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Value engineering boosts affordable housing segment


Value engineering as the name suggests, is a systematic approach to reduce the construction cost while ensuring superior quality of the product for the end user. The rationale behind value engineering is to avoid utilising higher-grade components in order to cut down the unnecessary cost of the construction process. However, this process does not involve compromising on the value and quality of the end product. The concept of affordable housing is not a new one anymore, especially after the boost it has received from the Indian Government. Recently, the government announced that they will relax FDI norms for the construction sector, this move will boost foreign investment in the housing sector, mainly affordable segment. Affordable housing doesn’t necessarily mean living in cramped apartments without privacy and amenities

If you look at ‘affordable’ housing options, builders should always endeavour to deliver more than what can be expected at a particular price point. In value engineering, the costs related to the construction, designs, maintenance and replacements are considered. Value engineering will enable the players to develop new methods and techniques. The term ‘value management’ is widely used in India instead of ‘value engineering’ as it covers most management functions rather than being focused only on the engineering techniques. Decoding Value Engineering Value engineering is an effective way of cutting down the cost and adopts different techniques in order to achieve far greater results.

The starting point for value engineering is to isolate the cause behind high cost which helps in devising effective strategies and analysing the ways for cost management. It is commonly seen that around 15% to 25% of the budget could be saved by adopting this initial step. In the construction industry, value engineering is a systematic way which is implemented during the stages of planning, design and construction.

Value engineering has the potential to be used in various projects and has proved beneficial, especially in more complex and higher value projects. Experts have observed that if the value concepts are implemented early in the concept stage, the savings will be higher. Strategy and planning are emphasised in the early stage because the scope of cutting down cost will keep decreasing as the project progresses. For example, in the hospital construction, the tests which need to be carried out in two rooms of the dimension 30 SQMT would be inappropriate, but carrying out the same tests within one room of area 45 SQMT would be beneficial. By following this method both the technician’s cost and cost of construction will be saved. If this is understood and implemented during the phase of the briefing, the amount saved will be higher. This could be clearly understood by looking at the figure 1 shown below, which highlights the phases of construction in the X-axis and the cost in the Y axis. Fig 1: Opportunities and potential saving through value engineering Value Analysis The initial step in any value analysis is to create a value methodology job plan.

This model is actively used by SAVE (Society of American Value Engineers) International and is divided into six phases:

1.The information phase: This phase involves assembling all the available information about the project in order to develop a better understanding of what elements are involved.

2.The function analysis: It involves elaborating the functions of every element and component of a project to develop a detailed analysis of what the project is supposed to accomplish.

3.The creative phase: This phase is part of a brainstorming effort that evaluates as many alternate means as possible to achieve a project’s function.

4.Evaluation: It examines all of the ideas generated during the creative phase and narrows down the feasible alternatives.

5.Development: Under this phase the team takes the feasible alternative and prepares information such as sketches, narratives and specifications to improve the value of the project.

6.Presentation: This phase involves presenting the value recommendations to the stakeholders of the project.


Apart from the huge investment associated, construction sector also has variety of construction projects involving stakeholders, materials, construction management techniques, etc.

All of these sectors widen the scope of application of value engineering/management. Considering the attributes and scope of the Indian construction industry, it will be beneficial to have more value engineering studies. This will allow players in the affordable housing sector and other industry players to identify and overcome various loopholes faced during the construction process and overcome the same through adopting creative alternatives. Value engineering will enable real estate developers innovate new methods and techniques along with increasing productivity, cost reduction, better performance, high quality, simple design (civil, structural, mechanical, etc.) and optimum project duration without affecting the function of project or service.

India’s economic growth rate is expected to rise to 7.5 percent this year and next, making it one of the fastest growing economies in the developing world, according to the IMF’s latest economic health check. Constant innovation and saving capital in the construction process can be diverted and used in other sectors for the overall development of the nation.



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