Value Engineering – Balancing Function with Cost

Bob Cooper
Global economic downturn is driving clients to find new innovative ways to keep projects within budget. In tandem, owners associations are seeking to reduce the cost of maintaining common areas and facilities. Value Engineering (VE) can help businesses to streamline their organisations.

What is Value Engineering (VE)?

VE should not be confused with cost-cutting. VE means identifying value improvement opportunities before balancing them against a cost benefit ratio. For example, when investing in a property, clients often consider preventative maintenance as an unnecessary cost. But, instead, it's a way to protect their investment and reduce long term operating costs.

How does the VE process work?

  • It analyses the function of the investment building against defined parameters.

  • These are the client's goals, needs and objectives on a short, medium and long-term basis.

  • Value improvement opportunities are then identified to deliver the client's overall needs.

This is a systematic approach to delivering the required functions, at lowest cost without detriment to quality, performance and reliability. It produces tangible results.

The Faithful+Gould approach

  • A detailed consultation process with the client and their relevant stakeholders

  • Interactive workshops, to ensure the business goals and objectives are being met by the project/services delivery.

  • Asking key questions early on in the project. This saves valuable deliverables (time, quality, function, money) at later stages.

When to apply VE?

  • Earlier rather than later.

  • The greatest opportunity for applying value improvements is when the cost of implementation is at its lowest.

  • As the project continues through the various stages and VE becomes reactive rather then proactive, the costs rise and the level of value improvements reduce.

  • VE workshop reviews at clearly defined stages through the project life cycle will increase the chance of project success.

  • Belief and support from senior management in the process also increases chance of success.

As any business matures and evolves, the lessons learnt from a VE process should be fed back into its system. VE complements the continuous improvement cycle such as those found in ISO 9000:2005.

Prior to economic downturn, many projects enjoyed a continuous flow of funds.  Today this has slowed considerably. This makes identification and achievement of value improvement opportunities a top priority. Integrating value engineering into a business management system is one important, systematic way of achieving this.