Energy vs Cost Modelling

Posted: June 20, 2016 by Mark Gifford , Category:BIM, Energy Performance, Modeling

Energy vs Cost Modelling

I recently conducted an energy survey at a new healthcare facility and a couple of headline numbers jumped out which I thought could do with some further investigation and validation. So the focus of this Post is specifically around the application of Energy vs Cost Modelling within the Building Performance Analysis industry.

So here are the facts:

  • The building in question is a rural UK healthcare facility
  • Estimated annual electricity spend of £40k
  • Approximately the same spend again on Gas – so another £40k
  • £20k allowance for miscellaneous utilities; standing charges, peak charges, water etc
  • So an approximate annual utility spend of £100k max.

The story sounds ok so far until you consider the total Project Value, a £29-million design/build cost. If we do some very basic lifecycle cost modelling the numbers look like this:

  • £100k per year utility spend
  • After 10-yrs cumulative utility spend of £1-million
  • After 30-yrs cumulative utility spend of £3-million

[Note: No Utility Rate increases, NPV or Discount Rate allowances made in this basic calculation]

As the calculations stand this facility would therefore take 30-years to have a cumulative energy spend of £3-million.

Let’s say that 20% energy savings could be made fairly easily via a £20k energy efficiency spend and that a 1-year ROI would be achievable. So a £20k up front spend on energy efficiency measures generates £20k worth of savings by the end of the first year. Assuming this £20k reduction could be maintained for the remaining 29-years a cumulative saving of £580,000 could be made over the 30-year range.

A 20% saving is a 20% saving and who wouldn’t want an extra £580k in their annual budget, but is it really worth waiting 29-years for?! It seems like such a long time to wait.

Now if we look at the £580k from the total Project Value perspective (£29-million) it’s works out as only 2%.

So here’s the point. If 2% could be shaved off the total Project Value up-front at Design/Build stage the £580k saving becomes money up front, cashed in the bank from Year Zero – money that doesn’t need a 29-year wait to get back in hand. To me this sounds like a better deal for any building Owner/Operator?

If we look at this from the Building Performance Modelling perspective it gets interesting. We spend fees on Energy Modelling and associated analysis for Green Building Certification schemes (BREEAM, LEED etc) but do we really use these intelligent 3D models to their full potential from a Cost modelling perspective?

Surely with the BIM analysis models that are being developed for purposes of Building Performance Analysis (Energy, Daylight, Natural Ventilation, Overheating studies etc) it’s an easy transition to further develop these models as accurate Cost models? In this way more time and resource could be used on predictive modelling of Cost based scenarios? We’re all well versed in scenario based energy modelling (e.g. multiple changes to a wall U-values, HVAC plant efficiencies etc) and we can predict the resulting % energy savings such measures will have against a baseline figure, but do we really consider these ‘energy’ measures from a Cost perspective?

I will continue on this same theme in a future Post but am interested to hear the industry feedback on this to date. How many Building Performance Analysis teams out there are actively involved in BIM based Cost modelling on a day-to-day basis? Where do you get the data for the Cost models? Is there more that the ‘modelling’ industry can do to populate better Cost models – or is it simply a bridge too far with insufficient Cost datasets currently available? Is a dedicated Project Quantity Surveyor needed for a detailed Cost analysis or can the modelling industry do more to support early stage scenario based Cost modelling of this nature?

Got some feedback that you’d like to share with Mark? Click here to comment on the original post on LinkedIn or click here to email Mark.

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