As a continuation of the cost management discussion, I want to discuss the term "value engineering", what the process is and should be relating to the construction bids that you receive.
Value Engineering generally refers to the process of reducing the cost of the construction after the bids are taken. Of course this process would only be considered if you are over budget and have to reduce the cost of the facility. The goal of this process is to look at specific items in the building systems and products that have been specified by the design professional, and make changes that reduce the cost but have minimal impact on the overall design intent. For example, a retaining wall may have detailed to be cast in place concrete. An alternate design might be to use a stacked block product (Keystone as an example). If the system works structurally to accomplish the intent, the engineer could approve that change, thus saving the owner the amount offered by the contractor. All systems should be reviewed, roofing, mechanical, lighting, electrical, finishes, etc. The contractor and the design professional should each come to table to make suggestions as to the items to be considered. If need be, reducing the size of the building could also be considered.
Once the items have been reviewed by all parties (owner, contractor, design professional), the items should be documented in the form of an addendum or change order.
Here is the rub, usually the items being offered are not going to be the full initial value of the change. By that I mean the change is usually at 50% or less of the cost. This is the nature of the construction industry. Once a building has been bid, the subs and suppliers have all quoted their best price. The change may only be in a product type but not necessarily reduce the cost to install it.
So where is the value in going through this process if you are only getting 50% of the value of the changes returned to you? Fortunately in this recession we haven't had to confront this issue many times, as bids continue to be at a reduced amount. It wasn't long ago however when construction costs rose at a 20% to 30% rate, sending many budgets into a tailspin.
The true value of 'value engineering' takes place as the architects/engineers design the project. Evaluating the materials and systems to be used as they are integrated into the design. The input of the contractor at this point can be especially useful. This is where you can realize the full value of changing products, prior to bidding the building.
Know what systems are being used in your building and take the time to talk with your design professional. Understanding the life cycle and performance of the different systems will help you make informed decisions as to what the suggested changes could mean in maintenance and upkeep down the road.
Green schools think globally about children's environmental health. They strive to be toxic free and rid their schools of pesticides, lead and mold. They use green building and cleaning materials. They avoid sitting on toxic land. They practice sustainability by being energy efficient and using green building design and environmentally sound school supplies. They reduce, reuse, and recycle. They create healthy green spaces like green schoolyards and gardens. They rethink school lunch and eliminate junk food and sodas. They participate in farm to school programs to provide their students with organic produce. They teach, learn, and engage the students in environmental education. They create hands-on, place-based learning by involving children in the greening of their schools. Isn't it more likely that schools taking this mindful approach will produce students who think globally and strive to make a positive, productive mark on their world? Isn't that the true value of these schools? (C. Scott--TSU)
ReplyDeleteI can see how someone might think there is a one to one savings when there is change in price. Trying to explain there may only be a 50% savings can be hard for the building owner to understand. If a school will try to reduce cost up front, maybe they will be better off if prices do go up.
ReplyDeleteCGibbs(TSU)
I like this idea, but believe that the owner(district) needs to be involved in the whole planning process. Trying to reevaluate after the bidding has taken place doesn't seem ideal. The relationship with the with the designer needs to be strong, so the true value is made before the bidding process takes place.
ReplyDeleteB.Irick (TSU)
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ReplyDelete> Cost Management - Value Engineering
ReplyDeleteTulu Toros, AIA Feb 17, 2012
For the term "Value Engineering" one of the best explanations I have heard over the years was: "It's neither VALUE, nor ENGINEERING"... As a professional planner and architect who delivered dozens of Design-Bid-Build and Design-Build projects, I cannot agree more.
Have I not done any value-engineering? You can bet I did, on a lot of projects. In fact, the process of system, equipment, and material selections are continuous engineering out of alternatives.
VE practice often refers to systematic reductions to be done in the design and construction. Surely, there are many aspects of civil, structural, mechanical, and electrical engineering that can be distilled but the end product is not the same as the original. Satisfying a need can be simplified.
You may like a certain BMW, a BMW can be "value-engineered" for giving you similar functions at lower cost systems and materials. But is it the BMW that you would have had?
TToros-KSU