Construction is lagging efficiency gains transforming most other sectors

Paul McNeive

The bottom-up pressure for change is being driven by building occupiers, particularly multinationals. Photo: Chris Ratcliffe

May 19 2022 02:30 AM

The construction industry should be conscious that it is lagging behind the advances in efficiency made in other manufacturing sectors, says Dermot Kehily, a quantity surveyor with experience of working in the US and Ireland, and now lecturing at Technological University Dublin (TUD). Too many projects, he says, finish over budget or behind schedule.

I spoke with him to hear more about a radical improvement in how we produce buildings.

The two big “disruptors” in the industry, Mr Kehily told me, have been “sustainability” and technology, and rampant inflation in energy costs, combined with new legislation, have brought a new focus to “life-cycle” costing of new buildings.

Traditionally, quantity surveyors calculated the cost of constructing a new building, with little attention to the cost of running that building, as those costs fell to the occupier.

“Life cycle costing” of a building involves assessing not only the cost of construction, but also the costs of running the building, to include energy and water usage, repairs and maintenance, and the amount of carbon used in producing the development, including, for example, in transporting construction materials.

Up to now, quantity surveyors were usually only asked about life cycle costings for building projects in the public sector, but now, legislation and market forces are seeing life cycle costing becoming more prevalent, and echoing the experience in the US, where they are now common across the market.

“It’s a top-down and bottom-up dynamic that is driving the change,” Mr Kehily explained. Ireland is already late in implementing an EU public procurement directive from 2014, and Environmental Protection Agency legislation from last year, makes it compulsory for all public procurement agencies to focus on life cycle costs from 2023.

The traditional means of assessing tenders to construct buildings here has been the “Most Economically Advantageous Tender” method, which usually saw the lowest priced tender being accepted. Now, a more sustainable approach is required, to include examining a contractors track record in sustainability.

The bottom-up pressure for change is being driven by building occupiers, particularly multinationals, whom Mr Kehily says, “are far more savvy than five years ago, and are prepared to spend more, to achieve higher environmental standards in the long term”.

One flaw in the traditional method of tendering, which Mr Kehily hopes to see improve, is the practice of fully designing a building, and then putting it out to tender.

This, he says, does not allow the contractors to contribute to more sustainable design and construction methods, from the outset.

Whilst some developers and institutions here have already made “sustainability” their central strategy in attracting tenants, by building to high environmental ratings such as BREEAM and LEED, Mr Kehily and I agreed that developers will now begin incorporating life cycle costing, leading to even higher sustainability credentials, to attract tenants.

“Research shows that it only costs one to two percent more to produce buildings which tread even more lightly on the environment,” he told me. “There is a small upfront cost, because higher standards are outside the norm, however when they becomes normal, costs equalise.”

Together with the Society of Chartered Surveyors Ireland, Mr Kehily has produced a detailed Guide To Life Cycle Costing.

“The new methods are more rooted in accountancy,” he concluded, “but everyone must become aware that they have no option now but to evaluate the life cycle of a building, both at design and when evaluating tenders.