icecap full paper v110111 final

8/4/2019 Icecap Full Paper v110111 Final

http://slidepdf.com/reader/full/icecap-full-paper-v110111-final 1/22

Gareth Bennell & Andrew Brunt of 22Blue Sky Environmental

ICECAP:1

An enhanced whole life cost tool to minimise financial2

expenditure, energy consumption and carbon emissions3

arising from construction projects4

5

Gareth Bennell and Andrew Brunt6

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Contact Details15

Blue Sky Environmental16

Building 100017

Kings Reach18

Yew Street19

Stockport, SK4 2HG20

Tel: 0161 475 022021

Fax: 0161 477 174822

Email: [email protected]




ICECAP – An enhanced whole life cost tool to minimise financial expenditure,1

energy consumption and carbon emissions arising from construction projects2

Abstract:3

In the construction industry increasing importance is placed on the life cycle costs of4

building projects. Rising energy costs and increasingly significant carbon taxation mean5

that owners, occupiers and managers of estates are becoming more discerning of post-6

construction costs.7

In response to this, blue sky environmental have developed a dynamic software tool that8

integrates the quantification of carbon, energy and financial costs throughout the life9

cycle of a building material, from initial capital costs and embodied carbon, through to10

maintenance and eventual disposal, incorporating external elements such as geographic11

location, changing energy and carbon prices, and climate change.12

This paper presents the outputs of research, conducted by blue sky design services ltd13

in collaboration with the University of Leeds, to design, build and implement a14

revolutionary whole life costing tool that minimises the resource impacts and lifetime15

costs associated with construction material procurement.16

Key Words:17

Whole life costing; Sustainable Procurement; Construction.18

19

Disclaimer20

All numbers used are actual outputs from the ICECAP model, however some information21

has been concealed due to commercial sensitivity and confidentiality considerations.22




Introduction1

The UK Government has placed sustainable development at the heart of the national2

agenda (HM Government, 2007). The built environment is responsible for almost 50% of3

annual UK CO2e emissions (HM Government, 2007) and 40% of global energy use and4

solid waste generation (Climate Action, 2008). The impact of the built environment5

provides a great challenge to reaching nationwide and global emissions reduction6

targets, compounded by the long life of buildings which delays improvement. Decisions7

made in building design now will determine environmental impacts over several8

decades, so it is essential that these decisions are made with consideration for their9

future impacts.10

Driven primarily by considerations of cost (and, to some degree, by sustainability)11

procurement decisions are increasingly based on whole life costing approach,12

incorporating some or all of the following factors: maintenance, repairs, energy, carbon,13

decommissioning and replacement costs. Life Cycle Costing is also increasingly used in14

sustainability assessment methodologies within the construction sector. The Office of15

Government commerce, for example, states that “value for money is the optimum16

combination of whole-life cost and quality to meet the user‟s requirements” (Office of17

Government Commerce, 2007, p4).18

The Building Research Establishment‟s Environmental Assessment Methodology19

(BREEAM) also recognises the importance of life cycle costing, and assigns two credits20

to the use and implementation of life cycle costing in healthcare and education buildings,21

for example. By incorporating maintenance, operation, and decommissioning costs into22

building design, Clift and Bourke (1999) maintain that emissions, waste and energy use23

can be reduced and there are many parties (including local authorities, national24




government, housing associations, house builders, contractors, consultants and1

academics) that promote the greater use of whole life costing within the construction2

industry (Park, 2009; Foley et al, 2002).3

However, the sheer number of variables affecting whole life costs within buildings can4

make comparison of alternatives a daunting process, deterring systematic consideration5

of relevant factors. Using a coherent and systematic approach to modelling these6

aspects can help incorporate of life cycle financial and environmental factors much more7

effective and achievable. blue sky design services ltd, in collaboration with the8

University of Leeds, have designed an innovative whole life costing tool that aims to9

minimise resource impacts associated with construction procurement, and provides a10

valuable and flexible tool for decision makers to evaluate these factors. The Integrated11

Cost, Energy and Carbon Assessment Programme (ICECAP) is a ground-breaking12

modelling and visualisation tool that allows accurate comparison of alternative13

construction materials on the basis of cost, energy and carbon impacts over the whole14

life cycle of any building project, from material production through to end of life building15

decommissioning.16

ICECAP is unique in both its flexibility and comprehensive approach. Appropriate for17

both new build and refurbishment projects in any sector, the model takes as its starting18

point an international standard financial life cycle approach and carbon and energy19

calculator, and incorporates a range of innovative elements, including climate change20

model, energy price forecasting, embodied carbon, transport impact, location and carbon21

cost forecasts, providing a detailed breakdown of costs specific to the building project22

specification.23




The model provides detailed numerical and graphical outputs, which show how these1

high-level costs breakdown across the life cycle of the project, and when key financial2

outgoings arise, providing valuable assistance for building/facilities management3

providers to manage cash flows.4

Underpinning the model structure is a library of energy, carbon and financial metrics for5

different materials. To further develop the model and ensure the quality and applicability6

of the outputs to as-built construction projects, we are keen to collaborate with7

practitioners who can provide real-world project data that further tests the model and8

provides additional practical insights.9

By using this tool to compare the whole life cost of products, design-stage material10

procurement can move beyond a simple comparison of initial capital costs to a longer-11

term view, accounting for future maintenance expenditure, decommissioning and12

replacement costs, energy requirements and carbon implications over a user-defined13

study years (often taken as 25 and, increasingly, 60 years).14

In addition, while ICECAP is conceived initially as a construction sector tool, it‟s inherent15

flexibility means that a range of other applications are also sqaurely within its sights.16

These include comparing alternative consumer and/or industry products, quantifying the17

financial/environmental benefits of new products coming to market which reduce18

maintenance or running costs, extend life expectancy, or reduce energy and carbon19

emissions but which may have higher initial capital costs or other barriers to20

commercialisation.21

This paper outlines the ICECAP model and its capabilities, presents an example of its22

use in industry and discusses further possible practical applications not only in the23

construction industry, but also in product development, and procurement more generally. 24




Method – Building ICECAP: a Sustainable Whole Life Cost Model1

The development of ICECAP has been based on standard methodologies for life cycle2

costing and carbon accounting. The “British Standard ISO 15868-5: 2008 Buildings and3

constructed assets – Service life planning – Part 5: Life cycle costing”, together with the4

supplement: “Standardized method of life cycle costing for construction procurement”,5

provide a standard methodology for life cycle costing in the construction industry (British6

Standards Institute, 2008a; 2008b). These detail which costs need to be included and7

how to calculate final figures for a life cycle cost assessment. ICECAP fully fulfils8

BREEAM requirements, which state that a life cycle costing assessment must be9

completed following this standardised methodology.10

BREEAM (2008) states that life cycle costing must be completed for two of the following:11

structure, envelope, services and finishes and must include both a strategic level and a12

system level analysis, referring to BS ISO 15868-5 standards on life cycle costing for13

further clarification (see figure 1). As clarified in the diagram, strategic analysis includes14

issues such as “location and external environment, maintainability and internal15

environment” while system level analysis should include aspects such as “cladding,16

roofing, windows and doors; and wall, floor and ceiling finishes”. Currently the model17

library offers cost comparisons for finishes (wall, floor and ceiling finishes) and for18

envelope (cladding, roofing, windows and doors) and includes both a strategic and19

system level analysis for these (see figure 1, highlighted).20




Figure 1: Diagram from BS ISO 15868-5:2008 standard, explaining the different levels1

of analysis at different stages of the life cycle. Items currently covered by ICECAP are2

highlighted in blue.3

(Source: BS ISO 15868-5:2008, p.11)4

Product Description5

The ICECAP model compares alternative construction materials to identify their relative6

financial, energy and carbon costs to identify the product with the lowest impact over the7

life of the building. Figure 2 outlines the elements that are included in the financial and8

environmental calculations for the model at each stage.9

10




Figure 2: Financial and environmental costs included in the ICECAP model.1

2

• Product Life Expectancy

• Dismantling & Demolition Costs

• Reuse Cost Savings

• Recycling Costs

• Landfill Costs

• Incineration Costs

• Energy Cost

• Carbon Taxes

• Maintenance Costs

• Repair Costs

• Installation Year

• Raw Material Cost• Labour Cost

• Fees and Taxes

• Installation Year

• Embodied Carbon

• Freight Emissions

Initial Capital Expenditure

In Use

• Energy Consumption

• Fuel-based Emissions

• Repair and MaintenanceEmissions

• Carbon Sequestering

End of Life

• Raw Material Cost

• Labour Cost

• Fees and Taxes

• Embodied Carbon

• Freight Emissions

Renewal

• Product Life Expectancy

• Dismantling & DemolitionEmissions

• Emission Savings from Reuse& Recycling

• Landfill Emissions

• Incineration Emissions

Key

Financial Costs

Environmental Costs

Key

Financial Costs

Environmental Costs




The model uses several input types to provide a detailed analysis of each material under1

consideration, all of which can be adjusted to suit the project:2

Project-specific inputs (such as size, quantity of material, location, installation3

year, fuel type, discount rate, installation year, current energy costs and building4

temperature requirements);5

dynamic forecasting assumptions and external factors such as fees and6

interest rates and future rates of change in energy costs, carbon-related costs7

and taxes, and climate change-related warming/cooling;8

material-specific inputs such as initial capital cost, maintenance and repairs,9

replacement costs, replacement periods, recycling and decommissioning, and u-10

values1;11

carbon factors for different energy types, (source: Department for Environment,12

Food and Rural Affairs (DEFRA)).13

Accurate data in the material library is critical to producing the correct results of such a14

model. Life cycle costing is a quantitative process and as such the “garbage in, garbage15

out” principle applies. This principle specifies that the quality and value of the numerical16

results obtained from the model will be directly related to the precision and accuracy of17

the input data (Churcher, 2008).18

Two types of data are required: data about the cost of individual activities and19

components that make up a project; and data about the timing of future events, which for20

building materials includes life expectancies and maintenance frequency. As21

1For envelope materials, the model calculates the energy that passes through the fabric area based on u-

values and local temperatures and this is costed using forecast energy prices. While this will not predict theenergy consumption of the building (other software is specifically designed to model building energyconsumption), but instead the model allows different materials to be compared.




recommended by BS ISO 15686-5 standard, the ICECAP model uses the following1

sources, in order of preference by reliability and relevance:2

In house data on current costs (eg, for maintenance);3

In house data from previous projects (adjusted to current costs);4

Industry average or benchmark figures (such as Langdon, 2010; Hutchins, 2010);5

National and UK Government figures (such as Office for National Statistics);6

Practitioner cost estimates;7

Supplier cost estimates.8

The model is designed so that library data can be kept updated and that project specific9

data from a client can be entered quickly and easily.10

11




Example Outputs1

The model is designed to produce a comparative analysis of each material, allowing2

maximum flexibility while requiring the minimum amount of user data entry. This includes3

discounted and non-discounted financial costs, energy expenditure and carbon4

emissions over both a 25- and a 60-year study period, giving a 10% confidence level for5

all estimates. The 10% confidence interval is used to show that these are estimates only,6

since it is not possible to predict what will happen to future costs and exactly when7

replacement and repair will be necessary. An example of a 25-year carbon life cycle8

output is shown in figure 3, clearly shows the lowest cost option (alternative 2) and that9

the variance of the base case and alternative 4 overlap, indicating that they do not have10

significantly different life cycle costs.11

The model aims to present the information in a format suitable for a high level decision12

maker. If sustainable procurement decisions are to be implemented throughout the13

construction industry, the comparative costs, benefits and savings associated with14

Figure 3: Model output. Whole life carbon cost over 25-year study period for six alternative

materials. „Alternative 2‟ can be easily identified as the lowest carbon option.

0.00.51.01.52.02.5

Base Case

Alternative 1

Alternative 2

Alternative 3

Alternative 4

Alternative 5

Carbon Emissions (tCO2e)

Decreasing Whole Life Carbon Emissions

10% variance Lowest

Carbon Option




different courses of recommended actions and investment options must be quantifiable.1

The analysis provided by ICECAP ensures that the language and metrics of2

sustainability match that of the end client decision makers; often finance directors or3

senior executives. 4

In addition to these high level outputs, the detail is provided so that the reasons for the5

overall figures can be examined. The model provides detailed outputs, both numerically6

and graphically, that show how these high-level costs break down across the life cycle7

and when key financial payments may be needed, which can help facilities management8

providers manage cash flow and/or financial risk. Figure 4 shows the carbon emissions9

of a product across a 25-year study period, with installation delayed by one year,10

increasing cost of heat loss through the fabric and a regular repairs/maintenance regime. 11

£-

£1,000

£2,000

£3,000

£4,000

£5,000

£6,000

£7,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Year

Initial Capital One-off Repairs/Maintenance End of Life Replacement

Decommissioning Interest FeesAnnual Maintenance Cooling HeatingCarbon Recycling

Figure 4 Model output. Financial breakdown for a material over a 25-year study period.




The outputs also include a high level breakdown comparison of each material by cost1

type for both financial and carbon costs to help identify key cost areas, as well as2

cumulative NPV which provide useful insights into when one option becomes more cost3

effective than another.4

Figure 5 shows the 25 year life cycle costs for six alternative materials, with each5

material separated by life cycle stage. Net Present Value (NPV) figures, where life cycle6

costs are discounted to account for inflation and technological improvement, are also7

provided for the model, with discount rates flexible dependent on the requirements of the8

client. It becomes evident when the data are displayed in this format how the majority of9

the life cycle costs are spent, and reasons can be inferred as to why some materials10

have greater life cycle costs than other. For example, in figure 5, it is clear that for some11

materials it is the initial capital cost that takes up a large proportion of the overall costs.12

Alternative 1, for example, has the lowest life cycle cost as it does not need to be13

replaced, even though it has the highest level of maintenance and repairs required of14

any material choice.15

16

-£100,000 £0 £100,000 £200,000 £300,000 £400,000

Figure 5: Model output. 25-year Life Cycle Costs for six alternative materials, split by cost type.

Residual Initial Capital Repairs/Maintenance

Decommissioning

Interest

Cooling

Fees

Heating

Carbon

Increasing Financial Costs (£)Cost Benefits (£)

Replacement

Base Case

Alternative 1

Alternative 2

Alternative 3

Alternative 4

Alternative 5




Residual values are also displayed (in light green). These figures are for separated for1

information purposes, and show the theoretical value remaining in the product at the end2

of the study period.3

Figure 6 shows a similar output for the carbon cycle for six materials. This splits the4

carbon costs over the life cycle of the products into embodied carbon, replacement,5

freight, decommissioning, cooling, heating, annual maintenance, sequestration (which6

shows as negative), recycling and residual carbon. Figure 6 shows the high carbon cost7

of decommissioning for the base case (bc), the high embodied carbon and annual8

maintenance for alternative 1 (a1); that alternatives 2 and 3 (a2 & a3) offset the majority9

of their embodied carbon (and replacement carbon) through effective recycling and10

carbon sequestration through the life cycle of the product. Freight emissions for11

alternatives 3 and 4 are high relative to others, so it may be possible that these would12

fare better if alternative means of tranpsort to site could be found.13

14

15

16

17

18

19

20

21

22

BC

A1

A2

A3

A4

A5

-50 0 50 100 150 200

Figure 6: Model output. 60-year Life Cycle Carbon Cost (in tonnes CO2e) for six alternative

materials, split by type of cost.

Embodied Carbon Replacement Freight Decommissioning

Annual Maintenance

/ Sequestration

Cooling HeatingRecyclingResidual

Increasing Carbon Emissions (tCO2e)Carbon Benefits (tCO2e)




Cumulative NPV1

ICECAP also provides outputs that show cumulative NPV. Calculating cumulative NPV2

allows users to determine which materials are of best value over different time periods.3

In construction materials, this is impacted by the product life span and renewal costs4

(see figure 7). Materials that appear initially to be a cheaper option may quickly be more5

expensive over the life cycle if they have lower life expectancies and require greater6

amounts of maintenance. The cumulative NPV chart can show exactly when these7

additional life cycle costs will have an impact, and so this can be accounted for by those8

organisations that will be responsible for the ongoing building facilities management.9

10

11

12

13

14

15

16

17

18

19

20

21

This model output can be therefore helpful in several ways. It allows model users to22

identify the time-period over which one alternative becomes better value than another. It23

can also be used to estimate the relative impacts of regular costs compared to one-off24

£0.0

£0.5

£1.0

£1.5

£2.0

£2.5

£3.0

£3.5

£4.0

£4.5

£5.0

0 5 10 15 20 25 30 35 40 45 50 55 60

N P V ( M i l l i o n s )

Year

Figure 7: Cumulative NPV of different construction materials over a 60-year study period.




costs. Annual costs will show a cumulative effect in the slope of the curves, whereas1

one-off costs will display as step-changes in the cost. Their relative impact can be2

assessed quickly and easily. In high value products, one-off costs, because of their3

magnitude, have a far larger impact on the outcome than annual costs (such as4

maintenance). For these high value products it would make sense to engage in regular5

maintenance regimes that lengthen the life expectancy of the product.6

7

Sensitivity of Discount Rates8

Sensitivity analyses were performed on the key assumptions made in this model, such9

as discount rate, material quantity, interest rate, region, etc.10

Sensitivity analysis found that an alteration in the discount rate used had a large impact11

on the ranking of material options over a 25-year and 60-year period (see figure 8).12

Changes in the discount rate have a greater impact on costs that are further into the13

future, and have no impact at all on any costs in year zero (the year in which the analysis14

is taking place). This means that the higher the discount rate, the greater the proportion15

of 60-year NPV is taken up by initial capital costs and the less impact that maintenance,16

replacement and disposal costs (as well as any residual benefits) will have on the final17

NPV value.18

Materials that have a relatively low initial capital cost, but require frequent replacement19

due to a short life expectancy, or higher maintenance costs, will fare much better with a20

higher discount rate.21

22

23




1

2

3

4

5

6

7

8

9

Interestingly, this has wider ramifications since the Government discounts schemes at a10

different rate to the private sector. While Government schemes discount 3% for 60-year11

study periods (3.5% for 25-year study periods) (HM Treasury, 2003), the private sector12

discounts at a much greater rate: normally 6-7% (Churcher, 2008).13

What makes ICECAP innovative?14

There are models currently available that provide a whole life financial cost for a product,15

but these do not include energy and carbon emissions, are generally not designed to16

compare alternative construction materials, and the installation year cannot be altered.17

Similarly, while there are carbon calculators available, these do not include financial18

components and tend not to include embodied carbon which, as our model19

demonstrates, is a critical component of the overall whole life carbon cost.20

£0.00

£0.10

£0.20

£0.30

£0.40

£0.50

£0.60

£0.70

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

6 0 y e a r N P V

( M i l l i o n

s )

Discount Rate

Gov‟t Private

Figure 8: Sensitivity analysis of discount rate on 60 year NPV for building fabric element, showing

govrernmental and private discount rates

government private




The incorporation of dynamic elements, such as a separate energy and carbon cost1

model to take account of expected rises in these costs, as well as the capacity to model2

the impacts of climate change, is also unique to the ICECAP model, providing a more3

accurate cost forecast.4

The benefits of the model are best demonstrated by the results of its use for Chadderton5

Health & Wellbeing Centre. When considering floor finishes, six alternatives were6

compared, from rubber to eco-friendly carpet tiles. Chadderton Health & Wellbeing7

Centre has almost 12,000 square metres of floor area, making a whole life cost8

approach to selecting a floor finish material especially beneficial. The model indicated9

that a vinyl floor finish would save the NHS approximately £2 million over the 60-year life10

expectancy of the building compared to carpet tiles (see figure 9), and save over 3,30011

tonnes of carbon in comparison to a polished concrete floor. Figure 10 shows a photo of12

the finished vinyl floor finish in place.13

14

15

16

17

18

19

20

21

22

£0

£500,000

£1,000,000

£1,500,000

£2,000,000

£2,500,000

£3,000,000

£3,500,000

0 5 10 15 20 25 30 35 40 45 50 55 60Year

Figure 9: Model output. Cumulative Net Present Value is used to identify lowest whole life costs.

C u m u l a t i v e N P V

Vinyl

Carpet




Further development1

This is a tool that can help to accurately predict and therefore reduce energy, enabling2

users to easily compare products from different manufacturers, while allowing new3

products to be tested against industry standard practice. Procurement professionals can4

use the model to drive decision-making, so that carbon emission reductions can be5

made while minimising impact on long-term financial costs.6

However, it is not only procurement professionals that can benefit from the model; It may7

also provide insight into producers and suppliers, especially those that are attempting to8

sell a product with a higher initial capital cost but with substantial benefits over the life9

cycle (whether that be financially or environmentally). By comparing their products to10

competitor products the model can produce outputs such as those shown in figures 411

and 5, which can help identify those life cycle aspects with the greatest impact.12

We are now looking to develop and enhance this model, extend the library of materials13

for which we have data and start applying the model on further developments. We would14

be especially interested in working with potential partners to progress this in a mutually15

beneficial manner.16

17




Figure 10: Installed vinyl floor at Chadderton Health & Wellbeing Centre, providing an1

estimated saving of £2m compared to carpet over the building‟s 60-year life.2

3

4




References1

BREEAM (2008) „BRE environmental and sustainability standard ’, BES 5063: Issue 1.0,2

IHS BRE Press, Watford3

British Standards Institute (2008a) BS ISO 15686-5:2008 Buildings and constructed 4

assets – Service life planning – Part 5: Life cycle costing. London: BSI.5

British Standards Institute (2008b) Standardized method of life cycle costing for 6

construction procurement. A supplement to BS ISO 15686-5 Buildings and 7

constructed assets – Service life planning – Part 5: Life cycle costing. London8

BSI.9

Clift, M and Bourke, K (1999) „Study on whole life cos ting’, IHS BRE Press, Watford10

Climate Action (2008) „Construction industry at a glance‟, Sustainable Development11

International,12

http://www.climatechangeactionprogramme.org/industryfocus/construction 13

Foley, N., Bishop, P., Bennett, P., Harrison, J., Horner, R.M.W., Mceleney, M., Mordecai,14

K., Neville, K., Reader, P., Smith, D., Sutcliffe, D., Waterman, A., Wornell, P.,15

Brook, N., Harriss, K., Tablin, K., Turrell, P. and Wainwright, C. (2002)16

„Rethinking construction: 20 steps to encourage the use of whole life costing‟,17

Constructing Excellence ,18

http://www.constructingexcellence.org.uk/sectors/housingforum 19

HM Government (2007) „Securing the future: Delivering UK sustainable development 20

strategy’, The Stationery Office, London21

Office of Government Commerce (2007) „Whole-life costing and cost management: 22

achieving excellence in construction procurement guide ’ , Office of23

Government Commerce, London24

Park, S.H. (2009) „Whole life performance assessment: Critical success factors‟, Journal 25

of Construction Engineering and Management , vol 135, pp1146-116126

Churcher, D. (2008) „Whole life costing analysis: A BSRIA Guide’ , BSRIA, Bracknell27

Langdon, D. (2010) „Spon’s architects’ and builders’ price book’ , Taylor & Francis,28

Oxford29

http://www.climatechangeactionprogramme.org/industryfocus/construction


http://www.constructingexcellence.org.uk/sectors/housingforum







Hutchins, (2010) ‘UK building blackbook: The capital cost and embodied CO2 guide’ ,1

Franklin and Andrews, London2

icecap full paper v110111 final

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