Whole Life Performance, Theory, Practice and Latest Developments

Kim Newman – Managing Director

PML (Programme Management) Ltd

BSc MCIPS MBIFM MCMI

Introduction Why consider the long term, what

are the benefits? Who should own the life cycle fund? Theory into practice Latest developments

Whole Life Performance

Roles and ownership

Who Designs Buildings? Who controls the briefing process? What is the Project? (D? B? F? O?) Who should ‘own’ the PM role?

Design / Construct Team?FM team?Financial team?

ClientDesign professionalsQuantity SurveyorFacilities ManagerProject ManagerMain ContractorFundersSPV

Who should manage the Whole Life Performance process?

Who gets involved and when?

Inception/ Feasibilty

ISOP/ ITN ITN/ BAFO Contractual/

Financial Close

Concession

Client

Project Manager

Designers

QS

Facilities Manager

Funders

SPV

Why consider the long term?80% of the cost of running,

maintaining and repairing a building is fixed in the first 20% of the design process (source: Ministry of Defense)

Over a 40 year life, maintenance and repair costs will far exceed the initial capital cost of a building

Ratio of Capital cost to maintenance and operating costs can be 1:5:200

Savings through Whole Life Costing

Who has a long term interest?

Consortium ShareholdersFunders

Construction Management

Facilities Management

Specialist Advisors

Estates Management

Subcontracts Subcontracts

Long term Interests

Design in Tension Competitive tension within the consortia comes from

the SPV's requirements to submit an affordable bid.

If they are smart they will have worked backwards from the affordability figure given by the client and allocated a potential cost to the various elements of the consortium.

How do you define ‘affordable’? Against the Capex criteria? Over the Life Cycle?

• Which one has most sway at the ‘crunch’?

Design in Tension So what should the Client be providing?

A comprehensive Output Specification where they will have listed their requirements for the running of the building, not how to do it, just what they want and occasionally, when they want it.

A comprehensive list of their functional requirements for the core business, again, not how, just what. A guide to the durability standards of building

components and general quality standards which will inform the Life Cycle replacement and maintenance programmes.

Design development should then proceed on the basis of meeting the long term Client requirements.

The ‘Whole Life’ approach...

Predictive approach to asset ownership Considers the future life of components in the

context of their use Uses this information to influence design

specification solutions Based on certain assumptions

That components are well defined in terms of durability.

Design and construction meet good practice. That components are maintained in accordance

with good practice. Assumes data matches installed elements

What was specified may not be what was installed

Design for tomorrow.. Think long term from inception. Quality of ‘the product’ dictates ongoing costs.

80% of the cost of running, maintaining and repairing a building is fixed in the first 20% of the design process (source: Ministry of Defence)

Over a 40 year life, maintenance and repair costs will far exceed the initial capital cost of a building

Ratio of Capital cost to maintenance and operating costs can be 1:5:200 (Source: BAA).

Learn from industry experience. Typically 40% of building defects are caused by errors

or omissions in design/ detailing/specification 40% defects due to errors in construction and poor

workmanship

Think ‘user’….think ‘life’ Advise - Bid / Tender Stage

Design / Spec development - optimisation (Design intent v Operational usage)

Use prediction of life cycle as a design tool (‘Soft and Hard FM issues)

Control - Production Information / Site Works Technical review of design / detailing, optimise life profile Site audits to verify design intent

Insure / Risk Manage - Throughout Lifecycle Latent defects and premature failure / Performance penalties

Monitor - Into the Lifecycle Cyclical inspection and reporting to verify plan profile Procurement of remedial work to meet plan

Feedback - For Future Works

What are the risks? Key Design Stage Risks / LCC Consequence

Overestimate of component life Inadequate specification based on Capex

only. Final design deviates from generic asset

specifications Design fails to recognise FM and

Construction output specifications Contractor deviates from agreed

specifications Building fails to meet post-concession

residual life criteria Acceptance of incorrectly commissioned

facilities

Inadequate whole life cost plan Excessive whole life cost plan

If bid too low - reduced margin. If bid too high - uncompetitive tender

Inadequate whole life cost plan and performance deductions

Potential inability to meet service requirement specifications and increased likelihood of performance and availability deductions

Whole Life Costs and performance flow from design decisions - not just cost analysis

Interfaces/impacts on whole life costs

Whole Life Cycle Design and Management

WHOLELIFE

PERFORMANCE

Detailing(how incorporated in

building)

Deteriorationagents

Maintenance(type, frequency)

Environment(macro/micro, climate)

Quality of component(spec & detailing)

Storage(on site prior to

installation)

Workmanship(how well installed in

building)

Interfaces(between components)

Whole Life Cycle Design and Management Constituent Parts

What is and isn’t part of the life cycle cost?

Who defines it?How is integrity ensured?

What are Whole Life Costs?

Total cost of ownership?

SCHOOLS - LIFE CYCLE FUND - STANDARD BID

0

2,000

4,000

6,000

8,000

10,000

12,000

1-6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Consideration of the total cost of ownership from inception to decommissioning and disposal of an asset.

What methods have been used?Guess !!Percentage of construction costsCost per square metre (£/m2)Previous projectsGeneric models

Methods of prediction

Difference in projected life• I.e CIBSE

Basis of data• I.e previous projects, £/m2

Impact of factors on whole life cycle plan.

Key requirement – empirical data

Factors affecting data accuracy

Typical Whole Life Cost Plan

Insert detail eg**** ELEMENT AREA DESCRIPTION QUANTITY UNIT RATE 1-6 7 8 9 10

4.2 - FLOOR FINISHES Sta irwell/ Entrance hall

Redecorate Pro prietary paint finish to concrete 70 m2 3.00 - 198 - - -

4.2 - FLOOR FINISHES Entrance Foyer Redecorate timber paviours, varnished 105 m2 3.50 347 - - - -

4.2 - FLOOR FINISHES C ourthall 01 Redecorate varnished 561 m2 3.02 - - - 1,595 - 4.2 - FLOOR FINISHES Store 01 Redecorate, painted 23 m2 3.02 - 66 - - - 4.2 - FLOOR FINISHES Store 02 Redecorate, painted 590 m2 3.50 - - - 1,944 - 4.2 - FLOOR FINISHES Foyer Redecorate, varnished 397 m2 3.02 - 1,129 - - -

4.2 - FLOOR FINISHES Yo uth wing ha ll/Store Redecorate, varnished 214 m2 3.02 - 608 - - -

4.2 - FLOOR FINISHES Office 01 Redecorate, varnished 582 m2 3.02 1,654 - - - -

4.2 - FLOOR FINISHES Entrance hall Regrout - 150 x 150 quarry tiles 5 m2 14.12 - - - - -

4.2 - FLOOR FINISHES Water Feature Regrout - 150 x 150mm ceramic tiles to poo l 351 m2 14.12 - - - - -

4.2 - FLOOR FINISHES WC Regrout - 150 x 150mm quarry tiles 9 m2 14.12 - - - - -

4.2 - FLOOR FINISHES Entrance Lobby Regrout - 150 x 150mm quarry tiles 166 m2 14.12 - - - - -

4.2 - FLOOR FINISHES C lo ak room Regrout - 150 x 150mm quarry tiles 35 m2 14.12 - - - - -

4.2 - FLOOR FINISHES Water feature Regrout - 150 x 150mm textured non- slip quarry tiles 168 m2 14.12 - - - - -

4.2 - FLOOR FINISHES Entrance hall Reg rout - 300 x 300 granite tiles 58 m2 14.12 - - - - -

4.2 - FLOOR FINISHES WC Regrout - granite tiles 305 x 305mm 29 m2 14.12 - - - - -

4.2 - FLOOR FINISHES Cafeteria Regrout- 150 x 150 clay tiles 23 m2 14.12 - - - - -

4.2 - FLOOR FINISHES C orridor Regrout- 150 x 150 clay tiles w ith matt well inco rporated 1 Nr 14.12 - - - - -

Elemental Analysis SheetCourt 01 - Element 4.2 - Floor Finishes

Typical Whole Life Cost Plan

Empirical data

What are the key areas of risks within a PFI/PPP project?

How are these measured and managed throughout the project?

How can the resultant whole life cycle risk be managed?

Risk Management

Risk Modelling

0.00

0.02

0.05

0.07

0.10

0.12

16.14 19.62 23.10 26.59 30.07 33.55 37.03

Distribution for Total/Monte Carlo/G14

PROBABILITY

0.0

0.2

0.4

0.6

0.8

1.0

16.14 19.62 23.10 26.59 30.07 33.55 37.03

Distribution for Total/Monte Carlo/G14

Prob ofValue <=X-axisValue

Asset Life Vs Probability

Asset Life Vs Probability

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

16%

17%

18%

19%

20%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Asset Life/Yrs

Lif

e S

pa

n P

rob

ab

ilit

y

Budgeted Life

Manufacturer's Life

Optimum Life

Consolidated modelling approach using empirical data within a risk management environment

Independent fund managementInsurance productsSecondary Market and Fund

acquisition

Latest Developments

Whole Life Cycle Fund Management Model

Budgeted Cost

Optimum Cost Comparator

Existing Life Cycle Fund

Data gathering

Technical Audit/

Commercial Analysis

Statistical modelling

Service Improvements/

Insurance Routes

Contract Management/Performance

Monitoring

Know-HowKnow-How

Scenario testing

RIS

K M

AN

AG

EM

EN

T

INFORMATIONFLOWS

CONTROLMECHANISMS

Systems

People

REALITYREALITYGAPGAP

Summary

Maximising the advantages of FM input Learning from Egan - Act early to design and build out

faults Component based empirical data analysis and

performance forecasting Standardised data / structured information Risk management and modelling tool New developments

Questions ??

Kim_newman@pmlgroup.com