How Architects Can Avoid the Dreaded "VE" or Value Engineering

How Architects Can Avoid the Dreaded Value Engineering

As an architect, you may fear the prospect of your job being valued engineered. Particularly when a project goes over budget, value engineering is used to bring it back on track.

Although in theory your design elements and materials will be substituted with others of the same quality, in practice such changes are often focused on budget rather than on quality.  As a result, your project’s aesthetics, effectiveness and performance may be compromised.   

Sometimes well-designed projects come to a standstill after the initial budget are submitted.  Everyone scrambles for ways to re-engineer the project to bring it back within budget.  The term “value engineering” looms large as design revisions begin. So what is an architect to do?

What is Value Engineering in Architecture?

Value engineering is a systematic approach to providing the necessary components of a project at the lowest cost, resulting in the optimum value for both initial and long-term investment. It is a technique used to identify and remove unnecessary expenditures by substituting materials and methods with less expensive alternatives without sacrificing functionality. Although it is often associated with cost cutting, its ultimate goal is to maximize function at the lowest cost possible.

The term was first used at General Electric during World War II. Driven by shortages of skilled labor, raw materials and component parts, its engineering department sought to find suitable substitutes that achieved the desired level of product performance at minimal cost and effort. Value engineering has been widely used in the construction industry since the end of the 20^th Century.

Health Care Design Magazine puts it this way: “In the construction industry, its most common purpose is to bring over-budget construction projects back within budget.” But, according to Paul Keskeys of Architizer, “Value engineering is a familiar term with a bad reputation. Many architects associate it with dashed hopes of high design, diluting their creative vision and transforming it from the inspirational to the pragmatic.”. In other words, value engineering is often viewed as the hatchet that hacks away at a beautiful design.

In the field of construction, value engineering considers the availability of materials, construction methods, site limitations, planning, costs and profits, and affects life cycle costs, quality and a project’s environmental impact. But unfortunately, in the industry, the process itself can be divisive, causing headaches for both architects and manufacturers and creating a conflict between quality and the budget considerations inherent to every building project.

A Strategy for Avoiding Budget Problems

The best way for architects to avoid cheap knock-offs, as they watch the integrity of their work go down the drain, is to build value engineering into the project’s design in the first place. In fact, the General Services Administration advocates “value engineering” even before the project gets to bid phase because it believes that early review affords greater savings and allows a change of direction if appropriate.

FitzGerald, an architecture firm based in Chicago, has come up with a concept called “value design.” It is based on a three-pronged approach: a building efficiency that supports the client’s pro forma, a focus on large areas that can be optimized, and an awareness of those areas on which cost-cutting will have the most adverse effect in the future.

The firm explains, “In general terms, about one-third of a building’s cost is in the structure; one-third is in the mechanicals, a quarter is in the envelope, and the remainder is associated with the finishes.”  Therefore, it is important to optimize the large systems that can make the greatest budgetary impact, such as structure, HVAC, and window and wall systems over smaller savings such as by minimizing finishes. 

When it comes to finishes, the substituted material must maintain the same class rating (A,B, or C depending on the flame spread rating and smoke development index) and comply with the Interior Finishes section of the building code (typically the International Building Code and/or the NFPA 101 LSC). This is critical and can be easily confirmed with communication with the manufacturer.

In addition, architects should ensure that the SEER (Seasonal Energy Efficiency Ratio) rating is maintained in whatever HVAC unit is substituted so that the energy efficiency of the HVAC unit will not be sacrificed.

Another recommendation is that the glazing at the building envelope must be comparable to what was originally specified in terms of  its R-value, U-factor, visibility requirements, etc. to ensure that energy efficiency is not sacrificed.

It is imperative to stay informed of the going rate for materials and labor, choosing materials, design elements and systems that are less expensive and have a longer average lifespan, as well as appreciating the costs of redesigning over the building’s lifespan. It is also incumbent on architects to have early discussions about the key aspects of the project to maximize value and eliminate surprises. In other words, it’s important to provide your client and contractor with the information they need to make smart decisions when considering budget.

The Building Solutions team at CRH, a leading global building materials group, came up with a strategy of six talking points:

• Create designs that limit the likelihood of budget overruns
• Use Building Information Modeling (BIM)to lower the changes of expensive design flaws
• Consult with material manufacturers to ensure building products work well together
• Consider the long-term costs and document them in your design
• Add options into the design that allow for "pick one" VE changes.
• Include details on life-cycle analysis on why particular elements have been selected

Paul Keskeys of Architizer stresses the importance of budget. Architects should discuss the project’s budget at the outset, making sure it aligns with the client’s expectations. He goes on to say that function is the most important consideration during the value engineering process, and suggests the following “results accelerators,” or universal best practices:

• Avoid generalities.
• Get all available costs.
• Use information from the best source.
• Blast, create and refine.
• Be creative.
• Identify and overcome road blocks.
• Use industry experts.
• Price key tolerances.
• Use standard products.
• Use (and pay for) expert advice.
• Use specialist processes.

“Value Architecture”

Crystal Structures, a commercial skylight company based in Wichita, KS, coined the term “value architecture,” based on the importance of devising solutions that start with the budget, so that options can be considered at the time of design, rather than when the first quotes come in, often months later.  It states, “Cutting the cost of construction by reducing the scope of work or quality standards should never be considered ‘value engineering.’ This kind of cost reduction doesn’t consider the overall value, long term cost savings or aesthetic design.” 

Value architecture allows architects to optimize the cost of the building beginning at the design stage, emphasizing an integrated project delivery approach which brings the owner, architect and contractor together at an early state. The result is an excellent outcome that is within budget.

The Bottom Line

While value engineering doesn’t have to be a dirty word or a necessary evil that causes inspires fear and loathing, there are ways for architects to protect their projects with communication, careful planning and a strategic approach.