the way to product looks.”

As a result, many of Focus’ recommendations are rooted in utilizing innovative construction technologies or hybrid methodologies. While there are risks with any new building method or technology, Focus’ team of construction professionals are experts at controlling the inherent risk of innovation through careful vetting and investigation. Our team understands that stakeholders must be confident the intersection of innovation and risk management has been intelligently vetted. Over time, we’ve developed a system for assessing new technologies to ensure project teams make the right decisions. This system relies heavily on our trade partners and industry relationships to identify new technologies and their expert opinions which are based on real hands on experience with the technology in question.

Controlling the risk of innovation

For instance, at 167 North Green Street, the Focus construction team proposed a new type of HVAC system called Variable Refrigerant Flow, or VRF, which most simply can be explained as a large-scale ductless HVAC system that can perform at a high capacity. While the upfront cost of installing and building the system was nearly the same as using a traditional HVAC system, Focus discovered through its research that over time, the increased energy efficiency, flexibility during buildout, and reduced footprint of the system lead to substantial savings for the owner.

Additionally, the VRF technology provides the ability for multiple indoor units or zones to operate on the same system. This gives tenants more control over their climates and reduces the amount of “shared air”, or cross-circulation between units – something which is now of great importance to potential tenants as a result of the Covid-19 pandemic.

Building value through VE design improvements

A succesSFul VE process can sometimes make the difference between a project that moves forward and one that does not. As an example, the Courthouse Apartments project in Wheaton was originally $1 million over budgeted costs. During the Focus VE review, the team found that in certain areas, the structural supports as designed were more than what was required, and by making adjustment such as changing the size of the structural studs and moving to traditional carpentry framing, the Focus construction team was able to get the project back on budget. Not only were the VE changes adopted succesSFully, but the cost savings achieved through VE together with buy out savings, ownership was able to utilize the savings to incorporate over 3,000 upgrades into the project, building higher value that originally anticipated.

As shown, a succesSFul VE process not only aims to reduce the cost of the build, but it should also add value to the final product through design enhancements, reinvestment, and efficiency. In the last 5 years, Focus has saved an average of 4% for clients through its value engineering process while also maintaining the vision of the client. Proof that working with an experienced team of construction professionals essentially pays for itself.

To learn more about Focus preconstruction services and our value engineering process please reach out today.

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