Value Engineering... Missed & Misunderstood

It is the same discussion I have from time to time about, of course, Value Engineering in Construction Projects; and the same question: why can't we attain the best utilization of it, especially in Gulf Countries?

Construction, driven by the real estate market, got more challenging for developers and contractors. Developers aim to build as low as it gets, which adds more pressure on contractors who aim in return to survive the fierce competition. So logically, this best utilization should be achieved, but NO.

I will list below some factors that I personally witnessed being the root cause of losing valuable opportunities. I encourage you to address other factors, as well.

• Limited time for Cost Managers: Although studying and advising potential improvements is part of the Cost Managers' job, they often do not have sufficient time to conduct a thorough analysis due to rushing processes to start the Construction.
• Misconception and resistance to change: Employers may be hesitant to approve VE proposals due to concerns about potential risks or uncertainties associated with changes to project plans, the final product or life cycle cost.
• Lack of Incentives: Employers tend to decrease the shared saving percentage with the Contractor to such an extent that it diminishes the Contractor's motivation to invest in Value Engineering.
• Lack of specialized expertise in VE: This applies to Contractors and Cost Consultants despite having in-house teams dedicated to VE, these teams may not possess the necessary knowledge and experience to effectively implement VE strategies.
• Contractor's time constraints: Contractors may face tight project schedules and may not have the time to devote to VE. Especially, when a long approval process is expected.
• Lack of awareness and knowledge: Contractors may not be aware of the potential benefits of VE or may lack the necessary knowledge and expertise to propose VE proposals effectively. This can lead to a lack of confidence in proposing VE proposals.
• Fear of reduced reward: Contractors may be hesitant to propose VE proposals as it may reduce their overhead and profit markup compared to the overall benefit from VE proposal.
• Uncertainty of the outcomes: VE proposals can require significant effort and resources, and the resulting cost savings may not be enough to offset the costs incurred. Therefore, contractors may prefer to focus on completing the project quickly and efficiently rather than investing in VE.

It is important to note that Value Engineering is not solely about cost savings, but also about optimizing the project's value by improving its functionality, quality, and overall performance. It can lead to enhanced project performance, reduced project risks, and increased stakeholder satisfaction in terms of Cost & Quality.