How Designers Can Ease the Pain of Value Engineering

In this excerpt from his recent “Point of View” column in LD+A, lighting designer Stephen Hoppe offers five ideas that can soften the blow of value engineering (VE).

Nothing unites lighting designers more than a disdain for the VE phase. We may argue about aesthetics, performance, even whether or not color-changing has a place in the world, but mention how much you loathe VE and you will have a comrade in arms. Value engineering can be a difficult time for any project. Many designers see it as the phase where contractors ruin their designs, while owners often see it as a way to rein in the expensive taste of the designers. While neither is really true, the goal of VE is worthy: provide the best value for the project that the budget can provide. This can be accomplished in one of two ways: 1) increase the performance of the fixture package while maintaining cost, or 2) keep the performance level and lower the cost. I believe most people in the lighting industry will be more familiar with the latter strategy.

Over the course of my career I’ve tried to come to terms with VE, knowing that it is a necessary part of our work. The following strategies may help mitigate the effects of VE and maintain our design intent. In order of preference, here are some suggestions:

  1. Plan Ahead. As the old saying goes, an ounce of prevention is worth a pound of cure. The best possible way to deal with VE is to not be required to deal with VE. To do this you need to design within the project’s budget and hope that it does not change down the road. With today’s hectic deadline schedule, this is not always easy; sometimes owners have not even developed a budget for you to work within. However, if you can, it is always best to work with the client and discuss their expectations. With this information gathered first you will have the upper hand and can provide a design that meets their requirements.The next step is to always get a fixture’s unit cost quote from your local manufacturer’s representatives and use this information to check your work by calculating a material budget. If you don’t do the homework up front it will be much more difficult to make a good argument that you met the budget when lighting is in the VE crosshairs.
  2. Use the “Three-Name Spec.” Another strategy that can help keep your design within budget is to provide what is traditionally referred to as a “three-name spec.” This means that for every fixture type you list at least three different manufacturers that can provide an equal product specification to meet your design intent. This strategy is almost required if you work in a “package” area where one sales agency tries to provide the entire lighting package for a project. By giving all the local agencies this ability to provide a product on every fixture type you will increase competition and create an environment that helps to drive the cost down.This strategy works hand-in-hand with planning ahead. Rather than waiting for VE, you decide early on what equal products exist in the marketplace and select those as acceptable alternatives to your base specification. You will be much happier when the VE substitutions come across your desk and you are able to argue that a substitution is not necessary since you already provided two perfectly acceptable alternatives that meet the budget.
  3. Create a Performance Specification. The result of a performance-based specification is similar to providing multiple names on each type, but you give up a certain amount of control with this strategy. A performance specification may or may not include acceptable manufacturers, but it always includes every important aspect of the fixture specifications (e.g. exact dimensions, lumen output, beam spread, maximum centerbeam candlepower, materials, lenses, accessories, etc.) that are required to meet the design intent, but without being specific to one particular manufacturer. This is useful if you have a unique fixture type or cannot find equal manufacturers.By providing performance requirements, you shift some responsibility to the agencies and/or contractor to find acceptable manufacturers, but you also must accept their suggestions if a product meets the requirements. This is great for keeping cost down as the contractor can select the lowest cost product that meets the specification, but that low cost may be a result of sacrificing fixture aesthetics or other aspects not directly addressed in the specification. Using this strategy is a bit of a gamble, but with a tight specification you will maintain your design.
  4. Provide Alternate Designs. Sometimes you may have designed a project that the client loves and really wants, but is still over their budget. When this happens we like to have a conversation with the client about whether or not they would be open to documenting part of the design as an alternate. Instead of putting the project through VE, you break up the design into “required” fixtures and “nice-to-have” fixtures. Make the extra fixtures an add alternate and ask the contractor to price it separately. If your client really loves the design they often will see the price and find a way to make it work. Of course they may also decide it just can’t happen and that is the risk you take with this strategy.
  5. Do It Yourself. If you’ve been rushed to complete documents and didn’t have time to plan ahead or provide equal manufacturers, you may find yourself dealing with a request to VE the project. You have two choices now, either let the contractor pick substitutions or do it yourself. We always prefer to find the products ourselves since that will maintain some control over the specification, but if you use this strategy be prepared to make some sacrifices. Chances are, if you didn’t feel it was necessary beforehand you still won’t be happy having to find equals at this point.Start by looking at the current products available compared to what was on the market when the project was designed. With the fast pace of fixture development, it may be that a better performer is available at a lower price or that your original specification could be modified to lower the cost. This strategy is certainly not ideal and you may be stuck with a sub-par fixture selection.

I hope that reading about these strategies inspires you to become more open in your approach to VE. It doesn’t always have to be a dreaded process if you take the time to address it properly. Try implementing some of these in your work and see if it helps ease the pain.

August 2015