From whole-life costs to whole-life value
Beyond whole-life cost — Andy Green of Faithful & Gould.
A new guide to ‘Achieving whole life value in infrastructure and buildings’ could play a key role in helping the construction industry answer the challenge laid down in the National Audit Office’s report on ‘Improving public services through better construction’, published in March. The Audit Office report states that while there is wide recognition of the need to base procurement decisions on value for money, many are finding it difficult to design and procure construction on the wider basis of whole-life value. Lack of real understanding of the whole-life value concept and the absence of suitable assessment tools to assist clients evaluate the interrelationships between costs, time and quality, and the wider social, environmental and economic impacts are among the many barriers to progress highlighted in the report. Collaboration between public- and private-sector organisations has produced a practical guide that has been greeted enthusiastically at road shows by delegates drawn from a broad cross-section of clients, designers, constructors, operators and industry procurement bodies. The guide demystifies whole-life value by explaining the working principles, supported by four working examples. There is an index of 66 assessments and when and how to apply them. Purchasing decisions have historically tended to centre on initial construction costs. The latest thinking is to look at the cost of developments over their entire life and focus on delivering value to all stakeholders — calling for a shift in the approach to achieving the best-value solutions from a business-benefits perspective. Andy Green, director and head of whole-life cost at Faithful & Gould, co-author of the guide, explains: ‘Many organisations are today adopting aspects of whole-life costing. Whole-life value is a step beyond whole-life cost and involves making decisions based on broader criteria, whilst also taking account of the needs of a wider range of stakeholders instead of just those typically involved in the immediate decision-making process. ‘The WLV guide is designed to help procurers understand the basic principles and how to appropriately use the techniques and tools currently available in the market. The guide illustrates how to appropriately used to help bring transparency and accountability to help make better informed investment decision making.’