The Essential Role of Value Engineering & Value Analysis
Cost optimization through value engineering and analysis allow decision makers in the construction industry to identify unnecessary outlays and improve the existing cost-to-benefit ratio.
Value engineering & value analysis play an essential role in all market sectors of the construction industry:
infrastructure (roads, bridges, tunnels)
industrial (power plants, refineries, factories)
commercial (malls, office buildings, stores)
residential (condominiums, homes, gated communities).
By carrying out a thorough cost optimization analysis, developers and construction project managers can make data-driven decisions on how to minimize costs and achieve projected completion times without compromising on the quality and performance of the completed building.
What’s the Difference Between Value Engineering and Value Analysis?
Value Engineering is the process that takes place in the design stage of a building with the aim of avoiding unnecessary expenses. In addition to the choice of materials and method of construction, value engineers also consider how to prevent loss of long-term value of the facility. The 6 steps are:
– information gathering
– brainstorming
– evaluating
– developing plans
– presentation
– implementation
Value Analysis is carried out on an existing structure to eliminate negative value components, identify areas where value can be increased and optimize the existing function-to-cost ratio.
Video: Value Engineering Explained by Professor
Project managers, real estate developers and building owners seek ways to maximize the value of their asset while reducing operating and maintenance costs.
In this video, Dr Mike Clayton explains the fundamentals of Value Engineering. Dr Clayton is the author of the project management book “How to Manage a Great Project“.
5 Key Takeaways
1) Value is defined as function divided by cost.
2) Value can be increased by either improving function or decreasing cost.
3) Value engineering consists of 6 steps: information gathering, brainstorming, evaluating, developing plans, presentation and implementation.
4) Value analysis is carried out on an existing structure to reduce expenses, increase value, or both.
5) Value engineering & value analysis allow construction managers and building owners to eliminate unnecessary expenses, prevent loss of value and maximize the value of existing assets.
Further Reference
Lawrence D. Miles Value Engineering Analysis Reference Center (University of Wisconsin, USA)
Value Engineering: Definition, Meaning and How It Works by Adam Barone for Investopedia (2022)
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