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Adoption of value engineering avoids cost escalation of building materials

Rising prices of construction materials, high rates of inflation and interest rates in Egypt’s real estate market have led real estate developers to raise the prices of their units amid expectations that prices will increase by more than 30% by the end of this year.

Similarly, value engineering is required due to higher cost of construction as a result of higher prices of raw materials.

Real estate developers believe that the application of value engineering can increase the value of various projects with significant improvement and a clear reduction in their costs, which helps in improving the profitability of these projects.

Value engineering is a systematic, coordinated approach that provides essential functions in a project at the lowest possible cost. Value engineering promotes the substitution of materials and methods with less expensive alternatives without sacrificing functionality. It focuses only on the functions of various components and objects rather than their physical properties.

For everyone working in the construction and development sector, especially real estate developers and in the state, value engineering has become of utmost importance as the construction industry is currently booming in Egypt, said Mohamed Abdel Ghani, head of the ECB Expertise House. Amount of real estate investments.

Abdel Ghani highlighted the importance of applying value engineering, which directly contributes to reducing unnecessary costs in a simplified manner while increasing the quality of projects and extending their lifespan.

He explained that value engineering is a specialized team that performs organized group work with a scientific method, which aims to analyze the functions of each aspect of the project, its components and costs, and then propose alternatives that ensure the achievement of those functions. Low total cost.

This approach is distinct from others as an effective approach that relies on creative solutions to solve problems without compromising basic requirements and quality, explaining that value engineering is the starting point for increasing efficiency and reducing project values. Construction costs.

Applying the principles of value engineering in various projects can save 7 to 10% of the total construction cost, if good project design is available, up to 30% in some designs, said Abdel Ghani. This confirms the need for value engineering, especially in light of the current economic conditions.

Apart from the pressures faced by real estate developers who are forced to construct projects at low cost, there are other major issues including high land prices, selling properties at competitive prices over long payment periods and on-time delivery with required specifications – a very difficult equation for any developer in the absence of application of value engineering in their projects.

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

He emphasized the high value of the application of value engineering in these difficult times, especially when the construction industry in Egypt is facing an increase in the cost of projects with the pressure of the construction period, which is considered a big challenge for all developers. .

“As a result of the conviction of Egyptian consulting offices that Egyptian workers and supervisors do not have the required efficiency and accuracy, they may have to place high design reservations, which usually leads to high construction costs. This is a real burden for every developer in light of the high construction costs due to the significant increase in land prices,” he explained.

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

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

“This method originated 40 years ago, and now we are in the current situation, it is the best engineering solution to preserve the investments and profits of the project by finding alternatives with raw materials that achieve the best results with the greatest possible cost savings. ,” he pointed out.

Furthermore, he highlighted the importance of value engineering in developing property projects with the same quality and same components but at a lower cost, which is implemented through consulting offices that specialize in working with this method.

Additionally, value engineering is concerned with reducing construction costs without compromising the quality and safety of facilities by finding alternatives or solutions to construction materials, which has a greater impact in reducing costs in construction in light of the large increase in raw material prices.

Islam Yehia – Head of Commercial Department of a leading real estate company – disclosed that the current period is the most suitable time for companies to apply value engineering in the construction of their projects and it will benefit both customers and developers.

He pointed out that the global economic crisis had led to an unprecedented rise in raw material prices and building and construction requirements, which directly reflected in the cost of implementing projects.



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