Most of us in manufacturing and construction-related fields probably have had some exposure to value engineering (VE). I do not know about you, but I can honestly say I have never had a good experience with it. One of my pet peeves is the term itself.
SAVE International (formerly the Society of American Value Engineers) defines VE as “a systematic and structured approach for improving projects, products, and processes.” In other words, it is a method to improve the value of a product or service either by improving function or reducing cost. Unfortunately, it generally is easier to reduce cost than to improve functionality, as VE—at least as generally practiced in our industry—rarely adds real value to a project. It does save initial cost, which, of course, is why owners allow it on their projects, particularly when they see them going over budget.
If VE is done properly—that is, during design—I have no doubt it can produce real benefits. More often than not, however—at least on construction projects—VE is done after the fact by contractors with little or no input from design professionals, and, often, these contractors avoid liability for less-than-desirable results. Case in point: a project involving the renovation of a 12-year-old commercial office building on which I’m currently involved. The building, which utilizes water-cooled package units for primary cooling, is located near coastal Miami, on the flight path of Miami International Airport—obviously, a very corrosive environment for roof-mounted mechanical equipment. The original specifications called for a stainless-steel cooling tower. The project was over budget, so as part of VE measures to reduce upfront cost, the contractor convinced the owner to accept a cooling tower (even the basins) of galvanized construction. Initially, the cooling tower saved the owner approximately $35,000. Today, however, the cooling tower has extensive damage caused by corrosion (it literally is falling to pieces) and is being replaced at a cost of nearly $500,000. Amortized over the cooling tower’s 12-year life, the cost is approximately $41,000 per year. As for the contractor who “saved” the owner $35,000? He’s long gone, of course.
This is just one example of VE gone bad on a construction project. If you have a VE story—bad or good—to share, please post it below. And remember, cutting cost without building value is NOT value engineering!