Value Engineering and Peer Review

Understanding the True Cost of a Project

The cost of a new building or major renovation extends beyond the dollar amount in the project budget. Consider all the following costs, which are not reflected in construction cost estimates:

Contrary to popular belief, reducing construction costs is not the main purpose of value engineering. For instance, a lighting system with fluorescent and HID lamps is less expensive than an equivalent LED installation. However, LED lighting has a lower ownership cost when you consider its energy efficiency and simpler maintenance. Older lamp types consume more energy, while requiring more frequent replacements. Fluorescent and HID lighting are less expensive upfront, but LED lighting is less expensive in the long run.

In a few words, value engineering focuses on cost-effective design, and not low cost strictly speaking. The optimization process typically makes the project less expensive, but the main goal of VE is to maximize value. This means that VE may actually increase some project costs, as long as the benefit outweighs the added expense.

Building Performance Areas that Benefit from Value Engineering

Building performance is a very broad concept, since buildings have many systems and functions. Value engineering can be used to lower operation and maintenance expenses, improving cost performance. However, building performance can also refer to aspects like indoor comfort and environmental impact.

To apply value engineering, an important step is to determine the specific areas of building performance that will be improved. As an example, consider the performance categories of two rating systems for buildings: LEED and WELL.

 The WELL certification focuses on human wellbeing, while the LEED certification focuses on energy efficiency and environmental sustainability. These certifications are not mutually exclusive, and a building can achieve both. However, this an example of how “building performance” can have different meanings. Value engineering for a LEED certification will focus on different metrics than value engineering for a WELL certification.

Many building owners use value engineering to improve cost performance. In this case, the project design team and peer review team collaborate to determine the building design with the lowest ownership costs. Of course, there is a lower limit to how much costs can be reduced. The project must meet all applicable building codes, and cost reductions should not be at the expense of human well-being.

However, value engineering goes beyond cost optimization, since it can also improve the following aspects of building performance:

• Making the building safer for its occupants.
• Improving indoor air quality and thermal comfort.
• Reducing the carbon emissions produced by the building.

There is a common belief that additional building functions always increase costs. However, there are opportunities to improve performance while cutting costs. For example, smart ventilation controls can be combined with air pollution sensors to improve indoor air quality. This measure also saves energy by preventing overventilation - air handling systems are ramped down when their full capacity is not needed.

Value engineering can also be used to improve building safety at an optimal cost. For example, when designing an automatic sprinkler system, value engineering can be used to design a layout that achieves full coverage with the least sprinkler heads possible.

Building emissions are getting more priority with the growing concern about climate change and its potential consequences. In fact, New York City has already introduced building emissions limits that are legally mandated. In this case, value engineering can identify the measures that will maximize the emissions saved per dollar invested.