Cost considerations in projects go beyond the bottom line

The saying ‘Form follows function’ has morphed into ‘Form follows finance,’ as coined by Carol Willis in her 1995 book of that title. Since we know how the end-product of a design process is largely a result of the financial structure of a project, why are we not doing more to understand the nuance of this?

It is a complex picture but five key moves, including some self-education, can help retain sustainable designs. As a sustainability professional and co-founder of BEF: Built Environment for the Future, my focus is on how we stop downgrading our sustainability ambitions for the built environment as soon as the inevitable ‘value engineering’ process begins.

In 2019 we saw a huge surge in the concentration on creating more sustainable places. Extinction Rebellion protests and launch of Architects Declare – which many architectural practices, engineering consultancies and other stakeholders in the built environment signed up to – was a statement of unity and ambition to make change happen.

Different times

Now, five years on; in the aftermath of a global pandemic, a worsening of geopolitical tensions and international uncertainty in the financial markets, we find ourselves perhaps taking our proverbial foot off the gas. The UK’s Future Homes Standard has lowered its ambition for energy performance standards from previous proposals set out in 2021; funding of offshore wind projects collapsed with only recent attempts to revive the plans; and a hardening of the insurance market has left designing with materials other than steel and concrete a huge hurdle to overcome.

These difficulties have coincided with a tightening of purse strings from developers and contractors. Fast-rising material costs driven by globally high inflation has meant any ambition to drive down embodied carbon using natural, recycled or lower embodied carbon materials is more than likely to slowly be eroded until the design returns to business as usual. What a depressing situation!

Though the majority of architects bemoan the role of ‘value engineering’, we seem to lack the necessary financial knowledge and vocabulary to be able to argue the value of key sustainability measures, which tend to come at an increased capital cost. This is true whether it be from improving fabric performance, switching the structure to stone or timber or even simply retaining a building rather than demolishing one.

Money talks

Financial decisions are made from the clichéd bottom line, done typically within a spreadsheet and usually without much discussion with the architect regarding the concessions to be made. It is in this disconnect between project managers, cost consultants and the design team that frictions arise, and relations wear thin. Rather than keep to this business-as-usual mode of operating, why shouldn’t we switch to a collaborative and open way of understanding the sustainability priorities and possibilities of the project with the whole team?

While we may not need to know the intricacies of financial modelling, we should be numerically literate enough to question analytical assumptions – such as design lives, inclusions of operational energy savings, construction programme timings etc. The way in which we educate ourselves should be through dialogue with those who analyse our projects through a financial and numerical lens.

Working together

Early-stage workshops with clients, cost consultants and project managers may help to identify shared ambitions for a project and develop understanding between the project team disciplines to reinforce a shared vision. This is, furthermore, likely to align with the client’s initial ambitions. Recent years have seen more briefs setting their sights on net-zero buildings, and we need to raise our engagement to meet those targets. All too often a brief will weaken its sustainability ambition to appease more traditionally valued aspects such as net internal area, density and the provision of amenities.

In answer to the next iteration of ‘Form follows…’, we should see this as an opportunity to move to a collaborative and collective process of building places, where there is cohesion between all the members of the project team. For any other designers in a position to influence sustainability ambitions I would suggest the following five considerations may help:

1 Understand where value lies for the client. Whether there are pure financial priorities or also social and wellbeing priorities. Blend in the human and fiscal elements of the project.

2 Understand where the money is coming from. Who are the investors and what sustainability ambitions/regulations are they aligned to?

3 Befriend the cost and project managers. Getting the whole team to feel driven to deliver sustainability can breed a positive mentality.

4 Get familiar with the jargon (if you’re feeling nerdy). It may be the hardest part, but understanding key terms like CAPEX, OPEX, REPEX, IRR, NPV and other alphabetti-spaghetti acronyms is useful and involving. Knowing that can help us to critically analyse costing exercises and make sure we are comparing options fairly.

5 Finance should not be viewed as a barrier to building sustainable and regenerative places, but as another facet of design.

‘Work smarter, not harder’ should be our mantra when faced with budgets that may on the surface pose difficulty to achieving a brief’s sustainability ambition. Perhaps in the future we will even come to redefine value, focusing on the community, health  and economic benefits that come with collaborating for a better future. 

Liam Kelly is environmental design lead at Allies and Morrison, heading up the delivery of environmentally responsive design and Passivhaus at scale

BEF: Built Environment for the Future brings together young professionals from across the industry to learn together and champion sustainability in more projects by applying and understanding each other’s skills and expertise