The Misalignment of Value Engineering

The term “value engineering” gets tossed around a lot in construction — oftentimes as a smart cost-cutting measure for building owners looking to make the most cost-effective choices for their facility. While trimming expenses can be great, making the wrong trade-offs in data center design can lead to long-term headaches that ultimately hurt efficiency, drive up costs, and even damage a facility’s reputation. So, how can operators strike the right balance?  

In this blog, we’ll explore the motivation behind value engineering in data center construction, including how contractor and building owner motivations may vary, and break down why small changes, like swapping out a light fixture, can end up having a major long-term impact on energy consumption, operational expenses, and even sustainability. 

The Contractor’s Motivation 

First, we’ll start by exploring how contractors approach value engineering. Completing projects on time and within budget is critical for contractors, which is why they primarily focus on cost, timeline, and deliverable execution in their project management. Because of this, contractors:

• Are incentivized to reduce material and labor coss wherever possible.

• May opt for cheaper alternatives to stay within budget while still fulfilling contractual obligations.

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Energy efficiency is not typically a motivating factor for contractors, and if it is, the approach to saving energy is most often associated with budgetary constraints and overhead expenditure reduction. For example, contractors may opt for less energy-efficient lighting if there is a benefit to the bottom line, aka they lower upfront costs. They might also suggest alterations or substitutions, such as using line voltage rather than low voltage to reduce complexity, which has major effects on long-term energy performance. Since contractors are only involved during the construction phase, the incentive to ensure energy efficiency extending beyond project completion may be minimal; however, energy-saving initiatives viewed solely through the lens of construction expenses may create bigger issues down the road. 

The Data Center Owner’s Motivation 

On the other hand, energy savings, reliability, and environmental responsibility are high priorities for a data center. Their focus isn’t just on the construction phase but on the decades of operational sustainability required to maintain an efficient, reliable facility.  

Energy consumption is a significant ongoing cost and challenge for data centers, particularly in the age of AI as data center operators are sliding backward away from ambitious energy goals due to the energy strain of AI and HPC workloads. To combat this, owners prioritize solutions like high-efficiency systems and renewable energy sources to reduce utility bills and maximize their return on investment. However, the importance of lighting is often minimized or overlooked because the operating costs may seem minimal compared to cooling systems, power distribution, and security.

Reliability and uptime are also essential to a data center. Value-engineered light fixtures that fail because they don’t meet the requirements of a high-heat environment, or maintenance personnel injured while serving faulty lighting can cause unplanned downtime resulting in millions of dollars in lost revenue. With rising data requirements and increasing energy usage, most data center owners understand the environmental impact of their facilities and are committed to corporate social responsibility and sustainability targets. 

The Cumulative Impact of "Small" Energy Inefficiencies 

Lighting is a common target of value engineering because it is often seen as something that doesn’t affect core operations. If the specification calls for an LED light fixture that produces 6,000 lumens, that’s an easy replacement. What is not considered are the watts the fixture requires to produce that amount of light. A seemingly small difference of 3 watts per light fixture can result in significant waste over time, especially for large data centers. Here’s an example: 

• 3 extra watts per LED light fixture multiplied by 1,000 fixtures equals 3,000 watts or 3 kilowatts. 

• When operating just 4 hours per day throughout the year, the energy use translates to 4,380 kilowatt-hours (or 4.38 megawatt-hours) wasted annually. 

Consider the financial and environmental cost of this waste, especially when scaled across several facilities over multiple years. Considering there are more than 5,000 data centers in the United States, the overall impact would be alarming. If even half of those facilities consumed an extra 4.38 MWh annually, it would equate to powering more than 1,000 homes (or a small town) for an entire year.  

This example highlights why every watt matters in a data center. Small compromises in energy efficiency today can lead to compounded costs and missed sustainability goals over the lifespan of the data center. 

A Conflict of Interests 

Contractors seek solutions that save money today, while owners focus on long-term investments in reliability and energy efficiency. This difference in perspective can sometimes lead to unintended trade-offs. Like the example above, a contractor may suggest a seemingly comparable but less expensive lighting option, inadvertently suggesting a choice that is less energy efficient over time. While this may achieve the desired effect of immediately lowering construction costs, the higher long-term energy use will become a burden carried by the data center owner. 

Since contractors operate within tight budgets and timelines, their decisions are naturally shaped by these constraints. Bridging the gap in understanding with clear communication and collaboration ensures that cost-saving measures taken during construction align with both immediate project goals and the data center’s long-term performance needs. Operators who recognize the benefit of choosing the most long-term energy-efficient fixtures stand to better their facility’s reputations, operational expenses, and carbon footprint.

Striking the Right Balance with Value Engineering 

Understanding the different priorities between contractors and data center owners is key to making informed decisions that support both cost-effective construction and long-term operational efficiency. While value engineering can be a useful tool for managing budgets, it’s important to evaluate proposed changes carefully to ensure they align with the facility’s energy efficiency goals, reliability needs, and sustainability targets.

One seemingly small decision — like a lighting substitution — can have a significant impact on a data center’s long-term energy consumption and costs. By prioritizing high-performance, energy-efficient solutions from the start, owners can avoid hidden inefficiencies that add up over time.

At LANTANA LED, we specialize in high-efficiency lighting solutions designed specifically for mission-critical environments like data centers. Our products help facility owners reduce energy waste, improve reliability, and meet sustainability goals — all without sacrificing performance. Visit our Lighting Efficiency Calculator now to evaluate lighting choices and learn about how the right lighting can optimize your data center for the future.