1. World Green Roof Congress Brad Bamfield +44 (0) 7803 133110 b.bamfield@thesolutionorgainisation.com Whole Life Costs

2. Presenter Brad Bamfield –+44 (0) 7803 133110 –b.bamfield@thesolutionorgainisation.comb.bamfield@thesolutionorgainisation.com Managing Director of The Solution Organisation Ltd Chairman of the Whole Life Cost Forum

3. Save the world or make money Developers are not interested in saving the world But they are interested in making money Are they mutually exclusive? Not if you talk their language

4. Save the world or make money Together we can save the world Together we can increase your investment yield (increase profit) Oh and by the way the World benefits too How to construct the message

5. Whole Life Costs & Sustainability The Solution Organisation definition; A systematic set of objectives and strategies to improve the financial performance of the organisation while at the same time reducing its impact on the environment and developing a positive social effect

6. 3 Elements of Sustainability Social Economic Environmental

7. Area of sustainability 3 Elements of Sustainability Social Economic Environmental Area of sustainability

8. Activities in Sustainability Whole Life Cost Materials Aesthetics Social Environmental Economic

9. Whole Life Costs Definition; “The systematic consideration of all relevant costs and revenues associated with the acquisition and ownership of an asset”. CRISP, the Construction Research and Innovation Strategy Panel

10. What is relevant? Costs that can be reasonably and accurately predicted. What about end of life costs? –Hard to predict +10 years –Not last cost of this project but first cost of next –Discount rate reduces impact of differences

11. Methodologies for Whole Life Costs Net Present Value (NPV) –Discounted Cashflow (DCF) Total Whole Life Cost (TWLC) Annualised Whole Life Cost (AWLC)

12. Discount rate DCF predicts the future value of money by discounting the annual cashflows WACC weighted average cost of capital + risk. WACC varies from organisation to organisation due to balance between shareholders funds and borrowings

13. Discount rate WACC + Risk –S–Sovereign –B–Bank –C–Corporate –P–Project Who specifies Rate? –C–Client, contractor or supplier?

14. Capital and Revenue Costs Focus on capital Without appreciation of revenue costs how is best value achieved? Capital and revenue different budgets different departments How can I spend more capital to save you energy costs over 25 years? Combine capital & revenue budgets

15. Service life Definition of functionality and condition limits states – or ‘triggers for intervention’ - for use in the prediction of whole life costs P B Bamforth, M Clift, M Gregory, D Patel DTI Contract no Cl 39/3/370 cc2330 Available from TSO web site 21 st Sept

16. Service life Table 3 Currently used sources of information and their perceived reliability Information sources Use Reliability Product suppliers 81 49 Previous projects 80 71 In-house expertise 79 68 Codes and standards 75 67 Personal experience 69 64 Consultants 67 56 Research Institutes 61 68 Professional Institutions 52 63 Trade Associations 50 42 Commercial databases 40 47 Universities 28 50

17. Service life Trade Ass. Suppliers 0 20 40 60 80 100 020406080100 Use Perceived reliability Figure 4 The relationship between the use of information and its perceived reliability In house Past projects

18. Importance of the Supply Chain Who can tell us most about a product? –Product databases –Users / maintenance managers –Previous projects –Consultants –Personal experience The supplier & manufacturer

19. Procurement Specification Performance Don’t tell me what you want –. tell me what you want to do

20. Whole Life Costs Benefits WLC analysis is a decision making tool It is not an arbitrary figure but a comparator, it changes with time Compares :- Capital Only to Capital + Cost in Use Products or systems against each other Demonstrates value over a period of time

21. Whole Life Costs Benefits Bridgewater Somerset http://livingroofs.org/livingpages/ wholelifecosts.html WLC financial only WLC + non financial Drainage gains were excluded

22. Capital Cost NPVRankingTWLCRankingAWLCRanking Exposed only1-49,160351,50031,7163 Sedum covered 2-21,2682-132,0002-2,6402 Bio diverse covered 37,4531-175,8001-3,5161 Whole Life Costs Example

25. RankingRoof type 1Bio diverse covered 2Sedum covered 3Exposed only

26. Whole Life Costs Example PointsRanking Exposed only693 Sedum covered802 Bio diverse covered941 Combining Financial & Non-financial We used the WLCF online WLC tool for the financial analysis and The Solution Organisation’s standard qualitative multi-criteria method for the non-financial which includes environmental, performance and social impacts of the options.

27. Better value from NPV, TWLC and AWLC So on these results what did the client say? Of course he approved the living roof and opted to investigate 4 more And oh yes we will have we helped the world a little bit as well Whole Life Costs Example

28. In Conclusion Relationship between Whole Life Costs and Sustainability The meaning of Whole Life Cost The methodologies of Whole Life Cost Capital costs & revenue costs Service life – who do you believe The role of the supply chain Procurement performance v specification Whole Life Costs example – benefits & profits

29. Thank you Brad Bamfield +44 (0) 7803 133110 b.bamfield@thesolutionorgainisation.com WLCF on line Tool www.wlcf.org