Value for Money vs Cost Cutting

Value for Money: balancing cost without compromising on quality. It’s a concept relevant to most industries, but in construction — where the stakes are high for both cost and quality, and in a climate of increasing prices and standards — the notion has never been more relevant and important.

What does Value for Money really mean?

In the construction industry, Value for Money (VfM) is the ideal balance between the benefits or quality of the project and the overall cost.

VfM can help to save money, but it isn’t just about cost cutting — it’s about managing costs whilst still ensuring quality.

Value for Money is delivered through value management and value engineering:

•   Value management finds and manages opportunities within a project to ensure value is continuously delivered.
•   Value engineering eliminates any unnecessary costs by assessing the value of each element of a project.

VfM rationale should be implemented from the beginning of a project with early contractor involvement and a collaborative design and professional team to develop a scheme that aligns with the client’s requirements to maximise the benefits.

Why cost-cutting puts Value for Money at risk

While cutting costs can make the project balance books look healthy, its true cost could be to put the project at risk if not managed properly.

Sometimes the saying “you get what you pay for” rings true — there is a risk that cheaper materials could cause costly problems or may not last as long in the future.

Whilst it doesn’t mean that high cost always equals higher quality, more expensive options could have their indirect cost benefits. Local suppliers may be more expensive but don’t have additional transport or time costs; a highly skilled workforce could deliver more quickly and efficiently; and high-quality materials commonly offer longevity, lower maintenance costs, and sustainability benefits.

How to drive up value without blowing the budget

Value is, in many ways, a subjective concept with different perspectives on what is considered to represent Value for Money. Whilst cost is a much more tangible measurement, quality is a factor that can come down to individual opinion or won’t show its true value until many years later through factors like longevity and durability.

Appointing a specialist in Value for Money can help drive up value within the project’s budget. They will consider the client’s, stakeholders’ and project’s objectives and align these with cost and quality.

An expert will also have established relationships with reliable suppliers, insight into the quality and availability of materials and trades, and knowledge of building industry restrictions and legislation, all of which will maximise value.

Cost-effective ways to improve value in a construction project may include reducing unnecessary costs and maximising opportunities to save time.

Some of the ways costs can be saved include an appropriate choice of procurement route such as construction management, a reliable cost plan, and using standard off-the-shelf products rather than custom-made, bespoke alternatives. Time can be saved by sound project planning, good knowledge and management of the supply chain, removing unnecessary project constraints, and efficient site management.

How Evolution5 can help

Using a professional construction consultant with expertise in Value for Money will ensure an informed, high-value, cost-effective project that runs smoothly.

Our highly experienced and award-winning team specialises in cost management for construction projects which can enhance your project planning process by focusing on understanding your objectives and tailoring a service that fits your requirements.

By choosing Evolution5, you will benefit from our broad knowledge, experience, and expertise gained from both contracting and consulting to expertly integrate with your professional team.

Evolution5 is a professional consultancy offering project management, construction management, employer’s agent, and contract administration services for projects across London and South East England.

If you have a construction project and would like to explore how the team can help you, click the button below or call 023 8040 5073.