Is Your Project Over Budget? What You Need to Know About Value Engineering.

 Is Your Project Over Budget? What You Need to Know About Value Engineering.

Value Engineering is NOT Cost Cutting. If your team is only focused on stripping features or swapping quality materials for cheaper ones, you're not doing VE—you're gambling with the asset's lifecycle. Here’s the critical distinction every Owner and Project Manager needs to understand before they panic.

Value Engineering focuses on optimizing the overall value of a project by improving functionality and reducing costs without sacrificing quality. Here's how Value Engineering is typically applied in commercial retail design and construction projects:

Value Engineering Project Example:

A relevant example is the George R. Sweeney (Beaver Run) Water Treatment Plant project outside of Pittsburgh, Pa. where we performed a construction management agency contract with the Westmoreland County Water Department.

Value Engineering Project Example:

A relevant example is the George R. Sweeney (Beaver Run) Water Treatment Plant project outside of Pittsburgh, PA. We performed a construction management agency contract for this project with the Westmoreland County Water Department.

This was a $25 million, 25 MGD (million gallons per day) plant. The Pennvest (Pennsylvania Infrastructure Investment Authority) loaned the money for the plant to the Westmoreland County Water Department. Their stipulation was that any project over $5 million would have to undergo a Professional Value Engineering review.

We hired a Professional Value Engineering team from Washington, D.C., to review the completed engineering drawings that were designed by Gannett Fleming Engineers. The two value engineers were familiar with water treatment plants in the areas of structural design, plant process piping, and controls

Their review produced 163 Value Engineering suggestions. Following this initial review, we met with the Owner, the Value Engineering team, and the Engineers of Record (Gannett Fleming) and discussed the Value Engineering items in detail.

From that meeting, we agreed to incorporate 49 of these suggestions into the project's bidding documents. The design and budget were established by Gannett Fleming Engineers for a 25 million gallons per day (MGD) plant. Their initial estimate was $1 million for each million gallons, totaling $25 million. This was the exact loan amount from PENNVEST. As construction managers, we created 12 bid packages and 17 purchase orders for the work, incorporating the suggested VE items into each of these packages.

Now, let's consider two Value Engineering (VE) examples that we reviewed.

The first is the main water tank, as you see here. The concrete tank was 200 feet by 50 feet by 20 feet high. This serves as the holding tank for the clean, processed water that is sent out through the water pipes.

 

As you can see from the design, the base and side walls had a three-foot thickness. In the VE review, we proposed that the structure's base and wall thickness could be reduced. Our estimated savings would be $175,000 in reduced concrete and steel reinforcement. The reason for our redesign was that the surrounding earth backfill would naturally add to the structure and support the interior water load.

The Engineers' response was that, yes, we could do that; however, their specification required us to build the tank, fill it with water, and then observe the walls for leaks.

The Owner ultimately rejected this VE item, and we built the tank according to the original drawings.

Another Value Engineering (VE) item we discussed was the Equalization concrete structure, as you see here. This is a 50-foot by 50-foot by 20-foot high basin. The function of the equalization basin is to receive the sludge water from the cleaning of the clarifier beds and filter out the solids. 

After they flood the basin, they then drain it, and the sludge is subsequently shoveled out and transported to the sludge drying beds. As you can see, the sludge is hosed down the slope of the basin. Our VE item proposed that we could reduce the slope of the basin, thereby reducing the overall structure by using less concrete in the slope, floor, and walls. This VE item resulted in a $30,000 savings. 

The Engineers' response was that while the slope could be reduced, the Owner might incur an additional maintenance expense. With the steeper original slope, workers could simply hose the sludge down. With the reduced slope, however, they might have to manually squeegee the sludge, requiring physical labor.

The Owner accepted this VE item.

The following is a list of the Value Engineering (VE) items that we included in the Bid Packages and Purchase Orders:

Site Work VE Items

1.       Reduce the paving section for plant access road.

2.      Delete shoring at the filter building and carbon building and lay back side slopes.

3.      Substitute pre-stressed concrete cylinder pipe for ductile iron pipe for raw water and finished water mains.

 Concrete Trade VE Items

1.       Reduce the percent slope of the concrete fill in the equalization basins, which will reduce the concrete volume and allow the base slab elevation to be raised. (Moderate redesign required)

 Architectural VE items

1.       Reduce specified brick allowance.

2.      Reduce cast stone coping.

3.      Delete cast stone banding. Use accent brick.

4.     Delete ground-faced block. Use epoxy-painted C.M.U.

5.      Delete structural glazed face tile. Use epoxy-painted C.M.U.

 Process Plant Piping VE Items

1         Allow the use of reinforced concrete pipe instead of ductile iron pipe for clearwell and equalization basin overflow lines.

2.      Substitute P.V.C. or C.P.V.C. material for stainless steel for air distribution piping in the clarifiers.

3.      Substitute P.V.C. or C.P.V.C. material for influent distribution and relief piping in the clarifiers. (Note: Section of piping through media bed to remain stainless steel.)

4.     Substitute fabricated steel piping for ductile iron process plant piping.

5.      Delete sluice gates at future ionization chambers in the clearwell

6.     Delete piping and valves for the clarifier by-pass. Install wall pipes necessary to allow for future installation.

7.      Delete painting of PV.C. Piping.

8.      Allow substitution of cast cast-iron sectional boiler.

9.     Substitute P.V.C. or “Enfield acid resistant polypropylene piping materials for specified silicon cast iron piping for lab waste system.

10.  Substitute A.S.T.M. D2513 Thermoplastic pressure for specified black steel pipe for size gas piping.

11.   Substitute P.V.C. piping materials for the specified cast iron piping for the rainwater conductor piping.

12.  Consider the use of pressure-class ductile iron pipe for site drain lines instead of the Class 51 wall thickness specified.

13.  Delete magnetic site gauges for chemical storage tanks.

14.  Delete coating for P.C.C.P.

15.  Substitute carbon steel pipe materials for specified stainless steel piping for air blower piping to the filters and clarifiers.

16.  Substitute wall-mounted chlorinators for the specified cabinet-housed chlorinators. All other requirements of the chlorinators shall remain as specified.

17.  Delete the stainless-steel relief vent from the clarifier influent manifold as a consequence of the use of Roberts Filter Company's “unrestrained” media beds.

 Clarifiers VE Items

1.       Consider modular type filter bottoms (i.e., Universal Underdrain as manufactured by F.B. Leopold Company) as a substitute for the specified muzzle and strainer type.

2.       Utilize lower-grade stainless steel for D.A.F. system components.

 HVAC and Electrical VE items

1.       Use stainless steel ductwork instead of fiberglass ductwork.

2.      Reduce the requirements for the mounting of light fixtures.

3.      Delete the light fixtures at the sludge drying beds.

Direct purchase of VE items

1.        Sonic level transmitters.

2.      Level probes.

3.      Ph analyzers.

4.     Venturi meters

5.      Turbidmeters

6.     Use “F” profile wall thimbles in place of “E” profile thimbles.

7.      Direct purchase capacitance type level transmitters.

8.      Delete telemetry via fiber optics to the existing Beaver Run plant.

9.     Used a dedicated telephone circuit with a remote I/O rack.

10.  Delete the shelf circulating pump.

11.    Delete the shelf spare recycle pump.

12.  Relocate the chlorine dioxide generator from the existing Beaver Run plant instead of purchasing new equipment. 

13.  Delete access manways to the chamber below the filter gullet due to the substitution of the filter manufacturer. 

14.  Purchase steel tanks from a steel pipe fabricator.

15.  Delete motor starters for the future raw water and high service pumps.

16.  Delete jib crane.

17.  Delete blower B.F. valves.

Roofing VE

Modify the specified roofing system. Reduce the roof insulation requirement. Consider the substitution of a specified vapor retardant. Utilize a Gold Seal-warranted, ballasted E.P.D.M. System in place of a mechanically fastened E.P.D.M. System specified.

 As I stated, we successfully hit the target budget of $25 million for the project, thanks to the Value Engineering items identified at the start.

The build took two and a half years, during which two severely harsh winters caused delays. These weather-related setbacks led to legitimate, compensable delay claims from several trades, resulting in total expenditures of just under $200,000. Looking at similar projects, it is wise to incorporate a contingency fund. This could be achieved by setting aside an equivalent amount—perhaps $200,000 of the accepted VE savings—to cover unforeseen costs. 

Value Engineering

1. Cost Reduction: Identify ways to reduce costs while maintaining or improving quality and performance.

2. Functionality Improvement: Evaluate the design and construction methods to enhance the functionality and usability of the retail space.

3. Material Selection: Recommend alternative materials that provide the same or better performance at a lower cost. Recommend alternative materials that provide the same or better performance at a lower cost.

 4. Collaboration: Work closely with architects, designers, and contractors to ensure all aspects of the project align with value engineering principles.

Value Engineering (VE) is a critical aspect of all our projects, ensuring that the final outcome meets the desired standards of quality and efficiency while staying within budget. We integrate VE into all of our design-build projects, and we also apply it when reviewing a set of drawings already completed by a project owner.

In your experience, what is the most successful VE substitution you’ve seen that actually improved the building's function?

Share your VE wins below!

Shettig Construction Management provides Professional Design-Build Construction Management services from the inception of your project through completion. www.shettig.com mshettig@gm