Role of Construction Value Analysis in Maximising Efficiency and Saving Costs

There’s an interesting story behind how value analysis came to be a practice in the engineering space. Lawrence Delos Miles was an American engineer working with General Electric. He was responsible for procuring raw materials for GE. This was around World War II, when manufacturing was at its peak.  

But, the war resulted in extreme resource shortages and Miles had no choice but to scout for sustainable alternatives which could derive the same value as the original raw materials. This search is what led to the creation of the concept of value analysis. 

Value analysis, also known as value engineering, is a systematic approach used in the construction industry to analyse and improve the value of a project. It focuses on achieving the desired functions, quality, and performance of a construction project while minimising costs.  

A Merit expert says, “In fact, the main objective of value analysis is to identify and eliminate unnecessary costs, without compromising the project’s essential functions or quality. It involves a detailed examination of the project’s design, materials, processes, and specifications to identify opportunities for cost savings and value enhancement.” 

6 stages of value analysis or value engineering 

The value analysis process typically involves the following steps: 

Stage 1: Information gathering 

Gathering all relevant data about the project, including design plans, specifications, cost estimates, and construction schedules. 

Stage 2: Functional analysis 

Identifying the key functions and requirements of the project and determining their relative importance. 

Stage 3: Creative idea generation 

Brainstorming and generating alternative ideas and approaches to meet the project’s functions and requirements more effectively or efficiently. 

Stage 4: Evaluation and selection 

Assessing each alternative idea based on its potential benefits, costs, and feasibility. Selecting the most viable ideas for further development. 

Stage 5: Development and implementation 

Refining the selected ideas into workable solutions and implementing them into the project’s design, construction, or procurement processes. 

Stage 6: Monitoring and review 

Continuously monitoring the project’s progress and reviewing the implemented changes to ensure they meet the desired objectives and deliver value. 

Value analysis often involves interdisciplinary teams consisting of architects, engineers, construction managers, and other relevant stakeholders. These teams collaborate to identify cost-saving opportunities, suggest design modifications, propose alternative materials or construction methods, and find ways to improve the project’s overall value. 

Let’s look at a simple example to understand this concept better. 

Let’s say a construction project involves building a new office building. The initial design includes high-end finishes, costly materials, and complex architectural features, which result in a high construction cost. The project stakeholders are concerned about the budget and want to explore ways to reduce costs without compromising the functionality and quality of the building. 

Here’s how they would perform a value analysis in this scenario.  

Initially, they would gather information on design plans, material specifications and such. Then, they would identify the key functions and requirements of the office building, such as providing comfortable workspaces, meeting rooms, and a professional appearance.  

They would then evaluate and select each idea based on its potential impact on cost, functionality and quality. For example, they might simplify the architectural design by reducing decorative elements that don’t significantly contribute to functionality, or they would explore alternative materials that can be sourced at a lower cost. They would then develop the selected ideas into a workable solution. Lastly, they would continuously monitor and implement changes to get the desired outcome. 

Is there a right time to do value analysis? 

The simple answer is, yes. Value analysis is most effective when it is integrated into the early stages of a project’s lifecycle. It’s ideal to do it in one of these three stages; 

• The design phase, where it allows for greater flexibility to make changes and optimise the project’s value. 
• The feasibility analysis stage where the project’s concepts and requirements are evaluated. An analysis carried out in this stage ensures that the project’s scope and objectives align with the desired functions and value. 
• The pre-construction stage where the project is being planned and organised. Value analysis during this stage can optimise the project’s cost, schedule, and resource allocation by identifying opportunities for efficiency improvements and cost reduction. 

Construction Value Analysis Trends in the UK 

When we look at its global adoption, incorporating value analysis in the sector has been most prevalent in developed countries, and especially in large, complex construction projects.  

Particularly in the UK, several steps have been taken in this direction. For example, the Government has shown support for value analysis through its procurement policies and guidelines. For instance, public sector construction projects often require value engineering studies to be conducted during the design and planning stages.  

Various industry bodies and organisations in the UK have also been promoting the adoption of value analysis as a best practice. For example, the Royal Institution of Chartered Surveyors (RICS) recognises value analysis as an essential tool for cost management and encourages its use in construction projects.  

Thirdly, professional associations and organisations in the UK construction industry have been providing training programs, workshops, and networking opportunities for professionals to enhance their knowledge and skills in value analysis. For example, the Institute of Value Management (IVM) offers certification programs and promotes the adoption of value management techniques.  

Lastly, when it comes to incorporating sustainable practices into construction projects, the UK has recognised value analysis as a valuable tool to identify sustainable design alternatives, energy-efficient solutions, and environmentally friendly materials. 

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