Alternate vs value engineering
What is the difference between an alternate and value engineering?
An alternate is scope priced separately at the owner's request, decided at award — the documents ask for it, and the owner chooses whether to buy it. Value engineering is a proposed change to the design, usually offered to cut cost after the bids come in over budget. An alternate was planned for; value engineering is a response to a number nobody liked.
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Reviewed by Eric Collin · President and Founder of Firmo Construction, 20+ years in preconstruction and bid evaluation
Asked for versus offered
An alternate originates with the design team. The documents define it, the bid form asks every bidder to price it, and the owner decides at award whether to accept it. Because everyone prices the same defined scope, alternates stay comparable.
Value engineering originates with the contractor or the bidder, usually after the base bid came in over budget. It proposes a different way to achieve the same function at lower cost — a different product, assembly, or method.
So the direction of the request is opposite. An alternate is the owner asking "what would this cost?". Value engineering is a bidder saying "here is what I would change".
Why VE proposals resist comparison
Alternates are comparable by construction: same scope, same form, every bidder answering the same question.
Value engineering proposals are not. Each bidder proposes different substitutions, each with different implications for performance, maintenance, warranty, and appearance. Two VE numbers are not two prices for one thing; they are prices for two different buildings.
That is why an unsolicited VE credit folded into a base bid is a problem rather than a discount. The bidder has priced something other than what was specified, and the field is no longer level. The correct handling is to require the base bid as specified, with any VE offered separately and priced as a stated deduct.
The judgment each one calls for
Deciding an alternate is largely a budget question — the scope is defined and priced, and the owner can take it or leave it.
Deciding value engineering is a technical judgment, and it belongs with the design team rather than in the bid comparison. A substitution that reduces cost may also reduce service life, void a warranty, or shift maintenance expense to the owner, and none of that is visible in the deduct.
The genuine version of value engineering is worth taking seriously: a subcontractor who builds this every week often does know a better assembly. What makes it useful rather than corrosive is that it is proposed openly, priced separately, and reviewed by the people responsible for the design.
- Alternate
- An alternate is separately priced scope, added to or deducted from the base bid, that lets the owner decide at award whether to include it.
- Value engineering
- Value engineering, or VE, is the process of finding lower-cost ways to deliver the same function, usually triggered when a project comes in over budget.
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