Tuesday, February 15, 2011

MIT Infrastructure “Life Cycle” Study is Progress Both Left & Right Can Embrace - Part 2, Fiscal Responsibility

Photo Credit - Flickr
Perhaps moving to the center is where we all need to be politically on the environment and effective spending compatibility. Not all “green technology” is crazy, and not all “business profit” or “government expenditure” is evil.

Even if you do not believe in man caused climate change, we can all agree leaving a cleaner planet and a more fiscally responsible government for the next generation is preferable to not doing so.

Perhaps green technology can be cost effective, and government fiscal responsibility may realistically include affordable green initiatives. Honest “life cycle analysis” and “life cycle cost analysis” study considerations should be a political compromise starting point both the left and the right can embrace.

MIT’s ongoing work on measuring the life-cycle carbon emissions of materials is scheduled to be completed by August 2011. The environmental findings will then be supplemented by economic analyses in 2011 to provide the most accurate assessment of the economic and environmental impacts for buildings and pavements yet produced.

CEMEX is an example of a responsible and realistic corporation. They understand the balance needed for a business in providing rightful green benefit and rightful shareholder benefit. “Our role in creating a sustainable future begins with our philosophy of corporate responsibility - to run an efficient and profitable business while caring for our employees, our communities, and the environment.”

Continuing our interview with CEMEX USA is Executive Vice President, Commercial, Frank Craddock and Vice President, Commercial Strategy & Marketing, Francisco Uzcategui to speak to fiscally focused questions around LCA and LCCA.

BKH: What is the average life in years of a building, road, etc?
CEMEX: The average life in years is a moving target. With technology, design, materials and construction experience, we are constantly expanding the life of assets. Today, it is commonly accepted that a road can last between 30-50 years with limited maintenance. When it comes to buildings, it is usually for 60 years, but concrete structures can last longer than that.

BKH: What percentage of current project cost is actual construction, and what percentage is life maintenance?
CEMEX: From our own experience and the use of statistical models such as The Mechanistic Empirical Pavement Design Guide (MEPDG), in a typical Life Cycle Cost Analysis (LCCA), the initial costs for a concrete pavement accounts for 80 to 90% of the pavements life cycle costs. For new construction or reconstruction pavement costs are approximately 40% of the projects costs.

A concrete pavements first rehabilitation will occur somewhere around year 35, and it will require 1 or 2 rehabilitation activities to get to 50 years.

While for asphalt pavements, the initial cost is about 50-60 % of the pavement’s life cycle costs. The first rehabilitation will occur sometime between years 8-15, and the asphalt pavement will require 4-5 rehabilitation activities to get to 50 years. Maintenance is 40-50% of the life cycle costs.

However, once historical actual inflation rates for liquid bitumen are taken into account, the asphalt maintenance costs increase to between 50-60% of the life cycle costs. Liquid bitumen is the refined petroleum product which is used as the “glue” in asphalt pavements and asphalt overlays.

BKH: What would happen if government projects were covered by current receipts allowing for no deficit increase?
CEMEX: Reducing spending to current receipts would be counter productive with little, if any, contribution to deficit reduction. Every study shows that America is under investing in its transportation infrastructure.

The final 2009 report of the National Surface Transportation Infrastructure Financing Commission submitted to Congress, led off with the opening statement: "The nation faces a crisis. Our surface transportation system has deteriorated to such a degree that our safety, economic competitiveness, and quality of life are at risk."

The current difference between federal transportation funding and user tax receipts is about 20% or $11B per year. One has to differentiate between spending on needed investments like transportation infrastructure, which are largely financed through user taxes, and other non-investment government spending which is driving the federal deficit to about $1.5 trillion.

Moreover, the current difference between tax receipts and spending doesn't factor in the job creation benefits that also produce substantial multiplier effects on the economy which contributes to lower deficits.

The nation should be increasing the funding for our transportation infrastructure. That can be done with innovative financing mechanisms to supplement and leverage existing revenues in a fiscally responsible manner.

BKH: How can we be more fiscally responsible in the construction bidding process?
CEMEX: The National Surface Transportation Infrastructure Financing Commission reviewed numerous studies and determined that spending from all levels of government needs to more than double to just meet the nation's maintenance needs.

In view of this massive level of under-investment, Departments of Transportation (DOTs) need to get the most value out of every dollar spent. To do so, they need to evaluate alternative designs using alternative materials on a full life cycle basis and employ competitive bidding.

Reducing funding may force DOTs to do more with less, but they need to maximize investment returns to society regardless of the level of funding.

BKH: Why do government infrastructure projects routinely have such large overruns - double, triple or more?
CEMEX: We think it is two fold. First, the budgets for projects are set in the planning processes, which occur 3-5 years before construction, and are often based on construction cost data that is 3-4 years old. By the time a project goes to bid, the economic conditions have often changed, and if an agency fails to properly account for inflation in their budget analysis, there is a shortfall.

This can be further compounded when constraints on an agency’s budget delay a project by an additional 2-5 years past their original construction date.

Second, too much emphasis is placed on the initial construction cost rather than the full life cycle cost of projects. In many cases when life cycle is taken into consideration the lack of a comprehensive methodology and correct inputs leads to the wrong conclusion that tax payers have to ultimately pay for.

BKH: Which state or federal projects are already participating or looking to support life cycle cost analysis for existing, current, or near future projects?
CEMEX: Thirty-eight states use life cycle cost analysis in some form for pavement type selection. Of these 38 states, approximately 10 states have used Association of Development Agencies Alternate design alternate bid (ADAB) and life cycle costs analysis to try and lower their pavement costs. Of these states, the 2 most successful have been the Louisiana Department of Transportation and Development (LA DOTD) and the Missouri Department of Transportation (MODOT).

Louisiana was the first state to use ADAB and LCCA starting in 2001. On the 32 Projects during 2001-2006 that have used ADAB, LA DOTD estimates they saved approximately $62.5M. The MODOT has combined the use of MEPDG and ADAB to successfully lower their pavement costs by over $1.6B.

A recent state to start using ADAB successfully is West Virginia. WV first used ADAB in 2007, and they have 9 projects as ADAB since then. Of these 9 projects, 8 have gone concrete, all based on the first cost. On the last 4 projects alone, WV Department of Housing estimates that they have saved $9.8M.

And the trend is continuing. Ohio has recently started using ADAB on projects with similar life cycle costs. Many other states such as North Carolina, Florida, and Texas are investigating how they may be able to implement ADAB and LCCA.

BKH: What do you anticipate being the most benefit to taxpayers by looking at projects with a life cycle analysis approach?
CEMEX: There are a few rating systems looking at both commercial and residential buildings, and in our opinion they represent a starting point in understanding the economic and environmental cost of constructing buildings.

Given the fact that the energy consume in buildings through their life is responsible for 39% of CO2 emissions in the US, it is imperative that all rating systems incorporate the effect of the use phase into their methodology.

Having a clear view of the full cost of a project not only initial construction cost will present authorities with the opportunity to make the right long term decision in the benefit of tax payers. We will move away from only caring about how much it cost us today to what is the right decision long term.

BKH: Thank you again gentlemen for sharing your expertise.

MIT concludes, “As policymakers and political leaders work to account for the environmental and economic costs of public building and paving projects, this type of comprehensive costing model of key materials may provide a roadmap to those who plan these major initiatives.”

Frank Craddock sums up the important balance needed for today’s responsible infrastructure considerations well. “The building decision making process must take into account our children’s future. We must take into account the financial cost impact as well as the environmental impact they will have to live with years from now. Both ultimately matter in the present and for the future.”

See Part 1, Green Responsibility

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Monday, February 14, 2011

MIT Infrastructure “Life Cycle” Study is Progress Both Left & Right Can Embrace - Part 1, Green Responsibility

Photo Credit - Flickr Common
It’s not too often hot topics “green technology” and “government fiscal responsibility” are necessarily put together in the same sentence regarding infrastructure progress.

Massachusetts Institute of Technology (MIT) formed the Concrete Sustainability Hub (CSH) in 2009 as a research center for advancing technology transfer from concrete science into the engineering practice by translating the synergy of three fields of study - economic, engineering and architecture - into a hub for concrete sustainability studies relevant to industry and decision makers.

In a December, 2010 press release, MIT announced the groundbreaking research will set a new standard for life cost analysis (LCA) with its ongoing studies producing the most comprehensive LCA model on record.

According to MIT professor and research team leader John Ochsendorf, “The life-cycle model we are developing will combine the best data on the full range of costs – construction, maintenance, reconstruction, user, direct, and indirect – with a time frame that reflects the real world life of pavements and building materials.”

MIT notes, “The economic study will produce an equally comprehensive life-cycle cost analysis (LCCA) model.” Ochsendorf adds, “Once both studies are completed, MIT will have provided the scientific community, industry leaders and policymakers with a framework to determine the economic and environmental life-cycle costs of selected infrastructure materials throughout the real life of projects.”

In the corporate world, CEMEX is a company heavily involved with MIT’s work and has been conducting their business with a social and environmental message for years.

CEMEX was founded in Mexico in 1906, and they have grown from a small, regional cement firm into a leading global building solutions company with over 50,000 employees worldwide.

CEMEX is an international building materials company that provides high quality products and reliable service to customers and communities throughout the Americas, Europe, Africa, the Middle East, and Asia.

Their operations network produces, distributes, and markets cement, ready-mix concrete, aggregates, and related building materials in more than 50 countries. CEMEX maintains trade relationships with more than 100 nations.

Thinking and working green, CEMEX’s USA Houston based Frank Craddock, Executive Vice President, Commercial, offers: “Most LCA models make the mistake of only looking at the construction phase. There is a need to look at the operating phase of a working building and pavement. A cradle-to-grave analysis needs to be performed to know overall energy use, economic and environmental cost of a project. The life cycle analysis should also consider cost at the end life of the project and prospects for material recycling. When a building or road is to be demolished, can the material be recycled?”

CEMEX’s commitment to energy efficiency in their innovative practices, technology, and operating facilities with respect for communities was rewarded in 2010 with receipt of top environmental awards.

Energy start partner of the year, Wildlife Habitat Council (WHC) recognized CEMEX USA with two of the Council’s top national awards, including the William W. Howard C.E.O. Award for environmental stewardship achieved through educational initiatives by CEMEX’s Aggregate Division, in Florida.

This is the WHC’s highest award, as it recognizes a company which has a history of striving for excellence in Conservation, Education, and Outreach (C.E.O.).

Along with receiving the C.E.O. Award, the CEMEX Center Hill Quarry, was awarded the Corporate Lands for Learning (CLL) of the Year Award, which is designed to recognize a site for outstanding environmental education, stewardship and voluntary employee efforts.

Frank Craddock, along with fellow Houston based CEMEX USA colleague Francisco Uzcategui, Vice President Commercial Strategy & Marketing, answered questions on how all this works when academic scientific study plays out in the business and government realities.

BKH: Please give a short description of the MIT HUB group exactly.
CEMEX: The Concrete Sustainability Hub is a center for advancing technology transfer from concrete science into the engineering practice by translating the synergy of three fields of study - economic, engineering and architecture - into a hub for concrete sustainability studies relevant to industry and decision makers.

The Hub was created in 2009 with the participation of MIT’s schools of Engineering, Architecture, and Business along with the support of the concrete industry.

BKH: In layman’s terms, what are “life-cycle analysis” and the measurements?
CEMEX: It is the process by which you evaluate a project from conception, to construction, to the use phase finalizing with the demolition phase. An environmental life cycle analysis is referred to as LCA and an economic life cycle cost analysis is referred to as LCCA.

In many instances the use phase of an asset is responsible for most of its life cycle impact. It is imperative to run a comprehensive analysis that incorporates all elements of a project’s life cycle. The inputs used in the analysis must be correct or the output of the analysis can be misleading.

BKH: Explain why concrete may be greener in construction, commercial performance, and more fuel efficient for both roads and the vehicles driving on concrete roads.
CEMEX: Concrete roads are more sustainable when it comes to construction because of its durability. These roads last longer than comparable materials with limited to no maintenance. This translates into significant CO2 emissions savings.

It is widely known that over 90% of CO2 emissions come from the use phase of a road. Research in Canada and Japan has shown that vehicles traveling over concrete pavements have higher fuel efficiency of 1-4% when compared to those riding over asphalt. MIT will be conducting studies to determine fuel efficiency differences of raiding over different pavement materials.

Finally, concrete can be recycled at the end of the life of a road. But this is a rare scenario, as most concrete roads are still in use long after their projected service life.

When we consider single family residential buildings, MIT has reported that the use phase represents 90% of CO2 emissions over the life of the asset. The advantages of higher R-value and lower thermal bridging enable concrete wall systems to deliver energy savings in heating, cooling, and ventilation that can represent 20% in energy savings and CO2 emissions compared to conventional construction.

BKH: Are current new building material and construction method advanced technologies cost effective?
CEMEX: National long term pavement performance data shows that concrete pavements have historically been over designed and have carried up to 10 times more loads than for which they were designed. While this over performance is good; it comes at an initial construction cost, which agencies have historically not been willing to accept despite lower usage cost.

A recently developed design procedure, called the Mechanistic-Empirical Pavement Design Guide (MEPDG) removes this over design and lowers the cost of concrete pavements significantly, 10-20% or more.

In addition to the improvements in predictive modeling and comprehensive analysis of actual performance data, innovations in design features, material and mix designs, the use of supplementary cementing materials such as fly ash and other waste by-products, and construction techniques are making concrete pavements more durable, more environmentally sustainable, and extending their life well beyond their historical performance.

Concrete wall systems in residential construction can be 30–40% more expensive than conventional wall systems construction representing 2-3 % incremental construction cost. However, energy savings of 20% more than compensate the carrying cost of the additional initial investment.

For a significant change to take place, incentives need to be realigned. If potential home buyers were aware of the energy and other benefits of concrete wall systems, builder would respond by making the additional investment and home owner would reap the benefits over the life of the asset.

Governmental bodies could also support more sustainable building practices through building code changes or appropriate incentives for energy efficient investments.

BKH: Are these newest technologies being bid for newest projects now?
CEMEX: Missouri DOT (MODOT) has fully adopted the MEPDG and is using it routinely on all their pavement designs. The Indiana DOT (INDOT) has used it on over 100 projects since December 2009. INDOT senior management also has performed a cost evaluation to quantify savings. On the 23 projects they reviewed, they estimate that Indiana has saved over $10M versus designs previously used.

MODOT has combined the use of MEPDG with another innovation called Alternate Design / Alternate Bid (ADAB). ADAB is a process in which both concrete and asphalt pavement designs are developed for the project and the contractor then chooses which material to submit for his bid. The bid that wins the project is the bid and pavement type that has the lowest life cycle costs.

The idea of ADAB is to increases competition and lower cost by bringing additional contractors to the bidding table. According to the MODOT, the use of ADAB has lowered costs between 4.8-8.6%. MODOT estimates that the use of MEPDG and ADAB has saved the state approximately $1.6B as of the last reported data in July 2009. (MODOT Alternate Pavement Approach, Dave Ahlvers, Presentation to the 2009 AASHTO Subcommittee on Construction.)

Of the 124 Alternate Projects thru July 2009, concrete has won 83, and asphalt has won 41 of the projects. In all but 3 cases, the winner has been based solely on initial costs.

Many other state DOTS are using it experimentally alongside their current design procedures for comparison purposes. Overall, 80% of the states have plans to implement the MEPDG within the next 5 years.

BKH: What do you see for the future in building materials technology advancement type and benefit?
CEMEX: There are many trends in today’s market. There are two initiatives our industry is actively working on. First is to develop solutions that provide a higher efficiency in use phase by leveraging the attributes of products, such as creative design alternatives like using concrete’s thermal mass to reduce heat loss in water pipes.

Second is to significantly reduce production emissions through the use of nanotechnology. MIT scientists at the Concrete Sustainability Hub, have developed the first atomistic-scale computational model of concrete from which they are expected to predict new structures and improved properties that will reduce CO2 emissions in concrete.

BKH: Thank you gentlemen. (See Part 2, Fiscal Responsibility, for more of the interview with CEMEX.)

In reality, the combination of academic research study and business implementation will allow productive political compromise at its best. It satisfies the left looking for green accountability and the right looking for fiscal accountability. That’s a legitimate breakthrough everyone can embrace.

See Part 2, Fiscal Responsibility.

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