Skip to main content

The Hidden Cost of Value Engineering in Designing Commercial Spaces

February 23, 2021 | Flexible Design, Workplace

The terms value engineering, value management, and value analysis basically describe one thing— a standard providing the necessary systems, materials, and equipment to projects at the lowest possible cost.

The idea is to substitute a product, means, or method with a less expensive alternative without sacrificing quality and functionality. It might sound easy on paper, but the reality is that value engineering is actually very difficult. There are pitfalls in prioritizing functionality over quality. The decision to go with lower-priced options, in the long run, can end up costing more and result in delays, overages, and worse, unhappy clients.

At the center of underperforming projects, you will often find project managers faced with the difficult task of balancing client priorities and desired outcomes with finite budgets. It is a complex process requiring quick assessments based upon the information available.

While the short term approach to designing for a commercial space may seem expedient, the results often won’t be. Investment in short term strategies is like impulse buying. Seth Klarman, the famous billionaire hedge fund investor, is noted for having said, “The single greatest edge an investor can have is a long-term orientation.”

While value engineering has its place, in the end, success is measured in finding the balance of price, quality, service, and performance.

Gaining a Better Understanding of Value Engineering

Value Engineering is a process whereby the value of the project is increased through either an increase in performance, function, or quality, and at the same cost or a decrease in the cost while maintaining the same performance or a combination of both. – MDC Systems

During the Second World War, the engineers at General Electric Company (GE)—Harry Erlicher, Jerry Leftow, and Lawrence Miles—created the concept of value engineering in response to shortages in skilled workers, raw materials, and parts. Their ultimate goal was to find acceptable substitutes that not only reduced cost but improved the product as well.

According to Investopedia, “Miles defined product value as the ratio of two elements: function to cost. The function of an item is the specific work it was designed to perform, and the cost refers to the cost of the item during its life cycle. The ratio of function to cost implies that the value of a product can be increased by either improving its function or decreasing its cost. In value engineering, the cost related to production, design, maintenance, and replacement are included in the analysis.”

In most cases, value engineering succeeded in both reducing costs and improving the product. The next logical step was to apply value engineering to things that weren’t exactly in short supply. GE hoped to improve certain products through the application of cost-effective substitutes. Nonetheless, their system of necessity became a systemic process. But while it may have worked well for GE, value engineering wasn’t intended to be a permanent way of saving money, nor was it designed for every organization or every situation.

Using Value Engineering in Building Design and Construction

It wasn’t until the later part of the 20th century that the concept of value engineering began to spread globally. Not only that but it was adopted in numerous industries. Being that mentalities and behaviors differ greatly from one organization to the next, value engineering underwent more than a few modifications. For example, the European Community’s (EC) Strategic Programme for Innovation and Technology (SPRINT) embraced “value management” as its official philosophy. Nevertheless, SPRINT chose to keep with the European style of management rather than the North American style.

Similar to the technology sector, the building design and construction sectors use value engineering to eliminate unwanted costs. It’s also used to identify and solve problems. This involves appraising site limitations, logistics, materials, construction methods, as well as planning and organization. Some examples of possible benefits include improvement in quality, reduction of environmental impacts, and a reduction in life cycle costs.

To improve the benefits, value engineering should begin at project inception. Contractors may also present significant contributions, but any changes to contracts shouldn’t incur additional costs, affect timelines, nor disrupt scheduled completion. It should never force one to compromise safety. If value engineering would result in building code violations or put the health and well-being of others in jeopardy, it should be rejected.

It’s important to remember that value engineering shouldn’t be a “knee-jerk” reaction to a project going over budget. Lastly, a large number of organizations eventually discovered they weren’t Americans with Disabilities Act (ADA) compliant due to value engineering. For example, an ADA consultant analyzes a project after design development. But when the project goes through value engineering, it changes clearances and spacing. As a consequence, the initial ADA compliance is compromised—most often after significant changes were done. As a result, money and time are wasted correcting the issue.

Cheaper Is Not Always the Best Option

When implementing value engineering to a building or renovation project, the most critical thing to remember throughout the process is how the result will affect user experience. While it’s easy to get carried away when modifying a structure or space—removing things, replacing them with cheaper alternatives, and modifying systems to save money—can also have an adverse effect on design.

Avoid cutting out things merely for the sake of value engineering if those things contribute to safety, compliance, efficiency, and user experience. When it comes to network security, it’s always wise to choose the best option no matter the cost. At the end of the day, an organization will not only save itself from having valuable data stolen but it will avoid the enormous costs of a damaged reputation.

High-quality workplace design attracts and retains great talent. The value this brings to an organization cannot be overstated. Ultimately, the commitment an organization makes to quality and the materials and equipment it invests in will reflect either positively or negatively on an organization.

Investing upfront in adaptive cable distribution and cable management systems is good value for money. It’s an investment in the long term. In contrast, values engineering, however well-intentioned, may sacrifice performance and sustainability for price.

A good investment is something that will best serve the long term interests of an organization. When it comes to flexible raised flooring solutions, there are hidden costs to cheaper options.

Value engineering decisions made at the top to save a small amount can translate to weightier costs of lost opportunity and operational limitations in the future. Operational restrictions arise in instances when implementing alternate cabling methods that are costly, time-consuming, and technically difficult to reconfigure.

Decisions made to delay technology upgrades reduce competitiveness in today’s very competitive environment. Decisions to delay workplace improvements can also impact the organization’s ability to attract and retain top talent.

While it might be tempting to skimp on a flexible cable management solution, doing so has proven to have long-lasting impacts on the adaptive capability of an operation.

Good cable management and distribution make troubleshooting networks easier, give the workplace a professional appearance, optimize performance, and simplify upgrades in the long term.

The advisors at FreeAxez specialize in supporting the design and installation of adaptive low-profile raised flooring systems that provide long-range flexibility for customers. FreeAxez also offers a full range of design services, including CAD, BIM/REVIT, documents, and installation plans.


See what can do for you.
Why Gridd