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Value Engineering
Practical Law Glossary Item 1-551-1726 (Approx. 3 pages)
Glossary
Value Engineering
As used in construction, a systematic, team-based approach to reviewing project elements in an attempt to reduce costs while maximizing the functionality of those elements.
While often used as a cost-cutting tool, value engineering serves other functions, including:
- Evaluating different design alternatives.
- Identifying alternative materials.
- Improving the functionality of a system.
- Identifying and addressing potential schedule or construction risks.
Value engineering relies on the equation, Value = Function ÷ Cost. The multi-step process consists of:
- Evaluating the owner's program or otherwise obtaining information about the project, design element or system requirements under review.
- Performing a functional analysis of those requirements in conjunction with budgetary constraints.
- Working as a team to brainstorm creative solutions.
- Analyzing and ranking the potential alternatives in terms of cost, feasibility, and value received.
- Presenting the alternatives to the final decision-maker in a comparison-based report.
Value engineering can be performed for the entire project or limited to specific design elements or systems. Value engineering can take place at any point during the design process (see Practice Note, Private Construction Project Delivery Systems: Overview: Box, Customary Design Phases). An outside consultant can be retained to perform or lead the analysis or the owner can rely on the resources of its own design and construction team.