Value Engineering

[cdslotz]

Does anybody else here have any ethical problems with statements like this in this thread? I always try to warn the Owner that he is not getting fair value for the reduction in quality for changes after the contract is signed.

There, I've stuck my neck out. Let the abuse begin.

That's why I always bid the job "as specified" and if there are some glaring items I can offer below the line as a "voluntary alternate" I will usually offer just cost difference.
I don't think offering a significant savings for AL vs CU is a reduction of quality. I think copper is grossly over priced and aluminum is just as reliable as copper for major feeders.
The same goes for switchgear. Cutting some bells & whistles doesn't necessarily cut quality.
I think most "specified" lighting packages are grossly over priced too, but I won't offer an alternate unless I am asked, or unless the specs allows equal mfrs.
I've had owners request a VE on the lighting, and when I go back to the rep and get him to work it up, he comes back with a nice deduct to offer back, and we find out he's submitting the original specified fixture only at a lower cost. Mainly because he doesn't have an equal to certain fixtures and he was gouging the owner in the first place.
I kid you not....

 

[dkidd]

Good information. Thanks.

 

[CopperTone]

when competitvely bidding - bid the specs only. I wouldn't say a thing about value engineering until you are awarded the job.

If you know you have the job and aren't bidding against anyone - they I would talk value engineering during pricing and give them options.

 

[cdslotz]

when competitvely bidding - bid the specs only. I wouldn't say a thing about value engineering until you are awarded the job.

If you know you have the job and aren't bidding against anyone - they I would talk value engineering during pricing and give them options.

Not me. They like to see VE below the line. Taking the time to point out unnecessary cost gets me to the table a lot of times.
I just won a job that way. I was not low on the base bid, but I did a better job of VE

 

[Harold H]

Keep the playing field level during the bid process

Keep the playing field level during the bid process

Whenever a bidder asks a clarifying question I have made it a habit to immediately summarize these and email all of the bidders with the clarifications, exceptions, allowances or whatever. In this way all bidders have equal access and I should have a better apples to apples bid for comparison.

I like the thought about suggesting cost savings to the customer after you get the bid. However asking the customer to bid lower cost or better value during the bid process would certainly be appreciated. I'm not sure if I would be thinking that the contractor making such suggestions was really trying to help me or trying to gain advantage. If I was made think the bidder was trying to help my interests, I might be inclined to pay a little more for this kind of thinking.

 

[BJ Conner]

Watch that "Vallue Engineering"

Watch that "Vallue Engineering"

Value can mean re-engineering in some cases. I have had Electrical and General contractors value engineer a job so it was still code compliant but not what the owner wanted. Mostly downsizing and changing material.
No problem, I just told the Building inspector I was pulling my stamp off the drawings because it was somebody elses design now.

 

[cdslotz]

Value can mean re-engineering in some cases. I have had Electrical and General contractors value engineer a job so it was still code compliant but not what the owner wanted. Mostly downsizing and changing material.
No problem, I just told the Building inspector I was pulling my stamp off the drawings because it was somebody elses design now.

Why would the owner be getting something he does not want?
"Voluntary Alternate" means it's.......voluntary. If you want those over priced fixtures, keep them.
If you want that specified voice evacuation, full coverage Fire Alarm system, when the code minimum is a flow and tamper system, keep it.
If you want your copper feeders instead of the $50,000 I offered you for a product that will perform the same and you can't even see, keep it.

Why would you need to pull your stamp?
If you specified a Lightning Protection system and it was VE'd out, how are you liable?

 

[petersonra]

If the job is being bid out, it's not reasonable to give one bidder special treatment and allow him to bid something that is going to cost less than the others will be bidding.

IMO, you might be better to bid to the spec and offer whatever alternates you might have with that bid.

 

[weressl]

Why would you need to pull your stamp?
If you specified a Lightning Protection system and it was VE'd out, how are you liable?

If a stamped design is modified, the modification should be reflected on the drawings otherwise the stamp becomes meaningless. I presume we're talking about a State Licensed PE in this case, and those documents can only be altered by another PE. The inspectors - in most States I presume - are also obliged not only to assure that the installation is done according to the National Codes and Local ordinances, but also as per the stamped drawings and definetly in cases where stamped drawings are legally required, like public or publicly acecsible facilities.

 

[renosteinke]

I feel your pain ....

And I REALLY felt it the time I spent three days researching a job for a "loyal" customer, only to have the information I provided be perveted to my harm.

All my research did was teach everyone else what lies to tell - and the result was another guy getting a bare-bones job. Small wonder his price was cheaper than mine.

Lets face it: "Bids" is a 4-letter word. Every 'expert' teaches folks to shop for bids, asserting this is the wise and prudent way to get the best value. WE know better. When somone puts out a request for bid, the onus is on him; if he's made some expensive goofs, it will come out of his pocket. (Of course, for government jobs that ultimately means our pockets).

The customer who asks for bids has made the error of assuming all contractors are interchangeable commodities. The deck is already stacked against to conscientious contractor; no wonder there are so many 'hacks.'

 

[BJ Conner]

Re-engineering not Value engineering.

Re-engineering not Value engineering.

If a stamped design is modified, the modification should be reflected on the drawings otherwise the stamp becomes meaningless. I presume we're talking about a State Licensed PE in this case, and those documents can only be altered by another PE. The inspectors - in most States I presume - are also obliged not only to assure that the installation is done according to the National Codes and Local ordinances, but also as per the stamped drawings and definetly in cases where stamped drawings are legally required, like public or publicly acecsible facilities.

In on case I did a facility design for an owner. I had worked very close with the production engineering group to give them what they needed ( two double ended 2,500 kva substations). The EC and the General decided a couple of 1200 amp switchboard would work. They had done another building for this client, but it was not the same production process. They supposedly knew other people in the company and could talk them into it ( lots of politics involved). IF everybody had wanted switchboard (including my customer ) no porblem. IF they were going to sneak it in, not with my help.
Downsizing generators has happened a couple of times. You can use the same generator for emergency, stand by and optional standby. The optional can be the water cooler if that's what the client wants and you size the generator and system to take care of it. It's not value engineering to supply a system that will take care of the emergency and leagally required stand by only.

 

[weressl]

In on case I did a facility design for an owner. I had worked very close with the production engineering group to give them what they needed ( two double ended 2,500 kva substations). The EC and the General decided a couple of 1200 amp switchboard would work. They had done another building for this client, but it was not the same production process. They supposedly knew other people in the company and could talk them into it ( lots of politics involved). IF everybody had wanted switchboard (including my customer ) no porblem. IF they were going to sneak it in, not with my help.
Downsizing generators has happened a couple of times. You can use the same generator for emergency, stand by and optional standby. The optional can be the water cooler if that's what the client wants and you size the generator and system to take care of it. It's not value engineering to supply a system that will take care of the emergency and leagally required stand by only.

Unethical business practices, not just those that are against the law, will result in the further deterioration and loss of trust in the free market enterprise system, but results in additional 'laws'. We are slaughtering our own golden goose, folks, and on the road to convert our economy to the cut-throat competition that is based on dishonesty. One of the 'fruits' (IMO) of multiculturalism, where we welcome people from far-away lands - where this is standard practice - and allow them to continue their practices instead of using the strength of the american pioneer spirit to induce them to embrace it.

 

[mivey]

Unethical business practices, not just those that are against the law, will result in the further deterioration and loss of trust in the free market enterprise system, but results in additional 'laws'. We are slaughtering our own golden goose, folks, and on the road to convert our economy to the cut-throat competition that is based on dishonesty. One of the 'fruits' (IMO) of multiculturalism, where we welcome people from far-away lands - where this is standard practice - and allow them to continue their practices instead of using the strength of the american pioneer spirit to induce them to embrace it.

Got a ribbon we can wear for that? :grin: I despair at times over some of the things I see but what do you suggest we do? It appears out of control.

 

[petersonra]

Got a ribbon we can wear for that? :grin: I despair at times over some of the things I see but what do you suggest we do? It appears out of control.

It is not a simple problem, especially with the way bids are all but rigged most of the time, one way or the other.

In most cases, it ends up being favorable to both parties to select a supplier up front that you are comfortable with, and then come to an agreement with them on what you really need and want, and can live with. That is impossible to do on a job that is bid out, so what happens is everyone involved tries to get the bid written to favor the supplier they want to get the job.

I have seen specs written in the past that specified that a PLC had to have RED LEDs indicating battery failure to prevent the use of a brand that used green LEDs to indicate the battery was OK.

I have seen specs where paint colors were selected to match what a specific manufacturer used as their standard because the engineer wanted that equipment but was not legally able to specify that brand.

These days we often get a spec along with an unofficial request that we look at it and see if we can actually do it for the amount of money they have available. If not, the spec gets revised until it fits their budget.

 

[renosteinke]

In the example I referred to earlier, the customer involved was from India. Now, one would have thought that, as such, he was familiar with the concept of "Karma." Well, I guess bad judgement and temptation are concepts that no ethnic group has any monopoly on.

Yet, "Karma" is the card we have to play. That is, we need the customers to learn that the short-cut they take today will bite them hard tomorrow.

Story time: I had another customer whose GC showed one circuit, with two receptacles, serving an entire wall of refrigerators and coffee machines. By the time I was done doing my homework, I saw a need for 11 receptacles and six circuits. Ditto for the area where signs would be hung: in place of one receptacle, six were installed.

THAT customer was still a bit sceptical on opening day - but within six months he was my strongest supporter, as the results came in. Every time he needed a receptacle, he would be surprised to find one right there. No more nuisance trips- and the breakers were actually identified in terms he could understand.

My problem, in the job that I lost, is that my customer was not "THE customer." That is, his plan was to turn the property over to another as soon as he could. His interest was only in doing as little as possible, for as little as possible, passing all deficiencies 'down the road' to the next guy.

"Bidding" too often means 'government' work. Lord almighty, does an alternative reality exist in their universe. Value? Hell no- often it's more a matter of making sure that no one ever nit-pics any of the choices made. Everybody wants to get in their two cents' worth, and micromanage. My favorite such experience was when some governmental functionaries speculated whether the contractor was using the correct gauge steel studs - and discussed amongst themselves whether there existed any means to measure metal thickness! The knew not of micrometers - but they sure 'knew' the contractor needed their guidance!

All you can do is bid as spec'd - then later tell them to sleep in the bed they made. (Of course, a kind word in advance might lead to 'no bid' repairs after the project is complete).

 

[weressl]

That is, we need the customers to learn that the short-cut they take today will bite them hard tomorrow.

On the other hand overdoing it in the style of 'government' projects will bankrupt them down the road if not sooner.