Value Engineering - the basics
PROJECTIVE DM
?? Helping Property Developers Reduce Risk & Cut Costs Through Smarter Design
The Basics of Construction Value Engineering: What You Need to Know
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Improving efficiency while maximising profitability is crucial for success in the competitive construction world. Enter value engineering – a concept that has gained significant recognition for its ability to unlock untapped potential in construction projects. In this introductory blog post, we will explore the fundamental principles of value engineering and why it holds immense significance in today's construction landscape.
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What is Value Engineering? Value engineering is a systematic approach that aims to improve the value of a project by optimising various factors, such as cost, time, quality, functionality, and sustainability. It involves analysing and evaluating every aspect of a construction project, with the ultimate goal of identifying opportunities to enhance value while reducing unnecessary costs.
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By focusing on value rather than just cost-cutting, value engineering considers the long-term benefits and the overall project lifecycle. It challenges the conventional notion that value is solely derived from low costs, emphasising that value lies in achieving the best possible outcome regarding quality, functionality, and stakeholder satisfaction.
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A mixed-use developer recently hired us to undertake value engineering for one developer on three separate apartment projects. Though a critical task for these projects was to bring the project costs back in line with the feasibility, one of the value engineering options was to re-evaluate the mix of the apartments to reduce the number of 1-bed apartments as these bring minimal yield and increase the number of 2-bed apartments. The result was not only to facilitate the development cost but also to increase the yield.
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In fact, along with multiple other Value Engineering options, we reduced the construction cost by approximately $5 million, just over 19%, but that will be a post for another time.?
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a.???? Cost Optimisation: Value engineering thoroughly examines project elements to identify cost-saving opportunities without compromising quality or functionality. By optimising costs, owners, developers and construction companies can improve profit margins and maintain a competitive edge in the market.
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b.???? Enhancing Efficiency: Through value engineering, projects are scrutinised, and potential inefficiencies are identified and rectified. By implementing streamlined processes and eliminating waste, construction teams can improve productivity and meet project deadlines more effectively.
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c.???? Quality Improvement: Value engineering emphasises delivering high-quality projects that satisfy client needs and expectations. By identifying and resolving design flaws or functional limitations early on, the final outcome will likely be more reliable and durable, reducing the risk of rework or costly repairs.
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d.???? Innovation and Adaptability: Value engineering encourages creative problem-solving. By re-evaluating existing practices, materials, and technologies, construction teams are better equipped to achieve innovative solutions that align with current industry trends or demands, ensuring long-term success.
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e.???? Stakeholder Satisfaction: Value engineering prioritises stakeholder satisfaction by focusing on value rather than simply delivering the bare minimum requirements. This leads to improved client relationships, enhanced reputation, and increased chances of securing future projects.
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Value engineering is a crucial approach that goes beyond cost-cutting in construction projects. By analysing and optimising various project aspects, value engineering enables construction companies to achieve improved efficiency, cost optimisation, enhanced quality, and stakeholder satisfaction. Embracing this systematic approach can significantly impact the success and profitability of construction ventures in today's competitive marketplace.
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Written by Gareth Barrett - Director - Projective DM - Value Engineering and building specialists.?