How would you like to cut construction costs by 20 percent without affecting the value of your project? That's what Genesis Real Estate Group, the Dallas-based developers of Ocean Villas, managed to do by continually evaluating design and construction options right up to the completion of the foundation. This process is known as value engineering. One of the main goals of the community, a two-tower, 19-story condominium project in Long Beach, Calif., was to reduce overall construction time so occupancy could begin as soon as possible. Genesis and EDI Architecture Inc. determined early in the development stage that using a tunnelform system would meet an aggressive construction schedule and save approximately 30 percent in direct construction costs. With the tunnelform system, walls and floors are poured simultaneously. This not only reduces construction time but also eliminates as much as 60 percent of interior partition framing and drywall.

Value engineering may make the difference between a high-rise project that gets built and one that doesn't. To get the maximum benefit, it's important to assemble a fully integrated design team experienced in large-scale fast track commercial high-rise projects. The value engineering process depends upon coordination among the entire consultant and construction teams, so it must be continuous.

Line Item Decisions The owner's pro forma serves as the baseline for cost-reduction efforts. As the preliminary design is produced, the design teams work together to create the outline specifications. Then, early in the process, the contractor provides the first cost estimate, which is almost always higher than the target. The owner, architect, and general contractor systematically reduce costs item by item until a price can be obtained that is in line with the owner's goals.

Design build coupled with tunnelform construction allowed Ocean Villas, in Long Beach, Calif., to achieve construction costs that were 20 percent below similar projects in the area. The project will encompass a total of 576 units and 63,000 square feet.
Design build coupled with tunnelform construction allowed Ocean Villas, in Long Beach, Calif., to achieve construction costs that were 20 percent below similar projects in the area. The project will encompass a total of 576 units and 63,000 square feet.

The design team and the owner must be flexible. The cost of a design can't be fully anticipated until well into the pricing process because major and minor building components are continuously re-evaluated.

At Ballpark Place, a Trammell Crow mixed-use project in downtown Houston, re-evaluating building components reduced costs by $7 million. Some of the major component decisions, which are typical, included:

Structural frame: Is it a concrete bearing wall system (tunnelform) or concrete columns and flat floor slabs?

Building skin assembly: Is it an exterior insulated foam system (EIFS) versus pre-cast concrete panels or a brick cavity wall?

Window systems: Are they flanged windows versus commercial sub-sill windows or storefront type systems?

Minor building components, such as the appliance package and floor finish selections had a substantial impact on the cost of the project as well.