By David MacLellan
Value Engineering: a loosely defined term that implies alteration of a product or system to achieve a cost savings without significantly deviating from the performance of the original system. To many builders and developers, value engineering is the salvation for construction budget over-runs.
Value engineering often involves substitution of waterproofing materials, such as roofing, building wraps, below grade membranes, and substitution of heating, cooling and plumbing equipment. Typically the statutory period of strict liability is a driving factor for the builder’s selection of material. Strict liability means that period of time that the builder is held liable for the performance of his product, and this is typically 10 years (although it can be shorter). If the product (such as any component of a house) fails to perform as intended, the builder is liable regardless of the reason. There are some exceptions such as acts of God, war, etc. Therefore, materials or systems that will last 10 years, and not much longer, are often value engineered into the job.
But value engineering decisions can often backfire. Substitution of materials or methods can result in an initial cost savings, only to create costly liabilities in the future. Perhaps one of the most egregious examples of value engineering gone bad occurred at a large assisted living complex in California. The structure was a single building, about 60,000 sq.ft. consisting of three floors of apartments. Although the building was designed to have an individual climate control system for each floor, the owner/builder was convinced by the mechanical contractor that a single control system on the middle floor would adequately serve the residents. The building was located in a warm to hot climate zone. When the facility reached about 80 percent occupancy (the month of July) the complaints by the residents began in earnest. The top floor temperature in was in the upper 80’s; the middle floor was in the mid 70’s and the lowest floor was in the 60’s. Attempts to “balance” the system failed. The owner tried many patchwork fixes including financial incentives, but he was not only dealing with the unhappy residents, but their adult children as well.
The subsequent lawsuit pleaded health and safety issues of the elderly and needless to say, it never went to trial. The cost of the settlement was nearly 10X the “value engineered” cost savings, not to mention the cost of retrofitting three independent heating and cooling systems.
So, before value engineering decisions are made, they should be argued pro and con by experienced industry consultants, keeping in mind long term effects.