Value Engineering

[Alwayslearningelec]

When trying to value engineer a job in the estimating phase what are some of the basics " substitutions/alternatives" you apply. I am sure a lot depends on what is specified. Also, I never understood this as I would imagine if you VE something in the estimate and give this info to the GC doesn't he have to have all other bidders price this? So how can VE be an advantage to an EC during the bidding process? THanks.

 

[cdslotz]

When trying to value engineer a job in the estimating phase what are some of the basics " substitutions/alternatives" you apply. I am sure a lot depends on what is specified. Also, I never understood this as I would imagine if you VE something in the estimate and give this info to the GC doesn't he have to have all other bidders price this? So how can VE be an advantage to an EC during the bidding process? THanks.

The basics are to look for significant savings. So you look at the big ticket items: lighting, copper, etc.
Then you look at spec items that may not be necessary: Fittings, 3/4" minimum conduit, hard pipe job vs use of MC, copper bussing, fully rated panelboards, etc. Then you look at items that the owner may not actually need: Lighting protection, ground counterpoise, special metering on switchboard, etc.

All of this can be presented as a shopping list to the GC and is all SUBJECT TO APPROVAL by the engineer.
Lighting is tricky and political. I will only do this if it comes down from the Architect that he lighting needs to be VE'd. And even then I will go to the original specified lighting rep and work with them. A lot of work had been put into the lighting layouts, energy codes by the architect/engineer/Lighting rep for months prior to you bidding a job. If you send that design out on the streets, the lighting rep will know about it in 10 minutes.
You will NEVER get a good quote again.

 

[Alwayslearningelec]

The basics are to look for significant savings. So you look at the big ticket items: lighting, copper, etc.
Then you look at spec items that may not be necessary: Fittings, 3/4" minimum conduit, hard pipe job vs use of MC, copper bussing, fully rated panelboards, etc. Then you look at items that the owner may not actually need: Lighting protection, ground counterpoise, special metering on switchboard, etc.

All of this can be presented as a shopping list to the GC and is all SUBJECT TO APPROVAL by the engineer.
Lighting is tricky and political. I will only do this if it comes down from the Architect that he lighting needs to be VE'd. And even then I will go to the original specified lighting rep and work with them. A lot of work had been put into the lighting layouts, energy codes by the architect/engineer/Lighting rep for months prior to you bidding a job. If you send that design out on the streets, the lighting rep will know about it in 10 minutes.
You will NEVER get a good quote again.

Thanks CD but a few questions.

1. If you present these VE items to the GC won't he ask for pricing on them from other EC's.
2. If copper is specified you will give them and alternate for aluminum??? Then you have to re-size the feeders? Can't you do that on every job?
3. If it is an EMT job only you would give them and alternate for MC?
4. Can you explain fully rated paneboards? What exactly is that and what would an alternative be.

THanks alot.

 

[cdslotz]

1. If you present these VE items to the GC won't he ask for pricing on them from other EC's.
A good GC won't. These are MY ideas. If I do a lot of extra work to sell the job and I find out the GC got the job using MY ideas, and shopped them to someone else, I would be really pissed.

2. If copper is specified you will give them and alternate for aluminum??? Then you have to re-size the feeders? Can't you do that on every job?

No you can't just do it on any job. The job is specified copper. The EE may insist on it staying copper. The owner may insist on the savings I offer, and overrule the EE. I would never dare do this, or any substitution on my own without approval.
Yes, you have to re-size the feeders, and sometime the conduits size or number of runs. I don't give back all of the money when I offer. I leave enough to cover these things, and enough to put in my pocket.

3. If it is an EMT job only you would give them and alternate for MC?
If it is an all EMT job, I can offer limited use of MC. "VE" means "Voluntary Alternate". They don't have to take it.

4. Can you explain fully rated panelboards? What exactly is that and what would an alternative be.
Too long to explain, but basically, panels downstream can be "series rated" and the breakers are cheaper.

 

[Alwayslearningelec]

1. If you present these VE items to the GC won't he ask for pricing on them from other EC's.
A good GC won't. These are MY ideas. If I do a lot of extra work to sell the job and I find out the GC got the job using MY ideas, and shopped them to someone else, I would be really pissed.

2. If copper is specified you will give them and alternate for aluminum??? Then you have to re-size the feeders? Can't you do that on every job?

No you can't just do it on any job. The job is specified copper. The EE may insist on it staying copper. The owner may insist on the savings I offer, and overrule the EE. I would never dare do this, or any substitution on my own without approval.
Yes, you have to re-size the feeders, and sometime the conduits size or number of runs. I don't give back all of the money when I offer. I leave enough to cover these things, and enough to put in my pocket.

3. If it is an EMT job only you would give them and alternate for MC?
If it is an all EMT job, I can offer limited use of MC. "VE" means "Voluntary Alternate". They don't have to take it.

4. Can you explain fully rated panelboards? What exactly is that and what would an alternative be.
Too long to explain, but basically, panels downstream can be "series rated" and the breakers are cheaper.

Ok thanks. VE means value engineering.

 

[Fulthrotl]

Lighting is tricky and political. I will only do this if it comes down from the Architect that he lighting needs
to be VE'd. And even then I will go to the original specified lighting rep and work with them. A lot of work
had been put into the lighting layouts, energy codes by the architect/engineer/Lighting rep for months
prior to you bidding a job. If you send that design out on the streets, the lighting rep will know about it in 10 minutes.
You will NEVER get a good quote again.

amen.

lighting is horrible that way. without good lighting numbers, you can't compete.

the owner of my wholesale house is superbly mannered... until you talk about
lighting reps.

longshoremen would blush.

 

[zog]

Ok thanks. VE means value engineering.

Value engineering = pay more later and less now

 

[Alwayslearningelec]

amen.

lighting is horrible that way. without good lighting numbers, you can't compete.

the owner of my wholesale house is superbly mannered... until you talk about
lighting reps.

longshoremen would blush.

Why is that?

 

[kwired]

Why is that?

Most commercial projects I have done more recently the lighting is over half the material cost for the whole project - especially if you stick to what is specified.

Some fixtures are not too difficult to replace with an "equivelant" that cost less. Others are unique enough you have no choice but to use the exact model that was specified.

 

[Strathead]

1. If you present these VE items to the GC won't he ask for pricing on them from other EC's.
A good GC won't. These are MY ideas. If I do a lot of extra work to sell the job and I find out the GC got the job using MY ideas, and shopped them to someone else, I would be really pissed.]

Yeah, but by that time the damage is done. In this bid market, I believe that it is not worth the risk. For items such as the copper to Aluminum, MC conversion etc., I recommend that you make a generic VE statement, such as "We have several cost saving ideas that could save as much as $xxx, and let the GC/owner come back to you. More big VE I find often is to offer set screw vs. compression fittings, IMC for GRC, eliminate GRC elbows underground, reduce the wiring device grade (usually from industrial spec to commercial spec).

One last thing, don't give back the profit and overhead as a general rule. There will be extra work involved throughout the job to proivde the VE's to you need to keep the profit to offset this.

 

[Alwayslearningelec]

1. If you present these VE items to the GC won't he ask for pricing on them from other EC's.
A good GC won't. These are MY ideas. If I do a lot of extra work to sell the job and I find out the GC got the job using MY ideas, and shopped them to someone else, I would be really pissed.]

Yeah, but by that time the damage is done. In this bid market, I believe that it is not worth the risk. For items such as the copper to Aluminum, MC conversion etc., I recommend that you make a generic VE statement, such as "We have several cost saving ideas that could save as much as $xxx, and let the GC/owner come back to you. More big VE I find often is to offer set screw vs. compression fittings, IMC for GRC, eliminate GRC elbows underground, reduce the wiring device grade (usually from industrial spec to commercial spec).

One last thing, don't give back the profit and overhead as a general rule. There will be extra work involved throughout the job to proivde the VE's to you need to keep the profit to offset this.

Thanks alot!!!

 

[kwired]

1. If you present these VE items to the GC won't he ask for pricing on them from other EC's.
A good GC won't. These are MY ideas. If I do a lot of extra work to sell the job and I find out the GC got the job using MY ideas, and shopped them to someone else, I would be really pissed.]

Yeah, but by that time the damage is done. In this bid market, I believe that it is not worth the risk. For items such as the copper to Aluminum, MC conversion etc., I recommend that you make a generic VE statement, such as "We have several cost saving ideas that could save as much as $xxx, and let the GC/owner come back to you. More big VE I find often is to offer set screw vs. compression fittings, IMC for GRC, eliminate GRC elbows underground, reduce the wiring device grade (usually from industrial spec to commercial spec).

One last thing, don't give back the profit and overhead as a general rule. There will be extra work involved throughout the job to proivde the VE's to you need to keep the profit to offset this.

You are not giving away profit when you do this you are changing the specs of the project and therefore making the total cost of the project less. This may result in less net profit depending on just how you determine what profit is. The bottom line for the GC and or owner is how much is it going to cost me and what do I get for that cost?

The designer comes into play in deciding what is going to cost less over the lifetime of the equipment more so than the initial installation cost. Higher grade equipment may cost more initially but likely is longer time before it needs repair or replacement.


Building owners today often only use a building for 5 - 10 years and then they either move to something else or make major rennovations anyway. Some value engineering may be well worth it in this situation.

 

[Ragin Cajun]

Value engineering = pay more later and less now

Oh, how true most of the time.

Regarding lighting, I am an absolute BEAR on shop drawings. I have yet to have a set of shop drawings for lighting I didn't reject at least once.

Typically they will substitute cheap china junk. Many times the substitutes are considerably less efficient than those specified. Either one is an automatic rejection.

I have just rejected for the 2nd time a generator shop drawing. The main issue was the sound rating. I specified ~71 dBA and they had ~76 dBA. I noted that if the 3rd submittal wasn't as specified they are to submit another vendor! There were other issues that where show stoppers. I don't appreciate games to shave the bid. It's unfair to other bidders to accept other than what's specified, it's also an injustice to the owner.

RC

 

[kwired]

I don't appreciate games to shave the bid. It's unfair to other bidders to accept other than what's specified, it's also an injustice to the owner.

RC

I don't like the games either, but you have to let the owner know that your price is what it is because of the specifications, and that your competetion may or may not be following specifications. And that if you were to lower the price it will involve changing specifications as well as having the designer give his blessing to do so.

If you do not do this they go with the competition based on price alone. Then after a lot of change orders, and other hold ups of the project they find out more about you from someone else you have worked on a project for and/or more about the contractor they did hire, and wish they had accepted you from the start.

You don't have to make it a game, just make the game that is played clear to the owner. Some don't care and all they want is cheap. You probably don't want to work for them anyway.

 

[mtfallsmikey]

Value engineering = pay more later and less now

Amen, brother. The buildings I run were "value engineered" to death, in all areas, not just electrical. No better than a cheapo spec residential house IMO.

 

[iwire]

Value engineering = pay more later and less now

Which in many cases is exactly what the customer is looking for as the budget for construction is entirely separate from the budgets for upkeep and repairs.

 

[mtfallsmikey]

Which in many cases is exactly what the customer is looking for as the budget for construction is entirely separate from the budgets for upkeep and repairs.

True, but after the value engineered equipment starts breaking down, even with a tightly run PM program, the customer/owner will wail and gnash their teeth at maintenance costs. Ask me how I know....

 

[iwire]

True, but after the value engineered equipment starts breaking down, even with a tightly run PM program, the customer/owner will wail and gnash their teeth at maintenance costs. Ask me how I know....

Things are not always like that.

I run a service department for a large electrical construction company, the construction side VEs the job as the customers want and later I add or change things for the maintenance division of the same customers.

 

[cdslotz]

I don't completely agree. Things that are VE'd out don't' need repairs or maintenance. It doesn't exist.
EMT fittings, MC cable, aluminum feeder wire doesn't wear out. Breakers with a lower AIC rating don't break down. Aluminum bussing in switchboards last as long as copper.
The switchboards/panels and terminations should be serviced and scanned and re-torqued periodically on expensive gear as VE'd gear, does it not?
I think lighting is the main product that needs more continual maintenance re-lamping/ballasts and cleaning. Does a cheaper fixture need to be serviced more than an expensive one? They contain the same lamps and ballasts as the expensive one's in most cases (I'm talking commercial grade stuff here, not resi-grade)
Someone explain how VE'd electrical results in more repairs and maintenance.
I think crappy installs are the biggest cause.

 

[ksmith846]

If you are going to offer them, I agree with offering a value in the bid for possible VE deducts of X amount to be discuseed and finalized after or just prior to contract.

Most GC's in my area will take the ideas and have their "pet EC's" price the same options.

Never give back all of the value either. For example if you offer aluminum feeders in lieu of copper only give back 1/2 the value. You know the rest of the bid is already tight so why let the owner/GC gain 100% of the savings when they are making out already with our weakend competitive pricing?