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World Green Roof Congress. Whole Life Costs. Brad Bamfield +44 (0) 7803 133110 [email protected] Presenter. Brad Bamfield +44 (0) 7803 133110 [email protected] Managing Director of The Solution Organisation Ltd

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World green roof congress

World Green RoofCongress

Whole Life Costs

  • Brad Bamfield

    • +44 (0) 7803 133110

    • [email protected]


Presenter

Presenter

  • Brad Bamfield

    • +44 (0) 7803 133110

    • [email protected]

  • Managing Director of The Solution Organisation Ltd

  • Chairman of the Whole Life Cost Forum


Save the world or make money

Save the world or make money

  • Developers are not interested in saving the world

  • But they are interested in making money

  • Are they mutually exclusive?

  • Not if you talk their language


Save the world or make money1

Save the world or make money

  • Together we can save the world

  • Together we can increase your investment yield (increase profit)

  • Oh and by the way the World benefits too

  • How to construct the message


Whole life costs sustainability

Whole Life Costs & Sustainability

  • The Solution Organisation definition;

    A systematic set of objectives and strategies to improve the financial performance of the organisation while at the same time

    reducing its impact on the environment and

    developing a positive social effect


3 elements of sustainability

3 Elements of Sustainability

Social

Economic

Environmental


3 elements of sustainability1

3 Elements of Sustainability

Area of sustainability

Social

Economic

Environmental

Area of sustainability


Activities in sustainability

Social

Economic

Environmental

Activities in Sustainability

Whole Life Cost

Aesthetics

Materials


Whole life costs

Whole Life Costs

  • Definition;

    “The systematic consideration of all relevant costs and revenues associated with the acquisition and ownership of an asset”.

    CRISP, the Construction Research and Innovation Strategy Panel


What is relevant

What is relevant?

  • Costs that can be reasonably and accurately predicted.

  • What about end of life costs?

    • Hard to predict +10 years

    • Not last cost of this project but first cost of next

    • Discount rate reduces impact of differences


Methodologies for whole life costs

Methodologies for Whole Life Costs

  • Net Present Value (NPV)

    • Discounted Cashflow (DCF)

  • Total Whole Life Cost (TWLC)

  • Annualised Whole Life Cost (AWLC)


Discount rate

Discount rate

  • DCF predicts the future value of money by discounting the annual cashflows

  • WACC weighted average cost of capital + risk.

  • WACC varies from organisation to organisation due to balance between shareholders funds and borrowings


Discount rate1

Discount rate

  • WACC + Risk

    • Sovereign

    • Bank

    • Corporate

    • Project

  • Who specifies Rate?

    • Client, contractor or supplier?


Capital and revenue costs

Capital and Revenue Costs

  • Focus on capital

  • Without appreciation of revenue costs how is best value achieved?

  • Capital and revenue different budgets different departments

  • How can I spend more capital to save you energy costs over 25 years?

  • Combine capital & revenue budgets


Service life

Service life

  • Definition of functionality and condition limits states – or ‘triggers for intervention’ - for use in the prediction of whole life costs

    P B Bamforth, M Clift, M Gregory, D Patel

    DTI Contract no Cl 39/3/370 cc2330

  • Available from TSO web site 21st Sept


Service life1

Table3

Currently used sources of information and their perceived reli

ability

Information sources

Use

Reliability

Product suppliers

81

49

Previous projects

80

71

In

-

house expertise

79

68

Codes and standards

75

67

Personal experience

69

64

Consultants

67

56

Research Institutes

61

68

Professional Institutions

52

63

Trade Associations

50

42

Commercial databases

40

47

Universities

28

50

Service life


Service life2

100

80

60

Perceived reliability

Suppliers

Trade Ass.

40

20

0

0

20

40

60

80

100

Use

Figure

4

The relationship between the use of information and its perceived reliability

Service life

Past projects

In house


Importance of the supply chain

Importance of the Supply Chain

  • Who can tell us most about a product?

    • Product databases

    • Users / maintenance managers

    • Previous projects

    • Consultants

    • Personal experience

  • The supplier & manufacturer


Procurement

Procurement

  • Specification

  • Performance

  • Don’t tell me what you want –

  • tell me what you want to do

.


Whole life costs benefits

Whole Life Costs Benefits

  • WLC analysis is a decision making tool

  • It is not an arbitrary figure but a comparator, it changes with time

  • Compares :-

    Capital Only to Capital + Cost in Use

  • Products or systems against each other

  • Demonstrates value over a period of time


Whole life costs benefits1

Whole Life Costs Benefits

  • Bridgewater Somerset

  • http://livingroofs.org/livingpages/

    wholelifecosts.html

  • WLC financial only

  • WLC + non financial

  • Drainage gains were excluded


Whole life costs example

Whole Life Costs Example


Whole life costs example1

Whole Life Costs Example


Whole life costs example2

Whole Life Costs Example


Whole life costs example3

Whole Life Costs Example


Whole life costs example4

Whole Life Costs Example

Combining Financial & Non-financial

We used the WLCF online WLC tool for the financial analysis and The Solution Organisation’s standard qualitative multi-criteria method for the non-financial which includes environmental, performance and social impacts of the options.


Whole life costs example5

Whole Life Costs Example

  • Better value from NPV, TWLC and AWLC

  • So on these results what did the client say?

  • Of course he approved the living roof and opted to investigate 4 more

  • And oh yes we will have we helped the world a little bit as well


In conclusion

In Conclusion

  • Relationship between Whole Life Costs and Sustainability

  • The meaning of Whole Life Cost

  • The methodologies of Whole Life Cost

  • Capital costs & revenue costs

  • Service life – who do you believe

  • The role of the supply chain

  • Procurement performance v specification

  • Whole Life Costs example – benefits & profits


Thank you

Thank you

Brad Bamfield

+44 (0) 7803 133110

[email protected]

WLCF on line Tool

www.wlcf.org


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