ETI Blog

Not many phrases in the multifamily construction industry stir up as much debate as “value engineering.” For architects, it often hints at potential design compromises in service of the budget. But what if this perception misses the true opportunity? What if value engineering actually allows architects to showcase their most respected skills like creativity, problem-solving and material expertise, while delivering strategic value? Value engineering isn’t about scaling back vision but about peeling back the layers of possibilities to find smarter ways to design and build within constrained resources.

The reality is that the cost to build has gone up. The price of steel and concrete, labor and building systems compounded by inflation and tariffs have made value engineering a topic of conversation on virtually every multifamily project. According to Rider Levett Bucknall's February 2025 data, construction cost inflation rose 4.69 percent year-over-year in Q4 2024, and as noted by Berkshire Residential Investments, net inputs to multifamily construction are already up 35 percent from five years ago and more than 50 percent from a decade ago. These spikes in cost have fundamentally changed what’s possible within client budgets, while simultaneously squeezing profit margins for construction professionals.

In essence, value engineering is about mastering the art of value creation, where the potential for realization is over 10 to 1 return and 30 percent savings. Achieving these results requires the collective expertise of architects, contractors, engineers and suppliers working together to provide the maximize the return on every dollar invested in a multifamily construction project, all without jeopardizing quality or performance.

Reframing the Conversation

The misconception that value engineering is solely a cost-reduction tool ultimately stems from its frequent misapplication. It often develops from a last-minute scramble when estimates start to exceed budgets or when material prices unexpectedly increase mid-project, prompting multifamily contractors to find quick solutions, while architects work to preserve the integrity of the design.

True value engineering is a methodology used to maximize budget, not trim the bottom line. It’s a proactive, integrated process that starts at the onset of design and focuses on the relationship between function and cost. Understanding the client’s functional goals—from the purpose of each element and the experience it should create to what performance standards should it meet—architects can then pair them with the appropriate cost solutions. Industry resources like RSMeans data from Gordian provide access to over 85,000 material, labor and equipment costs, giving architects the ability to explore accurate figures and choose options that align with the design goals while staying within the client’s budget. 

Here are a few actionable steps to take when adopting this methodology in multifamily construction:

• In the design phase, establish what “value” means to the client, so everyone on the project team shares the same objectives.
• Identify the materials needed in the design and what purpose they serve.
• Create a value matrix that that outlines which elements are essential to the design and which offer flexibility. Focus on “how might we” create value here, rather than a “we can’t afford” approach.
• Provide alternatives that could serve the same function and determine if they meet the experience and performance needed. Choose solutions based on long-term value, not just the lowest cost.
• Develop a personal library of successful material and system substitutions that meet quality design and functionality. This could be used to showcase versatility to future clients.
• Build relationships with manufacturers and suppliers to gain insight on cost-effective alternatives.
  
  

Mastering Material Selection in Multifamily Construction

In most multifamily construction projects, material costs account for 40-60 percent of total direct costs, with labor making up 20-30 percent. This means that by focusing on what and how materials are used in design can provide the highest impact area for value optimization. An architect’s versatility with materials and their ability to apply technical knowledge of performance characteristics, installation requirements and life-cycle costs often marks the difference between a project that moves forward and one that remains conceptual. 

Exterior Envelope Strategies

In Chicagoland, there’s an ongoing balance between preserving architectural history and incorporating innovative and sustainable designs. When value engineering multifamily building facades, it’s important to combine aesthetic appeal with functional considerations, such as durability, energy efficiency, acoustic performance and long-term maintenance costs. Building facades typically account for 15 to 40 percent of total construction costs, so optimizing material cost strategies can result in significant savings.

One approach we’re seeing more and more in multifamily construction is blending traditional materials with newer, more affordable options. For example, in neighborhoods where brick is a prominent (yet expensive) feature, architects are incorporating brick at the street level and key visual areas to maintain cohesion but incorporating less expensive cementitious panels, textured metal or weathered steel for upper floors and secondary elevations. By strategically allocating premium materials, it can reduce facade costs by as much as 20 percent while continuing to uphold the richness of the design.

Breaking up monolithic material applications with intentional patterning is another value engineering technique that creates an interesting visual rhythm that enhances the architectural expression while reducing material costs. This strategy can also eliminate the need for costly mitered corners at transitions, reducing the specialized labor required for precise cuts and easing installation.

When multifamily construction project budgets are tight, it doesn’t mean the exterior of the building has to suffer. It just means the opportunity for creativity has widened.

Interior Material Alternatives

From flooring and drywall, interior finish selection also provides equally fertile ground for technical alternatives. Luxury vinyl plank (LVP) has evolved significantly from where it was a few years ago. Today’s products offer an authentic wood aesthetic with 20-mil wear layers that outperform natural hardwood in high-traffic applications at one-third the life-cycle cost. For countertops, engineered quartz provides superior stain and scratch resistance compared to natural stone, without the sealing maintenance or susceptibility to etching from acidic substances.

In multifamily common areas, we’re seeing architects move from expensive Type C drywall assemblies toward USG ULIX gypsum board or 3/4” USG Ultracore. These alternatives maintain required fire ratings while reducing weight and accelerating installation schedules. Similarly, switching to Armstrong Shortspan ceiling grid systems can reduce labor installation costs by approximately 15 percent while providing identical finished appearance.

Strategic design decisions like these can help owners optimize returns on multifamily renovations and new construction projects.

System-Level Engineering

During the material selection process, consider how each component will integrate and function collectively. System-level value engineering looks at the multifamily property as a whole and fine-tunes mechanical systems to keep costs manageable. 

As an example, passive design strategies, such as building orientation, energy-efficient glazing and shading elements, help reduce heating and cooling demands, precipitating the need for smaller, more efficient HVAC systems. According to the Passive House Institute US based in Chicago, buildings incorporating passive strategies and designing to the PHIUS+25 standard perform 60 to 85 percent better compared to other code-compliant structures.

Extending this integrated thinking to the MEP systems, lighting and insulation early in the process can also spark ideas for optimizing system selection, spatial efficiency and intelligent controls to lower costs. Value engineering building systems broadens the lens to consider how these components interact to maximize performance and minimize waste; it does not, however, mean defaulting to cheaper products that could result in future maintenance issues and higher long-term costs.

Procurement Strategies

Even outside of a value engineering framework, strategic procurement plans are an integral part of feasibility in multifamily construction. Do we have the budget for this? Is there enough crew to meet timelines? What potential risks, such as supplier delays and price increases, should we anticipate? How and when materials and systems are ordered and when trade partners are available has a direct impact on cost, quality and schedule. 

Thinking ahead by identifying long-lead times and materials subject to price volatility can lock in pricing and keep budgets on track. Steel prices, for example, have fluctuated by as much as 30 percent within single quarters. For an average-size multifamily new construction project, that price swing could cost the investor tens—if not hundreds—of thousands of dollars. Strategic procurement helps control those fluctuations by staying informed about material availability, market trends and vendor capabilities, ensuring that every purchase contributes value to the project. 

Balancing Value and Risk

While value engineering goes a long way to stretch constrained budgets, cutting corners with less expensive materials and methods can expose the project to risks and carry potential liability. When submitting materials or systems, be sure to document changes with who proposed the change, who approved it and the expected performance. Careful documentation and clear approval processes will help align performance expectations and responsibility.

The goal is not to obstruct cost-saving measures but to ensure that the pursuit of value doesn’t inadvertently compromise design integrity or expose the project team to unexpected risks.

The Architect’s Advantage

Value engineering is often misunderstood as a shortcut, but the truth is, it’s a way to leverage creativity and expertise to achieve more with less in multifamily construction projects. It’s about savvy material design, better system coordination and strategic procurement, all while keeping the project within budget. 

As budgets tighten and expectations rise, partner with a multifamily contractor who knows how to deliver real value that goes beyond the bottom line. Call us at (773) 299-6574 or request a quote online today.