Value engineering with construction worker illustration
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Value engineering is a method of systematically increasing the value of production. In construction, value engineering can help project stakeholders identify alternative approaches that lower costs, reduce inefficiencies, and increase functionality.

The idea for value engineering emerged during World War II, when widespread shortages led engineer Lawrence D. Miles to establish a method for developing low-cost alternatives. With the construction industry facing material and labor shortages in the wake of the COVID–19 pandemic, there has never been a better time to consider the benefits of value engineering in construction.

In this post, we’ll show you the purpose of value engineering in construction and the six key phases of applying this methodology to any construction project.

The value engineering process

Lawrence Miles codified his value engineering approach in 1947, and his method is preserved today by the Society of American Value Engineers (SAVE). The organization works to educate and train professionals in the process of value engineering, which they break down into six key phases.

Their approach is known as value methodology, which involves six phases: information gathering, functional analysis, creativity and innovation, evaluation, development, and presentation

The goal of this process is to provide alternative approaches to construction that increase value. A common misconception about value engineering is that it is about simply reducing the project scope. But when you look at the formula for value, this idea falls apart. 

According to SAVE, value is defined as function divided by cost. 

Value =Function / Cost

With this formula in mind, value engineers look to either decrease costs or to increase function, since both of those approaches will add value to the project. 

The 6 phases of value engineering

The value engineering process includes six key phases: 

1. Information gathering
2. Functional analysis
3. Creativity & innovation
4. Evaluation
5. Development
6. Presentation

Through this process, the principles of value engineering help the key stakeholders in a construction project — including owners, architects, structural engineers, contractors, and construction managers — to make informed decisions about the best approach to building. 

StageObjectiveKey Question
Information gatheringDetermine the owner’s intention for each aspect of the project.What is the goal?
Functional analysisExplore project details to find opportunities for changes.What does it currently do and need to do?
Creativity and innovationBrainstorm alternative approaches to meeting the building’s needs.What other options are there?
EvaluationConsider the advantages and practicality of proposed innovations.Is this idea beneficial and realistic?
DevelopmentPrepare a comparison of cost and functionality.How do costs and function change with the new idea?
PresentationDemonstrate pros and cons of proposed alternatives.What are the owner’s options?

These phases can be applied to nearly any construction project, though projects with a larger scope or greater complexity are likely to see more benefit from the value engineering process.

How does value engineering work in construction?

The value engineering process in construction involves collaboration between various stakeholders, typically during the design phase of a project. 

Value engineering works for both design-bid-build and design-build projects. With both project delivery methods, value engineering takes place during the design phase, though design-build projects have the advantage of involving the contractor before bidding takes place.

Collaboration between stakeholders

Value engineering takes the effort of nearly every stakeholder in a construction project, from owners to contractors and everyone in between. 

Owners have goals and objectives for the building project, which will set the guidelines for all future analysis of alternatives. Additionally, owners have significant influence over the ultimate direction a project takes after the value engineering process.

The design team, which includes architects and structural engineers, propose the building’s initial design and work to incorporate any alternatives within the parameters of safety as well as sound engineering and design principles.

A Certified Value Specialist (CVS) or other value engineering professional guides the process of increasing value through decreased costs or improved function.

A cost estimator calculates the costs associated with various proposals to change aspects of the building’s design or construction techniques.

The construction manager and potentially a general contractor work together to discuss the feasibility and implementation of the proposals brought forth by the value engineering process.

Together, these stakeholders work to identify alternatives to the original design or construction process, evaluate the feasibility of those alternatives, and implement the new approach if the owner deems it satisfactory.

Example of value engineering in construction

Value engineering in construction involves looking at many aspects of a construction building project, including:

  • materials
  • construction methods
  • design needs
  • functionality
  • lifespan
  • cost

Taken together, all of these aspects contribute to the value of a construction project. When a project goes through the value engineering process, the team seeks to maximize the building’s value, balancing cost with immediate and long-term function

Here’s an example of what the process might look like with a specific aspect of a building.

In the information gathering phase, the team will work to understand the owner’s intentions for the project. For example, the owner may have a focus on energy efficiency that has motivated the initial design proposal.

During functional analysis, the team identifies project components that could change. For example, the building’s windows may use thicker glass to increase energy efficiency and temperature regulation — but at a high cost. 

Throughout the creativity and innovation phase, members of the team put forth as many alternative approaches as possible. For example, the team might look into window treatments, special coatings, window placement, and more. 

When the team begins the evaluation stage, the goal is to narrow down the initial list of ideas to those that are beneficial and realistic. For example, moving windows may compromise the aesthetics of the design, so only window coatings are considered realistic. 

As the team works through the development phase, they’ll look into the specific implantation, cost, and functionality of the proposed change. For example, they may find that the lifespan of window coatings is shorter than thicker glass, but the cost of materials and installation is significantly lower. 

Finally, during the presentation phase, the team provides a comparison between the original and proposed design for each aspect of the project. Importantly, a value engineering team is not aiming to sell the owner on any particular implementation, but simply to provide the advantages and disadvantages of each potential implementation. 

Overall, this process works to identify a variety of ways to improve the value of a construction project — not simply by cutting costs, but also by improving functionality. 

How value engineering affects contractors

When seen as strictly a cost-cutting exercise, there’s little incentive for a contractor to embrace value engineering. It is, after all, designed to benefit the owner. 

However, true value engineering doesn’t necessarily reduce the contract cost or diminish the price of the work. Creating value often requires the owner to spend a little more up front to reap rewards down the line. 

Perhaps the greatest advantage to value engineering for contractors is in the trust it builds. By leveraging your experience, your expertise, and your relationships to add value to the project, you build a level of trust with your client that will lead to repeat business, an enhanced reputation, and fewer disputes. People are generally happy to hand their money over when they know they’re getting real value for it.

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