Avoiding Post-bid Value Engineering

No one likes to feel like their work is being second-guessed, but sometimes it’s hard to avoid post-bid value engineering (PBVE) when budgets go awry. This practice can be a major headache for owners, architects, engineers, and construction professionals, so it’s important to know how to deal with it, and hopefully avoid it altogether.

Value engineering (VE) should take place at the project’s inception when maximum benefit can be achieved with minimum effort and cost.  Changes made early in the design process will yield much more effective results than those made late in the game. 

However, there are many times when VE is employed later in a project’s lifecycle, especially when budget constraints come into play. This latter form is called “post-bid value engineering” or PBVE.

It is crucial that PBVE is avoided as much as possible. In this blog post, we’ll discuss why PBVE is so detrimental to a project and what you can do to avoid it.

What Is Post-Bid Value Engineering (PBVE)?

PBVE takes place after the bid process has been completed and construction contracts are being negotiated, or have been signed. In other words, it’s an attempt to save money on a project that has already been designed, by making changes to either the scope of work (reduced) or by substituting alternate materials, equipment, and/or systems for those that were originally specified. PBVE can take many forms; however, some common examples include changing the glazing or insulation materials to a lesser grade product to save on costs, substituting lower-grade materials for those specified in the contract documents, or deleting entire components or programmatic areas from the project scope in order to save money.

Why Should You Avoid PBVE?

It Compromises the End Result

There are many reasons why PBVE should be avoided. First and foremost, it almost always results in a compromise in the quality and efficiency of the completed facility.  Changes made late in the design process normally involve simply reducing the quality of the materials used, or eliminating key features that make a project special. By applying value engineering principals to a project early in the design process, the project quality is enhanced, because the resources available for the project are applied in the most effective manner possible to achieve the best result.

Erodes Trust Between the Parties

Another reason why you should avoid PBVE is that it leads to distrust between you, your contractors and the design team. They have been hired to complete a specific scope of work according to a specific set of specifications. If you start making changes after the design is complete, or construction has begun, it sends a message that you don’t trust their abilities to do the job right, or that you’re not confident enough in your own abilities as the owner/developer.

Results in Sub-Par Workmanship

Finally, employing PBVE almost always results in subpar workmanship, especially when corners are cut by substituting low-quality materials, or removing entire components from the scope of work. Not only does this put your occupants/users at a disadvantage, but it also reflects poorly on you as an owner/developer.  The project simply does not measure up to the expectations set at the outset.

It’s Unfair to both the Contractor and the Owner

When a contractor wins a bid based on a certain set of plans and specifications, they do so with the understanding that those plans and specifications will be implemented. If they are then asked to make changes that result in a reduction in scope, they adjust their price; however, the full value of the change is typically not provided, as it would be if VE had occurred earlier in the process.  .

It Causes Delay

Making changes to the plans and specs, after the bid process has been completed, will inevitably cause delays. The contractor will need time to review the changes and determine how they will impact the schedule and budget. In some cases, the changes may require new submittals, further delaying the project.

How Can You Avoid PBVE?

Know Your Costs and Your Budget

Knowing your costs and budget early on is one of the best ways to avoid PBVE. Make sure you clearly understand all the materials, labor, overhead costs associated with the project, and ensure it stays within your budgetary limitations throughout. This will help you to submit a more accurate bid, and will make it less likely that the client will ask for changes that will reduce your profit margin.

Apply the Principles of Value Engineering Early in the Project

Ensure that the project team you select, to design and pre-con your project, are enabled with the skills and technology necessary to ensure that VE is carried out throughout the design process.  AI assisted design, frequent budget vs. cost reviews, and value based material selections are all good ways to ensure that value is being delivered to the project every step of the way.  If the systems are well engineered and material selections are carefully considered up front, including cost, the changes made will provide the maximum benefit to the project and actually result in a better project, rather than a compromised project, which often results from PBVE.

Communicate

Another way to avoid PBVE is to ensure communication throughout the project. Keep all the stakeholders updated on the progress of the design and address any concerns they may have. If the client feels like they are involved in the process they are less likely to request changes that would reduce the quality of the finished product after the fact.

Be Flexible

PBVE often occurs when a client requests a change that would reduce the project’s cost. To avoid this, try to be flexible in your design and be willing to make changes early on that would save the client money without sacrificing quality.

Have a Contingency

It is also important to maintain a contingency in order to absorb unexpected changes in pricing that could trigger a PBVE effort.  This contingency should not only include a reserve of unassigned funds to cover the unexpected, but also include alternative designs or material choices that would still meet the client’s requirements, but would not increase costs. A contingency will help you be prepared.

Review the Plans Carefully at Each Stage of Design

Finally, make sure you review all plans, at each stage, carefully before bidding the project. This review should include an examination of all material choices, with an evaluation of whether or not they are appropriate for the project, and if they will adversely affect costs. By taking time to review all plans carefully, you can avoid many of the problems associated with PBVE.

Conclusion

Post-bid value engineering (PBVE) is something that should be avoided. In this blog post, we discussed why PBVE is so detrimental to a project and what you can do to avoid it. If you take anything away from this blog post, let it be this: PBVE almost always results in compromises and those compromises are not returned to the owner at their full value. So, plan carefully, utilize the latest design technology available, and communicate effectively, so as to avoid PBVE at all costs!

Contact Schnackel Engineers today if you have questions or want more information about avoiding PBVE in your next project. Our AI for MEP^TM design software provides the ultimate in up-front value engineering.  With the AI assisted optimization of the MEP design to reduced construction costs during the engineering phase, you can be certain you are receiving the maximum value from your MEP partner, and from your completeed facility. We’re here to help!