Presentation to CIIA Conference

1
High Performance Buildings

• Presentation to CIIA Conference
• October 11, 2000
• by
• Mark Langdon

2
The Present Environment
Business Practices
Productivity Commission
Reduced Space Requirements
Energy Management
Building Industry
Environmental Sustainability
Reduced New Construction
Aust. Greenhouse Office
Surplus Building Stock
3
The Present Environment
Functional Requirements
Financial Influence
Space
Performance
Building
People
Process
Organisational Influence
Physical Characteristics
Adapted from Facilities Management and the
Business of Space - McGregor Shiem-Shin Then
4
Life Cycle Costs over 50 years
67
Occupancy costs
Operating costs
15
7
Finance costs
11
Capital costs
100
0
50
Recurrent Costs - A Role for the Quantity
Surveyor - Hatzantonis
5
Current Situation

• The new gurus talk about vision or strategic
  intent of companies, but usually architects and
  suppliers of physical space are not given much
  opportunity to link the process of designing
  office space with such strategies

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Current Situation
Given the general acknowledged link between the
workplace environment, employee satisfaction and
profitability, senior managers do appear to be
missing an opportunity to manage the working
environment for competitive advantage 200
Financial Directors and Managing Directors -
Gallup Poll , commissioned by Workplace
Management

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The Future

• Corporates are becoming more and more obsessive
  about performance measurement
• Building owners and occupiers are becoming aware
  of the actual physical work environment on worker
  performance and the resultant effect on business
  performance profitability
• High performance building design can improve
  business efficiency by 30 - 40

G. De Valence - Senior Lecturer in Construction
Economics - UTS
8
The Future

• Buildings must allow maximum workplace
  flexibility
• Be able to respond to changes in the shortest
  time possible in response to the technological
  explosion
• Add value to the business and increase
  shareholder wealth and make the business more
  competitive

Various speakers at PCA Corporate Real Estate
Conference 2000 - Melbourne
9
The Value Curve
Best Value for Money
Cost
Life Costs
Capital Costs
Operating Costs
Current Industry Focus
Durability
10
The Revised Value Curve
True Best Value for Money
Best Value for Money
Cost
Optimum Corporate

Performance
Life Costs
Corporate Performance
Opportunity Gap
Durability
11
The Objective

• To create and maintain intelligent facility
  environments which allow the user organisations
  to achieve their business objectives, while
  maximising the effectiveness of the occupants and
  minimising life-cycle costs.

12
Good Performance Measurement Framework
Effectiveness
Efficiency
13
Lockheed Missile and Space Company
6000 sq. metres
2700 Staff
Reduce Energy gt 50
14
Lockheed Missile and Space Company
Lighting costs reduced by 75
Energy costs halved
Energy efficient improvements added 2M to 50M
construction cost.
Energy savings were 0.5M pa.
Payback period 4 years
Absenteeism reduced by 15 productivity
increased
15
Lockheed Missile and Space Company

• The reduction in the absenteeism rate paid for
  the extra energy efficient construction in less
  than 1 year
• Lockheed management claim that the improved
  productivity gave them the competitive edge that
  helped them win a 1.5 billion contract
• The profit made from this contract more than paid
  for the entire construction cost of the building

16
Albury Hospital
Capital, maintenance, energy other operational
costs comprised only 12 of the total life costs
Staff salaries other labour services accounted
for over 70 of the total life costs
The greatest scope for reducing costs lay in the
actual functional operation of the facilities
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Albury Hospital

• The design team included
• Hospital administrators
• Health planners
• Architects
• Engineers
• Services consultants
• Contractors
• Cost experts

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Albury Hospital

• Focus on staff hours per patient
• Focus on life costs rather than initial capital
  costs
• Changing engineering standards to emphasise
  performance during design life
• Shift from high rise to low rise construction

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Albury Hospital

• Substantial reduction in hospital floor area
• Reduction in operating and capital costs
• Capital cost 40 below budget
• Dramatically reduced recurrent costs
• Significant productivity increases

20
ING Bank - Netherlands

• The brief
• integrate art, natural materials, sunlight,
  energy conservation, low noise levels and water
  usage
• be functional, efficient and flexible
• be human in scale
• have low running costs

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ING Bank - Netherlands

• The design team consisted of
• Architect
• Construction engineer
• Landscape architect
• Energy expert
• Artists
• Banks Project Manager

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ING Bank - Netherlands

• The results
• energy consumption is less than one tenth of the
  banks previous headquarters
• savings in maintenance costs of US2.4 M p.a.
• absenteeism reduced by 25
• enhanced corporate image

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ING Bank - Netherlands

• The results
• based on reduced running costs alone the payback
  period for the extra money spent on design and
  construction was only 4 months
• The value of the building to the bank has been
  greatly increased
• employees voluntarily work longer hours
• productivity has improved
• business has increased

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Present Research

• Most organisations still consider buildings as an
  operational overhead rather than having a
  strategic value
• There is a deficiency in the understanding of the
  relationship between buildings and the
  operational performance of the people who use
  them
• There is an increasing gap between building
  environments and the needs of the organisations
  which use them

Prof. D. Mc.George Dr. M. Loosemore - UNSW
25
The Problem

• Higher priced designs that enhance productivity
  may make more economic sense. Yet without an
  economic method for systematically including
  productivity benefits in building Life Cycle Cost
  analysis, these designs cannot be justified.

Productivity Impacts on Building Life-Cycle Cost
Analysis - Lippiat and Weber
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The Research Objectives
Lower Operating Costs
Environmental Sustainability
Improved Productivity
Building Environment
Better Communications
Enhanced Organisational Effectiveness
27
The New Market Opportunity
If existing facility owners and users can be
shown that retrofit designs based on accurate
occupancy cost analysis can produce considerable
benefits with short payback periods and increased
profit levels, the construction industry may
well see a boom in retrofit work
Business Performance
Building Environment
Increased Market Opportunities
Peter Smith - Senior Lecturer Construction
Economics UTS
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Who Needs To Involved?
A multi - disciplinary approach is required

• Facility Owners
• Architects
• Engineers
• Government Bodies
• Services Authorities
• Environmental Experts

• Energy Experts
• Construction Cost Experts
• Facilities Managers
• End Users
• Organisational Behaviour Experts

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The Project Delivery Approach
Determine Client Value
Develop Commonality of Purpose and Joint
Ownership of Project
Develop Continuous Improvement within the Supply
Chain
Integrate Design, Construction FM
Manage Costs Collaboratively
Use Target Costing, Risk Management Value
Management