Better performance. Lower cost – true value engineering
13 June 2019
By Mark Tomlin, Chief Executive Officer at VJ Technology
Value engineering is a phrase that has divided the industry. At a time when the sector is under close scrutiny around the quality of what we build, value engineering – which not so long ago referred to a supply chain working to deliver best value – has been thrown under the bus in some quarters and blamed as a catalyst for cost-cutting, poor quality and performance. But is this right? I for one do not think so.
At the end of last year, Dame Judith Hackitt, author of ‘Building a Safer Future: Independent Review of Building Regulations and Fire Safety’ addressed an audience at the annual CABE (Chartered Association of Building Engineers) conference. She spoke about the need for a joined-up regulatory process that went hand-in-hand with a tougher regulatory reform regime with real penalties and sanctions for those who didn’t conform. She argued that the term ‘value engineering’ should be driven out of construction, saying that it was a phrase she would be ‘happy to never hear again’.
“It is anything but value. It is cutting costs and quality,” she said. “The structure of industry has to change to make it more effective. We need to put a focus on the way in which buildings are procured. If we have a process that makes people bid at a cost they can’t afford to deliver at, we set ourselves up to fail.”
Whilst I agree with her sentiment about the industry’s need to change and be more effective, I think she has misinterpreted the ‘value engineering’ phrase. Following her statement, there were many who were quick to point this out.
So, what is the real definition of value engineering? Officially, value engineering is not a design/peer review or a cost-cutting exercise. It is a creative, organised effort which analyses the requirements of a project for the purpose of achieving the essential functions at the lowest total costs (capital, staffing, energy, maintenance) over a project’s lifetime. Through a group investigation, using experienced, multi-disciplinary teams, value and economy are improved through the study of alternate design concepts, materials and methods without compromising the functional and value objectives of the client.
In simplistic terms, we have the price – what someone offers to sell or produce something at; then we have the cost. This covers everything that is needed to have the product or service installed and working. We then have the value – this is what the working product or service is worth to the customer and end user. Value engineering is therefore the process of optimising the cost to meet the customer’s requirements for the purposes of the product or service throughout its working life. So, genuine value engineering is about added value through a process of design and evaluation.
The problem is the word ‘value’. To many this means reducing cost, and all too often when cost comes in to the equation, lowest cost wins. This leads to quality – and sometimes performance – being compromised. On virtually every project there is a need to reduce cost and a desire to improve margins. But reducing costs shouldn’t be about reducing quality, it should be about finding a way of delivering what is required at a lower cost, without compromising performance, safety and function.
I can think of a number of projects where value engineering has delivered true value to the client. For example, there have been instances where VJ Technology has been able to assess a design and provide the client with a solution that uses a high- grade fixing, that due to their performance, means fewer are required. Whilst individually the high performance fixings are more expensive, when you factor in the fewer fixings required and the associated time savings, it works out much better value – a better performance at a lower cost.
I stand by the true meaning of value engineering. The benefit of turning to specialist companies such as VJ Technology is so that you can utilise their skills and expertise and they in turn will provide recommendations that offer value, without compromise. And this is the thing to remember – value engineering is not about compromise, it is about adding value though engineering expertise.
