Saving the short-term without compromising long-term goals
With the UK facing an uncertain economic and political future over the next 12 months, it’s tempting for those responsible for built asset programmes to focus solely on their immediate challenges.
Persistently high inflation and escalating insolvency risk, not to mention construction’s prevalent labour shortages, all require immediate attention.
Yet short-termism, while understandable, is dangerous. Businesses who throw themselves into firefighting and take their eye off their long-term sustainability goals don’t just risk derailing strategic priorities like net zero. They may also inadvertently reduce productivity and amplify project risk.
However, it is possible for programme managers to combine the agility needed to solve today’s issues with the resilience and resolution needed to achieve their strategic ambitions. Here’s how:
1.
Focus on control, not costs
Knee-jerk cost-cutting when a project is in flight is invariably disruptive and may unleash unintended consequences that increase both cost and schedule risk.
By contrast, putting enhanced controls in place is more likely to preserve productivity and enable more targeted cost reduction.
For example, ‘landing points’ at agreed intervals during the project provide the opportunity to pause, assess progress and choose from a range of options with both the time and information needed to make the best decision.
Meanwhile ‘trigger points’ – in which performance at a clearly defined and measured level triggers an agreed response –helps the supply chain to keep things on track.
2.
Align goals through a programmatic approach
Many organisations are facing similar challenges – from ambitious targets and strict disclosure regulation to old infrastructure and buildings – alongside deep concerns around cost and specific choices of technology. Some are even at risk of failing, simply because of the complexity of decarbonisation and their lack of capability, coordination and control.
However, sustainability targets and the drive for lower operating expenses, and optimum project performance, should be seen as concurrent and complementary goals.
This can be achieved via a successful net-zero delivery programme which starts with sizing the challenge, collecting and measuring data against a clear carbon baseline, identifying levers of control to create a full programme of works.
Organisations should also think about a new operating model whereby they embed sustainability interventions into lines of business and day-to-day operations.
Once the programme is launched across the organisation, and large-scale delivery of projects are underway, make sure to record the progress and impact against ESG requirements.
3.
Procure strategically
The need for joined-up thinking starts at project inception. Decisions made during the design and procurement stages will determine an asset’s value, performance and environmental impact throughout its entire lifecycle.
For this reason, decision-makers must set up projects to avoid silos and prevent the excessive focus on narrow, unconnected targets rather than strategic aims. For example, measuring and managing a built asset’s total carbon impact should not wait until its operational life begins.
For example, a carbon calculator tool such as ours allows businesses to understand how much-embodied carbon their design choices entail. Used in conjunction with cost planning, this tool can help to make informed decisions during design, procurement and beyond.
The same thinking also underpins best practices in operating expense planning. The recent volatility in global energy prices, coupled with the greater availability of domestically-produced renewable energy, has encouraged some UK asset owners to extend their energy procurement horizons – with 15 or even 20-year fixed price contracts becoming increasingly common as they seek certainty on both energy cost and sustainability.
4.
Net zero - a business opportunity, not a burden
The most cited reason for pausing or watering down sustainability goals is the “need to focus on the bottom line”. Yet projects seldom need to choose between sustainability and profitability.
In reality, profitability is often best achieved by first delivering sustainability. Take for instance the long-term viability of conventional versus energy-efficient, low-carbon real estate.
With a third of the world’s largest publicly traded companies committed to net zero, there’s an increasing risk that non-ESG compatible office space could become an unsellable or unlettable ‘stranded asset’.
By contrast, ESG-led office schemes already command a green premium of up to 35.0 percent and some analysts forecast they will soon become the baseline against which the sector is judged.
At a national level, the Office for Budgetary Responsibility warns that if the UK delays action on net zero by 10 years, national debt as a percentage of GDP could be 23.0 percent higher by 2050.
While investment in sustainability is rarely free, ultimately the cost of inaction will invariably outweigh the cost of action.
Net zero should be viewed as a business opportunity to be seized, rather than a burden to be borne.
With the road to enduring profitability running through improved sustainability, businesses and their programme teams should focus on striking the right balance between short-term cost, long-term value and strategic environmental priorities.
If they work together pragmatically and programmatically, their future success need not be jeopardised to save the now.
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