What can we use instead? — That’s the question that kickstarted the concept of value engineering.
This breakthrough process maximizes efficiency and value — just as its name suggests— and can be applied to almost any sector, from logistics and healthcare to building. Keep reading to discover what value engineering in construction is & how it is revolutionizing the industry!
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What is value engineering in construction?
If this is your first time hearing about this concept, let’s start with the basics. Value engineering (VE) is a systematic & organized approach to providing the necessary functions in a project at the lowest cost. In short, it’s a method that ensures the owner or client isn’t overpaying for quality when there’s a more cost-effective option that performs just as well.
To understand value engineering in construction, you should think of it like a team sport. For example, a group of stakeholders — including architects, designers, engineers, contractors & project leads — work together to score the most wins possible by analyzing and redesigning building elements to cut costs, reduce time, and boost a building’s efficiency and sustainability while keeping quality intact.
Here’s a brief real example: In Torre Reforma project in Mexico City, the value engineering method was utilized to reduce costs and improve structural and energy efficiency. This approach is based on a methodology that aims to minimize costs without compromising quality or functionality and involves analyzing the building’s materials, structural elements, and energy systems to discover more efficient and sustainable solutions. It resulted in substantial savings on materials and the incorporation of sustainable systems such as high-efficiency glass and rainwater collection.
As a result, a seismic-resistant structure with elevated sustainability standards was achieved at a reduced cost.
The origins of value engineering
In the 1940s, American design engineer Lawrence D. Miles was responsible for purchasing raw materials for General Electric when manufacturing was at its peak. However, at the time there were severe material shortages, like copper & rubber, which posed serious threats to General Electric’s production chain.
To tackle this challenge, Miles had to search for suitable alternatives that could fulfill the function of unavailable materials. He discovered that some substitutes – like aluminum – weren’t only cost-effective, but actually better suited for his purpose. This realization was the origin of a new technique called “value analysis,” more commonly known today as value engineering.
Difference between value engineering & value analysis
When the VE concept emerged, these two ideas were used interchangeably, but today their main difference comes down to timing.
- VE is applied before a product is created, focusing on preventing unnecessary costs, primarily during the design phase.
- In contrast, value analysis is performed after a product is already in use, aiming to enhance its value by reviewing existing costs and benefits.
In a nutshell, while value engineering optimizes right from the start, value analysis deals with issues later, making tweaks throughout the product’s lifecycle as needed.
How it works?
Here is the step-by-step VE methodology applied to construction:
Gathering data
This first step is all about collecting information and getting a clear understanding of the project and its purpose. A value engineering team will examine the materials, schedule, costs, drawings, and specs until they are fully familiar with the project concept, who will be using it, and what is expected.
For example, in this phase, data is typically collected on the building’s location, its intended users, the type of building material required, and other relevant factors.
Thinking creatively
With the core expectations for the project documented, it’s time to explore new and different ways to develop it. This includes trying innovative approaches, taking risks on untested ideas, or creatively applying existing processes.
This phase is the “idea-generation” stage, where the team brainstorms potential design solutions to help the project achieve its required functions. It’s smart to focus on the big-ticket items like the structural system, heating, ventilation & air conditioning (HVAC) as they often represent significant costs and offer the most opportunity to deliver value.
Evaluating ideas
With a bunch of innovative ideas now on the table, it’s time to decide which are feasible and which are not. Experts, such as consultants in sustainability or logistics, may be brought in to help evaluate the feasibility of the potential options depending on the project type.
During this phase, ideas that are not viable are discarded. By the end of the evaluation phase, only the strongest options will remain.
Developing top contenders
Once ideas are ranked, the strongest options are selected for further analysis. The development phase is the next step in the value engineering process for building design & construction.
In this stage, each idea that passes the evaluation stage undergoes additional testing, including:
- Availability
- Pricing
- Long-term costs
- Required maintenance
The ideas that meet these criteria are considered viable and will then be developed into a proposal, which will be presented in the final stage of the project.
Presenting findings
With plans prepared and presentations ready comes the fifth and final step: presenting findings to the project owner or client.
This phase offers an opportunity to explore the final alternatives and determine if the proposal effectively meets the project’s needs as it progresses. The goal of the presentation phase in value engineering is to secure approval for the project.
Value engineering techniques
Let’s explore the techniques & technologies used to conduct value engineering.
Life Cycle Cost Analysis (LCA)
LCA is a technique that evaluates the total cost of ownership of a product or service over its entire life span. This analysis includes expenses such as initial costs, operation, and maintenance, among others. LCA helps make decisions that may have higher upfront costs but lead to lower total costs over time, which is beneficial in the long run for the project in which it is applied.
Pareto analysis
This method is used to identify the most significant factors contributing to a cost. This technique categorizes them to focus on the areas with the greatest impact. By addressing the critical factors that contribute most to costs or inefficiencies, teams can aim to achieve significant improvements with little effort.
Benchmarking
Benchmarking involves comparing a project’s processes and costs with those of similar projects or industry standards. This technique helps teams identify best practices and performance benchmarks, enabling them to set realistic targets and pinpoint areas for improvement.
Benefits
If you’re wondering how VE can benefit your construction business, here are 3 advantages that will make a difference:
Increased efficiency
By reassessing design decisions, construction techniques, and operational processes, value engineering streamlines workflows, removes bottlenecks, and optimizes resource use.
This translates into smoother project execution, shorter lead times, and higher productivity. With greater efficiency, projects stay on schedule, stay within budget, and adapt flexibly to changing needs, maximizing overall output.
Reduced costs
Cutting costs is one of the main perks of value engineering. This approach takes a close look at every part of a project and spots where money can be saved.
Trimming expenses improves the company’s bottom line, boosting profits and eventually making it more competitive.
Increased sustainability
Value engineering plays an essential role in promoting sustainability. By making cost-optimizing decisions that are also eco-friendly, such as choosing sustainable materials or improving energy efficiency with alternative fuels, VE helps align projects with green principles and improve their environmental impact.
Emerging trends & innovations in VE
Artificial intelligence (AI)
Artificial Intelligence (AI) is a hot topic rapidly transforming the construction industry. Value engineering will increasingly rely on AI to automate and optimize various processes. By integrating AI with value engineering, professionals can make more informed decisions and enhance the accuracy of their evaluations more quickly and comprehensively.
Building Information Modeling (BIM)
One of the key trends shaping the future of value engineering is the integration of digital technologies such as BIM. Building Information Technology is a tool that streamlines value engineering in construction projects by allowing project managers to assess various rendered model images and select the best value engineering alternative based on the project’s goals. This also allows these objectives to be evaluated in real time at every stage, from design to maintenance.
Cemex Ventures seeks innovative value engineering solutions in the construction industry
As the corporate venture capital and open innovation unit of Cemex, we’re always looking for next-gen solutions that have the potential to transform the construction industry. Through Construction Startup Competition, the largest startup competition in the sector, search for innovative solutions that make construction more sustainable, efficient, timely, and disruptive. We’ve just published the shortlist of the finalists’ applications. Stay tuned for all the latest updates by following us through our different channels below!
Whether you are a startup, SME, corporate, building professional, media journalist, or just want to find out more, we encourage you to contact us through our website or follow us on LinkedIn & X.
