1. An Agenda for Sustainable Construction in Europe Utilities Management and Sustainability 14 June 2002, Milano IT Olavi Tupamäki Villa Real Ltd/SA Merivalkama 12 Avenue Louise 65 FIN-02320 Espoo Finland B-1050 Bruxelles Belgique tel +358 9 802 3667 http://www.villareal.fi tel +32 2 535 7845 fax +358 9 802 3610 olavi.tupamaki@villareal.fi fax +32 2 535 7700

2. Construction and CREC (1) n In advanced European vocabulary "construction" is considered to cover the entire value chain of develop/own, design, manufacture, construct, recycle a building, infrastructure or other constructed assets. n Today in Finland and elsewhere, a new expression Construction and Real Estate Cluster - CREC has been taken to use to cover all activities directly related to construction and real estate (buildings, infrastructure and other facilities = 60-70% of the national wealth). Compared to the above, CREC covers the whole life of a building, hence additional activities concern running the building, which more often is done by facilities management. n A reason to this approach is the fact that major contractors are moving from plain construction towards taking care of the building/facility for its whole life. Also public-private partnership projects (BOOT, PFI; toll roads & bridges, schools, prisons etc) require this approach. And any sustainable construction consideration requires this!

3. Construction and CREC (2) While in Finland construction represents 10% of GDP (or 12% if repairs & refurbishment are counted in), CREC represents 30% of the same GDP. Accordingly, in the EU construction represents 11% of the total GDP, and CREC nearly 30% of the same GDP!

4. Construction and CREC (3) Here it can be seen that in Finland heating (17%), repairs & refurbishment (16%), maintenance (15%) and cleaning & waste (14%) are the highest cost activities.

5. What is Sustainable Development? n “Sustainable development is a matter of satisfying the needs of present generations without compromising the ability of future generations to fulfil their own needs” [Brundtland report, “Our Common Future”, 1987] n Sustainable development means sustainability not only ecologically (= environmentally) and economically but also socially and culturally. n Lately there is talk in the EU and UN about the three pillars of sustainable development. For not to forget cultural aspects, they should read economic, environmental and societal (= social, cultural, ethical etc) development. n As per Rio 1992, countries should prepare national strategies on sustainable development in 2002 latest. Only few countries have provided something meaningful (SE, DK, DE, AT, GB).

6. What is Sustainable Construction? n Sustainable construction has not been satisfactorily defined so far. CIB W82 (OT a member) has proposed the following definition 1998: "The creation and responsible management of a healthy built environment based on resource-efficient and ecological principles". A later programme document “Agenda 21 on Sustainable Construction” (CIB Report Publication 237, 1999) repeats this definition. n This definition is not satisfactory, as it leaves out economic and societal issues completely! CIB = International Council for Research and Innovation in Building and Construction

7. What could be sustainable construction? n The ways in which built structures are procured and erected, used and operated, maintained and repaired, modernised and rehabilitated, and finally dismantled (and reused) or demolished (and recycled), constitute the complete cycle of sustainable construction activities. n Minimise the use of materials, energy and water and mobility. (NL: factor 20). n Building products should, as far as possible, be reusable and materials recyclable. Design for long service life (and durability) is superior to design for reusability. Reusability is superior to recycling, and recycling is superior to waste disposal. n In sustainable construction, reusability and ease of changeability are necessary product properties, in particular for modular products and systems with different service lives.

8. What are LCA and LCC (or WLC)? n Derived from ISO 14040: In construction, environmental life cycle assessment - LCA is for assessing the total environmental impact associated with a product's manufacture, use and disposal and with all actions in relation to the construction and use of a building or another constructed facility. LCA does not address the economic or social aspects n Derived from ISO 15686: Life cycle costing - LCC is a technique which enables comparative cost assessments to be made over a specified period of time, taking into account all relevant economic factors both in terms of initial capital costs and future operational costs. [UK expression Whole life costing - WLC is gaining some support separating Life Cycle - LC from Whole Life - WL: WL can cover several different (usage etc) LCs of a building; also the LCs of various replaceable components/systems are much shorter than the WL of a building.]

9. Competitiveness of the Construction Industry - Sustainable Construction (1) n In 1997, the EC DG Enterprise published a document “Competitiveness of the Construction Industry”. Since that time several working groups have been actively carrying forward studies on various important topics. They are usually tripartite groups with participants from the Commission, member states and industries. n The most important one is the working group for Sustainable Construction (OT a member). In June 2001 this industry-led (FIEC) working group published a report titled “An Agenda for Sustainable Construction in Europe”. In this report the earlier- mentioned topics have been recognised, yet not all properly honoured. This report (a “non-paper”) has been sent to the member states. Total report see www.fiec.org.

10. Competitiveness of the Construction Industry - Sustainable Construction (2) The report’s recommendations include the following:  All member states and accession countries to draw up and publish programmes for “sustainable construction”. Within the EU, Finland, Germany, Ireland, Luxembourg, the Netherlands and the UK have such papers of various qualities.  Carry out a feasibility study to examine the extent to which eco- efficiency can be increased with the perspective of raising it by a factor of 4 or, over a much longer time frame, by 10.  Establish guidelines that will lead to LCA and LCC becoming normal standard procedures, and make such assessments mandatory for public works valued above a given threshold.

11. Competitiveness of the Construction Industry - Sustainable Construction (3)  Clients, especially public clients, must take the lead in promoting sustainability in construction and the built environment.  Study the advantages and disadvantages of awarding construction contracts on the basis of “concessions” and “facilities management” (BOOT, PFI, public-private partnership).  Develop a system of life cycle costs performance indicators. A European project CRISP led by CSTB is working on this.  Raise the awareness of the general public.  Organise annual competitions for “flagship sustainable construction projects” in the member states and the accession countries.

12. Competitiveness of the Construction Industry - Sustainable Construction (4) n A new task group (OT a member) was established last autumn to "Draw up recommendations and guidelines on Whole Life Costing (WLC) of construction aimed at improving the sustainability of the built environment”. The group tries to find models for practical application of sustainable construction based on Net Present Value – NPV of economic and environmental factors. n This group again is industry-led, European Construction Industry Federation - FIEC and Architects’ Council of Europe - ACE are running the action.

13. Competitiveness of the Construction Industry - Sustainable Construction (5) n NPV = Net Present Value of the accumulated future costs and revenues over a certain period of time, eg 50 years, at an agreed discount rate(s), eg 6% pa, dependant on prevailing interest and inflation rates. NPV is calculated according to the following formula, and can be done with MS Excel (up to 29 years only!).

14. Competitiveness of the Construction Industry - Sustainable Construction (6) n Societal factors (social, cultural, ethical etc) were unfortunately left out, although they obviously are important. Later on, it also seems to be that the group tries to calculate a total = LCC (money) + LCA (scoring points)! No existing related software gives any proper solution to this equation. [Yet, here it is my intention to study the suitability of the newest software for multi-objectives and multi-criteria decision making using Monte-Carlo simulation (@Risk, Crystal Ball) and decision trees (Precision Tree, Logical Decisions).] [Finish - Thank you]