Adopting value engineering would circumvent building material price increases


Soaring building material prices in the Egyptian property market, high inflation rates and high interest rates have led property developers to raise their home prices as prices are expected to increase by more than 30% d by the end of this year.

As a result, value engineering has become a necessity imposed by the high cost of construction due to high raw material prices.

Real estate developers believe that the application of value engineering increases the value of various projects with significant improvement and reduction in their cost, which helps to improve the profitability of these projects.

Value engineering is a systematic and organized approach to providing the functions needed in a project at the lowest cost. Value engineering promotes the substitution of materials and methods with less expensive alternatives without sacrificing functionality. It focuses only on the functions of the various components and materials rather than their physical attributes.

The head of the ECB’s house of expertise, Mohamed Abdel Ghany, said that value engineering has become of paramount importance for everyone working in construction and development, especially real estate developers and the state, given that the construction industry in Egypt is currently experiencing a boom in the volume of real estate investments.

Abdel Ghany underlined the importance of applying value engineering, which directly contributes to reducing non-essential costs in a simplified way while improving the quality of projects and increasing their lifespan.

He explained that value engineering is an organized group work with a scientific methodology carried out by a specialized team that aims to analyze the functions of each element of a project, its components and its costs, and then to propose alternatives. that ensure the realization of these functions at the lowest total cost.

This approach differs from others in that it is an effective method that relies on creative solutions to solve problems without compromising baseline requirements and quality, he noted, explaining that value engineering is a starting point for increasing the efficiency of project values ​​and reducing construction costs.

Abdel Ghany added that the application of value engineering principles in various projects can save between 7 and 10% of the total construction cost, provided that a good project design is available, which saves 30% in some designs. This confirms the need for value engineering, especially in light of current economic circumstances.

In addition to the pressures real estate developers face to build projects at lower cost, there are other major issues including high land prices, selling properties at competitive prices over long payment periods and on-time delivery with the required specifications — an equation that will become very difficult for any developer in the absence of the application of value engineering in its projects.

The head of the Real Estate Development Chamber of the Federation of Egyptian Industries, Tarek Shoukry, said that the application of value engineering principles and methods in projects has become one of the drivers of success and continuity of real estate companies in light of the great financial changes which the real estate market is witnessing in the current period.

He also underlined the great value of applying value engineering in this difficult time, especially as the construction industry in Egypt is facing increasing cost of projects with the pressure of the construction time, which is considered a big challenge for all developers. .

“Due to the belief of Egyptian consulting firms that Egyptian workers and supervisors do not have the required efficiency and accuracy, they may have to place design reserves in large proportions, resulting in a cost of high construction in general. This has become a real burden for every developer considering the high cost of construction due to the significant increase in land prices,” he explained.

For his part, Mohamed Al-Bostany – head of the New Cairo and New Administrative Capital (NAC) Developers Association – said the real estate market has seen a lack of clarity since the supply chain crisis. , then the outbreak of the Russian-Ukrainian crisis. War, which led to a rise in the prices of building materials.

Al-Bostany added that the value engineering approach is the construction of a safe and well-designed facility at the lowest cost.

“This approach was born 40 years ago, and now that we are in the current circumstances, it is the best engineering solution to preserve the investments and the profits of the project by finding alternatives with raw materials that allow ‘achieve the best results with the greatest possible savings,’ he emphasized.

Furthermore, he underlined the importance of value engineering to develop real estate projects of the same quality and with the same components but at a lower cost, implemented by design offices specializing in this approach.

In addition, value engineering aims to reduce construction costs without compromising the quality and safety of installations by finding alternatives or solutions for construction elements, which has a great impact in reducing construction expenses. construction given the sharp increases in commodity prices.

Islam Yehia – head of the commercial sector in a large real estate company – revealed that the current period is the most appropriate time for companies to apply value engineering in the construction of their projects and that this would benefit both the customers and developers.

He also pointed out that the global economic crisis has led to unprecedented spikes in raw material prices and building and construction requirements, which have directly impacted the cost of implementing projects.


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