Commercial and Whole Life Cost Assessment
WLC Ltd have been commissioned by the AIMCH partners to compare the whole life costs and life cycle costs of four different house types each of which was built using three different methods of construction.
The whole life cost assessment has been carried out in the wider context of the AIMCH Work Package 11 (Embodied Carbon (ECA)1 & Whole Life Cost Assessment (WLC) which, among its objectives, listed:
Evaluate “the benefits and/or impacts on the long term environmental and commercial/financial impacts of the use of MMC systems in future AIMCH housing and asset management
Provide data in support of the benefits/impact, on the procurement of housing, considerate of capital cost v WLC cost, in the context of MMC panelised construction systems, compared to conventional build methods, assessing procuring for value v procuring on cost.”
This document reports on the findings of the WLC assessment component of Work Package 11.
The key conclusions are:
- The timber frame solutions are 2-8% more expensive than traditional masonry solutions on average across the housetypes.
- One of the key benefits from MMC adoption is the reduction in on-site construction duration.
- Build-to-sell business models may benefit from earlier interest repayment of loans.
- Build-to-rent business models may benefit from earlier income from rent, depending on the geographic location.
- Timber frame perform better when considering environmental costs. If the cost of CO2e associated with construction is accounted for, the open panel and closed panel timber frame cost decreases on average by 0.5% and 0.6% respectively.
- Operational emissions are predicted to reduce with the implementation of the Future Homes Standard, continued decarbonisation of the UK electricity grid, and increased electrification, the benefits of timber frame, in terms of carbon, over masonry construction, will become increasingly significant, as will focus on reducing the embodied emissions, from cementitious products.
- Future Homes Standard will have a significant impact on both traditional and timber frame specifications, consequently impacting the cost margins between the two systems.
- The operation costs of traditionally built houses are similar to the operation costs of houses – of the same type – built using open panel and closed panel timber frame. This is principally due to the fact that regardless of the construction method, the considered houses are all designed to the same energy efficiency standard, and consequently their energy usage, associated emissions, and energy costs are the same.
- Geographical location has a significant influence on labour cost which make MMC a more viable solution in certain locations were labour cost are high (e.g. Southern Regions and London).
- The cost data used is from a small sample, therefore further cost analysis would need to be carried out before any business decisions are carried out.
- Construction cost data refers to late 2019/ early 2020 prices. Prices of materials have changed significantly since that data was collected. Therefore, it is recommended the models are update with current cost data before any business decisions are made.
- Although not directly quantifiable due to the lack of data, another benefit linked to the use of timber frame solution arises from quality improvements associated with the manufacture of MMC components in a controlled environment (i.e. the manufacturing of closed panels versus the on-site erection of walls).