Maximize Project Budgets with Alternative Solutions

Using value engineering to make data driven decisions to maximize budgets without compromising integrity.
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Sponsored by Gordian
By Amanda Voss, MPP

Defining the Process: VE Steps

Delivering a high-quality, value-engineered product does not just happen. It takes the right mindset, the right process, and the right tools. VE offers architects, engineers, and design professionals the ability to balance physical assets, code requirements, certification goals, and client requests while staying within budget. VE, when properly executed, also creates an opportunity to future proof designs and preserve building functionality.

VE creates the environment for teamwork and allows design professionals to share their vital insight with the client.

Strategies and Tactics for Easier VE

Defining the “What”

Before evaluating a design for VE, it is vital to have a firm grasp on the project owner’s expectations and the value the owner places on the project. For that reason, defining expectations is the essential first step. This means a clear communication of, and delineation between, needs and wants, ensuring a successful marriage of design and goals. Owners may have different motivations for completing a project, or even several motivations at once. One purpose might simply be to create a revenue stream. Or it might be to revitalize a neighborhood, drawing tourists to the area with an innovative design. Perhaps the building’s genesis arose from local merchants needing an affordable place to set up shop. Or the owner may have an attachment to the area from childhood and wish to preserve that history.

Regardless of the motivation, the owner’s goals, expectations, and vision of the project belong at the forefront of the discussion. While keeping any design criteria package within reach is vital, no amount of savings or added value will be enough to satisfy the owner if his or her expectations are unmet.

The key to the success of VE analysis is developing a more precise and appropriate definition of value, writes Steve Howard, senior vice president with Cumming, and Anthony Haas, AIA, ACHA, senior principal with Watkins Hamilton Ross (WHR) Architects.

In “The Good and Bad of Value Engineering,” Howard and Haas note, “The owner is responsible for defining the quality level of a project. The designer is responsible for producing a design that meets those expectations or requirements.” Howard and Haas caution that owners tend to define only the lower limit of those expectations. Designers frequently exceed those minimums, believing that better quality always equals better value. However, better quality usually comes at an increased cost and is not usually on a linear relationship with value. This is why the owner must establish what constitutes value.

Determining the “When”

Often, VE is brought into the discussion when a budget exceeds set parameters, regardless of where the project is in the design and construction process. At that juncture, the design team stands a crucial crossroads. On one side, if the project team and the building owner can agree that the extra cost is necessary, the budget can then be increased accordingly. Crisis averted. Owners may readily agree to a budget increase in the instance that an element or requirement changed, or if such was added to the original scope of the project, or when a new design or performance requirement was introduced. Conversely, in some instances, the owner will not agree to a budget increase. When increasing the budget is not an option, the other route to resolution is to launch the VE process.

When VE takes place often determines how great the maximized savings will be. There is an ideal balance of cost and savings versus time when VE is performed. Maximized savings are highest if VE is done during initial planning and analysis or even in schematic design phases. As time goes on, and the project proceeds from design to development, construction documents, and into construction, the design team is often confronted with losses from VE instead of gains.

According to the Whole Building Design Guide (WBDG), conducting VE during the planning stage of development has exceptional benefits. During planning, architects, construction managers, and design professionals can coalesce key project factors with little disruption and minimal loss of time and money. VE during planning includes a wide variety of actions: performing a functional analysis of the facility, obtaining the owner and occupant definitions of value, defining the key criteria and objectives for the project, verifying and validating the proposed program, reviewing master plan utility options, offering alternative solutions, such as square footage needs per function and adjacency solutions, and verifying if the budget is adequate for the developed program. Any changes to the program at this stage should have very little if any impact on schedule and A/E time and redesign costs. Conducting VE during planning also means that the project will be developed with fewer changes, fewer redesigns, and a greater understanding had by all parties of what the final function and space allocations will be.

VE during planning can also incorporate a fresh outside view of alternate solutions from other similar projects.

If VE is not performed in the planning stage, WBDG identifies project development, when the design has advanced to schematics, as the stage at which most VE participants are used to becoming involved. VE during design brings together the design team and the client to review the proposed design solutions, the cost estimate, and the proposed implementation schedule and approach, with a view to implementing the best value for the money. Again, the definition of what is “good” value on any particular project will change from client to client and from project to project.

While VE is still possible during construction, any VE done at this stage adds layers of complexity. Contractors can be provided monetary incentives to propose solutions that offer enhanced value to the owner and share in the financial benefits realized. However, any change at this stage needs careful consideration from both life-cycle and liability perspectives. The proposed change(s) should not have any negative impact on the overall design and building function.


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Originally published in Architectural Record
Originally published in March 2020