Two things with one name
Proper value engineering examines what each element is required to achieve and asks whether there is a better way to achieve it. It can increase quality while reducing cost, because it attacks the solution rather than the specification.
The other version arrives after tenders return over budget, under time pressure, and consists of removing items until the number fits. That is specification reduction, and calling it value engineering does not change what it is.
Both happen. The first is a design exercise with a cost adviser in the room. The second is a cost exercise with the design team defending.
The name matters because it changes how the exercise is received. A design team asked to participate in value engineering will engage. The same team asked to cut their scheme by a percentage will defend it, and the meeting produces a shorter list and a worse relationship.
Why the timing decides which one you get
Early in design, changing a structural solution, a grid, a floor to floor height or a facade strategy is a drawing exercise. Those decisions carry most of the cost, and revisiting them costs design time rather than construction money.
After tender, none of those are practically available. The design is complete, the contractor is priced against it, and changing anything fundamental means redesign, retender and delay. What remains available is the finish schedule, the specification of components and the extent of works.
That is why post tender exercises produce the same list on every project: floor finishes, sanitaryware, ironmongery, landscaping and any element the end user will notice. The savings are real and they come out of the product.
What the exercise should test
Three questions applied to each significant element. What is this required to do, as a performance rather than as a product. Is there a different way to achieve that. And what does the difference cost across the life of the building rather than at construction.
The third question is the one usually skipped, and it is where the false savings live. A cheaper roof covering with a shorter design life is a saving on a development being sold and a cost on one being held, and the two answers are both correct depending on the model.
A saving that reduces rental value or sale price is not a saving at all, it is a transfer from the income side of the appraisal to the cost side.
Keeping a record of what was removed
Every item taken out should be recorded with what it was, why it was removed, what the saving was and what the consequence is. That register serves two purposes.
The first is that a proportion of removed items come back later, when the market improves or when a buyer objects, and the record shows what reinstating them costs. The second is that it prevents the same saving being counted twice, which happens more often than anybody admits when the exercise is run under pressure.
It also protects the design team, whose scheme is being altered, and who will be asked in two years why the building is as it is.
The version that works
The most effective exercise we see runs at the end of a design stage rather than after tender, with the cost adviser, the designers and, where procurement allows, a contractor in the room. It looks at four or five significant elements rather than at fifty small ones.
It is also honest about the target. An exercise asked to find a specific number will find it, and the way it finds it depends entirely on whether anybody stated what could not be touched.
Writing down the non negotiables before starting is what separates value engineering from a negotiation with the specification.
What this means for you
Run the exercise while the answer can still be a better design rather than a smaller one, which means at design stage rather than after tenders return.
State up front what is fixed: the things that drive value, the things a buyer or tenant will notice, and anything with a life cycle consequence you are keeping.
Where the exercise is already happening under pressure, insist on the register of what was removed and what it saved. That work is part of cost planning and estimating, and testing whether the resulting figure holds is what client side quantity surveyor is for.
Where the exercise is being driven by a funding gap rather than by a design opportunity, it is worth testing the gap first. A tender return above budget sometimes means the market has moved and sometimes means the budget was never tested against measured scope. Cutting the specification to close a gap that came from a stale rate is solving the wrong problem at the expense of the product.