By Tom Dionne
(Editor’s Note: Tom Dionne is Vice President of Preconstruction Services & Design at Connolly Brothers Inc., where he leads preconstruction planning, estimating and value engineering efforts for commercial construction projects. In this guest op-ed, he explains why value engineering is most effective when introduced early in the design process and outlines how owners, architects and construction managers can use it to make more informed project decisions.)
In our first white paper, we defined Value Engineering (VE). To recap, value engineering is an additional layer of cost analysis that a construction manager can perform to improve the functionality-to-cost ratio of a project without sacrificing quality. This analysis may include budgetary pricing for alternative systems or materials, comparisons between options, and recommendations for solutions that achieve project goals more efficiently.
Value engineering is an important component of the overall preconstruction process because it provides owners with the information they need to make informed decisions while helping minimize costly design revisions or scope changes later in the project.
This article focuses on two key questions:
- When is the best time to perform value engineering?
- What should owners and architects expect from the process?
To illustrate these points, we’ll revisit Case Study 1 from our previous white paper and examine how value engineering was approached during preconstruction, along with opportunities to better align expectations with meaningful cost-saving strategies.
Case Study 1 Recap
An educational institution plans to construct a new 50,000-square-foot addition to its existing building. The architect has completed the Schematic Design (SD) phase.
The school issues a Request for Proposal (RFP) to qualified construction management (CM) firms. Each firm is asked to prepare a conceptual budget based on the schematic design drawings. As part of the RFP, the owner also provides a list of value engineering items and requires each CM to include pricing for those items in its proposal.
Analysis
Approaching value engineering in this manner presents challenges.
Because the project is only at the schematic design stage, there often isn’t enough information to determine which value engineering opportunities are truly relevant. At this point, the design has not progressed sufficiently for the construction manager to provide the level of analysis necessary to support informed decision-making.
As a result, owners and architects may find it difficult to identify where design changes would produce meaningful savings without affecting the project’s overall goals.
Initial discussions about value engineering during the RFP process can still be valuable because they allow owners to evaluate how different construction managers think about cost management. However, owners should also consider whether the CM has enough project information to offer meaningful recommendations—particularly when a project is already exceeding budget.
Without adequate design information, value engineering becomes an exercise in speculation rather than a reliable method of identifying cost-saving opportunities. In a competitive bidding environment, this can make it difficult for owners to compare proposals or understand where genuine savings may exist.
The key takeaway from Case Study 1 is that this is not the most effective way to approach value engineering.
A More Effective Approach
The first step is for the owner to clearly define the objectives of the value engineering process. At this stage, those objectives typically include:
- Developing a clearer understanding of overall project costs.
- Identifying opportunities to reduce costs without compromising quality.
- Evaluating how the selected construction manager approaches value engineering.
In the context of Case Study 1, the design has not advanced enough to properly evaluate meaningful VE options, even though bidders are being asked to do exactly that.
A more effective strategy is for the owner to first select a construction manager and then conduct a collaborative value engineering effort involving both the architect and the CM. This allows the project team to evaluate alternatives based on a more developed design and a shared understanding of the project’s priorities.
Why Timing Matters
The timing of value engineering has a significant impact on its effectiveness.
The earlier a construction manager becomes involved, the easier—and less expensive—it is to make design adjustments. As the design progresses, changes become more complex and costly to implement.
Early involvement also allows the construction manager to provide valuable insight into alternative systems and materials, product availability, lead times, supplier reliability, and procurement schedules that may influence project decisions.
Ideally, value engineering should occur throughout the design process as part of developing the project’s cost model.
The cost model serves as both a budgeting tool and a guide for reconciling costs as the design evolves. As project scope becomes more clearly defined and construction documents are refined, the construction manager continually updates the model by tracking inclusions, exclusions, and pricing adjustments. This provides owners with increasingly accurate information on which to base important decisions.
Questions Owners Should Ask
To better understand the scope of the value engineering effort, owners should ask both the architect and construction manager several key questions:
- What stage of design has the project reached?
- Is there enough information to develop a reliable conceptual budget and meaningful VE recommendations?
- Will subcontractors, vendors, and suppliers be consulted during budget development?
- To what extent is the budget based on current market pricing versus historical unit costs?
The answers to these questions will help establish realistic expectations for what value engineering can achieve at each stage of the project.
Value engineering delivers the greatest benefit when it begins early in the design process.
Ideally, owners should engage a construction manager at the same time—or shortly after—they retain the project architect. This enables the architect and CM to work together throughout design, identifying opportunities to reduce costs, evaluate alternatives, and refine the project before major decisions are finalized.
When incorporated early and continuously, value engineering becomes a proactive planning tool rather than a reactive cost-cutting exercise. It provides owners with timely pricing information, supports informed decision-making, and reduces the likelihood of expensive design revisions or scope changes later in the project.
