Value engineering

Value engineering looks at what each element of a building has to do, then asks whether there is a cheaper or better way to do it. Function comes first: a façade must keep weather out, meet fire and energy requirements and look right. Anything that delivers those functions for less is a value engineering option.

On most projects it happens at three points. During design, the design team and cost planner test options against the budget. During tendering, contractors and subcontractors offer alternatives, often as separately priced options alongside a conforming tender. After award, the contractor may propose savings, and some contracts share the saving between the parties.

Value engineering is sometimes run as a formal workshop, with the client, designers, cost planner and builder working through each major element in turn. On smaller jobs it is less formal: a list of options, each with a description, a price saving and any programme effect, that the client accepts or rejects. Either way the decisions should be made before documents are finalised for construction.

• Structure. Changing from a conventionally reinforced slab to a post-tensioned slab to reduce depth and material.

• Façade. Substituting an equivalent cladding system that meets the same fire and performance requirements.

• Services. Rationalising mechanical plant or ceiling layouts to cut duct runs.

• Method. Using prefabricated bathroom pods or precast elements to shorten the programme.

• Finishes. Replacing specified products with approved equivalents of the same performance.

Each option needs a clear statement of what changes, the saving, any time impact, and who is responsible for the redesign and approvals.

Genuine value engineering keeps the function and performance and removes cost. Cost cutting removes scope or quality to hit a number. The two are often confused, and value engineering has a poor name on some sites because the label was used for downgrades.

Any substitution has to be checked against the National Construction Code, fire engineering, warranties and the client's requirements. Changes to cladding, fire systems and waterproofing need particular care, and the certifier and designers must sign off before the change is built.

Under design and construct contracts, value engineering is built into the delivery model. The contractor develops the design from the principal's requirements and has a direct incentive to find savings, provided the result still meets those requirements.

• Unclear design responsibility. If the contractor proposes a change, agree in writing who now owns that part of the design.

• Chasing capital cost only. A cheaper item that costs more to maintain or replace may not be better value.

• Late options. Proposals made after documentation is complete cost redesign time that can wipe out the saving.

• Not documenting approval. Treat an accepted option as a variation, recorded and priced, not a site agreement.