For clients whose tender came in over budget
Value Engineering in Construction: How to Cut Cost Without Cutting Quality
Sviatoslav JerdetchiiCEO & Founder of Craftex. Updated , 7 min read
The short answer
Value engineering in construction means changing how a building is designed, specified or built so it costs less while doing the same job to the same standard. Done during design it saves money without losing quality; done after an over-budget tender it often becomes cutting scope.
- It starts from what the building must do, not from a number to hit.
- It works best while the design is still moving, and loses value with every stage.
- It must never touch fire, structure, approved external walls or planning conditions.
Value engineering in construction means finding a cheaper way to deliver what a building must do. RICS says the exercise "is not about removing necessary cost from a project by reducing its scope".
This guide is for clients whose tender came back above budget. Our pre-construction services test the cost and the buildability of a design before you sign. Tender over budget? Get a free cost and buildability review.
What value engineering in construction means
Value is the ratio between what a building gives you and what it costs to get it. Value engineering is a structured search for a better ratio. The team asks what each part of the building must do, then looks for a cheaper way to do it.
RICS gives an office example. A scheme was designed with one desk per person, because that is how the client had always worked. A review showed that fewer desks plus hot-desks would do the job. A smaller floor area brought the cost down.
RICS contrasts this with cost reduction. Cost reduction might lower the quality of the decor, delete the building management system and cut the meeting rooms. The scheme would hit the number, but the occupiers' needs would go unmet.
| Point | Value engineering | Cost cutting |
|---|---|---|
| Starts from | The function the building must keep | A number to hit |
| What changes | How the function is delivered | What is delivered |
| Who is involved | Designer, cost consultant and contractor together | Whoever holds the pen |
| Evidence | An options register with cost, programme, quality and compliance effect | A list of deletions |
| Compliance and warranties | Checked before an option is accepted | Often found out later |
| Result | Lower cost, same performance | Lower cost, lower performance |
Where value engineering savings usually come from
Savings come from decisions made about how a building is formed, serviced and built. They rarely come from a cheaper finish alone. These are the places we look first.
- Structure and frame. A different grid, span or frame type can cut material and programme. Test the whole cost: RICS warns that a lighter beam can demand complicated connections that cost more on site.
- MEP design and plant. Services are often designed generously and priced late. Right-sizing plant, simplifying routes and coordinating the ceiling void can save money without touching comfort.
- Façade and envelope. An equivalent system, a simpler module or fewer bespoke details can lower cost, provided performance and approvals still hold.
- Layout efficiency. A plan that wastes less floor area costs less to build, service and finish.
- Programme and logistics. Shorter sequences, fewer phases and better access reduce preliminaries, which are time-driven.
- Package procurement. Splitting or combining packages, and ordering long-lead items early, changes what the market charges.
- Equivalent specifications. A product that does the same job to the same standard can replace a named one. Check its life: a cheaper item that fails sooner costs more over time.
Whole-life cost matters as well. RICS notes that traction lifts can replace hydraulic lifts in a low-rise building, reducing the number of lifts and removing the underground cylinder. The same source says LED lamps in high ceilings cut replacement costs.
Savings of this kind need the people who price and build the job in the room early. Our pre-construction services put them there before the price is fixed. Get a free cost and buildability review.
When to value engineer: the design stages
The earlier you ask, the more you can change. RICS says the benefit of a value engineering study decreases as the project progresses, while the cost of change rises. It places the strategic version, value management, in the early stages and value engineering mainly in RIBA Stages 3, 4 and 5.
| Stage | What is still open | What a change costs you |
|---|---|---|
| Stage 2, Concept Design | Brief, layout, form, structural idea | Drawings only |
| Stage 3, Spatial Coordination | Structure and services coordination, planning drawings | Design fees and some re-drawing |
| Stage 4, Technical Design | Specification, products, details | Redesign of the affected parts and re-pricing |
| After a tender | Substitutions only | Redesign, re-approval, fees and programme |
Under design and build, the RIBA Plan of Work says contractors may propose alternatives to win a tender. It notes these are frequently called "value engineering". Treat every such option as a design change and test it like one.
A contractor at the table during design finds savings a post-tender exercise cannot. A two-stage tender appoints one early, usually under a pre-construction services agreement. It also helps when rising construction costs have moved the price since your appraisal.
Your tender came back over budget: what to do
Do not start by asking the contractor for a blanket discount. Follow these six steps. You can start this week.
- Level the tenders. Put every return on the same scope, inclusions and exclusions. Our guide on why builders' quotes vary so much shows what to check.
- Find the cost drivers. List the few packages that make up most of the gap, such as structure, services and façade.
- Build an options register. For each driver, list the alternatives with cost, programme, quality and compliance effect.
- Test each option. The designer, the contractor and your funder each check it. Drop any that fail on function or compliance.
- Sign off in writing. You decide, and you record each accepted change, so the design, the contract and the cost plan agree.
- Re-price and update the cost plan. The contractor re-prices the accepted options. Then you compare the new total with your budget.
Send us the tender return and the drawings, and we will show you where the price comes from. Get a free cost and buildability review. Already have a quote? Send it to us. We'll beat it.
I worked perfectly with Sviat and Joe, with their architect they came up with a very smart design for our office to fit more desks and optimise the space to its maximum capacity. They also did excellent value engineering on the MEP design proposed by others, allowing us to save around £50K. The quality and speed were outstanding we finished two weeks ahead of schedule. Highly recommend these guys.
What value engineering must never touch
Some changes look like savings and are not yours to make. They trigger approvals, or they undo something a regulator has already accepted. Check this table before any option goes into the options register.
| Change | What it triggers |
|---|---|
| Materials in the external wall of a relevant building | Regulation 7(2): materials must be European Classification A2-s1, d0 or A1, subject to listed exceptions. A relevant building has a storey 18 m or more above ground and contains dwellings, an institution or a residential room |
| Any change to approved work on a higher-risk building | Change control under regulation 18: you record it. A major change needs a change control application and cannot be carried out until it is granted |
| Materials or details fixed by a planning condition | A non-material amendment under section 96A, or a new application. The council weighs the change together with earlier changes |
| Structural or fire strategy changes | The structural or fire designer must re-check it, and building control may need to see the revised design |
| Anything your funder, warranty provider or insurer approved | Check their requirements first. They may have accepted the original specification only |
On a higher-risk building, regulation 26 lists what counts as a major change. It includes the structural design, the external wall, the fire safety measures, the staircases and the common parts. It also includes swapping a product for one with a lower reaction-to-fire classification.
That list is the safest guide to the rest of your project. If an option touches one of those items, treat it as a design change with a compliance question, not as a saving.
How we value engineer before you sign
We review the drawings and the cost plan together with how the building will be built. We list the options, price each one and say what it does to the programme, quality and compliance. You choose what goes in.
At Medusa in Knightsbridge the client came to us at RIBA Stage 2. Our design and construction teams saw the cost impact of the concept and proposed more affordable solutions. The final design fitted her budget: 180 sq m over four floors, delivered in 17 weeks.
At Portsoken House in Aldgate, design and build under one roof gave the client accurate pricing and considerable savings.
In a Google review, John Smith credits "excellent value engineering on the MEP design proposed by others, allowing us to save around £50K". Ask any contractor for the same kind of evidence, in writing.
Use this list before you accept any value engineering option. Want a second opinion on the tender and the drawings? Get a free cost and buildability review.
Before you accept a value engineering option
- The function it protects is written down.
- Cost, programme, quality and compliance effects are all stated.
- Your designer has agreed it, and the structural and fire designers where relevant.
- It does not touch an external wall, a fire measure or a planning condition without the approval above.
- Your funder, warranty provider and insurer have seen it.
- The change is signed off in writing and the cost plan is updated.
- The saving is net of any redesign fee and any delay.
