An Introduction toWhole Life Costs and

Sustainability

Content

• Definition of WLC

• The 3 Elements of Sustainability

• Where Does WLC Fit In?

• Why Should Clients Care?

• Why Should You Care?

• What We Need To Do?

• Where WLCF Can Help?

Definition of WLC

Whole Life Cost is the analysis of all relevant and identifiable

financial cashflows regarding the acquisition and use of an asset.

3 Elements of Sustainability

Social

Economic

Environmental

3 Elements of Sustainability

SocialEconomic

Environmental

SocialEconomic

Environmental

3 Elements of Sustainability

Unattainable

Activities in Sustainability

Whole Life Cost

Materials

Aesthetics

Social

Environmental

Economic

Where Does WLC Fit In

• Next Step in Continuous Improvement

• First Step in Sustainability

• May Already be Doing It (Sort Of)

• Easily Understood

• Financial and Operational Gains

Whole Life Cost Ratios Capital Cost Cost in Use Business Costs

1 : 5 : 200Source.: "The long term costs of owning and using buildings" –

published by The Royal Academy of Engineering (November 1998).

Capital Cost Cost in Use Cost to Business 1 : 5 : 200

-100k : +£500k : +£20m

WLC – The Big Picture

BuildBuild

2 Years2 Years

DesignDesign

1 Year1 Year

£17%

£3%

OperateOperate

25 Years25 Years

Run / Maintain£ 40%

Repair£ 30%

PeriodicReplacement / Refurbish

£ 10%

TotalTotal

TotalTotal

DisposeDispose

1 Year1 Year

100%

Cost ofOwnership

£?%£

?%

Source Gardiner & Theobald

WLC Rules of ThumbTypical Airport Terminal

Revenue80%

Capital20%

Typical Shopping Centre

Revenue55%

Capital45%

Typical Office Block

Capital40%

Revenue60%

Revenue Cost Breakdown

• EnergyEnergy

• CleaningCleaning

• MaintenanceMaintenance

• Admin ServicesAdmin Services

• SecuritySecurity

• Admin and Management Admin and Management InsuranceInsurance

7%10%

20%

27%

31%

5%

Why Should Clients Care?

• Compulsion– Climate Change Levy– Carbon Trading– PFI Conditions– Funding

• Concern for Environment

• Curiosity

• Competitive Advantage

• Profit

Why Should You Care?

• Leading Role in Industry

• Understand New Concepts

• Concern for Environment

• Competitive Advantage

• Profit

What We Need To Do

• Adopt Performance Specification

• Consider the Costs in Use for Asset Selection

• Take Small Steps - Progress Slowly

• Understand What You Have Achieved

• Benchmark

Where WLCF Can Help

• The web based WLC Comparator Tool

• Common Data Structures• Common Calculation

Methodologies• Access to Database • Optioneering• Benchmarking• Credibility• Accreditation • Help - You Are Not Alone

Some Useful Web Sites

• Whole Life Cost Forum– www.wlcf.org.uk

• Training• Definitions• Guidance• Access to the Online Tool