Industrialised, Integrated, Intelligent sustainable Construction - I3con

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SUSTAINABLE CONSTRUCTION HANDBOOK 2 This makes no sense if user and societal requirements, as well as environmental conditions, change. For many building types, such as hospitals, schools, retail centres, office buildings, transfer centres and factories, requirements may change every 5 to 10 years. If the building cannot be modified adequately, three options exist: (a) users stay in the building but have to accept a sub-optimal solution, (b) the original users leave, so that the building gets a function for which it was not originally designed, or (c) the building will be demolished. In all cases the value of the building decreases, which poses a serious risk for the investor. Figure 1. Many buildings are demolished and end up as landfill, because they do not meet today’s standards for usage, and because they are not designed for disassembly and reuse The recent crash of the financial system has demonstrated these risks once more. Most construction projects are funded through loans from a bank. For a bank, the artifact is collateral for the loan. If the lender cannot meet his or her financial obligations, the bank is entitled to sell the collateral on the open market. But if such a market does not exist, the collateral has no value. Banks will perceive such loans as too risky. In the best case the bank will provide the credit but asks a high interest percentage in order to compensate the risk. It is of course possible to produce buildings with a shorter lifetime. But the capital investments in buildings are usually so high that they cannot be written off in a short period of time. Moreover, the need to demolish a building after a short period worsens the already existing problem of excessive waste. Dynamic thinking in construction is not new. Several initiatives have been taken in the past to realize buildings, often using industrial production techniques that can be changed if user requirements change. Probably the most well known concept in this respect is Open Building [Kendall 1999, Habraken 1988]. An Open Building has a fixed, durable, main structure, and a flexible infill. The Open building concept is primarily an architectural - and partially technical - answer to the problem. 188
HANDBOOK 2 SUSTAINABLE CONSTRUCTION More and more construction companies offer today mass-customized solutions, based on industrially manufactured building systems and production automation. Clearly, these are steps in the right direction to improve the efficiency and quality of construction. But most industrial solutions are however positioned as alternatives for traditional contracting and rely therefore primarily on the reduction of initial (capital) costs, not on reduced Total Lifecycle Costs, reduced risks or increased client value. Furthermore, a building that is customized and made fit-for-use at the beginning of its lifecycle, may not remain fit-for-use at a later stage. Buildings that deviate from average market requirements are perceived as risky investments but will never be optimal solutions for users. Objectives This paper describes a new business model for construction that recognizes changing user demands as well as changing social and environmental demands. Not by trying to predict the future, but by realizing product/service combinations through which buildings can de adapted continuously, without destroying capital value and without causing waste and environmental damage. The research examines also the required change of contractual relationship between client and provider. Background In 2002, the national parliament of the Netherlands held an enquiry about fraud and cartel agreements in the Dutch construction sector. It was concluded that the sector had to reorganize itself. In order to support the transition process, a research and development programme called PSI Bouw was executed between 2004 and 2007. One of the most challenging concepts that came out of this programme was the Living Building Concept [de Ridder 2006]. A few companies now try to implement this concept in practice. Chapter 1 presents a model of four levels of business efficiency. It clarifies the difference between the Living Building Concept as a Product Service System (PSS) and current business offerings in construction. Chapter 2 describes the lifecycle model of adaptable, <strong>sustainable</strong> buildings. Chapter 3 discusses the processes of condition and performance monitoring, vitalization and remanufacturing. Chapter 4 addresses financing and value creation, and chapter 5 describes a pilot project in Veenendaal, the Netherlands. The Business Model Four Levels of Business Effectiveness The type of business offering that is most appropriate for the new concept is a value oriented Product/Service combination. It differs fundamentally from existing business offerings in construction. The differences will be explained here. The efficiency of a modern enterprise with respect to the delivery of client value can be expressed on a scale that has four distinctive levels [Gielingh, 2006]; see also Figure 2. a) An enterprise that offers capacity, such as human capacity, is paid based on time spent on a job. It does not sell the results or the way in which these results are obtained. Risks are minimal for the provider, but maximal for the client. b) On the second level, enterprises offer processes, such as in the form of projects. They commit themselves to execute a project within time and budget. Results are variable and differ from project to project. c) On the third level, enterprises offer products or services to their clients. They commit themselves to time, budget and results, but not to (end) user value. Most industrial enterprises, such as car manufacturers and producers of household appliances, belong to this category. 189
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