In the investment world, short-term investments are generally associated with higher risk. If this is true, why do investors often fail to look long-term when constructing buildings?
Many investors, donors, developers, institutions and purchasing departments embrace the lowest initial cost for their buildings and designers while placing less emphasis on the life-cycle cost and the legacy that the built form will represent.
With the evolution of Building Information Modeling (BIM) we can calculate how much a building will cost over its lifetime, which can help investors decide where to cut costs and where to spend.
The initial investment of a building includes the construction cost plus “soft costs”. A significant soft cost is the fee for professional design services such as architects and engineers. Choices made during the design phase are critical because they will continue to impact future profitability, flexibility, operational costs and occupant health, happiness and productivity for the lifespan of a building. It is during the design phase of the process that a building owner has control over how much the project will cost in the long run. It is more accurate to refer to professional design fees as an investment rather than a cost.
With the current low-margin model, buildings of relatively poor quality often reach the end of their serviceable life after 50 years, before being demolished and replaced by new ones. What once seemed like a great investment is reduced to a pile of rubble in a landfill. We know that this trend is not financially nor environmentally sustainable – and there is a better way forward.
A more profitable and sustainable model exists, allowing us to construct better quality and more energy-efficient buildings. It’s now possible to build to a net-zero standard, where buildings produce as much energy as they consume. There is also a growing trend to perform deep retrofits to existing buildings, which is a renovation of an existing building which results in a substantial reduction in energy consumption. These approaches come with an incrementally larger initial investment in both design fees and construction cost but drastically reduce operation and maintenance costs over the building’s lifetime.
To better understand lifecycle cost, check out the video below:
Common sense and history tell us that investors who take the long view are the ones who end up on top. As designers, it is our responsibility to encourage our clients to see beyond the initial costs to gain an understanding of the true value of their investment.