Value engineering in material procurement

Value engineering

Value engineering (VE) is a systematic, organised, function-oriented method of analysing a product, material or service to achieve its required function at the lowest total (life-cycle) cost without reducing quality, reliability or safety.

$$\text{Value} = \frac{\text{Function (performance)}}{\text{Cost}}$$

Value rises when the function improves at the same cost, or when the cost falls for the same function.

Job plan

1. Information (collect data)
2. Function analysis (what does it do, and why is it needed?)
3. Creative phase (brainstorm alternatives)
4. Evaluation of alternatives
5. Development and recommendation
6. Presentation and implementation

Application in procurement of construction materials

• Replace costly or imported materials with local alternatives of equal function (for example, local stone or blocks instead of imported tiles, PPC instead of OPC where suitable).
• Use standard sizes and grades that reduce wastage and cost (standard steel lengths, modular tiles).
• Avoid over-specification, for example specifying M30 concrete where M20 is enough.
• Buy in bulk, through long-term supply contracts or directly from the manufacturer, to reduce the price.
• Compare life-cycle cost, not only initial cost (durable roofing, paint).
• Choose suppliers near the site to cut transport and storage costs.
• Use ABC analysis to concentrate VE effort on A items (steel, cement), which carry the most value.