The Importance of Value Engineering

Posted by Barbour ABI on 6th October 2021 -

Value Engineering, or as Dame Judith Hackitt described it, “The race to the bottom” has long been a part of the construction industry. Chris Ashworth of Competitive Advantage considers what it is, how it is used and the future implications for the industry.

Value engineering was first developed during the Second World War to overcome problems of product shortages. So, with many industry bodies predicting that product and labour non-availability will continue into 2022, it is a tool that the construction industry needs to be using.

If you look at a definition of value engineering you will see that it is a process to identify and eliminate unwanted costs, while improving function and quality. In construction this means considering available material, construction methods, transportation and site restrictions. Most importantly, it should happen at project inception where the benefits can be greatest. As a process this makes good sense, and if it is applied at Stage 2 or 3 of the RIBA Plan of Works it can be effective. This creates a situation where the architect and engineer’s concepts can have input from the contractor to develop a practical design solution. Perhaps opting to use offsite manufacture. It is an approach used by some clients to great effect.

However, very often the process of value engineering takes place at Stage 5 of the RIBA Plan of Works when the sub-contractor is appointed. Grenfell is a classic example of this. Very often, the role of value engineering is then not to improve function and quality but just to reduce cost. And in the drive to achieve this function and quality are compromised. In her interim report ‘Building a Safer Future’ Dame Judith Hackitt said “It has also been observed that the use of ‘value engineering’ is almost always about cutting cost out of a project, at times without due reference to key specification requirements” (Point 1.66).

It is also common practice for architects to name a product with the qualification ‘equal or approved’. In doing this the architect is nominating the product they have selected as most suitable to deliver the performance required. But they are recognising that there may be alternatives that are just as good, but with better price or availability. By adding the caveat ‘equal or approved’ they are giving the contractor the option to negotiate with suppliers and to propose alternatives. But this is where the correct and thorough wording of the specification is so important. If it is not comprehensive, then there is a risk that the intended performance might be compromised. For example, a product may deliver the thermal performance required but fail to provide the necessary fire performance. And those undertaking the value engineering process must fully understand the intended performance and have the technical competence to make these decisions before they start to eliminate costs.

A common reason for changing the specified product during construction stage is non-availability. This is probably more of an issue now than ever before. In the past changes would be made at this stage relatively quickly to avoid site delays. And it is not unknown for the contractor to use it as a means to get a lower cost product approved. While probably still happening with many products, there is a much greater awareness amongst contractors of the hazards and consequences of a substitution for a fire resisting application and in particular with cladding. This is taking up a lot of administrative time as they check that any alternatives are fully tested for that application and ensure that all components used are those in the approved construction. For example, it is not acceptable to switch one brand of plasterboard for another as the alternative may have been tested in a slightly different construction with different dimensions for fixing and components. Quite a challenge when trying to overcome product shortages.

So, with continuing problems of product non-availability there is an increasing likelihood of product substitution. If buildings are to deliver the intended design performance, it will be important that product manufacturers support architects by providing comprehensive specifications which can be used. And that when substitutions are made, they are approved by people who are competent in that aspect of design.

In the future there is a place for value engineering, but it should be a process with input from designer and contractor at the concept design stage. Fortunately, BIM is an enabler for this. Having a clear definition of the performance required with comprehensive product specifications will help prevent a compromise in performance and quality due to value engineering during the construction phase.