How much does it really cost to

create a building?

Life time costs of buildings-

They still cost money after you

have built them

Why worry about lifetime costs?

• 100 Watts

• Lasts 6 months

• Costs 25p

• Five year power

approx 180 kWh

£15.00

• Five year cost = £2.50 + £15.00 = £17.50

• 10 Watts

• Lasts 5 years

• Costs £4.00

• Five year power

approx 18kWh

£1.50

• Five year cost = £4.00 + £1.50 = £5.50

But…

How much energy to make one of these?

What much cost to dispose of one? Who pays?

What does it cost to build a building?

• Site acquisition

• Legal and

statutory fees

• Design fees

• Materials

• Labour

• Administration

The capital costs of a new building

Construction Costs

Who is interested in the costs of building?

– If it is built for speculative sale, the initial owner, the developer, will only be interested in construction costs

– If it is built for lease or short term rent, the building owner will be interested in change and disposal costs as well, but not running costs

– If it is built for the owner’s personal use, she will be interested in all but the disposal costs as the building will probably outlive her.

– Someone will eventually have to bear the cost of demolition

What does it cost to run a building?

• Heating

• Lighting

• Cooling

• Power

– ENERGY

• Energy costs of

buildings are of

increasing public

and political

concern.

• Maintenance

• Redecoration

Running costs

• These will be of interest to a building owner-user or a tenant

• The Government is also legally interested in energy costs– Building regulations cover conservation of fuel and

power as a significant aspect of government policy

– Other regulations have been changed to allow building owners to feed power into the national grid, if their building generates a surplus of energy.

• An energy efficient building costs more to build than an inefficient one. Speculative builders will not be interested in such efficiency without legal pressure.

What does it cost to change a building?

• Why change a building?

– Change of use

– Change of technology

– Change of fashion

• Most buildings eventually

become redundant for

any or all of these

reasons

Costs of keeping a redundant building

• There is no economic case for keeping

a redundant building which cannot

covers its costs. This is why it is called

redundant

• Redundant buildings are kept for

– historical reasons (castles and keeps)

– Costs (it would be even more expensive to

get rid of them: Nuclear power stations)

– Irrational pride (the Millennium Dome)

What does it cost to keep a building?

• Security

• Repair

• Ground rent

• Weather protection

Millennium dome (now called the O2):

• Original cost: £800 million

• Monthly cost to mothball: £190,000

• Final “storage” cost on hand over in 2007: £33 million

• Redevelopment costs: £210 million

•Finally sold (2009) for £25 million to Cambridge

University.

What does it cost to get rid of a building?

• Demolition

• Waste disposal

• Site cleaning

• Site restoration

• Value of cleared site

Berkley Nuclear

Power Station: closed

for several years, but

no one can afford to

demolish it

Demolition costs

• Many buildings cost little to demolish. They are smashed up, carted off and buried, or even recycled.

• Some buildings are very expensive to demolish:– Asbestos

– PCBs

– Prestressed concrete

• Some buildings are prohibitively expensive to demolish– Nuclear reactors

• What about off-shore wind farms?

If buildings cost so much, why build them?

1. They satisfy needs and the costs are

worth paying (benefits outweigh costs)

2. Many buildings have an earning

potential which covers their costs

– Rent

– Accommodation for valuable activities

– Resale value

The ethical dilemma for the professional advisor

• When you are asked to advise on

building costs, what do you do?

– Just advise on capital costs?

– Consider running costs?

– Consider whole lifetime costs?

• Do you give advice based on the

immediate cost to your client, or the

long term costs to your society?

• Government interest in lowering “carbon

footprint” of new buildings is becoming

significant. How do you respond?