Use of life cycle costing in the u. S. Green building industry




НазваниеUse of life cycle costing in the u. S. Green building industry
страница1/9
Дата07.10.2012
Размер0.81 Mb.
ТипДокументы
  1   2   3   4   5   6   7   8   9






THESIS


USE OF LIFE CYCLE COSTING IN THE U.S. GREEN BUILDING INDUSTRY


Submitted by


David Nornes


Department of Construction Management


In partial fulfillment of the requirements

For the degree of Master of Science

Colorado State University

Fort Collins, Colorado

Fall 2005


COLORADO STATE UNIVERSITY


October 27, 2005


WE HEREBY RECOMMEND THAT THE THESIS PREPARED UNDER OUR SUPERVISION BY DAVID NORNES ENTITLED USE OF LIFE CYCLE COSTING IN THE U.S. GREEN BUILDING INDUSTRY BE ACCEPTED AS FULFILLING IN PART REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE.


Committee on Graduate work





Donald E. Johnson, Ph.D.




Bolivar A. Senior, Ph.D.




Adviser

Brian H. Dunbar, Ph.D.




Department Head

Larry Grosse, Ph.D.


ABSTRACT OF THESIS


USE OF LIFE CYCLE COSTING IN THE U.S. GREEN BUILDING INDUSTRY



This analysis examines the use of life cycle costing (LCC) within the United States green building sector. The major objectives were to determine the extent LCC is used on current projects, the principle goals of LCC, the limitations faced, and what improvements are necessary to promote more widespread use of LCC. Further objectives included determining which team member initiated the interest of conducting LCC, the types of projects and building components where LCC is applied, and if LCC is perceived as a tool to increase sustainable building practices. A sample of LEED (Leadership in Energy and Environmental Design) project contacts participated in a web based survey of 21 questions related to LCC use in construction projects. The findings indicate that although a strong interest and demand exist, the use of LCC in the building industry is lackluster. The prevailing goals of performing LCC are to lower operation and maintenance costs, extend useful life of the building, and increase occupant comfort/productivity. While the owner is most often the driver of the use of LCC, major limitations exist to a more widespread use. The most significant limitations revealed in this study were the lack of up-front capital in budgets to take advantage of long-term cost benefits, and the lack of additional time required to execute a formal study. LCC is most commonly applied toward mechanical systems, lighting, insulation, and windows. A vast majority of those surveyed claim LCC is an effective tool to increase sustainable practice, however more consistent methodologies and simpler software tools are needed. Many agreed that increased stakeholder education on the overall benefits of LCC would facilitate its use in common practice.


David Nornes

Department of Construction Management

Colorado State University

Fort Collins, CO. 80523

Fall 2005

Table of contents


Introduction and background 1

Management dilemma 6

Problem statement 7

Research questions 8

Methodology 9

Findings 11

Conclusions 21

Future research 24

References 26

Appendix A—Literature review 29

Appendix B—Survey questionnaire 50

Appendix C—Human subjects committee approval 55

Appendix D—Findings (raw data) 61


Use of Life cycle costing in the U.S. green building industry


Introduction


The construction industry is the largest manufacturing industry in the United States, employing 8 million workers and accounting for roughly 8% of the gross domestic product (U.S. Industry and Trade Outlook, 2000). Because the built environment has such an impact on the national economy, higher attention has been placed on resource efficiency and environmental impacts associated with construction and operation of structures. Hence, an emphasis toward a more sustainable approach to building design and life cycle performance continues to gain momentum. Sustainable building practice, otherwise known as green building, attempts to identify how the built environment impacts the natural world and subsequently offers a balance of sound performance with environmental integrity.

Although sustainable building is a fairly new term within the construction world, throughout history the built environment has addressed many of the related issues. Mainstream building development practices initiated in the last 60 years have only recently come under scrutiny. A number of factors can be identified that have contributed to exponential negative environmental impacts attributed to the construction industry. These factors relate to systems, materials and design. Although energy efficiency in buildings has improved vastly since the 1950’s, buildings generally used to be designed with better natural ventilation and day-lighting than they are today (Landman, 1999). Despite offering improvements in the structural elements of buildings, the increased use of concrete and steel have led to a massive increase in the embodied energy in the construction of the built environment (Steele, 1997). Also, while lower manufacturing energy is associated with traditional timber production, the average residential home size has more than doubled since 1950, leading to higher overall resource use (U.S. Bureau of Census, 1999). With larger homes come larger lot sizes and the environmental impacts related to urban sprawl, such as pollution from automobiles and open-space development. Sustainable building merges sound environmentally responsible practices into one discipline that looks at the environmental, economic, and social effects of a building as a whole (Sustainable Building Policy, 2002).

Definition of Terms

The ensuing list of relevant terms to the study is represented to clarify any ambiguities that might exist pertinent to the subjects of building economics and green building practice.


Commissioning: a systematic, documented and collaborative process that includes inspection, testing and training conducted to confirm that a building and its component systems are capable of being operated and maintained in conformance with the designed intent.


Day-lighting: providing building occupants with a connection between indoor spaces and the outdoors through the introduction of daylight and views into the regularly occupied areas of the building.


Discount Rate: the discount rate is selected to reflect the investor’s time value of money. The discount rate is used to convert future costs and revenues occurring at different times to equivalent costs at a common point in time.


Green Building: buildingg practices recognizing the interdependence of the natural and built environment and seek to minimize the use of energy, water, and other natural resources while providing a healthy and productive indoor environment


Leadership in Energy and Environmental Design (LEED): a voluntary, consensus based market-driven building rating system based on existing proven technology that evaluates environmental performance from a ‘whole building’ perspective over the building service life.


Life Cycle Assessment (LCA): the environmental burden of a product from the mining of the raw material used in production and distribution, through to its use, possible reuse or recycling, and its eventual disposal, primarily in terms of non-renewable energy and materials, pollution, and waste.


Life Cycle Cost analysis (LCC): valuation of the total cost of ownership of an item over its usable life, taking into account all of the costs of acquisition, operation, maintenance, modification and disposal, for the purpose of making decisions.


Performance Based Contracts: a construction method that allows a facility to complete capital saving improvements within an existing budget by financing them with money saved from future expenditures--financing project improvements through guaranteed future savings.


Sensitivity Analysis: a test of the outcome of an appraisal based on alternative values of one or more parameters about which there is uncertainty—a change in the study period or discount rate.


Sustainable Development: development that meets the needs of the present without compromising the ability of future generations to meet their own needs.


United States Green Building Council (USGBC): an independent coordinating body that has established consensus-based criteria to promote green building practice including the LEED guidelines for sustainable building practice.


Life Cycle Costing (LCC)

Life Cycle costing (LCC) is a fundamental process of the greater field in building economics called value engineering (Ruegg and Marshall, 1990). LCC is defined as an economic evaluation process that can assist in deciding between alternative building investments by comparing all of the significant differential costs of ownership over a given time period in equivalent dollars (Johnson, 1990).

The importance of life cycle costing (LCC) in building construction stems from the actual distribution of costs incurred over the life of a project. Buildings are typically long term investments of significant magnitude, and valuation models must account for all costs and benefits throughout the length of ownership. Initial capital cost of a typical office building accounts for only 2-10% of costs incurred over the life of the structure, while the remaining 90-98% of costs are realized in operation, maintenance, financing, and staffing (Sustainable Building Technical Manual, 1996).

LCC analysis is best suited for evaluating alternative construction applications where quality and long-term value are primary goals. Because city, state, and federal projects represent the public interest, the government sector has been most active in developing standards and initiating mandates for the use of LCC for procurement. Many public construction projects require LCC analysis for substantial infrastructure improvements (highways, bridges, and wastewater treatment facilities), aimed toward durability and longevity, as well as buildings, where energy and water efficiency are paramount (U.S. General Services Administration, 2002).

Since green building initiatives are predicated on the understanding that benefits accrue over the life of the project, LCC applied to development of sustainable design is appropriate when choosing to build green. The necessity of implementing LCC analysis early in the design phase and using multi-disciplinary teams parallels the green building philosophy of front loading or designing for end use/ least cost objectives.

The United States Green Building Council (USGBC)


The United States Green Building Council (USGBC) is an independent coordinating body that has established consensus-based criteria to promote green building practice and has produced rating systems for new commercial, major renovations, and high rise residential structures based on pre-determined specifications (LEED 2.1, 2002). Since inception in 1993, USGBC membership has steadily grown to over 5,500, representing various segments within the building community. Member groups include design firms, construction companies, product manufacturers, universities & research institutions, building owners and managers, utilities, fortune 500 companies, environmental groups, and many city, state and federal governmental agencies (USGBC, 2002). In 2000, the USGBC created the Leadership in Energy and Environmental Design (LEED) rating system emphasizing state of the art technologies that encourage environmental performance from a whole building perspective over the life of a structure. As of October 2005, 285 buildings have been LEED certified, and an additional 2,164 are currently in the registry and are either in the planning or actual construction phase (USGBC, 2005). LEED is set up as a feature oriented system where credits are earned toward an overall score in five general areas—sustainable site development, water savings, energy efficiency, materials selection, and indoor environmental quality.

Summary

Certain barriers to increased green building have been addressed relating to education/training in sustainable design and construction, availability of materials, code issues, safety/liability, and financial concerns. Within the financial barriers to increased green building practice, surveys reveal major concerns with the higher initial project costs and lack of owner education toward the cost benefits of sustainable construction over the life of the project. As a result, a gap between the level of interest and voluntary (versus mandated) adoption of sustainable building practice exists.

Actual costs of sustainable building practice are not always as high as perceived (Landman, 1999). In many cases, initial costs of implementing green design can be lower than traditional practice, such as incorporating natural cooling through shading and ventilation in place of an air conditioning system, or eliminating the need for an irrigation system by planting native landscape (Lee et al, 2000). Additionally, an integrated design team using a whole-systems perspective may specify a combination of increased insulation, efficient lighting, and higher grade windows to allow downsizing the HVAC system, hence offsetting any additional capital costs associated with the upgrades (Schendler and Lane, 1990).

Many recent developments within LCC models have integrated LCA, attempting to look beyond the owners’ scope and examine the societal benefits of green building such as less pollution, less natural resource use, lower greenhouse gas emissions, and less urban sprawl. As evidenced in the growing membership in the USGBC, and higher public awareness of the environmental impacts of the construction industry, there is an increasing number of those willing to take the extra initiative to continue the revolution of green building.

More benefits of green building occur over the life of the project and beyond, and must be emphasized early in the design process for maximum overall gain. Use of LCC analysis applied toward green alternatives will expand the education of economic benefits to sustainable building, helping to promote interest in green building.


Management Dilemma


In researching sustainable building practices, inquiry has supported that while green building is increasing in popularity, it is not a standard practice in the construction industry. A number of apparent barriers preventing widespread adoption of green building including legislative/code issues, lack of education and/or training of materials and methods, lack of awareness of building owners to sustainable practice, additional capital costs to build green, and failure to calculate and account for long-term cost benefits associated with sustainable procurement.

A number of green building professional articles and studies emphasize the importance of life cycle cost analysis to explain the cost benefits of building green. However, there is little evidence whether LCC is actually being performed, and to what degree the studies undertaken are influencing project stakeholders. Additionally, there are a variety of LCC software alternatives, but little documentation is readily available regarding the use of the tools or their reliability. This study aimed to determine if LCC is used to promote green building practice, to what extent, and if LCC would likely aid in the promotion of more widespread sustainable building practice.


Problem Statement

The building industry in the U.S. is facing many challenges from both government and society relating to environmental accountability in procurement of new construction and building renovations. Although sustainable building practices are increasing throughout various construction sectors, the level of green building is still in the minority compared to traditional practice. Many green building alternatives add up-front capital costs yet become economically superior over the life of the project.

Increased use of life cycle costing (LCC) in design and development of projects should lead to increased sustainable practice. A number of professionals in the building sector have emphasized the importance of LCC to substantiate the long term economic benefits of environmentally sound building alternatives, however little evidence exists confirming that LCC is being used to the full capability suggested.

Research Questions

It is understood that green building practices are, at least in part, predicated on the fact that benefits accrue over the life of the building. Because the public sector is expected to cater to and protect the best interests of society, many federal and state initiatives require LCC to certain building features. However, the private sector has traditionally focused more on minimizing initial capital costs and appears to be less apt to implement LCC to projects.

LCC models are well developed in their application toward energy efficiency calculations because cost data is available and savings can be quantified. However, in the typical office building, as much as 90% of the costs incurred over the life of the building are directly related to the occupants in the form of salaries and benefits. This fact illustrates the importance of designing and building for occupant comfort and health.

It has been established that detailed LCC studies require time to perform and sufficient input data. Furthermore, LCC studies have a tendency to result in variable output depending on differing parameters chosen. These characteristics lead to the conclusion that an experienced LCC practitioner, familiar with standardized methods, is necessary to calculate accurate cost-benefits among competing alternatives. The importance of comparing anticipated benefits to actual realized savings cannot be underestimated.

The overriding question to be answered by the research study was: Is life cycle cost analysis being used as a tool to increase sustainable building practice in constructing LEED projects? The study was aimed at exploring the use of LCC in the United States green building sector, making an assessment of the current level of successful LCC implementation, and exposing the difficulties encountered and limitations faced. The following investigative questions that helped in determining the extent of LCC use:


  1. To which sectors within the green building industry is LCC applied?

  2. Which stakeholder(s) among the project team request and perform the LCC in green building projects?

  3. What are the goals of green building practitioners in LCC?

  4. To which components of the green building project is LCC applied?

  5. What tools are used, constraints exist, and improvements are necessary in current green building LCC studies?


Methodology


A questionnaire was designed (appendix C) and programmed into an online survey instrument. A cover letter was then prepared informing the participant of the purpose of the study, the approximate time needed to complete the survey, and an assurance of confidentiality. The cover letter introduced the researchers, explained the goals of the study, and asked the project contact to forward the document to the individual(s) responsible for the economic analysis of the registered project. A hyperlink to the survey was provided at the bottom of the letter directing the respondent to the website containing the questionnaire. A decline link was also incorporated into the cover letter for those contacts that wished to be removed from the sample list. The individuals included in the study were professionals within the building sector with particular interest and knowledge of green building, incentive to promote green building, as well as a familiarity with life cycle cost analysis. This population included architects, engineers, contractors, facility managers, consultants, vendors, and developers. The source to solicit such an audience was the USGBC registered projects database available through the USGBC website. Each of the 2164 registered projects has a project contact actively involved and openly available for information relating to the specific development. One thousand cover letters were emailed to project contacts around the country. Twenty project contacts emailed a reply stating that LCC is not used to their knowledge on the project. A total of 84 individuals completed the online questionnaire. An additional 20 individuals chose to use the remove link to decline any participation in the study. It is probable that more than 84 registered projects were represented in the data as many of the project contacts are working on more than one registered project at a time. One limitation to this study was the inability to anticipate the individual email filtering settings. There was no record of how many cover letters were automatically deposited into an individuals bulk folder and never opened. A higher response rate would be expected if a method to bypass the filtering mechanism would have been developed.

The first section of the questionnaire was aimed at obtaining information in order to set the framework of both the sample population and parameters within the model of the study. These questions deal with the individual participant’s professional title, type of projects they are involved with, the drivers of the analysis, and the individual doing the calculations. Part 2 of the survey investigates the specific use/ application of the LCC, the tools used, the goals of LCC, and the constraints faced in LCC. A spreadsheet was used to organize and analyze the findings. Finally, three open response questions sought opinions and perceptions toward LCC and green building. These subjective questions asked for both the strengths and weaknesses of LCC models, their use in promoting sustainable building measures, and improvements needed in current LCC practice. A conceptual map was created to organize the open ended responses that suggested where improvements are needed in LCC models, as well as respondents’ perceptions relating to the effectiveness of LCC in promoting sustainable practices. This map aided in grouping the information gathered in terms of similar ideas and themes allowing analysis within a few general categories.

Findings

Characteristics of respondents

Of the eighty-four (84) participants that completed the study survey, the three dominant occupations present were architects (45%), engineers (17%), and consultants (9%). Others included commissioning agent, government executive, project manager, and interior designer (Figure 1). This representation is consistent with LCC fundamentals of implementation using an interdisciplinary team early in the design development (Kirk & Dell’isola, 1995).



Questions 6 & 7 asked which team members initiated the interest of conducting LCC, and the individual(s) typically responsible for the analysis. Over 60% of the responses labeled the owner as the driver in the pursuit of the LCC (Figure 2). Architects and government officials initiate the LCC in 25% of the cases, with engineers and consultants initiating almost 20%. When asked who typically performs the LCC, 55% labeled the engineer as the analyst, 43% chose the consultant, and 25% the architect. Others listed included estimator, project manager, and manufacturers. These results suggest that there is an interest to pursue cost benefits over the life of the structure by project owners, however a built environment professional typically carries out the analysis.



Figure 3 shows the level of LCC experience of the participants. Despite the fact that formal LCC methods were introduced in 1961 at a Building Research Institute conference in Washington D.C., 58% of respondents claimed to have fewer than 5 years of experience with LCC. On the other hand, 21% have been implementing LCC for 12 years or more (Figure 3).




Extent of use

The survey asked how often LCC was being executed on LEED registered or other projects with which they had an association. A total of 42% of those surveyed acknowledged the use of formal LCC on current LEED projects. Figure 4 illustrates the respondent’s experience of LCC use in LEED projects versus all other projects. The majority (75%) of all other projects implemented LCC less than one quarter of the time, however 33% of those profiled said LCC is used on more than 25% of the LEED projects.



When asked which types of projects have applied LCC in their experience, 68% of respondents noted public projects, 45% institutional, and 40% commercial and private projects (Figure 5). Because city, state, and federal projects represent the public interest, the government sector should have a concentration in buildings aimed for durability and longevity as well as resource efficiency (U.S. General Services Administration, 2002). Additionally, many institutional projects have high operation expenses due to expansive mechanical systems where LCC tools and data are more easily attainable.




When asked how long of a payback period is typically acceptable for an LCC considering alternatives, 38% reported a 4-6 year payback, 30% reported 2-4 years, and 15% noted no payback period was requested (Figure 6). With the current borrowing environment at historical lows, allocating higher capital costs initially to offset reduce budgeted operation and maintenance costs is logical. As the cost of borrowing increases, payback periods become longer, making higher initial costs less attractive regardless of

potential long-term savings.



LCC application

Question 14 of the questionnaire asks respondents to identify the overall goals to pursuing LCC. It was found that 87% of those surveyed selected reducing operation and maintenance costs as very important (Table 1). Seventy-five percent (75%) of those surveyed chose ‘extend useful life/longevity of the building’ as a very important goal. These results are consistent with LCC historical use, however 88% of respondents selected the goal to ‘increase occupant comfort/ productivity and conserve natural resources’ as either very important or somewhat important. Both goals represent direct outcomes of green building practices, however research has indicated costs and benefits are difficult to quantify and subsequently difficult to implement into a LCC.



Table 1.

 Goals of the

project's

 LCC

 

Goal

Very important

Somewhat important

Not important

Response Avg.

Reduce operation/ maintenance costs

55

8

0

1.13

Extend useful life/durability

47

12

4

1.32

Increase occupant productivity/comfort

31

24

8

1.63

Conserve natural resources

27

29

7

1.68

Future facility alteration

17

37

9

1.87

Lower construction costs

16

36

9

1.89

Meet government mandates

15

25

21

2.1


Questions 15, 16, and 17 address the utilization and success of LCC to particular building components. Table 2 ranks a number of building components and decisions where LCC is most often applied. As expected, those components and decisions dealing with the principle goals of LCC are most often chosen for analysis. HVAC and lighting/day-lighting are almost always a part of a LCC, with operation/maintenance, windows, and insulation also typically included in a study. The right hand column of Table 2 lists the success in predictive analysis applied to each building component or decision measured in positive pay-off. Ninety-four percent (94%) of respondents claimed an LCC applied to the HVAC system revealed a positive cost benefit to increase up-front capital cost to reduce long-term operational costs. LCC performed to lighting/day-lighting typically provided positive pay-off to 75% of participants, and operation/maintenance, windows, and insulation all predicted future cost benefits for increased initial expense over 50% of LCC practitioners.



 Table 2.

 LCC

application







 

 

 

Building component

Always

Sometimes

Seldom

Never

Weighted avg.

 

Positive pay-off

HVAC system

41

23

1

0

1.38

 

94%

Lighting/day-lighting

27

30

7

0

1.69

 

75%

Operations and maintenance

27

26

8

2

1.76

 

59%

Windows

23

29

9

2

1.84

 

50%

Insulation

21

31

10

1

1.86

 

45%

Water conservation

19

27

16

2

2.02

 

45%

Exterior finishes/Roofing

23

22

15

4

2

 

34%

Size of building

11

14

20

16

2.67

 

22%

Interior finishes

10

21

17

16

2.61

 

17%

Renewable energy

17

25

19

2

2.1

 

13%

Disposal/deconstruction

5

20

19

20

2.84

 

11%

Foundation/structural elements

4

13

30

16

2.92

 

3%


Table 3 ranks the accuracy of LCC projections for each building component or decision based on post-construction follow-up. Although many of the projections are not typically verified in post-construction studies, the category lighting/day-lighting ranks as the most successful building component in LCC. On the same scale, LCC applied to HVAC appears to meet or exceed predicted cost benefits. Additionally, operation/maintenance, windows, and exterior finishes/roofing all rank as successful LCC applications. Surprisingly, water conservation, although not included in LCC as often as other building decisions, ranks as the third most accurate positive pay-off in post-construction follow-up. Ranking at the bottom of the list, renewable energy LCC decisions neither provide a cost benefit in predictive analysis nor do the calculations meet predicted numbers in post-construction follow-up. However, in conclusion, one must assume that as renewable energy technology advances, and the cost of fossil fuels continues to escalate, more attention will be directed toward the renewable energy alternatives available.


 Table 3.

 Accuracy of

projections

 

 

 




 

 

 

Building component

Better than or equal to projected

Less than projected

No post

construction

follow-up

Weighted avg.

Lighting/day-lighting

26

7

20

19

HVAC system

29

12

13

17

Water conservation

21

8

23

13

Operations and maintenance

20

8

20

12

Windows

13

4

33

9

Exterior finishes/Roofing

9

2

38

7

Size of building

9

4

35

5

Insulation

13

9

29

4

Interior finishes

7

3

34

4

Foundation/structural elements

3

4

37

-1

Disposal/deconstruction

4

6

33

-2

Renewable energy

7

14

24

-7
  1   2   3   4   5   6   7   8   9

Похожие:

Use of life cycle costing in the u. S. Green building industry iconScope a seminar designed to assist pastors and other ministry leaders in analyzing their leadership strengths and weaknesses, while building a learning life-style for the remainder of their ministry life. Objectives

Use of life cycle costing in the u. S. Green building industry iconAs Part of the Software Life Cycle

Use of life cycle costing in the u. S. Green building industry iconBuilding Champions in Swimming and Life

Use of life cycle costing in the u. S. Green building industry iconUsing input-output life cycle assessment in measuring product group eco-efficiency in the finnish forest sector

Use of life cycle costing in the u. S. Green building industry iconMike started his working life as an astrophysicist and made his way into tourism via the scuba diving industry. He built one of Australia's first backpacker

Use of life cycle costing in the u. S. Green building industry iconScope of Food & Beverages Industry tdp industry sectors and core occupations

Use of life cycle costing in the u. S. Green building industry iconHolding ead based on pending green card application. Approved i-140 Green Card application in eb2-niw (National Interest Waiver) category. I-485 (Adjustment of Status) is pending. Citizen of P. R. China. Objective

Use of life cycle costing in the u. S. Green building industry iconEnabling Decision Support and Costing of Product Designs by using Visual Metaphors

Use of life cycle costing in the u. S. Green building industry iconTo serve as an ict expert and Consultant in an industry where my skills and knowledge will be used for the growth of the industry. My foundation is as a technical consultant, ict4D expert, database specialist, information security expert and a developer in multiple languages, on many platforms

Use of life cycle costing in the u. S. Green building industry iconGreen Practice Assessment

Разместите кнопку на своём сайте:
Библиотека


База данных защищена авторским правом ©lib.znate.ru 2014
обратиться к администрации
Библиотека
Главная страница