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Sustainable Capital Projects:Sustainable Capital Projects:Leapfrogging the First Cost BarrierLeapfrogging the First Cost Barrier
Dr. Annie R. PearceDr. Annie R. Pearce
Myers-Lawson School of ConstructionMyers-Lawson School of Construction
Virginia TechVirginia Tech
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Sam
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Life Cycle Cost
Fir
st C
ost
“Unarguable” regions...
The realist says...
The pessimist says…
The idealist says...
• Learning curve…• Economies of scale…• Resource scarcity…• Stricter legislation…
Expectations about Sustainable Projects
Traditionally considered quantifiable costs
Qualitative costs
Nontraditional quantifiable costs
First Cost
Life Cycle Cost
Revised Whole Project Cost Model
Leapfrogging the First Cost Barrier
What are the top strategies for leapfrogging the first cost barrier?
How are others using these strategies effectively?
Systems Thinking: Question the question...
• Homestead Fire Station, Homestead, FL
• Anticipated budget cut in half - yikes!
• What’s the question?
• Performance benefits:- Infrastructure cost avoidance- Reduced construction costs- Proximity
Systems Thinking: Question the question...
• Phrase your problem and evaluation criteria in terms of performance requirements
• Think outside the box; look at the big picture!
• Don’t be satisfied with “it can’t be done”
• Sometimes a crisis can result in better outcomes!
Law of Diminishing Returns
Conventional wisdom: – The more you throw
at a problem, the less bang for the buck you get
– There’s a point beyond which you are spending more than you will recover over your investment horizon
Diminishingreturns
Cost-effectiveness limit
STOP!
Cumulative energy savings
Cos
t of e
ffici
ency
impr
ovem
ent
(Hawken et al. 1999)
Integrated Design
0
Mar
gina
l Cos
t of
Impr
ovem
ents
Cumulative Savings
Diminishing Returns
Cost effectiveness limit
Tunneling through the cost barrier...
Lovins’ Discontinuity Effect
(Hawken et al. 1999)
Exploiting Lovins’ Law
Run the law in reverse to find cost discontinuities...
• Consider:– Construction costs and
constructability
– Equipment selection and labor requirements
– Fundamental nature of different types of materials and equipment
– Vendor practices
“Servicizing”/Leasing
• Puts product responsibility on manufacturer
• Encourages environmental responsibility, efficiency, and innovation
• Reduces liability and attention required from lessor
• Shifts cost to O&M
• Maintenance contracts
Multifunction Technologies
• Look for products that can play multiple roles:
– Increased efficiency
– Reduced material use
– Reduced packaging
– Reduced construction time
– Reduced maintenance
First Cost Premium = Myth?
There’s fruit, and then there’s fruit– “Greener” does not necessarily
mean “exotic, expensive, and unachievable”
– Sometimes fruit has already fallen into your basket
– Start with low hanging, ripe fruit first
Look for the “no-brainers”
• Lake Meredith National Rec. Area
• Wind-powered wind warning system:– Warns boaters when
winds exceed 18 MPH
– Flashing lights and siren
– Powered exclusively by the wind
Rapid payback/high SLOS strategies
Choose strategies with rapid payback and high Sustainability Likelihood of Success (SLOS):– Risk
– Reliability
– Value
– Difficulty
Sustainability Likelihood of Success
• Risk - how likely is it that implementing the intervention will have the desired effect?
• Reliability - how likely is it that the desired effect will continue over time independent of user behavior?
Sustainability Likelihood of Success
• Value - what are the chances that the intervention will achieve desired effects without additional negative effects? How much net positive impact per unit effort?
• Difficulty - given constraints & available resources, how implementable is the intervention? How much is required? What barriers stand in the way?
Thank you for your attention!
Got questions? Want to take it to the next level?
[email protected]://www.sustainablefacilities.com
(540) 818-7732