»Aug 7 Posted by Scott

Value Engineering in the Retail Market

Retail owners and developers, in both the tenant improvement and ground up markets, have tight construction budgets.  When utilizing the traditional Design-Bid-Build project delivery method, quite often there is a last minute search for savings in the form of Value Engineering.  When contemplating Value Engineering substitutions late in the design process, there are many potential drawbacks to consider.

‘Finish’ type materials are the easiest to substitute at a more budget-friendly price without affecting the design.  Examples include materials such as floor tile or countertops.

Mechanical or electrical equipment such as rooftop units and light fixtures are often substituted, although there are more design considerations to study prior to proceeding with these alternates.  In addition to the obvious concerns, things such as structural support, future access and maintainability, and compatibility with building management or fire alarm systems must be well-thought-out.  Keep in mind that these are typically pieces that need to be released first on a project as their procurement defines the critical path, so a cost savings opportunity could become a hindrance to the schedule.

If a Value Engineering substitute contains more than an alternate material, other considerations should be made.  Commonly overlooked are the needs for additional design time or permitting resubmittal to local jurisdictions.  Constantly evolving energy codes will limit mechanical and electrical systems and exterior envelope changes.

It may be a good idea to consider a Construction Management project delivery method if tight budgets are expected to lead into a Value Engineering search.  This can help avoid design, permitting, or procurement delays by selecting the best value materials and equipment early in the design process.