Understanding Value Management in Construction as a Residential Property Developer

value management in construction

At Little Fish, we’re always excited to share our expert knowledge of all things real estate development with you.

We believe in empowering our readers and our customers to make the most of their property. So, in this helpful article we’re going to take a quick look at value management in construction, and how to understand it as property developers.

Value management in construction is essentially a way of ensuring that your development projects achieve maximum value for money and a high return on investment (ROI).

It’s essential to implement efficient and effective value management techniques during a project.

Value is what you want out of a project versus what you pay during the process. Basically, you want to make money, but you first need to spend it. It’s that old saying again.

That said, a great value management perspective to take is how to get a high return with the lowest possible cost without compromising the desired outcome.

A successful property developer will get every step right and maximise their profits from each development.

When to Start the Value Management Process?

This is a great question, and the answer is from the very beginning. You might want to begin by reaching out to your network or start to build one. By asking local real estate sales agents about what buyers are currently looking for.

You might find that two-bedroom townhouses in a particular suburb are selling like hotcakes. If that’s the case, then you want to look for a lot that is zoned correctly and can accommodate a dual occupancy subdivision of two or more two-bedroom townhomes.

At the same time, you want to work closely with your chosen architect to get the plans right and then work with your interior designer to ensure that your build will achieve maximum value and that your build will have all the fixtures, fittings and finishes that buyers are looking for.

Side note – if you have a dual occupancy project already underway and you are looking for a quality builder then check out this list we’ve curated of the best builders in Melbourne.

Don’t Compromise

You need to ensure that you don’t compromise on the integrity of your project.

Remember, at the end of the day you’re looking for a high ROI. So you don’t want to overcapitalise (over-spend) in areas that aren’t going to deliver any returns. On the flip-side you need to ensure you are spending money in the right areas that will help you increase your ROI.

A Collaborative Approach

A successfully value managed project will get all the different working parts working together in collaboration.

At Little Fish Property Developments, we genuinely believe in the power of a collaborative approach. We like to coordinate all the different stakeholders of a project to achieve the maximum result.

It’s about getting the architect, interior designer, sales agents, your townhouse builder and all other parties all working together towards the same goal.

You need to remember the importance of getting all your ducks in a row.​ Value management is an essential step in the real estate development process.

An Example of Value Management When Developing

If you’re still a bit confused, that’s okay – there’s a lot to take in. So let’s look at an example. Your choice of building materials can create value for money.

In the kitchens we like to use a more expensive stone as a hero but in the other wet areas. We would try and find a secondary stone that is complementary and less expensive. Doing something like this alone throughout your development can add significant money to your bottom line.

This is value management in action.

Below are examples of the hero stone in the kitchen and the secondary stones in the other wet areas such as the bathroom and laundry.

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Summing Up

In the property development space, knowledge is indeed power, but also profit. You need to make educated and informed decisions because small things can result in substantial savings or significant losses.

You can’t put a price on experience with value management as it relates to residential property development projects.

Having an understanding of value management in construction will help a great deal.

As time goes by, you can build up your knowledge and optimise your future builds accordingly. Increasing your ROI time after time.

If you want to learn more around development project timing and costs check out this case study where we break down a Melbourne dual occupancy project.

And off course, if you’d like to know more about value management, the team at Little Fish are on standby to help. Reach out to our team for a free no-obligation site analysis on 1300 799 277.

peter kelly

To put it mildly, Peter Kelly is enthusiastic about real estate. When he’s not looking at properties, or visiting potential sites, Peter can be found online at realestate. com. For him, it’s more than a job – it’s an obsession. Peter is a co-founder here at Little Fish Property developments.