During any phase of the market cycle, the value engineering process – starting at pre-construction and continuing throughout a project’s life-cycle – can play a key role in the delivery of top-quality construction projects, within budget and on time. Broadly defined, VE in construction involves identifying cost-control measures while upholding the highest quality of work, remaining faithful to project aesthetics and respecting original specifications. At best, it involves an experienced multi-disciplinary team of finance and construction professionals collaborating with the client and design group.
The importance of VE holds true for all sectors and property classes within commercial real estate. We expect VE to take on increased significance in New Jersey and throughout the U.S. as the commercial real estate industry moves through a pandemic-pressured economy.
Keys elements of the process include:
- Assisting with financial reporting needs, including cash flow forecasts, cost modeling and depreciation schedules
- Examining sites before construction starts, ensuring conditions are properly reflected in contract documents and gaining a complete understanding of all site limitations and restrictions
- Analyzing all requirements, including safety measures, of the proposed project, such as building features, systems, equipment and materials
- Conducting architectural and engineering “peer review” to achieve optimal design within the project budget
- Identifying applicable incentive programs, including tax abatements, utility savings, low-cost financings and government-sponsored grants
For GTL Construction of NJ, a textbook example of value engineering is the renovation of 2 Journal Square in Jersey City. The New York-based building owner, Gaia Real Estate, is completing a partial repositioning of the Class A, 300,000-square-foot, nine-story property. Throughout all phases of the project, the GTL team has collaborated with the client and provided value engineering services.
Improvements include extensive exterior work, an MEP energy-efficient infrastructure upgrade with a new HVAC system, and the addition of 30,000 square feet of first-floor retail and restaurant space. The year-long, multi-million dollar construction project at 2 Journal Square is set to wrap up within the next few weeks, preparing the property for prospective retail and restaurant tenants, as well as potential Fortune 100 office tenants.
During the pre-construction phase, GTL prepared budgets and pre-purchasing schedules, and pre-qualified sub-contractors and vendors to ensure superior service and avoid delays. Our company provided comprehensive phasing and site logistics plans to the owner, as well as site-specific safety plans. A multitude of complex logistics and safety plans came into play due to the building’s location on JFK Boulevard, one of the city’s main thoroughfares. In addition, the high-trafficked Journal Square neighborhood is undergoing a revitalization all its own – from multifamily, retail and office development standpoints – as available parcels along Jersey City’s waterfront have become scarce.
To ensure proper safety measures, GTL coordinated with multiple Jersey City and Hudson County building and utility entities on necessary sidewalk and street closures. As well, our team coordinated all closures with the client and existing tenants of the property. Keeping open channels of communication with all stakeholders enabled the project to adhere to the proposed schedule.
Two Journal Square now features an attractive, welcoming entrance and walkway off JFK Boulevard. A sleek, metal canopy of structural steel gives the façade a modern look, accented by concrete pavers and a new patio area. As part of GTL’s value engineering process, the company recommended the substitution of the exterior metal ceiling manufacturer, which provided a more seamless and aesthetically pleasing look; the substitution was a more cost-effective option and offered an improved lead time.
The sleek exterior design flows through to the renovated lobby, which now features an updated reception desk, energy-efficient lighting, tile floors, and upgraded bathrooms with new plumbing. GTL’s work also included prepping interior, first-floor space for incoming retail tenants, as needed. Further VE work involved recommending the substitution of more cost-controlled lighting fixture types, remaining faithful to the modern aesthetic. The VE process also included hard negotiations with material manufacturers.
Led by an executive team including GTL Director Samuel Champi Jr., the construction team includes Tim Fritzsch and P.J. Scriffignano serving as superintendents, and Raymond Dungee and Nancy Murphy as assistant project managers. The on-site team helps ensure the continuation of the value engineering process, supporting the delivery of top-quality construction work in adherence with schedules and budgets. For construction companies, it is that type of product that will likely produce repeat business from clients for years to come.
Pietro Barberi is vice president of GTL Construction of NJ Inc. He has more than 20 years of construction industry experience.