VE or Value Engineering. Two words everyone on a project hates to hear. (except for contractors and others that have found out how to work the system).
What is Value Engineering? Often times when a project is over budget, the owner, contractor, and design team will meet to find ways to reduce the cost of the project. Value Engineering is the term given to this process of eliminating areas that are over designed or not needed in a project. Unfortunately, this typically means that the owner is not getting the best overall value on their project. Value engineering rarely adds value to a project.
The right approach to design should mostly eliminate this part of a project. A great design team should be looking at life cycle costs when selecting materials and equipment for a facility, which should include a detailed cost-benefit analysis where the best overall products are included in a facility.
It should be noted that some of the products with the lowest life-cycle cost (think total cost to own) might include products that have high capital cost (or first cost) but low cost to operate (the amount you are paying each month). The prime example of this is LED lights. LED lights are often expensive to install, but last longer and are less expensive to operate then normal light bulbs. It is common knowledge that LED lights cost lest over the long haul, but are often on the chopping block during VE.
Typical VE options for commercial swimming pools include:
- Switching to a lower cost pool surface.
- Changing gutter styles.
- Reducing the mechanical equipment
- Accepting cheaper or less expensive deck products these often include scoreboard systems, waterslides, play features, bulkheads or starting blocks.
On projects were the VE process has failed, often times the owner is controlled by the bottom line. In this situation the contractor typically has the upper hand and can actually make additional money on the project.
An example of this is when a contractor removes an UV system for the project as value engineering. The owner will get a credit back from the contractor that is less than the piece of equipment actual price, which puts money into the contractor’s pocket for doing less work. This is when having a skilled design team that understand current market rate for equipment is able to hold the contractor accountable for the actual reduction of project cost.
On large projects, Value Engineering is typically done through a long “laundry” list of cost reductions where the owner is asked to decide on major items without much information on what is being proposed to reduce cost on a project. For a $20 million project, this list could be over a 100 items, with prices ranging from $5,000 to $500,000. In this scenario the owner is forced to select items almost solely based on cost.
Don’t give contractor the upper hand when it comes the project, hire a skilled architectural team to help you navigate this process. This team should be able to help hold the contractor accountable to the costs reductions that are being offered on the project.