
Background: My interest in this topic started when I was a student at UWM School of Architecture in the early 1970’s. In November 2000, I gave a Value Engineering presentation for industry peers. This updated narrative takes information from that presentation and reflects developments since that time. Throughout this blog, I lean on my 44 years of professional experience in a variety of design and management roles and ways in which I’ve seen value engineering work and not work throughout the years.
What Value Engineering Is and What It Is Not:
Value Engineering (VE) is a means of reconciling scope and budget to arrive at a base value that aligns with the priorities defined by the owner. Value engineering has always been important, and in a time when construction industry costs have risen three times the rate of our normative long-term increases, it becomes even more so. Value engineering is most effective as a budget planning tool where design alternatives and associated costs are examined early in the design process. Value engineering major participants consist of the Owner (which may include facility managers), Architect, Engineering Consultants, Construction Manager and Cost Estimator. Successful and impactful VE requires a team approach.
Value Engineering is not (ideally) a last-minute effort to reconcile scope and budget. This latter approach does not take into consideration the time, effort and coordination it took to get to the project scope and may result in unnecessary sacrifices to the project. It is important to create balance as well as to take into consideration functionality and lifecycle cost.
What Factors Should You Consider When Value Engineering:
- The Owner: Who the Owner is may greatly influence the approach for lifecycle costing and influence value engineering. A developer will likely have different attitudes about value engineering as compared to a school district administrator or a corporate owner. Speculative developers may not have been concerned about lifecycle cost in the past, but thanks to the rise in sustainable factors, they are becoming more so.
- Sustainable Practices: Emphasis on sustainable design and building certifications like LEED or WELL, have continued to become more of a mainstream approach. Educational buildings are now vested in the long-term approach as well. For instance, schools designed and built in the 1960’s often featured one-story plans with relatively low ceiling height and with use of outside air direct mechanical systems (unit ventilators); to add a ducted system or lay in ceiling and lighting or direct/indirect light fixtures with these types of buildings is not possible. This example highlights how a focus on first costs limits future flexibility and how not considering a lifecycle cost approach takes away real value to the owner in the long-term.
- Schedule: Another factor which affects value engineering is a project schedule. Often schematic design phase budgets are locked in prior to developing sufficient information to produce an accurate budget. Educating the Owner on best practices and communicating with the stakeholders to set expectations are requirements for developing proper budgeting goals. The concept of an Owner’s Basis of Design (BOD) and Owner’s Project Requirements (OPR), have become part of the industry’s vocabulary relatively recently thanks to the green building movement.
- Flexibility: Corporate and institutional clients demand flexibility and durability with their new spaces. Schools are following corporate models for flexibility within the classroom using furniture workstations and nonloadbearing interior partitions.
- Prototype Buildings: In some cases, prototypes have been used in corporate or institutional sectors to achieve economies of scale and as a value engineering approach of sorts. This often works better with smaller retail-type facilities; larger facilities must consider the zoning, siting, utilities, building footprint/grades, site orientation and solar angles and other factors. Most buildings are site specific, and care must be taken if the building design is prototyped.
How to Go About Value Engineering:
- Well-Defined Scope: As a general best practice, the project scope must be defined in detail, early within the design process. Scope inclusions and exclusions must be discussed with the Owner and team, and ongoing conversations regarding expected value are important. Incorporating value engineering at the onset, project teams should conduct an owner interview to discuss quality levels as this is just as important as building and site size. Outlining specifications at the schematic design level can go far in setting a correct level of expectations.
- “Alternates:” A key part of value engineering, alternates should be discussed early in the design process. (These may be “additive” or “deductive” and the industry has pro and con opinions on which to use). If a CM approach is being used, then the number of alternates may be reduced due to feedback provided by the CM to Owner and architect. Alternates can be set up to inform and enhance value engineering.
- Review Major Components: Value engineering alternates sometimes involve site, architectural, interiors, roofing, glazing, framing and other major elements. Mechanical systems offer many options for review early in the process.
- Preliminary Code Review: National, State, and local codes for building types are well-defined for component elements and inform value engineering, lifecycle, and alternative cost discussions. The IBC (International Building Code) has been adopted in many states and offers a level of consistency, albeit with State and local modification that should always be reviewed early in planning and design. Early code reviews and zoning reviews can help in proper cost-design. And accurate early pricing of major components is just as important.
Benefits of Value Engineering:
- Identification of Project Goals and Outcomes: The process and basis of value engineering is one of examining the project goals/objectives and the components that make up these goals/objectives. “What are the desired outcomes?” and “How to get to that destination in the most efficient manner?” are major functions and determinations of this process.
- Understanding the Components that Make the Whole: Most projects start in a pre-design effort that involves space planning and programming. This is ideally aligned with institutional vision, mission, and values. Value engineering starts at this juncture. Prioritizing what spaces are to be considered and what is not included in the scope is an essential exercise of VE. Every square foot of space has a value and cost and is measured within the entire project cost.
- Sense of Purpose and Mission: Recent terms like OBD (Owner’s Basis of Design) and OPR (Owner’s Project Requirements) are very applicable in determining what is the “Base Value” that is trying to be attained with this project? If you don’t determine that, you will not have a proper path to prioritize and value engineer throughout the process. The “value” of the project is inherently tied to the perspective of whose values are being articulated, and whose scope/budget (value) is being “engineered” for the best outcomes. A successful project will consider and weigh the options and alternatives to develop a balanced scope, budget, and lifecycle costs for the Owner and in turn, the end users of the space.
As we continue to navigate the disruption in supply chain, rising costs and potential recession, it is important to consider how to integrate value engineering from project onset through completion. I’d love to hear how you’ve seen VE successfully executed or further discuss the benefits and potential pitfalls of VE.

Abie Khatchadourian, AIA, NCARB, LEED AP BD+C
Senior Project Manager : Associate