Value Management (VM) and Value Engineering (VE) have a common purpose: to maximize project value and achieve the project’s vision. Although, even the most experienced developers, who understand that VM and VE enhance project value, often have difficulty explaining how the two differ.
In major construction projects, VM and VE support each other and the project as a whole. When all project team members are aligned about the differences and benefits of each, the integrity of the project vision can be maintained.
Common Misunderstandings Limit Creative Solutions
The most common misunderstanding about VM and VE is at what stage in the project lifecycle they are applied. VM and VE have different purposes. Their differences must be understood and applied appropriately to make the best use of each and maximize their impact.
- Value Management is proactive, conceptual, overarching, and strategic. Its benefits are maximized at the beginning of a project but are experienced throughout construction and beyond.
- Value Engineering is reactive, specific, and immediately practical or technical. Its benefits are maximized during construction in response to important changes. Those changes may result from a number of variables, including technological advances, supply-chain problems, unforeseen material cost increases, or newly discovered obstacles which impact how to proceed.
The Power of Value Management
When a major construction project is well planned, it is more likely to progress on time and on budget. Early engagement and collaboration between project stakeholders mitigates risks and obstacles during the construction phase. Applying value management during this early phase delivers design and planning benefits that reduces risk, maximizes impact, and support the project vision.
Consider a simple example of how value management impacts projects. The original concept may include an efficient structural design which uses fewer materials, with the intent of saving construction costs. However, the contractor may know that additional considerations, including A/C ducts, electrical wiring, or fiber optic cabling will be required, therefore potentially increasing other costs. These modifications must be assessed against their ultimate value.
Another example would be site conditions. If the building being constructed is too close to an existing building or to a property line, the approach to construction may need to be rethought. If, as a result, single side form work or shotcrete walls have to be utilized, it is better to know that and to plan for it before the site is occupied by contractors, equipment, and materials.
Changing construction materials or making fabrication savings may impact future maintenance or replacement costs. In turn, these changes impact building use as well as affect the client’s vision and ultimate objectives. Those factors are considered as an integral part of the VM process.
Involve All Stakeholders As Early As Possible
A prime element of project success is for all project team members to engage early and continuously throughout the project’s lifecycle. This collaboration helps to develop proactive solutions and to address changes as they present themselves. Managing those changes properly maintains the vision and delivers the intended project results.
Three Main Areas That Benefit from Value Management
- Structure: Engaging the GC at the earliest opportunity enables input into the ‘bones’ of the project. Altering them after city permitting or supplier orders have been placed, is both complex and time-consuming.
- Constructability: Ensuring the architectural plans are detailed enough and accurate from the GC and specialist contractors’ positions minimizes risk or misinterpretation of the construction phase.
- Means and Methods: As the general contractor, our goal is to ensure the project is constructed as efficiently and effectively as possible. A well thought out logistics plan and a coordinated project pre-planning process is critical for this success.
Value Engineering: Purpose and Process
As noted above, VE is reactive. It supports the previous VM decisions to meet specific situations. Major construction projects take time. During construction, new on-site situations come to light which must be addressed to minimize any delay. Market conditions also change. The supply-chain may be disrupted, and materials may not be available as they become needed. One materials supplier may increase their prices, but another may not. VE decision-making addresses such situations.
The VE Environment
Value engineering is primarily activated in the areas of Constructability and Means and Methods.
VE decisions are made to address specific real time situations and are essential in problem solving. However, effective VM planning targets to prevent many of these instances to begin with.
When Value Engineering decisions are made, it should be within the Value Management context. For example, if a supplier cannot deliver as originally planned, a VE decision is made to find a supplier who can deliver comparable materials at an acceptable price. If circumstances come to light that could not have been foreseen, VE decision-making addresses and solves the problem.
More generally, there are always opportunities to save money during construction and delivery. Continually applying VE processes during the construction phase, may lead to sourcing the same material from a lower-priced supplier, thus reducing the overall project costs.
To quote Joseph Howell, Director of Preconstruction, an ongoing purpose of VE is to “. . . use value engineering to help find comparable products that have a better price point to maintain design-intent as well as the budget.”
Making Value Management and Value Engineering Work for Our Clients
MPC firmly believes in a collaborative approach. When all project stakeholders work together, that focus helps to ensure the project’s vision is maintained from planning through completion. Our team focuses heavily on the pre-planning process to ensure an efficient construction phase. Once construction begins, VE processes are used appropriately within, and as part of, the VM strategy.
With that as a foundation, MPC continuously engages with trade partners to determine which appropriate alternate materials and methods we can apply to deliver pre-planned results.
We believe that better construction begins with a conversation. If you are based in the greater Denver or Austin area and would like to discuss how our approach will deliver better results for your business, click here.
MPC’s United Project approach for Construction Management is a strategic initiative to minimize risk and maximize opportunities. Our informed design process will coordinate your plans and ensure a successful build.