an introduction to whole life costs and sustainability
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An Introduction to Whole Life Costs and Sustainability. Content. Definition of WLC The 3 Elements of Sustainability Where Does WLC Fit In? Why Should Clients Care? Why Should You Care? What We Need To Do? Where WLCF Can Help?. Definition of WLC. - PowerPoint PPT PresentationTRANSCRIPT
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An Introduction toWhole Life Costs and
Sustainability
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Content
• Definition of WLC
• The 3 Elements of Sustainability
• Where Does WLC Fit In?
• Why Should Clients Care?
• Why Should You Care?
• What We Need To Do?
• Where WLCF Can Help?
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Definition of WLC
Whole Life Cost is the analysis of all relevant and identifiable
financial cashflows regarding the acquisition and use of an asset.
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3 Elements of Sustainability
Social
Economic
Environmental
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3 Elements of Sustainability
SocialEconomic
Environmental
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SocialEconomic
Environmental
3 Elements of Sustainability
Unattainable
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Activities in Sustainability
Whole Life Cost
Materials
Aesthetics
Social
Environmental
Economic
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Where Does WLC Fit In
• Next Step in Continuous Improvement
• First Step in Sustainability
• May Already be Doing It (Sort Of)
• Easily Understood
• Financial and Operational Gains
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Whole Life Cost Ratios Capital Cost Cost in Use Business Costs
1 : 5 : 200Source.: "The long term costs of owning and using buildings" –
published by The Royal Academy of Engineering (November 1998).
Capital Cost Cost in Use Cost to Business 1 : 5 : 200
-100k : +£500k : +£20m
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WLC – The Big Picture
BuildBuild
2 Years2 Years
DesignDesign
1 Year1 Year
£17%
£3%
OperateOperate
25 Years25 Years
Run / Maintain£ 40%
Repair£ 30%
PeriodicReplacement / Refurbish
£ 10%
TotalTotal
TotalTotal
DisposeDispose
1 Year1 Year
100%
Cost ofOwnership
£?%£
?%
Source Gardiner & Theobald
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WLC Rules of ThumbTypical Airport Terminal
Revenue80%
Capital20%
Typical Shopping Centre
Revenue55%
Capital45%
Typical Office Block
Capital40%
Revenue60%
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Revenue Cost Breakdown
• EnergyEnergy
• CleaningCleaning
• MaintenanceMaintenance
• Admin ServicesAdmin Services
• SecuritySecurity
• Admin and Management Admin and Management InsuranceInsurance
7%10%
20%
27%
31%
5%
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Why Should Clients Care?
• Compulsion– Climate Change Levy– Carbon Trading– PFI Conditions– Funding
• Concern for Environment
• Curiosity
• Competitive Advantage
• Profit
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Why Should You Care?
• Leading Role in Industry
• Understand New Concepts
• Concern for Environment
• Competitive Advantage
• Profit
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What We Need To Do
• Adopt Performance Specification
• Consider the Costs in Use for Asset Selection
• Take Small Steps - Progress Slowly
• Understand What You Have Achieved
• Benchmark
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Where WLCF Can Help
• The web based WLC Comparator Tool
• Common Data Structures• Common Calculation
Methodologies• Access to Database • Optioneering• Benchmarking• Credibility• Accreditation • Help - You Are Not Alone
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Some Useful Web Sites
• Whole Life Cost Forum– www.wlcf.org.uk
• Training• Definitions• Guidance• Access to the Online Tool