Value Engineering Demystified

July 18, 2023

Value engineering is one of those terms that many in building and construction use, but it isn’t always clear exactly what it means. In construction, value engineering can help project stakeholders identify alternative approaches that lower costs, reduce inefficiencies, and increase functionality.

The idea of value engineering emerged during World War II, when widespread shortages led engineer Lawrence D. Miles to establish a method for developing low-cost alternatives. With the construction industry facing similar material and labour shortages in the wake of the global pandemic, there has never been a better time to consider the benefits of value engineering in construction.

It’s important to note that improving the value of your project does not only mean cutting costs. It means optimizing the elements of the project through an analysis of all factors—cost, upkeep, wear-and-tear, aesthetic value, etc.

So, where to begin?

For the very best value engineering process, it is of the utmost importance that your construction and design team understand the project as a whole and that you share your vision and goals for the project. Every project is different, as is every client’s definition of value.

To really understand the value, you need to dig deeper. How long will the materials last? What type of maintenance will they need? Will they work more efficiently and cost less to operate? The best place to start is to ask yourself what is/are the most important part(s) of the project, and what do you want the project to achieve? Once you’ve identified them, share them with your construction and design team, and they’ll collaborate to identify a list of suggestions that respect your goals and enhance your project to provide the best possible value that meets your budget. This approach is one of value enhancement for your individual project—rather than sweeping cost-cutting measures that may not be the best fit for your needs or goals.

When evaluating these options, you should keep these three main criteria in mind: cost reduction, added quality, and life cycle/maintenance.

Cost reduction is what drives many value engineering processes. Your consultants and contractors will bring ideas of less costly materials or systems to your project for your consideration. Whether that’s finding a similar fixture that costs less or alternating an unnecessary feature, these suggestions can bring value to your project.

However, without a consideration for quality, value engineering would just be called cost-cutting. Added quality ensures that the cost cuts made do not diminish the value of the project.

Quality needs to be considered before making any decisions on your value engineering options. Quality can have a lot of different meanings. Quality of the environment you’re creating. Quality of the products that make up that environment. Quality of the team you’re choosing to create that environment.

While some equipment or design elements may have a higher cost, they could be justified by the quality that they bring. Higher-cost items and elements may allow you to charge more for your services. They may have a positive impact on the productivity or happiness of the people who will use the space. A quality product could have more overall value than a low-cost product.

Life cycle/maintenance is also important to consider. What are the long-term implications of these value engineering decisions? While choosing a low-cost flooring may seem like the most valuable option initially, if you need to replace it twice as frequently as a higher-cost flooring, it could end up costing you more money in the long run.

However, if saving that extra money upfront is the difference between getting your project off the ground or having it stall out in design, then making that decision may very well be the best option. The key is to be flexible where you can be, and to really understand what is most important to you, and where you are open to compromise.

Value engineering can take place during any phase of a construction project. However, it will be most effective if undertaken during the planning phase. That’s one reason why we recommend including Terlin at the outset, by taking advantage of our pre-construction process. Before you’ve committed to design, procurement and tendering, let us help you get the most bang for your buck!

If you’re considering a construction project this year, reach out to us right away. We can help guide you through the process. Contact Terry McLaughlin, President, at 1-888-791-9376 or