How to Value Engineer a Custom Home or Remodel

With construction costs still at historic highs, more people are interested in exploring value engineering (VE) for their custom homes or remodels. Clients tend to broach the subject in the interest of saving costs. It’s understandable, as land, materials, labor, and financing are more expensive today than they were a few years ago. Indeed, making a budget stretch is a common goal.

It’s also important to understand that value engineering is not only about saving costs. It involves a whole systems approach to delivering a home that is of the highest quality in terms of functionality and aesthetics. VE for homebuilding is, at its core, the process of creating a home within budget that serves a client’s unique needs and style preferences. Cost savings are an intended benefit and typically occur as a result of working through the VE process.

Here is a breakdown of how KGA approaches value engineering for custom homes and remodeling projects, including how we define it, our process, and tips for maximizing a project budget.

Table of Contents

Value Engineering 101

Value engineering looks different for custom home building when compared to its application in commercial and production home development. But first, a little history before jumping into the details.

Value engineering as a practice isn’t new. Lawrence Miles developed the concept at General Electric in the 1940s to ensure the company continued producing high-quality products during the material and labor shortages of World War II. Miles’s idea was to take a product, evaluate its functionality, and come up with alternative materials and methods to maintain or exceed the same level of performance.

Value Engineering for Commercial Buildings and Production Homebuilders

Naturally, commercial and production homebuilders adopted the process of value engineering to improve building design and reduce construction costs.

How VE Aligns With Commercial Construction

VE fits easily into commercial building design and construction thanks to the wide range of building materials and finishes at a variety of levels and price points. Commercial architects and builders also have more flexibility in construction methods, which opens up a broader range of architectural design possibilities.

Commercial VE is usually straightforward and bottom-line focused. Commercial clients building an office or warehouse aren’t as emotionally invested as a homeowner building their dream home. The design trade-offs don’t have as much potential to impact them negatively. They don’t have to experience the disappointment of living with a particular feature they decided to sacrifice or compromise on.

How VE Benefits Production Homebuilders

VE works well for production home builders because they build a limited number of plans that saves them costs at scale. For example, a $500 cost savings on a home may not seem like much, but the same savings on a 25 or 50-home community is substantial.

Value Engineering for Custom Homes and Remodels

At KGA, value engineering is not a separate phase of the architectural design process. We’re always seeking out innovations and improvements – key tenets of VE – so they’re ingrained in the early project stages. The industry calls it VE. We call it good design.

What Does VE Look Like for a Custom Home?

Custom home VE is a conversation between you and your chosen architect and builder (and interior designer, if applicable). Its principles align with our mission to deliver value-driven design and are seamlessly woven throughout all aspects of our process.

VE at KGA is an open and honest conversation about your budget and priorities. It’s why we emphasize setting a realistic budget and working in a collaborative design-build environment. It involves trust and partnership by allowing the architect and builder to design and build to those priorities within the established budget.

VE discussions should take place during the programming and schematic design phases, while the design is still evolving. Above is an example of a home in schematic design.

When Does VE Occur During the Process?

Value engineering discussions should start in the earliest stages of the architectural design process. Ideally, this would happen sometime during the Programming and Schematic Design phases of the project. We’ll take your home’s features and functionality scoped out during the Programming phase. Along with your budget, we’ll produce an initial set of drawings so you can begin to see your ideas and vision take shape. This is where the VE conversations should start so we can adjust the design in the early phases to accommodate budget or other project constraints.

Waiting to discuss VE later in the project, especially after Construction Drawings are produced, would require a redesign. Of course, we can and will accommodate these changes, but we don’t recommend it. Not only will you be responsible for additional service fees, but you may feel frustrated and hindered by the project delays a redesign may require. And waiting until construction begins to make changes is a major no-no, as changes in the field are the most expensive.

If a redesign isn’t possible, then cost reductions would have to include the removal of expensive architectural features — bespoke, project-defining characteristics you may be reluctant to sacrifice. This is why VE and budget discussions should happen early, so you can avoid the disappointment of having to remove expensive features from your home’s design.

Who Else Is Involved?

Ideally, the builder is also brought into the fold early in the architectural design stage. You, the architect, and builder should create opportunities for honest conversations about how best to achieve the project’s priorities while still delivering optimal value. It’s taking a closer look at the entire project picture — how the home is designed, materials, systems, and construction methods and discussing alternatives or improvements.

What About Home Quality?

VE is about maintaining or improving quality, so it’s also essential to define what “quality” means to you. Is it the overall living experience? Or is it about building a one-of-a-kind home? Perhaps quality is the use of luxurious materials and finishes? Quality means different things to different people, so being clear with your architect and builder on your personal definition of quality is essential to creating a program that’s within your budget.

This hand-drawn elevation is another example of a home in schematic design.

How to Set a Realistic Budget

It’s easy to feel discouraged if you’re unrealistic about what your budget can achieve. Trusting the design and construction professionals you’ve hired (and trusting the process) will help them design and build to the budget.

As you begin drafting your budget, having an understanding of the primary price variables below is a great starting point. Here are a few tips on creating a budget that’s right for you:

1. Assemble Your Team

Select your builder early in the design process, as they are the most knowledgeable about building materials and finishes that will impact construction costs. Consulting them during architectural design can help you stay on budget or provide you with enough information to determine if you have to adjust your budget or expectations given your priorities.

2. Know the Main Variables That Affect Price

Understanding the main pricing drivers and how they contribute to the project’s overall cost will help prioritize a program.

  • Project size
  • Project scope
  • Specifications

3. Understand You Can’t Have It All

Unless you have an unlimited budget, chances are you can’t have everything you want, but you can probably get what’s most important to you. Circle in your architect and builder on your must-haves as early as possible for the best chances of making them happen.

4. Prioritize Your Program

This idea goes back to the initial conversations about how you define quality because that often uncovers the features that are most important to you. Setting priorities creates a framework for the discussion so you can make important decisions about how to design your home. For example, if square footage is a high priority, then selecting a lower tier of finishes may help achieve that within your budget.

Cost Savings Ideas for Custom Homes & Remodels

A money tree would surely come in handy during a new build (if only!), but most KGA clients work within a pre-specified budget. If you’re reading this, you probably already have an idea of the maximum dollar amount you want to spend. You may even be researching ways to make your budget stretch to include more items on your nice-to-have list.

A home’s functional aspects and aesthetic requirements are different for everyone, but there are a few common ways to save money during a custom home build or remodel.

Get the Look For Less

HGTV and the fashion industry are famous for this approach, and it can be applied to custom building and remodeling projects (within reason). Here are a couple of ideas:

Alternative Moving Glass Walls

The request for more glass and less window frame is on-trend and timeless to create a more transparent indoor-outdoor connection. Moving glass walls are beautiful and dramatic, but they come with a hefty price tag. An alternative is installing two large center-meet sliding glass doors. You’ll see more frame, but the outdoor views are still spectacular at a fraction of the cost.

Minimize Masonry

Installing masonry along a home’s exterior creates lovely character and curb appeal. To save money, instead of surrounding the home with masonry, keep it to the areas that are most visible from the street to achieve a similar look.

Make the Most of Your Budget

Knowing where to save and where to splurge can help a budget stretch without feeling like you have to settle for less. This is where an architect and builder can shine. Below are two common tips for saving costs, but an architect can provide some creative (and often surprising) ways to make your money stretch further than you think it could!

Be Selective with Custom Cabinets

Custom cabinetry is a notorious budget buster. Consider custom cabinets for the kitchen only and semi-custom or stock for the bathrooms.

Standardizing Windows

Selecting the right windows for a project can make or break the budget. Specifying standard window sizes can help maintain costs. Specialty and curved windows are more expensive on average, so consider square-topped designs or using them sparingly.

Bottom Line for Custom Home Value Engineering

Value engineering is a realistic possibility for custom homes and remodels. There’s nothing more satisfying than helping our clients create homes they love that work for both their lifestyle and budget. Contact us to learn more about our approach to custom home design and value engineering, and to book a discovery call.

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