How to succeed in the common push-pull negotiations around price versus kitchen design integrity.
"Value engineering" might have been a dirty word in the past, conjuring up images of eager foodservice design consultants specifying too-expensive pieces and dealers slashing selections with price-minded red pens. Naturally, situations like that can result in a lot of tension on both sides, along with a confused and concerned end user.
Now, with projects getting bigger, faster and more budget-focused than ever before, foodservice design consultants and dealers alike find they need to work more closely to cut costs and stay in range without harming the integrity of the kitchen design and overall concept.
Customer satisfaction and experience should — and do — remain the top priorities, for both dealers and consultants, at least in the view of Chris Wair, design principal at Indianapolis-based Reitano Design Group, who joined the firm recently after working with TriMark Hockenbergs, a dealer based in Omaha, Neb. Given his experience working for both a dealer and a foodservice design consultant, Wair is uniquely positioned to weigh in on the age-old value engineering (VE) debate.
Dealers and consultants share the same goal of wanting to do what's best for their operator customers. Where they often disagree, though, is the best way of accomplishing this. The debate often centers on a push-pull that pits price against kitchen design integrity. With that in mind, FE&S culled tips and tricks that have worked for others and can guide you toward a successful value engineering project before — or after — the bid process.
No. 1; Define and know the budget before the bid process.
This is the most important approach to new projects, regardless of whether they end up being value engineered or not, according to Kristin Sedej, FCSI, president of S2O Consultants Inc.
"Ideally, any value engineering should happen during design and not after it goes out to bid," Sedej says. "It's important for consultants to meet expectations of a dollar amount but also ensure the integrity of the project."
Sedej has multiple conversations with the operator about the budget projections and then explains the bid process thoroughly and keeps in close contact after submitting her specs so there are no surprises. Making changes to a spec sheet becomes more difficult — as well as costly and time consuming — once the contract gets assigned to a foodservice equipment dealer.
"I try to remember who's writing the check and respect that, looking at both the immediate capital and long-term goals," Sedej says. "Design and equipment selection is just a small piece of a whole project. I don't get too far into the design until we've discussed budget and numbers over and over again."
Wair's trick for making room around the budget is to include additional equipment specs as alternates so they don't impact the bottom line of a bid. "If we spec three combi ovens, but feel they might be able to function OK without one of them, we'll include just two on the spec sheet and list the third as an alternate," he says. That way, if there's room in the budget to add it, that can happen right away, or the item can simply be dropped.
No. 2: Determine top priorities.
Every operator wants to save money on a project and get the most bang for the buck. Sometimes, though, certain foodservice goals or other wishes take the top slot over cost. Sedej points out a situation where a stadium operator wanted draft beer, which can be a costly endeavor if choosing remote draw rather than direct draw.
"We, as consultants, need to do due diligence in the beginning, research all the options and talk through exactly what the operator wants and the costs associated so they can prioritize and understand why we picked what we picked," Sedej says.
No. 3: Understand the nature of the concept.
Context is everything. "A football stadium is different than a baseball field because in football, there are 8 home games versus close to 100 or more for baseball," Sedej says. An all-stainless, interior/exterior walk-in might be a huge waste of money for a football stadium, but makes more sense in a baseball field or other busy arena that might take a bigger beating in the kitchen.
"If the equipment will be torn apart in four or five years, the equipment package doesn't have to have all the top-of-the-line pieces, but they have to be solid and durable enough to withstand the heavy usage," Sedej says.
In the case of schools, which might not see large capital expenditures for equipment replacements for decades, it's typically worth it to go for the more long-term, durable pieces built to last, even if they cost more up front. Perhaps more VE can happen with an independent restaurant, which faces a higher likelihood of closing in two or three years.
No. 4: Provide multiple manufacturer alternates where appropriate.
Because of the range of budget restrictions, priorities and context, offering multiple alternates in a spec sheet helps dealers meet operators' budget needs. "Ninety percent of the time we include three options on a line item," Wair says. "In theory, that offers the best opportunity for the best price on those products."
Luke Green, contract and design specialist for Rapids Foodservice Contract and Design and FES' 2017 DSR of the Year, also prefers a wide range of alternates. "This helps us open the spec up to three or more manufacturers with whom we have a good rapport so we can get the best possible price," he says. But as a designer himself, "we also can't go too far and need to make sure we're taking all the specified pieces in consideration to ensure the design still works well."
For example, most recently, Green received a spec for a particular type of food shield that tends to be on the costlier side, But he's worked with other types before that don't cost as much and do the job just as well. Consultants who specify the same manufacturer over and over throughout an entire bid package limit potential for some cost maneuvering, even when the design might warrant it.
No. 5: Stay knowledgeable about the equipment.
This is true for both dealers and consultants.
Sedej always reads the fine print. "There was a new ventless piece I was really excited about, but then I read the tiny, tiny fine print on the bottom of the cut sheet, it required 100 square feet, which we didn't have," she says.
Some pieces are more difficult to install than others, Green points out. Also, what happens when you install a top-of-the-line piece of equipment, only to have users not understand how to operate or maintain it?
"It's important to know who's managing the kitchen, and for us dealers to offer training or work with consultants and manufacturers' reps to make sure everyone is properly trained," Green says. "Unfortunately, I have been in several school kitchens that had expensive combi ovens but were never used because the staff were afraid of them and didn't want to use them incorrectly."
No. 6: Pay attention to all the nitty-gritty details when swapping equipment in and out.
Again, it's all about reading fine print. Green points out a situation where some VE was allowed on mobile hot cabinets but the plug types weren't made clear and they didn't match up with the electrical requirements in the kitchen design. This was a costly case of miscommunication during VE that could have been resolved with more attention to detail and communication on all fronts.
"We double- and triple-check our bid forms, and sometimes note things correctly, but the architect won't pick up the change and direct the electrician to proceed as is," Green says.
Green now uses RFIs (requests for information) to make VE-related changes like these more obvious in the bid process and to make more official updates to drawings to ensure everything works the way it should.
Also, be wary of items labeled as "accessories" on cut sheets, Sedej says. "Like lug nuts on a car, if it's required to make the equipment operate normally, it's not an accessory," she says.
No. 7: Keep communication lines open with dealers, architects and general managers before, during and after the bid process.
Aside from keeping the lines of communication open about budget and numbers, Sedej puts the emphasis on explaining why she chose certain equipment over others. Any vagueness opens up the floodgates to suggestions that she might be partial to one manufacturer over another, when in all cases, she's made selections based on how the items work with the overall design and foodservice goals of the operator.
"If we select the equipment, when it goes out to bid, we want the client to know why we picked what we picked, and all the costs associated with it," Sedej says.
Sedej does her best to be able to review a bid package when it comes back before the contract is awarded to make sure any VE will still work with her design and the operator's budget and not lead to any costly mistakes.
"We try to avoid getting into arguments with the GC [general contractor] and work with the client and all team players to make sure everyone understands our choices," Sedej says. "Everyone seems to be happier in the end if we're more open and communicative up front."
No. 8; Partner with the consultant/dealer to walk away with lessons or recommendations after the fact.
After all is said and done, Green appreciates the opportunity to get together with the consultant to discuss the learnings and takeaways so they can see eye to eye on specifications in the future.
"In one project, we had some significant problems with a walk-in, so I wanted to let the consultant know that for future reference," Green says. On the flipside, there are also lessons he has gathered about certain equipment and design preferences.
Though it can still spur tensions and political moves, as more consultants and dealers work hand in hand to meet their shared customers' needs, VE has gone from once being seen as a bad thing to now being recognized as an opportunity for better communication, consciousness and collaboration on complex projects.
VE by the Equipment
It makes sense to VE equipment pieces in some instances more than in others. Here Reitano Design Group's Chris Wair and Rapids Foodservice and Contract Design's Luke Green offer a few tips on where VE can make sense based on their experience.
Stainless Steel: If budget allows, Wair generally prefers to specify custom stainless because of its heavy-duty construction and longer lifespan. At the same time, he says, "a six-foot table is still a six-foot table." In a VE situation, swapping custom out for catalog stainless makes for easy cost savings.
Hood Systems: This presents another opportunity to adjust choices for cost savings, but foodservice design consultants have to make smart choices using architectural drawings and recommendations or risk creating complications with the overall HVAC system. "Some manufacturers will say their hoods can produce smaller static pressure with a smaller exhaust fan, but any time we change static pressure, we're changing the duct run," says Green. "It might be a small thing we're changing, but the impact on the whole system is exponential."
Since hood prices range widely, it's possible to save some money by selecting a less expensive option. If an operator wants to reduce energy costs, then considering features like demand-controlled ventilation or infrared sensors makes sense. This also means that trying to VE the hood system presents a potential problem.
Ice Machines: This is a low-hanging fruit opportunity; Wair will suggest leasing these units in the short term until more capital funding becomes available later for bigger purchases.
Walk-Ins: Some foodservice design consultants say hard rail construction boxes are the only way to go with walk-ins, but in Green's experience, these represent some of the most expensive and most challenging pieces to install. With such a variety of walk-in coolers available in today's foodservice industry, there's often more room to choose alternatives and save a few dollars. Of course, these decisions need to take into account the operator's needs in both the short and long term.
Beverage Equipment: Soda and coffee machines represent some of the first things to become vendor-supplied in a VE situation. Some will argue most coffeemakers perform equally well, but this depends on the needs and volume of the operation; it might not be best to go the more basic route for a heavy breakfast operator or 24/7 outlet that brews a significant amount of coffee.
Lighting: Switching from flush-mounted LED lights to more standard globe fixtures in the kitchen can save a few dollars, Wair points out. But, he also notes, changing too much lighting in the front of the house could affect customer experience. Investing in LED lighting throughout the space will save the operator more money in as little as one to two years, but in a tight budget situation, that lighting investment may be better made down the road.
Dishmachines: The dish room presents more complications in a VE situation than other equipment and areas of the kitchen, Wair finds. It's possible to lease certain dishmachines, depending on volume and the nature of the operation. However, if the operator really needs a flight-type machine, there are few models on the market, so VE becomes more challenging. Ventless machines can sometimes save dollars with less of a need for extra hood systems, but again, it depends on the operation.
Combi Ovens: Always seen as the extra equipment in a space, combi ovens are some of the most expensive equipment in a kitchen. It's an even bigger shame if not used properly after installed. However, with the right installation and training, combi ovens can replace the work — and cost — of two or more steamers or steamer/oven combinations. Consultants should consider this balance and make their recommendations clear to the operator and other team players before the equipment becomes value engineered. A less expensive heavy-duty steamer might be more appropriate than a combi if there are any training or employee maintenance concerns.