Value Engineered Bid Services

Value Engineered Bid Services is about how this architectural firm helps its Clients pare down costs while improving the value of their houses after the Bidding Phase.

Surprise, surprise! The General Contractors bidding on your project have just turned in their bids to build your dream house. And no doubt, you, like tens of thousands of other people all over the USA (and the world) every year, have discovered that the prices proposed to build your project are much more than you hoped to pay. What to do now? Some people get angry and frustrated and forget the whole thing, wondering what to do with the land they have previously purchased on which they were going to build their new house. Others settle down and do what rational people should do: ask their Architect what they should do.

That’s the intelligent approach. Some architectural firms (meaning companies that have licensed Architects running them) often offer what is called Value Engineering.

This is where you pay your Architect to negotiate with your selected Builder to cut costs, while improving the value of what will be built for you. Unless you happen to be a construction industry professional yourself and have comprehensive knowledge regarding residential construction and how cutting certain things can jeopardize the quality, durability, water-tightness, infiltration, energy characteristics, health consequences and similar conditions, you may want your Architect to handle this for you. You’ll be glad you did. Some things you don’t scrimp on. Others can be cut without much consequence. Your Architect is the only one involved in your project on your side that has your best interests at heart. He or she will collaborate with your selected Builder to arrive at numbers that will hopefully work for you.

Recently, on one of the HOME ARCHITECTS ® projects in Sevierville, Tennessee, this architectural firm did just that. The Client wanted a high degree of quality. This is to be his dream house. The land is a spectacular 9+ acres in a gated neighborhood, where all the parcels are in multiple acres. This is a mountain-themed community. This firm, in addition to designing the project and producing the Construction Documents, also was tasked with Bidding the project. They did that. There were some challenges. This area is becoming increasingly upper-end and some communities are known for construction costs of between $300 to $400 and up for quality custom houses. Also, nearly all the local builders were busy building $400/HSF (Heated Square Feet) houses and weren’t particularly interested in taking on any more work.

This architectural firm has a bidding philosophy of trying to obtain half its bidder’s list from the local rural area and half from a larger more metropolitan area. The reason: sometimes the more rural (while closer) Contractors may sometimes lack the familiarity of working with Architects and may not have the patience or capabilities to deal with more detailed and comprehensive working drawings and specifications. Especially if they are busy. Those from more metro areas often also build commercial projects as well, and as such, have to work with Architects, with more demanding quality documents. So, when you involve both the rural and metro Contractors, the hope is that you will find a mix of Builders that are both interested and more familiar with building projects at a reasonable price point that have good quality.

Therefore, this Architect contacted home builder’s associations in both Servierville and Knoxville, asking them to post a notice electronically about this project and to please email-blast their various members. The Sevierville chapter was very friendly and helpful and spread the word among their members. The Knoxville office was not cooperative (in the opinion of the Architect) and refused to inform their membership about this opportunity, which this architectural firm did not understand. Then they suggested the payment of a special “fee,” to which the owner objected (and quite rightly so). So: the bidding efforts were hamstrung by these circumstance. However, due to the helpful efforts of the Sevierville home builders association, the word was spread to eventually enlist the participation of Contractors all the way between and around Sevierville and all the way up to Knoxville.

And the Architect performed research to find additional bidders in the Knoxville area, with the assistance of the project Structural Engineer, Surveyor and Geotechnical Engineer.

So, a good slate of bidders was created. All had good references. However, as the bidding process progressed, gradually one bidder after another began to drop out.

One firm decided it was too busy (one of the smaller rural firms, which happens in many project bids), and a larger Knoxville Contractor decided on the day of the bids to drop out (not a very nice thing to do). Therefore, the Architect, expecting some attrition always likes to see at least 4 bidders, knowing that at least one will drop out, had, in fact, this time around, 2 bids. One of the bids was sky-high and was immediately thrown out. The other one, while high, came from a highly respected Contractor halfway between Knoxville and Sevierville. His company was both strongly recommended by both a local Structural Engineer and another Architect (whose house he had built).

So now, what to do? Give up? Rebid? Change the entire design, paying the Architect to redo everything?

There’s another choice: it’s called Value Engineering (VE). The Owner and Architect discussed this and decided to proceed with the highly recommended Builder, into a VE phase. The bid was for $858k+/-. The Owner had hoped to spend around $500k for the project, which included a generous 3 car fancy garage, impressive tall front and rear timber frame porches, a 2-story house with cathedral ceilings, large gourmet kitchen with two cold boxes, 48″ range/double-ovens, granite counters and island, sumptuous master suite with fireplace, clawfoot tub in the Master Bathroom, with huge 2-person shower, large walk-in-closet, connected Laundry, giant Pantry, very large glass areas on the rear of the house facing a spectacular mountain view from on high, upstairs loft with bunkroom, bathroom, additional bedroom with a private rear porch, and a marvelous selection of high-end energy performance glass, double insulation values, durable materials, cast in place concrete foundation walls, encapsulated crawlspaces and other notable quality features.

So: this Architect worked with the Builder to arrive at modest cuts in various items to reduce the project cost by well over a quarter of a million dollars, all the way down to around $589k. This was a work of magic: the design looked about the same, yet saved all this money.

However, the Client, every desirous of quality, started examining the various cuts required to bring the project down to that reduced cost. He, the Contractor and the Architect worked together, with the Architect serving as the main coordinator, to gradually add back into the project various items that the Owner really wanted. This was to be his forever house. So, the costs started to ratchet back up, bit by bit: $620k, $650k, $675k, $691k, $710k, $725k, finally topping out at $750k+/-. Also, several new options that were not included in the original price proposal were now in the project. This was deemed to deliver the exact Value that the Owner wanted. And the home looked 99.99% like the original design he had grown accustomed to and wanted to have built.

This is how the VE (Value Engineering) process works. People have to become acclimated to what real costs are, while going through these negotiations. The result is to achieve the balance of costs and features and materials and design that yields the best value for the Owner.

Value Engineering Architect: email: Rand@HomeArchitects.com 828-269-9046