Project Delivery

  • 1.  Value Engineering

    Posted 05-30-2011 10:38 AM
    This message has been cross posted to the following Discussion Forums: Center for Value of Design and Project Delivery .
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    Hi
    I am new to this site and was encouraged to join when I saw some recent discussion on value engineering (VE) and cost cutting - I hope I am not going over old ground. 

    My basic point is that there is a huge difference between value engineering and cheapening the product. If your value engineer is just cheapening the product ask them to identify other areas of work which offer additional potential to add value.

    Effective value engineering should enable the supply chain (including the architect) to be more profitable at the same time as delivering best value for the purchaser.  Fears about race to the bottom may be valid if people assume that the market focus is about buying space as a commodity.  However, I would question that assumption - space is the environment which motivates and enables organizations to do a great job in attracting and serving customers so there is plenty of scope to add value in design. 

    Think of value engineering as a proven approach which, when performed effectively, delivers creative solutions that enhance technical design performance and commercial performance by focusing effort on exactly what the customer needs. That focus enables right first time efficient working and creation of designs that really serve the client. For VE to work well it's not just about replacing components with cheaper versions, its about identifying real value drivers, refining design solutions, and making effective decisions which achieve an approriate balance between design performance and resources invested. And those decisions should fit with the client priorities. 

    I hope those comments help. 
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    Michael Graham
    UKValueManagement
    Stirling

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  • 2.  RE:Value Engineering

    Posted 05-31-2011 06:48 AM
    Michael:
    Your point is well taken. However, there is a major philosophical difference between the actual practice here  vs. the UK. Our Value Engineers are oft times the Constructor, with a vested interest in producing a project at or below the usual GMP. instead of being on a "Fee for Service" basis. They are intent on maxomizing their profit and not necessarily providing the best value.

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    Burton L. Roslyn, FAIA
    President
    Roslyn Consultants, LLC
    Roslyn Heights, New York
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    Original Message


  • 3.  RE:Value Engineering

    Posted 06-01-2011 05:14 AM
    Yes there are some differences in the philosophy adopted by value engineers. And the role of the value engineer as facilitator of the process for adding value can be different too.  But our building and construction industries have many common problems and opportunities.  

    The challenge is to have the team working together and making good initial design decisions which do not need to be revised later.  

    The problems of self interest and cost cutting at the expense of value seem to be generic issues. Unless people have a means of influencing other parties all people can do is look after their own business.   And this is a vicious cycle.  The contractor who has a reputation for 'does not deliver best value' will find it tough to negotiate new work.  

    Contract terms and conditions and the way in which gain-share incentives work affect behaviour.  When one party to the contract (client or contractor) is looking out for themselves at the expense of the other there will often be a problem.  Industry standard terms and conditions each have their own solutions to these situations. But are those terms understood, agreed(!), and applied effectively? It is the people around the table and on the job site who really make the difference between a job that runs well and one which is unsatisfactory. 

    Whether the client is a private individual or large organization VE can draw out the functional requirements of design up front in a way that enables people to understand the commercial position - cost to function explains proposals in terms of why the money is to be spent as well as how much and where it is spent.  And I would also add that when doing this work it is important to differentiate price and cost to understand the differences between impact on contract/market prices and impact on supply chain internal costs and profits.

    Perhaps all these issues indicate why clients and contractors need good architects to manage the commercial aspects of the job as well as to create good designs and prepare construction documents!  


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    Michael Graham
    UKValueManagement
    Stirling

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    Original Message