What Is Value Engineering in Construction? (And What It Is Not)
Value engineering is a structured review of a building's design that asks what each part has to do, then finds the way to do it for the lowest total cost over the building's life. The goal is the same function for less, counting operating and maintenance costs, not only the construction price. It is not the same as cutting scope, though on many projects the term gets used for both. It pays most early in design, while a change is still a line on a drawing.
| Value engineering | Cost cutting | |
|---|---|---|
| The question | Is there a better way to meet this need? | What can we remove to hit the number? |
| Function | Kept, sometimes improved | Often reduced |
| Cost measured | Total life cost: build, operate, maintain | Construction price only |
| Best timing | Early design | Usually after a bid comes in high |
| Example | A different system that does the same job for less over time | A cheaper finish or a dropped room |
Both have their place. The point is to know which one you are being offered.
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How value engineering works
Formal value engineering follows a set job plan. The phases differ slightly by source, but the Washington State DOT's value methodology standard and the Whole Building Design Guide describe the same sequence:
- Information. Gather the design, the budget, the owner's goals and what the project has to achieve.
- Function analysis. Break the project into what each part does: enclose, support, condition, light, separate. This is the step that makes it value engineering and not just a price review.
- Creative. List other ways to deliver each function, without judging them yet.
- Evaluation. Score the ideas against cost, function, risk and schedule, and keep the ones worth developing.
- Development. Turn the best ideas into proposals with real costs and drawings.
- Presentation. Put them in front of the owner and designer to accept or reject.
On large public projects this is a formal study with its own team. On a typical commercial build-out it is usually less formal: the builder prices the design as it develops, and the owner and architect decide which ideas to take.
When value engineering pays off
Early. The sources agree that the potential to change cost is greatest at the start of design and shrinks as decisions get locked in. An idea during schematic design changes a sketch. The same idea after permits changes drawings, may need another review and can delay the job. That is the main reason owners bring a builder in during design, through construction manager at risk or design-build, instead of waiting for bids on finished drawings. Before value engineering, make sure the bids compare evenly; see bid leveling. Our preconstruction step exists for this: pricing the design while there is still time to act on the numbers.
What is not up for value engineering
Some items are fixed by code or by the lease, and a value engineering idea that touches them has to be checked by the designer, and sometimes by the building department again:
- Accessibility. The accessible route, restrooms and entrance, including the path of travel spending an alteration triggers.
- Fire separations. Rated walls between units or occupancies, like the demising walls between apartments, and the separation in a mixed-use building.
- Exits and life safety. Exit widths, exit signs, sprinklers and alarms where required.
- What the lease says. If the landlord's work letter or the lease sets a standard for walls, systems or finishes, a change may need the landlord's approval.
How to ask for value engineering, as an owner
- Ask early. Bring the builder in while the design can still change.
- Ask what each idea gives up. A real value engineering idea keeps the function. If it gives up function, call it what it is and decide on that basis.
- Look past the bid price. A cheaper system that costs more to run or replace is not a saving.
- Get it on the drawings. Accepted ideas belong in the drawings and the contract, not in an email, or they become change orders later.
Related terms, like guaranteed maximum price and preconstruction, are in our commercial construction glossary.
Frequently asked questions
What is value engineering in construction?
A structured review of a project's design to deliver what each part of the building has to do at the lowest total cost over its life, counting operating and maintenance costs, not just the construction price. It looks for a better way to meet the same need, not a way to need less.
Is value engineering just cost cutting?
No. Cost cutting removes scope or downgrades quality to hit a number. Value engineering keeps the function and changes how it is met. In practice the term gets used loosely for both, so ask what a proposed change gives up.
When should value engineering happen?
Early, during design. The earlier an idea comes in, the more of the building it can change and the less it costs to redraw. Value engineering after bids or during construction is still possible, but each change costs more and can affect permits.
Who does value engineering?
Formal value studies use a team, often including people outside the design team, following a set job plan. On most commercial build-outs it happens through the builder pricing the design as it develops, with the architect and owner deciding which ideas to accept.
Can value engineering affect code compliance?
It must not. Accessibility, fire separations, exits and other code requirements are fixed. A change that touches them needs the designer to confirm it still complies, and some need the building department to review it again.
The bottom line
Value engineering means meeting the same need for less over the life of the building. It works best early, with the builder pricing the design while it can still change, and it never touches what code requires. When someone offers you "VE," ask what it gives up.
Modern Northwest has built commercial projects across Portland and Southwest Washington since 2005, including design-build and CMAR jobs like the Ace Hardware garden center and the landlord work at Mercantile Village. Send us your drawings and we will price them with you.
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