Value Engineering?

Why do clients they let their construction managers hold ‘value engineering’ workshops at moments of crisis in building projects? The interminable VE meetings invariably result in a higher consultancy bill, the recognition of previously undeclared costs, and a descent into nervous cost cutting.

It was better when clients recognised that if they were going into a construction contract without all details and specifications finalised at the beginning then cost over-runs would occur because there was insufficient contingency, incompetence, unexpected inflation, or mid-contract opportunism.

There was a time before Sir Michael Latham and Sir John Egan imagined teamworking as a voluntary alternative to the threat or reality of contractual disputes. In that pre-history to procurement innovation everyone maturely anticipated the prospect of cost cutting where pre-tender preparation was either impossible, or inadequate.

Spontaneous contracting

Today the Latham-ised or Egan-ist professionals, who are paid a percentage to protect the client from taking commercial risks or liberties with contractors, will delude themselves that contracting can be spontaneous, and even better than working things out in detail, in advance.

Innovative VE is supposed to maintain architectural quality while reducing costs. Wikipedia (www.wikipedia.org) insists that VE is a method to improve the value of goods and services by improving the ratio of function to cost. It adds: “It is a primary tenet of Value Engineering that quality not be reduced as a consequence.’ There are libraries of UK construction management handbooks and an eternity of CPD seminars claiming that a project crisis is really a creative opportunity missed at the beginning of a contract.

What is odd is that clients don’t always take this literally, and when the lack of preparations show in the need for a VE exercise, insist that the consultants have already been paid to be as creative as possible. Clients seem too ready to pay dearly for invention when perceived as necessary on-site, rather than having ensured the best ideas were forthcoming before they committed their finances.

VE is big business in the US. And decades of talking about “Value Methods” in the US encouraged construction industry modernisers in the UK to advocate VE. However what the modernisers failed to appreciate is that VE in the US developed as a form of industrial preparation, not as a substitute for it.

modernisers failed to appreciate that ve is a form of industrial preparation – not a substitute for it

US-style VE was developed at the General Electric Corporation during World War II, and is widely used in industry and government, particularly in defence, transportation, construction, and healthcare. For the US military in particular, VE means getting the biggest bang per buck before hostilities break out. No army would VE their equipment during a war. Innovating ammunition while trying to fire bullets in the field would put military objectives in jeopardy, and disorient the troops.

Pre-tender only

Latham and Egan didn’t appreciate this in their enthusiasm for forms of contract that assume VE is coincident with the process of main or trade contractor design development. VE should only be part of the process of compiling fully co-ordinated project information pre-tender.

So today, while the client’s team of consultants and contractors battle on site to maintain construction programmes and budgets, VE becomes a way for professional cynics and mediocrities to disguise cost-cutting or force cost-increases. VE in UK construction management is not about value.

Relying on Value Engineering, except during pre-tender preparations, is ill advised. If only construction managers won awards for being the most sensible and realistic; for telling their clients not to redesign parts of buildings in mid-programme. Sadly, it seems a remote prospect.

What do you think? Email your views to us at construction_manager@cmpi.biz

Ian Abley is an architect and runs www.audacity.org