September 2017

Middle East Issue #15

Global economy:
Industry focus Optimism tempered by uncertainties
Driving value Tense times as Gulf economies cope with
with lifecycle far-reaching and fundamental change

costing Commodities
price analysis
Global

Content

3 Welcome to Insight #15.

In this edition we take another close look at current trends in the

Global economy: global economy and how they may have an impact on you and your
Optimism tempered business, wherever you are in the Gulf region.
by uncertainties Economic recovery continues across key world markets, although it
is sluggish in most regions, due to a mixture of global and regional
factors, according to recent notable studies. The Middle East is

5
among those regions whose economies are experiencing significant
structural change while continuing to feel the impact of lower oil
prices.
Observers remain cautious, despite signs of continued overall
progress. The 2008 global crash is at the root of that caution, as
economists are increasingly reluctant to make firm predictions of
growth, given that such forecasts have proven themselves short-lived
during the intervening decade.
Recent months have underlined the trend. The World Banks global
Tense times as Gulf economic review this summer was titled A Fragile Recovery. Soon
economies cope afterwards, the International Monetary Fund (IMF) published the
more optimistic A Firming Recovery.
with far-reaching and
fundamental change Both forecasts do point in the same positive direction, but remain
distinctly wary of predicting growth.
This edition of Insight also takes a look at the growing trend towards

8
assessing construction projects using lifecycle costing (LCC). The
industrys understanding of the value of LCC and how it works has
improved substantially in western economies over the last 15-20
years. Various professional disciplines have developed sophisticated
measures to assess the true through-life cost of projects.
Price analysis
The approach takes on new vitality in Gulf Co-operation Council
(GCC) and broader Middle Eastern markets, where private and
public sector clients are adopting increasingly complex approaches

10
to funding, including public-private partnerships (PPPs) and other
measures.

Driving value with

lifecycle costing

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Global
Global economy:
Optimism tempered
by uncertainties
Global forecasters remain
positive about current economic
growth at the macro level, but their
optimism has been tempered by
uncertainties in the US, the UK and
the Middle East, and growing concern
over activity in North Korea.
Much of the caution stems from
continued apprehension in mature
markets such as the US and the UK,
whose fortunes both seem uncertain
because of political rather than
economic developments.
The Trump administrations failure to
date to introduce fiscal changes in
the US, and the UKs so-far difficult
negotiations with the European
Union over Brexit, have prompted
forecasters to revise expectations.
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The IMF downgraded the UK forecast The World Bank expects
in July for the first time since the
referendum in June 2016 over regional economic
continuing membership of the EU. It growth to fall to 2.1 per
now expects the British economy to
expand by only 1.7 per cent during
cent during 2017, citing
2017, 0.3 points below the forecast of oil price fluctuation and
just three months earlier. The IMFs recent geo-political
expectation for 2018 is a low-growth
1.5 per cent. The organisation says tensions as areas of
that one key risk facing the global concern.
economy is that Brexit might end in
failure.
Similarly, the uncertainties of the first
period of the Trump administration
have prompted a reduced forecast of
growth in the US to 2.1 per cent for
both 2017 and 2018.
September 2017 3
Global
The IMF is, however, predicting that
overall growth in 2017 will reach 3.5
per cent, with a slight improvement
next year. This is being driven largely
by steadier recovery in the larger
EU economies France, Germany,
Italy and Spain and the Asia-Pacific
economies.
According to the IMFs research
director and economic counsellor
Maurice Obstfeld, there is now
no question mark over the world
economys gain in momentum. The
distribution of this growth around
the world has changed, however;
some economies are up but others
are down, offsetting those (previous)
improvements.
Once again, world growth is being led
by the Asia-Pacific economies, but not
only by China, which has experienced a
gradual slowdown, albeit with a growth
rate that remains above six per cent.
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The situation is less rosy in the Gulf
region, where policy makers continue
to grapple with fundamental economic
change. The World Bank expects
regional economic growth to fall to 2.1
per cent during 2017, citing oil price
fluctuation and recent geo-political
tensions as areas of concern. If these
issues stabilise, the Bank expects the
region to perform more strongly during
2018, rising to 2.9 per cent.
These tensions especially in Iraq,
Syria and Yemen have continued
throughout recent months. Addressing
the risks arising, the Bank comments:
Security tensions and conflict in Iraq
and Syria are serious hindrances.
Conflict has led to destruction,
displacement and famine in Yemen.
Although sovereign risk has been
declining among members of the
GCC, conflict-driven uncertainty is a
vulnerability for this group.
It goes on to warn: A less-than-
expected increase in oil prices
whether due to increase in shale oil
production or weaker compliance with
OPEC production cuts would reduce
fiscal space in oil exporters and weigh
on confidence.
Even in the higher-growth Asia-
Pacific region, the World Bank
warns of external risks to the
economy, including heightened
policy uncertainty in the US, and in
Europe. A rising political trend that
embraces the rhetoric of increased
protectionism, tighter immigration
rules and disruption to existing trade,
indicates potential disruption in local
markets, caused by such external
factors, which could interfere with
spending and investor confidence.
September 2017 4
Regional
Tense times as Gulf economies
cope with far-reaching and
fundamental change
The main economies of the Gulf are
reducing expenditure as part of new
policy stemming from government-
level determination to diversify.
However, the ongoing changes are
challenging and will take time to
become established.
This is the conclusion of observers
and economists, who are predicting
another period of lower-than-usual
growth in the region. The World Bank
notes that growth across the Middle
East has been held back by oil
production cuts, consolidation, and
regional conflicts. Its risk assessment
says that these three factors could
continue to have an impact over the
next year.
Despite those issues, the Gulf Co-
operation Council states continue
to promote high-profile construction
projects, particularly in energy and
infrastructure. The difference is in the
trend towards privatisation and the
adoption of alternative procurement
models, mainly around western-style
public-private partnerships (PPPs).
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As Insight went to press, the OPEC Basket price
trade embargo on Qatar by other
GCC countries continues without
resolution, with the situation being
watched closely by the private sector
across the region. Nine countries,
led by the Kingdom of Saudi Arabia
(KSA) and the United Arab Emirates
(UAE), continue the embargo, while
September 2017
attempts at reconciliation continue.
The move towards PPP is reflected US$ 52.70
in a range of projects, with the field
led by transportation, energy and August 2017
healthcare. Significant growth is also
noted in the renewables sector, with
US$ 49.60
several Gulf states making serious
investments in solar energy as part July 2017
of the diversification from oil. Middle
East Business Intelligence (MEED)
US$ 46.93
estimates that 67 gigawatts of clean
energy projects worth an estimated June 2017
US$200 billion are at various stages
across the Gulf.
US$ 45.21
MEED also reported that contract
awards spiked during August
May 2017
following several quiet months, US$ 49.20
thanks in no small part to a busy
month for Oman, which awarded
April 2017
deals worth US$5.9 billion. The total
value of contracts for the month was US$ 51.37
US$15 billion, nearly twice the total
across the GCC for July. MEED
estimates that there are US$45.8
billion-worth of projects at the main
bid stage, with a further US$800 Middle East Business
billion under study. Contract awards Intelligence (MEED)
in KSA and the UAE remain flat,
according to the analysis.
estimates that 67
gigawatts of clean
Trade Arabia has calculated that a
total of 37 mega-hospital projects energy projects worth
are at various stages of progress an estimated US$200
within the Gulf, which are worth a
total of US$28.2 billion and will add billion are at various
22,500 beds to existing capacity. stages across the Gulf.
September 2017 5
Regional
Alpen Capital noted that major health
projects include Burjeel Medical City
(Abu Dhabi), Mediclinic Parkview
(Dubai) and Al Amal Mental Health
Hospital (KSA).
Significantly, given the more difficult
trading conditions of recent months,
the Gulf is now home to the highest
number of construction claims in the
world, according to the Institute of
Construction Claims Practitioners
(ICCP). The way that we do things
out here, in my opinion, encourages
claims, as we insist on projects being
done as quickly as possible. And that
is just a breeding ground for these
types of disputes, ICCP executive
Andy Hewitt told Construction Week.
Andy Hewitt
Source:
www.constructionclaimsclass.com/
about/people/
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Meanwhile, more than 40 per cent of
respondents have told MEED that late
payments are worsening this year.
The survey, which included architects,
engineering firms and contractors,
showed that the worst situation
concerned private sector rather than
government clients.
Such difficulties combine with the geo-
political hurdles of sluggish oil prices,
regional conflicts in Yemen, Iraq and
Syria, and fiscal difficulties to present
a picture of uncertainty in the Gulf.
Yet the fact remains that numerous
contracts, projects and future plans
remain live.
In Kuwait, the Port Authority is
seeking bids for road and facilities
management at its three sites in
Shuwaikh, Doha and Shuaiba. It also
plans to restart procurement for the
previously-stalled Mubarak al-Kabeer
port project.
Qatar Rail has extended its deadline
for a 20km addition to the Doha
Metro Green Line. Six international
consortia, including contractors from
Greece, Spain, Austria, France and
Italy, have been shortlisted.
KSA is, in many respects, leading
the rush towards privatisation and
the use of PPP. The Kingdoms
endorsement of new policies has
been driven primarily by the impact
The Saudi Arabian
government predicted
that all of the Kingdoms
airports will have
set out on a road to
privatisation during
the year ahead, using
a transfer of assets to
the Public Investment
Fund.
Source: Stefan Krasowski, Creative Commons
of its strategic decision to take on the
US shale gas producers by allowing
oil prices to fall (in agreement with
its fellow OPEC members). A new
generation of policy-makers wants
to use the situation to modernise
the Saudi Arabian economy, to vary
procurement methods and to evaluate
high-cost projects by their social and
economic utility.
The Saudi Arabian government
predicted that all of the Kingdoms
airports will have set out on a road
to privatisation during the year
ahead, using a transfer of assets
to the Public Investment Fund. The
Civil Aviation Authority head, Abdul
Hakim Al-Tamimi, told journalists that
airport assets would be transferred
into a state-owned holding company
with the aim of selling stakes in the
businesses to private operators and
investors over a period of time.
The aim is to improve the level of
services provided to passengers, and
to convert the targeted sectors into a
profitable centre to cover costs and to
be a source of income for the owner,
stated Al-Tamimi. His organisation
envisages a mix of procurement
methods and management
collaboration, including the sale of
minority stakes, PPP and build,
operate and transfer agreements.
September 2017 6
Regional
He commented that the authority
would be the regulator and controller
of the aviation sector in the next
phase, in the event of concluding the
privatisation process. KSA has hired
Goldman Sachs to manage the sale
of a stake in King Khalid International
Airport, the first such privatisation,
according to Reuters.
Banque Saudi Fransi is concluding
the US$600 million financing of a
three-airport project to a Turkish-
Saudi venture that will design,
build and operate a new passenger
terminal at Prince Abdul Mohsin bin
Abdul Aziz Airport, and redevelop
airports at Qassim and Hail.
The Kingdom has also announced
a new PPP airport project serving
Jubail Industrial City and Jubail 2 in
the east of the country. This will be
the sixth airport PPP in the country,
bringing the number of airports to 28.
KSAs first PPP-procured airport, the
US$1.2 billion Prince Mohammed
bin Abdulaziz at Medina, was fully
commissioned in 2015.
KSA is now planning to extend PPP
to rail infrastructure with four urban
metro and light rail schemes at Makkah,
Jeddah, Medina and Dammam. Rail
network privatisation could follow a
Dubai visitor
performance data
Americas
6%
Total International
Guests
9.20 M 8.40 M
2017 2016
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similar pattern to current planned
changes in the airport sector.
PPP funding is the way of the future
for many projects in the Middle East,
according to Mathew Shimmy of KBW
Investments. He told Construction
Week: [PPP] is a great way for the
private sector to shoulder some of
the burden of financing and to help
deliver a huge variety of infrastructure
projects here, a burden that has
traditionally been the domain of local
government.
Despite various uncertainties, the
UAE also remains a hive of intense
activity. Trade Arabia has reported
that the top ten commercial and
retail projects in the Gulf are based
in the UAE, with Dubai still attracting
particular regional and international
interest.
The publication also found that the
total value of UAE transport projects
481 of them received a total value
of US$87.6 billion during the first half
of 2017.
Dubais confidence is driven partly
by its continuing success as a tourist
destination. Overnight visitors during
2016 topped 15 million, a five per cent
increase. 40 per cent of them came
from the major markets of the UK,
Western
Europe
20%
MENA
11%
Africa
5%
Source: https://www.visitdubai.com/en/tourism-performance-report
Germany, India and the rest of the
Gulf, while total spending grew by 7.6
per cent.
His Highness Sheikh Ahmed bin
Saeed Al Maktoum recently told
Reuters that success will continue
to be driven by capital investment
projects. As an example, he pointed
out that nearly 50 contract awards
are expected in relation to Expo
2020 alone. Dubai is planning a
major and increasingly sophisticated
role in regional and global value
chains through transport, distribution,
marketing services and research and
development, he added.
As outlined in Saudi Vision 2030,
KSAs growth plan, the Kingdom is
expanding the Two Holy Mosques
in order to accommodate 30 million
Umrah visitors each year, up from
the current annual figure of 8 million
religious tourists. The US$16.5 billion
Haramein high-speed rail link between
Makkah and Medina is due to start
operations in 2018, while the Public
Investment Fund is also planning a
major tourist destination on the Red
Sea coast, encompassing 200km
of coastline with a vision to create
35,000 jobs and contribute US$4
billion to the economy each year.
Eastern
Europe
7%
GCC
North Asia and
20% South East Asia
South
Asia 11%
18%
Australasia
2%
September 2017 7
Commodities

Price analysis

2016 2017
Commodities Unit Q4 Q1 Q2 Q3
Non-ferrous metals
Aluminium alloy US$/tonne 1,574.27 1,648.28 1,661.90 1,689.83
Aluminium US$/tonne 1,749.42 1,897.03 1,951.97 2,019.64
Copper US$/tonne 5,307.21 5,847.78 5,722.10 6,304.01
Lead US$/tonne 2,171.89 2,255.26 2,174.03 2,338.89
Nickel US$/tonne 10,991.02 10,594.05 9,563.54 10,455.06
Tin US$/tonne 20,649.65 19,934.37 19,804.76 20,191.05
Zinc US$/tonne 2,468.65 2,600.74 2,510.18 2,773.40
Steel
Reinforcing bars US$/tonne 413.33 445.00 433.33 497.50
Steel beams - channel US$/tonne 523.33 556.67 570.00 632.50
Hot rolled plates US$/tonne 473.33 521.67 485.00 562.50
Cold rolled coils US$/tonne 561.67 628.33 530.00 595.00
Prepainted galvanised steel, 0.35 US$/tonne 673.33 785.00 761.67 852.50
Stainless steel HR coils 304 base US$/tonne 2,158.33 2,258.33 2,058.33 2,212.50
Energy
Crude oil US$/barrel 47.46 52.03 48.58 48.19
Diesel (Dubai only) US$/gallon 6.91 7.52 7.39 7.04
Cement
Cement US$/bag 3.62 3.66 3.74 3.76
Cement (Dubai suppliers) AED/m3 13.39 13.56 13.83 13.92
Rubber
Rubber US$/100kg 187.02 228.93 217.00 213.45
Bitumen 60/70
Bitumen US$/tonne 493.24 493.24 493.24 493.24

Non-ferrous metal prices are derived from London Metal Exchange, whereas steel prices are derived from Middle East steel price
indications; all based on average prices for the month.
The price of rubber is derived from International Rubber Board, based on average prices for the month.
All prices for commodities are based on bulk quantities, cash trade, US dollar.
Where ranges have been provided, an average price has been assumed for the purpose of comparison.
The rate for beams - channels has been derived from Far East/Europe/India market.
Cement prices are derived from UAE local supplier.
Crude oil price is derived from light crude Brent, US market.
Diesel rates are from EPPCO.
Concrete rates AED/m3 based on the average price of concrete 45/27 from four UAE local suppliers.
Reinforcing bars are based on the average price from four UAE suppliers.
Cement rates AED/tonne based on the Dubai government cap imposed in 2008.

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 Commodities

Crude oil (2006 - 2017) Cement (2006 - 2017)

30.00

120.00
25.00

105.00

90.00 20.00
US$/barrel

75.00

US$/bag
15.00

60.00

45.00 10.00

30.00
5.00
15.00

- -
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Diesel (Dubai only) (2009 - 2017) Steel (2006 - 2017)

16.00
5,000.00 Steel beams - channel
Hot Rolled Plates
14.00 Cold Rolled Coils
Reinforcing bars
4,000.00
Prepainted Galvanised Steel, 0.35
12.00
Stainless Steel HR Coils 304 Base
AED/gallon

US$/tonne

10.00 3,000.00

8.00
2,000.00

6.00

1,000.00
4.00

2.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2009 2010 2011 2012 2013 2014 2015 2016 2017
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Low non-ferrous metals (2006 - 2017) Non-ferrous metals (2006 - 2017)

4,500.00 50,000.00 Copper

Lead
Nickel
Aluminium Alloy 45,000.00
4,000.00 Tin
Aluminium

Zinc 40,000.00
3,500.00

35,000.00
3,000.00
US$/tonne

US$/tonne

30,000.00

2,500.00
25,000.00

2,000.00
20,000.00

1,500.00 15,000.00

1,000.00 10,000.00

5,000.00
500.00

-
- Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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Focus

Driving value with

lifecycle costing
The Forth Road Bridge, an
international icon and one of the longest
span suspension bridges in the world,
cost approximately US$16 million by
completion during the early 1960s.
The bridge near Edinburgh, Scotland,
is still admired by engineers and the
general public visiting both the bridge
itself and the magnificent, adjacent
Victorian rail structure crossing the
River Forth. Since its completion
five decades ago, the road bridges
maintenance costs have totalled
in excess of US$340 million, more
than 21 times the original capital
construction cost.
A second road bridge, the 2.7km
Queensferry Crossing, opened this
month, completed at a capital cost
of US$1.8 billion. Its funders are
celebrating that this was at a fraction
of original costing estimates, due to
the application of modern planned
design and construction techniques,
most notably off-site pre-fabrication of
major components.
Such financial facts are a vivid
illustration of the challenges facing
clients, project managers and
construction businesses as they
assess the true cost and value of any
proposed investment. What matters
most when we are planning major The Forth Road Bridge
construction of infrastructure projects,
such as roads, schools, hospitals or
airports? How do we measure their While the experience of the last 50 An international icon
true value, and their likely cost-benefit years includes several periods of high
over a fixed period of 20 years, 30 inflation, the challenge remains as and one of the longest
years or even longer periods? We relevant as ever. On average, over suspension bridges
a 50-year period, the initial capital
should expect major infrastructure
construction costs may amount to just
in the world, costing
investments such as bridges and
tunnels to have a lifespan in excess 30 per cent, or even less, of the total around US$16 million
of a century, if the rail bridge crossing whole-life cost of typical projects. by its completion in the
the River Forth is any guide.
early 1960s.

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Focus

Expert understanding of whole-life

costs, termed lifecycle costing (LCC),
has improved substantially in western
economies over the last 15-20 years,
and various professional disciplines
accountancy, project management
and cost consultancy have
developed sophisticated measures
to assess the true whole-life cost of
projects.
The application of LCC is being
given new vitality in the Middle East
and Asia-Pacific (APAC) markets,
as clients in these regions adopt
advanced approaches to funding,
including public-private partnerships
(PPPs) and other measures. In the
Middle East particularly, such funding
approaches are being driven by the
need to reduce dependence on oil,
as well as significant pressures on
capital availability.
What should clients do when faced
with the need to adopt LCC? First
of all, they should seek the advice
of their cost consultants and be
encouraged to think that the whole-
life cost of their investment is
analogous to an iceberg, where only
the upfront capital cost is visible.
The invisible costs, those below
the waterline of the iceberg
representing the ongoing costs of
running and maintaining a facility to
the end of its life - are much larger.
In the past, too little regard has been
paid to these hidden costs and this
remains true to an extent today.
However, realistic LCC forecasts
can enable incorporation of building
management efficiencies at the
design stage, offering the chance
to reduce operational budgets
significantly.
How is it done? Firstly, it is vital to
engage the LCC process from the
earliest possible stage of design.
The LCC approach begins by
importing development cost plans
into the initial financial model, with
each component of the development
properly assessed covering
repairs, cleaning and maintenance,

LLC Technical Standard as featured in BS ISO 15686-5

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Focus
replacement or redecoration intervals.
Accurate data available from
manufacturers, in-house records and
facilities management, can assist in
these much-improved forecasting
techniques. An assessment of the
utility costs, occupancy levels,
utilisation and other aspects of
a facilitys use creates a realistic
forecast of its total operational costs
over the facilitys desired lifetime. The
future cashflows from the LCC model
are discounted using the net present
value (NPV) process to achieve a
common basis for comparison and
benchmarking.
This approach makes the financial
appraisal process simpler, with the
ability to make real comparisons, and
drives improvement throughout the
development. Combined with greater
demand for sustainability across the
construction chain, the LCC process
is fast becoming a must have for
developers and owner-occupiers.
Here is the key to the bottom line:
implemented properly, LCC repays
more than its costs as it is a low-cost,
high-benefit approach, achieving
long-term value for its developers,
owners and financiers. It generates
a lower overall whole-life cost, as
well as higher quality. How many
times have we seen the downside
of an approach that aims simply to
cut initial costs, resulting in higher
maintenance and repair bills further
along the line? In that context, it
can be argued, therefore, that LCC
represents plain common sense,
generating recognised benefits such
as reduced running costs, lower
energy consumption and more
efficient facilities management.
LCC also promotes closer
collaborative working during the
design and planning stage of the
project. Clients and professional
advisors can take a combined
approach to analysis at component
or elemental level in deciding how
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to make efficiencies in design,
maintenance, health and safety and
risk assessment. Vastly improved
data from international benchmarking
means that there is a lot more
information available too.
Sustainability standards are
increasingly important. They include
the UKs internationally recognised
standard Building Research
Establishment Environmental
Assessment Method (BREEAM),
which now covers more than two
million projects worldwide and was
the worlds first such programme.
The USs green building certification
Leadership in Energy and
Environmental Design (LEED) first
developed as a set of rating systems
for the design, construction, operation,
and maintenance of buildings, aiming
to help building owners and operators
be environmentally responsible
and use resources efficiently is overheads. Now planning can be more
increasingly more relevant.
In the United Arab Emirates, Abu
Dhabi has adopted Estidama. Based
on the Arabic for sustainability,
Estidama has been adopted as part
of the Vision 2030 initiatives as a
collection of values which will underpin
new building projects.
In the APAC region, Singapores
Green Mark, Australias Green
Star and Hong Kongs BEAM
lead the initiative and are being
continually upgraded to meet greater
expectations from designers and
challenges presented by global trends.
Generations of cost consulting and
procurement management mean that
advisory teams have more information
available to them than ever before.
Whether new-build projects are
completely new, such as major
bridges or other infrastructure, or are
replacements or refurbishments of
schools or hospitals, enough is known
about what will work best over the
lifetime of the project.
When implemented
properly, LCC repays
more than its costs as
it is a low-cost, high-
benefit approach. LCC
achieves long-term value
and can result in a lower
overall cost, as well as
higher quality.
Just as schools built a century ago
were difficult to clean and lacked
energy efficiency, so their successor
buildings of 50 years ago had known
problems in terms of maintenance and
sophisticated: if, for example, most
maintenance can only be undertaken
during school holiday periods, a
proper specification covering a
projected 30-year lifetime can include
accurate costs and schedules
accordingly. Consultants know which
materials and their arrangement
flooring, glazing, roofing offer best
whole-life value, even though, as
is not unusual, their upfront cost is
higher than cheaper alternatives that
need more maintenance or earlier
replacement later on.
Overall, there is plenty of evidence
that adopting the LCC approach to all
projects works well, makes economic
sense over time and addresses the
rising expectations that what we
build should be sustainable. The
key for clients and advisors is to
take a considered approach upfront:
decisions made before day one of
construction can reverberate for
good and ill for years to follow. Done
properly, LCC smoothes the path and
delivers true whole-life value.
September 2017 12
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