ISSUE 27
Smithsonian’s National Museum of African American History & Culture
Also in this issue: Strategic Facility Consulting in U.S. Oman welcomes Asian Beach Games Singapore backs PPP Issue twenty-seven
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CONTEnTS 4
Epoch – Efficient Predictability & Control Industrial cost and performance management system
6 Asian Beach Games Oman plays host to the 2010 Asian Beach Games
8 BioPharma Networking Collaborating on best practice in capital investment
Strategic Facility Consulting 10 Making existing buildings work harder and smarter
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The Smithsonian Institution’s National Museum of African American History & Culture Taking its place on the National Mall, Washington, D.C.
PPP in Singapore & Southeast Asia 14 Singapore establishes itself as a PPP knowledge hub
Bringing Efficiency to the Banking Estate 16 Maintaining the portfolio during recession
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Conservation & Development Al Ain Wildlife Park & Resort
20 International Construction Intelligence Highlights from our last International Construction Intelligence publication
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Life Cycle Costing Assessing the total costs of ownership
Front cover: The Smithsonian Institution’s National Museum of African American History & Culture
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A warm welcome to our latest edition of Solutions, which showcases some of our most interesting projects and innovative services. I very much hope you’ll find it of real interest. Economic conditions have remained challenging over the last six months, but it seems we’re now through the worst of the recession’s depths. Recovery may not be as quick as we’d like, but I’m pleased to report that our business has continued to make the most of new opportunities thanks to the diverse nature of our work and our geographical spread. Our emphasis on maximizing our skills, and investing in new services and products, continues to provide our clients with best value in a cost constrained world. We’re currently involved with some unusual projects around the world, including the Al Ain Wildlife Park & Resort in the U.A.E. featured on page 18. On a trip to the Gulf recently, I visited Al Ain and was inspired by this amazing tourist experience that also pledges to remain a sustainable conservation habitat. This marks an important departure from the usual scale and nature of development in the region. The sports world also has much inspiration to offer and our support of our parent company Atkins, the official engineering design services provider for the London 2012 Olympic and Paralympic Games, has been complemented by our appointment on the Asian Beach Games. This project, discussed on page 6, promises to put Oman on the map as a tourist and business destination.
Our company is a people business and we’ve been looking at some collaborative drives to facilitate networking among our client base. In the BioPharma Sector our client conferences in New York and London were especially well received and this has led to our ‘communities of practice’ initiative, profiled on page 8. A chance for clients to step aside from the competitive nature of their core activities and share best practice around capital investment, the biopharma success has prompted us to explore this format in other sectors. I hope we’ll be able to report on this before long. Closer to home we are proud to have been appointed cost managers on the Smithsonian Institution’s National Museum of African American History & Culture in Washington, D.C. The new museum will take its rightful place on the National Mall in 2015, becoming part of the world’s largest museum complex. You can read more on page 12. I’d like to once again thank you for your interest in Faithful+Gould. I hope that Solutions will spark your imagination and that you’ll want to know more. My team and I look forward to continuing to serve you in the best possible way.
Richard Hall CEO Worldwide Operations
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Efficient Predictability and Control Many major research and manufacturing companies have large capital facilities portfolios, but struggle to effectively and proactively cost manage their projects and programs. This is in part because the significant investments made in Enterprise Resource Planning (ERP) systems, such as SAP, Maximo, Oracle and JDE, initially preclude more focused project and program solutions which would address the specific requirements for best practice project management.
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The high-value process of maintaining capital facilities can take its toll on both the balance sheet and the bottom line, and generally ERP systems are optimized around high-volume processes like procurement and accounting. This shortcoming is because these systems are not primarily focused on helping the capital project and maintenance groups manage costs, but to provide consistent accounting and procurement support. In many ways the lack of understanding around the requirements and the discipline of project cost management has been confused with accounting and project finance, and has generally concluded, erroneously, that financial tools will do the job. Where clients are charged with predicting and controlling facility capex and opex costs in a cost efficient manner, their teams may be too busy manually extracting, disentangling, reassembling, manipulating and formatting masses of data on a daily and weekly basis to notice that the budgets are at serious risk of overrun. Although MS Excel has traditionally been used for cost engineering purposes, our experience is that professional cost engineers add most value when managing costs proactively rather than being enslaved by collation and manipulation of numbers. For the last five years, Faithful+Gould has supported industrial clients in redressing this imbalance via our enterprise cost management system, Epoch. Epoch’s core role is to help track and control all post-sanction cost, hours, quantities and progress, providing clients TM with Efficient Predictability and Control . Epoch supports the Control of budget, funding reserves (contingencies, management reserves and supplemental funds), contractual commitments, all types of change and trend, work in progress (WIP), approved spend and accruals. All of this underpins its primary role of helping improve the Predictability of total and time-phased cost forecasts. As well as these predictability and control goals, Epoch provides clients with significant time savings. These are derived from automatically loading data from multiple intertwined ERP and project controls systems, via our proprietary data ETL (extract, transform, load) process. The resulting efficiency gains routinely eliminate 20-60 percent of the weekly workload for a cost engineer, permitting a balance of cost savings and allowing more time to be spent on forecasting and analysis.
Epoch provides clients with significant time savings, resulting in a balance of cost savings, and allowing more time to be spent on forecasting and analysis. Successful users include Michelin, a leading tire manufacturer, and a major oil company. These two corporations have many differences yet they face similar challenges, which reinforces the fact that the aforementioned problems are not unique to a company or even a market sector. Michelin presented some interesting challenges. Due to capital expansion in China, Brazil and India, with only one application and database instance, our U.S.-based support function has extended its reach into the Asia Pacific time zones by establishing a second helpdesk in Shanghai.
A major oil company has been a long-standing Epoch user, and the last twelve months has seen adoption extend to all five U.S. refineries. The Faithful+Gould technology allows new sites to easily benefit from their predecessors’ investments and developments.
Faithful+Gould’s industrial cost and performance management system offers support to all clients with significant maintenance and capital programs. The system’s success is based upon considerable client-side study and experience, leading to the development of Epoch to represent best practice, governance and control from the client perspective.
For further information contact Mark White (U.S.) on +1 832 476 3310 mark.white@fgould.com or Chris Taylor (U.K.) on +44 (0)1642 675136 chris.taylor@fgould.com Issue twenty-seven
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Oman will play host to the 2010 Asian Beach Games, a multi-sport event regulated by the Olympic Council of Asia, to be held in December. Fourteen sports are on the program: beach soccer, beach handball, beach kabaddi, beach sepaktakraw, beach volleyball, beach waterpolo, beach woodball, bodybuilding, jet-skiing, marathon swimming, sailing, tent pegging, triathlon and waterskiing. The event was first held in 2008 in Bali, Indonesia. The 2010 Asian Beach Games are expected to further raise Oman’s profile as a tourist destination. One of the region’s most economically and politically stable nations, and the oldest state in the Gulf Cooperation Council (GCC), Oman is geographically diverse. Its largely untouched coastline is formed by the Arabian Sea in the south and east, and the Gulf of Oman in the northeast. Attractions include mountains, deserts and the capital Muscat, with its forts, palaces and old walled city. Unlike other major tourism players in the region, Oman has actively avoided overbuilding, has not relied on foreign investment, and its construction industry has remained relatively stable during global recession. Infrastructure spending remains a priority for the government and continues to boost the economy. As with other Gulf nations, oil is the mainstay of Oman’s economy, providing a large chunk of GDP, but Oman is a modest producer compared to its neighbors. Agriculture and fishing are important sources of income but tourism is a major part of 6
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the diversification, reinforced by the government’s Vision 2020 economic plan. The population of three million includes 600,000 expatriates, but the current ‘Omanization’ policy aims to increase the proportion of nationals in skilledlabor positions. The Games will be held in the one-millionsquare-meter Al-Musannah Sports City, a coastal site about 78 miles from Muscat. The Sports City provides a sports center, marina, athletes’ village, public grandstand, hotels and other hospitality facilities. Infrastructure includes roads, car parking and associated supporting facilities to prepare for the influx of 50,000 spectators.
The 2010 Asian Beach Games will reinforce Oman’s recognition on a global scale, strengthen its reputation as an international sport and eco-tourism destination and create new economic opportunities.
Legacy is an important consideration for any major event host city, with locations typically seeking longterm benefits such as regeneration, tourism, economic positioning and transfer of knowledge. OMRAN, the government’s tourism development and investment arm, intends that the 2010 Asian Beach Games will reinforce Oman’s recognition on a global scale, strengthen its reputation as an international sport and eco-tourism destination and create new economic opportunities. Faithful+Gould is providing project, cost and construction management services for the construction of the Games’ facilities. In spearheading the aim for ISO Certification Standards for Health and Safety, our project management team has encouraged a culture change in
the site environment. We were especially proud when the site earned the safety accolade of one million hours incident-free. Health and safety will continue as part of the project’s legacy, as the government has now legislated for a minimum standard of compliance. Globally, our experience in the sports sector includes supporting our parent company Atkins, the official engineering design services provider for the London 2012 Olympic and Paralympic Games. We have been active in the Middle East since 2004 and we now have offices in Oman, Dubai, Abu Dhabi, Qatar and Saudi Arabia. Alongside the Asian Beach Games, our portfolio in Oman includes ports, highways, workers’ accommodation and commercial developments.
For further information contact David Stapleton on +971 (0)4 405 9100 david.stapleton@fgould.com Issue twenty-seven
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Biotechnology and pharmaceutical facilities – research and development laboratories, pilot plants and manufacturing facilities – are complex buildings with stringent regulatory constraints. The BioPharma Sector has traditionally proved relatively robust in times of recession, but nonetheless faces its own significant challenges in the current market. Intense pressure to develop new products and technologies while controlling costs and avoiding product recalls, fending off generics competition and creating shareholder value, combine to place heavy burdens on the industry. New facilities seek not only value for money, but also the flexibility to adapt as technologies advance. The sector’s approach to the challenges of the built environment is based on a drive towards achieving best practice. There is a growing recognition that collaboration in this area of capital investment planning can benefit all major companies in the sector. This transcends the issues of intellectual property and commercial competitiveness that naturally exist in the players’ core business areas. In 2008, we facilitated the first Faithful+Gould BioPharmaceuticals Conference, held at London’s Institute of Directors. Thirty pharmaceutical and biotechnology clients joined us to share best practice in the program and project management of their planned investments in a variety of global locations. There was a clear recognition that the different
business cultures represented, together with a variety of problem-solving approaches, could lead to greater efficiency and innovation. Following the success of this event, the second conference took place at the Sheraton Hotel, New York in 2009. Six key themes emerged from the New York workshops: Risk management Key performance indicators and metrics Verification of processes Estimating Standard processes Organization Delegates were keen to continue their discussions on common challenges and constraints, and look at further opportunities for collaborative exploration. To facilitate this, we have set up six ‘Communities of Practice’ (COP) groups, each focusing on one of the key themes. Interested contributors from the BioPharma community can interact via a dedicated BioPharma SharePoint site, giving them access to forums, information and file sharing. The site will also be available for BioPharma clients who prefer to be ‘visitors’ rather than participants, enabling them to keep updated on the COPs’ progress. Faithful+Gould is long established in the BioPharma Sector. We’re located in every primary location in the global BioPharmaceuticals market, and continue to work closely with the top 15 players. Our next global BioPharmaceuticals Conference will focus on the COPs’ plans and progress to date. This is scheduled for fall 2010 and details will be available shortly. If you are interested in networking, sharing best practice and exchanging ideas, please feel free to contact us.
For further information contact Chris Taylor on 44 (0)1642 675136 chris.taylor@fgould.com 8
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There is a growing recognition that collaboration in this area of capital investment planning can benefit all major companies in the BioPharma Sector.
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The current economic constraints in the marketplace have caused most organizations to readjust their thinking and divert away from the new-build route. Now, owners are taking a closer look at their property portfolios and considering how to make their existing buildings work harder and smarter to achieve maximum proficiency. Moving away from the new-build mindset means a new approach to investment planning. Owners now need to ask themselves key questions such as ‘what is the condition and functional suitability of our facilities?’, ‘how much capital investment is required over the short, medium and long term?’, ‘how do our facilities synchronize with our overall business goal?’, ‘how can we reduce our facility related expenditures?’ and ‘how do we make our facilities more
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sustainable?’ Faithful+Gould’s strategic facility consulting (SFC) service can help owners identify priorities and make decisions on what can be done to maintain their facilities and bring them into modern and green standards.
Cigna Healthcare Building; Wilmington, Delaware
Washington Nationals Park; Washington, D.C.
With owners facing these and other questions, there is a legitimate need to maintain and reinvest in their current portfolio. Our SFC service has a history of helping owners understand the extent and condition of their facilities, construct defendable and transparent capital budgets, predict and prioritize capital needs and meet sustainability goals. The information we provide ultimately helps owners develop a comprehensive capital and facility plan. Our past experience has helped our clients achieve maximum return on investment (ROI) from their properties by providing them with information on the condition, performance and costs of the property portfolio. Key differentiating factors addressed in every assessment include operating costs, infrastructure, maintenance, energy performance and security status. With this approach, we identify priorities, allowing owners to clearly see what needs to be done to maintain the facility and bring it up to current market and corporate standards. Our SFC approach contrasts with traditional facility condition assessments, which typically deal only with property-specific defects. By incorporating a holistic interpretation of the facility condition assessment, combined with capital and operating data, clients are empowered to manage the total cost of ownership. Our customized web-based tool, iPlan™, provides a medium to see these results in a transparent and analytical platform. With these tangible results, owners can optimize operations, increase accountability and provide key performance indicators, benchmarks and measurements to understand and best manage the lifespan of any facility. In today’s market, our SFC service is used as a tool built on solid data collected to help our clients justify their expenses and provide a valid document
IRS Electronic Computing Center; Detroit, Michigan
to secure the necessary funding to maintain their facilities. By taking the singular condition assessment service, which has limited benefits and limited investment, and highlighting our differentiators, we have successfully educated our clients on the best approach to receive maximum benefit and ROI. The key to a successful program is to look not only at the positive elements of the facility, but also at the negative, to show the consequences of receiving minimal funding. Our theory encompasses the idea of receiving increased value for every consulting dollar that is spent. This approach transforms the management of the built environment into a sustainable core of operational proficiency. Clients can then maximize their business results by aligning their mission and objectives within a defined strategy for their built environment. We have achieved effective results for a diverse range of U.S. clients in a variety of sectors including aviation, pharmaceuticals, energy, government, education and commercial. Many of these clients are major players in their fields and our team has been able to provide sectorspecific experience. For instance, we recently commenced work with two major municipalities, assessing more than 400 properties including offices, apartments, hospitals, fire stations, police stations and prisons. Recently we won a project with a large portfolio holder in the southeastern U.S. Our scope includes nine million square feet of property encompassing residential, offices, institutional and recreational facilities. We educated the client on how to prioritize expenditure, identify criticality and highlight the consequences of shortfall funding and non-action. The client opted for our service on the basis that this robust multi-faceted, live financial and energy tool would save money in the long term and provide them with a strong proposal for funding purposes.
For further information contact Ben Dutton on +1 703 684 6550 benjamin.dutton@fgould.com. Issue twenty-seven
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The Smithsonian Institution’s National
This is a challenging and exciting time for U.S. museums. Huge changes in opportunity, public perception and expectation have led our museums and galleries to reassess and re-examine their values, purposes and priorities. Plans for the Smithsonian Institution’s new National Museum of African American History & Culture (NMAAHC), in Washington, D.C., are underway after many years of discussion. Legislation for a national center for the African American experience was first proposed in 1929. More modern efforts remained at the project proposal stage for almost 20 years, before legislation established the museum as part of the Smithsonian in 2003. The Smithsonian Institution is home to nineteen museums, nine research centers and the National Zoo,
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making it the world's largest museum complex. The NMAAHC’s 313,000-square-foot building is located at the end of the prestigious National Mall in Washington, D.C., 800 feet from the Washington Monument and next to the National Museum of American History. NMAAHC aims to promote the study and appreciation of African American history and culture and its impact on America, its people and the world. The museum will provide for the collection and study of artifacts and documents relating to African American life and for the establishment of programs relating to lived experience, art, history and culture. Permanent and temporary exhibits will document the history of African American life through the periods of slavery, reconstruction, the Harlem renaissance, the civil rights movement and others. Even without a building, the NMAAHC has been an active enterprise for several years, incorporating a virtual museum online, exhibits in other parts of the
Smithsonian and an archive of 1,800 recorded oral history interviews. This reflects the global museum community’s growing trend for maximizing the potential of virtual access and social networking. Most museums are now using or exploring this model, alongside their traditional facilities, to offer access to visitors of all ages, backgrounds, nationalities and locations. The NMAAHC project is attracting considerable attention because of its location, the challenges of building in this historic area and the shrinking availability of land on the Mall. Technical issues include the water table underneath the Mall, a 50-foot setback ordered by the federal government after the 2001 terrorist attacks, utility issues in an open space and the height of a structure within sight of the Washington Monument and the White House. With the site now assured – and with a budget of $500 million from a mix of federal government and private benefactor funds – the project is now in the design phase. Six award-winning architects competed to design the signature building. The Smithsonian selected a joint venture of four architect firms: Freelon Group, Adjaye Associates, Davis Brody Bond Aedas and Smith Group. During the design competition, Faithful+Gould was instrumental in setting the construction budget, providing cost estimating services for the winning team. We are now providing estimating, life cycle costing and cost advice during the design phase, which runs until early 2013. Construction of the museum is scheduled to be completed in 2015.
We have substantial and wide-ranging experience in the arts and heritage sector. Our U.S. portfolio includes the Metropolitan Museum of Art, New York; Museum of Modern Art (MoMA), New York; the Getty Center, Los Angeles; Museum of Fine Arts, Boston; Clinton Presidential Library and Museum, Little Rock, AK; U.S. Capitol Visitors Center, Washington, D.C.; National Museum of the American Indian, Washington, D.C.; American Museum of Natural History, New York; Austrian Cultural Forum, New York, and the National September 11 Memorial & Museum, and adjacent performing arts center, Ground Zero, New York. In the U.K. our work includes the British Museum, the Imperial War Museum and the Beaney Institute. Our global experience also includes the Museum of Tolerance, Jerusalem; the Guggenheim Museum, Abu Dhabi, and the Stavros Niarchos Foundation Cultural Center (SNFCC), Athens.
For further information contact Alan Wilson on +1 703 684 6550 alan.wilson@fgould.com
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in Singapore and SouthEast Asia
The last five years has seen a steady increase in private investment in Southeast Asia’s infrastructure. Governments across the region have promoted PPP 1 programs, with Singapore especially keen to establish itself as a PPP knowledge hub and project finance center. Singapore was the first country in the region to launch a PPP program. Although Singapore’s infrastructure was well developed, the government saw PPP as a way of bringing in specialist private sector expertise and efficiencies, and attracting more international players into the domestic market. Other countries in the region had a much stronger need for inward foreign investment to close the infrastructure gap. Despite many false starts, we are now seeing promising developments in some of these countries. The process was given a boost by the World Bank’s new Global Urban Strategy, launched at the inaugural Infrastructure Finance Summit in Singapore last year. As part of this new strategy, Singapore will offer its expertise in urban management to assist other governments. Singapore will help them develop a 14
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regulatory and financing framework to prepare PPP projects for the market. The initial scheme involves projects in Vietnam, Mongolia and China, with other countries expected to follow. Thailand, the Philippines and Indonesia have also taken steps of their own to develop a PPP framework, with a view to testing the market’s appetite in the near future. Many of the consultants and advisors who worked on the Singapore projects are now involved in advising other governments on PPP frameworks, feasibility studies and corporatization programs. PPP investment funds, including Gammon Capital, John Laing and Plenary, have set up office in Singapore and are now active in exploring PPP projects as future investment opportunities. Add this expertise to 1
Public Private Partnership: the design, construction, finance and operation of public facilities by a private sector consortium.
Singapore’s solid presence of project finance banks, and it may seem that the government has succeeded in creating a project finance hub, without the need to have a pipeline of PPP projects of its own. However this view is not shared by the majority in the PPP community in Singapore, who are still looking for a new pipeline of opportunities in their own backyard.
Faithful+Gould has been an active participant, playing a role in every social infrastructure PPP launched to the market. We are providing consultancy services on the Sports Hub and we are active on the ITE project. We have also worked on a PPP schools project for the Ministry of Education and a student hostel project for Singapore Management University.
Singapore's largest and flagship PPP project is the Sports Hub. One of the first PPP projects to be rolled out, the Hub replaces the aging National Stadium with a new 55,000-seat stadium and sports complex. Located on a 35-hectare site in Kallang, the Hub is expected to play a critical role in accelerating the development of Singapore’s sports industry. The credit crunch and rising construction costs caused some delays, but the project is now progressing again.
Our presence in Singapore for more than 20 years has given us a thorough understanding of the public sector market, together with best practice from the private sector. We also have the support of our PPP colleagues throughout the global Faithful+Gould business, and can draw on their wider experience in facilitating the growth of PPP.
The Institute of Technical Education (ITE) West project will be Singapore’s first successfully completed social infrastructure PPP project. ITE is the principal provider of technical education and a single campus in the new town of Choa Chu Kang, due to complete shortly, is replacing the current five smaller network campuses.
For further information contact Martin Riddett (Singapore) on +65 6227 6144 martin.riddett@fgould.com or Ryan Brady (U.S.) on +1 602 445 3574 ryan.brady@fgould.com Issue twenty-seven
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Bringing efficiency to the
Recent turmoil throughout the worldwide financial markets has led many banks to make dramatic changes to the way they run their property portfolios. Some organizations have collapsed and others have consolidated in order to stabilize their balance sheets. This has led to millions of square feet becoming available and the financial sector having to review its occupation strategy across its retail and office estate.
Key aspects of any occupier strategy must include effective space and asset management in order to meet the budget ‘belt tightening’ required by both the market and regulatory pressures. Our ethos of true integration with our clients has allowed us to develop and deliver innovative responses to these pressures. We recently delivered a 350,000 square foot office which has been designed to an occupancy factor of 1.17 which is the sharing ratio of occupiers to desks – a real positive in space efficiency. But imaginative space planning and higher occupancy levels augment the pressure on asset condition and maintenance as the building use increases. As cash availability is tightened, both revenue and capital expenditure on any property portfolio must be focused to manage risk and drive value. We are bringing significant change to the approach taken by many of our finance sector clients, by demonstrating how web technology can improve process. This technology also assists in the delivery of detailed work
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programs that are essential to ensuring the workplace environment is safe and temperature controlled. We are using the latest hand held technology to gather asset condition data. This informs maintenance budgets and provides real benefit, particularly when a true life cycle view of the asset is factored in. We believe that dynamic integration between scheduled condition surveys, immediate work programs, and planned maintenance contracts will drive budget efficiency. We have invested in systems that allow us to deliver this integrated approach, essential when focusing limited cash on where it counts. This is especially appropriate when property portfolios continue to change through mergers and acquisitions This ongoing change can create a mismatch of property, resulting in a property portfolio that no longer matches the business needs, often with redundant buildings and land. We adopt a holistic approach to these redundant assets, treating them as valuable opportunities and with a view to producing maximum business efficiency. For instance, several discrete land parcels may be
amalgamated to create a more valuable and efficient business-focused land bank. This can free up additional vacant land that can then be prepared for disposal. This view delivers tangible savings and improvements in space utilization, operating and maintenance budgets, increased energy and reduced carbon emissions and an overall reduction in user charges. Faithful+Gould has a global team of property and facilities management professionals with comprehensive experience of asset maximization. We can advise on how best to align the portfolio to meet the organization’s needs and how to reduce both capital and operating costs of the estate, maximizing the value of redundant assets. We understand that organizations vary in their in-house property expertise. We work alongside clients’ estates and facilities departments where appropriate or we can take the lead if required. We have achieved effective results for a diverse range of clients in a variety of sectors, including finance, pharmaceuticals, energy and central government.
For further information contact Rod Bisset on +44 (0) 131 221 5600 roderick.bissett@fgould.com
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Recession may have slowed the rate of development in the Gulf States, but economic diversification looks set to continue and is expected to accelerate as markets recover. While Dubai has seen aggressive growth, Abu Dhabi, the largest emirate and the U.A.E.’s capital, has been steadily progressing ambitious plans to become the regional capital of culture.
Plan Abu Dhabi 2030 will mastermind growth over the next 20 years, aiming for a sustainable economy without sacrificing environmental and cultural heritage. The Plan pledges to respect the natural environment of coastal and desert ecologies. Cutting-edge developments in renewable energy are also underway, together with plans for an eco-city. Estidama, Abu Dhabi’s sustainability initiative, is a central focus and incorporates a regulatory framework, green building rating system and educational outreach schemes. Tourism and ecology are being brought together at Al Ain, a low-rise oasis city located approximately 99 miles east of the Abu Dhabi capital, bordering Oman. Its name (“the spring” in Arabic) derives from its originally plentiful supply of fresh water. The surrounding district is a fertile agricultural area with many forts and archaeological sites and is also home to the U.A.E.’s main university. Plan Al Ain 2030 intends to foster the authentic Arabic identity of Al Ain, balancing conservation and development, protecting endangered desert and mountain ecologies, conserving ground water resources and protecting natural habitats. While limiting urban sprawl, Plan Al Ain 2030 proposes projects that exploit the existing economic wealth to develop renewable energy production and reduce the consumption of non-renewable resources. Work has already begun on developing the largest wildlife park in the Middle East, the Al Ain Wildlife Park and Resort (AWPR), into a world-leading commercially and environmentally sustainable resort. When complete, the AWPR will comprise over 900 hectares of land, and will incorporate the existing zoo established in 1968. At the center of the completed development will be the
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World Deserts – a new wildlife exhibit and safari experience based around the eco-systems of Africa, Asia, Arabia and Central America. There are also plans to contruct villas, hotels, and mixed-use commercial, retail and recreational spaces. As part of the transformation into a wildlife resort, significant development is currently being undertaken to set the standards globally for conservation efforts. Growing rates of species extinction and habitat loss on a global scale means that wildlife conservation initiatives will become increasingly important. The AWPR will be managed for the protection, preservation and conservation of the wildlife collection and wildlife safari habitats. Integrating conservation, education, tourism, residential opportunities and commercial enterprises, the AWPR aims to help people to understand and experience life in a desert environment. The masterplan includes the Sheikh Zayed Desert Learning Centre which utilizes both active and passive sustainable design elements and is seeking an ambitious level of compliance with the Estidama Pearls rating method. The residential housing units and resort hotel were among the Estidama Pilot Projects which benefited from a series of workshops
conducted by the Abu Dhabi Urban Planning Council’s Estidama arm. The workshops explored ways of incorporating the Estidama New Buildings Guidelines into the current design, how to rate the project’s sustainability performance, the process of documentation and key milestones within the Estidama Pearls rating method.
Growing rates of species extinction and habitat loss on a global scale means that wildlife conservation initiatives will become increasingly important. Faithful+Gould is providing cost management and estimating services for the Al Ain Wildlife Park and Resort, working with a multi-national team of design and program management consultants. We are also working on a further range of projects in Abu Dhabi. These include the residential Empire Tower on Al Reem Island and the Guggenheim Museum. Faithful+Gould has been active in the Middle East since 2004. Our regional headquarters are in the U.A.E., with offices in Dubai, Abu Dhabi, Qatar, Oman and Saudi Arabia.
For further information contact David Stapleton on +971 (0)4 405 9100 david.stapleton@fgould.com Issue twenty-seven
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International
As the world shows early signs of recovery from the worst economic downturn for over 70 years, our latest International Construction Intelligence publication looked at some local construction markets. These were some of the highlights. U.S. The construction industry will continue to suffer from the effect of the recession in 2010. Unemployment in the construction industry is about 18 percent. Construction put in place will be down about 3 percent this year after falling 15 percent in 2009 and 7 percent in 2008. Residential construction, which typically leads a recovery, could increase about 4 percent this year after falling 14 percent last year after a 29 percent in 2008. The nonresidential segment will be down about 6 percent in 2010. Many segments will continue to see significant declines, but health care and education should be some of the better non-residential market segments this year.
Canada From mid-2009 to early 2010, non-residential construction in Canada has experienced moderate forward momentum in the volume of new work. Federal and provincial government stimulus spending in the education, health and infrastructure sectors has resulted Industrial Building Parities/Index, U.S. Base Index: February 2010 Index City Parity Range Exchange Rate/Currency Index U.S. Chicago 0.93–1.07 1.00 USD 100.0 Canada Toronto 1.10–1.27 1.06 CAD 111.8 Mexico Mexico City 9.62–11.19 12.84 MXP 81.0 United London 0.66–0.76 0.65 GBP 108.5 Kingdom China Shanghai 4.38–5.24 6.84 CNY 70.4 Singapore Singapore 1.30–1.51 1.41 SGD 99.6 U.A.E. Dubai 3.38–4.05 3.67 AED 101.1
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in early starts for smaller projects and a steady number of projects currently in various stages of design will enter the market in 2010. Residential construction has not recovered significantly since the steep fall in output that occurred in late 2008. Residential construction in 2010 is unlikely to expand unless lending policies are revised to provide more funding to builders and to consumers. Labor and material costs are stable and are not anticipated to fluctuate in the near to mid-term.
Mexico Construction industry output fell 7.5 percent in 2009 due to the global economic crisis. Private investment will continue to avoid risk conditions, so public projects are the other option to recover activity in 2010. The approved government budget for this year includes MXP 598 billion for the construction sector – 45.8 percent for Oil and Gas and 12 percent for communications infrastructure. However, the year begins with the funding flowing too slowly and contract award delays. The forecast for domestic construction Gross Internal Product (GIP) in 2010 is 2.3 percent growth, assuming an upturn in activity at the end of the first semester. Construction employment will grow 3.2 percent.
United Kingdom Construction prices have fallen approx 16 percent from the peak of 4th Quarter 2007, with recovery in the Tender Price Index (TPI) not expected until 2nd Quarter 2011. New work output fell by approximately 13 percent during 2009 with the construction industry continuing to be hit hard as the U.K. economy spent the whole of 2009 in recession. Recovery in the sector is likely to
be led by private invested works as the public funded works is expected to be cut back as the U.K. seeks to deal with the level of public debt. The private residential and commercial sectors have shown increases in output in the last quarter of 2009 with all public sector works seeing a reduced output to previously reported figures.
China
years during which at various times the overall economy was contracting. The residential market is now in robust health and the government has recently introduced new measures in an attempt to cool some of the speculative pressure in the market. This improved sentiment is translating into new projects being launched and keen bidding for plots of land as they become available.
The country’s economic recovery is gaining momentum. There has also been a strong rebound in the domestic economy, fuelled by the government’s stimulus package (GBP 357.6 billion), which has boosted demand for steel, cement and other materials. Confidence in China as a top investment location is beginning to return, and we expect this to encourage foreign companies to continue their investment in China.
U.A.E.
Singapore
Faithful+Gould’s International Cost Intelligence publication combines leading economic indicators, our own research, and our local knowledge of tender prices and market conditions. To receive our International Cost Intelligence regularly, please subscribe to our Constructive Expertise newsletter via our website www.fgould.com
The Singapore economy resumed expansion since the third quarter of last year. This greatly helped the sentiment in the property market generally, especially when the regional power house of China is registering large percentage growth figures. The construction industry provided Singapore with some growth over the last two
The outlook for 2010 is modest with GDP growing 2 percent to 4 percent. Abu Dhabi will drive the growth with Dubai leveling off or contracting further. Based on this and the ongoing global conditions, the construction market in the area is likely to follow the patterns of 2009, with continued pressure on prices and lower volumes of work than experienced in pre-2009.
For further information contact Tom Wiggins on +1 404 469 9127 tom.wiggins@fgould.com Issue twenty-seven
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Facilities are expensive to construct but also extremely expensive to own and operate. Facilities naturally age, change in their functional use and are affected by larger business plans and corporate direction. Life cycle costing is a proven technique to achieve true life cycle effectiveness and gain a maximum return from limited capital resources. Life Cycle Costing (LCC) Life cycle costing (LCC) is an economic assessment of an item, system or facility by considering all significant costs of ownership over an economic life, expressed in terms of equivalent costs. This is a proven method used to compare various options by identifying and assessing economic impacts over the whole life of each alternative. LCC applies economics and the time value of money to properly assess the present value impact of future expenditures or savings. This is accomplished by applying a discount rate or interest rate to future dollars such that all expenditures can be compared on an equal basis. As an example, for federal project life cycle analysis, OMB Circular A-94 defines a “real” discount rate of 7 percent (above and beyond expected inflation).
Figure 1 – Life Cycle Cost of a Hospital Building management 0.7% Replacements 2.5% Alterations 4.6%
Taxes 2.5% Other utlities 0.7% Insurance 0.5%
Maintenance 3.1% Energy 1.8% Total Initial Project Cost 14.4%
Staffing 69.2%
What is the owning cost of facilities? Future costs over the life of a facility – operations, maintenance, alterations and replacement – will typically match or exceed the initial cost of procurement. When staffing and other use costs are factored into the analysis, the initial procurement may be less than 20 percent of the total cost of ownership. Some facilities are particularly future cost intensive. As an example, the life cycle cost of a hospital is displayed in Figure 1. If a hospital can be designed and constructed for 22
Issue twenty-seven
New York Presbyterian Hospital
$500/square foot, then the total owning cost expressed in equivalent net present value is nearly $3,500/square foot
Figure 2 – Life Cycle Information Management
Life Cycle Information Management
Briefing Functional req. Estimates Conditions Requirements
So, if facilities are expensive to own and operate, how do facility planners, designers, constructors and operators spend money wisely and provide more effective facilities? Dependable cost information is a critical need. Unfortunately, until recently, information on the operations, maintenance, replacement and elective upgrades has been very limited.
Demolition, refurbishment Rebuild Demolition Restoration
To address this, one of the more recent industry initiatives has been the concept of “Life Cycle Information Management” – namely developing an overall logic to collect, manage, distribute and utilize information over the life of a facility. The objective is threefold: to reduce redundancy (industry reports show that the same information may be investigated and “entered” as many as six times); improve accuracy, and enhance sharing. Recent applications of Building Information Modeling (BIM) and advanced facility management systems are speeding these efforts. Figure 2 is adapted from information prepared by the buildingSmartalliancetm as a way of graphically demonstrating how information is developed over a facility’s life, the importance of collecting and managing this information centrally and then making it available to planners, designers, constructors and facility managers.
Key Life Cycle design issues Energy usage is a big factor, but other utilities are also important. Balancing energy efficiency and utility consumption, with building operations and with functional use, is a key issue.
All building components and systems contribute to life cycle effectiveness. Their selection should be tempered with a balance of initial cost and life cycle cost. General choices for all building materials can be LCC issues for life expectancy and maintenance.
Proper maintenance is critical to facility component life and overall facility dependability. The cost of facility downtime due to unexpected repairs can be enormous.
Access to equipment to better facilitate maintenance and repair is important and too often overlooked.
Knowledge databases Best practice knowledge Own practice
CAD software Drawings, calculations Architect, engineer...
Life cycle Information Management
Facility management Leasing, sale, operations Maintenance Guaranties
Construction management Scheduling Logistics
Laws and regulations Building regulations Building specifications
VRML Visualization 3D models
Procurement Product databases Price databases
Specifications Specification sheets Classification standards Estimates, accounting
Simulations Comfort Insulation Ventilation, heating Life cycle cost Fire, usage Environment Life time predictions
Space adaptability and flexibility is an LCC issue where initial cost is balanced against the ease of future changes.
Overall program flexibility is a major LCC issue. Choices are to build general space that adapts easily in the future or to design very program specific space that is less flexible in the future.
Effective management of buildings and building space can yield benefits through focused maintenance and avoidance of conflict between program changes and maintenance/repair requirements.
Sustainability impacts many areas of LCC. Achieving sustainability goals that are affordable initially and maintainable in the future is critical.
Faithful+Gould has been a pioneer in the development and application of LCC and has developed standards for state and federal agencies, institutions and corporations, most recently for the American Institute of Architects (AIA). We have successfully applied LCC principles to hundreds of projects in the U.S. and around the world.
For further information contact Michael Dell’Isola on +1 407 875 0707 michael.dellisola@fgould.com Issue twenty-seven
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