Do I Need a Million-Dollar-Plus Project to Save on Construction Costs?
Updated: Dec 1, 2022
General contractors often get asked about whether value engineering (VE) is a useful solution to reduce costs for building projects under $1,000,000. The simple answer is yes, but it depends. Value engineering is appropriate for a building project of almost any financial value. But it helps to consider what value engineering is really all about in the broader context of maintaining quality on your next build.
In one way, value engineering can be viewed as a mindset. A way of looking at a project to achieve maximum value. And it can also be viewed as a methodology that facilitates the design and execution of a build with quality and savings in mind while accounting for the life cycle of the building. A value engineering plan is one or a series of things that can be applied during any phase (planning, design and construction) of the building process.
Factoring in a VE option early in the planning phase, when a healthy collaboration among professionals often begins, can save on time, expenses and potential disagreements that may come up later between the design team, engineers, and the general contractor. Getting everyone on the same page early is really key for keeping a project on-budget and on-schedule. For instance, an experienced contractor may be more knowledgeable about product materials being considered than the rest of the team. An architect would then defer to the contractor’s expertise.
Value engineering practices that are implemented during the construction phase, can often be more costly and time-consuming. That being said, in the construction phase, finishes are going to be the most common material change. A recent Concore client, for example, saved $50,000 by sourcing new finish materials (e.g., flooring, tile and light fixture); the millwork package was also modified to save an additional $100,000.
Countertops are another place to reduce expenses. Some top-of-the-line materials like quartz are very popular, but can be comparatively pricey. For office countertops there are more affordable options, such as a stone-based material, laminate, or even certain types of granite. All these options can look great and function exceptionally well. Rethinking painting options is also another cost-saving step. A recent Concore client reduced costs by using integral paint in stucco instead of painting the stucco. Other VE approaches can offer even bigger rewards. A Concore multifamily development client recently saved $750,000 by moving from an electric water heater to gas boilers.
The application of a value engineering plan is also quite common with large infrastructure projects. Complex, high-budget builds often utilize value engineering in different phases of a construction process. So if your project exceeds seven figures, value engineering can typically offer you even more ways to save.