“None of us is as smart as all of us.” –Ken Blanchard
When a mortgage is granted, and your permits approved you are ready to start your build or renovation. How many times have you heard friends of yours or seen on building design programmes that a project has gone over budget? A recent document published by global consulting firm McKinsey & Company suggests that up to 80% of larger scale projects have a cost overrun.
So, what is Value engineering?
Value engineering is a step by step process which helps to improve the “value” of the materials or services you may be using for your construction project. Value, as defined, is the ratio of service/material/ideas to cost. Value can therefore be manipulated by either improving one of the functions or reducing the cost. Its main aim is for you to cost save while still adding value to your project.
A quick step guide to apply it to your project
- Define your Project Scope.
Have a detailed listing of your overall project and have collect all information needed to conduct the Value Report. Sometimes it is best to conduct a SMART Analysis.
The Smart Analysis will help you categorize the following:
- Specific – Clearly define what you are going to do.
- Measurable – How these goals would be measured so that you have tangible evidence that you have accomplished the goal.
- Achievable – Can our goals be met
- Realistic – what results can realistically be achieved,
- Time-Bounded – What were the time constraints and were they achievable
- Conduct a Stakeholders analysis and Value Criteria
The Stakeholders are all people involved in your project. This could be the Project Manager, Architect. Quantity surveyor and homeowner. From experience try and get some feedback from trades. They usually have some good ideas about cost saving.
In order to conduct an Analysis ask questions such as :
- What is important to this stakeholder on the project? (for a PM it should be scheduling, coming in under budget with a good level of quality)
- How can the Stakeholder contribute to the project?
- How could the Stakeholder block the project? (An engineer might not sign off on something causing delays. This goes back to quality control)
- How does everyone involved in the project intend to engage? (this could be weekly on-site meeting, an online platform etc)
Once you have these questions answered you know what is important to the project and each Stakeholder. You can then identify what will add value to the project.
- Brainstorm Value Proposals
Value Proposals are ideas that the Stakeholders come up with to help cut costs while trying not to affect quality.
These could be anything from changing designs , changing materials or changing sub-contractors. But remember all these come with their own issues. Changing designs could mean changing permits and delaying the build so be careful. Weight up the pros and cons of each.
- Develop your Proposals and begin Implementation Process
Pick your chosen proposals and develop them. How much can you potentially save and what will be the potential outcome?
Remember that when trying to implement these proposals every stakeholder must be involved as breakdown in communication is one of the biggest reasons costs overrun.
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