What does value mean to you?
Is it saving money? Is it higher quality? Higher functionality? Higher ROI? When you think of value engineering, the scope of your knowledge is often in line with your perception of value. For many of us, we think lowering investment cost, that sounds like a good value. But what if I tell you that that’s a major misconception?
Will you believe me when I say that value can cost more? That there is a way to make a profit faster by spending more? We’ve all heard the saying “you have to spend money to make money” and this is true. Value engineering is an extra process that can add significant value to your development. This analysis is done by a team who train to look at the initial cost and the long-term ROI.
Which is of greater value to you?
While VE can potentially lower cost, the term value means something different based on the context. For example, if you’re a person who is looking to buy work boots, does the less expensive option offer you the best value? Upfront, sure it does, however, if you must replace this pair of boots every six months versus paying more to begin with and replacing less often, which is of greater value then? That depends on your view of the word value.
Value engineering
You’ll find that value engineering is often used the same way. When you perform a value analysis, the initial investment doesn’t always go down, in some cases it increases. The value in this is that five or ten years down the road, you’re not replacing or repairing as much, which means you spent more and saved more. That’s not to say that VE won’t lower your cost and preserve the quality, that is naturally the goal. As explained by Steve Williams, our VP, and Head of Design, just because it looks good and is more expensive, doesn’t make it the most functional, efficient, or highest value. The flip side is, when you’re doing a value analysis during this phase, you can use higher grade finishes and the project will appraise higher, meaning the investors make a larger ROI. Even though they spent more going in, they earned more in the end.
Value is a very flexible word with a wide variety of applications. In construction projects it can lower cost, or it can require higher investment but result in a higher ROI. Consider the possible outcome in taking the time to complete a value analysis, even at the additional expenditure. Value is truly in the eye of stakeholder.
