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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Life Cycle Cost

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“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...

OR

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

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(Hawken et al. 1999)

Integrated Design

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Cumulative Savings

Diminishing Returns

Cost effectiveness limit

Tunneling through the cost barrier...

Lovins’ Discontinuity Effect

(Hawken et al. 1999)

Integrated Design

Cost effectiveness limit

Integrated Design

Cost effectiveness limit

Why does this principle work?

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

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

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?

apearce@vt.eduhttp://www.sustainablefacilities.com

(540) 818-7732