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The True Meaning of Value Engineering: 3 Key Components

You’ve worked with your design team to draw up your commercial retail space. You’re getting your employees, tenants and customers excited about what the new building will bring. You request bids from a group of general contractors, eager to make your design a reality.

But the bids come back way higher than you expected, and you must hard-heartedly “value engineer” your project to get the cost down? Not necessarily. When someone says “value engineering” our minds immediately go to a process that reduces the cost of the project by cutting out certain design elements or reducing the quality of materials being used.


However, that is not necessarily what value engineering should be.

What Is Value Engineering?

In construction, value engineering (VE), is a method your project team can employ to improve the value of your project by examining the function of each item or element of the building and its associated cost. By weighing the cost/benefit ratio, your team can make suggestions for alternate construction methods, designs, or materials that improve the value of the project.


It’s important to note that improving the value of your project does not always mean cutting costs. It means optimizing the elements of the project through analyzing a variety of factors–cost, upkeep, wear-and-tear, aesthetic value, etc.


To truly provide advantageous value engineering, your construction and design teams need to first understand the project as a whole and your vision and goals for the project. Every project is different, as is every client’s definition of value.

Graphic breaking down value for your project

Defining “Value” For Your Project

Something that has a favorable ratio of costs to benefits is considered a good value. While costs may seem easy to define – how much they cost upfront – there’s a little more to it.

To really understand the value, you need to dig deeper.

· How long will those materials last?
· What type of maintenance will they need?
· Will they work more efficiently and cost less to operate?

The best place to start is to ask yourself what is/are the most important part(s) of the project, and what do you want the project to achieve? Once you’ve identified them, share them with your value engineering team, and they’ll get back to you with a list of suggestions that respect your goals and enhance your project to provide the best possible value that meets your budget. This approach is one of value enhancement for your individual project – rather than sweeping cost-cutting measures that may not be the best fit for your needs or goals.

When evaluating these suggestions, keep these three main criteria in mind: cost reduction, added quality, and life cycle/maintenance.

Graphic showing components of Value Engineering

Cost reduction is what drives many value engineering processes. Your value engineering team will bring ideas of less costly materials or systems to your project for your consideration. Whether that’s finding a similar fixture that costs less or alternating an unnecessary feature, these suggestions can bring value to your project.

However, without the next criteria, value engineering would just be called cost-cutting. Added quality ensures that the cost cuts made do not diminish the value of the project.

Before making any decisions on your value engineering options, you need to consider quality. Quality can have a lot of different meanings. Quality of the environment you’re creating. Quality of the products that make up that environment. Quality of the team you’re choosing to create that environment.

While some equipment or design elements may have a higher cost, they could be justified by the quality that they bring. Higher-cost items and elements may allow you to charge more for your services. They may have a positive impact on the productivity or happiness of the people who will use the space. A quality product could have more overall value than a low-cost product.

Similar to quality, it’s important to consider the long-term implications of these value engineering decisions. While a low-cost flooring may seem like the most valuable option initially, if you need to replace it twice as frequently as a higher-cost flooring, it could end up costing you more money in the long run.

However, if saving that extra money upfront is the difference between getting your project off the ground or having it stall out in design, then making that decision may very well be the best option.

When Should Value Engineering Take Place?

At a high level, there are three main stages of a construction project: project planning, design, and construction. As an owner, you can call for value engineering services at any time throughout the construction process. However, the pros and cons of making changes vary from stage to stage.



For these reasons, it’s important to partner with a general contractor that’s committed to doing the right thing and being good stewards of your resources.


At OneTen REI, we’ll be an engaged team member from the second we become involved throughout the entire process.  We’ll never stop looking for ways to add value to your project. Contact us today to get your commercial real estate project underway.