Asset Management and the Life Cycle: Concepts and Tools for Making the Business Case for Sustainability

Transcription

1 Asset Management and the Life Cycle: Concepts and Tools for Making the Business Case for Sustainability IFMA Fall Symposium Portland, OR September 27, 2007 BLOCK Joshua Skov Principal Good Company Eugene, OR

2 overview introductions shared understanding: definition of sustainability Is there a business case for sustainability? barriers opportunities two lenses for looking at facilities management the life cycle asset management a short activity

3 Good Company sustainability research and consulting firm mission-driven, for-profit clients: government, higher ed, private sector

4 definition Meeting the needs of current generations without compromising the ability of future generations to meet their own needs. sustainability

5 common sustainability action areas common focus areas: energy, water, waste/recycling/composting landscape maintenance and custodial services purchasing (paper, computers, equipment, etc.) transportation green or high-performance buildings (LEED) performance indicators, assessment areas of integration and coordination: land use planning and transportation endangered species preservation education, training and organizational change mission: core products and/or services sustainability

6 What is sustainability? Is there a business case? no yes reasons why not incorrect prices intertemporal decision making fear/costs of change reasons why cost savings risk reduction new sources of use value new brand value operations and labor business models that go beyond business as usual

7 barriers to the business case incorrect prices externalities natural resources, pollution, social costs costs/fear of change realities of human nature existing stock of human capital flaws in inter-temporal decision making uncertainty and/or ignorance about the future systematically bad math with investment and return bad language

8 barriers to the business case flaws in inter-temporal decision makng flawed decision-making: underinvestment due to undervaluing future cost savings overvaluing current costs example: ROI vs. payback average long-run stock market returns: 9-11% typical cost of long-run capital: 7-12% typical acceptable payback in new buildings: 3-5 years 5-year payback: equivalent to 19-24% return our language is a barrier (focus on first costs) a forty-million-dollar building a ninety-thousand-dollar truck

9 short activity: barriers barrier notes for your entity incorrect prices OR fear of change (choose one) possible problems with inter-temporal decision making bad language

10 lower costs through efficiency lower costs resource efficiency, labor efficiency, or trading one for the other total cost of ownership investment decisions with correct timeframe tunneling through the cost barrier (Lovins) marginal analysis not always sufficient large investments can dramatically change overall resource use and significantly lower cost super-insulation (home energy systems) redesign of entire systems (energy in manufacturing) waste reduction (less infrastructure, less regulation) opportunity

11 price increases (general trend) price volatility obvious example: energy opportunity management of price risk

12 asset management background A way of managing infrastructure capital assets that minimizes the cost of owning and operating those assets and maximizes their performance over time. Basic processes facility inventory capacity, criticality, and condition assessments asset valuation Advanced processes formal O&M program formal renewal Program life-cycle cost analyses and evaluations

13 asset management public works infrastructure drinking water wastewater transportation common applications large facilities (buildings), public and private detailed understanding of building systems multi-building infrastructure (stormwater, steam)

14 life-cycle thinking definition of life-cycle analysis (LCA): assessment of a product s environmental, social and economic impacts across every stage of the product life cycle not just life-cycle cost analysis life-cycle stages: pre-use use resource extraction processing manufacturing transportation and distribution fuel/energy and material inputs maintenance end-of-life disposal reuse or refurbishing recycling, down-cycling, composting

15 life-cycle thinking building products/process

16 life-cycle thinking life-cycle example: buildings Source: National Research Council, 1998

17 life-cycle thinking life-cycle example: buildings

18 life-cycle thinking life-cycle example: buildings

19 using AM and the life cycle using the concepts individually, together Why are these concepts/tools effective? AM will lead to better long-term stewardship of any particular asset. Life-cycle thinking will inform where your biggest environmental, health and social impacts are. How can we use them? Change the way people think and talk about the organization s opportunities. Gradually make them part of our decision making processes.

20 using AM and the life cycle life cycle discussion questions What are the mission-related leverage points for introducing life-cycle thinking, apart from costs? Where is there overlap between life-cycle impacts and life-cycle costs? asset management Where do we have asset management opportunities that are not visible because we don t collect, manage or present the information?

21 Thank you! Feel free to contact me: Joshua Skov (541) 341-GOOD (4663), ext. 11