This is Part Two of a series of articles on Sustainability that will consider how a prudent decision-maker working in the built environment might improve his/her insights and capabilities. They will appear periodically and will contain both reflections, and guides to the use of both basic and more advanced analytical tools.
This Part 2 considers some of the issues in decision-making. This is a key area relative to achieving sustainability objectives, as sustainability inevitably involves balancing numerous factors. Good understanding of concepts and of decision-making tools, will improve the likelihood of achieving real sustainability.
(The School of Pythagoras, at St.John's College, Cambridge is over 800 years old, and new uses for the building are still being found)
Having considered sustainability in general, it is necessary to focus on the issues associated with buildings. In contrast to packaging, clothing, or even cars, whether a building is to be effectively sustainable or not is a long-term matter. It is sustainable over its life-time only if it makes a positive overall contribution to the various factors of sustainability, including natural, physical and/or human capital, and generally contributing to human well-being without being an excessive drain on resources. When a building, or part of it, is disposed of, the resources used in creating it no longer remain productive in that use. Thinking in accounting terms, the resources used in a building are essentially ‘amortized’ over the life of the building. Such things as vacant shopping malls indicate that, even though a building might work well when it is completed, it might still be an unsustainable concept or design over the longer-term – and it might not even be known then, as vacant buildings might still be adapted to serve new purposes.
Decisions about the built environment have special characteristics, and people who create and manage buildings have to be aware of these factors.
Multiple attributes
A building can provide a range of benefits, including such things as
shelter, status, personal expression, financial value, and access to nearby
benefits, such as related businesses or desirable schools. This means that buildings have a high level
of complexity.
Fixed in space
Most assets can be moved to locations where they
perform best, but, generally, not buildings. This, therefore, means that the
utility of buildings is entwined with their location. This also means they are
targets for regulation and taxation because they cannot move to a more lenient
jurisdiction.
Every building is
unique
Buildings are all individuals, if only because each
one occupies a different site, and are likely to be occupied by people or
businesses who put different demands on them.
Even fast food restaurants are on different pieces of land, and have
differing orientations. This situation
has to be respected, so principles of sustainability must be applied on a
case-by-case basis.
Very long lifecycle
As we saw earlier, almost everything associated with
buildings takes longer than for other products.
They take long times to build, and potentially can last hundreds, or
even thousands, of years, during which uses and expectations can change
dramatically. For some buildings, such
as hospitals, it is possible that substantial changes may occur between initial
conception and completion of construction.
The result of this is that most buildings are in second-hand use.
Universality
Everyone uses buildings (if only indirectly).
Open-ended demand
The demand for buildings sometimes goes far beyond
rational need. Individuals and
corporations sometimes invest heavily in buildings for reasons that are best
interpreted by the psychologists. While
for most goods and services, demand tapers off as more is received, this is not
always the case for buildings. There are
many examples of people, corporations and governments who have ruined
themselves through excess building. King
Louis XIV of France was nearly bankrupt through much of his reign, but that did
not stop him from building the Versailles we know today. In Toronto, Sir Henry Pellatt built Casa
Loma, the largest home in Canada, even while his fortune was being compromised.
Lack of quality data
It is very difficult to get good data on how buildings
perform. There are many variables and
such things as occupancy patterns, fuel consumption, refurbishment, rents and
sale prices vary on a case-by-case basis, sometimes varying between different
floors or on different faces of a single building. Decisions still have to be made, often using
limited data (which can still be very useful if interpreted properly), so for
the developer and architect, every case is a special case. This may not be ideal, but it is the world in
which developers, architects, engineers and other industry participants have to
operate.
Communication
with other disciplines
The building
industry has its own terminology and concepts that can be different from those
in the management disciplines.
Making Decisions
Decision-making in the built environment is always about attempting to achieve balance between competing factors, and it is often difficult. The environment, energy, business concerns and social and cultural impacts are all criteria relating to comprehensive project sustainability. To make things worse, buildings and infrastructure can last centuries, so a successful balance will involve both the somewhat-knowable, and some highly unclear future.
If the decision-making methods are fundamentally flawed or incomplete, good balance is unlikely to be achieved, and the results might be rather like throwing possible solutions at a problem, and hoping something will stick. The likelihood of a reasonable basket of sustainable objectives being met would, in such cases, be low.
There are two ways in which sustainability can be undermined.
Underinvestment: This typically occurs when higher initial standards would have resulted in increased longevity, lower ongoing energy consumption, lower maintenance, better functionality, or fewer ongoing replacements. Opportunities to do better have been missed, because not enough resources were expended initially.
Overinvestment is less obvious. This is when the initial standards, hence resource use, are higher than would be warranted by the benefits generated through a building or component’s life, sometimes occurring because the building or part of it experienced a short life.
Neither under-investment nor over-investment make an optimum use of resources. With under-investment the current generation is too stingy and as a result imposes a burden on future generations. Advocates of sustainability generally prefer to see more invested in such things as high levels of insulation, renewable energy systems, and long-lasting and recyclable materials. However, high up-front investment increases the risk of over-investment, which can be as unsustainable as under-investment – perhaps even worse, as buildings can be upgraded in the future, but if the benefits are disappointing, expended resources can rarely be recovered. In such a case, over-investment by today’s generation consumes resources not available to future generations. The quest for sustainability involves dealing with complex issues in an environment of rampant uncertainty.
The management literature offers numerous tools, many allowing quantification, but, while they are often insightful and might be usefully employed in other industries, the characteristics of buildings and infrastructure mean that using them without due consideration of real estate’s special characteristics is unwise. Given the complexities in the built environment, we often find a very curious thing – people making major built environment decisions with significant financial, environmental and social/cultural implications without the sort of careful analysis you might see done by people designing hair blow-dryers.
These issues mean that the capabilities of experienced professional engineers and architects become important in defining and understanding issues, devising possible solutions, employing various decision-making tools, and arriving at suitable decisions.
In spite of the fact that decision-making is a fundamental part of being an animal – rats, dogs and pigeons are among the non-human species that have had their decision-making capabilities explored, the process of becoming an expert human decision-maker can be quite protracted. There are significant advantages in dealing with architectural and engineering firms where experienced senior members of the profession are directly involved with design matters.
Uncertainty
Almost every decision made faces uncertainty, but those dealing with buildings, because of their multi-attribute nature and long lives, face more than most. If there was no uncertainty, decision-making would be easy, with optimality readily achievable.
Mathematical tools can be of considerable support to the decision-maker, even if they are only used conceptually. The fundamental tool is discounted cash flow analysis, although it can be known by other names, such as cost-benefit analysis, whole-life costing, or net cash flow. Decisions relating to buildings that face high levels of uncertainty should reflect high discount rates, which imply an emphasis on the short term. While this sounds inappropriate (‘short-termism’ is popularly seen to be a reprehensible strategy), in high-risk contexts it can be appropriate. If future returns are highly uncertain, not as much should be paid to get them than if they were more certain to appear. Technology changes as do regulations and fashions. Why use expensive flooring in a situation where it is likely to be ripped up in a few years due to a change in fashion? Expensive, durable, flooring would likely be a good choice in a school, but not in a boutique selling trendy clothing.
It is surprising how often uncertainty is almost ignored in decisions. Consideration of it, even in general terms, will likely lead to better decisions.
Optimality
If we cannot know the future, what is an optimal decision?
Decision-makers can only use information that we have in the present (including historical data).
Decision-makers have to be humble –beware of projections of future events. It is only necessary to look back a couple of decades to see that events can unfold very differently from projections.
Flexibility and adaptability are important – that we give these as resources to let future decision-makers to act responsibly, according to the demands, expectations and available technologies and resources available in their own times.
An optimal decision is not the one that is known in hindsight, because (as will be seen in a future piece) reality can unfold in very improbable ways, rather like flipping a coin and having heads come up ten times in a row – you can win on betting for that, but, in most cases, it is probably not a prudent wager. That means that the optimality is established at the time the decision is made, and that means integrating the best information with the best decision-making techniques, and that is rarely easy.
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In subsequent articles we will contemplate some aspects of people as both wonderful, and flawed decision-makers.