Most people in the engineering and construction community are familiar with value engineering and value cutting, but few approach project estimates as this particular project team recently has.
For this project, the design professionals, the owner representative, the user group, the sustainable design representative, the facility management team, and the commissioning firm all worked together in the schematic phase to develop a project cost that would accommodate the owner's program goals and operating budget, and would be friendly to the environment. Based on this effort, I thought I would revisit past issues associated with estimating and introduce this value management approach.
Value Cutting
This is traditionally implemented by construction management firms while 50% to 80% of the construction documents are completed. At this point in the project, the owner has very few options as the design effort has consumed months of precious time that can affect the owner's targeted building occupancy date. In other words, there is no going back!
In this preconstruction phase, the construction manager and, more specifically, the firm's estimating department, routinely complete the pricing. In defense of construction managers, if they are not brought in during the conceptual/schematic phase of a job, value engineering just isn't going to happen when 50% to 80% of the construction documents are completed. When a project estimate goes astray at this point in the process, there is little that can be done other than "cut-cost" (a.k.a., value cutting).
Value Engineering
This is traditionally implemented by construction management firms late in the schematic phase and/or early in the design development phase. Experience has shown value engineered system and equipment alternatives are usually chosen to reduce cost, keeping the project in budget. Unfortunately, value engineering seldom spans the entire building program looking for long-term enhancements that could include all of the following:
- Facility management opportunities to maximize future operating budgets (energy and labor) in unison with the owner's entire operating budget and business plan.
- Life-cycle and sustainable design opportunities that take into account local and global issues, as well as the project itself.
- User groups relative to adequate program square footage and, equally important, value engineering of furnishings to mirror the other enhancements noted here.
- Facility management needs relative to serviceability, maintainability, and commissionability.
Here again, value engineering, like its counterpart value cutting, will usually be executed by an estimating department with little joint venture effort with the design team and/or owner's team. Meeting the budget becomes the mantra to which the building program marches, losing potential opportunities along the way.
