struggling between cost and scope
struggling between cost and scope

The bids start trickling back and , oh snap, they are too high!. What should we do?  Value Engineering!…We’re not talking about those good values we learn as little kids. We are talking about selectively editing out unnecessary items, reducing the cost, substituting x for y  and bringing in the project on budget.

 

substitutions
But many clients have that puzzled look when we start the  conversation, so here goes…It’s more than just reducing costs after thumbing through the drawings…It’s part gut check, part triage, and reviewing concepts from Economics 101.
Do you remember economics 101, “marginal utility” ?
Value engineering (VE) is a systematic method to improve the “value” of goods or products and services by using an examination of function. Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost.
cost reduction
Value Engineering has been applied by many private industries, and local, state, and federal agencies. VE had its origin during World War II, at General Electric, when innovation was required because of material shortages. Some critical materials were difficult to obtain, and a great many of substitutions had to be made. Mr. Harry Erlicker, a vice president, made the observation that many times these changes resulted in lower costs and improved products. This encouraged him to seek an
approach to intentionally improve a products value. This works hand in hand with bidding http://seconarchitect.com/bidding-mistakes-for-the-hayseed/.
Sometimes there are major re-designs, sometimes just a tweak to the specifications. But here is typically what happens – as well as the usual suspects that are lined up against the wall:
  1. 1.Thoughtful review of the original parameters and objectives
  2. 2.Review of priorities, Have there been priority or functional changes since the beginning of the project?
  3. 3. Is there functionality that can be reduced of eliminated?
  4. 4. Does the scope of the project need adjustment? Can a room be made smaller? Can several functions be merged?
  5. 5. Are there any substitutions that can achieve the same result, or “close enough” and save money?
  6. 6. Are there ways of structuring the deal to be built in another time of the year to save money? You get the idea.  Get creative-not cheap.

Article by Steven Secon