Blog#3 | Value Engineering Is Really Value Added
How many times have you heard a discussion about Value Engineering in a conference room, job trailer or the field? Most of the time these conversations are between laborers, foreman, superintendents, project mangers, owners and engineers. There are not too many topics that transcend every aspect of the project life cycle both in the office and the field. In a time where job costs often climb past the original estimate, using the Value Engineering process should be a no brainier.
Value Engineering and the utilization of it is one of the many differences between private and public projects. The motives for a successful private construction project to be completed on time and on budget are obvious. The private owner has fixed or limited cash flow, and the financing is structured heavily on the project completion date. Not to mention the way private projects are structured with layers of management and boards. On the other hand, you have public projects that are financed and structured almost completely opposite. The costs can not go over a certain approved number, so all jobs put out to bid have a multiplier and additional contingencies in reserve to ensure they do not go over the approved budget. The hardest thing to do on a public project is to go back to the council and ask for more money after the project has started. There is not much incentive for public owners to complete a project early unless they add in an early completion incentive. (This is not very common unless it is life safety or public health.)
The private projects of recent have had very good success with implementing some sort of Value Engineering across the project which is in place to benefit both the contractor in terms of money and the owner in terms of either reduced cost and/or a better project. The majority of hard bid public projects are not structured to benefit the project, owner or contractor, so they just get built per plan! The best success I have seen on the public side is on Joint Ventures and alternative delivery models like design build or GC/CM. At the heart of these alternative delivery models is the goal to ensure the most efficient and cost effective process possible. How do we incentivize change on the traditional public construction projects? It is human nature for people to need an incentive to make change. Mandates only deliver compliance and the benefits are lost along the way. I am sure there is room for improvement in both the public and private construction markets, but looking at the industry as a whole, Value Engineering could be used more. We see the benefits, we know they exist, so how do we get more out of our current projects? We must utilize new technologies on projects though Value Engineering. This can include changes to specifications, procurement, plans, means and methods of construction.
New technologies will allow the contractor and craft to play a bigger role in the Value Engineering process, as alternatives are reviewed and evaluated. That is not to say that I have not heard some crazy ideas from the craft, but I have honestly heard equally insane ideas from owners and contractors. The funniest idea I ever heard was in a Value Engineering meeting, regarding how to move lots and lots of material (bricks, steel and conduit) through very tight spaces. The idea was not through the use of conveyors, forklifts or any other conventional method, but Monkeys! I am not kidding. Monkeys. The senior manager was dead serious. The need for the four steps in the Value Engineering process is just and has the right goals in place. This process needs to be used more and encouraged at the contract level. I have seen one owner use an eight step process that at first seemed cumbersome and timely, that ended up running very fluid and efficient. In many cases the Contractor now has a better grasp of the existing conditions than the Engineer who made the plans some time ago and often without even a site visit. Contractors have advanced hardware like laser scanners, robotic total stations and UAV's coupled with in-house Professional Engineers and full BIM teams that rival the best small engineering firm.
To increase margins and decrease risk for the contractor, practices like Value Engineering will need to be employed more frequently. The benefits must be realized for both parties to value the changes and be on board. One can not lead the other. This partnership can and will lead to improved utilization, decreased schedules and a project completed on budget, all while building a better final project. That is, after all, what everyone in construction wants.