Green procurement of buildings: estimation of environmental impact and life-cycle cost

Abstract: This thesis focuses on environmental impact reduction and life-cycle cost estimations in building procurement. The aim for the work presented in this thesis is to contribute to the understanding of whether costs and environmental impact of a building can be integrated in a, from the users perspective, practical model applied for tender evaluation. The model should also be able to use as a base of evaluating different solutions in the design phase. Specifically this means to: Increase knowledge about integration of economical and environmental aspects from a life-cycle perspective in relation to buildings Provide recommendations for procurement of cost effective and environmental aware buildings In the first part, environmental requirements stipulated by Swedish clients were investigated through a questionnaire survey followed by interviews. The identified requirements were analysed in relation to reduction of environmental impact and productivity. It was found that requirements linked to the construction process, waste reduction and choice of building materials were well represented. Several requirements were obstacles for a more cost-effective construction without benefiting the environment. The environmental impact from operation, as energy use, was however not considered to any larger extent. Energy use is currently considered to be the major source of environmental impact and governmental authorities in Sweden and EU advocate reductions. To encourage a development of innovative solutions in this area, clients should provide the incitements. It is here suggested that the integration of environmental impact assessment with life- cycle cost estimation in tender evaluation provide such incitement. In the second part, a broader understanding of life-cycle cost estimations and the extent of use by clients was established by a questionnaire survey in Sweden and a seminar in Canada. It was found that Swedish clients consider life-cycle cost estimations mainly in design and to a limited extent in procurement. In general the cost elements considered are investment, energy and, maintenance costs. Limitations for a wider uptake were also identified as lack of access to reliable input data and restricted experiences in actual use of the method. The seminar in Canada aimed at collecting information about the integration between theory and practice and the use in environmental design. It was found that in the absence of a formalised life-cycle cost approach, capital cost were used as the primary basis of comparing design alternatives. In the context of environmental design it was further found particularly important to use life-cycle cost approaches to motivate possible initial cost increases. When the use of life-cycle costing and its limitations were identified the development of the tender evaluation model was performed in two steps. First, the life-cycle cost elements with the largest impact on the total cost were identified through a case study of six buildings. This to simplify the model by reduction of cost elements included. Three of the buildings in the case study were environmentally designed and compared with three similar conventional buildings. Results from the life-cycle cost analyse showed that the environmentally designed buildings were in the same cost range as the conventional buildings in spite these had significantly lower initial costs. A sensitivity analyse was used to examine how the variation in energy prices would impact the result. Second, the environmental impact from energy use was established trough a classification of emissions into environmental impact categories. This showed that the environmentally designed buildings in the case study had a significantly lower impact than the conventional buildings. A method to weigh the categories into one index was applied. The use of life-cycle cost estimations in design, procurement and tender evaluation will provide a better base for performing investment decisions. Reduction of operational energy use will be displayed as economical beneficial and automatically environmental impact reductions are obtained. Clients with higher ambitions for environmental impact reductions can use the tender evaluation model suggested where the two aspects, life-cycle cost estimations and environmental impact assessment are integrated. As these parameters are measured on different scales integration experiences some problems. The solution suggested was to convert the environmental impact to a cost. The translation factor was seen as a factor to promote improvements for further energy reductions, and by doing so a comparison on a single criterion was possible. The model was hypothetically tested using empirics from the six case study buildings. Based on the results and conclusions presented in this thesis a number of general recommendations to clients are given: To motivate energy reductions, reduced costs and environmental impact, clients are recommended to evaluate tenders based on life-cycle cost estimations. By reducing the cost items included in the life-cycle cost model to initial costs and costs for operational energy about 70 to 90 % of the total cost is captured. When stipulating environmental requirements in procurement using to general expressions makes the effectiveness of the requirement questionable as the possibilities of verification are limited. Clearly stipulated preferably measurable requirements should be used. Requirements concerning materials should limited to not using hazardous materials. Other requirements will limit the competition and increase costs.