Value Engineering Procedures
Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: Estimators, Project Managers, Preconstruction
Purpose
Establish procedures for identifying and implementing value engineering opportunities to reduce costs without sacrificing function or quality.
What is Value Engineering?
Value Engineering (VE) analyzes functions to identify ways to:
- Reduce cost
- Maintain or improve function
- Maintain quality requirements
- Meet owner objectives
Value Engineering vs. Cost Cutting:
| Value Engineering | Cost Cutting |
|---|---|
| Maintains function | May reduce function |
| Thoughtful analysis | Quick reductions |
| Owner benefits | May benefit contractor only |
| Often improves design | May reduce quality |
| Collaborative | May be adversarial |
When to Apply VE
Timing Opportunities:
| Phase | Opportunity | Savings Potential |
|---|---|---|
| Design (early) | Highest | 10-30% |
| Design (late) | Good | 5-15% |
| Bidding | Moderate | 3-10% |
| Construction | Limited | 1-5% |
Earlier = Better: More freedom to change, lower redesign costs.
Value Engineering Process
Step 1: Information Gathering
Understand:
- Project requirements
- Owner priorities
- Budget constraints
- Code requirements
- Schedule needs
Analyze:
- High-cost items
- Complex systems
- Over-specified items
- Constructability issues
Step 2: Function Analysis
For Each Element, Ask:
- What is its function?
- Is that function necessary?
- What else could provide that function?
- What is the cost of the function?
Function Categories:
- Basic: Primary purpose (must have)
- Secondary: Supporting purpose (nice to have)
Step 3: Creative Phase
Generate Alternatives:
- Different materials
- Different systems
- Different methods
- Eliminate unnecessary items
- Simplify complexity
Brainstorming Rules:
- No criticism during ideation
- Quantity over quality initially
- Build on others' ideas
- Wild ideas welcome
Step 4: Evaluation
For Each Alternative, Evaluate:
- Cost savings
- Impact on function
- Impact on quality
- Impact on schedule
- Risk/feasibility
- Owner acceptance likelihood
Step 5: Development
For Promising Ideas:
- Detailed cost analysis
- Technical feasibility
- Drawings/specifications
- Risk assessment
- Recommendation
Step 6: Presentation
VE Proposal Should Include:
- Current condition/cost
- Proposed alternative
- Cost comparison
- Function comparison
- Quality impact
- Schedule impact
- Recommendation
VE Proposal Format
================================================================
VALUE ENGINEERING PROPOSAL
================================================================
VE Item #: ____________ Date: ____________
Project: ___________________________________________________
Prepared By: _______________________________________________
================================================================
DESCRIPTION:
Current Design:
___________________________________________________________
___________________________________________________________
Proposed Alternative:
___________________________________________________________
___________________________________________________________
================================================================
COST COMPARISON:
Current Design Cost: $____________________
Proposed Alternative Cost: $____________________
────────────────────
SAVINGS: $____________________
Design/Coordination Cost: $____________________
NET SAVINGS: $____________________
================================================================
FUNCTION ANALYSIS:
☐ Maintains required function
☐ Improves function
☐ Reduces function (explain): ______________________________
Quality Impact:
☐ No impact ☐ Improved ☐ Reduced (explain): ______________
Schedule Impact:
☐ No impact ☐ Faster ☐ Slower: ______ days
================================================================
FEASIBILITY:
Technical: ☐ High ☐ Medium ☐ Low
Owner acceptance: ☐ Likely ☐ Possible ☐ Unlikely
Risks/Concerns:
___________________________________________________________
================================================================
RECOMMENDATION:
☐ Recommend adoption
☐ Further study needed
☐ Not recommended (explain): _______________________________
================================================================
APPROVALS:
Owner: _____________________________ Date: ________________
Architect: _________________________ Date: ________________
Contractor: ________________________ Date: ________________
================================================================
Common VE Opportunities
Structural:
| Current | Alternative | Consideration |
|---|---|---|
| Steel frame | Concrete | Market conditions |
| Cast-in-place | Precast | Schedule, quality |
| Deep foundations | Shallow | Soil conditions |
| Over-design | Right-size | Engineering |
Mechanical:
| Current | Alternative | Consideration |
|---|---|---|
| Central plant | Distributed | First cost vs. operating |
| VAV | VRF | Space, efficiency |
| Copper pipe | PEX | Application, code |
| Complex BMS | Simple controls | Owner capability |
Electrical:
| Current | Alternative | Consideration |
|---|---|---|
| Copper wire | Aluminum (feeders) | Size, application |
| Custom lighting | Standard | Lead time, cost |
| Over-designed | Right-size | Load analysis |
Architectural:
| Current | Alternative | Consideration |
|---|---|---|
| Curtain wall | Storefront | Performance needs |
| Natural stone | Manufactured | Appearance, durability |
| Custom millwork | Standard | Design intent |
| High-end finishes | Value alternatives | Owner priorities |
VE Program Management
Tracking VE Items:
| ID | Description | Savings | Status |
|---|---|---|---|
| VE-001 | Proposed/Accepted/Rejected | ||
| VE-002 | |||
| VE-003 |
Sharing Savings:
- Per contract terms
- Typical: 50/50 owner/contractor
- May vary by delivery method
Constructability Review
Related to VE:
Constructability = Can we build it efficiently?
Review For:
- Sequence issues
- Access limitations
- Tolerance coordination
- Material availability
- Labor skill requirements
- Schedule impacts
Constructability VE:
- Simpler connections
- Standardized elements
- Prefabrication opportunities
- Sequence optimization
Owner Considerations
When Presenting VE:
Do:
- Focus on owner benefit
- Maintain quality/function
- Present professional proposals
- Be honest about trade-offs
- Support design team
Don't:
- Criticize design team
- Propose quality reductions
- Hide trade-offs
- Push inappropriate ideas
- Make it adversarial
Related Documents
- Estimating Standards
- Preconstruction Services
- Change Order Management
- Submittal Process
Template provided by support.construction. Value engineering benefits everyone.