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How Value Engineering Can Improve Contractor Margins

There are many strategies contractors and developers can use to minimalize risk while increasing margins. Improvements such as more accurate estimating, structured procurement, schedule management, and lean construction all contribute to cost-saving efficiencies. But there’s one strategy that’s relatively quick and easy to implement immediately: value engineering.

There has been a lot of talk about value engineering lately in the greater New York City region. This approach to procurement allows developers and contractors in all five boroughs and Long Island to use other materials or processes to reduce costs. However, substitutions must still meet all functionality, quality, and aesthetics criteria. It’s important to remember that this strategy is very different from cost-cutting, in which quality suffers.

While the concept makes sense, it’s not always easy to put into practice. That’s because few contractors are working with commercial building materials suppliers who want to do more work to save money for contractors. So unless contractors can find high-integrity suppliers committed to the value engineering approach, it’s challenging to incorporate the process into most projects.

However, at Metro Interior Distributors, our trusted sales team is committed to the value engineering approach. This means that our staff can improve the material value for many aspects of commercial contracting projects, including insulation, exterior sheathing or exterior panels, drywall, steel frames, suspended and acoustical ceiling tiles, and grids, soundproofing, lumber, fasteners, adhesives, firestop, fire safety doors, personal protection equipment (PPE), and job site protection equipment.

While we know that saving customers money may also mean we make less on any given sale, we also believe that helping our customers succeed is the best investment we can make. Maybe that’s why, since 1983, we’ve grown bigger and more profitable each year, not by going for short-term profits, but by putting customers first, every time.

Getting Started

Many developers and contractors like the idea of value engineering, but they’re unsure how to get started. At Metro, we get started by asking these five questions.

  1. Which materials or methods should we assess? While it may be tempting to start by applying value engineering techniques to every specification, this is usually impractical. It can also present issues further down the line. That’s why the Metro teams encourage customers to start by focusing. To ensure that value engineering meets all criteria, it’s essential to move through the process carefully and methodically, working with one product at a time.

2. Does it meet all functionality requirements? When it comes to construction, functionality can be complex. It can include strength, durability, moisture resistance, fire resistance, acoustics, conductivity, aesthetics, and more. To ensure that value engineering recommendations meet all criteria, we begin by inventorying all the functions.

3. What alternatives are available, and how will they affect the project? Once we know what we’re working with and all the associated requirements, it’s time to research possible substitutions. Contractors and developers often tell us that using a knowledgeable building supplies company like Metro saves them time and money. We can bring deep knowledge about a range of alternatives. For example, we might recommend that a ceiling contractor use a value engineering approach to identify options for the brand they usually use. The alternate solutions will meet or exceed aesthetic and functional requirements. But they may also bring added benefits that affect the project in unexpected ways. Perhaps the value engineering solution is packed differently, so it’s easier to store on-site. Or maybe it’s lighter, easier to cut, or less likely to absorb moisture.

4. What are the costs and timing implications of alternative solutions? Once potential substitutions are identified, the Metro team will submit costs and delivery timelines. Sometimes our recommendations are also easier to install, which reduces labor costs. We also make sure our recommendations can be delivered within the required timeframe.

5. Have all key players approved the recommended alternative? While Metro can help estimators find smart ways to save money, customers must ensure their colleagues understand and approve of the substitutions. Typically, engineers, architects, designers, site managers, and other decision-makers must sign off on the alternative.

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It's Never too Early to Consider a Value Engineering Approach

Because most contractors and developers must get buy-in on value engineering recommendations, it’s wise to think about the role of value engineering at the start of a project. But that doesn’t mean it can’t play a role in other phases. The sales team at Metro Interior Distributors knows they can make recommendations for alternative materials that might work for a range of job requirements. We’re proactive and offer value engineering help at every stage. So if you’re ready to use value engineering on your projects for Manhattan, Queens, Brooklyn, Staten Island, The Bronx, Suffolk County, or Nassau County, contact Metro’s skilled support staff.

Want to learn even more about value engineering? Check out these articles:

Take the Value Engineering Quiz

How Contractors Boost Profits with Value Engineering

How to Use Value Engineering in Your Next Construction Project

Value Engineering for Fun and Profit: A Profit Guys Blog

How to Increase Profitability on Your Next Suspended Ceiling Job