Value Engineering in Construction Projects

A. N. Prakash is a leading construction project management consultant in the country and Managing Director of Bengaluru-based A.N. Prakash Construction Project Management Consultants Pvt. Ltd. He can be reached at prakash@anprakashpmc.com Value engineering is a systematic and organized approach to providing the necessary functions in a project at the lowest cost. Value engineering promotes the substitution of materials and methods with less expensive alternatives, without sacrificing functionality. It is focused solely on the functions of various components and materials, rather than their physical attributes.

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A N Prakash.

During the World War II, the Allied nations passed an ordinance reserving the use of materials such as Nickel, Chromium, Molybdenum etc., for the purposes defence manufacturing. As a result, there was a shortage of these essential materials for consumption by the private sector manufacturers. As the saying goes ‘necessity is the mother of invention’. This shortage of essential materials forced the industry to search of alternate materials.

Lawrence D. Miles, Chief of Purchase at General Electric (USA), was constrained to look for alternate materials without compromising either the performance quality or the function of the original material. After extensive research, Lawrence D. Miles developed a system for providing low-cost alternatives without having to compromise either on quality or the function. This systematic approach to cost reduction adopted by Lawrence D. Miles was named Value Engineering (VE).

Definition of ‘Value’

Before we delve further into VE, let us understand what ‘value” is. Value of all things is a very subjective judgement, like beauty, where its assessment is largely in the eye of the beholder. Generally, the perception is that one pays more for a useful commodity than for the one that is less useful. However, this is not always true. One of the best examples to demonstrate the paradox of value is comparing water and diamonds. Water has low value but high utility whereas ornamental diamond has a high value but low utility.

‘Value’ is often mistaken for ‘cost’. Cost is merely a consideration paid in exchange for product or services rendered. The major attribute that differentiates cost saving or cutting and VE is that VE involves reducing the cost by improving the functionality.

Value = function + quality+cost

Where:

Function is: The specific work that a design/item must fulfil.

Quality is: Owner’ or User’s needs, desires and specifications.

Cost: The life cycle cost of an item or a product.

The ‘value’ of a product or a service increases either with an increase in the ‘function’ and ‘quality’ or reducing the ‘cost’, without affecting or lowering level of performance, quality or reliability.

It is also important to understand the difference between ‘cost-cutting’ and VE.

VE is NOT about cost-cutting, scope reduction, quality reduction or compromise and forced re-design.

Concept of VE

The Society of American Value Engineers International (SAVE International) defines value engineering as a “function-oriented, systematic, team approach to provide value in a product, system, or service”

VE is a methodical and organised approach and application towards cost reduction by analysing function of a product, service with sole purpose of achieving the required functions such as quality, reliability, aesthetics at the lowest overall cost. 

The cardinal principle that should be applied while conducting value engineering is to be inquisitive and pose questions such as:

  1. What is it? What does it do? What must it do?

2. What does it cost? How much energy does it use?

3. What are the needed requirements?

4. What other material or method could be used for the same job?

5. What would the alternative material or method cost?

6. Will the alternatives meet the functional requirements?

Let me demonstrate with a case study:

We were the Construction Project Managers for an IT facility being put up by a large industrial house. The architectural design was unique. During the construction phase, a drawing was issued for construction of wooden trusses. The designer had specified solid teakwood trusses (not provided for in the budget) of 40 feet span, 3 of them at the entrance lobby covered by Mangalore roof tiles. These trusses were placed approximately 30 feet above ground level.

It was observed that based on the structural design, the solid teakwood trusses were very expensive and was beyond the budgeted cost.

We asked ourselves all the question mentioned above.

The primary function of the truss was to meet structural requirement.

Teakwood as the structural member is secondary and is for aesthetics and not structural.

A teakwood truss vis-à-vis a structural steel truss would require heavy sections to satisfy the structural design requirements.

Teakwood is expensive as compared to structural steel members.

There would be better quality control over structural steel members as against heavy teakwood sections.

Still, the trust must have the aesthetic appeal of teakwood.

After a brainstorming session with the client and the designers, we came up with the following solution:

Since the trusses were placed at a height of 40 feet from the ground, it would not be easily discernible if it is a solid wood or truss covered with teakwood planks.

It would be prudent to use structural steel trusses with teakwood planks to cover the steel trusses and give it a ‘teakwood look’.

This solution meets both the structural and aesthetic functions.

This solution met the definition of Value Engineering since an amicable solution was reached by reducing the cost without compromising either the function nor the quality expected out of the steel truss.

Conclusion

Value Engineering is an essential part of Construction Project Management. Application of Value Engineering at every phase of a project life cycle ensures that both technical and commercial aspects of have been thoroughly scrutinised to ensure best value for the money spent without compromising or sacrificing quality, function and performance.