I hate value-engineering. It occurs after a project has more or less been completely planned and priced and the cost of the project turns out to be more than anyone involved anticipated. It doesn’t just happen when an architect is involved before a contractor is onboard, but that is one common cause of the need for value-engineering. Why is this so common? Here are a couple of reasons:
No one takes responsibility for addressing the client’s budget in a realistic way. With this lack of specificity, there is no point of reference for making the steady stream of small decisions about whether or not the most recent new idea regarding the scope will fit in the budget.
Scope creep when a project is being planned is inevitable. The more a client is engaged and thinking about their project, the more likely it is that they will keep on coming up with new ideas about how to make their project better. So the scope keeps growing in an unmanaged way.
How to avoid all this? Whether or not you are a contractor who works with architects, or your firm is a design/build contractor, as early as possible, have a discussion with the client about his basescope, i.e., what problems with his home he most wants to solve.
Your goal in this discussion is to separate the absolute essential elements of the project — the ones that will never be value-engineered — from the items of work that would be nice to have. Get clear about the differences between these two.
Help your client own the decisions he makes when deciding upon the base scope. Then discuss budget or, in other words, the client’s investment amount.
Do whatever you need to do to determine if there is a fit between the client’s investment amount and his base scope. This could entail doing a feasibility study to get a clearer sense of cost. If there is not a fit, then you and the client must deal with that before proceeding. If there is a fit, then you are ready to move forward with estimating the project. And you can now proceed confidently, since you won’t be value-engineering after your proposal is “done”! —Paul Winans, a veteran remodeler, consults with remodeling companies through Remodelers Advantage. paul@remodelersadvantage.com