Value Engineering Hidden Costs

What Value Engineering involves

What’s happening: To reduce costs, the General Contractor is proposing to replace Coordination Drawings with Value Engineering.

“Value Engineering is a systematic approach to identify essential functions in a design and find cost-saving alternatives while maintaining safety and functionality. This often involves replacing components or methods with cheaper options, including removing coordination drawings and using diagrammatic contract drawings instead.”

Definition of Value Engineering

In efforts to reduce costs, the General Contractor may suggest the removal of coordination drawings from the contract requirements, as part of a value engineering approach. This would mean that you be relying solely on diagrammatic contract drawings, leaving all trades to handle measurements and coordination in the field. By removing the requirements for Coordination Drawings, the General Contractor is essentially forcing the sub-contractors to work with diagrammatic MEP contract drawings and thereby increasing their exposure to liability and even liquidated damages. While the General Contractor might save money, this leads to challenges and increased costs and liability for the mechanical, plumbing, electrical and fire protection contractors. 

This approach can introduce significant risks, including:

• • Inadequate Field Coordination: Without Coordination Drawings, you rely solely on MEP contract drawings, which often lack the detail needed for precise field coordination. This can result in costly adjustments and delays.

• • Space Constraints and RFIs: If space is not accurately accounted for, work may need to be stopped to issue Requests for Information (RFIs) and wait for responses. This can delay your installation, especially if the ceilings and fixtures are already scheduled to be installed immediately after your work, leading to potential conflicts and additional rework.

• • Higher Costs and Delays: Due to insufficient planning, you may encounter more problems in the field, leading to higher material and labor costs, as well as project delays. The lack of detailed coordination drawings increases the risk of unforeseen issues and wasted materials.

The responsibility is put on you

When the General Contractor requests Value Engineering for coordination drawings, you’re forced into a risky design role you didn’t sign up for.

• • Clarifying roles: Coordination drawings serve as an excellent communication tool between the contractor and engineer, outlining details like ductwork location, size and connections. Once approved by the Engineer, these drawings confirm the work is authorized and ready for fabrication. If any issues arise, the contractor can use the approved drawings as proof that the work that they installed was authorized. Your company was most likely contracted for fabrication, supply and installation, not for design. As a contractor, you do not have the authority to alter building parameters or manage design changes, which can be a risky responsibility.

• • Implications of undocumented changes: Field changes made without proper documentation can lead to significant issues, such as system balancing. Without accurate records and communication, you could be held responsible for any resulting inefficiencies or operational problems.

• • Limitations of Contract Drawings: Most MEP contract drawings are diagrammatic only and lack the detailed information necessary to be used in the field. This leaves significant room for risk and potential clashes, as they typically do not cover all installation and coordination issues.

• • Increased costs and corrections: The vague, diagrammatic nature of contract drawings can lead to overlooked conflicts, increasing fabrication costs and requiring costly field corrections. Coordination issues such as trade intersections and pipe slopes that were not properly accounted for, may require adjustments, rerouting, or requests to lower ceiling heights. The initial designs shown on the contract drawings often need changes to fix these issues, showing the limits of the original plans and the need for detailed coordination drawings.

How to prevent financial losses

To avoid the risks associated with Value Engineering deductions and credits, and to ensure smooth project execution, insist on using Coordination Drawings. These drawings are essential for detailed planning and smooth field installation. They offer precise, comprehensive information for seamless trade integration, helping to prevent conflicts, minimize costly rework, and ensure your project stays on track and within budget:

• • Prevent ‘First trade on site chooses its location’: Avoid the issue where the first trade on site dictates the location and elevation, which can create conflicts and inefficiencies for subsequent trades.

• • Avoid field re-coordination costs: A minor change made during the coordination phase, before installation begins, can prevent major issues for other trades. Identifying and addressing potential conflicts early, during coordination and the creation of coordination drawings, is far more cost-effective than correcting mistakes in the field, saving you from expensive rework and material waste.

• • Save on fabrication costs: Accurate and detailed planning reduces errors in fabrication, preventing costly modifications and material wastage. Effective coordination ensures that fabrication aligns with actual field conditions, avoiding costly adjustments later.

• • Keep the project on schedule: Proactive coordination and early issue resolution help maintain the project schedule, avoiding delays and the associated loss of productivity.

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