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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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Same
Sam
e
<
>
>
<
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
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Traditionally considered quantifiable costs
Qualitative costs
Nontraditional quantifiable costs
First Cost
Life Cycle Cost
Revised Whole Project Cost Model
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Leapfrogging the First Cost Barrier
What are the top strategies for leapfrogging the first cost barrier?
How are others using these strategies effectively?
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Systems Thinking:Question the question...
OR
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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
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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!
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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)
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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)
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Integrated Design
Cost effectiveness limit
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Integrated Design
Cost effectiveness limit
Why does this principle work?
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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
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“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
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Multifunction Technologies
• Look for products that can play multiple roles:
– Increased efficiency
– Reduced material use
– Reduced packaging
– Reduced construction time
– Reduced maintenance
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Technology Equivalence
?=
++
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Technology Equivalence
?=
++ +
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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
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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
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Rapid payback/high SLOS strategies
Choose strategies with rapid payback and high Sustainability Likelihood of Success (SLOS):– Risk
– Reliability
– Value
– Difficulty
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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?
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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?
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Thank you for your attention!
Got questions? Want to take it to the next level?
[email protected]://www.sustainablefacilities.com
(540) 818-7732