The following is a blog published today in association with Tom Buffery of Talk Recruitment
The Construction Design Manager – Value Engineering Tips
In this blog, we spoke to a special guest, John Eynon, who is not only a very experienced construction Design Manager but also notably the author of “The Design Managers Handbook” to bring to you tips on the topic of value engineering.
Value Engineering can play a big part of the Design Managers role and some believe it’s the skill that separates the best Design Managers from the average, on the basis if done right it can save the client and contractor both time and / or money.
It also further supports the value a Design Manager can directly add to the project and as such highlights that the Design Manager brings so much more to the table than merely managing a process.
On that note lets dive into a Q&A below with John Eynon for his insight and tips on Value Engineering.
Why would a Design Manager need to do Value Engineering on a Project?
There are a number of reasons why this may happen.
Maybe you’ve just won the tender but your proposed cost is above the client’s budget and cost plan.
How did that happen you may ask, well more often than not it could be that the cost plan is out of step with the design!
Alternatively maybe the client’s circumstances have changed. Budgets reduced or perhaps a change of requirements.
What savings are realistically achievable?
Having sat through many VE workshops. And let’s be honest a lot of the time we are talking about purely cost saving – the question of value rarely comes into it, but we can return to that later. However, always remember! …….
Whatever savings you identify, you will do well to achieve and realize even 50% of that figure.
So, you need to be ruthless, which doesn’t fit well with the grain of Design Managers sometimes.
I’m a big advocate of protecting design quality, but you will need realistically to target more than you need to recover.
For every item you cut, usually there will be something to add back. Eg substituting a cheaper cladding, so you need to understand the “add backs” as well as the potential savings. Also you will need to include designers’ fees for the changes and time in the programme – this could ripple out to specialist sub-contractors and the procurement/construction programme. Everything needs to be taken into account. All of this needs to be factored in, understood and evaluated by the whole team.
Make sure where you’re changing components or systems, ensure they still comply with the ERs and specifications, “like for like”. Particularly technical or regulatory requirements, sub-contractors and suppliers are very good at sneaking in changes to suit them in the small print.
Do consider the proportion of savings required in relation to the overall project cost.
If you’re looking at say much more than 10%, lets say over 20%, then definitely you will need to consider radical design surgery and a difficult conversation with the client and team.
Only so much can be achieved by fiddling with substitutions and specifications. Maybe the cost symptoms indicate a deeper illness, requiring a need to save floor area, and building volume.
Redesign, of course means delay, time, and costs/fees.
Are there any areas to be careful of changing?
Beware of anything that could have planning permission implications. Try to avoid this unless you’re desperate, and the client and whole team are prepared to accept the risk, bearing in mind it will take a few months to at least to get any changes approved. So you will all be at risk on the cost saving until you have the approval.
Likewise beware of impact on building regulations and fire safety, the Grenfell tragedy and the ongoing inquiry tell the story here. It’s well worth following the Grenfell enquiry as it illustrates unfortunately the many pitfalls of cost savings on a D&B project.
Is Value Engineering purely about saving costs?
No, the flip side of this is to think of “Value Creation” as well as cost savings. Increasing the net lettable area by slimmer wall constructions for instance. Or on a project, we saved a stair and lift core, which saved the cost of the core and added more lettable floor area for the developer.
On a residential scheme we created more apartments and increased the financial viability of the scheme. So sometimes there can be a little creativity in the process.
Are there any other benefits of Value Engineering?
So to get back to where we started, usually post tender , the main contractor is often the bearer of bad news that the scheme is going to cost more than the client had been led to believe.
There are all kinds of reasons why that happens.
But it does provide an opportunity to build relationships, gain the trust of the client and the team, and show that you’re willing to do what it takes to make the scheme work for them and to deliver what they want. It also provides opportunities to build relationships with the designers, and work with them to deliver their design vision. It’s not easy but hey ho, all in the daily life of a Design Manager!
Furthermore it is apparent with the use of value engineering that Design Managers can play an integral part in correcting the direction of a floundering project and if done right can not only save cost and time on a project but also build creditability with the client by providing a consultative service, likely leading to future repeat business.
Many thanks to Tom Buffery at Talk Recruitment, Talk Recruit