Amin Terouhid, Ph.D., CVS

Executive takeaway. A proposed saving creates value only when its effects on required functions, performance, and long-term resources are understood. Owners should require evidence that an alternative delivers the needed outcome, including its operating and implementation consequences, before accepting the lower price.

Start with the required function

SAVE International describes value methodology as a systematic process conducted by a multidisciplinary team and led by a qualified facilitator. Its focus on understanding required functions helps value engineering (VE) teams reconsider how a project meets its purpose. [1] Similarly, FHWA describes VE objectives in terms of reliable, efficient function, overall cost, quality, and completion time. [2] As such, in projects, processes, or organizations, value can improve when performance requires fewer resources, or when a justified increase in resources delivers benefits the owner needs. Safety and mandatory requirements should also remain satisfied.

A structured study provides the evidence

SAVE’s job plan moves through information gathering, function analysis, creativity, evaluation, development, and presentation. A disciplined team clarifies needs before generating alternatives, screens those alternatives, and develops the strongest concepts into supported recommendations. Preparation and implementation follow-through make the study useful beyond the workshop. [1]

The focus of value engineering is not on cost reduction, but instead on enhancing value. As such, actions such as scope deletion are not necessarily the right solution. Scope deletion removes something from the project, but it is not necessarily beneficial. It does not necessarily enhance value either. Scope deletion may be appropriate when a need has changed, or an element is unnecessary, but losing a required function is a scope tradeoff. Product substitution changes the selected item; it may emerge from VE, but a lower quotation alone does not establish equivalent performance. Similarly, budget reduction sets a spending target without identifying how to meet it.

For owners, the practical distinction is the decision record: what function remains, what changes, what evidence supports performance, and what costs or risks move elsewhere. A proposal that cannot answer these questions needs further development before its savings are credited.

Make acceptance criteria explicit

As a practical recommendation, agree on acceptance criteria before comparing prices. The owner identifies service needs; designers establish technical limits; operators explain maintenance constraints; and cost and scheduling specialists assess implementation consequences. For example, two systems with the same nominal capacity may differ in part-load control, noise, maintenance access, or available replacement parts. Record those differences rather than assuming equivalence from a product description. Where a preference can be relaxed, obtain an explicit owner decision and show the resulting tradeoff. Where evidence is incomplete, identify the required investigation and its cost before presenting the alternative as ready for approval.

Based on what we discussed, it is recommended that the following five questions be asked before accepting a saving or VE alternative:

1. Which required functions and measurable performance criteria remain satisfied?
2. What calculations, tests, or operating evidence support the alternative?
3. What is the net life-cycle effect, including redesign, operation, and replacement?
4. What happens to schedule, reliability, maintainability, and risk?
5. Who will approve, implement, and verify the promised outcome?

As a practical management recommendation, record the baseline, assumptions, responsible reviewer, and acceptance tests for each proposal. Track proposed savings separately from implemented and verified benefits.

References

[1] SAVE International, “About Value Engineering.”

[2] Federal Highway Administration, “Value Engineering,” About VE.

[3] NIST, Building Life Cycle Cost Programs. To discuss how a function-based value engineering study could support your project, contact us https://www.adroitprojectconsultants.com/contact-us/