Analysis

How value engineering can boost Middle East construction

Value engineering can have a positive impact on projects, as long as it’s implemented correctly, says Sharon Jutla

Sharon Jutla

The Middle East construction sector is going through another challenging year, with the number of new contracts lower than previously forecast. As a result, we’ve seen a number of newly tendered contracts for refurbishments and extensions, as developers try to generate more revenue from existing assets.

The theme of 2017 could be said to be cost certainty in an uncertain world, and recent developments in the region have demonstrated the wider impact on the local construction industry of uncertainty, associated with falling commodity markets.

The GCC economies are poised for stiff challenges, driven by multiple factors, but mainly by a liquidity deficit. This will have a trickle-down effect on the construction industry as a whole. As a result several infrastructure developments will stall due to a shortage of funds.

Investment experts are aware of the fact that the current liquidity challenges brought about by dipping oil prices, against the backdrop of subdued government spending, has negatively affected asset prices, equities, credit growth and bank balance sheets. At the moment companies and governments are cutting costs on projects under the pretence of value engineering, however cost cutting is not the specific focus of value engineering.

Defining Value Engineering

Value engineering aims to improve function and quality by solving problems, as well as reducing unnecessary cost, thereby adding value to the product. This is mainly realised by considering material availability, methods of construction, planning and organisation, transport, site limitations, and other factors. Quality improvement, environmental impact and a reduction in lifecycle costs are just some of the main benefits that can be achieved.

Naturally, value engineering should commence at the beginning of a project, mainly because this is where the benefits are optimal. Here all details including selections and materials, can be carefully studied, and assessed, in order to create a strong, creative design. This ensures that the design is not compromised.

The quality of each creation is maintained due to careful compliance with client expectation without compromising the original idea. The project contractor is welcome to weigh in on the process, but it should not negatively affect the project timelines or budget.

The Design Process and Value Engineering stage

Today, most projects are handled by a team of professionals. To commission the design team, the owner participates in a rigorous selection process that includes designers, engineering experts and architecture selection. Some owners rely on a project manager to represent them in this process.

Once the selection of a general contractor and a construction management consultant has been identified, the design team is then consolidated. A project begins once a space programme has been identified, a list of project requirements defining scope and function has been developed, and a budget defining cost has been set. The design and construction teams then review the design schematic and development, and prepare preliminary statements of probable cost.

Design and cost evaluation will then be done in comparison to the initial project scope and budget. This will give the owner and the team a clear picture of how well the project is progressing vis-à-vis the budget. This is enabled by a continuous monitoring process through each step of the project.

Value engineering in typical construction projects is used sporadically, usually when the design team encounters a budget problem. On many occasions, it has been effectively used to rally the project design team to identify and fix problems in a bid to save costs.

In some cases, the project owner, contractor and designer prevent true value engineering from being achieved, especially when they get too invested in their respective disciplines. Open mindedness and flexibility is the key here. While there is also the possibility of reducing costs marginally, this often leads to a reduction in quality and actual value.

Client Role and Design Changes

It is imperative that precautionary and value engineering measures be considered, especially in the creative process, so that quality isn’t negatively impacted. If this is not done, the contractor might be forced to effect the changes in order to complete the project within the set budget – a move that could affect the project design and uniqueness.

For value engineering to succeed, a more precise and appropriate definition of value is paramount. The quality level should be clearly defined by the owner, while the delivery of a design that meets expectations is the sole responsibility of the designer.

Designers are often convinced that better quality is equivalent to better value, but this isn’t always accurate. The fact is, better quality will likely cost more but not necessarily be of greater value. What constitutes value should be made clear to the project owner, to avoid incurring unnecessary additional costs on the project.

A well-executed engineering process delivers a cost-efficient project that satisfies the owner’s needs and objectives. It also significantly enhances a team’s ability to solve issues effectively, reduces the team’s expenses and allows an efficient construction process.

Sharon Jutla is the founder of Sharon Jutla Interiors

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