Sustainable Project Cost Modeling Initiative

Despite widespread commitment to developing sustainable facilities, the public sector is experiencing difficulty in implementing the concept due to the way in which funding is allocated to projects. Facilities personnel responsible for developing project estimates have no way of accurately estimating the first costs of a sustainable project, let alone potential life cycle cost impacts of sustainability. In many cases, the only method available for estimating sustainable project costs during the project planning stage is to add a contingency factor to the estimate for a traditional project to cover anticipated increases in design costs, material costs, and other project costs. This approach inhibits the implementation of sustainability for two reasons. First, projects are typically funded based on efficiency of first cost, meaning that projects with a higher parametric cost estimate are less likely to get funded. Additionally, adding a contingency to the project estimate means that even if the project does get funded, there is reduced incentive to seek cost savings since the money will be lost if it is not spent – this creates a self-fulfilling prophecy of increased costs for sustainable projects.

A better approach to cost estimating is needed if the public sector is to institutionalize sustainability as a goal for its capital projects. Not only must we develop better methods for accurately estimating first costs of sustainable projects vs. their traditional counterparts, but also we must take into account the entire set of costs associated with a project in order to make project decisions that make the best use of public money. Georgia Tech’s Sustainable Facilities & Infrastructure Program is working to model the dynamics of project cost estimating at the conceptual estimating phase of project planning to aid decision makers in making better resource allocation decisions that accurately reflect the benefits offered by sustainable projects. Efforts are focused on modeling project planning and resource allocation in public agencies subject to constrained resources and political decision processes; understanding and exploiting strategic decision points and cost savings opportunities that are common to all capital projects; and identifying resources and effects that can be leveraged to leapfrog economic barriers to sustainability on public sector projects.

Resources:

Pearce, Annie R. (2003). “Sustainable Construction: Leapfrogging the First Cost Barrier,” EnvironDesign7 Conference, April 30-May 2, Washington, DC. – This presentation describes the top seven strategies for leapfrogging the most common barrier to sustainable projects: the expectation that sustainable projects cost more than their traditional counterparts. (To be uploaded)

Pearce, A.R. (2002). “Sustainable Facilities: Leapfrogging the First Cost Barrier.” Construction Owners Association of America Magazine, Summer. This article describes strategies for surmounting the first cost barrier, along with a case study of the Homestead Air Reserve Base Fire Station. (To be uploaded)

Pearce, A.R. (2001). "Sustainable vs. Traditional Facility Projects: A Holistic Cost Management Approach to Decision Making," White paper prepared for US Army Forces Command, Fort McPherson, GA. – This paper presents a framework for comparing project alternatives holistically in terms of all costs attributable to sustainable project decisions.

Pearce, Annie R. (2002). " Resource Allocation and Problem Prioritization for Sustainable Military Facilities, Infrastructure, and Installations," Proceedings, National Defense Industries Association Conference, Charleston, SC, March 25-28. – this paper takes a different approach to prioritizing resource allocation for sustainability enhancements based on a Sustainability Likelihood of Success metric that captures human interactions with sustainable technologies. (paper and slides to be uploaded)

Pearce, Annie R. (2000). “The Economics of Sustainable Capital Projects.” CEE6120A: Environmentally Conscious Design & Construction, School of Civil & Environmental Engineering, Georgia Institute of Technology, Atlanta, GA. November 1. – This presentation covers the basic elements to be considered in life cycle costing of sustainability projects.

Pearce, Annie R., Gregory, Rita A., and Vanegas, Jorge A. (2000). “Resource Allocation and Problem Prioritization for Sustainable Facilities and Infrastructure.” Proceedings, Construction Congress VI, February 20-22, Orlando, FL. – This paper describes an overall approach to prioritizing the allocation of resources for sustainability projects based on the degree to which those projects will maximize sustainability variables. (slides)

Pearce, Annie R., Gregory, Rita A., and Williams, Laura. (1999). “Range Estimating for Risk Management Using Artificial Neural Networks,” Journal of Parametric Estimating, 14(1). – This paper describes a non-traditional approach to parametric estimating under uncertainty that can be applied in situations with many unknowns (to be uploaded)

Gregory, Rita A. and Pearce, Annie R. (1999). “Cost Effective Allocation of Research Funds for the Development of Emerging Technologies.” Journal of Professional Issues in Engineering and Education, 125(3), 88-93. – This paper describes allocation of finite funds under conditions of uncertainty typical of research investment funds.

For more information, contact Dr. Annie R. Pearce at annie.pearce@gtri.gatech.edu.