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Project Budget Overruns: Value Engineering Options

Construction projects occasionally require changes at the design stage to achieve a workable solution. A reduction in the available budget, stakeholder differences, a project improperly estimated at the onset, an unexpected event leading to increased costs, or some other occurrence that has driven the expected costs beyond the level of funds available – any number of events or circumstances can leave builders looking for ways to reduce the cost of a project by any means possible.

To solve their dilemmas, many builders are turning to a formal cost analysis process called Value Engineering (VE). The process is not intended to correct omissions in the design, and it is not a cost cutting process that sacrifices needed quality, reliability or performance. Nor is it a part of the normal design process. It is intended to replace portions of the original design without a loss in functionality or value.


Depending on the size of the project, the VE process can be initiated at the concept stage but is more often undertaken at the schematic design stage or mid to late in the design/build stage when plans have been solidified and any attempt to redefine the scope of the project is difficult to accomplish.


Value Engineering is typically done as a workshop conducted in group sessions bringing together a multi-disciplinary team – designers, engineers, estimators, project managers, field supervisors, and other relevant parties – under the guidance of an analysis leader. Depending on complexity, some projects require adding outside experts and external facilitation to conduct the process.

The process begins with a formal design presentation in which the design A/E helps the team understand the background and scope of the work that have influenced the development of the design. It’s also an opportunity for other people involved in the project to present their individual problems and general project concerns.


A Value Engineering analysis is different from the cost estimate, which typically outlines only the initial cost of the project, in that the VE team uses a systematic structured engineering approach to identify, classify and select the most appropriate ways to assure best value will be obtained over the life of the building.


All components of the building, including envelope, exterior façade, interiors, and MEP systems, are reviewed to address initial costs versus maintenance costs, life expectancy, energy consumption and total ownership costs over the designated period.


Once identified, the team breaks the components into functions, analyzes which ones are required and rates their level of value. They then brainstorm alternatives, assessing them for how they may improve effectiveness or sustainability, mitigate or avoid risks, reduce total life-cycle cost, and/or improve performance.


These alternative ideas are screened. Those that hold no interest are scratched. Advocates for various options are asked to explain their reasoning. The team discusses and records the pros and cons. The ideas are scored and broken into categories, then ranked and rated on a matrix.


The preferred options are merged into a formal plan. Each option is categorized according to key considerations with a cost estimate that puts the project on the most efficient path to completion.


The VE process concludes with a formal oral presentation with the client that recommends alternate methods, processes or products that can provide the same or better value with no extra cost, or, ideally, significant saving, to ensure everything meets the project goals and that the client is ready to move ahead.

The Value Engineering process can produce savings, improve the functionality of the project – both initial and life-cycle costs – and help keep the project within range of the initial cost estimate and project scope.

Interested in learning more?

Check out our guide on value engineering and alternative project delivery methods that can save you money and cut down on your schedule. 

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