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Specifying Techniques to Prevent Value Engineering

Value engineering is a term that both design and MAS consultants either fear or shun. But for designers who specify foodservice equipment, value engineering represents an unfortunate reality, and one they may have faced to a greater extent in the last couple of years because of a damaged economy that has resulted in tighter than normal budgets.

Eric Norman of MVP Services in Dubuque, Ia., however, has a solution for this issue that has worked well for him in assisting foodservice operators from all industry segments. Known as single-source and pick-three specification, it's an approach that Eric's father Ed taught him, and it is something other consultants might use, too.


Single-Source (or Proprietary) Specification

Eric Norman describes single-source specification as a way of saying "no substitutions" next to a particular spec on a project proposal.

"If I'm designing a kitchen and want to use a particular combi-oven, and I feel no one else has anything like it on the market, I will write the spec with the preferred brand and model number, and write next to it ˜no substitutions' because I don't feel any other piece of equipment can perform to those standards."

It seems like an aggressive measure to take, but Norman usually uses single-sourcing for the core group of cooking equipment that will make up the kitchen's heart. He'll then blend those single-source specifications with a variety of pick-three specs to balance a proposal and offer flexibility to operators and dealers. This approach allows Norman to stand his ground on foodservice equipment he deems the most important for a particular kitchen.

"Our goal is to represent the end-user's best interests, so I want to decide what specific equipment will do the best job – that is the main goal," Norman says.

Single-source specifying also helps prevent last-minute, headache-inducing costly changes to plumbing, electrical and mechanical wiring in the kitchen, because it ensures that the other team players will install the specified piece of equipment from the get-go.

"Often our design revolves around those core pieces of equipment, so if they switch the equipment and don't tell us, it can usually affect the electricity and plumbing throughout the entire kitchen or building, and it can affect other equipment too," Norman says.

To further prevent the swapping of core pieces of equipment, Norman will include notes about the electrical, mechanical or plumbing needs of specific items. This is the equivalent of saying, "Hey, if you change the equipment but you need to take into consideration these back-end requirements and how the new equipment will work with existing others if you do so. And by the way, it's going to cost extra money if you make these changes."

Basically, single-sourcing comes down to a lot of trust between the foodservice operator and the specifying consultant. Clients and other team members must feel that the consultant has made the "no substitutions" spec on a certain brand and/or model number because they feel it will perform the best, not because kick-backs are involved. "People generally put their trust in us to do what's best for them," Norman says, adding that they rarely have problems or arguments with their choice for single specs.

Aside from objectively choosing the right piece of equipment, they've also been able to prevent unforeseen problems by being upfront, communicating openly, and double-checking documents before going to bid.

"The more information I have to back up why I did what I did, the better," Norman says, adding that it's also important to include a lot of safeguard notes throughout a proposal. By that he's referring to the notes about the electrical and plumbing requirements, as well as notes indicating that prices on equipment are not stagnant because of inflation rates that may occur over a few years if the project takes longer to develop.

They haven't had to do this, Norman says they're prepared to back up their specs with the proper documentation to show why they picked the equipment they did, whether it's by using cut-sheets from the manufacturers, or documented results from performance tests conducted by unbiased, third-party vendors. "We'll write how we feel it needs to be written, but if there are budget or other issues or challenges, we'll go through each equipment piece by piece with the client to make sure things are right," he says.

And, always, Eric double-checks the final bid that's going out. "I always make sure that the final drawing and spec match up. I always ask the end-user to bring any changes to their design or spec to our attention before we bid on a project. For example, we may have had a six-burner range in the drawing, but then I get the spec back from the client and it has a 4-burner range listed. Those are the things specifying designers need to watch.

"Pick-Two" or "Pick-Three" (or Alternates) Specifying

To suggest alternative brands next to a specification, MVP will cite two or three brands they deem as close in quality to the original in a pick-three specification. "I may have designed the kitchen to include a work table that's 24-inches wide by 28-inches high," Eric says.

He'll then pick the top two or three stainless fabricators to write next to the spec as alternatives to the original. Listing two or three options is a lot better than writing "Or Equal" next to a spec, meaning it's up to the operator to choose. "That leaves it wide open for the operator to decide the item to put in there," Norman says.

This introduces the opportunity for value engineering at its extreme forms. Instead of putting a good quality, stainless steel table in that space, an operator can easily choose a cheap version by an unknown supplier just to try to save a few dollars. In the long run, that could cost them.

Although Norman rarely uses this spec, he's requested to do so with some customers. Government and public projects seem to favor the pick-three form of specifying, Eric says. "We get a lot of schools requesting this because we have to be more cost-conscious or if it's a government job, consider that tax-payer money is being used to fund the project."

So, in essence, Norman is allowing a slight version of value engineering, but he still maintains some control to ensure the project is done thoroughly and correctly. Pick-three specifying also helps out the dealer. "Certain dealers work with certain stainless steel manufacturers, so they can pick which one of the three will give their customer the best option while also bringing the cost down because of rebates."

It also prevents in-fighting, one could argue. "Generally, I like to use a combination of single-source and pick-three specifications," Norman says. "If I write 80 specs, I might designate 10 as single-source and the rest as pick-3's. That helps us keep our work product up to the highest standards while also ensuring the main important pieces of equipment that I want in there that will perform well.

Bottom line: it's all about the details. The more structure, accuracy, back-up documentation, and safeguarding notes a proposal has before going to bid, the less chance value engineering, and costly changes, will ensue.