Whole Life Costing for Sustainable Building

Mariana Trusson

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781317289951
• Edition: 1
• Topic: Architecture
• Subtopic: Architecture General

Whole life costing is now integral to building procurement, both for new buildings and major refurbishments. It is key when assessing investment scenarios for estates as well as individual buildings, and has become a tool for justifying higher capital cost items.

Standard whole life costing methods combine capital cost, facilities costs, operational costs, income and disposal costs with a "single action–single benefit" approach. Costing based on this type of single attribute assessment misses out on realising value from the intricacies of the interactions buildings have with their occupants, users and the location in which they are placed. In contrast, the multi-attribute approach presented by the author of this book explains how to analyse the whole cost of a building, while also taking into account secondary and tertiary values of a variety of actions that are deemed important for the project owners and decision-making stakeholders. The process is an effective tool for presenting a good business case within the opportunities and constrains of real life. For example, it presents the interdependencies of how:

• Building location affects servicing strategies which impact on maintainability and control and, by extension, on occupant comfort;
• Material selection affects time on site, building maintainability as well as overall building quality and the environment;
• Building shape impacts on servicing strategies as well as operating costs.

The reader will be shown how to incorporate this method of whole life valuation into standard cost models allowing for a more robust decision making process. This is done by breaking down project aims into their most basic aspects and adopting the methods of simple quantitative risk analysis, the functionality of which is based on real data.

Written by an author immersed in project team collaboration to identify the interdependencies of design decisions throughout her professional life, this is the most practical guide available on the topic.

1 Whole life valuation

Why it is important

Looking at the big picture

In a nutshell, buildings exist to allow, among others:

• Businesses to operate in a productive environment;
• Retailers to facilitate sales;
• Governments (local and central) to promote civil necessities;
• Educational establishments to provide an effective learning environment;
• Healthcare facilities to provide a healing environment;
• Residences to provide shelter and safe havens for occupants.

There are a number of real-world business objectives that are met through effective building design. These are not traditionally associated with decisions taken during building and building services procurement; however, there are strong correlations to indicate that they should be taken into account.

Profitability/sales prosperity

Profitability is undeniably the most important business objective. Profitability is the essence of a sustainable business model and, as such, is considered sacrosanct; and rightly so. The focus should be controlling costs in both production and operations while maintaining the profit margin on products or services traded.

In the retail sector, everything is measured by sales, which in turn are affected by a number of aspects such as brand loyalty, footfall, etc.

Productivity

Pivotal to profitability is productivity. Good business sense means providing all of the resources that employees need to remain as productive as possible. This includes training, equipment and, of course, buildings.

For governmental or not for profit organisations productivity is principal to achieving public spending key performance indicators (KPIs). Top of the list here are educational establishments where pupil/student/researcher productivity is very publicly visible through test/exam/research results.

Employee retention

It costs an average of £30k¹ to replace an employee in lost productivity and the costs associated with recruiting, which include employment advertising and paying placement agencies. Twelve percent² of exit interviews state stress or illness (other than sickness) as the reason for leaving. Maintaining a productive and positive employee environment improves retention.

Customer service/customer experience

Good customer service helps retain clients, generating repeat revenue. Studies³ show that reduced staff turnover and happier employees, particularly those that are client-facing, lead to statistically significant higher levels of customer service.

For retailers, customer loyalty is paramount, and an enhanced customer experience is crucial to attracting and retaining customers.

Growth

Growth is directly affected by how company resources such as cash, equipment and personnel are managed.

Financing

Even an organisation with good cash flow needs financing contacts in the event that capital is needed for long-term projects.

Marketing and brand awareness

Marketing is about advertising; getting customer input; understanding consumer buying trends; being able to anticipate future needs and developing business partnerships that help an organisation to improve its market share.

Efficiency, sustainability, carbon savings and energy are all strong market trends that are here to stay.

Competitiveness

Any business decision that improves competitiveness in an international market, within sound financial constraints, is an incontrovertible advantage.

Agility and flexibility

Preparing for growth and creating processes that effectively deal with an ever-evolving and changing market is essential for any business.

Wellbeing

Feelings of wellbeing are fundamental to the overall health of an individual and they directly affect a multitude of other aspects, such as a person’s life span. The rate of recovery from illness is directly linked to wellbeing, which in turn may ultimately reduce the healthcare burden releasing government funds for other services or reduce insurance premiums for individuals and companies.

Prioritising the intangibles

A business case puts a proposed investment decision into a strategic context. It should provide the information necessary to make an informed decision about whether to proceed with the investment and in what form. It should also be the basis against which continued funding will be compared and evaluated.

The importance of the business case in the decision-making process continues throughout the entire life cycle of an investment: from the initial decision to proceed to the decisions made to continue, modify or terminate the investment. The business case should be used to review and revalidate the investment at appropriate stages and whenever there is a significant change to the context, project or business function. As such, it is common that businesses cases are revisited and considered anew if the context changes materially during the course of the project.

In the building industry the context of a project is rarely put in terms of real benefit terms; rather, buildings are considered as single assets with a fixed monetary value which is not affected by their occupants.

This book is about informing the brief of a project and helping to include this “occupant” context within business cases made for building investment/maintenance. By using familiar tools, we will look at how to account for the benefits of multi-attribute whole life value (MWLV) that are undeniably significant but often not considered. These include:

• Reduced cost in the medium and long term;
• Reduced risk;
• Planned and budgeted maintenance control;
• Informed and standardised decision making;
• Continued compliance with regulations on procurement from the national and international legislative bodies and with best practice;
• Constructing a building that improves the occupier’s business performance by designing from an asset performance requirement;
• Improved accuracy of asset service life projections;
• Aligning component selection with planned maintenance and renewal and supply chain engagement;
• Following through on whole life costing findings for overall project costs.

For suppliers, manufacturers and service providers MWLV allows them to:

• Demonstrate value for money in terms of the client’s own criteria;
• Retain building value (beyond the effect of market forces);
• Support economic, social and natural resource sustainability goals.

MWLV provides a useful backbone against which...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication Page
• Table of Contents
• Acknowledgements
• Introduction
• 1 Whole life valuation: why it is important
• 2 Project decision making: the standard processes
• 3 Efficient design: options under consideration
• 4 Efficient design: consequential savings and costs
• 5 Whole life value: the incorporated approach
• Index