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VALUE ENGINEERING

The National Institute of Building Sciences’ Whole Building Design Guide defines Value Engineering as:

VE is a creative, organized effort, which analyzes the requirements of a project for the purpose of achieving the essential functions at the lowest total costs (capital, staffing, energy, maintenance) over the life of the project. Through a group investigation, using experienced, multi-disciplinary teams, value and economy are improved through the study of alternate design concepts, materials, and methods without compromising the functional and value objectives of the client.

Value engineering is a way for the contractor to reduce his price.  Value engineering can also increase the contractors’ chances of securing the project.  Request for value engineering cost savings are usually initiated because the project is over budget.

Remember, that Value Engineering really doesn’t offer “value;” the main objective is reducing costs. However, the contractor should try to retain value. The earlier the process begins for VE, the greater the results.

The most common value engineering and price reduction suggestions:

  1. Substitute loadcenters for panelboards.
  2. Substitute copper bus in panelboards with aluminum.
  3. Substitute copper core transformers with aluminum.
  4. Cable tray and conductors in lieu of conduit feeders.
  5. Use aluminum conductors in lieu of copper for feeders.
  6. Combine and trunk branch homerun circuits.
  7. Reduce wiring methods to minimum code standards.
  8. Reduce material quality – fixtures, lighting controls.
  9. Reduce the number of branch circuits for lighting and branch receptacles by loading circuits to maximum devices.
  10.  Relocate panels to central locations and reducing the length of homeruns.
  11.  Exclude excavation, backfill, and concrete encasement.
  12.  Exclude concrete site lighting standards.
  13.  Exclude painting of exposed conduits if required.
  14.  Exclude concrete housekeeping pads.

The contractor should be careful about offering very detailed value engineering costs savings.  It would be best if you could sign a contract for the project and then negotiate the savings.  Sometimes, this is not possible.

Things to remember when offering and considering Value Engineering:

  1. Document the source and objective of the Value Engineering request.
  2. Request in writing, clear directives from the engineer of the approved options.
  3. Clearly establish the scope of the design.
  4. Is the request for Value Engineering timely?  if not, how will it affect labor and installation costs?
  5. Does the request involve materials and equipment already purchased?  If so, how will the owner allow credits to be given?
  6. Be sure the Value Engineering requests are owner desired.

Remember, estimating is expensive, poor estimating is costly, but quality estimating is profitable.