Value Engineering : Cheapest is not always best

In 1969, Joseph McGrath brought Terry Southern’s comic novel “The Magic Christian” to life in a film starring Peter Sellers, Ringo Starr and a host of other well known actors and comic performers. Largely panned by the critics both at the time and subsequently, the recurring theme revolved around “everything and everyone has its price”.

A century earlier, John Ruskin was purported to have said:

​”There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price alone are this man’s lawful prey,”

and:

“It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money – that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.”

Although the authorship of the above statements is now debated, there remains an inevitable and haunting truth in the sentiments expressed.

It is not wrong to obtain best prices in an open competition, but it is wrong to be driven by cost-cutting for the sake of it, and where doing so lowers the level of quality and, indeed, safety.  However, where ‘Value Engineering’ cuts quality to achieve a Client’s unrealistic budget, it’s a dangerous game, and is bound to result in often catastrophic failures.  At the core of all construction projects, there must be a bottom line for levels of Quality, Health and Safety that cannot be breached.

Alternatively, ‘Value Management’ defines and adds value, focusing on innovation, objectives and outcomes before solutions and obviously has its place in modernising the Construction Industry.  Where a Contractor offers Value Management services with the aim of improving the contract offer, this must be done collaboratively with the whole team, including Client and Consultants, with the interests of the end users, be they residents, school children, teachers or public sector employees, very much at the fore.

Don’t cut coat according to your cloth, if doing so leaves you and those who depend upon you vulnerable.