Focusing on Sustainability and Whole Life Value

Procurement must take account of the long term costs of ownership and of the fact that the acceptance of the lowest tender may actually increase the costs of long term maintenance. The establishment of Whole Life Costing and Value systems will help clients save money and deliver better long term services to residents.

Partnering with key suppliers, contractors, consultants and specialists can bring high levels of expertise and knowledge on long term costs to the investment process. As a result of this collaborative working arrangement the clients' long term control of costs can be strengthened.

The importance of Whole Life Costs is illustrated by the Royal Academy of Engineering who found that the typical costs for owning a building are in the ratio of:

• 1 for construction costs
• 5 for maintenance costs
• 200 for building operating costs

Better investment decisions can be made by adopting Whole Life Costing and Life Cycle Costing systems which are vital to setting targets, measuring and achieving long term value and improved cost management.

Collaboration between clients and suppliers will identify and facilitate the following;

• Integration and continuous updating of detailed data on stock
• Integration of design and build processes
• Identification and planning for long term maintenance costs
• Setting up systems of Life Cycle replacements
• Joint management of data under integrated IT systems.
• Connection of data management to strategic cost planning and options appraisals
• Strengthening of asset management planning

Barriers to change can be overcome by:

• Resources and leadership need to be focused on investment in the integration and coherent management of stock and life cycle data. Much detailed information and data is already held by landlords but it is fragmented and held in so many different places that it is of little value in strategic terms.
• The new Prudential Borrowing Rules which came into effect in April 2004 will begin to break through the distinction between capital and revenue expenditure. This will enable housing clients to make a longer term assessment of revenue costs resulting from capital investment decisions. It will be possible to invest to save - clients therefore can decide to spend more on initial investment to minimise expenditure down the line on maintenance.
• The integration of Whole Life Costing skills into project processes such as Value Management, Risk Management and Value Engineering.

Examples:

Barnsley Metropolitan Borough Council

Barnsley Metropolitan Borough Council has developed its community plan, setting out a long term strategy for the regeneration of the borough including four specific groups.

View demonstration project.

CDS Housing Partnership

Sustainability remains a high priority and objective for all the members of the CDS Housing Partnership and links in to CDS design and performance standards.

View demonstration project.

Emcor Drake and Scull

Emcor Drake and Scull chose a condensing boiler and high recovery hot water cylinder on the basis of a reduction of fuel consumption life cycle costs.

View demonstration project.