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Smart Luxury: Design Development Value Engineering

Posted August 6, 2014 by & filed under

This week we are finishing up the Design Development stage of the IMI Smart LuxuryTM Program with a discussion on Value Engineering. This is such an important and vital aspect to the design process as a whole and it is perhaps one of the least understood.

From the beginning there have been discussions of what the budget for the project is expected to be. During the specification process the design team worked to the best of their ability to remain within that budget.  However, as we discussed previously, during the early stages of Concept Development and even the first portions of the Design Development, the designer is not always aware of the exact cost of various items. The overall experience the team has guides them in a direction based on the understanding that certain vendors are at an appropriate or inappropriate price point and various materials can be estimated within a certain range. The designers use this base knowledge during the initial selection. Once the specifications are completed and the builder begins requesting bids for these materials a lot can change. Agreements and pricing between each builder and vendor can vary drastically; perhaps a certain materials has been in high demand for some reason and the price has increased over what it normally would be. There are thousands of factors that come in to play during pricing exercises such as this. The most important—and I cannot emphasize this enough—point to remember is that these initial bids are not the end-all-be-all of the budget. Once the bids are received the Value Engineering begins.

There is an art to Value Engineering that requires a bit of finesse. It is all too easy to look at one particular item, cabinetry for instance, and say “That is too high. Let’s cut out this aspect of it.” The problem with that approach is that various aspects of the design carry different weight; some aspects are vital to the aesthetic and the design integrity of the overall approach while others are accents and provide more leeway. In addition, various spaces (recall the discussion on Primary and Secondary Spaces) give room for adjustment as well. The proper way to approach Value Engineering is for the builder to gather all of the bids, in detail, and have a VE meeting with the team as a whole. It is the design team’s responsibility to review the bids and determine what can be adjusted and what is vitally important to remain. Going back to our cabinetry example, perhaps the cabinetry is over budget on that single item but it is a major factor in the overall aesthetic for the project. However, the powder room accent tile that is also quite expensive but in smaller portions is not quite as important; an appropriate alternative can be easily selected for that tile, bringing it under budget and freeing funds to be applied toward the needed cabinetry.

It is important for clients and builders alike to understand this process. Don’t panic when single items come back higher than anticipated. Don’t start cutting and changing specs one at a time. The design was built as a whole and should be adjusted as a whole. This is not an unexpected step in the process; it is a required step. Just as an initial concept was developed and then tweaked through the Design Development process, the design itself was developed and will be tweaked through the VE process. Just remember not to panic. A good design team will have multiple options to continue the design process and remain within the proposed budget.