What exactly is value engineering? Value engineering investigates and compares alternative means, methods, and materials to initial construction costs. It’s also important to consider the impact on future costs when building to suit.
This commercial real estate development stage is used to solve problems and identify and eliminate unnecessary costs. But this method isn’t just about saving money. True value engineering entails carefully considering all options while keeping the project’s goals in mind while improving function and quality.
How does value engineering work?
Value engineering is a technique that can be used at any stage of a commercial real estate development project. Using the process early in the project stages, on the other hand, can help avoid more significant risks.
Value engineering can be divided into three major stages of the development process:
- In the planning stage: the developer and contractors should agree on the project’s estimated cost.
- At the design stage: the design team and the client should meet to discuss the proposed design solutions, cost estimates, and proposed schedule and approach.
- During the construction stage: the architect/engineer team should be included in the decision-making process to ensure that proposed changes have no negative impact on the overall design and function of the building.
The purpose of value engineering
In particular, when it comes to build-to-suit properties, where rents are based on build-out costs, value engineering allows experienced developers to get more bang for their buck in design, contracting, and final build-out. And the process is intended to benefit not only the initial construction phase but also to provide long-term value.
Only 11% of a building’s total lifecycle costs are incurred during construction. This figure emphasizes the fact that early decisions have a significant impact on the long-term cost of ownership.
A great value engineering process will provide the owner and tenant with a better, more cost-effective project that meets all the needs and objectives. Value engineering is not intended to compromise the project’s vision or material and quality, functionality, performance, and reliability. On the contrary, the process can improve aspects by identifying innovative options and new approaches.
Value engineering can mean fewer redesigns and a more efficient construction process for architects, engineers, and contractors.
Overall, value engineering can assist in providing:
• Increased work scope
• Lower costs
• Reduce waste
• Broaden consensus
• Assist in keeping costs within budget.
Value engineering frequently results in improved project functionality and increased savings and value over the life of the building. The right development partner can assist in leveraging relationships to implement value engineering, ensure quality construction, and complete a successful project on time and under budget.
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