What is value engineering and how can it help you control costs in Real Estate Development?

1 The principles of VE

VE is based on the premise that value is the ratio of function to cost, and that function is what the project needs to perform or achieve. Therefore, VE aims to increase value by either increasing function or reducing cost, or both, without compromising quality, safety, or aesthetics. VE follows a structured approach that involves the following steps: information gathering, function analysis, creative brainstorming, evaluation and selection, development and presentation, and implementation and follow-up.

2 The benefits of VE

Virtual Engineering (VE) can help you control costs in real estate development by providing several benefits, such as reducing unnecessary expenses and waste, increasing efficiency and productivity, enhancing quality and functionality, and improving customer satisfaction and loyalty. VE simplifies features that do not contribute to the project's function or performance, streamlines design and construction processes, improves coordination and communication, avoids delays and rework, and finds innovative solutions that meet or exceed the project's requirements and expectations, adding value to the end-users and stakeholders. Ultimately, VE can help you deliver a project that meets or exceeds customers' needs, preferences, and budget.

3 The challenges of VE

VE is not without challenges, however. Common obstacles that you may face when applying VE to your real estate development projects include resistance to change from the project team, the client, or the end-users, lack of time, resources, or expertise to conduct a thorough and effective VE analysis, and difficulty in measuring and quantifying the value and benefits of VE. These issues can be particularly problematic in complex or large-scale projects, as well as when it comes to intangible or subjective factors such as aesthetics, comfort, or satisfaction.

4 The best practices of VE

To maximize the potential of VE and overcome any challenges, it is important to involve a multidisciplinary team of experts and stakeholders who can provide diverse perspectives and insights. Additionally, VE should be conducted early in the project's lifecycle, such as during the conceptual or schematic design phase. Furthermore, a systematic and rigorous methodology, such as the Job Plan developed by the Society of American Value Engineers (SAVE), should be used to guide the VE process and ensure its quality and consistency. Lastly, communication is key - it is essential to clearly and effectively explain the purpose, objectives, and results of VE to the project team, client, and end-users. Don't forget to solicit their feedback and support!

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?