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  • HPH350: What is value engineering?

    HPH350: What is value engineering?

    Ben Adam-Smith explains what value engineering is and how it can help us to do more with less. He reflects on a short video about Slate House in Herefordshire that includes some great examples of value engineering.

    This video was produced for Coaction, a fantastic training initiative that aims to upskill the UK construction industry and encourage higher quality, more sustainable building practices.

    Coaction has allowed us to share this video with you, which explores some of the decisions made at Slate House and how they contributed to making a low budget but high value home.

    Value engineering is about doing more with less

    Value is defined as function divided by cost (value = function/cost).

    If we increase the function the value goes up.

    If we decrease the cost and value goes up.

    The only thing we need to bear in mind is that performance must not go down.

    Value engineering is about creating better solutions

    Value engineering is a creative endeavour and as such there is no limit to what you could do, so long as you’re following the principles mentioned. In fact, just building to Passivhaus standard will entail a fair amount of value engineering (orienting your building well would be one example).

    However, when it comes to housing there are some common examples which we are going to cover today.

    Photo credit – Graeme Deas and Stuart Hedley

    Passivhaus standard is within reach on low budgets (if you make good decisions)

    This podcast is looking at some of the value engineering examples at Slate House in Herefordshire.

    Graeme Deas and Stuart Hedley are the self-builders behind the project. Builder Mike Whitfield delivered an airtight, insulated shell with the ventilation system integrated, while Graeme and Stuart completed the internal fit-out.

    Nick Grant from Elemental Solutions was their Passivhaus Consultant and also a strong advocate of value engineering.

    Nick has been on the podcast before:

    How value engineering could benefit a house build

    Why an integrated design approach works well for self build

    How to share knowledge, test and debunk

    Nick is also Technical Director of UK Passivhaus Trust and a trainer with Coaction.

    Keeping things simple is not what they do on Grand Designs

    Graeme is a design professional so a lot of this came naturally to him.

    Stuart, however, was tentative at first because all he knew about building houses came from TV shows and glossy magazines. Just remember that often even award-winning projects do not perform particularly well.

    Although building to Passivhaus standard brings multiple benefits related to health, comfort and energy efficiency, is it worth doing if the house doesn’t make a statement?!

    Constraints were embraced

    The budget was a key constraint on this project but this also informed the choices ahead. If you like this idea of leaning into the constraints then check out our podcast with Andrew Michler on how to create beautiful designs through constraints.

    Value engineering happens at the beginning of a project

    Value engineering sometimes gets confused with cost-cutting but there’s an important distinction to be made: value engineering can only take place at the beginning of the project whereas cost-cutting is something that takes place at the end. The efficiencies that we’re talking about are decided in the early stages of the design process, not when construction is underway and we’re looking to downgrade materials, etc.

    Photo credit – Juraj Mikurcik

    Design from the inside out

    A driving philosophy on this project was to design from the inside out, with windows being sized sensibly and picking out views.

    Therefore nobody would be standing on the outside placing the windows where they would look good. The composition was something that emerged from the design process.

    However, Stuart had initially stated that he didn’t want asymmetrical windows.

    One of the few specifications I had was that the house should look good from the outside. And part of that for me was that it did not have asymmetrical windows. So I’ve really fallen in love with what I initially thought was rather an unexciting box.

    Photo credit – Graeme Deas and Stuart Hedley

    Keeping the shape of the house simple will make it cheaper to build

    You may hear the term ‘form factor’ mentioned a lot. This refers to how much surface area is losing heat (external surface area) relative to the useful floor area.

    So reducing this ratio as much as possible and keeping things simple will make construction easier and it will cost less.

    A form factor below 3 is starting to get good.

    We go into this in more depth in a podcast with Alan Budden on how simple design decisions can impact on energy performance.

    Photo credit – Graeme Deas and Stuart Hedley

    Photo credit – Graeme Deas and Stuart Hedley

    Simpler windows perform better and are cheaper

    Windows without extra frame and mullions and transoms perform better, and because they are simpler they are also cheaper. Although it’s logical, sometimes it can be a hard sell. For example, Ben and his wife Kay completely disagreed over the windows during their self build. It was only after a lot of discussion that Kay agreed to have windows without mullions and transoms. Even today, while she likes the view from the inside looking out she is still not sure from the outside looking in!

    Avoid the wall of glass

    Avoiding excessive glazing and sizing windows well will be cheaper and help summer comfort.

    There may also be opportunities within a house to have a fixed window. Obviously you want openable windows in every room for ventilation and safety but their may be awkward spots, like above the kitchen sink. A fixed unit here will be another cost saving.

    A concrete slab can take on two functions

    At Slate House there’s a concrete slab which provides structure but because it’s been polished on top it can serve as the finished floor surface.

    Photo credit – Graeme Deas and Stuart Hedley

    A tin roof is another cost effective solution

    So long as it is detailed simply then a tin roof is durable and low cost.

    This, along with many of the other value engineering examples we’ve included, have also been a part of Juraj Mikurcik’s self build project Old Holloway.

    Find out more

    Check out the Coaction website

    Coaction on Bluesky

    Elemental Solutions

    Passivhaus Trust

    Transcript

    Download a transcript of this episode.

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  • HPH208 : Bringing down the cost of my self build – with Ben Adam-Smith

    HPH208 : Bringing down the cost of my self build – with Ben Adam-Smith

    Ben Adam-Smith looks at some of the reasons why his tender returns might have been so high. He then sits down with his wife Kay to consider possible savings.

     

    Why were our tender returns over budget?

    In episode 207 Kay and I received our tender returns and we got a shock. We had budgeted £400,000 for our house build but our returns were a lot higher!

    Before we consider how we might get back on track, I’m going to ponder reasons.

     

    The market is changing

    Over time prices will naturally go up. The market is never static. However, could there be a bigger change going on at the moment?

    The obvious culprit would be Brexit (although it’s almost impossible to verify).

    Dan Higginbotham from Parsons + Whittley specified our project, but he also specifies a number of projects that pass through their offices and he can spot trends. Dan told me: “We have seen a 12-20% increase on certain masonry projects over the last year.” He’s noticed the cost of labour has risen on their projects too (between 3-5%).

    As the design process takes a number of months, by the time the tender returns are opened the cost of the project can have risen significantly. Before we opened our returns Chris Parsons had warned us that several recent returns had come in much higher than anticipated.

     

    Costs can vary between regions

    Anyone who has tried to buy a property in London will know that it is expensive!

    If living in London is expensive, does it follow that everything else is expensive too (building contracts included)?

    Although we’re not building in London, we’re probably in the next most expensive place: the home counties. Our architecture firm, Parsons + Whittley, is based in Swaffham, Norfolk, and I believe there are differences between the regions.

     

    ‘Handmade’ or ‘bespoke’ items don’t come cheap

    On a self build you personally get to choose the quality. From the outset we budgeted £2000 per square metre, which I always think of as high end. However, it doesn’t mean you can just have anything you want (particularly when you’re designing a Passivhaus)!

    Perhaps Kay and I were guilty of getting carried away. We have specified handmade bricks for the plinth, handmade tiles for the roof and the walls are thick lime render (which requires a specialist skill).

    The interior also has recycled timber flooring, four bathrooms to kit out, and a couple of bespoke designed units.

    Knowing how much money can be sunk into kitchens, we’ve gone with fairly standard units . . . but our interior designer has helped us accessorise to make it seem more luxurious. Some of these extra fancy bits are expensive.

    Dan Higginbotham from Parsons + Whittley told me: “Normally when we’re tiling in the kitchen we might allow £25 per square metre, but the tiles you are using are £185 per square metre.”

     

    Our house got bigger during the design process

    First I must point out that this headline is slightly misleading. When we bought the plot of land, the extant consent was for a house of over twice the size of what we plan to build.

    However, when I did my initial sums with the land equation (land cost + build cost + 20-30% profit < value of the finished house) I based it on a house of 200 square metres and a specification of £2000 per square metres.

    These rough calculations were not stress tested at all. I didn’t envisage building a house of 226 square metres.

    And, I’m somewhat embarrassed that I made no allowance whatsoever for the garage (28 square metres). Although it will cost less to build than the house, we are probably still talking £1700 per square metre.

     

    We were forced to dig down to gain planning consent

    Due to the proximity of our house to the neighbours, we had to sink our home down by 0.5m in order to gain planning consent.

    This had knock-on effects. Initially we had imagined spreading the spoil across the half acre site, but the soil was poor quality and had to be taken away costing £9000.

     

    The word ‘Passivhaus’ can add expense

    If contractors haven’t tackled a Passivhaus before there is a risk factor, so perhaps they add on a little extra to take that into account.

     

    The value engineering

    Having received the cost breakdown from the contractor who put in the lowest bid (£612,234), the next part of the process was to look at every possible change to bring the cost down.

    Dan Higginbotham from Parsons + Whittley put together a spreadsheet of some ways we could to reduce cost.

    It started with the big ticket items, such as removing the garage or balcony, and came right down to much smaller items (like changing the doorbell!)

    Here’s an example.

     

    Scale down your plans to get back on track

    When severely over budget, like us, the most sensible thing would have been to reduce the floor area of the house.

    Reducing the building by 1 metre could save us £25,000!

    However, we’re not that sensible.

     

    Some savings are easy to make . . .

    Going through this list of potential savings is a peculiar exercise.

    For example, we had originally specified a resin driveway. We weren’t convinced about this at the time we made the decision, so changing it to gravel not only saved us £20,000 but probably was more in keeping with what we want.

     

    Some savings are not so easy to make . . .

    Nobody likes to go through their beautifully designed house and take out all the bits that they liked.

    A good example here might be the lime render we’d specified on the outside of the building. We could have reduced the thickness or even specified another type of render, but I think both Kay and I agreed we hadn’t come this far to compromise on things like this!

     

    There is another option to cutting costs

    Obviously not everybody will have this luxury, but we decided that paying more was the way to go.

    So we’ve come in between the £400,000 original budget and the £612,000 contract value.

     

     

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  • HPH194 : What are the hidden costs of building a house? – with Paul Testa

    HPH194 : What are the hidden costs of building a house? – with Paul Testa

    Paul Testa from Paul Testa Architecture talks about how to predict the costs of a house build and shares his tips on limiting a self-build budget.

    Interview with Paul Testa

    Architect Paul Testa’s interest in construction led to coordinating and teaching the technology course for the MArch in Architecture at Sheffield University. He’s also a tutor and lecturer for the Sustainable Architectural Studies Masters course at Sheffield University. He is a member of AECB (Association for Environment Conscious Building).

    Build cost is not necessarily ‘cost per square metre’

    Paul aims to help clients gain realistic expectations of their project’s costs. They start by assuming a mid-range, bespoke new-build would cost roughly £1500 a square metre. They then use their cost calculator to add in additional costs, taking into account factors like slope of the site, higher specification and external works.

    To price the whole project, Paul says self-builders should include connecting utilities, landscaping, and contingency in the overall build cost. If an architect or builder prices your project at £1500 a square metre, remember this may not include all the costs of the build.

    A steeply sloping site

    Fees are affected by more than just project size

    It is important to have accurate cost predictions for your build and these do not just relate to square metres. Paul explains that the cost of consultants isn’t tied to the size so much as the complexity of the project.

    Some costs, such as surveys, might depend on both the size and the complexity of the project. Paul recommends adding 30% to your construction cost for planning and building regulations fees and any other costs. Some of these don’t change with the size of the build, so the fee will be a greater percentage of the build cost for a smaller project.

    Utility costs can vary from site to site

    Paul has found the cost of connecting gas to be quite consistent, but not so for the electricity supply. The cost can vary hugely depending on the work involved in making your connection, and remains unknown until the application is made. Furthermore, Paul warns that there is no room for negotiation, saying, “It’s a captive market unfortunately.”

    “Most contractors won’t have sufficient insurance for the whole project”

    Contractors will have insurance to cover their liabilities (public liability and employer’s liability insurance) and potentially for their equipment on site. The architect also needs professional indemnity insurance and public liability insurance to cover the implications of design decisions. Paul advises clients to procure insurance to cover the new building and materials.

    Claiming back VAT may depend on your contractor

    Some contractors don’t pass on the cost of VAT: the client never sees that cost and the contractor just claims it as part of their quarterly VAT payments. This may be beneficial for clients who don’t have the cash flow to pay upfront for the build plus VAT and then reclaim the VAT later.

    Often clients prefer to procure large single ticket items (e.g. windows) themselves, to avoid the contractor’s overheads and profit. In that case, Paul reminds clients they should budget to cover that VAT cost until the end of the project.

    Keep back at least 5% of your budget as contingency

    To deal with unknowns such as the ground and weather, Paul recommends having “something there to cover you, a minimum of 5% but more generously 10%”.

    He warns that stretching both construction budget and contingency “can be quite dangerous.” He advises spending more at the end if you have money left, rather than pushing to do absolutely everything without compromise.

    Expert advice during planning helps predict cost more accurately

    Although he cannot completely mitigate the risks of unknown costs, Paul ensures that the correct investigations are done as early as possible to try and minimise additional costs. “Certainly on the bigger jobs where there is more scope for value engineering,” he says, “we will try and bring a quantity surveyor or an estimator in at roughly the planning stage.”

    This expert can give a budget cost for the build. If it doesn’t fit within a client’s budget, Paul’s team can make changes before the planning application is submitted, avoiding later amendments and resubmissions.

    Avoiding the tender process can actually save money

    Ideally, Paul likes to find a contractor he wants to work with and that the client is happy with, who will “buy into” achieving the building at the budgeted price. He relies on the expertise of the chosen contractor to ensure that the detailed design matches that budget.

    Although Paul acknowledges the benefits and drawbacks of both routes, he doesn’t believe the tender process is the best way of procuring a building, saying “We actually incentivise that in our fees and we charge less for a negotiated price with a contractor than we would do for dealing with a full tender process.”

    Contractor availability can be as important as cost

    Paul works with a pool of preferred builders, although this can change over time. He explains that the best contractors can be booked up to two years in advance. Although clients might be disappointed by delays, they usually come round. “If they want the very best product, they want the very best people to do that,” he says.

    Engaging the contractor earlier in the process can mean that delays are avoided. Having agreed an approximate start date with a contractor, Paul stays in touch while developing drawings, maintaining agreement on budget and timescales. He says, “By the time we’re ready and the contractor’s ready, everything’s drawing together.” However, he adds, “it doesn’t always work that perfectly.”

    Tender processes have their own drawbacks. A four to six week process can lead on to reviewing prices, interviews, and value engineering. After all this, the contractor’s availability might be delayed another year. It can be difficult for a client to ignore a much cheaper quote but Paul warns, “Normally, if it’s too good to be true, it probably is.” The project ends up costing as much but with extra difficulties.

    A passive house can be built for less than £50,000!

    In 2013 Paul’s team submitted a design to the National Self-Build and Custom Build Association’s annual competition ‘Self-build on a Shoestring’. The brief asked for a detached family home, on a very simple flat plot, for £50,000 or less, including all materials and specialist labour but assuming utility connections were already in place.

    Paul’s approach was to make “a simple construction that can be built by the average self-builder”. While mainly a “materials only” cost, it included specialist input such as commissioning the MVHR system, certifying the electrics, gas installation and digger and scaffolding hire.

    Not only did their design offer a 70m2 family home for around £45,000, it was also designed using the passive house planning package. Paul says, “We delivered a building that achieved passive house for less than £50,000 and would be a compact but very comfortable single family home.”

    Delivering build elements constructed off-site to manage costs and time on a steep site

    Five top tips to keep build costs to £50,000

    • Remove main contractor: get hands on, do physical work, and do your own project management
    • Reduce risk by choosing a manageable construction method, such as a simple softwood timber frame.
    • Minimise the number of materials.
    • Maximise the function of each element, e.g. exploit oriented strand board (OSB) in three ways: as an airtight layer, internal wall linings and structurally, to stop the building twisting.
    • Choose larger format materials with cheaper production and installation costs, such as fibre cement slates rather than timber cladding.

     

    Find out more

    Visit the website of Paul Testa

    Follow Paul Testa on Twitter

    Follow Paul Testa on Facebook

    Visit the website of AECB (Association for Environment Conscious Building)

    Transcript

    Download a transcript of the interview with Paul Testa

     

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  • HPH111 : How value engineering could benefit a house build – with Nick Grant from Elemental Solutions

    HPH111 : How value engineering could benefit a house build – with Nick Grant from Elemental Solutions

    Nick Grant of Elemental Solutions explains what is meant by value engineering and how it can be used in the house building process.

    DSC_0091

     

    Interview with Nick Grant

    Nick was a Trustee of the AECB and is Technical Director of the Passivhaus Trust. He is a sustainable building consultant with a background in engineering and, stemming from a childhood ‘make do and mend’ mentality, a lifelong passion for doing more with less.

     

    Giving maximum value through engineering

    As an engineer, one of the modules that most inspired Nick was one about value engineering.

    Value is defined by Nick as being performance divided by cost. If you maximise performance, or reduce cost, it increases value.

    Nick cites as an example the trend of smartphones having fewer buttons than ever before. An iPhone has been very value engineered in that “it manages to deliver a lot by doing very little and it takes a lot of effort to get to that”.

    In engineering it’s an incredibly positive thing and what is strived for, however when Nick started working in the construction industry he discovered that people were using the term to mean cost-cutting in a negative sense:

    “So I went from this thing being something I thought was inherently a great thing and a real challenge and exciting, and for me defined really good design, to this thing that people say “it’s been value engineered, they’ve ruined my project, they value engineered it.”

     

    Value engineering has to happen at the beginning of a project

    It needs to happen right at the start when the design is being developed. Decisions about the size, shape, orientation, etc all have an impact on the final value, cost and challenges that are going to arise. If the correct steps haven’t been taken at the beginning then it is likely that contracts in the tender will come back over budget, resulting in a cost-cutting exercise which will inevitably see the removal of features that you liked about the design.

    Dempsey Decourcy Architects - Vowchurch
    Dempsey Decourcy Architects – Vowchurch

     

    It should be integrated in the house building process

    Nick feels that everything he does is value engineering, but that people can be reluctant to pay for something which leaves them feeling like they’re actually getting less. It may be that they’ve been told about something which they didn’t need to do, thus saving money, but they haven’t actually got anything tangible for it.

    Typically in architecture it tends to be cost cutting and might be carried out by a Quantity Surveyor. Nick feels however that it should be completely integrated, with everyone on board and led by the lead designer. There should be encouragement, whether for the structural engineer, landscape architect, energy consultant etc, to find better, cheaper and easier ways of doing things.

    Example of VE interior detail - polished concrete floor / foundations
    Example of VE interior detail – polished concrete floor / foundations

     

    Example of VE interior detail - Kitchen cupboards made of shuttering ply and surplus stainless steel washers
    Example of VE interior detail – Kitchen cupboards made of shuttering ply and surplus stainless steel washers

     

    Having constraints on a project can be a positive

    Nick says that rather than having to make compromises if they’ve run out of time or budget, it should be the case that if the correct work has been put in during the process they should be able to come to something “where it kind of all works.”

    Having constraints can in some ways make the job easier. There can be fewer choices needing to be made and subsequently less things that they can get wrong. It can free the designer to focus on other things as well.

    “So the more constraints we have, I think as a designer I take that as, I like that. So if we’ve got a very small budget, limited palate of materials, I quite like the challenge of that.”

    By establishing a budget early on you can immediately realise that there are things that might not need to be considered, such as the indoor swimming pool and fancy finishes!

    Dempsey Decourcy Architects - Cae Duff
    Dempsey Decourcy Architects – Cae Duff

    “So you’ve got to do the value engineering, you’ve got to find a better way of doing things, find more clever materials, but you’ve got to also set a budget and then work to that budget. Otherwise everything will just expand to meet it.”

     

    You can do things cheaply, quickly or well: you can’t do all three!

    Nick and his partner designed and built their own home, blowing their original £30,000 budget and spending £40,000! While they like to think they did it well and cheaply, it did take them a long time to complete. They took inspiration from Christopher Alexander’s book A Pattern Language, but by doing that they did end up with a house that has a very complex form (a form factor of around 5) and which was a lot more time consuming to build.

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    It’s not easy to do simple!

    By working on repeat projects Nick has been able to invest the time into working out details that appear to be simple, but if they were that easy everyone would be doing them! The process can evolve very slowly but benefits are reaped by the experience gained, thus making things easier on the next projects.

    Dempsey_Decourcy Cae Duff 2
    Dempsey Decourcy Architects – Cae Duff

     

    Give a great deal of thought about the number and function of windows being used

    Nick is currently doing some work on overheating for the Passivhaus Trust. He explains that in our climate we tend to want to let the sunlight in and aren’t used to going out and putting the shutters down, whereas in warmer climes this is something people do automatically. It therefore shouldn’t be a surprise when we return home and find them overheating!

    So firstly it’s important to have enough glass for views and letting daylight in, but without having too much.

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    Glazing is expensive so, coming back to value engineering, make the window do as much work for you as possible. Thinking of function, if there are windows that can’t easily be accessed and opened, then consider a fixed rather than openable one, which typically you could pay 30% less for.

    Nick gives this example of his own window behind the kitchen sink which they can’t easily reach to open, and suggests that actually a fixed, single frame view would probably have been better.

    DSC_0080

    Have a guess what percentage of glass there is to frame, and find out the answer in the podcast. The answer may surprise you!
    Have a guess what percentage of glass there is to frame, and find out the answer in the podcast. The answer may surprise you!

    Ensure also that if your windows are to open, that they open enough to get the airflows. Often they open in a restricted reveal which doesn’t allow enough air in. Evolving over many buildings, Nick has learned to step the reveals in a way that when the window is tilted it still allows good airflow. It’s this repetition, and going back to review previous jobs, that is critical to learning and making improvements next time.

     

    Decide what matters and work to your budget

    Deciding what matters and working to your budget is Nick’s key piece of advice.

    “Everything isn’t possible. But again that shouldn’t mean there’s a compromise necessarily. What you end up with you shouldn’t be thinking oh I really miss the little Victorian fake windows, you should think oh thank God I didn’t do that!”

     

    Find out more

    Follow Nick Grant on Twitter

    Find out more about Elemental Solutions

    View Nick’s presentation: Value Engineering, What’s not to love?

    Find out more about Charles Grylls and Dempsey Decourcy Architects

     

    Transcript

    Download a transcript of the interview with Nick Grant.

     

    Inquiry into the Quality of New Build Housing in England

    Towards the end of last year, Ben was part of a panel at the Inquiry into the Quality of New Build Housing in England, at the Houses of Parliament. Presenting to a handful of politicians and construction professionals, those contributing included:

    • Phil Waller, who has previously worked for a major house builder. His opinion was that they could be doing much better, and he has set up a website to try and advise potential purchasers what they should be looking for if they’re intending to buy from a developer.
    • Geoff Peter from Wingrove Law is a solicitor who represents owners of new builds who have ongoing issues with their homes.

    We know what a lot of the issues are and a lot of good questions were being asked, but it just comes down to whether anything will actually get done.

     

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