02whole 1 200

The development of a multi-criteria approach for
the measurement of sustainable performance

for built projects and facilities
Grace K C DING
BSc., MSc (Thesis)
A thesis submitted in fulfilment of the requirements

for the award of Doctor of Philosophy of the
University of Technology, Sydney
February, 2004
CERTIFICATE
I certify that this thesis has not already been submitted for any degree and is not being
submitted as part of candidature for any other degree.
I also certify that this thesis has been written by me and that any help that I have
received in preparing this thesis, and all sources used, have been acknowledged in this
thesis.
______________________________
Signature of Candidate
ACKNOWLEDGEMENTS
______________________________________________________________________
There are many people who have helped and guided me through my doctoral thesis at
the University of Technology, Sydney. I would like to thank my supervisors Dr. John
Twyford and Dr. Glen Searle for their overall support and assistance with the doctoral
research process.
A special thanks to Professor Craig Langston for his overall support, inspiration and
direction, reading my manuscript, and providing continuous encouragement from the
very beginning of this research till the end.
I would also like to give my special thanks to Professor Goran Runeson who read my
manuscript and provided valuable comments on my research, particularly on the aspects
of the research findings, and provided advice associated with the statistical analysis.
Many thanks are also due to my colleagues in Construction Economics at UTS for their
advice, support and encouragement; to the Department of Commerce, NSW for
providing me with the data and information for the case studies; to John Li &
Architects, and G. Vasilareas & Assoc. Pty. Ltd for providing professional assistance in
the case studies; and to all those who participated in the surveys in this research.
Ms Carey Martin is gratefully acknowledged for her valued editorial assistance.

TABLE OF CONTENTS
________________________________________________________________
Acknowledgements ii
List of Figures ix
List of Tables xi
Abstract xiii
Chapter One - Introduction
1.1 Foundation for the research 1

1.2 Problem definition 2
1.3 Research hypothesis 4
1.4 Research aims and objectives 5
1.5 Research methodology 6
1.6 Thesis structure 7
Chapter Two - Economic development and the environment
2.1 Introduction 11
2.2 The environment and the economy
2.2.1 Introduction 12
2.2.2 The role of the natural environment 12
2.2.3 Environmental problems 16
2.2.4 Summary 21
2.3 Overview of environmental valuation techniques
2.3.2 The concept of sustainability 22
2.3.3 Environmental valuation techniques 28
2.3.4 The limitations of environmental valuation techniques 31
2.3.5 Summary 34
Table of content
2.4 Cost benefit analysis and multi-criteria analysis

2.4.2 Cost benefit analysis as an evaluation tool 35
2.4.3 The limitations of cost benefit analysis in environmental
valuation 36
2.4.4 The principles of multi-criteria analysis 43
2.4.5 Multi-criteria analysis – a non-monetary appraisal techniques 45
2.4.6 Summary 47
2.5 Conclusion 48
Chapter Three - The construction industry and the environment
3.1 Introduction 50
3.2 Sustainable construction and environmental issues
3.2.2 The construction industry and its impacts on the environment 52
3.2.3 The concept of sustainable construction 55
3.2.4 ISO14000 and environmental management systems in
construction 57
3.2.5 A way forward 60
3.3 Energy and the built environment
3.3.2 Energy and the construction industry 65
3.3.3 Life-cycle energy analysis 68
3.3.4 The importance of embodied energy 69
3.3.5 Embodied energy modelling 73
3.3.6 Embodied energy measurement tools 81
3.3.7 Critique of current methods of measuring embodied energy 83
3.3.8 Operational energy 87
3.3.9 Embodied energy versus operational energy 90
3.4 Conclusion 92
iv
Table of content
Chapter Four - Conceptual framework of a sustainability model for

project appraisal
4.1 Introduction 93
4.2 Environmental building assessment methods
4.2.2 An overview of environmental building assessment methods 95
4.2.3 The role of environmental building assessment methods
in the construction industry 100
4.2.4 Critique on the environmental building assessment methods 102
4.2.5 Summary 108
4.3 The conceptual development of a sustainability model for project
appraisal
4.3.2 Single or multiple dimensional assessment approaches 109
4.3.3 The multiple dimensional model of project appraisal 114
4.3.4 Summary 120
4.4 Conclusion 121
Chapter Five - The development of sustainability index for project appraisal
5.1 Introduction 122

5.2 The identification of project appraisal criteria
5.2.2 Research methodology 123
5.2.3 Pilot study 124
5.2.4 Extensive questionnaire survey 126
5.2.5 Rationale for data analysis 127
5.2.6 Observation and analysis 128
5.2.7 Summary 138
5.3 The development of a sustainability index for project appraisal
5.3.2 The derivation of project appraisal criteria 140
5.3.3 Rationale of project appraisal criteria 141
5.3.4 The conceptual framework of sustainability index 152
v
Table of content
5.3.5 Summary 170

5.4 Conclusion 171
Chapter Six - Research Methodology and Data Collection

6.2 Research methodology 173
6.3 Research hypotheses 175
6.4 Research design 177
6.5 Overview of case study projects 179
6.6 Data collection
6.6.1 Financial return 183
6.6.2 Energy consumption 187
6.6.3 External benefits and environmental impact 192
6.7 Conclusion 198
Chapter Seven - Data Analysis and Discussions

7.2 Building cost
7.2.1 Construction and building life costs 201
7.2.2 Comparing construction and building life costs by elements 204
7.3 Energy consumption
7.3.1 Initial and recurrent embodied energy 210
7.3.2 Operational energy 218
7.3.3 Comparing embodied energy and operational energy 221
7.4 External benefits 224
7.5 Environmental impact 227
7.6 Analysis of projects by age and location
7.6.2 Analysis of projects by age 230
7.6.3 Analysis of projects by location 236
7.6.4 Summary 242
vi
Table of content
7.7 Analysis of relationships between building cost and energy consumption

with gross floor areas
7.7.2 Analysis of relationships for building cost and gross floor area 243
7.7.3 Analysis of relationships for energy consumption and gross
floor area 246
7.7.4 Summary 249
7.8 Conclusion 250
Chapter Eight -Developing the decision models and verifying the sustainability
index

8.2 Developing the linear regression models and testing the hypotheses
8.2.2 Regression model (Model 1) for building cost and energy
consumption and test of hypothesis (H1) 253
8.2.3 Regression model (Model 2) for building cost and external
benefits and test of hypothesis (H2) 256
8.2.4 Regression model (Model 3) for building cost and
environmental impact and test of hypothesis (H3) 258
8.2.5 Regression model (Model 4) energy consumption and external
benefits and test of hypothesis (H4) 260
8.2.6 Regression model (Model 5) for energy consumption and
8.2.7 Regression model (Model 6) for external benefits and
8.3 Developing the multiple regression model and testing the hypothesis
8.3.2 Multiple regression model (Model 7) for the prediction of
energy consumption and test of hypothesis (H7) 267
8.3.3 Summary 271
8.4 Verifying the sustainability index
8.4.2 Proposed development 272
8.4.3 Data collection and analysis 274
8.4.4 Calculating the sustainability index 277
8.5 Conclusion 278
vii
Table of content
Chapter Nine - Developing SINDEX – A benchmarking tool in construction

9.2 The need for environmental benchmarking in construction 281
9.3 The development of a sustainability benchmarking tool – SINDEX
9.3.2 Maximise wealth (Financial return) 286
9.3.3 Minimise resource (Energy consumption) 287
9.3.4 Maximise utility (External benefits) 288
9.3.5 Minimise impact (Environmental impact) 289
9.3.6 Sustainability Index as an environmental benchmarking tool 291
9.4 The benefits of using SINDEX in construction 293
9.5 Conclusion 294
Chapter Ten - Summary and Conclusions

10.2 Review of aims and objectives
10.2.1 Impacts of development 296
10.2.2 Aid to decision-making 297
10.2.3 Identifying sustainable determinants for project appraisal
and modelling decision-making 297
10.2.4 Verifying the decision-making model 298
10.2.5 Concluding remarks 299
10.3 Summary of research 299
10.4 Conclusions 302
10.5 Policy implications 303
10.6 Limitations of this research 305
10.7 Recommendations for further research 306
References and Bibliography 312
Appendices
viii
LIST OF FIGURES
_________________________________________________________________________
1.1 Thesis structure 10

3.1 The components of life cycle energy analysis 67
4.1 The PICABUE principle 113
4.2 Multiple dimensional decision model of project appraisal 115
5.1 Distribution of respondents by professionals 129
5.2 Distribution of respondents by age 130
5.3 Distribution of respondents by education 131
5.4 The proposed sustainability index model 162
5.5 Two-dimensional evaluation matrix 163
6.1 Locations of the 20 public high school projects 181
6.2 Criteria and sub-criteria of external benefits 194
6.3 Criteria and sub-criteria of environmental impact 195
7.1 Comparison of construction cost and building life cost (60-year life span) 203
7.2 Composition of superstructure for construction and building life costs 206
7.3 Composition of external fabric for construction and building life costs 207
7.4 Composition of internal finishes for construction and building life costs 208
7.5 Composition of building services for construction and building life costs 209
7.6 Average initial and recurrent embodied energy by elements 215
7.7 Comparison of initial and recurrent embodied energy by major elements 216
7.8 Comparison of annual initial and recurrent embodied energy 218
7.9 Annual operational energy consumption per square metre of
gross floor area 220
7.10 Summary of energy consumption for 20 high schools in NSW 223
7.11 Life-cycle energy analysis of 20 high schools in NSW 224
7.12 Comparison of weighted value score of external benefits 226
7.13 Comparison of weighted value score of environmental impact 229
7.14 Comparison of weighted value score of external benefits by age 234
7.15 Comparison of weighted value score of environmental impact by age 235
7.16 Comparison of weighted value score of external benefits for by location 240
7.17 Comparison of weighted value score of environmental impact by location 241
List of figures
8.1 Regression analysis of external benefits (value score/m2) and

Environmental impact (value score/m2) 266
9.1 Input screen of maximise wealth 287
9.2 Input screen of minimise resources 288
9.3 Input screen of maximise utility 289
9.4 Input screen of minimise impact 290
9.5 Main page of SINDEX 292
9.6 Summary of characterised faces to show evaluation outcome 292
x
LIST OF TABLES
_________________________________________________________________________
2.1 Summary of environmental valuation techniques 30

3.1 Summary of initial embodied energy studies per unit quantity of
gross floor area 72
3.2 Summary of percentage allowance of on-site construction energy 76
3.3 Summary of recurrent embodied energy per unit quantity of
gross floor area 78
3.4 Summary of percentage allowance of embodied energy of building
services 79
5.1 Distribution of survey participants 127
5.2 Summary of relative importance ranking of environmental impact
in construction 133
5.3 Ranking of economic and environmental criteria by professions 135
5.4 Final ranking of economic and environmental criteria 136
5.5 Project selection techniques used by building professionals 137
6.1 Summary of information for the 20 public high schools
in New South Wales 180
6.2 Summary of life cycle data used in the case studies 185
6.3 Summary of construction and building life costs over a 60-year
life cycle 187
6.4 Summary of embodied energy coefficient from different sources
for the major materials used in the case studies 188
6.5 Summary of embodied and operational energy 192
6.6 Summary of the weighted value score of external benefits and
environmental impact for 20 high schools in NSW 198
7.1 Summary of construction and building life costs 201
7.2 Summary of construction and building life costs per annum and
per square metre of gross floor area 202
7.3 Summary of average construction cost and building life cost
by elements and by proportion 205
7.4 Summary of initial and recurrent embodied energy 211
7.5 Annual initial and recurrent embodied energy by elements 214
7.6 Summary of initial and recurrent embodied energy per annum
(60-year life span) 217
List of tables
7.7 Summary of operational energy by fuel types over a 60-year

life span 219
7.8 Summary of operational energy 220
7.9 Summary of embodied and operational energy 222
7.10 Summary of weighted value score of external benefits 225
7.11 Summary of weighted value score of environmental impact 228
7.12 Summary of projects completed before 1997 230
7.13 Summary of projects completed between 1997 and 2002 231
7.14 Summary of annual operational energy by age 232
7.15 Summary of two-sample ‘t’ test for differences in two means by age 236
7.16 Summary of projects in Sydney region 237
7.17 Summary of projects in the country region 237
7.18 Summary of operational energy by fuel types and by location 239
7.19 Summary of annual operational energy by location 239
7.20 Summary of two-sample ‘t’ test for differences in two means by
location 242
7.21 Results of regression analysis for construction cost and gross floor area 244
7.22 Summary of results of regression analysis for building cost 245
7.23 Results of regression analysis for embodied energy and gross floor area 247
7.24 Summary of results of regression analysis for energy consumption 248
8.1 Results of regression analysis for building cost and energy consumption 253
8.2 Summary of results of regression analysis for Model 2 to 6 256
8.3 Results of curvilinear regression analysis for external benefits and
environmental impact 265
8.4 Results of multiple regression analysis 268
8.5 Summary of design details for the proposed development 273
8.6 Summary of gross floor areas (GFA) for the proposed development 274
8.7 Summary of financial return for the proposed development 274
8.8 Summary of net present value (NPV) and benefit cost ratio (BCR) for
the proposed development 275
8.9 Summary of energy consumption, external benefits and environmental
impact for the proposed development 276
8.10 Two-dimensional evaluation matrix for the proposed development 277
xii
ABSTRACT
______________________________________________________________________
It has long been recognised that environmental matters are important to the survival of
the construction industry. Yet, in general, the construction industry continues to degrade
the environment, exploiting resources and generating waste, and is reluctant to change
its conventional practices to incorporate environmental matters as part of the decision-
making process.
Building development involves complex decisions and the increased significance of

external effects has further complicated the situation. Cost benefit analysis (CBA) is one
of the conventional tools used widely by public and private sectors when appraising
projects. It sets out to measure and compare the total costs and benefits of different
projects that are competing for scarce resources in monetary terms. However, there are
growing concerns that the values of environmental goods and services are often ignored
or underestimated in the CBA approach which has led to the overuse and depletion of
environmental assets. Consequently, CBA’s usefulness and relevance in this respect is
increasingly controversial.
Project development is not just concerned with financial return, but is also conscious of
the long-term impacts on living standards for both present and future generations.
Sustainable development is an important issue in project decision-making and
environmental effects need to be incorporated into the evaluation process. A multi-
dimensional evaluation approach attracts increasing attention around the world as the
way to incorporate environmental issues in the decision-making process. This approach
uses the conventional market approach to monetarise economic aspects of a
development, whilst using a non-monetary approach to evaluate the environmental
matters.
Abstract
The purpose of this thesis is to critically examine the impact of construction activities
on the environment and methods of quantifying environmental matters. This thesis also
evaluates the principal sustainable development determinants for modelling, and
evaluating long-term environmental performance of buildings during the project
appraisal stage. Projects can be assessed using an index system that combines the
principal determinants of sustainable development.
The four criteria as identified in this research are financial return, energy consumption,
external benefits and environmental impact. The derived sustainability index combines
the four identified attributes into a single decision-making tool. The attributes are each
expressed in units that are best suited to their quantitative assessment. The development
of a sustainability index is a way of combining economic and environmental criteria
into the decision-making framework.
The sustainability index has also been developed into computer software called
SINDEX to be used as a benchmarking tool to aid design and the sustainability
assessment of projects. SINDEX is a sustainability modelling tool used to calculate and
benchmark sustainable performance of proposed buildings, new and existing facilities.
Conventional project appraisal techniques measure net social gain to select a project,
whilst the sustainability index measures the relative ranking of projects from a
sustainable development view. Buildings have a long life, so any improvement in
appraisal techniques for choosing the best option amongst the alternatives will
significantly reduce their future environmental impact. As such, a methodology that
embraces various criteria in relation to project development is crucial in this respect.
The development of a sustainability index is a way to combine multiple criteria
measured using different units. Using the sustainability index will greatly assist the
construction industry to realise sustainable development goals, and thereby make a
positive contribution to identifying optimum design solutions.
xiv
_______________________________________________________________________
CHAPTER
ONE
_______________________________________________________________________
INTRODUCTION
1.1 FOUNDATION FOR THE RESEARCH
Global environment deterioration has captured people’s attention and been the focus of
constant mass media reports locally, nationally and worldwide (Joubert et al., 1997;
Bentivegna et al., 2002). Environmental crises concerning matters such as ozone layer
depletion, global warming, ecosystem destruction and resource depletion are of
increasing importance in our daily life (Langston & Ding, 2001).
Environmental economics and sustainable development have become central concerns

to people from all disciplines and in all countries (Cole, 1999a; Holmes & Hudson,
2000). Much environmental discussion centres on the concept of ecologically
sustainable development. Ecologically sustainable development, from a project
development point-of-view, is efficiently using resources to meet the requirements and
needs of present and future generations, whilst minimising adverse effects on the
natural environment (Best & de Valence, 1999).
Project development potentially contributes to the economic and social advancement of

society, enhancing both the standard of living and the quality of life. However it is often
also associated with impairment of the environment (Azqueta, 1992). Project
development may result in the loss of valuable agricultural land, forests and wilderness,
cause pollution of air, land and water, generate noise, consume non-renewable natural
resources and minerals and use large amounts of energy (Spence & Mulligan, 1995).
Chapter 1: Introduction
To harness project development positively, it can be used to contribute to the

sustainable development by thorough assessment of environmental issues at an early
stage to help choose the most efficient development option among competing
alternatives (van Pelt, 1993b; Lowton, 1997). The choice of the best development
proposal depends not only on the plant and materials used and profit generated, but also
upon the selection of the most appropriate site and design options to meet
environmental criteria and to respect the feelings and views of community (Winpenny,
1991b; Langston & Ding, 2001).
1.2 PROBLEM DEFINITION
A monetary unit is a common unit that has been used to facilitate comparison among
project alternatives. The conventional project appraisal methodology employs cost
benefit analysis (CBA) as the main tool in the decision-making process, particularly in
the public sector (Harvey, 1987; Tisdell, 1993; Perkins, 1994; van Pelt, 1994). CBA is
designed to show whether the total benefits of a project exceed the total costs in order to
determine a preferred option. Although CBA may appear reasonable and practical, there
are growing concerns that this approach often ignores or underestimates the values of
environmental goods and services, leading to overuse and depletion of environmental
assets (Tisdell, 1993; Hobbs & Meier, 2000; RICS, 2001).
Literature on CBA and environmental protection indicates that using a single objective
in the evaluation process is insufficient when taking environmental values into account
(Zeleny, 1982; Hanley, 1992; Nijkamp et al., 1990; Spash, 1997). The environment’s
complexity means its relationship with human activities remains largely unknown
(Gregory et al., 1993; van de Burgh, 1996; Harding, 1998).
Current project appraisal techniques measure project costs and benefits based on market
transactions and price. However monetary value, when applied to environmental assets
is difficult, if not impossible to ascertain. CBA methodology is concerned with
measuring project costs and benefits in monetary units, whilst environmental effects
2
frequently cannot be successfully priced through the same conventional approach

(Janssen, 1992; Powell, 1996; Abelson, 1996; Harding, 1998; Crookes & de Wit, 2002).
Research on non-monetary techniques has been undertaken to search for alternative

methods so that environmental values can be identified and evaluated in a proper
manner. One such method is multi-criteria analysis which uses a weighted score
approach to evaluate environmental issues. This has gained significant attention in
operational research (Voogd, 1983; Nijkamp et al., 1990; van Pelt, 1994; Hobbs &
Meier, 2000).
Completely replacing a monetary market approach with non-monetary techniques has

limitations, however both methods are regarded as complementary tools by many
researchers (Watson 1981; Jones, 1989; Nijkamp et al., 1990; Gregory et al., 1993; van
Pelt, 1993b; Powell, 1996; Joubert et al., 1997; Mirasgedis & Diakoulaki, 1997; RICS,
2001). There is no strategic model for project appraisal that embraces significant
sustainable development determinants where these determinants are assessed using
methods that suit their nature.
Therefore a gap exists between conventional project evaluation techniques and the
incorporation of environmental values in the decision-making process. In order to
bridge the gap, current appraisal methodologies require thorough examination leading
to a new model that incorporates the principal determinants of sustainable development
into the decision-making process using a multi-criteria approach as opposed to the
current single dimensional approach. Therefore, the aim of this research is to establish
an empirical model to evaluate projects other than in monetary terms and incorporate
environmental values in the decision-making framework.
3
1.3 RESEARCH HYPOTHESIS
This research focuses on identifying, quantifying and incorporating environmental

issues into the decision-making process. A decision-making model will be developed to
embrace the broader sense of environmental protection at the appraisal stage of project
development.
This requires a comprehensive examination of the existing decision-making

methodology used in the construction industry. The use of CBA and environmental
valuation techniques are investigated and an examination of the current literature will
also identify significant variables for decision-making on environmentally sensitive
projects. The investigation is in three main areas:-
1) a literature review to identify impact variables,
2) using findings from the literature as a basis for an extensive industry survey to rank
the identified major sustainable development determinants, and
3) the formulation of a decision-making model based on the survey results.
A sample of twenty public high school projects is studied to establish the criteria and
data are collected and analysed to determine relationships between the criteria. Finally,
the model will be tested for robustness and validity.
The industry survey to rank major sustainable development determinants comprises an

extensive questionnaire for professionals currently practising in the construction
industry. Their opinions on the ranking of a series of decision-making variables are
examined and collated to develop a framework for decision-making. This framework is
proposed to be a composite index system. The technique of multi-criteria analysis is
used to bring these variables together into a single model. A sustainability index (SI)
will then be developed to calculate the level of sustainability of a project and facilitate
the choice of the best option. The principal role of the sustainability index is to
incorporate environmental and social issues into the decision-making process at an early
stage. It is intended that this model will bring together the strength of CBA and multi-
criteria analysis into a single decision-making tool.
4
The research proposition forms the reference point for the literature review. The
working hypothesis (Hw) for this research is expressed as:
Hw: The use of a sustainability index in the decision-making process for

environmentally sensitive projects can significantly enhance the
prospects of sustainable development in the construction industry.
The research builds upon the appraisal techniques that are available in the field. Their
advantages and disadvantages are investigated to provide the ground work for the
development of a model to assess sustainability of built projects and facilities. While
the outcome of this research is to develop a methodology for incorporating
environmental goods and services in decision-making, the research findings in the
literature review and the survey will increase understanding of the level of
environmental awareness in the construction industry.
1.4 RESEARCH AIMS AND OBJECTIVES
The aim of this research is to develop a strategic decision-making model by objectively

incorporating environmental and social issues into the decision-making process at an
early stage of a development. The model can then be applied to choose the best
development option and be further enhanced to benchmark the performance of projects
and facilities. Specifically, it is envisaged that this research will promote environmental
sustainability in the construction industry.
The specific objectives of this research that will realise the research aim are to:
i. identify, investigate and examine development impacts on the environment,

ii. suggest ways to improve the conventional decision methodology used in the
construction industry,
iii. evaluate the principal sustainable development determinants for modelling
decision-making for built projects and facilities,
5
iv. develop a new decision-making model that comprises both quantitative and
qualitative analysis, and
v. test the effectiveness and usefulness of the new decision model.
1.5 RESEARCH METHODOLOGY
This research involves both quantitative and qualitative data. The methodology engaged
in this research will, therefore, consist of a combination of strategies. A literature search
involves a thorough review of current practices and previous research in the areas of
environmental evaluation and project appraisal. The literature search also explores the
background issues in relation to the development of a sustainability index as a decision-
making tool. Data collection has been divided into two parts. The first part used
questionnaire survey to obtain data from the building professionals for developing the
model of sustainability index. The second part involved retrieving building data from
the project archive to quantify the criteria as identified from the questionnaire survey.
It was decided to use an industry questionnaire to obtain data on professionals’ opinions

about sustainability criteria in the construction industry. The purpose of the
questionnaire is to identify variables to be included in the decision-making model for
sustainability. A mail survey was employed due to the benefits of administration, wider
coverage and the speed of data collection. Following the identification of key variables
for the decision-making model, case study research was used to collect data for the
variables. The decision-making model is primarily developed to appraise built projects
and facilities and, therefore, case study methodology is a rational approach to the
research (Yin, 2003).
Data was collected for twenty public high school projects using a questionnaire and
other measurement techniques. The interaction of these variables was examined using
linear and multiple regression analysis to establish probabilistic models. The hypothesis
of this research was then tested for correlation. Details of the data analysis are discussed
in Chapters 6 and 7. The robustness and soundness of the sustainability index is
demonstrated on another project with different design options.
6
1.6 THESIS STRUCTURE
The thesis structure is presented in Figure 1.1 and the specific chapter descriptions are
as follows:
Chapter One
This chapter provides background information for this research. It also explains why
this research was undertaken and how this research is significant to the construction
industry. A working hypothesis (Hw) was developed to provide a reference point for the
literature review.
Chapter Two
This chapter builds a theoretical foundation for the research by reviewing literature and
previous research. The research also examines the nature and extent of environmental
degradation of the built environment in relation to economic development. This study
provides information and argument for the importance of incorporating environmental
values in the appraisal of built projects and facilities. The techniques available for the
quantification of environmental values are also critically reviewed. A multi-criteria
approach for project appraisal is reviewed and contrasted to the conventional market-
based approach. The argument established provides a platform for further investigating
the literature concerning other environmental valuation techniques such as non-
monetary approaches.
Chapter Three
Whilst the previous chapter focuses on the broader discussion of environmental issues,
this chapter concentrates on the relationship between environmental issues and the
construction industry. This chapter starts by examining construction activity effects on
the natural and man-made environment and how using an environmental management
system can help to enhance sustainable goals in the construction industry. The impact of
energy consumption in the built environment is also investigated from a life-cycle
approach. The energy analysis of the built environment includes the study of both
embodied and operational energy throughout a development’s life span. The energy
7
study also highlights the importance of energy consumption in achieving sustainable

practice in construction.
Chapter Four
This chapter critically reviews the environmental building assessment methods
currently used at national and international levels when evaluating a building’s
environmental performance. A multi-dimensional approach to the sustainable appraisal
of projects is discussed as opposed to the conventional single-dimensional approach.
This chapter also presents the conceptual development of a sustainability index for
project appraisal. The sustainability index uses a multi-dimensional approach to
appraise projects and its development is built on the theoretical foundation arising from
the literature review as reviewed in Chapters Two and Three.
Chapter Five
Following the conceptual development of a sustainability model to aid decision-making,
this chapter aims to identify key determinants of sustainable development that may be
important to the decision-making process when assessing environmentally sensitive
projects. The findings from the literature review provide a foundation for an industry
questionnaire. This chapter details the questionnaire sent to the construction industry,
followed by a pilot study. The main purpose of this survey is to obtain opinions from
practising professionals in the construction industry to rank the criteria identified from
the literature. These will be incorporated into a decision-making model. This chapter
also presents the analysis of the survey results enabling a mathematical model of a
sustainability index to be developed.
Chapter Six
The sustainability index model is tested in this chapter by using a sample of public high
school projects. Twenty public high schools were assessed to provide data for the
analysis. The detailed research methodology and data collection processes are presented
and the working hypothesis established in Chapter One is also refined and extended to
provide a foundation for analysis. The criteria are then measured and put together to
form a decision-making model.
8
Chapter Seven
This chapter reports on the underlying principle of data analysis and presents findings
from the data analysis of the sample. The properties and characteristics of data are
discussed and presented for each criterion in the sustainability index. Data analyses also
include comparing projects by age and by the geographical location of the projects.
Further analyses are also carried out to examine the relationships for building cost and
energy consumption to the size of projects.
Chapter Eight
In this chapter both linear and multiple relationships between variables are analysed and
discussed. The hypotheses developed in Chapter Six are also tested and reported. The
sustainability index developed in the previous chapter is then applied and tested for
robustness and validity on a separate project with different design options.
Chapter Nine
This chapter draws on the findings from the literature review and industry survey,
providing a comprehensive discussion on developing benchmarking as an evaluation
tool to assess project sustainability. Computer software, called SINDEX, was developed
as a benchmarking tool based on the concept and model of the sustainability index for
assessing built projects and facilities. The detailed methodology of its development is
discussed and presented.
Chapter Ten
This chapter summarises the research and states the conclusions. Conditional statements
are made with respect to the application of the sustainability index in the construction
industry. Limitations of the research and the possibilities of further research are made at
the end of the chapter.
Figure 1.1 Thesis structure
9
Chapter 1
Define the problem. Develop research aims, objectives and research hypothesis.
Chapter 2
Undertake literature review in relation to the relationship between economic
development and the environment
Identify impact of Investigate the Evaluate the monetary

economic development techniques of and non-monetary
on the environment environmental evaluation project appraisal
approaches
Chapter 3
Undertake literature review on the relationship between the construction industry and
the environment
Investigate the impact of building Undertake life-cycle energy study

activities on the environment of the built environment
Chapter 4
Conceptual development of a sustainability model for project appraisal
Chapter 5
Detail industry questionnaire and develop sustainability index for project appraisal
Chapter 6
Discuss details of research methodology used in case study and data collection
Chapter 7
Discuss data analysis and research findings for case study. Examine the relationships
between variables and the size of projects.
Chapter 8
Establish linear and multiple regression relationship of variables. Test the
sustainability index model.
Chapter 9
Discuss the use of benchmarking in the sustainable appraisal of projects and the
development of SINDEX
Chapter 10
Present summary, conclusion and recommendations for further research
10
______________________________________________________________________
CHAPTER
TWO
______________________________________________________________________
ECONOMIC DEVELOPMENT AND THE

ENVIRONMENT
2.1 INTRODUCTION
This chapter investigates the impact of economic growth on the natural environment
and the importance of incorporating environmental values into project appraisal. The
conventional market-based approach to decision-making is examined in detail,
compared with the multi-criteria approach to evaluating environmental values.
Economic growth and environmental protection are symbiotic; the environment being
the prime supplier of raw materials needed for economic growth which, in turn, relies
on a steady supply of those raw materials such as iron ore, timber, and quarried stone
(Thampapillai, 1991; Common, 1995; Spence & Mulligan, 1995).
Now economic growth, particularly in the construction industry, is under threat from
overuse or finite limits of supply (Rees, 1999). External effects such as air and water
pollution generated from mining, manufacturing and construction processes can also
seriously affect the environment’s capacity to continue producing raw materials (Kein
et al., 1999).
Economic growth and the natural environment jointly affect mankind’s well-being,
therefore the efficient allocation of scarce resources for project development is an
important issue to both present and future generations, and decisions taken during
project appraisal are of paramount importance if the balance of our social fabric is to be
maintained.
Chapter 2: Economic development and the environment
The activities which precipitated this environmental crisis relate mainly to man
exhausting and degrading natural resources, population growth and pollution. Research
shows that non-market characteristics are the main causes and these environmental
issues possibly affecting society’s economic growth (Nijkamp et al., 1990; Hanley &
Spash, 1993; Abelson, 1996, Joubert et al., 1997). So it can be seen that the relationship
between the environment and economic growth is vital and much depends upon its
investigation and improvement.
2.2 THE ENVIRONMENT AND THE ECONOMY
2.2.1 Introduction
Economic growth and environmental protection have a two-way interaction. The

environmental crisis is now of global importance. Human economic activity is the
principal cause through exploitation and pollution, yet such activity relies heavily on a
healthy environment for continuation and productivity (Common, 1995). There is,
hence, a vital partnership upon which much depends. This section investigates the role
of the environment in economic growth and the environmental problems associated
with these activities.
2.2.2 The role of the natural environment
The economy and the environment are mutually dependent on each other’s existence for
survival. Common (1995) states that the linkages between economic activity and the
environment are pervasive and complex. The complexity of the relationship is due to
the inherent, and difficult to quantify value of the natural environment to the economy
and the natural environment supporting the economy. Hill (1997) suggests that the
biosphere would seem to have infinite value, since without the biosphere, nothing can
survive.
According to the World Bank (1998), mankind values environmental goods and
services. The value can be intrinsic, or in the form us use, option and bequest. When
12
considering environmental assets’ values, Shechter and Freeman (1994) argue that
moral rights and interest should also be assigned to the non-human nature of the
environment. Therefore, the environment has a value, no matter whether humans are
around to sense, consume or experience it.
The environment serves the economy in many ways including as a resource base and
providing renewable and non-renewable resources as required (Thampapillai, 1991;
Common, 1995). Renewable resources are the biotic population of flora and fauna that
have potential to regenerate through natural reproduction when there are losses from
economic extraction, such as timber. Non-renewable resources are minerals such as
fossil fuels that cannot regenerate and so cannot be used sustainably. These stocks also
require geological surveys to estimate their size and value and are used to produce
goods and services consumed in the economy. As Booth (1998) says, the supply of
environmental resources is critical in order to sustain our living standard.
Whilst the environment serves as a resource base, it also consumed by performing as a

receptacle for wastes. Economic activities produce waste products, often described as
pollutants, that are discharged into the natural environment. The law of conservation of
mass states that energy can neither be created nor destroyed by human activity
(Common, 1995), it is merely transformed from one state to another. The environment’s
ability to absorb waste products is assimilative, as it is capable of receiving waste
matter, degrading it and converting it to nutrients, which then feed the occupants of an
ecosystem. However, that capacity depends on the waste’s biodegradability or whether
the level of biodegradable material is exceeded (Pearce, 1998).
Despite the environment’s direct value through providing the necessary materials for
economic activities and absorbing the waste product as a result of these activities, the
environment also adds an indirect value to the normal functioning of the economy by
providing humans with recreational facilities and other sources of pleasure and
stimulation (Thampapillai, 1991). This function does not directly involve any
consumptive material flow however its excessive use may lead to changes in its
character such as soil erosion and vegetation loss. This function is important to our
quality of life. Finally, the environment provides the life support system for mankind to
13
survive, such as breathable air, range of temperatures and water (Abelson, 1996). These
functions do not directly contribute to economic activities, but if its existence ceased to
function there would, no doubt, be not only a serious affect on the economic growth but
also on human life.
When the environment is exploited non-sustainably and rapidly polluted, there is a loss
of one or more of environmental services such as health, productivity or amenity and
the survival of the human race is seriously under threat. When a rare species or feature
of the environment disappears, there is not only a loss to man, but also an irreversible
loss of existence value. The economy often regards the adoption of environmental
protection as a costly measure that jeopardises profitability (Boughey, 2000). However,
there is a strong association between labour productivity and a high standard of
environmental quality such as output losses due to illness and absenteeism. Clearly, the
natural environment is an important component of the economic system and without it
the economic system would not be able to function. Therefore, as Thampapillai (1991)
states, the natural environment should be treated as an asset and a resource on the same
basis as the other factors of production.
The supply of public goods in the global common is often abundant and once it is
available for everyone it will not exclude anyone else from consuming it. Once it is
provided it bears no extra cost to additional consumers. Environmental goods are free
gifts of nature and there is no private property right of its ownership. However, up to a
certain extent, the public properties of environmental assets will cease and they will
become private goods. Beyond this point people may need to pay for the consumption
of environmental goods. According to OECD (1995), based on an economic viewpoint,
something that is abundantly available to all has no economic value. However, when the
assets start to become scarce, it starts to have potential economic value. This zero price
condition leading to market failure has led to these goods being excessively used,
resulting in depletion, deterioration and no incentive for their protection (Datta &
Mirman, 1999).
The problem of market failure is caused by the inability of the price mechanism to
reflect the value of social costs and benefits of resource use due to the environmental
assets are non-measurable and non-valuable (Thampapillai, 1991; OECD, 1995). As
14
such, the market cannot signal the relative scarcity of different resources through their
prices in the market. Market failure is also caused by the mismanagement and
inefficient use of natural resources and can be traced to malfunctioning, distorted or
totally absent markets. However, even though environmental goods have no market
price, they significantly affect the well-being of mankind both now and in the future.
As society fails to protect the environment and destruction occurs, these goods become
external to the market (Beder, 1996). The natural environment has been shown to be an
important factor for economic growth. Therefore, as natural environmental resources
are eroded and destroyed, the result will be jeopardised, if not limited, economic growth
(Thampapillai, 1991).
There are ongoing discussions about whether a constraint should be placed on economic
growth as environmental degradation is so evident (Xepapadeas & Amri, 1998). Some
people argue that economic growth is necessary to pay for environmental protection and
reverse environmental deterioration (Booth, 1998). Daly (1992) supports a steady-state
economy under which the natural resources are consumed at a fixed, sustainable rate
and the quality of the environment is maintained at a level that protects the health of
human individuals, species and ecosystems. Booth (1998) advocates that economic
growth is contrary to any notion of sustainability. He goes on to state that even if all
environmental costs were successfully internalised, economic growth could still lead to
environmental deterioration. Hence, in according with his opinion, the only way to
protect or preserve the environment is to cease all kinds of economic activity.
Daly’s (1992) opinion is more acceptable as it is more realistic about maintaining a

balance for economic growth and environmental protection. In fact, it is impossible to
stop all economic activities for the sake of protecting the environment. On one hand, if
economic activities are reduced in order to protect the environment, environmental
degradation will also be caused as a result of increased unemployment and poverty
(Thampapillai, 1991; Spence & Mulligan, 1995; Langston & Ding, 2001; Reed, 2002).
Therefore, neither extreme will benefit the environment.
15
Barbier (2003) suggests that the environmental and natural resources should be treated
as important assets and described as natural capital. Better understanding of these
complex environmental values may lead to more sustainable economic development.
The natural environment is an important component of the economic system, which
affects many aspects of mankind now and in the future. Renewable resources should not
be consumed at a rate greater than their natural rate of regeneration. Even though non-
renewable resources cannot be replaced, they should be conserved and used in a more
efficient way. Through technological improvements, their conservation can be achieved
by preventing their exhaustion by the present generation (Pearce & Turner, 1990).
2.2.3 Environmental problems
Environmental destruction is apparent everywhere, precipitating a crisis that is now of

global proportions. Global warming, thinning of the ozone layer, loss of biodiversity,
depletion of natural resources, widespread deforestation and the resulting deserts are
examples of global environmental degradation. Human economic activity is the
principal cause of the environmental crisis through exploitation and pollution, and yet
such activity relies heavily on a healthy environment for its continuance and
productivity. Rees (1999) says that ‘empirical evidence’ suggests that resource
consumption already exceeds the productive capacity of critical biophysical systems on
every continent. He further suggests that waste production has already violated the
assimilative capacity of many ecosystems at every scale.
Climate change has become synonymous with global warming (Loáiciga, 2003) and it
is caused by the build-up of greenhouse gases, which trap energy on the Earth’s surface.
Significant climate change over the next century is expected. The continuing of global
warming has intensified many atmospheric extremes leading to significant increase in
the frequency and severity of heat waves (Glasby, 2002).
The greenhouse gas effect is not a new problem. As early as 1896, a Swedish chemist
already proposed that the changing atmospheric carbon dioxide concentration was the
major cause of global temperature fluctuations (Kininmonth, 2003). In accordance with
Loáiciga (2003), the carbon dioxide concentration in 1765 was about 280 parts per
million by volume (ppmv) but it has increased to approximately 364 ppmv in 2000. The
16
concentration of carbon dioxide was due to the burning of fossil fuels leading to global
warming.
In 1985, researchers claimed that global warming was caused by human activities
(Kininmonth, 2003) and the first Intergovernmental Panel on Climate Change (IPCC)
confirmed this claim in 1988. The subsequent report, published in 1990, confirmed that
there is a greenhouse effect and the increased atmospheric concentration of carbon
dioxide was caused by human activities. A second IPCC followed in 1995 and a third in
2001 both expressed increasing confidence that greenhouse gases will cause dangerous
future climate change (Bala, 1998; Kininmonth, 2003; Meadows & Hoffman, 2003).
Apart from the increased atmospheric concentration of carbon dioxide, atmospheric

concentrations of other greenhouse gases such as methane, nitrous oxide and
chlorofluorocarbons are also increasing as a result of human activities (Loáiciga, 2003).
According to the third IPCC in 2001, the Earth’s surface temperature has increased
between 0.3°C and 0.6°C during the last 150 years (Loáiciga, 2003), and if no
environmental pressure or controls are introduced, an increase in global mean
temperature of about 2.5°C can be expected by the year 2100 (Houghton, 1997).
The increased temperature has already caused severe problems in the precipitation
pattern as global surface warming affects the climate pattern. Higher temperatures tend
to speed up evaporation in some regions and cause more precipitation in others. A
warmer atmosphere retains more moisture and water vapour absorbs more radiant heat.
Extra water vapour in the air will make more rain, and this cycle inevitably enhances
the greenhouse effect (Falk & Brownlow, 1989; Bala, 1998).
The warming of the Earth’s surface has a significant effect on the living creatures on
Earth and as well as the structure of the atmosphere. Human health will be affected by
the increased heat stress and widespread vector-borne diseases such as malaria
(Houghton, 1997). Increasing global temperature warms and expands the oceans, melts
polar ice caps and, in turn, raises sea levels. It is estimated that there will be an average
increase in sea level of about 6cm per decade for a temperature rise of between 1.5 to
17
5.5°C (Falk & Brownlow, 1989). The sea levels are expected to rise by about 0.5m by
2100 (Houghton, 1997; Bala, 1998).
As sea levels rise, soil erosion, flooding and storm damage to some coastal regions will
follow. Ecosystems at river mouths and the quality of fresh water are also affected.
Reduced snow and ice will reflect less light back into space and produce even greater
warming (Langston & Ding, 2001). High concentration of carbon dioxide in the
atmosphere will also affect coastal ecosystem productivity (Bala, 1998).
The high concentration of carbon dioxide in the atmosphere also increases the rate of
plant loss, that is, loss of biodiversity, another environmental problem that threatens
human existence. Biodiversity refers to the variety of life of Earth. It is an important
global resource and its existence has a close relationship with every aspect of human
society. Its conservation must be treated as a matter of urgency as human populations
are degrading the environment at an accelerating rate, destroying natural habitats and
reducing it. According to Glasby (2002) the rate at which species are disappearing is
about 1,000 to 10,000 times the normal rate and more than 25 percent of all species
could disappear within the next two decades.
Biodiversity is important in many ways. First, it sustains food production. With an

increasing rate of growth in world population, the demand for food becomes critical
(Gilland, 2002). Second, species are the source of medicines to cure a range of known
diseases, as well as for medical research and development (Bates, 1990; Wills, 1997; de
Mendonca et al., 2003). Third, rainforests play an important role in the terrestrial
recycling of carbon, nitrogen and oxygen by helping to regulate the greenhouse effect
through absorbing carbon dioxide from the air, returning oxygen (Common, 1995;
Pearce, 1998). Fourth, the planet is an interwoven ecosystem. The existence of one
species is important to the existence of another. The extinction of one species may
eventually lead to the loss of many others dependant upon it, which may result in an
accelerated loss of important genetic information (Bates, 1990; Wills, 1997).
The loss of biodiversity may be caused by the expansion of human population and
activities (Wills, 1997; Bala, 1998). The construction of facilities and extraction of
18
resources can disturb natural land areas and thereby endanger sensitive ecosystems
Flora and fauna destroyed through human activities may not fully regenerate.
Population growth is clearly a major threat to the environment (Munda et al., 1998;
Chew, 2001; Glasby, 2002) and there is no doubt that the human population has been
putting increasing pressure on the ecosystem of the Earth for food, clean water and
resources. It increases the pressure on renewable and non-renewable resources, reduces
the amount of capital and productivity per worker, and increases the inequality of
income.
According to a 1998 United Nations (UN) report, the global population will increase to
eight billion in 2025 and nine billion in 2050 (Young, 1999; Reuveny, 2002). The
annual increase in world population is approaching 80 million per year, approximately
90 percent of which is in the poorest countries. The fundamental reason for this increase
is that life expectancy is extended as a result of the improvement and advancement of
medicine. Population increases at an exponential rate, placing more demand on food
production (Young, 1999; Chew, 2001). However, as Hopfenberg and Pimental (2001)
state, the world human food availability continues to grow, but slower than the
population rate. The shortage became more evident after the world food summit in 1996
where plans were prepared to reduce the number of under-nourished, estimated as 920
million, to half this level by 2015 (Young, 1999).
Population growth may also be associated with the world poverty level. Population
growth may be a cause of poverty, particularly in the developing countries. In
accordance to the World Development Report 2000/2001, 2.8 billion people are earning
less than US$2 per day (Glasby, 2002) and the 1998 UN report states that about 25
percent of the world’s population live in absolute poverty (Young, 1999). By the end of
this century, approximately eight out of nine people will live in poor developing
countries compared with approximately one out of two in 1950 (Plant et al., 2000).
As population grows, greater demands are placed on land use, leading to deforestation,
loss of biodiversity, water resource shortage, wasted natural resources, loss of soil
fertility and increased soil erosion. This is especially serious in the developing countries
where deforestation is at its highest. The depletion of soil fertility and water reserves is
19
due to over farming and increased crop production. In order to maintain soil
productivity, farmers have to use chemical fertilisers (Gilland, 2002). Crops, which are
dependent on chemical fertilisers, tend to rob the soil of its fertility which, in turn, will
require more fertilisers in succeeding years. As a result, after a number of years overall
productivity may decline, and so even more fertilisers may need to be applied.
This increased fertilisation has further speeded up the rate of global warming in two
ways. Fertiliser production involves mining and processing phosphate and nitrogen-
bearing ores, and this process consumes fossil fuels increasing carbon dioxide
production, methane and other greenhouse gases. Fertilisers also reduce the ability of
soil microorganisms to remove carbon from the atmosphere.
The economic activities and population pressures on rural economies cause migration,
especially the urban centres. In accordance with the World Health Organisation, the
global urban population has increased from 32 percent in 1955 to 38 percent in 1975
and 45 percent in 1995 (Moore et al., 2003b). In 2002, the United Nations Environment
Program predicted that the world’s urbanisation would increase from 47 percent to 65
percent by 2015 (Moore et al., 2003b). The number of cities with a population greater
than 1 million has increased from 90 in 1955 to 336 in 1995, representing an increase of
35 percent of the world’s population situated in urban areas (Moore et al., 2003b).
This rapid urbanisation has caused further environmental problems through

contamination of soils, surface water and aquifers from poor sanitation. The results are
severe health hazards, especially due to crowding and a poor living environment.
Inadequate quality water supply, air pollution, water pollution, poor sanitation services
and solid waste collection (Chew, 2001; Moore et al., 2003b). The increase in diseases
associated with these conditions is further evidence of a declining standard of living.
2.2.4 Summary
There is no doubt that resource depletion, pollution and population growth are seen as
the main causes of biologically and ecologically destructive phenomena. The increase
in the amount of human activities is responsible for the amount of pollutants dumped
20
onto land, into water and the atmosphere, causing various pollution problems to the
environment, hazardous wastes generated from economic activities and stratospheric
ozone depletion from chlorofluorocarbons. Evidently the planet is in environmental
crisis and these environmental problems are inter-related. The environment needs to be
treated as a whole, rather than paying attention to its individual parts. The links between
the environment and the economy established earlier also ensure that the environmental
crisis is also an economic crisis. It is caused by economic activities and it undermines
the very functions on which economy depends.
2.3. OVERVIEW OF ENVIRONMENTAL VALUATION TECHNIQUES
2.3.1 Introduction
The term ‘sustainable development’ is not a new concept. The debate about
sustainability was activated by the Club of Rome’s report “The Limits to Growth”
during the 1960s and 1970s (Harding, 1998; Boughey, 2000). The debate led to the First
United Nations Conference on the Human Environment held in Stockholm in 1972
where the international agreement on desired behaviour and responsibilities to ensure
environmental protection was discussed. The discussion was followed by the World
Conservation Strategy in 1980 when the term ‘sustainable development’ was first
expressed (Rees, 1999).
The concept of sustainable development was further discussed at the Earth Summit held
in Rio de Janeiro in 1992 by the United Nations Conference on Environment and
Development (UNCED, 1992). The Earth Summit was the first international conference
attended by world leaders on environmental issues to promote international cooperation
for global agreements and partnerships for environmental protection (Harding, 1998).
A number of important conclusions were reached at the Earth Summit and the Rio
Declaration on Environment and Development set out 27 general principles for
achieving sustainable development. The declaration was adopted in the Agenda 21
‘policy plan for environment and sustainable development in the 21st century’ as an
21
action plan to pursue the principles of sustainable development in this century

(Langston & Ding, 2001; Bentivegna et al., 2002). The purpose of Agenda 21 is to
balance environmental with economic development needs in this century (Postle, 1998).
Sjöström and Bakens (1999) state that Agenda 21 provides an action plan for
sustainable development including goals, commitments and strategic program areas.
Following Agenda 21, the global concern about sustainability and the government’s
commitment requires the building sector to act differently from the conventional
approaches (Langford et al., 1999). The Second Earth Summit was held in 1997 in New
York and the progression of the commitments made at Rio five years earlier were
assessed.
However, up until now, sustainable development is still a difficult notion to define as

the concept is ambiguous, multi-dimensional and generally not easy to understand
within the single issue of environmental protection (Lombardi, 1999).
2.3.2 The concept of sustainability
Sustainable development is a catchword that has been interpreted and discussed in all
fields (Nijkamp et al., 1992; van Pelt, 1994; Hill & Bowen, 1997; Harding, 1998; Ofori
et al., 2000). According to Pearce (1998), it is not the difficulty of defining sustainable
development, but rather the difficulty of determining ways to achieve the goal. The
concept of sustainable development has emerged to describe a new framework for
development aimed at achieving economic and social balance whilst maintaining the
long-term integrity of ecological systems. The concept is firmly embedded in
government policy, legislation and in the environmental policies of private
organisations (Harding, 1998).
According to Goodland and Daly (1995, cited in Herendeen, 1998), sustainability has
three levels: weak, strong and absurdly strong. Weak sustainability requires that the
total of the man-made and natural capital do not decline and are close substitutes (van
Pelt, 1994, Herendeen, 1998; Victor et al., 1998). Strong sustainability is based on a
disagreement of the degree of substitution and the natural and man-made capital is not
substitutable but complementary in most production functions (Ekins & Jacobs, 1998;
22
Victor et al., 1998). Absurdly strong sustainability tends to stress limits to

sustainability. Accordingly, non-renewable resources could never be used at all and
renewable resources could only be harvested at the net annual growth (Ekins & Jacobs,
1998; Herendeen, 1998). With the three levels of sustainability, controversy about the
meaning and definition of sustainable development is inevitable.
According to Cooper (2002), sustainable means capable of being maintained

indefinitely within limits whilst development implies the pursuit of continuous growth.
This appears contradictory, as development tends to destroy the ability to sustain.
However, Ofori et al. (2000) suggest that as long as development is sustained, economic
growth will continue and environmental issues will be dealt with through technology.
Similarly, Boughey (2000) states that sustainability indicates economic activities which
could continue without long-term damage to the natural environment or general human
well-being. This viewpoint indicates that economic growth will continue to thrive
whilst the environment will never be deprived, or even used, at all. However, it is
highly unlikely that this will happen, as economic growth requires the consumption of
environmental resources to sustain its activities.
The most used definition of sustainable development is derived from the Brundtland
Commission on Environment and Development (WCED, 1987, p. 43): “development
that meets the needs of present generations without compromising the ability of future
generations to meet their needs and aspirations”. The four aspects as emphasised in the
report are to: eliminate poverty and deprivation; to conserve and enhance natural
resources; to encapsulate the concept of economic growth, social as well as cultural
variations into a development; and finally, to incorporate economic growth and ecology
in decision-making. This shows that many factors can contribute to achieving the goal
of sustainable development.
Daly (1990) states that the Brundtland definition has made a great contribution by
emphasising the importance of sustainable development, supported by van Pelt et al.
(1995) who say that the interpretation of sustainable development in the Brundtland
report is the clearest. Mitchell et al. (1995) describe the definition as being very much
about quality of life and ecological integrity and Spence and Mulligan (1995) further
23
state that the idea of sustainable development is well summarised in the report. The
report also acknowledges that there are limits imposed by the ability of the biosphere to
absorb the effects of human activities and advancements in technology and social
organisation are needed to improve economic growth.
It is true that sustainable development is about imposing limitations on the use of scarce
natural resources in the production and consumption process in order to ensure quality
of life of present generations. In that way, sufficient resources may be reserved to allow
future generations to have an acceptable level of welfare and quality of life. As the
WCED definition appeals to many, it forms the guiding principle for the design of
environmentally sound socio-economic policies. It is also clear from the report that
unless decisions are taken now to address the deteriorating situation, future generations
will not have the ability to correct them. Therefore there is an immediate need for an
action for this crisis situation.
The general acceptance of the Brundtland definition of sustainable means it is regarded

as representing an international consensus of the concept and conflicts between the
demand for human development and future protection of environmental systems
(Bentivegna et al., 2002). On the other hand, the definition is often considered to be too
vague and therefore inadequate in practice (Daly, 1992; Hill, 1997; Elkington, 1997;
Ofori et al., 2000; Bentivegna et al., 2002). Glasby (2002) says the Brundtland’s
definition fails to recognise the method and does not provide an agenda to achieve a
sustainable society or, most importantly, of how to survive in an unsustainable world.
Indeed, the Brundtland definition does not satisfactorily provide guidance on how to
define sustainability or be measured in practice. For the principle of sustainable
development to be achieved and practiced, a clearer and more precise definition is
required for different sectors of society. A specific definition of sustainable
development for the construction industry will be discussed in detail in Chapter three.
Since the publication of the Brundtland definition, over 160 definitions of sustainable
development have been developed, used or interpreted by different groups to suit their
own goals (Pearce et al., 1989; Elkington, 1997; Langston & Ding, 2001). According to
Pearce et al. (1989), sustainable development requires future generations to be left no
24
worse off than present generations, and if sustainable development is to be achieved,

depreciation of natural capital must be zero since man-made capital does not provide
adequate compensation for a reduction in environmental capital. Similarly, Daly (1992)
suggests that an explanation of sustainable development has to satisfy three conditions.
Firstly, the rates of use of renewable resources should not exceed the rates of
regeneration. Secondly, the rates of use of non-renewable resources should not exceed
the rate at which sustainable renewable substitutes are developed, and finally, the rate of
pollution emission should not exceed the assimilative capacity of the environment. In
addition to Daly’s viewpoint, Moser et al. (1993, cited in Krotscheck & Narodoslawsky,
1996) believe that the natural variety of species and landscapes must also be sustained
or improved so as to maintain the quality of life and the needs of successive
generations.
Hill and Bowen (1997) describe sustainable development as that development effort
which seeks to address social needs while taking care to minimise potential negative
environmental impacts. Postle (1998) goes further, suggesting that sustainability, as a
concept, has a far wider reach than the environment, encompassing a whole range of
social and ethical factors such as employment, social welfare, culture, infrastructure and
the economy. In other words, sustainability requires that all of the factors that contribute
to long-term societal benefit be catered for in decision-making. Ball (2002) supports the
idea that sustainable development is a broader concept than sustainability and includes
issues on the quality of life and the integration of social, economic and environmental
spheres of activity. Indeed, sustainable development need not always be seen as
restrictive to making choices among the issues, but as an integrated approach to
consider all the issues.
As described by du Plessis (1999), sustainable development initially only addresses the

conflict between protecting the environment and natural resources, and answering the
development needs of the human race. However, he believes that sustainable
development would not be possible without tackling the problems of poverty and social
equity both between people and between nations. Indeed, as Spence and Mulligan
(1995) state, the only way to reduce environmental deterioration is to eliminate poverty
by raising standards of living. This is particularly important in the developing countries
25
as environmental degradation is closely related to rapid population growth, land

degradation and loss of the tropical forest (Spence & Mulligan, 1995; Ofori, 1998; du
Plessis, 2001). du Plessis (2001) further states that social responsibility as a principle of
sustainability is achieved through sharing the benefits of wealth with the community.
Therefore, development is guided by community interest, not individual profit.
From these discussions it is clearly shown that the means of achieving sustainable
development deals with the concepts of environment, futurity and equity, with the
emphasis that the welfare of future generations should be considered in the decision-
making process. On the other hand, The International Institute of Sustainable
Development (IISD)1 stipulates that sustainable development should also
simultaneously consider the improvement of the economy Beder (1996), Berggren
(1999), Stigon (1999) and Rohracher (2001) all discuss the concept of sustainable
development in the context of considering economic growth in addition to the social
and environmental dimensions). Economic growth, with an emphasis on aspects such as
financial stability and material welfare creation, is the ultimate goal for every
government in order to secure rising standards of living and increase the capacity of
providing goods and services to satisfy human needs.
In spite of differing perceptions about the precise meaning and the possible
interpretation of the term ‘sustainable development’, it is widely accepted that for a
development to be sustainable it must examine ecological, economic, social and ethical
aspects of reality. It also places emphasis on the importance of combining economics
and ecology in development planning (Tisdell, 1993; van Pelt, 1993b; Spence &
Mulligan, 1995; Moffatt, 1996; Berggren 1999; Stigon 1999). The divergence of
opinion relating to the term proves that sustainability is so broad an idea that a single
definition cannot adequately capture all meanings of the concept. While there is little
consensus about a definition for sustainable development, there are certainly commonly
accepted principles that can be used to guide the process of development (du Plessis,
1999). Sustainable development is a continuous process of dynamic balance instead of a
1
IISD—http://www.iisd.org
26
fixed destination that must be reached at a certain time (Berggren, 1999; du Plessis,
1999).
In summary, the concept of sustainable development must consist of the examination of

economic, social and environmental aspects of a development. In addition, sustainable
development may not be viewed as one-dimensional, but consists of multiple facet of
issues that concern people today and in the future. It is the concept of sustainable
development on which this research is based to develop a sustainability index for
project appraisal.
The Brundtland report, although it has been shown to be vague in its own way, provides
sufficient explanation of what sustainable development may have meant. To this end, to
find a precise definition of sustainable development that satisfies all needs may be
difficult. It is more important to find ways to achieve sustainable goals in order to
maintain and conserve the environment, so that future generations will not be
disadvantaged. It is also difficult to derive a definition that applies to all sectors in the
economy, therefore it is more realistic to define the concept of sustainable development
with particular reference to each sector.
27
2.3.3 Environmental valuation techniques
Environmental valuation refers to the process of identifying environmental issues, the

collection of information and incorporating the information into the decision-making
process. Before a decision is made, all environmental effects are to be expressed in
numeric form and then converted to a single unit of measurement that has a dollar
value. Therefore environmental valuation is to put a monetary value on the
environmental effects of economic decisions, and to provide a framework for
comparing the environmental loss with economic gains (Herendeen, 1998; Boughey,
2000). Such monetary units offer consistency and direct access to policy-makers (van
de Bergh, 1996). Winpenny (1991b) describes three reasons for valuing the
environment. Firstly, it helps a better selection of projects as the environmental costs
are considered. Secondly, it provides a measure of economic efficiency and finally, it
offers a basis for resolving use conflicts and awarding compensation in a fairer
distribution of wealth.
In Section 2.2, environmental problems are closely linked with the absence of market
value for environmental goods and services (Harding, 1998). There is no pricing
mechanism to acknowledge an ecosystem’s value to the economy and to be included in
the current gross domestic product (GDP) accounts (Alexander et al., 1998). The
ecosystem is typically unpriced, or not priced correctly because of a lack of private and
organised markets for such services. It is because most environmental services are
considered ‘free’ goods, in that they are not marketed and so no price exists to assess
their values. Omitting this environmental valuation can lead to an underestimation of
environmental damage (van de Bergh, 1996; Alexander et al., 1998; Harding, 1998).
Over the years, attempts have been made to incorporate the value of ecosystems in the
traditional GDP accounts: termed ‘green’ GDP (Pearce et al., 1989). In green GDP
accounts the ecosystem services are treated as a stock of inputs, which are depreciated
or depleted over time. However, according to Alexander et al. (1998) the green GDP
fails to account for the productivity of ecological inputs and is, therefore, of little use.
The United Nations has developed the Satellite System for Integrated Environmental
and Economic Accounting (SEEA) as a way of expanding the overall scope of the
28
national accounts, while leaving the core accounts undisturbed (Lintott, 1996; van den
Bergh, 1996; Herendeen, 1998). Other attempts such as regulations or fiscal policies,
introduction of tradable abstraction rights and pollution permits have been used to
promote environmental protection (Field, 1996; Boughey, 2000).
Valuing environmental resources is using market forces to determine resource

allocation and ensure less wasteful consumption. The approach helps to place an upper
limit on resource usage and allowing a trade-off process to establish market prices by
which these resources will be allocated (Boughey, 2000). According to Pearce and
Turner (1990) the adoption of monetary valuation can help to stimulate environmental
awareness, justify a decision, and evaluate regulation so as to indicate relevance to
macroeconomic objectives and to determine compensation. However, the problem is
that some potential consumers are not even born and cannot help to determine current
prices.
There are several different ways to assign monetary values to environmental benefits or
damages. In accordance with OECD (1995), the valuation techniques can be grouped
into three main kinds namely market valuation of physical effects, stated preference and
revealed preference methods as shown in Table 2.1. Market valuation of physical
effects observes environmental changes in physical terms and the differences are
estimated accordingly. Stated preference methods obtain values of environmental assets
by asking people directly to place monetary values on environmental issues such as the
value of preserving a forest. It is a questionnaire-based social survey to obtain
individuals’ willingness to pay for an environmental gain or to accept compensation for
a loss (Turner et al., 1994). Revealed preference methods concern the examination of
people’s behaviour to the environment. It is based on surrogate markets, which act as a
proxy for the missing environmental goods and services in the market (Turner et al.,
1994).
Each valuation technique has strengths and weaknesses. Deciding which technique to
use will depend on the nature of environmental goods. Therefore, these techniques
should be considered as complementary rather than competitive; not substituting for one
another, but valuing different aspects of a proposed project or change (OECD, 1994).
29
30
Table 2.1 Summary of environmental valuation techniques

Market valuation of physical effects
Dose-response Based on developing a dose-response relationship between output level
method of economic activities and environmental qualities. This technique is
used to identify the consequences of changes in environmental issues to
the economic return. To assess the gain or loss of benefits resulting from
such a change requires the analysis of biological process, technical
possibilities and the effect of resulting production changes on consumer
welfare (Hanley & Spash, 1993; Hoevenagel, 1994).
Damage functions Uses dose-response data to estimate the economic cost of environmental
change using the market prices of the units of output (OECD, 1995).
Production function Estimates the change in the environment on output and valued at market
approach prices (Winpenny, 1991b; Hanley & Spash, 1993; OECD, 1995).
Human capital Cost estimated using the impact of workers’ productivity in relation to
methods bad health caused by environmental changes (Winpenny, 1991b; OECD,
1995).
Replacement cost Uses the cost of preventing or restoring environmental damages as a way
method to estimate the value of protecting the environment, such as the cost of
pollution (Winpenny, 1991b; OECD, 1995; Anon, 1996).
Stated preference methods
Contingent valuation It is a direct valuation method which determines a value by surveying
method people’s ‘willingness to pay’ for an environmental gain or ‘willingness
to accept’ compensation for a loss on a hypothetical market scenario
(Cameron & Englin, 1997; Harding, 1998; Foster & Mourato, 2002). It
was originally proposed by Davis in 1963 and has been widely used by
resource economists (Hanley & Spash, 1993) that enable economic
values to be estimated for a wide range of commodities not traded in the
markets (Tunstall & Coker, 1992; Abelson, 1996).
Revealed preference methods
Travel cost approach Developed by Clawson in 1959, it is widely used to evaluate recreational
benefits (Thampapillai, 1991; Hanley & Spash 1993; Anon, 1996;
Harding, 1998). This approach has simple methodology and it is an
indirect environmental valuation method, in which the costs incurred in
visiting an area are taken as a proxy to value the site itself. Market-
related prices are used to estimate the demand curve for non-market
goods. The information is obtained through visitors’ surveyed on the
distance and costs of travel and the origin of each group, thus providing
an indication of the cost of conversion to another use.
Avertive behaviour Information is obtained on the cost of protecting people from potential
Defensive harm caused by declining environmental quality (Hoevenagel, 1994;
expenditure OECD, 1995; Langston & Ding, 2001).
Hedonic pricing This is a form of revealed preference analysis attempting to assess the
technique value of environmental assets by estimating the prices of their closest
market substitutes such as house prices (Beder, 1996; Gilpin, 1995).
Hedonic pricing technique seeks to find a statistical relationship between
the levels of environmental services and the prices of the marketed
goods using regression analysis (Hanley & Spash, 1993; Anon, 1996).
The technique focuses on a single environmental factor such as noise
levels or air pollution (Langston & Ding, 2001).
31
2.3.4 The limitations of environmental valuation techniques
The usefulness and accuracy of environmental valuation techniques is highly

controversial. The complex nature of the ecosystem has made it difficult to ascertain the
quantity of natural resources and the functions they perform in relation to our daily
activities. Moreover, environmental effects have no natural units of measurement.
Consequently, it is difficult to translate them into economic valuations and bring them
into national account calculations (El Serafy, 1991). Foster and Mourato (2002)
suggests that environmental valuation techniques need a unique ability to deal with
situations as environmental damages are multidimensional and the trade-off between the
dimensions is of particular importance. However as Prato (1999) states, most
environmental valuation techniques are single-dimensional, therefore unsuitable for
evaluating multifaceted ecological impacts. For a technique to be useful and adequately
address environmental assets, it needs to be more diverse and embrace the complex
nature of the environment. However as van de Bergh (1996) explains, no single
valuation method yet exists that provides a satisfactory valuation across the full range of
environmental goods and services. It is also argued that the benefit of the environment
to society is too complex to be captured by a single dollar value and to attempt to do so
is to underestimate the importance of the environment (Gregory et al., 1993; Harding,
1998). Indeed, shadow pricing method is particularly difficult and it becomes even
harder as the valuation involves evaluating future demands over a number of
generations and over different social groups (Harding, 1998). Consequently,
environmental impacts are often ignored in the decision-making process.
According to Hanley and Spash (1993), the only inclusive method that can be used to
value a variety of environmental resources is the contingent valuation (CV) method.
Other methods are restricted to measuring a limited class of environmental impact.
However the CV method’s usefulness to value environmental services is debatable and
must be viewed with caution (Gilpin, 1995). Gilpin (1995) further states that a
willingness to pay might be overstated to encourage preservation of an area, or might be
understated to minimise the possibility of a significant user charge or levy. The
possibility of over or understatement in the CV method is a major problem in
32
environmental valuations as it is unable to provide a true market value to be

incorporated in the decision-making process (Hanley & Spash, 1993).
Another problem with survey-based approaches is that biases may arise (Hanley &
Spash, 1993; Anon, 1996; Crookes & de Wit, 2002). The CV method is a typical
example as it relies heavily on an individual’s view rather than actual market behaviour,
which is highly responsive to supply and demand theory. The sums of money stated
may exceed the willingness to pay because the participants knew they would not really
have to pay (Hanley & Spash, 1993; Anon, 1996; Prato, 1999). The biases may also be
caused by the survey design (Abelson, 1996) or due to the hypothetical situation with
which survey respondents are unfamiliar or lack of experience with the environmental
resource being valued (OECD, 1995; Cameron & Englin, 1997) necessitating the
provision of explicit background information about the resource.
Environmental valuation techniques also attract argument about the feasibility and
desirability of converting all environmental benefits and costs into dollar values; the
main argument being that ethical issues such as the worth of a human life is beyond any
monetary valuation (van de Bergh, 1996; Prato, 1999; Hobbs & Meier, 2000). Many
people dispute that it is possible to assign accurate economic values to aspects of the
environment, which often do not have any direct use in the economy. Therefore they
consider that it is morally unacceptable to attempt to estimate non-use values. Thus
many natural resources are considered priceless and cannot be compared with ordinary
market commodities (Abelson, 1996; Harding, 1998). Crookes and de Wit (2002)
further state that if such an approach is incorrectly interpreted, unethical issues are
attached. So far, trying to put a monetary value on environmental assets using
environmental valuation is inadequate and undesirable.
Environmental valuation requires extensive information to be collected and analysed.

Except for the travel cost method, most valuation methods require extensive data
collection, which is lengthy, costly and time-consuming (Tunstall & Coker, 1992;
OECD, 1995; Crookes & de Wit, 2002). Additionally, the information required for
valuation by various methods might either not be available or only available in an
33
elementary form. This is a particularly serious concern in developing countries (Tewari

et al., 1990; Crookes & de Wit, 2002).
Each valuation method has its own methodological limitation. In the hedonic pricing
technique, the proposition is simple but the application is complex (Gilpin, 1995)
because using house prices as a proxy is highly unreliable as there are too many
variables that may affect the price such as age, size, location, quality and layout.
Therefore the selection process of which factors to be included will significantly
influence the results (Hanley & Spash, 1993; Anon, 1996). Abelson (1996) further
states that the whole of the environment is greater than the sum of its parts and it cannot
be valued simply on the collection of separate pieces of real property.
The travel cost method is restricted to measuring a limited class of environmental

impacts (Anon, 1996) and only direct use values of actual users are measured with this
method (Hanley & Spash, 1993). In the dose-response method there may be problems
of interdependence between causal variables and whether the alternative costs fully
reflect the cost of the externality (Anon, 1996). Conducting a survey-based contingent
valuation method could exaggerate the importance of the issue. The result depends on
how well the study is designed, carried out and interpreted (Hanley & Spash, 1993;
Gilpin, 1995). In avertive behaviour and defensive expenditure methods the problem of
underestimating the damage has suffered due to imperfect substitutability is
unavoidable in the evaluation (Hoevenagel, 1994).
Distribution problems are inherent in valuation techniques. Environmental assets in an

area populated with wealthy people cannot be directly compared with poorer people in
another without any income adjustment (Anon, 1996). As Abelson (1996) states,
everyone has an equal right to natural environmental assets and therefore techniques
that are based on income, such as the willingness to pay, are irrelevant and unfair.
34
2.3.5 Summary
The purpose of putting value on environmental assets is to limit environmental

degradation and to promote its protection. However, as discussed in this section, putting
a price on environmental quality is not useful for protection as the valuation techniques
suffer from methodological limitations and cannot accurately value the environment.
Furthermore, environmental issues such as biodiversity cannot be priced at all, since
plants and animals have an intrinsic value that cannot be represented in dollars.
However, even though the environmental valuation techniques are constrained, it will
always be better to do something rather than nothing. If putting a price on the
environment cannot save the environment, it at least allows the decision-maker and
general public to realise the potential damage and, in the process, highlight the
importance of environmental conservation and its incorporation into the decision-
making process.
As has been shown, the concept of putting a dollar value on environmental assets is
controversial and there is no doubt that the current environmental valuation techniques
are deficient. Therefore, it is important to transfer the focus from pricing the
environmental assets to evaluating them using a non-monetary approach such as multi-
criteria analysis. It is the purpose of this research to examine the usefulness of a non-
monetary approach to assess environmental values and to incorporate this into the
decision-making process. The next section will present the concept of using such an
approach to evaluate environmental assets.
2.4 COST BENEFIT ANALYSIS AND MULTI-CRITERIA ANALYSIS
2.4.1 Introduction
This section examines the usefulness of cost benefit analysis as an evaluation tool to
assess environmental effects and the incorporation of these values into the decision-
making process when appraising a project. It is argued that cost benefit analysis as a
single dimensional tool is theoretically insufficient to consider environmental effects as
35
they are unable to have a dollar value appended to them (details refer to Section 2.3).
The issues raised in the literature have called for a review of the methodology and
applicability of current project appraisal methods. The debates are working towards a
complementary appraisal tool such as multi-criteria analysis.
Multi-criteria analysis does not require a dollar value to be appended to environmental

effects, nor does it exclusively focus on efficiency measurement. This section provides
a detailed discussion of the issues raised in the literature and the usefulness of both
methodologies in environmental valuation.
2.4.2 Cost benefit analysis as an evaluation tool
The initial decision to proceed with a development rests with the financial viability of
the proposal by maximising aggregate welfare with given available resources. This is
often expressed by forecasting project benefits received from, and project costs incurred
by, undertaking a project. The appraisal of the relationship between these two elements
is vital to the decision-making process as it will identify if discounted project benefits
exceed discounted project costs, making the project viable. If there are separate
development proposals, the determination will rest on the option that exhibits the
greatest net benefits. Lower ranked options or those showing negative benefits will be
abandoned altogether.
Cost benefit analysis (CBA) is a single dimensional tool widely used in decision-
making. It is based on weighing up costs and benefits associated with an action
(Nijkamp et al., 1990; Janssen, 1992; Tisdell, 1993; van Pelt, 1993b). CBA captures the
trade-off between the real benefits to society from a given alternative and the real
resources that society must give up to obtain those benefits, using money as the
universal unit. CBA is designed to help evaluate proposed projects in order that the best
option is selected and resource efficiency and social welfare are promoted in a
systematic manner. By assessing the costs and benefits of each alternative in monetary
terms and ranking alternatives on the criterion of economic worth, society is able to
identify the best allocation of scarce resources and therefore maximise social benefit.
36
CBA was adopted in the United States as early as 1808 when Albert Gallatin, US
Secretary of the Treasury, recommended the comparison of costs and benefits
associated with water-related projects (Hanley & Spash, 1993). This idea was adopted
by the French engineer, Jules Dupuit, in the formulation of cost benefit analysis
described in the 1844 publication ‘On the Measurement of the Utility of Public Works’.
Since then CBA has become established as the most popular technique for evaluating
public projects (Hanley & Spash, 1993) and is now the primary technique used in the
field of environmental economics.
CBA methodology, however, exhibits some conceptual and practical difficulties (van
Pelt, 1993a; Abelson, 1996; Ding, 1999a; Crookes & de Wit, 2002), which means that
its effectiveness as a decision tool may be questioned. The current focus on sustainable
development highlights some of the difficulties of relying on CBA as the sole
consideration for project choice (Tisdell, 1993; Joubert et al., 1997). As Joubert et al
(1997) state, the inclusion of equity and sustainability in decision-making has made the
flaws in the theoretical foundations of CBA less easy to accept.
2.4.3 The limitations of cost benefit analysis in environmental valuation
The concepts of potential Pareto welfare improvement and the Kaldor-Hicks

compensation principle are at the heart of CBA framework, which favours projects that
exhibit the greatest net present value (NPV) (Hanley & Spash, 1993; Sinden &
Thampapillai, 1995; Joubert et al., 1997). These principles ignore equity issues and
conflict with the ultimate goal to allow for efficient allocation of scarce resources and to
promote social welfare. In other words, while more people win than lose, the losers may
be made a great deal worse off and this will not matter so much as long as they are in
the minority. Compensation is theoretically provided from the winners, but this does not
usually happen unless a particular compensation plan is built into the successful
proposal.
Farrow (1998) explains that the concern for the distribution of benefits and who incurs
costs can be viewed as an unplanned rejection of the Kaldor-Hicks criteria. CBA treats
gainers and losers equally and is unconcerned about who gains and loses from a project.
37
Hanley (1992) argues that a project, which yields negative NPV, should still be
considered if it exhibits better distribution, but this is disputed.
The general approach of CBA is to value all project costs and benefits in monetary
terms based on market prices. This limits the scope of any analysis to consideration of
only those factors that are the subject of market transactions. Other factors such as
environmental features, risks or externalities that may be relevant to a social CBA
including all public goods in the global commons and all environmental impacts, can
hardly be valued in money terms (Joubert et al., 1997). Most often these costs (or
benefits) are neither recorded nor incorporated in the project cash flow. The Department
of Finance (1997, p.82) states that “the use of the money yardstick for measuring costs
and benefits lends a false accuracy to the result of a cost benefit analysis”. This means
that social CBA results may not reflect the true benefits of a project if intangible values
are present. Double counting of benefits is also a common pitfall.
As with the potential Pareto welfare improvement and the Kaldor-Hicks compensation
principle, concepts of welfare and the compensation principle suffer because they
ignore equity issues that conflict with the goal of CBA to promote social welfare
(Nijkamp et al., 1990; Hanley & Spash, 1993; Abelson, 1996; Joubert et al., 1997;
Department of Finance, 1997). This equity issue is particularly important for future
generations who can have no say in current decision-making processes. Their interests
rely totally on the considerations of the present generation. The definition of sustainable
development as defined in the Brundtland report strongly advocates that future
generations should have equal opportunity and right to cast their votes on the decision
of project developments which may have long-term affects on their living environment
(WCED, 1987). Even though equity can be introduced in CBA by means of income
distribution weighting, this is rarely used in practice (Joubert et al., 1997).
Distribution issues are normally ignored in CBA since only the sum of monetarised
effects is taken into consideration. In reality, either the welfare benefits are not
equitable or governments may not be able to distribute income. The combination of
high levels of poverty, unequal distribution of income, and ineffective income
redistribution policies led to the growing importance of intratemporal equity as an
38
appraisal criterion for development projects (Dasgupta & Pearce, 1972; van Pelt, 1993a,
Sinden & Thampapillai, 1995; Abelson, 1996; Crookes & de Wit, 2002). Sustainability-
oriented project appraisals should address environmental issues at the project level, as
well as at the national and international level (van Pelt, 1993b). Future generations
cannot cast their votes, so project appraisal techniques must encompass this issue.
Certainly equity issues cannot be upheld for future generations without undertaking a
distribution analysis, which is overlooked in many studies.
Under the principles of CBA, no concern is given as to who gains and who loses from a
project; as long as the total benefits outweigh the total costs therefore the option with
the greatest positive net benefit is selected. A project that generates net benefits to the
rich has opportunity equal to that of a project that generates net benefits to the poor.
However, a project that yields benefits to the poor has a desirable distribution impact
(van Pelt, 1993b). Equity is not generally a criterion for consideration within the CBA
framework and largely weakens the effectiveness of CBA when applied in social
contexts (Hanley & Spash, 1993; Perkins, 1994).
The outcomes of CBA may be manipulated to suit private purposes and may be less
useful where political decisions dominate (Perkins, 1994). These outcomes may be
influenced in various ways, e.g., by the adoption of particular values, shadow prices or
discount rates in order to produce a pre-determined result. This is actually in direct
conflict with the welfare objective of CBA as it may lend support to less desirable
alternatives that suits private purposes rather than promoting options that are more
resource efficient and socially desirable.
Market failure is another limitation of CBA (Nijkamp et al., 1990; Hanley & Spash,
1993; Abelson, 1996). One of the fundamentals of CBA is the assessment of project
costs and benefits at local market prices, and as a result the outcome of CBA relies
heavily on prevailing market valuations. However, markets may be distorted by a
number of factors such as government intervention, interest rates, balance of payments
deficit and foreign exchange rates (Perkins, 1994). Such market failure can lead to an
incorrect set of prices, which inaccurately measures marginal social costs and benefits,
and therefore an inefficient allocation of resources. In addition, environmental effects
39
are not recorded in any market systems, as no property rights exist for many
environmental goods and services.
Another concern is the use of discounted cash flow analysis as part of the methodology.
Discounting is the process by which costs and benefits that occur in different time
periods may be compared. CBA is involved in predicting the future and dealing with
uncertain interaction between human activities and ecosystems. Crookes and de Wit
(2002) state that CBA is insufficient to assess environmental variations as the
traditional CBA values impact within the lifetime of the project but environmental
impacts may extend beyond that lifetime. In the long term, it is possible that the
discount rate might play a critical role in the intertemporal decision concerning the use
of environmental resources for sustainable development. High discount rates
discriminate against future generations. Many environmentalists argue that discounting
violates the rights of future generations (Martin, 1993). Although the discounting
philosophy is conceptually acceptable, its application to social and environmental issues
is debatable and may lead to an undervaluing of these costs and benefits (Hanley &
Spash, 1993). The choice of discount rate is also controversial, particularly where high
rates are chosen that rapidly disadvantage future cash flows rendering them irrelevant to
the decision. Besides, risk and uncertainty are also difficult to handle in CBA and other
environmental valuation techniques (Crookes & de Wit, 2002).
Because public participation in the decision-making process is gaining strength

(Mitchell et al., 1995; Joubert et al., 1997; Curwell & Cooper, 1998), the usefulness of
CBA as a primary tool in decision-making is highly questionable. As Joubert et al.
(1997) describe, CBA may no longer be appropriate as a decision-making tool if
externalities are part of the consideration in project appraisal within a participatory
democracy.
Given the limitation of CBA in accounting for environmental goods and services, Postle
(1998) argues that in order for the goals of sustainable development to be realised,
environmental and other social impacts should be properly taken into account in the
decision-making process. This can only be achieved through quantification and full
valuation. Placing values on the environmental goods and services in the projects
40
appraisal stage may enhance their importance and the awareness among people (Pearce
& Turner, 1990). However, over the years, monetary evaluation approaches have
received harsh criticism (Nijkamp et al., 1990; Hobbs & Meier, 2000).
Pearce et al (1989) suggest that the use of CBA as a project selection methodology
should be modified to make allowance for sustainability considerations. They further
state that CBA should only be used in appraising a project providing that net
environmental damage for projects selected is zero or negative. That means it is only
useful in the situation where projects that are environmentally enhancing compensate
for environmentally damaging projects. The argument gives a picture that solely relying
on net benefits to decide whether a project is viable is inadequate if environmental
values are also considered since environmental values are difficult to monetarise.
While CBA is an important tool in decision-making and its systematic arrangement of

information enhances the decision-making process, its limitations are serious and
cannot be neglected. There is a wide range of valuation techniques that can be used to
incorporate environmental effects in the CBA framework. One modification is to extend
the current CBA methodology to encompass any environmental cost or benefit
(Azqueta, 1992; Powell, 1996). However, as Tisdell (1993) comments, it is a brave
attempt to introduce sustainability considerations into the current CBA framework as
there are often limitations in its methodology in measuring all relevant impacts of a
project in money units (Nijkamp et al., 1990). It is, indeed, difficult to put all the
complexities of ecological systems into a common measure and the price mechanism is
an inappropriate method for attempting to control environmental process. Prices may be
rather bad indicators of the real scarcities and pertaining social evaluations in the
economy (Nijkamp et al., 1990; Common & Perrings, 1991; Moffatt, 1996).
Nijkamp et al (1990) further explain that although many efforts have been undertaken to
arrive at values for intangibles and externalities it is, in practice, almost impossible to
place anything more sophisticated than arbitrary numerical values on such effects.
However, even if it may be possible to adopt the advanced cost benefit methodology to
evaluate all the impacts in terms of monetary units, this approach still suffers from the
41
drawback that the potential cost of the impact will vary with different outcomes of
concern (Lee et al., 2002).
Powell (1996) argues that it is not necessary to assign monetary values to environmental
effects in order to determine the viability of a decision. The CBA framework can be
supplemented by adopting other techniques such as effectiveness analysis and multi-
criteria analysis, which may help to produce a better evaluation tool (Nijkamp et al.,
1990; van Pelt, 1993b; Powell, 1996). Various methods have been proposed to solve
these evaluation problems, but these alternatives may often give rise to different
outcomes, making them unstable to use.
Social CBA has been developed and includes adjustment for biased income distribution
patterns. However, van Pelt (1993b) argues that social CBA cannot cover all equity
issues and may only consider income distribution among target groups by using the
income generated from a project for either consumption or savings. He further states
that both economists and policy makers may find that social CBA is a rather
inaccessible technique to deal with enormous data requirements and the need to
explicitly express value judgements in the framework. When economists have been
confronted with the requirement to monetarise all relevant effects and the difficulties in
collecting data on several types of effects, they have frequently failed to incorporate all
the costs and benefits of development projects.
The above problems and limitations of the market price approach gave rise to a search
for alternative evaluation approaches to completely replace CBA, for example, cost
effectiveness analysis (CEA) and environmental impact assessment (EIA). Such
techniques identified environmental effects but did not require that these effects be
monetarised. Sagoff (1988) argues that CBA should be replaced as a tool for project
appraisal by the normal democratic process. Publicly elected politicians always make
the final decisions based on the argument that they are the representatives of the citizens
and should be delegated with rights to make decisions on their behalf. Interest groups
may participate in the decision-making process to lobby in favour of particular
alternatives (Norton & Hannon, 1997).
42
CEA is a variation of traditional CBA which is useful for public sector projects. This
technique assumes a common level of social benefit and therefore focuses on measuring
the costs. CEA is used in lieu of CBA when the project benefits are not readily
measurable in monetary terms. Instead, benefits are expressed in physical units while
project costs are expressed in money terms (Department of Finance, 1997). CEA is
based on the acceptance of a target and only the cost of achieving the target is sought,
so it is also known as a least-cost approach. As the benefits are equal they cancel out
and can, essentially, be ignored. However, only indirect project benefits are measured.
The difficulty in estimating externalities is also largely obviated by this approach. CEA
substitutes non-monetary effectiveness indicators for a monetary estimate of social
benefits. CEA examines the cost to achieve results on the assumption that there is a
positive net benefit (Harlow & Windsor, 1988; Department of Finance, 1997).
EIA resembles CEA as only the damage side of a project is considered. The main
problem of EIA is its incompatibility with other approaches. EIA originated from a very
different theoretical framework as a way for the treatment of externalities and public
goods to be measured in a situation characterised by the absence of markets for some
commodities (Azqueta, 1992; Gilpin, 1995). However, as Joubert et al. (1997) suggest,
EIA offers no structure and provides no guidelines to the decision-maker whose aim is a
rational assessment of the impacts and trade-offs involved.
Azqueta (1992) suggests using extended CBA, which integrates EIA and social project
appraisal into the same framework. However Pearce et al. (1990), argue that the
extended CBA suffers from serious shortcomings as the two streams are based on
different theoretical backgrounds implying different social objectives.
2.4.4 The principles of multi-criteria analysis
Project appraisal techniques are often employed by decision-makers to structure the

complex array of data relevant to a project into a manageable form and provide an
objective and consistent basis for choosing the best solution for a given situation. In
CBA, much effort has been put into assessing the input costs and output benefits by
means of a market approach. With the increasing awareness of possible negative
43
external effects and the importance of distribution issues in economic development,

CBA’s usefulness in this respect is increasingly controversial. Consequently, in the past
decade much attention has been paid to multi-dimensional evaluation approaches
(Nijkamp et al., 1990). One such approach is known as multi-criteria analysis (MCA).
The identification of value for money on construction projects is clearly related to

monetary return. But some other issues are becoming increasingly significant,
particularly for social infrastructure projects. For example, issues such as welfare
enhancement and resource efficiency are vital to the assessment of environmental
impact in the wider social context. Since no single criterion can adequately address all
the issues involved in complex decisions of this type, a multi-criteria approach to
decision-making offers considerable advantages.
Traditional CBA uses price as the main tool to evaluate projects, based on market
transactions. However, as has been shown, over the past decade criticisms of CBA have
been many, and relate mainly to attempts at putting the underlying welfare economic
theory into practice. It is often difficult, or even impossible, to improve social welfare in
a society if the natural environment continues to be abused and depleted. Goulder and
Kennedy (1997; cited in Prato, 1999) state that CBA is not a sufficient criterion for
evaluating natural resource investments. Joubert et al. (1997) also argue that CBA is not
an appropriate tool to evaluate investments that generate social and environmental
externalities. Indeed, within the CBA framework, environmental assets are often
ignored or under-estimated as there are frequently considerable difficulties in measuring
all relevant impacts of a project in monetary units (Abelson, 1996).
Ecologically sustainable development (ESD) is now a constant focus for the mass media
and a matter for widespread public concern (Joubert et al., 1997). As a consequence,
intangibles and externalities have become major issues in project development. The
presence of externalities, risks and spillovers generated by project development often
preclude the meaningful and adequate use of a market-based methodology. When the
analysis turns to assessment of environmental quality or loss of biodiversity, it is rarely
possible to find a single variable whose direct measurement will provide a valid
indicator of the severity of these effects.
44
The need to incorporate environmental issues into the project appraisal process is
becoming increasingly apparent, and as it does, applying market prices to these factors
becomes more and more questionable.
Apart from replacing CBA with techniques like CEA or EIA as discussed previously,
others have suggested supplementing CBA with a technique that can measure
environmental costs in terms other than monetary (Nijkamp et al., 1990; van Pelt,
1993b; Hanley, 1992; Abelson, 1996; Joubert et al., 1997). MCA is now widely
accepted as a non-monetary evaluation method to aid decision-making when dealing
with environmentally sensitive projects. As Joubert et al. (1997) describe, CBA is a
well-established decision tool as long as there are no ‘externalities’ involved. MCA thus
emerges as a technique to appraise projects with a potential environmental impact. As
Diesendorf and Hamilton (1997) state, MCA is a useful technique for drawing together
all of the complex information. As discussed previously, CBA equity issues are
insufficiently addressed in the CBA framework. MCA can directly address equity issues
by using improvement in income or non-income equity as project selection criteria. The
equity issues can be measured on an interval or preference, rather than a monetary scale
as in the CBA method.
2.4.5. Multi-criteria analysis—a non-monetary appraisal technique
Non-monetary evaluation techniques originated in operational research and developed

in response to criticism of monetary methods (Janssen, 1992; Powell, 1996). Since the
1970s, a number of non-monetary evaluation techniques have been developed under
MCA system. These techniques aim to provide a method for the systematic appraisal
and incorporation of a number of alternative projects involving a range of different
criteria into the decision-making process (Voogd, 1983; Janssen, 1992; Powell, 1996;
Postle, 1998). Most of the differences between the various multi-criteria evaluation
methods arise from the arithmetic procedures used as a means to aggregate information
into a single indicator of relative performance. The use of such mathematical models to
45
predict impact on each of the attributes lies at the heart of the MCA process (Voogd,
1983).
MCA has, in the past decade, become one of the most powerful methodologies in
optimisation analysis (Nijkamp et al., 1990). It serves to enhance decision-making
quality by providing a thorough methodological platform for decision analysis and an
operational framework. MCA techniques offer the possibility of accounting for non-
efficiency criteria as well as non-monetary project impacts, and can address subjective
views of various parties in society (van Pelt, 1994; Hobbs & Meier, 2000).
MCA is designed to value two or more criteria for project selection, which include
efficiency, equity and meeting a sustainability constraint. It is particularly useful for
those environmental impacts that cannot easily be quantified in terms of normal market
transactions. MCA transfers the focus from measuring criteria with prices, to applying
weights and scores to those impacts and to determine a preferred outcome thus avoiding
the ethical debates surrounding the issues of monetary valuation as environmental
matters are largely priceless and unique (van Pelt, 1993b).
MCA as a utility approach has been structured in such a way that public participation
can be readily included in terms of criteria selection, alternative evaluation and
weighting assignments through questionnaires. Stakeholder groups may participate to
review the results and identify areas of agreement and disagreement (Hobbs & Meier,
2000). In addition, MCA contains tools that facilitate the decision-making process by
displaying trade-offs between criteria and improving the decision-maker’s ability to
assess those trade-offs. (Joubert et al., 1997; Hobbs & Meier, 2000). Total scores are
used in MCA to rank project alternatives to indicate the best option.
MCA is a more flexible methodological approach as it can deal with quantitative,

qualitative or mixed data for both discrete and continuous choice problems and does not
impose any limitation on the number and nature of criteria (van Pelt, 1993a). However,
CBA is limited to quantitative data for discrete choice problems. As a result, MCA is a
more realistic methodology in dealing with the increasingly complex nature of building
development.
46
Despite its flexibility, MCA may also have limitations. Its usefulness is governed by an
explicit view on the relative priorities in terms of weights, and stakeholder groups’
priorities may fail to reflect the values of the community at large. It would be more
useful if MCA was used to appraise several alternatives since the decision on a single
alternative is either “rejected” or “approved” (van Pelt, 1993a & 1994; Hobbs & Meier,
2000).
As Hobbs & Meier (2000) state, with the amount of data generated in the MCA
methodology concerning the performance of alternatives on numerous criteria, there is a
possibility that stakeholders may not be easily able to digest. The true preferences of the
stakeholders may be distorted and lead to inconsistencies across jurisdictions regarding
value judgements (van Pelt, 1993b; Hobbs & Meier, 2000). In addition, there are so
many techniques to choose from that confusion may result and different MCA
techniques may be improperly applied to a particular problem resulting in the different
outcomes. The problem of method uncertainty deserves specific attention and it may
require applying several MCA techniques to a particular problem to test the results (van
Pelt, 1993b).
Finally, even though equity and sustainability issues are difficult to fully evaluate in a
broad sense, measurable sub-criteria using methods other than market transaction may
indicate at least relative movement towards these goals. The debate on conventional
versus modern evaluation analysis tends to regard CBA and MCA as complementary
tools rather than as competitive tools (Watson 1981; Jones, 1989; Nijkamp et al., 1990;
Gregory et al., 1993; van Pelt, 1993b; Powell, 1996; Joubert et al., 1997; Mirasgedis &
Diakoulaki, 1997; RICS, 2001).
The methodology of supplementing traditional CBA with MCA is no doubt an

improvement, but may still fall short of the requirements, as issues are either
monetarised or scored. A methodology that quantifies economic and environmental
effects using the method of measurement that best suit their nature and characteristic
may be required. Some effects such as energy consumption may be better measured
rather than rated in relative terms. The sustainability index as developed in this research
47
is a way to address multiple criteria in relation to project decision-making and the

economic and environmental effects are quantified as much as possible. Using a
sustainability index will greatly enhance the assessment of external effects generated by
construction activity, realise sustainable development goals and thereby make a positive
contribution to the identification of optimum design solutions. The discussion of such a
model will be detailed in Chapters Four and Five in this thesis.
2.4.6 Summary
Cost benefit analysis is a systematic and consistent method of project appraisal widely
used by developers, investors, governments and international funding agencies. All
project development, policies and programs will have different approaches or proposals
in order to achieve the same objectives. Projects need to be properly evaluated before a
decision is made to proceed. The approach used in project appraisal, therefore, becomes
important in choosing the best option from the available alternatives.
Economic or social CBA are tools used to assist decision-makers to compare

alternatives by applying economic theory. The main theme of CBA is to monetarise and
weight the total flow of costs of proceeding with a project against the total flow of
benefits obtained from it, and to rank the options. Alternatives with a net positive
benefit are acceptable, whereas alternatives showing negative outcomes should be
abandoned. The higher the NPV the better, given a reasonable benefit-cost-ratio (BCR)
and an acceptable level of profit and risk contingency.
But the technique is not without its problems, and for public projects where externalities
and intangibles are common, the calculated outcomes may be highly questionable.
Much advantage lies in the rigour of the technique itself and the ability to evaluate
different scenarios using a range of variables that are significant to the analysis. In a
sense, the greatest benefit of CBA is its ability to allow for social and environmental
issues objectively, and yet this is also its greatest weakness.
Building development involves complex decisions and the increased significance of

external effects has further complicated the situation. Society is not just concerned with
48
economic growth and development but is also conscious of the long-term impacts on
living standards for both present and future generations. Sustainable development is
now an important issue in project decisions. Ecologically sensitive projects require a
different approach to appraisal than most traditional projects. The engagement of a
conventional single dimensional evaluation technique such as CBA in assisting
decision-making is no longer relevant and a much more complicated model needs to be
developed to handle multi-dimensional arrays of data. Multi-disciplinary appraisal
teams and an overall methodology are essential to uphold the goal of a sustainable
development.
2.5. CONCLUSION
There is no doubt that the environment is closely linked to economic growth and the
continued depletion of environmental assets will be detrimental to the well-being of
mankind. As such, much research has been undertaken to evaluate environmental values
and their incorporation in project appraisal. This chapter summarises the current
environmental problems that are experienced around the world and their impacts on
present and future generations. The techniques that are available in the valuation of
environmental assets are also discussed but as this chapter described, they suffer from
serious methodological shortcomings. These are closely related to the single-
dimensional nature of these techniques which have restrictive methodology in assessing
the complex nature of the natural world. This chapter also discussed the emergence of
valuing the environment using a non-monetary approach in lieu of the conventional
market-based approach of valuing costs and benefits in dollar values.
This chapter, whilst discussing the issues on a global viewpoint, has laid down the
fundamental platform for the discussion of the impact of the construction industry and
its related activities on the environment in the following chapters.
49
_______________________________________________________________________
CHAPTER
THREE
_______________________________________________________________________
THE CONSTRUCTION INDUSTRY AND THE

ENVIRONMENT
3.1 INTRODUCTION
Construction projects differ widely in type and size. They can be as small as a simple
domestic renovation or as large as a transnational infrastructure project such as the
Channel Tunnel, requiring the collaboration of several countries. Construction is not
limited to buildings but includes civil engineering and mining projects, transportation
and energy generation projects, maintenance of existing facilities and developing new
technologies.
A project is defined as “a discrete package of investments, policy measures, and

institutional and other actions designed to achieve a specific development objective
within a designated period” (van Pelt, 1993b, p.41). Indeed, projects can be in the form
of physical developments, government policies, community activities and welfare
programs. Projects are often conceived in response to particular problems. The project
is designed to change an undesirable existing condition into a desirable new condition
within a stated period of time and within budget limits. Project development involves
systematic analysis of prioritised development objectives to facilitate efficient resource
allocation. A project may also be defined in the broader sense of any use or saving of
resources, such as health, social services and environmental control projects (OECD,
1994; Abelson, 1996).
A project is regarded as successful if it is completed within the imposed constraints of

quality, cost and time and achieves its designated purpose. This involves the
Chapter 3: The construction industry and the environment
fundamental processes of selecting the right project, constructing it according to

specification at reasonable cost and within minimum time. Project selection often
involves choosing the best option from a range of possible ideas.
The purpose of a project is derived from a prescribed set of objectives. The objectives
of a private development may be to maximise current profit, efficiency, yearly turnover
or employment. In society’s view, the ultimate goal of a project may be to improve
social welfare or quality of life, or provide enjoyment. From an environmental
viewpoint, however, more project development means more damage to the natural
world and depletion of scarce renewable and non-renewable resources. In this way,
people tend to go to one of two extremes, either focusing on project development
without any consideration of the environment, or criticising almost any kind of new
development in society. Nevertheless, going to either extreme is not an ideal
circumstance and an effective balance needs to be struck.
The objective of this chapter is to review the relationship between construction

activities and environmental issues. To study this, the literature review has focused on
the impacts of the construction industry on the environment and the importance of
environmental management systems in enhancing sustainable goals in the construction
industry. In addition, this chapter also evaluates the importance of energy consumption
in the built environment. To provide information for the study, the energy analysis has
been carried out based on a life cycle approach where both embodied and operational
energy were examined.
3.2 SUSTAINABLE CONSTRUCTION AND ENVIRONMENTAL ISSUES
3.2.1 Introduction
In the late 1960s and early 1970s people started to worry about the ability of the
ecosystems to support ever-increasing economic activities (Azqueta, 1992). Throughout
the world, the building industry is responsible for high levels of pollution as shown in
previous research resulting from the energy consumed during raw materials extraction,
51
processing and transportation. Industrialised building methods, based on the widespread

use of high energy materials such as aluminium, cement, concrete and steel, must now
comply with new directives for the protection of the environment. The construction
industry, whilst important for every society, is also responsible for environmental
protection.
3.2.2 The construction industry and its impacts on the environment
Concern is growing about the impact of building activities on human and environmental
health. It is clear that actions are needed to make the built environment and construction
activities more sustainable (Hill & Bowen, 1997; Barrett et al., 1999; Cole, 1999a;
Holmes & Hudson, 2000; Morel et al., 2001; Scheuer et al., 2003). The construction
industry and the environment are intrinsically linked and it is inevitable that it has
found itself at the centre of concerns about environmental impact. According to Levin
(1997), buildings are very large contributors to environmental deterioration. Kein et al.
(1999) describe the building industry as uncaring and profit motivated, and the
members as destroyers of the environment rather than its protectors. Indeed, the
construction industry has a significant irreversible impact on the environment across a
broad spectrum of its activities during the off-site, on-site and operational activities,
which alter ecological integrity (Uher, 1999).
Construction activities affect the environment throughout the life cycle of a

development from initial work on-site through to the operational period and to the final
demolition when a building comes to an end of its life. Even though the construction
period is comparatively short in relation to the other stages of a building’s life, it has
various significant effects on the environment. Therefore the analysis of the impact of
the construction industry on the environment may need to look at a ‘cradle to grave’
viewpoint (Ofori et al., 2000).
The construction industry is one of the largest exploiters of both renewable and non-
renewable natural resources (Spence & Mulligan, 1995; Curwell & Cooper, 1998; Uher,
1999). According to Worldwatch Institute (2003), building construction consumes
40 percent of the world’s raw stones, gravel and sand, and 25 percent of the virgin
52
wood per year. It also accounts for 40 percent of the energy and 16 percent of the water
annually. According to Levin (1997), in the USA construction uses 30 percent of raw
materials, 40 percent of energy and 25 percent of water. In Europe, the Austrian
construction industry has about 50 percent of material turnover induced by the society
as a whole per year (Rohracher, 2001) and 44 percent in Sweden (Sterner, 2002). It
relies heavily on the natural environment for the supply of raw materials such as timber,
sand and aggregates for the building process. This extraction of natural resources causes
irreversible changes to the natural environment of the countryside and coastal areas,
both from an ecological and a scenic point of view (Curwell & Cooper, 1998; Ofori &
Chan, 1998; Langford et al., 1999). The subsequent transfer of these areas into
geographically dispersed sites not only leads to further consumption of energy, but also
increases the amount of particulate matter in the atmosphere.
Raw materials extraction and construction activities also contribute to the accumulation
of pollutants in the atmosphere. According to Levin (1997), in the USA construction is
responsible for 40 percent of atmospheric emissions, 20 percent of water effluents and
13 percent of other releases. Dust and other emissions include some toxic substances
such as nitrogen and sulphur oxides. They are released during the production and
transportation of materials as well as from site activities and have caused serious threat
to the natural environment (Spence & Mulligan, 1995; Ofori & Chan, 1998; Rohracher,
2001). Other harmful materials, such as chloroflucarbons (CFCs), are used in
insulation, air conditioning, refrigeration plants and fire-fighting systems and have
seriously depleted the ozone layer (Clough, 1994; Langford et al., 1999).
Pollutants have also been released into the biosphere causing serious land and water
contamination, frequently due to on-site negligence resulting in toxic spillages which
are then washed into underground aquatic systems and reservoirs (Kein et al., 1999).
According to Langford et al (1999), about one third of the world’s land is being
degraded and pollutants are depleting environmental quality, interfering with the
environment’s capacity to provide a naturally balanced ecosystem. If the construction
industry continues to overuse these natural resources, a limit on economic growth will
eventually emerge. In other words, the destruction of the environment will inevitably
affect the construction industry.
53
The construction industry produces an enormous amount of waste. A large volume

results from the production, transportation and use of materials (Ofori & Chan, 1998;
Kein et al., 1999). Construction activity contributes approximately 29 percent of waste
in the USA, more than 50 percent in the UK and 20–30 percent in Australia to the
overall landfill volume (Teo & Loosemore, 2001). According to Levin (1997), in the
USA construction contributes 25 percent of solid waste generation. In the European
Union, the construction industry contributes about 40–50 percent of wastes per year
(Sjöström & Bakens, 1999; Sterner, 2002).
Most construction waste is unnecessary according to Sterner (2002) who says that many
construction and demolition materials have a high potential for recovery and reuse.
However, due to the economic nature of the building industry, every stage of the
construction period is minimised. In addition, time and quality are crucial and virgin
materials are considered superior to second hand products for these reasons alone.
Screening, checking and handling construction waste for recycling are time consuming
activities and the lack of environmental awareness amongst building professionals may
create significant barriers to the usefulness of recycling (Langston & Ding, 1997d). The
depletion of natural resources by the building industry is a topic of serious discussion as
most of the recyclable material from building sites ends up in landfill sites. Sterner
(2002) states that implementing a waste management plan during the planning and
design stages can reduce waste on-site by 15 percent, with 43 percent less waste going
to the landfill through recycling, and it delivers cost savings of up to 50 percent on
waste handling.
Besides generating waste, building activities also irreversibly transforms arable lands
into physical assets such as buildings, roads, dams or other civil engineering projects
(Spence & Mulligan, 1995; Langford et al., 1999; Uher, 1999). The loss of agricultural
land is mainly found along coastal areas where soil fertility is most suited to crops and
other agricultural production. According to Langford et al. (1999), about 7 percent of
the world’s cropland was lost between 1980 and 1990. Arable land is also lost through
quarrying and mining the raw materials used in construction. Construction also
contributes to the loss of forests through the timber used in building and in providing
54
energy for manufacturing building materials. Both deforestation and the burning of
fossil fuels contribute directly global warming and air pollution.
The building industry is also considered to be a major consumer of energy and the use
of finite fossil fuel resources for this purpose have contributed significantly to carbon
dioxide emissions (Clough, 1994; Spence & Mulligan, 1995; Ofori & Chan, 1998;
Langford et al., 1999; Uher, 1999). Building material production consumes energy, the
construction phase consumes energy, and operating a completed building consumes
energy for heating, lighting, power and ventilation. In Europe, construction activities
have consumed about 40 percent of total energy production (Sjöström & Bakens, 1999;
Rohracher, 2001; Sterner, 2002). The energy consumption and the construction sector
will be discussed in greater detail in Section 3.3 in this chapter.
3.2.3 The concept of sustainable construction
Sustainable construction is considered as a way for the construction industry to

contribute to the effort of achieving sustainable development. It is also a way to portray
the construction industry’s responsibility towards protecting the environment (Pitney,
1993; Spence & Mulligan, 1995; Hill & Bowen, 1997; Bourdeau, 1999; Ofori & Chan,
1998; Ofori et al., 2000; Zhang et al., 2000).
One view considers that the construction industry plays an important role in the world
economy through creating man-made capital, a significant contributor to maintaining
economic growth and quality of life. Hill and Bowen (1997) state that about 10 percent
of the global economy is dedicated to constructing, operating and equipping homes and
offices. This activity accounts for approximately 40 percent of materials flowing into
the world economy (Hill & Bowen, 1997). In the European Union, the construction
sector contributes about 10–12 percent of gross national product (GNP) to the economy
each year (Sjöström & Bakens, 1999). It is also a main supporter of economic
development by providing infrastructure and buildings. Therefore, continuing and
increasing levels of construction activity are essential to all aspects of development.
55
However, the alternate view is that the construction industry has a significant impact on
resources such as land, materials, energy and water and, therefore, also shares
responsibilities of working towards a sustainable future through limiting the
environmental impact of building activities. The total environmental damage can be
significantly reduced if the construction industry takes proper actions to improve its
environmental performance (Miyatake, 1996; Ofori & Chan, 1998; Ball, 2002) and this
potential damage has to be analysed when considering sustainable development
(Bourdeau, 1999).
There is still no consensus agreement of what sustainable construction really means

(Ofori, 1998). According to Kibert’s presentation in the First International Conference
on Sustainable Development in 1994, sustainable construction is defined as the creation
and responsible maintenance of a healthy built environment based on resource efficient
and ecological principles (cited in Bourdeau, 1999). Bourdeau (1999) states that this has
provided a broad definition that forms a starting point for defining sustainable
construction. The definition of sustainable construction includes the concepts of
construction that prevents environmental degradation and utilises resources efficiently
so that the environmental, economic and social benefit justify the environmental
degradation created throughout the building life cycle (Najjar, 1994; Guy & Kibert,
1998; Ofori et al., 2000).
Spence and Mulligan (1995) state that restricting the total amount of construction in
order to achieve the principle of sustainable development is not essential. Construction
development is interwoven with economic growth, and economic growth is about
improving standards of living. du Plessis (1999) suggests that social impacts should
have a role in accomplishing sustainable construction. He points out that social
achievement through improving the quality of life is the motivation for many actions
and it follows that the more development, the more growth, leading to improved
standards of living. Therefore, sustainable construction is not just about saving the
world, but also about maintaining a comfortable environment for mankind. This view
supports the idea that sustainable construction does not imply a complete halt to
irreversible change in the natural environment. Some conversion of natural into man-
made capital is acceptable providing that the depletion rate of the world’s natural
56
capital does not exceeds the rate of accumulation of man-made capital of lasting value
(Spence & Mulligan, 1995; Curwell & Cooper, 1998). Unfortunately this is currently
not the case. The consumption rate of the world’s natural resources is much faster than
the regeneration rate and waste production has already breached the assimilative
capacity of many ecosystems (Rees, 1999).
Hill and Bowen (1997) state that sustainable construction starts at the planning stage of
a building and continues throughout its life to its eventual deconstruction and recycling
of resources to reduce the waste stream associated with demolition. They go on to
describe sustainable construction as consisting of four attributes: social, economic,
biophysical and technical. These four attributes form a framework for achieving
sustainable development that includes an environmental assessment during the planning
and design stages of projects, and the implementation of environmental management
systems.
The continuing confusion about concepts and lack of agreement on causes and effects
have reduced the ability to provide guidance based on well-accepted and understood
concepts for good practice in construction (Bröchner et al., 1999). With regards to the
existing definition of sustainable construction, it is important to note that even if the
principle of sustainable construction is attained, construction operations would continue
to have environmental impacts, but at a reduced rate (Ofori et al., 2000).
3.2.4 ISO14000 and environmental management systems in construction
Improvements in environmental performance are often seen as a cost burden. At the

same time, because the construction industry is fragmented and because much of what it
produces has cultural significance, it is particularly slow to change and to embrace
environmentally friendly practices (Teo & Loosemore, 2001; Ball, 2002). With the
widespread publication of environmental problems, there has been an increasing force
for the construction industry to take a more responsible attitude towards the
environment. In particular, understanding the impact of the construction sector on the
global environment is still unclear (Bourdeau, 1999). Teo and Loosemore (2001)
57
describe how attitude and conventional behaviour have hindered changes in the
construction industry.
Bourdeau (1999) argues that it is important for the construction industry to realise the
nature and extent of environmental impacts caused by its activities so that solutions will
be developed. Construction companies’ current corporate practices may need to respond
to the requirements of sustainable development. Environmental management systems
are considered as a way for construction to minimise environmental effects (Kein et al.,
1999; Ofori et al., 2000, Zhang et al., 2000). They are tools that help to make a trade-off
between economic growth and the sustainability of the environment. ISO14000 has
environmental management systems and it includes a standard for organisations to
implement these systems into their practices. The ISO14000 series of standards
provides a framework for construction companies to manage their operations in order to
improve the environmental performance and to achieve tangible results without
compromising their corporate goals.
The International Standards Organisation (ISO) developed ISO14000 in 1996 in

accordance with the results of a 1993 study of major international standards for
environmental management systems by the Technical Committee (TC 207) (Ofori et al.,
2000). The main objective of the study was to develop a uniform international
environmental management system standard to be used as an environmental
management tool. Apart from environmental management systems, ISO14000 has four
other standards: environmental auditing, environmental labelling, environmental
performance evaluation and life cycle assessment. The development of ISO14000
supports the view of sustainable development as minimising harmful effects on the
environment through construction activities (Ball, 2002).
Zhang et al. (2000) state that ISO14000 brings environmental issues into an
organisation’s decision-making process, integrating sustainable development principles
with business practices. Fundamentally, ISO14000, even though voluntary, has
provided a framework to link the concept of sustainable development with the
construction procurement process. Environmental management systems as defined in
ISO14001 are part of the overall management system which includes the organisational
58
structure, planning activities, responsibilities, practices, procedures, processes and

resources for developing, implementing, achieving, reviewing and maintaining a
company’s environmental policy (Kein et al., 1999).
Environmental management systems have many benefits for the construction industry
assisting improved its environmental performance. Zhang et al. (2000) state that such
systems can help to reduce environmental damage and improve environmental
performance in the construction industry. Ofori et al. (2000) state that they are a set of
management tools enabling companies to protect the environment from the potential
impacts of its activities, products and services. They also provide a means to manage
the processes and procedures to avoid adverse effects to the environment, and to
comply with environmental regulations. Kein et al., (1999) and Ofori et al., (2000)
nominate other key benefits of environmental management systems for the construction
industry as:
• enhanced image and credibility,
• lower operating costs from resources conservation and waste minimisation,
• minimised risk of violating environmental legislation and regulations,
• reduced environmental risk,
• improved customer trust and satisfaction leading to improved competitiveness,
• improved business expansion potential where environmental management
capability is needed, and
• enhanced employee involvement and education in environmental matters.
Conversely, Kein et al. (1999) and Ofori et al. (2000) also nominate some drawbacks
from implementing environmental management systems in the construction industry.
The environmental management system as an ongoing activity may add a short-term
financial burden from employing environmental consultants and setting up the required
structures and training for the firm’s personnel. Nevertheless, the additional cost may be
offset by the long-term benefits that may accrue from implementing the system. The
diversity of construction techniques and individuality of each project also make it
difficult to employ environmental management systems. Therefore, environmental
impacts and measures can be difficult to assess and quantify.
59
The process of incorporating ISO14000 into company practices may require further
investigation to minimise adverse effects during implementation. Implementing
ISO14000 has short-term adverse effects on company practices and may well be offset
by improvements gained through proper management of building activities such as
lower energy and maintenance costs, and a reduction in employee absenteeism as a
result of healthier buildings. However in the long term, ISO14000 seems to be a way of
directing the construction industry towards improved environmental performance (Ball,
2002). Nevertheless the biggest problem remains the low level of environmental
awareness and lack of interest by the construction industry (Kein et al., 1999; Ofori et
al., 2002).
3.2.5 A way forward
Environmental protection is effected by implementing resource-efficient sustainable

practices, preserving ecosystems and maintaining the carrying capacity of the planet.
According to Ofori and Chan (1998), sustainable construction can be achieved by the
clients and contractors forming a team to manage environmental issues. It is important
that every development includes environmental protection to the list of project
objectives which traditionally include only time, cost and quality considerations (Ofori
et al., 2000). Bourdeau (1999) believes that sustainable construction can be achieved
through the cooperation of various parties in the construction industry. Building clients
and developers can promote sustainable construction since they represent the demand of
the building sector. The development of environmentally aware processes, and the
consideration of proficiency in formulating, evaluating and verifying relevant
environmental requirements to include these aspects, is crucial to development (Ofori,
1998; Ofori et al., 2000; Sterner, 2002). In addition, it is also important for clients to set
up an environmental policy for each project and to consider environmental track records
when selecting consultants and contractors (Ofori et al., 2000).
For building designers it is important to show environmental consciousness in their

design (Ofori, 1998). Bourdeau (1999) suggests that a more integrated approach to
design be adopted to consider the fundamentals of sustainable building design and
environmental labelling. Bourdeau (1999) continues, suggesting that building designers
60
should work together with manufacturers to create new designs which facilitate material
recycling. The environmental qualities of construction materials may be considered as
fundamental to the design and life cycle assessment models may be used to facilitate
product development. However, life cycle analysis in its present form is too complex
for efficient use and the input data is not sufficient for a complete assessment of
building products since there are over 40,000 products on the market with new products
in the pipeline (Sterner, 2002). Therefore, it will take a long time for a life cycle
assessment to be carried out on all products on the market. Nevertheless, it is important
for contractors to adopt environmentally conscious techniques in construction methods
on-site (Ofori, 1998).
In addition to design teams incorporating environmentally sensitive initiatives, there are

other important factors. In order to achieve sustainable goals in construction it is also
important to improve land use by controlling the rate of conversion of agricultural lands
to support development of human settlements and urbanisation (Ofori, 1992; Bourdeau,
1999; Zhang et al., 2000). At the same time, it is important to extend the life and reuse
of existing buildings (Spence & Mulligan, 1995; Kohler, 1999) reducing the resources
required to construct new facilities. However, current practices frequently result in
buildings designed with a very limited life expectancy (Spence & Mulligan, 1995;
Kohler, 1999) because the natural capital used is not considered to have any significant
value leading to abuse of these resources. So far, the cost of rectifying environmental
damage from the extraction of resources has not yet been properly recognised as part of
the cost of those resources to society and is therefore not included in the price paid by
those using the product.
The waste generated from construction activities is also a target for change and this is
particularly important for avoidable waste. Teo and Loosemore (2001) state that the
wasteful practices in the construction industry are due to the convenient and cost-
effective solution provided by landfill sites. They further state that construction waste
has a residual value and is avoidable by adopting an effective waste management
system. Spence and Mulligan (1995) suggest that the increased use of mineral,
agricultural and demolition wastes in construction would reduce the impact of
construction on the natural environment. It would also reduce the environmental impact
61
associated with the disposal of those mineral wastes. Considerable research and
development work has been devoted to minimise construction waste and recycling
methods that put them back into the production process (Tränkler et al., 1996; Lowton,
1997; Poon et al., 2001; John & Zordan, 2001; Klang et al., 2003). However, John and
Zordan (2001) state that there are many barriers to recycling beyond the technical
difficulties, including economic, geographic, legal, social, time and informational
barriers, all of which have hindered the full potential of promoting recycling in the
construction industry.
There are many other ways to change current construction activity to become less
environmentally damaging. Research and development has already been carried out in
response to the environmental challenge including:
• preparation of pre-construction environmental impact appraisals (Pitney, 1993;
Spence & Mulligan, 1995),
• improvements in the total life-cycle energy efficiency of buildings (Ofori, 1992;
Zhang et al., 2000),
• sustainable use of non-renewable resources (Zhang et al., 2000), and
• increased control of the atmospheric and water pollution consequences of
construction (Ofori, 1992; Spence & Mulligan, 1995; Zhang et al., 2000).
3.3 ENERGY AND THE BUILT ENVIRONMENT
3.3.1 Introduction
Present day buildings tend to depend on energy, such as that provided by fossil fuels, to
such an extent that should those fuels become unavailable, buildings would become
inoperable or uninhabitable. Energy is the major aspect in the day-to-day operation of
the community and business, even an individual’s domestic life (Blowers, 1993;
Treloar, 1997, Hammond, 2000).
62
Energy is used primarily for heating, ventilation, cooling and lighting buildings and for
vertical transportation via elevators. Since energy plays such an important part in our
daily life, energy efficiency and energy management become vital design criteria in
buildings. Energy is also important to economic growth and without fuel to make
energy, transport and living standards in industrialised countries would be considerably
jeopardised.
At present, most of the world’s energy is supplied by coal, oil, natural gas, nuclear
power and hydropower. Since the energy crisis of the 1970s, there has been growing
concern about the world’s stock of natural resources, in particular non-renewable
resources, and the adverse affects on the environment through the combustion of fossil
fuels and the use of biomass (Ellis, 1987; Cole & Rousseau, 1992; Johnson, 1993; Baird
et al., 1994; Brown & Herendeen, 1996; Pierquet et al., 1998). Coal production could
be increased, but at great cost, damaging human health and the environment.
Hydropower is increasing in popularity, but its supply capacity is around 20 percent of
the world’s total electricity (Lauge-Kristensen, 2001). Oil and natural gas are clean and
easy to deliver, but world reserves for both oil and natural gas are in great doubt and
new oilfields need to be discovered in order to cope with present consumption. It has
been estimated that oil production will peak early this century and then fall rapidly.
New sources of energy need to be developed to bridge the gap of world energy needs
and reserves (World Bank, 2000).
New renewable energy sources such as solar, wind, wave, tidal, ocean thermal and
nuclear power are now being used to supplement fossil fuels. However, these energy
sources would be more useful if this energy could be stored economically on a large
scale (Baird et al., 1984; Lauge-Kristensen, 2001).
The production and use of energy has become a growing source of environmental
concern and research has demonstrated that the production of energy is closely related
to the degradation of the environment (Cole & Rousseau, 1992; Brown & Herendeen,
1996; Fay & Treloar, 1998; Hammond, 2000; Tiwari, 2001). The wide use of fossil
fuels, to some degree, has polluted the atmosphere (Hodgson, 1997). Electricity
generation from conventional coal-fired power plants accounts for environmental
63
deterioration through atmospheric emissions and other effluents, and these impacts are
not sufficiently taken into consideration in making energy decisions (Johnson, 1993;
Hammond, 2000). Currently, companies and governments involved in energy
production do not properly consider the implied costs imposed on society such as
damage to human health, and the natural and social environment (such as crop failure,
forest destruction, various pollution, contamination of buildings and archaeological
monuments).
Air pollution contributes to premature death, chronic bronchitis and other respiratory
illness and early childhood death, particularly in developing countries. It is estimated
that air pollution has caused economic loss of approximately US$350 billion per year
amounting to about 6 percent of the gross nation products (GNP) of developing
countries (World Bank, 2000).
Energy production and use also contributes to global climate change through carbon
dioxide, methane and nitrous oxide emissions from the combustion of fossil fuels.
Approximately 80 percent of greenhouse gas emissions from human activities are
related to the production and use of energy (Norgard & Christensen, 1994; Hall &
Peshos, 2000). The blanket-like gases around the earth trap heat emitted from the
earth’s surface, causing average global temperature to increase by 0.3 to 0.6 degrees
Celsius over the past century. The Intergovernmental Panel on Climate Change (IPCC)
predicts that global temperatures will rise a further one to 3.5 degrees Celsius by the
year 2100 (World Bank, 2000). This global temperature change consequently causes a
rise in the sea level adversely affecting human health, ecosystems, agricultural, water
resources and human settlement (Hodgson, 1997; World Bank, 2000).
Considering the urgency of saving the world’s energy reserve, studies on the total
energy use during the life cycle of a building are crucial. Previous research has mainly
focused on the energy used during the occupancy stage of a building, such as space
heating, hot water and the need for electricity. However, embodied energy usage during
the life cycle of a building is largely ignored (Cole & Rousseau, 1992; Treloar & Fay,
1998; Pullen, 2000b; Treloar et al., 2001a; Chen et al., 2001). Energy-conscious
buildings are becoming an important part of design helping to minimise demands on
64
non-renewable resources while providing better natural ventilation than was previously
possible (Baird, et. al., 1984, Brown & Herendeen, 1996).
3.3.2 Energy and the construction industry
Buildings consume energy and other resources at each stage of development from
design and construction through to operation and final demolition (Cole & Rousseau,
1992; Hui, 2001). At each stage buildings consume different amounts of energy and
generate pollutants accordingly. This is particularly serious when fossil fuels are
involved (Fay & Treloar, 1998; Pullen, 2000a). Improving energy efficiency alone may
not result in the maximum potential reduction in energy consumption, because there is a
substantial portion of energy trapped in the upstream and downstream production of
goods and services (Treloar, 1997).
According to the World Resources Institute (2001), the world’s commercial energy
production has increased by 15 percent in the last decade and mainly produced by
burning fossil fuels (e.g. oil, gas and coal).
Construction is one of the largest consumers of commercial energy in the form of direct
fossil fuel burning or the use of electricity (Spence & Mulligan, 1995). Energy use in
buildings accounts for almost 50 percent of carbon dioxide emissions in the UK and
building material production accounts for 8 percent and 20 percent in the UK and
Australia respectively (West, 1995). Construction also contributes greatly to the
depletion of non-renewable materials and fossil fuel, and the emission of greenhouse
gas and other pollutants (Fay & Treloar, 1998; Morel et al, 2001).
The environmental problems associated with energy consumption have extended from a
local scale of urban and indoor air pollution through to a global scale of contributing to
climate change and stratospheric ozone depletion. Consequently, reducing energy-based
fossil fuels to provide thermal comfort, lighting, hot water and other services, and to
minimise energy consumption to reduce environmental degradation has been the focus
of much research and development activity (Fay & Treloar, 1998).
65
Over the entire life span of a building it is maintained, refurbished, extended and finally
demolished. The use of energy at various stages is largely influenced by how the
building was constructed and how the energy is used (Spence & Mulligan, 1995; Morel
et al., 2001). Baird et al. (1984) state that assessment of energy performance is
important at all stages. Such assessments may be used to check the design or as a basis
for relevant standards.
Construction consumes energy in two principal ways. Firstly, it consumes energy

through the construction of buildings and related facilities. In general the energy is used
to produce building materials and their subsequent on-site assembly at their final
destination. Secondly, it consumes energy in the later use of these buildings and related
facilities in the form of heating, ventilation and cooling, lighting, hot water, and
appliances and equipment.
The actual amount of energy consumed by buildings depends on many factors such as
the design of the building fabric, orientation, outside temperature, window areas, light
systems, air conditioning and ventilation, level of insulation and the thermal
characteristics of walls and roofs. The impact of buildings on the environment is based
on the whole-of-life assessment of many variables such as fossil fuel based energy, and
other non-renewable resource requirements and various emissions to soil, water and air.
Besides consuming energy during and after the construction of buildings, the process of
manufacturing building materials also contributes to the carbon dioxide (CO2)
emissions that play a major role in global warming. In the UK, the building and
construction trades account for over 50 percent of total CO2 emissions (Weir & Muneer,
1998). Commonly used building materials, such as structural steel, reinforced concrete
and aluminium, release CO2 during the production process therefore research into new
material production, manufacturing methods, recycling of building materials and using
low embodied energy materials has become extremely important (Weir & Muneer,
1998).
66
Total energy usage is based on a building’s life-cycle analysis (Figure 3.1). There are
four distinct categories of a building’s life-cycle energy use (Pullen & Perkins, 1995;
Cole & Kernan, 1996; Yohanis & Norton, 2002):
1. The energy initially used to produce building materials and components. This is
usually described as initial embodied energy and is derived from the recovery of
raw materials and the manufacturing of building materials together with on-site
construction energy.
2. The recurring embodied energy is the energy used to refurbish and maintain a
building over its effective life. It is measured during the building’s economic life
after occupancy. It also refers to the embodied energy used to produce materials
and components for replacement, repair and maintenance during the building’s life.
3. The energy used to operate the building is the energy needed for heating,
cooling, ventilation, and lighting during its effective life cycle.
4. The energy used to demolish and dispose of the building at the end of its
effective life
Figure 3.1 The components of life cycle energy analysis

Recycling of materials/components
Embodied Extraction of Replacement Extraction of Replacement Demolition

Energy materials of materials & materials of materials & process
components components
Manufacture Manufacture Transport
of components of components
Transport to Transport to
site building
Construction
process
Operational Heating and/or Power tools Heating and/or

Energy cooling cooling
Energy loads
Lighting for any on- Lighting
going use
Appliances Appliances
Construction Use Refurbishment Use Demolition
Building Life
Source: Yohanis & Norton, 2002
67
The kind and amount of primary energy used in the production of building materials,
and the handling of the building materials after demolition of the building, can affect
the flow of greenhouse gasses (GHGs) to the atmosphere in different periods of time.
This is, indeed, an area worth researching in order to protect the environment.
3.3.3 Life-Cycle Energy Analysis
Life-cycle analysis (LCA) is a methodology used to assess a product’s, process’s or

activity’s overall environmental impact throughout its life cycle (Scheuer et al., 2003).
Life-cycle analysis is also known as the “cradle to grave” assessment of a product (or
service) from the initial extraction and processing of raw materials to final disposal
(Blowers, 1993; Ayres, 1995; Bennetts et al., 1995; Weir & Muneer, 1998; Scheuer et
al., 2003). This method has been widely used in Europe and the United States initially
for product comparison, but its current application has been extended to include
government policy, strategic planning and product design. LCA permits an evaluation
of how impacts are generated and distributed across various processes throughout the
life cycle.
LCA methodology was originally developed by the Society of Environmental

Toxicology and Chemistry (SETAC) to improve the science, practice and application of
reducing resource consumption and environmental burdens associated with products,
packaging, process or activities (Weir & Muneer, 1998; Johnstone, 2001). LCA has
four stages (Ayres, 1995; Miettinen & Hämäläinen, 1997; Weir & Muneer, 1998):
1) Goal definition and scoping—defining study objectives, products and their
alternatives, system boundary choice, environmental parameters and data collection
strategy.
2) Inventory analysis—data collection and treatment, quantifying materials, energy
inputs and waste emissions, and preparing inventory tables where system’s material
and energy balance is calculated.
3) Impact assessment—classifying the inventory table into impact categories,
aggregation within the category, normalisation, weighting different categories
where the system’s potential environmental impacts are evaluated.
68
4) Improvement assessment—sensitivity analysis, improved prioritisation and

feasibility assessment to reduce the environmental burden are pursued.
LCA methodologies have complicated and sophisticated in assessment processes, so

computer software has been developed as an aid. Products such as LISA and SimaPro
are widely used to apply LCA for environmental impact assessment of products or
materials (Department of the Environment and Heritage, 2001).
LCA has been extensively used in energy analysis since the 1960s. During early
studies, energy consumption and efficiency were the main focus and energy-related
waste emissions were not considered (Ayres, 1995). Since the early 1970s, waste
emissions generated by the production processes were taken into account and life-cycle
energy analysis became an important tool for assessing environmental impact based on
energy uses (Fay & Treloar, 1998; Treloar et al., 1999). Treloar et al. (1999, p.404)
defines life cycle energy analysis as “the initial and recurring embodied energy plus the
operational energy and any energy required for decommissioning”. Indeed, life cycle
energy analysis enables assessment of the effects that products, processes and activities
have on local, regional or global environments.
Life cycle energy analysis provides a complete means of analysing the energy
requirement and environmental impact of buildings. The analysis includes the energy
required to construct the building, the energy used during occupancy and the energy
used to maintain, renovate and eventually demolish the building (Bennetts et al., 1995).
3.3.4 The importance of embodied energy
In many industrialised countries, the construction industry is largely factory-based with

much of the building manufacturing process occurring away from the building site. Site
work consists mainly of component assembly such as precast concrete panels and
structural steel. There is a growing awareness of environmental impact in the choice of
building materials. The designer should not only consider the traditional requirements
of the owner and occupants of the building, but also the resource base and the effects on
69
the environment of extraction, manufacture and processing of the building materials

(Börjesson & Gustavsson, 2000; Venkatarama Reddy & Jagadish, 2003).
Recent research has shown that energy used to manufacture building components off-
site accounts for over 75 percent of the total embodied energy in buildings (Spence &
Mulligan, 1995). Tucker et al. (1994, cited in Treloar et al, 2001a) explain further that
in Australia the energy embodied in construction can represent up to one-fifth of
national energy consumption. However, the energy embodied in manufacturing of
building materials is not included in the calculation of total energy consumption of
buildings. In the past, the common view was that embodied energy is almost negligible
compared with operational energy over the life of a building. However this view is now
hotly contested (Lawson, 1996b; Pullen, 2000b).
Researchers have estimated the embodied energy intensity of building materials since
the 1970s (Boustead & Hancock, 1979; Baird et al., 1984 & 1994). These studies have
included the calculation of atmospheric pollutants associated with fossil fuel burning
such as CO2, ozone depletion and acid rain throughout the life cycle energy
requirements of buildings (Baird et al., 1994; Pullen & Perkins, 1995; Ayres, 1995;
Lawson, 1996b; Alcorn, 1998; Pullen, 2000a; Treloar et al., 2001a).
Embodied energy comprises the energy consumed during the extraction and processing
of raw materials, transportation of the original raw materials, manufacturing of the
building materials and components and energy use for various processes during the
construction and demolition of the building (Baird, 1994; Edwards & Stewart, 1994;
Howard & Roberts, 1995; Lawson, 1996b; Cole & Kernan, 1996). Embodied energy is
defined by Tucker et al. (1993, cited in Edwards et al., 1994, p. 318) as “the total
energy consumed from all sources in creating that product … it includes energy
consumed in the winning (e.g. mining), transporting and processing of raw materials, to
the final delivery of the product; plus the energy of all intermediate manufacturing and
transporting processes, and a share of all energy required to provide the capital
infrastructure which enable the product to be produced”.
70
Treloar et al. (2001b) state that embodied energy is significant because it occurs
immediately and the total energy consumed in the production of building materials can
be equal, over the life cycle of a building, to the temporary requirements for operational
energy. The study of energy use in buildings has already captured the interest of many
researchers and, together with increasing awareness of the surrounding environment,
there is little doubt that embodied energy will be an area of major focus in further
research of energy efficiency. Knowledge of embodied energy can stimulate the
development of products with low embodied energy content, using reduced quantities
of energy and contributing fewer amounts of greenhouse gases to the atmosphere in
their use phase.
Embodied energy is an area that attracts attention around the world as one of the main
aspects of green building design and is the focal point of energy management in
building construction (Stein et al., 1976; Lawson, 1996; Pears, 1996; Aye et al., 1999;
Pullen, 2000b and Treloar et al., 2001b). Indeed, embodied energy is within the
construction industry’s control. Fully identifying the nature and extent of embodied
energy intensity will allow designers, builders and building materials manufacturers to
improve production processes to minimise energy consumption (Edwards & Stewart,
1994). Embodied energy is divided into direct and indirect energy, which is consumed
throughout the life cycle of a building (Treloar, 1997).
Table 3.1 (see next page) summarises the results of previous studies on the initial
embodied energy of various types of building from different sources and different
countries. The embodied energy per square metre varies widely. In residential buildings
the embodied energy per square metre of gross floor area ranged from 3.6 to 8.76 GJ/m2
whilst for commercial construction the range is from 3.4 to 19 GJ/m2. The university
building in South Australia is recorded as 11 GJ/m2 which is in the mid range between
residential and commercial construction.
71
Table 3.1 Summary of initial embodied energy studies per unit quantity of
gross floor area
Embodied Building Sources
energy (GJ/m2) type
3.6 Residential Hill, 1978 (cited in Pullen, 2000b)
3.9 Residential Edwards et al., 1994
4.3-5.3 Residential D’Cruz et al., 1990 (cited in Pullen, 2000b)
4.9 Residential Pullen, 1995
5.0 Residential Lawson, 1992 (cited in Pullen, 2000b)
5.9 Residential Pullen, 2000b
6.6 Residential Ballantyne et al., 2000 (cited in Pullen, 2000b)
6.8 Residential Treloar, 1998
8.76 Residential Treloar, 1996b
3.4-6.5 Commercial Honey & Buchanna, 1992 (cited in Pullen, 2000c)
4.3-5.1 Commercial Cole & Kernan, 1996
5.5 Commercial Oppenheim & Treloar, 1995
8.0-12.0 Commercial Oka et al., 1993 (cited in Pullen, 2000c)
8.2 Commercial Tucker & Treloar, 1994 (cited in Pullen, 2000c)
10.5 Commercial Yohanis & Norton, 2002
18.6 Commercial Stein et al., 1976 (cited in Pullen, 2000c)
19.0 Commercial Tucker et al., 1993 (cited in Treloar, 1996b)
11.0 University Pullen, 2000c
There are various reasons for the wide range of embodied energy consumption. The
high figures presented in the table may be due to shifts in building performance and
materials production efficiencies over the past 20 years (Cole & Kernan, 1996). In
addition, it is not clear whether this data is based on a primary or delivered energy
basis. This is important as research indicates that the primary energy may be three to
four times more than the delivered energy (Fay & Treloar, 1998; Pullen, 2000c).
Furthermore, the exact boundary of the studies is unclear without investigating their
methodology in detail. Some studies may not include energy used in furniture and
fittings, on-site construction processes and demolition which may result in greater
differences in the total embodied energy calculation. It is also impossible to draw
universal conclusions based on buildings categorisation in terms of number of storeys
and types of principal structure. Finally, the magnitude of these values depends, among
other factors, on the method of construction employed and on materials selection.
The research may also be based on different sources of information. The most important
one is the embodied energy coefficient. Some researchers may derive their own
embodied energy coefficient in their studies, but others may just adopt information
72
from current literature. However, there is much debate about the current methodology
in the compilation of embodied energy coefficients. This will be discussed in greater
detail in the latter part of this section.
As stated by Kohler (1991), there is no absolute or correct energy intensity of a material

because a stated value is a direct function of what was included and what was excluded
from its derivation. Therefore, it is difficult to arrive at universally applicable embodied
energy values because of the large variations in the values of embodied energy
available to date.
3.3.5 Embodied energy modelling
Some recent research has suggested that the criteria for embodied energy consumption
in buildings includes the energy required to manufacture building materials and
components, the energy required to transport building materials and components to and
from the building site during construction, renovation and demolition, and the energy
used in various processes such as crane lifting and smoothing of soil during the
construction and demolition of the building (Adalberth, 1997a; Chen et al., 2001).
The embodied energy estimation can be separated into ‘initial’ and ‘recurrent energy’
(Pullen, 2000b). The initial embodied energy refers to the total energy used to produce
building materials, including extracting and then transporting raw materials to factories
and then the finished products to the site, and the on-site operation energy. Recurrent
energy measures energy use during the operational life of a building. This includes the
energy use for the production of materials or components for renovation, repair and
routine maintenance during the life spans of a building.
Initial embodied energy
Energy is needed to manufacture building materials and components. It would be very

useful and provide significant data if each manufacturer recorded the energy used
associated with their particular product. Such information would ensure that more
specific energy requirement data for each type of construction material would be
73
available. At the same time, the information may also be fed back into the assessment
loop to monitor and adjust product design development (Adalberth, 1997a). Improved
materials manufacturing technologies may reduce energy consumption.
Energy is needed to transport the building materials and components. Transporting

materials is a major factor in the cost and energy of a building. The transportation
distance may vary depending upon the location of construction activities and from
project to project. Energy is required whenever building materials and components are
to be moved from one location to another at different stages in the process, including
transporting raw materials from the place of extraction to the place of component
manufacture. Further energy is consumed in delivering the manufactured components to
the site (Miller, 1996; Adalberth, 1997a; Chen et al., 2001). The energy requirement
will increase if the materials or components are imported.
Past research on transportation energy shows that this is often assessed using
generalised assumptions (Miller, 1996; Adalberth, 1997a; Chen et al., 2001). Adalberth
(1997a) states that transportation energy represents approximately 5–10 percent of the
manufacturing energy for each building material. However Miller (1996) identifies
transportation energy at around 0.8MJ/t/Km and approximately 6 percent of the total
initial embodied energy of materials and components used to construct a building. It is
difficult to compare research results since the mode of transportation and the distance
travelled is crucial to the calculation but remains largely unknown. It is necessary to set
up a boundary of studies for the energy consumption of transportation. The more
imported raw materials required to manufacture building materials and components
from abroad, the higher the embodied energy consumption.
The energy efficiency of different means of transport is significant. Locally made

materials should be preferred to those transported long distances, including imports and,
where possible rail transport is preferable to road transport (Lawson, 1995b).
Energy is needed in the on-site construction process. On-site construction energy plays
an important part when calculating embodied energy (Stewart et al., 1995; Pullen,
2000b). When erecting a building, energy will be needed for a variety of processes such
74
as off-site manufacture, delivery, assembly, operation, demolition or re-cycling phases.

On-site construction may require direct electrical energy or fuel to operate tower cranes,
power tools, trucks and generators. All this equipment will have an indirect embodied
energy impact arising from the share of all the energy inputs necessary to produce that
equipment originally, to get it to the site, and to maintain it in service.
This energy consumption is often ignored because accurate information is difficult to

obtain or unavailable. This energy consumption is also considered to be small compared
with the embodied energy used to manufacture building materials (Pullen, 2000b).
Nonetheless, Tucker et al. (1993, cited in Stewart et al., 1995) argue that the energy
required to construct a 150m2 house is about equal to the energy required over nine
years to heat it.
Table 3.2 summarises the percentage allowance of on-site construction energy in

relation to the total embodied energy information gathered from the literature. The
allowance ranges between 6 and 15 percent. With such a wide range, it is important to
note that only the percentages derived from the data of Stewart et al’s (1995) and See’s
(1998, cited in Pullen, 2000b) research work were based on actual monitored on-site
activities starting with site levelling through to carpet laying. The results obtained from
Stewart et al. (1995) and See (1998, cited in Pullen, 2000b) appeared to be consistent.
The research details of the other percentage allowances in Table 3.2 (see next page)
were unknown and no information is provided as to whether the energy term is based
on delivered or primary energy. Therefore the figures can only be treated as a rough
guide for calculating total embodied energy in the assessment of on-site construction
energy. There is no doubt that the amount of energy consumed on-site is important
when calculating embodied energy and further research is required to examine the
accuracy of these allowances. However, on-site construction energy is difficult to
measure accurately as it is affected by site location and topography, site management,
outdoor climate and the duration of construction.
75
Table 3.2 Summary of percentage allowance of on-site construction energy

On-site Building
construction type Sources
energy (%)
6 Residential Stewart et al., 1995
6.5 Residential See, 1998 (cited in Pullen, 2000b)
7-10 Unknown Cole & Rousseau, 1992;
Lord, 1994 (cited in Pullen, 2000c)
10-15 Unknown Lawson, 1996b
10 Office Treloar et al., 1999
10 Unknown Christophersen et al., 1993 (cited in Pullen & Perkins,
1995)
11 Residential Ballantyne et al., 2000 (cited in Pullen, 2000b)
15 College Baird et al., 1994
Apart from allowing energy for site processes, construction materials will also be
wasted during construction. Such wastage should also be considered when estimating
embodied energy (Chen et al., 2001). The waste factor varies from material to material
and from site to site. Building materials fabricated on-site may have more wastage than
pre-fabricated components. There is no research, so far, on the energy of material
wastage on-site. Since there are so many variables, researching on-site material wastage
would be challenging.
Recurrent embodied energy
Recurrent embodied energy accounts for the changes in embodied energy associated
with building up-keep and improvements. Recurrent embodied energy includes the
energy consumption of building materials used during building maintenance and repair
over its effective life; energy to produce the materials consumed (light bulbs, cleaning
fluids, paint, etc.); and a share of the energy used to manufacture the maintenance tools,
ladders, etc. Therefore the longer the life span, the more recurrent embodied energy is
used during occupancy, and the less annualised initial embodied energy is used
(Edwards & Stewart, 1994; Adalberth, 1997a; Chen et al., 2001).
Energy use at this stage starts when the building is finished and occupants start to move
in. At this stage, there will be two main uses of energy: that required for heating,
cooling, lighting and hot water supply, which is considered as the operational energy
and will be dealt with later in this section; and energy required to manufacture materials
76
or components used for renovation, repair and routine maintenance. The embodied
energy calculation should now also include providing building materials and
components for maintenance and replacement during the entire life span of the building.
The building’s needs for maintenance during its life span depends on the type of
materials, the climatic conditions, the location of components, anticipated life span of
materials and components, frequency of maintenance, type of construction and pattern
of occupants’ energy consumption. Some components may require more frequent
maintenance, for example, woodwork will require repainting every three to five years
but masonry may only require cleaning once during the life of the building. All these
materials should be taken into consideration when calculating recurrent embodied
energy (Adalbertha, 1997a). The internal finishes and components, which represent
only a relatively small portion of the initial embodied energy, dominate the recurrent
embodied energy during the building life cycle.
The internal partitions, doors, finishes and building services are replaced, refurbished
and maintained more frequently than the structure and the building envelope comprises
the majority of the initial embodied energy. Some building components such as floor
coverings may need replacement from time to time in order to maintain the normal
functioning of a building. The average life span of materials or components varies in
accordance with the types of product and the life expectancy. Components may require
replacement due to wear and tear, or changes in style. Relevant data on the replacement
cycles of building components is difficult to obtain and even though the data is
available, the validity of these data may require investigation before they can be used.
In order to calculate energy use during this stage, some assumptions regarding the
lifespan and maintenance cycles of materials or components may have to be made
(Adalberth, 1997a; Pullen, 2000b; Johnstone, 2001).
Recurrent embodied energy plays an important part when calculating total embodied
energy. Treloar (1996a) suggests a further 50 percent of initial embodied energy is
required for maintenance. Cole and Kernan (1996) further estimate that recurrent
embodied energy is equivalent to about 130 percent of the initial embodied energy.
Fay and Treloar (1998) found that the recurrent embodied energy is 32 percent of the
initial embodied energy and Pullen (2000c) had similar results where recurrent
77
embodied energy of approximately 37 percent of the initial embodied energy is required

for replacement, repair and maintenance activities. Table 3.3 summarises the current
research results of recurrent embodied energy in buildings.
Table 3.3 Summary of recurrent embodied energy per unit quantity of

gross floor area
Recurrent Building
embodied energy type Sources Life span
(GJ/m2)
6.32 Office Yohanis & Norton, 2002 50
6.5-6.8 Commercial Cole & Kernan, 1996 50
10.2-20.4 Commercial Howard & Sutcliffe, 1994 (cited in Cole 60
& Kernan, 1996)
9.9 Residential Pullen, 2000b 50
Table 3.3 shows that recurrent embodied energy ranges from 6.32 to 20.4 GJ/m2 with a
life span of 50 to 60 years. The wide range of recurrent embodied energy reveals that
differences life expectancy assumptions, maintenance and refurbishment frequency and
climatic conditions may affect the calculation. Research suggests that the recurrent
embodied energy may be greater than the initial embodied energy depending on the
number of years involved (Cole & Kernan, 1996).
Embodied energy in building services
The next significant component of total embodied energy calculation is the embodied
energy of building services such as electrical, plumbing, mechanical and water supply.
This component is the most difficult to assess according to Cole and Kernan (1996).
Most of the information found in the literature is based on a percentage allowance of
the total embodied energy. In some embodied energy calculations, building services
have been disregarded, as the level of information in the design and construction is
largely unknown or unavailable at the time of the research. In addition, the embodied
energy coefficients for the materials and components used in building services are
insufficient in that there are not enough of them to be used. More work needs to be done
in this area in order to allow an accurate measurement of embodied energy of building
services. Table 3.4 (see next page) summarises the percentage allowance of embodied
energy of building services in the literature.
78
Table 3.4 Summary of percentage allowance of embodied energy of

building services
Embodied energy of Building Sources
building services (%) type
19 Residential Treloar, 1996a
20 University Pullen, 2000c
20-25 Commercial Cole & Kernan, 1996
22.8 Office Yohanis & Norton, 2002
Building services must also be repaired, maintained and replaced at regular intervals
making them one of the most significant categories of recurrent embodied energy (Cole
& Kernan, 1996). Kirk and Dell’Isola (1995) contend that building services are required
to be maintained yearly and replaced every five to 35 years.
Embodied energy in furniture and fittings
Embodied energy research has typically focused on the structure and finishes of a
building. Not much study has been carried out on furniture and fittings and, typically,
embodied energy calculations do not include the initial and recurrent embodied energy
of furniture and fittings (McCoubrie & Treloar, 1996; Treloar et al., 1999). This is
because there is a large variety of furniture and fittings used in buildings and there is
insufficient information on the embodied energy coefficient for the calculation.
However, in accordance with Treloar et al. (1999) furniture and fittings are significant
when estimating embodied energy.
Furniture and fittings are often used in the initial construction and fit-out of a building.
Furthermore, they are often consumed several times over during the life of a building.
Compared with other building elements, furniture and fittings have high replacement
rates and that may contribute significantly to the calculation of recurrent embodied
energy over the life of a building (Treloar et al., 1999).
Treloar et al. (2001a) state that while the initial embodied energy in furniture and
fittings was small (around 10 percent of the initial embodied energy of the building),
the energy embodied in furniture and fittings used over the building’s life cycle
represented about the same amount as the life cycle operational energy. Treloar et al.
79
(1999) calculate the life span of furniture and fittings as approximately five to seven
years. That means that for a 40-year life span, the churn rate for furniture and fittings
would be approximately 560 percent. Treloar et al. (1999) also found that the initial
embodied energy for furniture and fittings is approximately 1.5 GJ/m2 of gross floor
area, and the recurrent energy added further 8.4 GJ/m2 to the total embodied energy
calculation. The initial and recurrent embodied energy of furniture and fittings are, thus,
equivalent to about 31 percent of the total life cycle delivered energy of a building
(McCourbie & Treloar, 1996; Treloar et al., 1999).
These results are stunning, showing that around one third of the total building energy is
consumed by the furniture and fittings alone. However, the results are only based on a
single scenario and on contentious assumptions. For example, the direct energy of the
manufacturing process was based on an allowance of 15 percent of the total embodied
energy, an assumption that needs validation by further research. Additionally, the life
cycle of furniture and fittings varies greatly according to the type of furniture, the way
the furniture is used and changes in fashion. These are critical in the calculation of
replacement rates. Most furniture can also be re-used or refurbished making energy-
implication modelling very difficult. The research needs to be updated to include a
greater number of case studies to further improve the analysis results. In addition, the
idea of replacing furniture and fittings every five years appears peculiar because their
life span varies greatly between different furniture items.
Owing to the high replacement rates, even though the research is primitive, the
importance of the embodied energy of furniture and fittings cannot be denied. Further
research is required to break down the furniture and fittings into their respective basic
elements and to collect data on the direct energy consumption of furniture
manufacturing processes such as administration, storage and transport. The outcome,
whilst important for facilities managers and building owners who select items for fit-
out, is also critical for furniture designers. If furniture is designed to be more durable
there are potentially large savings through reduced replacement rates.
80
Energy use during the demolition
At the end of the useful life of a building, energy is used for demolition and transport.
This energy is another significant part of life-cycle energy analysis. Current demolition
practice is a high energy user and landfill supplier. It is difficult to estimate the energy
used during demolition as predicting such energy consumption is approximately 50 or
more years in the future. It is also difficult to predict the useful life of a building
(Yohanis & Norton, 2002). The method of demolition, the energy implication of any
materials or components’ re-use or recycling and the importance of salvaging of
materials at a future date are difficult to assess at the present time.
Published figures on the actual amount of energy associated with demolition and
recycling capability are limited. Christophersen et al (1993, cited in Pullen & Perkins,
1995) state that demolition energy is about 2 percent of the total initial embodied
energy. Cole and Kernan (1996) suggest about 1–3 percent of the total initial embodied
energy. However, these figures are highly uncertain, as details of what is included in the
demolition process and whether transportation is included in the calculations are not
provided.
Due to the high degree of uncertainty surrounding demolition processes and the
numerous unknown variables, demolition energy was not considered in most of the
research studies of embodied energy (Cole & Kernan, 1996).
3.3.6 Embodied energy measurement tools
Calculating embodied energy intensity is an enormous task, which involves using the
data from input-output tables and other national and international studies (Treloar,
1997; Tucker et al., 1998; Treloar, 2001b). Recently, information technology has been
used to enhance the study of embodied energy with CAD-based embodied energy
modelling underway since 1993 (Edwards & Stewart, 1994). Embodied energy
consumption and other atmospheric emissions are demonstrated and measured using
three-dimensional CAD models, which drastically simplifies the work of estimating
embodied energy (Edwards et al., 1994; Ambrose, 1997; Tucker et al., 1998; Johnstone,
81
2001). A CAD based modelling approach is becoming more attractive as this evaluation
technique is easy to use, quick to apply and reliable. Three-dimensional CAD modelling
enables embodied energy impacts to be quantified as a total for the building, per
element, per square metre of floor area and for each type of construction material. It
will also facilitate comparisons between the embodied energy impacts of alternative
construction materials, aiding design decision-making.
APDesign is one of the popular three-dimensional CAD packages used in Australia. It

is designed to allow the calculation of embodied energy values, building mass data and
atmospheric emissions from the three-dimensional CAD drawings (Tucker et al., 1998).
Another is Ecotech2, a conceptual environmental design tool for a three-dimensional
geometric modelling of initial capital and running costs of projects which also provides
life-cycle assessment of materials throughout the design stage.
A further package, LCAid3, was developed in Australia by the Department of Public

Works and Services (now known as Department of Commerce) Environmental Services
and is designed to evaluate the environmental performance and identify environmental
impacts over the building life cycle. It is particularly useful for measuring embodied
energy, and the data library contains the up-to-date embodied energy intensity of
building materials and their components (Hall & Peshos, 2000). LCAid also provides
an integration of environmental software such as Ecotect and the Boustead Model, and
can input material data from most CAD models.
ENVEST4 was developed by the Building Research Establishment in the UK as a

software tool to assess life cycle energy consumption of buildings, the system uses
ecopoints for measurement. However, as Scheuer et al. (2003) state, the software has
limited usage in assessing the environmental impacts from a life cycle perspective due
to the continuing data limitations and a large variety of construction techniques and
materials choices.
2
Ecotech—http://fridge.arch.uwa.au/ecotect
3
LCAid—http://asset.gov.com.au/dataweb/lcaid
4
Envest—http://www.bre.co.uk
82
Energy Express5 was developed by the CSIRO Energy and Thermofluids Engineering
in 2003. The tool is designed to quantify the thermal performance of commercial,
industrial and domestic buildings and is now at the beta testing stage. There are many
similar systems such as SimaPro and LISA, which are also widely used in this respect.
LCAid is the chosen tool used to measure total embodied energy consumption of the
sample of 20 high school projects examined in this research because the different
manufacturing processes for materials, components, and fuel types makes the UK-
developed ENVEST software less useful for Australian projects. At the same time,
Energy Express is only at the beta testing stage and full development is not yet
available. As LCAid was developed for an Australia context and has a comprehensive
data library which will be a useful tool to measure embodied energy.
3.3.7 Critique of current methods used to measure embodied energy
Calculating total embodied energy involves estimating the quantities of materials to be

used in a building. Traditionally, calculating total embodied energy consumption can be
estimated using a bill of quantities which normally breaks down building works by
trades (Edwards & Stewart, 1994; Treloar et al., 2001a). Embodied energy intensity can
be inserted into the relevant location in accordance with the trade breakdowns and the
total embodied energy can then be summed. However, this method may not be practical
as all the items may need to be converted to per unit mass of materials as most
embodied energy values are expressed as Megajoules or Gigajoules per unit mass. This
is a time-consuming and labour intensive approach. Furthermore, a copy of the bill of
quantities may not always be available as using bills of quantities in the building trade
is declining in some countries (Edwards & Stewart, 1994). Computer software may
help to reduce the overall workload of measuring total embodied energy, but may not
always be available or may be too expensive to use.
5
Energy Express—http://www.cmit.csiro.au
83
Calculating an embodied energy coefficient6 is important in the life cycle energy

analysis of buildings. Nevertheless the accuracy of embodied energy coefficient is
highly controversial (Pears, 1996; Pullen, 2000a; Treloar et. al., 2001b). Embodied
energy intensity varies over different countries and years due to variations in raw
material quality, climate, manufacturing processes, fuel types and distance from
markets. These will all contribute to variations in calculating the results (Cole &
Rousseau, 1992; Edwards & Stewart, 1994; Lawson, 1996b; Pears, 1996; Pullen, 1996).
Pears (1996) states that most publications and computer software used to calculate
embodied energy in building materials and components are based on a single source of
information. This single source of information may represent the national averages or
just simply be based on a single supplier. Hence, the accuracy and reliability of
embodied energy coefficients are very much in doubt.
Pears (1996) goes on to explain that variations may occur from different research
methodologies, dissimilar production processes and sources of information. He states
that based on the sources of information, calculating embodied energy coefficients
using primary energy is different from a calculation which uses secondary energy with
results that may end up approximately 30 to 40 percent apart.
Pullen (1996 & 2000a) explains the possible errors that may occur in the use of
different methods when measuring embodied energy values. If process analysis is used
in the calculation, only direct energy consumption will be included for manufactured
building materials or components, unless a very extensive analysis has been undertaken.
This method can be significantly incomplete due to the extreme complexity of the
upstream requirements for goods and services (Cole & Rousseau, 1992; Lenzen & Dey,
2000; Treloar et al., 2001a).
In process analysis indirect energy, such as upstream energy used to extract, prepare
and transport all the raw materials and downstream energy used to transport the finished
product to the market place, are not included in the embodied energy coefficient
6
Embodied energy coefficient is defined as a numerical expression of the energy directly and indirectly
to manufacture a product or component. It is usually expressed as GJ or Mk per unit element.
84
calculation. Energy used to manufacture the production plant and other equipment may
also not be included in the calculation using process analysis (Pullen, 2000a; Treloar et
al., 2001b). Nevertheless, the process method can be very accurate but it is only
relevant to the particular system considered and can be subject to substantial
inconsistencies (Treloar et al., 2001a).
Pullen (1996 & 2000a) explains that input-output analysis is also adversely affected by
the incomplete methodology used to calculate embodied energy values. Input-output
analysis is based on government data sources and is used to measure both direct and
indirect energy consumption. Nevertheless, this methodology requires a significant
number of assumptions to be made about the energy tariffs and material prices in the
conversion of the economic data to energy data. Some manufacturing sectors will pay
different prices for energy and as this information is often confidential, it cannot be
used in the calculation (Lenzen & Dey, 2000; Pullen, 2000b). The widely differing
production processes may also contribute to the variations of embodied energy values
and are not reflected in this method (Pullen, 2000a; Treloar et al., 2001b). However, the
results of input-output analyses are representative of the national average and are
considered to represent a consistent approach across the range of building materials
(Pullen, 2000b; Treloar et al., 2001a).
Hybrid analysis combines the benefits of both process analysis and input-output
analysis to measure embodied energy intensity. Nevertheless, this method also suffers
the same incompleteness and limitations of the other two methods (Treloar et al.,
2001b). The hybrid method is, however, complementary, reducing the errors associated
with both techniques so that uncertainty in the estimate of the total energy requirement
for a large electricity plant can be reduced to less that 10 percent (Lenzen & Dey,
2000).
Cole and Rousseau (1992) state that the differences in the energy intensity values may
be due to a lack of clear definitions and system boundaries in relation to calculating
energy intensity values. Current embodied energy values are calculated on the use of
energy sources based on fossil fuels. Renewable energy sources such as solar, wind and
wave power are not presently considered in embodied energy impact studies (Edwards
85
& Stewart, 1994) because they only occupy a small portion of energy production. They
may become more important in the future but in the meantime, there is no way to check
and no information available on which to base calculations.
Pullen (2000a) says the factors affecting embodied energy values include:
• different locations and possible variations in the production processes,
• possible improvement in process efficiency over time,
• different methods of estimating embodied energy,
• some estimates that do not consider all of the energy inputs to the production
process,
• whether the values are based on delivered or primary energy, or
• whether the fuel value of the product is included as part of the embodied energy.
Such deviations in embodied energy intensity calculations may provide misleading data
on the low energy materials and components and may also distort the results obtained
for a building’s life cycle energy analysis. It is therefore important to determine a set of
guidelines, or methodologies, to monitor calculations of embodied energy values and
the type of materials to be included (Pears, 1996). However, such a methodology which
prefers one environmental material over another may lead to conflict or confusion
amongst material manufacturers and consumers. Treloar (1996b) suggests a technique
which breaks down the input-output model into embodied energy pathways. This way,
the errors of double counting and assumptions made when calculating embodied energy
coefficients can be minimised (Treloar et al., 2001b). The purpose of breaking down the
input-output model is to determine the viability of validating embodied energy paths
that represent 90 percent of the overall energy intensity of the residential building sector
(Treloar et al., 2001b).
The total embodied energy usage will be calculated for a sample of 20 high school
projects and included in a sustainability index developed for this research. Computer
software called SINDEX, based on the concept of a sustainability index, has been
developed in this research to include embodied energy in the decision-making process.
Detail development of SINDEX is included in Chapter Nine of this thesis.
86
3.3.8 Operational Energy
Operational energy is the main focus of energy efficiency studies (Howard & Roberts,
1995). Operational energy is also called ‘in-use’ energy consumption, which refers to
the energy used for heating, cooling, ventilating, lighting, powering appliances and
equipment. The main purpose of operational energy usage is to provide thermal and
non-thermal comfort for building occupants.
Operational energy usage starts when a building is completed and occupants start to
move in. It will continue until the building is finally demolished. Operational energy is
an important area of lifetime energy consumption. The longer the life span of a building
the more in-use energy is required. In addition, the operational energy consumption
multiplies as the building gets older due to systems becoming inefficient.
Operational energy usage varies considerably with building use patterns, prevailing
climate and season, and the building’s efficiency and its systems. It is also directly
affected by the way the building is used and managed (Cole & Kernan, 1996; Lawson,
1996b). The varying climate from location to location throughout the year will lead to
considerable differences in energy use in heating and cooling between different
buildings. Routine maintenance and repair will also affect energy. The level of energy
used relies heavily on system efficiency which itself depends on adequate maintenance.
Inadequate maintenance will jeopardise a building’s normal functions over its physical
lifetime and can drastically increase energy consumption.
The total operational energy consumption also depends on the building’s life
expectancy. There is no doubt that the energy used to operate a building is by far the
largest component of life-cycle energy analysis and is probably the reason why it has
attracted most research attention. In addition, building designers can contribute to the
planned objective of energy conservation (Lawson, 1996b).
Operational energy is usually expressed in terms of energy per unit of floor area per
annum (MJ/m2/year). It is calculated by multiplying the energy use per year by the life
span of a building (e.g. 50 years) to derive the total operational energy. There are
87
usually two approaches to estimate operational energy. The first is collecting data on
energy usage based on the energy bills for electricity and gas. An average energy
consumption of various fuel types is usually used in research studies. However,
operational energy estimated using this approach may be based on delivered energy
instead of primary energy. Researchers regard the use of primary energy as a better
representation of energy used (Cole & Kernan, 1996; Fay & Treloar, 1998; Pullen,
2000b).
Besides collecting actual energy consumption from energy bills, computer software is
also used to estimate the energy costs to heat and cool the building. Computer software
such as NatHERS, CHEETAH, TEMPZON, TRNSYS, BUNYIP, DOE2 and
CHEENATH are commonly used in operational energy studies (Fay & Treloar, 1998;
Department of the Environment and Heritage, 2001; Matthews & Treloar, 2001). The
computer simulation programs are complex, making them difficult to use and are
incapable of modelling complex human behaviour. The results from computer software
may be used as indicative only and manual adjustment may be required to tailor the
program to allow for relevant variations in a particular project or particular environment
(Fay & Treloar, 1998). Despite these limitations, computer simulations allow large
numbers of variables to be modelled and their impact evaluated for a building that is
going to be built or refurbished (Fay & Treloar, 1998; Tucker et al., 1998; Karlsson et
al., 2000).
A number of studies have been carried out on different types of buildings to estimate
the annual operational energy consumption based on gross floor area. Tucker et al.
(1998) suggest that the annual energy usage of a typical house is 157.30 GJ/m2 with
heating and cooling loads the most significant contributor.
However, Pullen (2000b) estimates the average annual energy usage of 25 houses in
Adelaide to be 0.8 GJ/m2 (approximately 132 GJ) based on energy bills. A primary
energy factor was applied to convert the figure into primary energy terms. The figure is
lower than the figure suggested by Tucker et al. (1998), but compares well with the
research carried out by Williamson et al. (1993, cited in Pullen, 2000b) which found the
figure of 0.7 GJ/m2. Unfortunately, the detail of the research study of Williamson et al.
88
such as system boundary and research methodology was not available in the literature
for further comparison. These figures are higher than the research carried by Treloar et
al. (1999) who suggest the figure is 0.4 GJ/m2.
In commercial construction, Oppenheim (1995) finds the operational energy to be

0.65 GJ/m2 for an office building in Canberra. Cole & Kernan (1996) state that the
annual operational energy per square metre of gross floor area is in the range of 0.96 to
1.64 GJ/m2. These figure are high side when compared with the Building Owners and
Managers Association of Australia’s target figure in 1994 (cited in Pullen, 2000c),
which is in the range of 0.5 to 1 GJ/m2.
For higher education buildings, Pullen (2000c) studied a university campus in South
Australia and arrived at a figure of 0.5 GJ/m2 for a 60-year life span. This figure was in
the mid range of the figure provided by a survey of higher education carried out by the
Queensland University of Technology, Brisbane in 1999 (cited in Pullen, 2000c) of
0.3 to 1 GJ/m2.
The variations in the operational energy consumption can be partially explained by the
unclear nature of the energy terms used, i.e. whether these figures are based on
delivered, or primary, energy. Additionally, some of the results are derived using
computer simulation whilst others are based on the average annual energy consumption
from energy bills. The difference in the methodological approach may contribute to the
wide range of research results.
Energy usage is directly affected by the use pattern. With commercial usage, full
heating/cooling loads may be expected in daytime during the week for the whole year
whilst for domestic usage full loads may only apply to nights and weekends. For higher
education, the full load of energy usage may only be relevant to daytime during the
week for about 40 weeks of the year. These differences in the usage pattern may make
comparative analysis extremely complex.
The facilities that are available in different types of building may also contribute to
different energy consumption. In domestic usage, only basic facilities such as cooking
89
appliances and electrical goods (such as white goods, air-conditioning, etc.) are
required. However for commercial and higher education use buildings, more complex
facilities are required such as chiller plants, generators and lifts. These differences in
the annual operational energy result per square metre of gross floor area obtained from
the literature make them difficult to compare. Nonetheless, the building industry has
recognised the high energy usage in buildings and has focused its efforts for the past 20
years on conserving energy in order to reduce building operational energy consumption.
3.3.9 Embodied energy versus operational energy
Operational energy is always the main focus of reducing energy consumption in

buildings (West, 1995; Treloar & Fay, 1998; Pullen, 2000b; Treloar et al., 2000b; Chen
et al., 2001). Over the last decade, knowledge of global warming and depletion of non-
renewable resources has encouraged a more comprehensive approach to life cycle
energy analysis and it has become a major interest to researchers in minimising total
energy use in buildings (Fay & Treloar, 1998; Pullen, 2000b). As part of life cycle
analysis, indirect energy use through building materials manufacture is gaining
increasing attention and is considered to be an important issue in environmental-
friendly developments (Pullen, 2000b). Pierquet et al. (1998) state that the embodied
energy in construction materials can add up to many years’ worth of operational energy
in an energy efficient house.
Environmental impact from energy use ensures that the energy embodied in building
materials has now become of prime importance (Weir & Muneer, 1998; Treloar et al.,
2001b). As Pears (1996, p.15) states:
… much work on embodied energy aims to specify representative embodied
energy values for different materials produced or supplied in a given
country or region, so design can choose environmentally-preferred
materials, or to assess the embodied energy associated with various
activities.
The knowledge of energy embodied in building materials can help designers to choose
low embodied energy materials. Edwards and Stewart (1994, p.22) suggest that:
90
… embodied energy impacts are best studied at an early stage in the design
process of buildings, when the effect of using alternative materials … can be
investigated, preferably before any major design decisions are taken.
Research by Pullen and Perkins (1995), investigating the embodied energy of 10 brick
veneer houses in Adelaide, revealed that embodied energy was about 85 percent of the
heating and cooling requirement and 23 percent of the total operational energy over an
80-year life cycle.
In another study carried out by Oppenheim and Treloar (1995) on the embodied energy
in the office building materials, the total embodied energy was estimated to be equal to
around 21 to 37 years of the operational energy of those buildings. Cole and Kernan
(1996) also undertook a study on office buildings using three different kinds of
materials, namely timber, concrete and steel. They discovered that the total embodied
energy of a timber building is equivalent to approximately 34 years of operational
energy. The same building constructed using concrete or steel will definitely have
higher embodied energy consumption as both are high energy intensity materials.
Furthermore, other research estimates that the total embodied energy consumption can
correspond to around 15 to 20 years of operational energy (Treloar, 1996b; Pullen,
2000a). Tucker et al. (1998) state that buildings have a significant impact on the
environment due to the energy embodied in construction materials. These studies
provide very similar results with a significant portion of total energy consumption of
buildings embodied in the material.
A further complication when comparing operational energy and embodied energy is

that it is not always certain whether energy estimates have been expressed in terms of
the delivered or primary forms of energy (Pullen, 2000b). Taking into account these
research results, embodied energy cannot be ignored in the energy management of
buildings. Consideration should be given to the specification of materials with low
embodied energy as a contribution to reducing total energy consumption and
greenhouse gas emissions (Pullen, 2000a).
91
The energy required to manufacture building materials and components is rarely

revealed in marketing energy efficiency during the operational phase. In contrast, in
economic evaluation, both the capital cost and operating costs are taken into account in
life cycle costing (West, 1995; Treloar & Fay, 1998). Further, research on increasing
operational energy efficiency alone, such as heating or cooling buildings, may not result
in minimum energy consumption in an overall life cycle sense as additional embodied
energy may be required through additional thermal insulation, for example. Energy
efficiency should be considered in a life cycle energy analysis in which initial and
recurrent embodied energy both play a role.
3.4 CONCLUSION
This chapter presented a literature review of the relationship between construction and
the environment. The literature has revealed that the construction industry undoubtedly
shares the responsibility of conserving natural resources and protecting the
environment. The principle of sustainable construction, even though it is vague in its
definition, is still the goal. The future direction for construction is a more responsible
attitude and more environmentally friendly practices.
A further issue with environmental degradation is the context of energy consumption by

the built environment. From the literature review it is clear that energy consumption is a
significant field of research as it relates to depleting non-renewable resources and
contributing to environmental pollution. It is particularly important for construction as
it is the major consumer of global energy sources. For the goal of sustainable
construction to be achieved, life cycle energy analysis of built projects and facilities is
essential.
The literature review highlights a number of issues surrounding sustainable

construction and energy consumption. The information provided in this chapter
provides the platform for further research on the conceptual development of the
sustainability index for project appraisal which follows in the next chapter.
92
_______________________________________________________________________
CHAPTER
FOUR
_______________________________________________________________________
CONCEPTUAL FRAMEWORK OF A SUSTAINABILITY

MODEL FOR PROJECT APPRAISAL
4.1 INTRODUCTION
Construction has been beset with problems ranging from excessive consumption of
global resources, both in terms of construction and building operation, to the pollution
of the surrounding environment (Spence & Mulligan, 1995; Uher, 1999). As suggested
in the previous chapter, the construction industry is closely related to environmental
degradation. Solutions are already being researched with goals such as minimising the
impact of construction on the environment, recycling building materials to reduce
natural resource depletion, and reducing construction wastage from on-site processing
(Uher, 1999).
Research on green building design and using building materials to minimise

environmental impact is also underway. However, relying on the design of a project to
achieve the goal of sustainable development, or to minimise impacts through
appropriate management on site, is not sufficient to handle the current problem. The
aim for sustainability assessment goes even further on a project and it is essential to
consider its importance at an early stage, before any detailed design or even before a
commitment is made to go ahead with a development. However, little or no concern has
been given to the importance of selecting more environmentally friendly designs during
the project appraisal stage; the stage when environmental matters are best incorporated
(Lowton, 1997). The goal of ecologically sustainable development should be considered
as soon as possible in a project’s life in order not to waste time, effort, money and
resources.
Chapter 4: Conceptual framework of a sustainability model for project appraisal
The main objectives of this chapter are to investigate the current methods used to assess
the environmental performance of buildings and to present the concept of a new, multi-
dimensional approach to assess sustainability. This research firstly examines the
development, role and limitations of current methods in ascertaining building
sustainability, then the new approach will be discussed. The final section of this chapter
presents the concept of developing a sustainability model for project appraisal based on
the multi-dimensional approach discussed earlier, that will allow alternatives to be
ranked. The mathematical model for the sustainability index is discussed in detail in the
next chapter.
4.2 ENVIRONMENTAL BUILDING ASSESSMENT METHODS
4.2.1 Introduction
There is now concern being expressed about how to improve construction practices in
order to minimise their detrimental affects on the natural environment (Cole, 1999a;
Holmes & Hudson, 2000). The environmental impact of construction, green buildings,
designing for recycling and eco-labelling of building materials have captured the
attention of building professionals across the world (Johnson, 1993; Cole, 1998a;
Crawley & Aho, 1999; Rees, 1999). In addition, building performance is now a major
concern of professionals in the building industry (Crawley & Aho, 1999) and
environmental building performance assessment has emerged as one of the major issues
in sustainable construction.
According to Cole (1998a), the definition of building performance varies according to

the different interest of parties involved in building development. For instance, a
building owner may wish his building to perform well from a financial point-of-view,
whereas the occupants may be more concerned about indoor air quality, comfort, health
and safety issues. Therefore, an ideal environmental building assessment will include all
the requirements of the different parties involved in the development. However, using a
single method to assess a building’s environmental performance and to satisfy all needs
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of users is no easy task. Building performance assessment methods are currently one of
the emerging areas in research and development (Cole, 1998a; Cooper, 1999; Holmes &
Hudson, 2000).
4.2.2 An overview of environmental building assessment methods
Building designers and occupants have been concerned about building performance for
a long time (Cooper, 1999; Kohler, 1999). Considerable work has gone into developing
systems to measure a building’s environmental performance and physical facilities over
its life cycle. Separate indicators, or benchmarks based on a single criterion, have been
developed to monitor aspects of building performance such as air quality and indoor
comfort. In spite of this, a comprehensive assessment tool is essential to provide a
thorough evaluation of building performance against a broader spectrum of
environmental criteria. The release of the Building Research Establishment
Environmental Assessment Method (BREEAM) in 1990 was the first comprehensive
building performance assessment method. In this research some of the popular
environmental building assessment methods were examined in detail and they are
broadly divided into two categories, local and international methods.
Environmental building assessment methods used locally
BREEAM—BREEAM was the first environmental building assessment method in the

world to be developed and remains the most widely used (Larsson, 1998). The Building
Research Establishment developed the system in 1990 in collaboration with private
developers in the UK. It was launched as a credit award system for new office
buildings. A certificate of the assessment result is awarded to the individual building
based on a single rating scheme of fair, good, very good or excellent. The purpose of
this system is to set a list of environmental criteria against which building performances
are checked and evaluated. This system can be carried out as early as at the initial stages
of a project. The results of the investigation are fed into the design development stage
of buildings and changes can be made accordingly to satisfy pre-designed criteria
(Johnson, 1993).
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Since 1990, the BREEAM system has been constantly updated and extended to include
assessment of such buildings as existing offices, supermarkets, new homes and light
industrial buildings (Yates & Baldwin, 1994). Crawley and Aho (1999) suggest that the
system is successfully alerting building owners and professionals to the importance of
environmental issues in construction. BREEAM has been adopted worldwide, with
Canada, Australia, Hong Kong and other countries developing their own environmental
building assessment methods largely based on the BREEAM methodology.
BEPAC—The Building Environmental Performance Assessment Criteria (BEPAC)

were developed by the University of British Columbia in 1993. BEPAC is a more
detailed and comprehensive assessment method than BREEAM, but its use is limited to
the evaluation of new and existing office buildings (Cole, 1994 & 1998a). It is similar
to BREEAM as it evaluates the environmental merits of buildings using a point system
(Crawley & Aho, 1999). It has a set of environmental criteria related to interior, local
and global scales based on objective performance standards. A certificate of design and
management performance is offered to the building on completion of the assessment.
LEED—In 2000, the US Green Building Council developed LEED, Leadership in

Energy and Environmental Design7 through a consensus process (Crawley & Aho,
1999). It is a green building rating system for commercial, institutional and high-rise
residential new construction and major renovation in five areas of sustainability: water
efficiency, energy and atmosphere, materials and resources, and indoor environmental
quality. It adopts a whole-building approach that encourages and guides a collaborative,
integrated design and construction process. It is also a voluntary and market-based
assessment method that is intended to define a green building and is very simple to use.
However as Larsson (1999) states, while it is widely accepted and used by the
community of building owners and managers because of its simplicity, its completeness
in assessing building performance is in doubt.
7
LEED—http://www.usgbc.org
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EPGB—The Environmental Performance Guide for Building (EPGB)8 was developed

by the Policy Services Division of the NSW Department of Public Works and Services
(now the Department of Commerce) in Australia. The framework is largely based on the
Green Building Challenge (GBC) performance assessment framework (described later
in this section) by using a rating method to assess buildings. The guidelines cover the
areas of resource consumption, environmental loadings, quality of internal environment,
functionality and wider planning issues.
NABERS—The Department of Environment, Australia is developing the National

Australian Building Environmental Rating System (NABERS)9 as a performance-based
approach to promote sustainability in the built environment during operation. It
provides an assessment tool allowing comparisons to be drawn between different
designs and investment options, and assesses a building’s operational environmental
impact.
The system evaluates things such as energy and water efficiency, site conservation and
biodiversity, indoor air quality, efficiency of resource use and other relevant
environmental factors.
ENER-RATE—Soebarto and Williamson (2001) developed ENER-RATE software to

be a designer-oriented environmental performance rating tool. It is intended to assist
designers to test their strategies against different sets of criteria. The system adopts a
multi-criteria decision-making approach to assess energy use, indoor air quality,
thermal comfort, operating plant load, cost and other environmental degradation. The
design proposals are compared with an automatically generated reference building,
based on the principle rules of ASHRAE 90.1. The software is still in a developmental
stage. However, once it is completed it will be the only software that can be used to
consider sustainability issues at the design development stage (Soebarto & Williamson,
2001).
8
EPGB—http://www.asset.gov.com.au
9
NABERS—http://www/ea/gov.au/industry/waste/constructing/index.html
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CPA—Comprehensive project evaluation (CPA) is an assessment methodology that

embraces all economic, social and environmental costs and benefits in project
appraisals developed by the Royal Institution of Chartered Surveyors (RICS) and the
Environment Agency. CPA is an appraisal framework which enables sustainable
development issues to be incorporated into the development evaluation process. CPA is
different from a building performance method as it is used to assess projects during the
development process using a combination of financial and economic appraisals to
provide monetary values where possible, and scoring and weighting techniques for
measuring impacts (Woolley et al., 1999). CPA provides a mechanism to evaluate the
nature of the impacts, select the most appropriate analysis method, incorporate local
sustainability priorities into the analysis, and a framework to select the best
development option (RICS, 2001). The framework uses a multi-criteria analysis
approach to assess environmental and social impacts.
CPA is a checklist type evaluation framework that requires an independent assessor to

undertake the assessment. Subjectivity is inevitable but it is a limitation in most of the
environmental building assessment methods. CPA is more useful than most
environmental building assessment methods as cost is measured based on the technique
of cost benefit analysis. However, energy and other social and environmental issues are
only scored by the assessor. Any assessment method that does not quantify criteria as
much as possible is potentially problematic. Energy consumption, for instance, is
important as it reflects resource allocation and there are methodologies readily available
for such measurement. CPA does not allow other parties to participate in the evaluation
process, except when determining priorities, which is another shortcoming of the
methodology. CPA’s usefulness may be to provide an additional service area for the
planners, chartered surveyors and others in the construction industry, but may not be
useful to assess a building’s environmental performance.
Other systems such as the Total Quality Design and Assessment System of Austria,
ESCALE of France, EcoProfile of Norway; Eco-quantum of the Netherlands and HK-
BEAM of Hong Kong are based on the BREEAM model (Davies, 2001; Todd et al.,
2001; Lee et al., 2002).
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Environmental building assessment method used internationally
GBC—Since 1995, the environmental building assessment method has moved towards
an international collaborative effort to develop an environmental building assessment
tool for international purposes. Known as the Green Building Challenge (GBC), thirteen
countries collaborated to take a comprehensive look at environmental issues within
buildings (Larsson, 1998; Rohracher, 2001). GBC’s objectives are to establish
international benchmarks for building performance and to offer participating countries
help in developing regionally sensitive assessment models (Kohler, 1999). Some
aspects of BREEAM also served as a model for the GBC framework (Todd et al.,
2001). GBC developed through different stages from GBC 98 to GBC 2000 (Cole,
1998a; Larsson & Cole, 2001). Initially, GBC was difficult to use as a design tool
because of its complexity and the data entered into the GBTool were not clearly linked
to the scoring system (Todd et al., 2001; Soebarto & Williamson, 2001). In order to
simplify the process, GBC was implemented through software called GBTool.
BEQUEST—The Built Environment Quality Evaluation for Sustainability through

Time (BEQUEST) system was an international project funded by the Research and
Technical Development Directorate of the European Commission through the Fourth
Framework Programme in 1997. The project’s main objective was to identify a common
language and framework to assess and implement urban sustainability (Cooper, 1999;
Deakin et al., 2002).
The BEQUEST represents a similarly successful international research project to GBC

for creating greater collaboration of international partners at a multi-disciplinary level
using the BEQUEST Extranet as the communication network. The research project
combines the diverse knowledge and expertise of a wide range of environmental
researchers, professionals, infrastructure providers and managers to produce a
framework, directory of assessment methods and set of procurement protocols which
are linked together in the form of a tool-kit (Curwell et al., 1998). The vision of the
BEQUEST is to enhance sustainability issues in urban decision-making.
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The framework of the BEQUEST is different from the existing environmental building
assessment methods such as BREEAM for assessing individual building sustainability.
Instead, the BEQUEST aims at advising users on incorporating sustainability in urban
design. As Kohler (2002) suggests, the BEQUEST is a framework for the preparation of
projects for the ‘City of Tomorrow’. Indeed, the successful implementation of the
BEQUEST will no doubt enhance the sustainable development concept in urban
development.
The principle of BEQUEST is based on the four principles of sustainable development

identified by Mitchell et al (1995): to embrace environment, futurity, equity and public
participation. However, as Cooper (2002) describes, there is a lack of a clear definition
of sustainable urban development and its implementation process. Kohler (2002) further
states that the problem of valuing the different aspects of sustainable urban
development has not been explicitly identified. Thus no clear basis for future
discussions and implementation exists.
4.2.3 The role of environmental building assessment methods in the

construction industry
As the problems of natural resource depletion and global environmental degradation

become evident, building performance has become a matter of public concern. Most
building evaluation methods are concerned with a single criterion such as energy use,
indoor comfort or air quality to indicate the overall performance of a building (Cooper,
1999; Kohler, 1999). As environmental issues become more urgent, a more
comprehensive building assessment method is required to assess building performance
across a broader range of environmental considerations.
An environmental building assessment method reflects the significance of the concept

of sustainability in the context of building design and its subsequent construction work
on site. Designers aim to improve the overall performance of buildings in relation to
their effects on both the natural and man-made environments. The primary role of an
environmental building assessment method is to provide a comprehensive assessment of
the environmental characteristics of a building (Cole, 1999a). It is undertaken by
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providing a common and verifiable set of criteria and targets for building owners and
designers to achieve higher environmental standards.
Additionally, the assessment method helps to define the direction for a project and
provides information on which to make informed design decisions at all stages and to
plan effective environmental design strategies. The development of an environmental
building assessment method lays down the fundamental direction for the building
industry to move towards environmental protection and achieving the goal of
sustainability. It also provides a way of structuring environmental information, an
objective assessment of building performance, and measure of progress towards
sustainability.
Assessment methods act as a bridge between environmental goals and strategies and
building performance during the design and occupancy stages of a building. They
comprise a set of environmental criteria that are relevant to buildings, and are organised
and prioritised to reflect the performance of a building. The environmental assessment
methods satisfy three major aspects: global, local and indoor issues. They also include a
set of standard guidelines for how individual buildings are assessed and evaluated. They
are prepared in order to provide a methodological framework to assess building
performance in a broad context of decision-making, where environmental issues have a
significant role (Yates & Baldwin, 1994; Cole, 1998a; Cooper, 1999; Crawley & Aho,
1999).
Environmental building assessment methods do not just provide a methodological

framework for assessing building performance but also collect useful information to
form guidelines for remedial work in order to meet pre-designed criteria. The collected
data can also be used as feedback information for planning future projects of similar
design while offering the same level of service and amenity. The accumulated
knowledge and expertise of environmental building design contributes to the greater
consideration of environmental issues within the decision-making process, thus
minimising the environmental impacts of a building in the long term.
Environmental building assessment methods also enhance the environmental awareness
of building practices, highlighting concerns about the design and construction of more
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environmentally oriented projects. Crawley and Aho (1999) state that environmental
assessment methods might provide a means for incorporating more holistic
environmental performance requirements in national building regulations, which again
aim to significantly reduce the environmental impact of new construction. They go on
to state that although largely different from each other and designed around different
indicators, these systems nevertheless have a positive impact on reducing environmental
stress in the short term. However, work is needed to develop a universal life cycle
assessment system based on internationally agreed absolute indicators of environmental
performance (Uher, 1999).
4.2.4 Critique on the environmental building assessment methods
As stated by Cole (1998a), environmental building assessment methods contribute

significantly to the understanding of the relationship between buildings and the
environment. However, the interaction between building construction and the
environment is still largely unknown. The assessment methods have limitations that
may hamper their future usefulness and effectiveness in the context of assessing
environmental performance of buildings as discussed below.
Environmental building assessment methods used as a design tool
Environmental building assessment methods are most useful during the design stage
when any impairment for the pre-design criteria may be assessed and incorporated at
the final stage of design development. Incorporating environmental issues can be
achieved in the design process which can minimise environmental damages. Even
though these assessments are not originally designed to serve as design guidelines, it
seems that they are increasingly being used as such (Crawley & Aho, 1999; Cole,
1999a).
The more effective way of achieving sustainability in a project is to consider and to

incorporate environmental issues at a stage even before a design is conceptualised. It is
important to separate project design and project assessment as building design takes
place at an early stage and most of the outcomes of the design have already been
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established and incorporated into the final design. However, the assessment process
works the opposite way around, thus may not be useful as a design tool (Crawley &
Aho, 1999; Soebarto & Williamson, 2001). Therefore, in order for environmental
building assessment methods to be useful as a design tool, they have to be introduced as
early as possible to allow for early collaboration between the design and assessment
teams. However, apart from ENER-RATE which has been particularly designed to
assist the design process, the other assessment methods were not designed for this
purpose (Soebarto & Williamson, 2001).
Some environmental building assessment methods may be used to assess existing

buildings, such as BREEAM 4/93: An Environmental Assessment for Existing Office
Buildings. However, the usefulness of the environmental building assessment method in
this respect is doubtful as the remedial work needed to make a completed building
comply with the environmental criteria may be too extensive, too costly and time
consuming (Lowton, 1997; Crawley & Aho, 1999). For example, remedial work to
existing buildings may be impracticable or difficult to facilitate, e.g. replacing an
existing ventilation system with a more environmentally friendly system or installing
more windows to allow for natural ventilation. This assessment system has
predominantly been applied to new construction, but refurbishment and maintenance of
existing buildings are also an important part in future construction activities.
Project selection
Environmental building assessment methods are less useful for project selection as they
are used to evaluate building design against a set of pre-designed environmental criteria.
Environmental issues are generally only considered at the design stage of projects
where the effect of different development options or locations of development are
required to be considered at the feasibility stage.
Project selection starts at an earlier stage and it is at this stage that environmental issues
are best considered and evaluated (Lowton, 1997). A project may have various
development options and choosing the option that minimises detrimental effects to the
environment plays an important role in achieving sustainable goals. Lowton (1997)
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argues that environmental matters are to be considered as early as possible. If they are
not dealt with before and during the appraisal stage of a project, later alterations to the
brief will cost money and cause annoyance. Sustainability should be considered as early
as possible in the selection phase in order to minimise environmental damage, maximise
natural resources and reduce remedial costs. According to Crookes & de Wit (2002),
environmental assessment is most efficient during the identification and preparation
stages of a proposed project but current environmental assessment methods are
designed to evaluate building projects at the (later) design stage to provide an indication
of the environmental performance of buildings. However, by this stage it may be too
late to consider environmental issues, as changing the design to meet full compliance
with the environmental criteria may be costly.
Financial issues
Environmental building assessment methods focus on the evaluation of design against a

set of environmental criteria broadly divided into three major categories: global, local
and indoor issues. These tools assess several main issues including resource
consumption (such as energy, land, water and materials), environmental loading, indoor
comfort and longevity. Some assessment tools such as BREEAM, BEPAC, LEED and
HK-BEAM do not include financial matters in the evaluation framework. This may
contradict the ultimate principle of a development, as financial return is fundamental to
all projects because a project may be environmentally sound but very expensive to
build. Therefore the primary aim of a development, which is to have an economic
return, may not be fulfilled making the project less attractive to developers even though
it may be environment friendly. Environmental issues and financial considerations
should go hand in hand as parts of the evaluation framework when making decisions.
As stated in Larsson (1999), the revised GBC model will include economic issues in the
evaluation framework. This is particularly important when the decision-making process
starts from the outset at the feasibility stage where alternative options for a development
are assessed. As shown, both environmental and financial aspects should be considered
when assessing environmental concerns.
Regional variations
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Most environmental building assessment methods were developed for local use and do
not allow for national or regional variations. To a certain extent, weighting systems can
offer opportunities to revise the assessment scale to reflect regional variations and
criteria order. However, regional, social and cultural variations are complex and the
boundaries are difficult to define. These variations include differences in climatic
conditions, income level, building materials and techniques, building stocks and
appreciation of historic value (Kohler, 1999).
Many countries have adapted the BREEAM system for their own use giving rise to new
systems such as HK-BEAM and Total Environmental Assessment of Buildings in
Australia. Adjustments to customise the system include cultural, environmental, social
and economic considerations. It is unlikely that a set of pre-designed environmental
criteria could be prepared for worldwide use without further adjustments.
The GBC is the first international collaborative effort to develop an international

environmental assessment method. The prime objective of the GBC was to overcome
the shortcomings of the existing environmental assessment tools. The Green Building
Tool (GBTool) has been developed to embrace the areas that have been either ignored
or poorly defined in existing environmental building assessment methods for evaluating
buildings throughout the world. However, GBTool suffers from other shortcomings.
Crawley and Aho (1999, p.305) state that “one of the weaknesses of the GBTool is that
individual country teams established scoring weights subjectively when evaluating their
buildings”. They further state that “most users found the GBTool difficult to use
because of the complexity of the framework”. GBTool is the first international
environmental building assessment method and it is unlikely it will be used as intended
without incorporating national or regional variations. Curwell et al. (1999) think that the
approach of the GBTool has led to a very large and complex system causing difficulties
and frustration for over-stretched assessors rather than a global assessment method as
intended.
Complexity
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Environmental issues are a broad area and difficult to capture by using a set of criteria.
Consequently, environmental building assessment methods tend to be as comprehensive
as possible. For example, the BEPAC comprises 30 criteria, C-2000 comprises 170
criteria and GBTool comprises 120 criteria (Cole, 1999a, Larsson, 1999). This approach
has led to complex systems which require large quantities of detailed information to be
assembled and analysed. Typically, they tend towards generalisation in order to capture
most environmental criteria within their evaluation framework. However, this may
jeopardise their usefulness in providing a clear direction for making assessments
cumbersome. Striking a balance between completeness in the coverage and simplicity
of use will be one of the challenges in developing an effective and efficient
environmental building assessment tool.
Evaluation of quantitative and qualitative data
The assessment system accommodates both quantitative and qualitative performance

criteria. Quantitative criteria comprise annual energy use, water consumption,
greenhouse gas emissions etc., whereas qualitative criteria include the ecological value
of the site, local wind effects, and so on.
Quantitative criteria can be readily evaluated based on the total consumption level and
points awarded accordingly. For example, in BREEAM 8 credit points are given for
CO2 emissions between 160-140kg/m2 per year and more points are awarded if CO2
emissions are further reduced (BREEAM’98 for Office). However, environmental
issues are mainly qualitative criteria, which cannot be measured and evaluated using
market-based approaches within the existing environmental assessment framework.
They can only be evaluated on a ‘feature-specific’ basis where points are awarded for
the presence or absence of desirable features (Cole, 1998a). This may largely undermine
the importance of environmental issues within the decision-making process. The
accurate assessment of environmental issues involves a more complex and operational
framework in order that they can be properly handled.
Weighting
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Weighting is inherent to the systems but not explicitly and, as such, all criteria are given
equal weights (Todd et al., 2001). The GBC framework provides a default weighting
system and encourages users to change the weights based on regional differences.
However, since the default weighting system can be altered, users may manipulate the
results to improve the overall scores in order to satisfy a specific purpose (Larsson,
1999; Todd et al., 2001).
There is insufficient consideration of a weighting system attached to the existing

environmental building assessment methods. The overall performance score is obtained
by a simple aggregation of all the points awarded to each criterion. All criteria are
assumed to be of equal importance and there is no order of importance for criteria. Cole
(1998a) states that the main concern is the absence of an agreed theoretical and non-
subjective basis for deriving weighting factors. It is currently dependent on the in-depth
understanding of the environmental impact of building. The relative importance of
performance criteria is an important part of the decision if the stated objectives are to be
achieved, for example, the public sector’s opinion will definitely differ from that of the
private developer. Therefore, weighting environmental criteria should be derived on a
project-by-project basis and should reflect the objective of a development. The absence
of any readily used methodological framework has hampered existing environmental
assessment methods in achieving sustainability goals.
Measurement scales
Measurement scales are also based on a point award system and the total score obtained
for the evaluation reflects the performance of a building in achieving sustainable goals
in the industry. However, there is no clear logical or common basis for the way in which
the maximum number of points is awarded to each criterion. Most building
environmental assessment methods award their own points to environmental criteria.
Using consistent measurement scales facilitates more comparable assessment results
across countries. Benchmarking the baseline performance for assessment is another
difficult area to accurately assess in the existing assessment tools.
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4.2.5 Summary
Construction is one of the largest end users of environmental resources and one of the
largest polluters of man-made and natural environments. The improvement in the
performance of buildings with regard to the environment will indeed encourage greater
environmental responsibility and place greater value on the welfare of future
generations. There is no doubt that environmental building assessment methods
contribute significantly in achieving the goal of sustainable development within
construction. On one hand, it provides a methodological framework to measure and
monitor environmental performance of buildings, whilst on the other it alerts the
building profession to the importance of sustainable development in the building
process.
However, existing environmental building assessment methods have their limitations as

examined in this section reducing their effectiveness and usefulness. There is a
requirement for greater communication, interaction and recognition between members
of the design team and various sectors in the industry to promote the popularity of
building assessment methods. The inflexibility, complexity and lack of consideration of
the weighting system are still major obstacles to the acceptance of environmental
building assessment methods.
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4.3 THE CONCEPTUAL DEVELOPMENT OF A SUSTAINABILITY

MODEL FOR PROJECT APPRIASAL
4.3.1 Introduction
Ecologically sustainable development is the central concern of people from all

disciplines (Cole, 1999a; Holmes & Hudson, 2000). The concept of sustainability in the
context of construction is about creating and maintaining a healthy built environment
and at the same time focusing on minimising resources and energy consumption,
thereby reducing damage to the environment, encouraging reuse and recycling, and
maximising protection of the natural environment. These objectives may be achieved by
considering the most efficient option amongst competing alternatives through the
process of project appraisal at an early stage.
Following the thorough discussion on the usefulness of environmental building

assessment methods in the construction industry in achieving the goal of sustainable
development, this section sets out to conceptualise the development of a model that can
be used in project sustainability appraisals. It is argued in this section that a multiple
criteria approach may be considered in the development of a sustainability model.
4.3.2 Single or multiple dimensional assessment approaches
The decision-making process frequently involves identifying, comparing and ranking

alternatives based on multiple criteria and multiple objectives. This process frequently
occurs without conscious consideration in our daily life (Tabucanon, 1988; Nijkamp et
al., 1990). Decision-makers often emply project appraisal techniques to structure a
complex collection of data into a manageable form in order to provide an objective and
consistent basis for choosing the best solution for a situation. However, for big
decisions where millions of dollars may be involved, there is a tendency to simplify the
objectives of the project into a single decision criterion (Tabucanon, 1988). Single
criterion evaluation techniques have dominated project appraisal since World War II
and they were mainly concerned with economic efficiency (Zeleny, 1982; Nijkamp et
al., 1990; Tisdell, 1993; van Pelt, 1993b; Burke, 1999).
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Cost benefit analysis (CBA) is the leading tool in this respect and it is a well respected
appraisal technique widely used in both private and public development to aid decision-
making (Harvey, 1987; Tisdell, 1993; Perkins, 1994; van Pelt, 1994; Joubert et al.,
1997). Everything is converted into dollars, at least where possible, and the decision is
based on finding the alternative with the highest net monetary value (Hanley & Spash,
1993; Perkins, 1994; Abelson, 1996). Often financial return is the only concern in
project development, but the project that exhibits the best financial return is not
necessarily the best option for the environment. In addition, many environmental and
social considerations underlying sustainable developments cannot be monetarised
(Tisdell, 1993; Hobbs & Meier, 2000; RICS, 2001) significantly reducing CBA’s
usefulness.
Other single criterion evaluation techniques focus on energy efficiency such as energy
rating. NATHERS and ASHRAE Standard 90.1 are used to simulate energy
consumption to estimate the performance of proposed building as an aid to decision-
making (Lord, 1994; Fay & Treloar, 1998; Pullen, 2000b; Soebarto & Williamson,
2001). These methods are mainly focused on operational energy in relation to indoor air
quality and user comfort.
However, in reality, decision-making is rarely based on a single dimension. Janikowski

et al. (2000) argue that using only one assessment criterion cannot be regarded as a
correct approach. They go on to advocate that it is necessary to accept a multi-criteria
perspective that takes into account a spectrum of issues regarding a development. Since
the end of the 1960s it has been gradually recognised that there is a strong need to
incorporate a variety of conflicting objectives. An increasing awareness of externalities,
risk and long-term effects generated from development, and the importance of
distributional issues in economic development (Zeleny, 1982; Nijkamp et al., 1990)
fostered this new perspective. Thus single dimensional appraisal techniques are
increasingly controversial (Zeleny, 1982; Nijkamp et al., 1990; van Pelt, 1993b; Tisdell,
1993; Abelson, 1996).
The strong tendency towards incorporating multiple criteria and objectives in project
appraisal has led to a need for more appropriate analytical tools for analysing conflicts
110
between policy objectives (Moffatt, 1996; Powell, 1996; Popp et al., 2001). Multi-
criteria analysis (MCA) provides the required methodology to evaluate multiple criteria
and objectives in project appraisal (Voogd, 1983; Nijkamp et al., 1990; Janssen, 1992;
van Pelt, 1993b).
The multi-dimensional framework incorporates the consideration of environmental

issues in a development and it will take an important role in the evaluation approach.
Sustainability, as defined by Young (1997), is a measure of how well the people are
living in harmony with the environment taking into consideration the well-being of the
people with respect to the needs of future generations and to environmental
conservation. Young (1997) goes on to describe sustainability as a three-legged stool,
with a leg each representing ecosystem, economy and society. Any leg missing from the
‘sustainability stool’ will cause instability because society, the economy and the
ecosystem are intricately linked together. Indeed, Young (1997) explains clearly that a
measurement of sustainability must combine the individual and collective actions to
sustain the environment as well as improve the economy and satisfy societal needs.
Elkington (1997) expands the concept of sustainability to be used in the corporate

community, developing the principle of triple bottom line. Triple bottom line refers to
the three prongs of social, environmental and financial performance, which are directly
tied to the concept and goal of sustainable development. They are highly inter-related
and are of equal importance (Cooper, 2002). It is a term that is increasingly accepted
worldwide within the corporate community, and as a framework for corporate reporting
practices.
The triple bottom line concept focuses not just on the economic value as do most of the
single criterion techniques, but equally on environmental and social values. For an
organisation to be sustainable it must be financially secure, must minimise the negative
environmental impacts resulting from its activities, and must conform to societal
expectations (Elkington, 1997; Roar, 2002). The triple bottom line concept underlies the
multiple dimensional evaluation process of development. To conform with the concept,
a business to be sustainable, must deliver prosperity, environmental quality and social
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justice. Further, the triple bottom line concept has been expanded and used as an audit
approach for sustainable community development (Rogers & Ryan, 2001).
Kohler (1999), states that a sustainable building has three dimensions: ecological,
cultural, and economic sustainability. Young’s (1997), Elkington’s (1997) and Kohler’s
(1999) frameworks to measure sustainability have many similarities but Kohler (1999)
also emphasised the importance of cultural considerations. The assessment of a
sustainable building has to make explicit the particular cultural expectation which the
development has been designed to maintain (Kohler, 1999; Cooper, 1999).
Apart from this three-dimensional concept of sustainability, Mitchell et al. (1995)

describe four separate principles: equity, futurity, environment and public participation,
which underpin sustainable development, known as the PICABUE (see Figure 4.1).
Equity deals with the principle of fair shares, both locally and globally, among the
current generation. The principle of futurity is to ensure intergenerational equity within
which a minimum environmental capital must be maintained for future generations. The
integrity of the ecosystem should be preserved, and its value recognised and respected,
in order not to disrupt the natural processes essential to human life and to protect
biodiversity. The fourth principle recognises the importance of public participation in
decisions concerning them and the process of sustainable development (Mitchell et al.,
1995; Curwell & Cooper, 1998).
PICABUE is a methodological framework designed to develop sustainability indicators.

Its name is derived from the seven steps used to develop sustainability indicators to
enhance quality of life (for details refer to Mitchell et al., 1995). Cooper (1999) further
proposes that the principles of PICABUE should be addressed when environmentally
assessing buildings or cities. The PICABUE model of sustainable development has also
been adopted by the BEQUEST as the basic principle of development (Bentivegna et
al., 2002). The four principles were used to define common understanding and
terminology for sustainable development in the BEQUEST network (Cooper, 2002).
Cooper (1999) further states that only the environment directly deals with ecology
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whilst the other three principles are political and socio-economic issues that are
concerned with resource allocation and the decision-making process.
Figure 4.1 The PICABUE principle
Source: Mitchell et al., 1995
Most building performance assessment methods only tackle the principle of economics
and are inadequate in addressing the concept of sustainability (Curwell & Cooper,
1998). The public participation factor is only found in the PICABUE model and it
concerned with the general public’s participation in the decision-making process. This
is a significant part of the process as it is the public that will suffer any long-term
effects arising from decisions about developments. Indeed, the requirement for public
participation is increasing (Joubert et al., 1997) and is also in line with Principle 10 of
the Rio Declaration on Environment and Development (Curwell & Cooper, 1998).
Other concepts of multi-dimensional approaches are developed on the same basis. The
four system conditions as described in the Natural Step10 have also gained significant
attention. Karl-Henrik Robért developed Natural Step in 1989 to address environmental
issues. The first three conditions provide a framework and a set of restrictions for
10
Natural Step—http://www.naturalstep.org
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ecological sustainability. The fourth condition formulates an international turnover of

resources for society, ensuring that human needs are met worldwide (Herendeen, 1998;
Chambers et al., 2000). The Natural Step has provided a good sustainable development
business philosophy, and has been widely applied in the business and industrial sectors
(Bentivegna et al., 2002).
Giarni and Stahel developed another concept, the ‘service economy’ which seeks more
cyclical industrial and economic processes, rather than the current linear process of
production, consumption and waste (Bentivegna et al., 2002). Reusing, refurbishing and
recycling materials and components form a feedback loop in the process, aiming to
considerably reduce material flows by increasing resource utilisation efficiency and by
extending product life (Curwell & Cooper, 1998; Bentivegna et al., 2002).
From the above discussion, it is clear that project appraisal is multi-dimensional and the
aspects, as described in the PICABUE and others, have summarised the essential
components to be assessed in a development.
4.3.3 The multiple dimensional model of project appraisal
Given the previous discussion of an increased tendency to consider multiple criteria in

project appraisal, it is necessary to develop a model to facilitate multiple dimensional
assessment of criteria to aid decision-making. A sustainability index for project
appraisal is designed to bridge the gap between the current methodology which uses a
single objective approach, and the need for a multiple criteria approach in order to
incorporate environmental issues in the decision-making process. It is based on a
multiple dimensional model that embraces economic, social and environmental values.
The criteria included in the sustainability index are based on an absolute assessment
approach and are combined into a composite index to rank options for projects at the
feasibility stage. The purpose of this research is to develop a mathematical model
yielding a single index allowing development alternatives to be ranked.
In this respect, project appraisal may be considered as a continuous process, which

takes place during the early stages of a development. No matter what size of
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development, there are always many possibilities during the decision-making process
that must be assessed and judged. Generally, project evaluation goes through several
distinctive, inter-related stages. The literature describes many models for this process
but most of them use similar and, as discussed, flawed, approaches (Nijkamp et al.,
1990, Janssen, 1992; van Pelt, 1993b; Hobbs & Meier, 2000; RICS, 2001). Figure 4.2
shows the model adopted in this research. The evaluation process for a project will not
be seen as a simple linear process but follows a cyclic nature (Nijkamp et al., 1990,
Janssen, 1992; Bentivegna et al., 2002; Ding, 2002b). Each stage can supply additional
information participate in the feedback loop to provide further information for a more
precise consideration for the forthcoming stage or stages (Nijkamp et al., 1990; Ding,
2002b).
Figure 4.2 Multiple dimensional decision model of project appraisal
Defining problems Identifying alternatives
Formulating attributes,
Identifying criteria
objectives and goals
Assessing impact
Estimating weights
Feedback Determining score
Reaching a conclusion
Source: Adopted from Nijkamp et al., 1990

i) Defining problems
Project appraisal usually starts by defining a problem then formulating project

attributes, objectives and goals (van Pelt, 1993b; RICS, 2001). The project problem is
structured to provide adequate specification of objectives, and so that attributes can be
identified. In addition, project constraints such as financial, political and external will
115
also be investigated (Nijkamp et al., 1990). Financial constraints relate to the

availability of scarce resources for a development; political constraints have to be
considered when public funds are to be used; and external constraints refer to the
external effects generated through development upon the man-made and natural
environment. These constraints often govern the compilation of alternative criteria sets
in a development. Early identification of project constraints is critical to develop a more
precise set of alternatives to optimise the best solutions, or acceptable compromise
solutions, to problems (Nijkamp et al., 1990).
ii) Identifying alternatives
The next step is to identify alternatives, based on the decision problem’s structure.
Alternatives may include design alternatives, location options, technology and
development options. They are usually derived from observing the project problem and
through screening and scoping a number of possible solutions (van Pelt, 1993b; Hobbs
& Meier, 2000). At this stage, the list of possible alternatives concerns objectives which
include maximising utilities, optimising renewable and non-renewable resources, and
minimising disturbance to the environment. There is no limit to the number of
alternatives, but policy makers tend to reduce the total number in order to facilitate
decision-making. A recommended number is approximately seven because an increase
in number can create confusion and uncertainty (van Pelt, 1993b).
iii) Identifying criteria
Evaluation criteria are defined following the identification of development alternatives.

Criteria are reflections of objectives to be achieved and can be used as guidelines to
analyse impacts from each alternative (Nijkamp et al., 1990; van Pelt, 1993b; Hobbs &
Meier, 2000). Criteria about environmental effects will also be formulated and may
result in a special environmentally focused analysis of alternatives at a later stage. The
list of criteria should be sufficiently precise and comprehensive to cover the full range
of issues, but should also be limited to around eight criteria as this is the maximum
number from which most people can make meaningful and reasonable judgements
(Voogd, 1983; Nijkamp et al., 1990; van Pelt, 1993b). The decision model will focus
116
only on the aspects that are salient and eliminate those that are less attractive. If the
number of criteria cannot be reduced, a hierarchy of criteria may need to be established
to categorise them (Saaty, 1994). However, in such a situation is less than ideal, causing
the decision process to become more complicated.
iv) Assessing impact
The previously identified criteria may contain objective and subjective issues. For
objective issues, such as financial obligations and energy flows, there may be
techniques that are readily applicable for their quantification. The main difficulty at this
stage is to quantify subjective issues which are largely social and environmental
matters. Therefore, at this stage of the impact assessment, different methodologies may
be engaged to evaluate satisfactorily each criterion.
Detailed analysis of each criterion is an important step in determining the score in

relation to a development’s impacts. It involves expressing impacts in numeric terms
and information may be presented in an evaluation matrix with alternatives set against
criteria in a spreadsheet (Voogd, 1983). Each criterion is measured using the most
appropriate method for its nature to reflect its relative importance against each
alternative. Each criterion can be measured in either a quantitative method or on a
qualitative scale.
A quantitative scale is expressed in monetary or physical units such as dollar or Gj/m2.

However, qualitative scales are much more difficult to handle and may be expressed in
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three different ways (van, Pelt, 1993b), through:

• an ordinal11 ranking expressed as 1, 2, 3, … or + + +,
• a nominal scale which reflects the characteristics of alternatives such as type of
colour, or
• a binary scale that contains only two answers such as yes or no.
Whenever a qualitative measure is involved, the measure must be converted to

numerical data (Nijkamp et al., 1990).
This is the stage when the public can participate. Local inhabitants can be consulted to
identify likely impacts from a development that may affect them and the community.
This process may ensure that not just the technical or financial criteria will be
considered but, within the multi-criteria project appraisal model, the social and
environmental criteria will also be considered.
v) Estimating weights
In any list some items are likely to be more important than others. For example, in a
public project the social and environmental issues may have more weight than the
financial aspects. However, the situation may be the reverse in a private development as
financial return is the crucial driver for private projects. It is only a rare scenario when
all criteria carry equal weights, such as the PICABUE, triple bottom line, and
environmental stool concepts (Mitchell et al., 1995; Elkington, 1997; Young, 1997).
In a project appraisal, choosing an option from a list of alternatives means that priorities
must be set and weights assigned to each criterion, reflecting each criterion’s priority.
Nijkamp et al (1990) suggest various methods to estimate criteria weighting. These are
broadly divided into two main approaches: direct and indirect estimation.
11
It is noted that the author has used the term ‘ordinal’ in a manner that is not strictly the meaning
accorded it by the Concise Oxford Dictionary 3rd Ed. s.v. ‘ordinal’.
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Direct estimation of criterion weights refers to the expression of relative importance of

the objectives or criteria in a direct way through questionnaire surveys. Respondents are
asked questions within which their priority statements are conveyed in numerical terms.
Respondents can be members of the design team, representatives from the client, local
council and the public (Seabrooke et al., 1997). This is another opportunity for the
increasing demand for public participation in the decision-making process (Joubert et
al., 1997; Price, 2000).
Direct estimation method techniques come in various forms:

• The trade-off method where the decision-maker is asked directly to place weights
on a set of criteria to all pairwise combination of one criterion with respect to all
other criteria.
• The rating method where the decision-maker is asked to distribute a given number
of points among a set of criteria to reflect their level importance.
• The ranking method where the decision-maker is asked to rank a set of criteria in
order of their importance.
• The seven-points (or five-points) scale which helps to transform verbal statements
into numerical values.
• The paired comparison, which is similar to the seven-point scale, obtains the
relative importance of criteria by comparing all pairs of criteria on a non-points
scale.
However, all these methods run into trouble when the number of objectives becomes
large (van Pelt, 1993b; Hobbs & Meier, 2000). When this happens, objectives may have
to be structured in a hierarchical model to separate objectives into different levels
(Saaty, 1994).
The indirect approach is based on investigating the actual behaviour of respondents in

the past. Weights are obtained through estimating actual previous behaviour derived
from ranking alternatives or through an interactive procedure of obtaining weights by
questioning the decision-maker and other involved parties. Hypothetical weights may
also be used in some projects. Here, the analyst prepares weights to represent the
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opinion of specific groups in the community, then policy-makers may comment

accordingly. Each approach has restrictions and limitations in terms of accuracy and
cost. Their usefulness strongly depends on the time required and the attitude of
respondents (Voogd, 1983; Nijkamp et al., 1990; Hobbs & Meier, 2000).
vi) Determining score
A total may be obtained by amalgamating the assessment scores of criteria and their
related weights using combined methods, because criteria may contain objective and
subjective issues. Therefore, this stage may involve the use of multi-criteria analysis to
bring the values together for each alternative to aid decision-making. Since criteria may
be measured using different units, standardisation may be required to convert these
criteria into a common basis (Voogd, 1983; Nijkamp et al., 1990; Janssen, 1992). As
mentioned, the purpose of this research is to develop a mathematical model to produce a
single index that allows alternatives to be ranked. The model for the sustainability index
will be significant for the use of multi-dimensional approach in project appraisal.
vii) Reaching a conclusion
Finally, a conclusion can be drawn and decisions made according to the score of each
alternative. In accordance with the concept of the sustainability index, the higher the
score the better will be the option for a development. Evaluation may be considered as a
continuous activity in a planning process as evaluation feedback loops can take place in
different routes at different stages, providing further information to define alternatives
and/or criteria to satisfy the ultimate objectives to be achieved.
4.3.4 Summary
This section presented the literature review and a discussion on conventional single
criterion models and the multiple dimensional approaches for project appraisals. This
section also presented a framework as adopted from Nijkamp et al. (1990) for the
conceptual development of a sustainability model that can be used to evaluate projects.
This model is based on a multiple dimensional concept that encompasses economic,
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environmental and social/cultural aspects in the evaluation process. Combining these

criteria into a single decision tool is fundamental to decision-making and will be the
focus of investigation in the next chapter. The project appraisal model, as discussed in
this section, represents a systematic and holistic approach to making a decision. It uses
the concept of multi-criteria analysis and this concept will be further extended in the
development of a sustainability index for project appraisal in the next chapter.
4.4 CONCLUSION
This chapter summarised the aspects of environmental building assessment methods

that have been used by many countries to assess environmental performance of both
new and existing buildings. The environmental building assessment methods have
escalated from local programs into an international agenda. The importance of
environmental building assessment is well recognised as a way for promoting
environmental awareness among building professionals. However, as discussed in this
chapter, the usefulness of environmental performance of buildings can be extended
from a checklist-type single evaluation method, to a multiple criteria framework that
includes physical quantification of criteria for project appraisal.
This chapter also presented a conceptual framework for such a multiple criteria
approach to project appraisal. The discussion in this chapter has laid down a platform
for the development of a sustainability index, which will be discussed in detail in the
next chapter. The next chapter will focus on identifying project appraisal criteria to be
included in the sustainability index. Time, cost and effort do not permit the evaluation
of every criterion that relates to project appraisal. It is, therefore, critical to identify
those criteria that are important in project appraisal. An extensive questionnaire survey
is used to identify these criteria. A mathematical model for the sustainability index will
also be presented and discussed in the next chapter.
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_______________________________________________________________________
CHAPTER
FIVE
_______________________________________________________________________
THE DEVELOPMENT OF A SUSTAINAILITY INDEX

FOR PROJECT APPRAISAL
5.1 INTRODUCTION
The previous chapter reviewed the literature on environmental building assessment

methods, their development, role, and limitations in promoting ecological sustainable
development in construction. Following the conceptual development of a sustainability
model for project appraisal in Chapter Four, this chapter sets out to identify economic
and environmental criteria to be incorporated into the new model.
Study data was collected via an industry questionnaire. Its main aim was to survey
professional opinions on ranking the economic and environmental criteria identified in
previous chapters. The survey was sent to building professionals currently practising in
construction. The procedure and results are discussed and presented in this chapter
which has been divided into two main sections. The first section details the process of
identifying project appraisal criteria. It includes the introduction, research design of the
questionnaire survey, questionnaire structure and presentation of survey results. The
second section presents the rationale for the development of a sustainability index for
project appraisal. The conceptual framework, together with the mathematical model of
the sustainability index, are presented and discussed.
Chapter 5: The development of a sustainability index for project appraisal
5.2 IDENTIFYING PROJECT APPRAISAL CRITERIA
5.2.1 Introduction
Following the discussion on current environmental building assessment methods and

the evaluation of their usefulness in promoting ecological sustainable development in
construction, this section sets out to develop a project appraisal model which
incorporates environmental values in the decision-making process. A questionnaire is
used to investigate project appraisal techniques commonly used in construction and
identify the most important attributes in the sustainability assessment of built projects
and facilities. The collected data and the results are analysed and presented in this
section. A copy of the final version of the questionnaire and a summary of the survey
result are included in Appendix A and B at the end of the thesis.
5.2.2 Research methodology
A survey was used to identify the sustainable determinants to be included in the

decision-making model for project appraisal. It was based on the literature review
carried out in Chapters Two to Four. Economic and environmental factors were
identified from the literature that merit consideration during the process of project
selection. These factors were highlighted and ranked by building professionals in the
survey. The outcome aided the development of a decision-making model, which will
encapsulate the essential components of project appraisal and environmental matters
that are part of the decision-making process. The questionnaire was carried out in two
stages, an initial pilot study followed by an extensive survey amongst building
professionals.
Due to time and cost constraints, the target population of the study is confined to
professionals currently involved in construction in New South Wales. They include
architects, engineers, quantity surveyors, contractors, building developers, planners,
project managers and environmentalists. Bias is inherent in all research and is an
inevitable in such a survey work (Leedy & Ormrod, 2001). There is no doubt that the
survey results will be biased, particularly through the selection of the sample for the
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study. In order to minimise the level of bias, it was decided to use composite samples to
improve precision and reliability of the data collected. A composite sample is, therefore,
obtained from each respective profession for the study; the respective sample size can
be found in Section 5.2.4.
Both the public and private sectors were included in the study since differences in the
achievements in, and attitudes towards, ecologically sustainable construction was
expected. In the public sector, professionals from the Department of Public Works and
Services (now the Department of Commerce), Department of Housing and local
councils were invited to participate.
The survey was mailed to each participant, together with a self-addressed, stamped
envelope to improve the response rate. Non-respondents also received a reminder note.
The sample of each professional sector was compiled by contacting the respective
professional institutes or organisations. The required sample size in each category was
selected using a random sampling method.
5.2.3 Pilot study
Based on the literature review and an initial consultation with industry representatives,
a questionnaire was designed to identify consultants’, developers’, government
agencies’ and planners’ views on economic and environmental impacts in
developments.
Before the full survey was carried out, a pilot study was conducted to test the
questionnaire. The aim of the pilot study was to highlight problems and also test the
viability of the questionnaire amongst a small group of people qualified to be part of the
survey. The pilot questionnaire was sent out in September 1999, to 25 people
comprising five architects, contractors, quantity surveyors, project managers and
engineers currently practising in the construction industry. The sample was obtained
randomly from the list compiled for the major survey.
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The aims of the pilot study were to:

• check the effectiveness of the research design,
• test whether the questions concerned were clear and free from ambiguities, and
• estimate the cost and duration of the main study.
Three responses were received from each group making a total of 15 completed
questionnaires, representing a 60 percent response rate. The feedback from the pilot
study was analysed and some comments and criticisms were incorporated, leading to
substantial changes to the original draft.
The questionnaire was changed in the following ways:

• the overall layout of the questionnaire to suit the nature of the questions making it
clearer and easier to follow,
• the number of questions, reducing them from 35 to 28,
• rewriting some questions that were highlighted as being unclear,
• rewriting Part Three of the questionnaire which helps to lay down the foundation
for case studies in the later part of this research project, and
• including a pairwise comparison matrix to rank the economic and environmental
criteria identified as being important for project selection, since the traditional
ranking technique caused confusion.
The purpose of these changes was to maximise the opportunity of obtaining quality
information from the survey such as understanding the scope of environmental projects
that have been undertaken by building professionals.
As a result, the revised questionnaire is divided into three parts. The first part is
intended to obtain information about the respondents and details of their organisations.
The second part is based on 11 previously identified economic and environmental
factors considered important in selecting a project for development. Respondents were
requested to rate the significance of each factor on a five-point scale ranging from one
to five where one represents the least important factor and five indicates the most
important factor. A pairwise comparison matrix is used to rank these 11 attributes and
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the result from this evaluation matrix will form an important part in developing a
sustainability index as a decision-making tool at a later stage.
Finally, the third part contains eight questions designed to identify the respondents’
level of expertise and their training in relation to administering environmentally
sensitive projects.
5.2.4 Extensive questionnaire
Following the pilot study, an extensive questionnaire was undertaken. The

questionnaire was sent to 600 consultants, environmentalists, contractors, developers,
project managers and planners in New South Wales by post in October 1999 in two
groups to permit easy management. The first group was sent to environmentalists,
building developers, project managers, contractors and planners; the second group to
engineers, architects and quantity surveyors. Follow-up reminders were also sent to
survey participants toward the end of November 1999, which led to the return of 152
completed questionnaires, representing a 25.33 percent response rate. This response rate
is acceptable for research of this type. The aim was to obtain a general view of building
professionals, therefore a small response rate is inevitable.
The samples were compiled using a random sampling method from membership lists
from the following professional organisations:
• Royal Australian Institute of Architects,
• Australian Institute of Quantity Surveyors,
• Australian Institute of Builders,
• Master Builders Association,
• Australian Institute of Engineers of Australia,
• Institute of Project Managers,
• Property Council,
• Australian Property Institute,
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Local councils and Department of Public Works and Services and Department of
Housing were also contacted for undertaking the survey.
The sample was compiled with no considerations of the participants’ work experience,
age or educational background as there is no published source of this information. Table
5.1 shows the distribution of survey participants.
Table 5.1 Distribution of survey participants

Results Arch Cont Eng Env Plan PM Bldg Dev QS Others Total
Sent 100 100 100 20 70 50 50 100 10 600
Returned 20 18 33 16 10 18 7 27 3 152
% of total 13.16 11.84 21.71 10.53 6.58 11.84 4.61 17.76 1.97 100
Note: Arch - Architects PM - Project Managers

Cont - Contractors Bldg Dev - Building Developers
Eng - Engineers QS - Quantity Surveyors
Env - Environmentalists Others - included Building Surveyors and Land Surveyors
Plan - Planners
The main objectives of this survey are to:

• explore and assess environmental awareness amongst building professionals
currently practising in construction,
• determine the critical environmental criteria that are important in assessing building
sustainability, and
• investigate the current techniques of assessing sustainability in construction.
Full details of the results are contained in Appendix B.
5.2.5 Rationale for data analysis
The choice of statistical test to use is one of the most important tasks any researcher has
to address. The selected option must reflect the problem being investigated and the
answers the researcher is looking for in the study. There are many statistical methods
that can be used to analyse data.
The aim of this research was to examine the subject of environmental awareness and the
building professionals’ approach to environmental protection. The results obtained from
127
the survey were undoubtedly based on experience and opinions of building

professionals in construction. However, opinions on the controversial topics of
environmental values were likely, in some respects, to be subjective. At the same time,
definitive assumptions about population parameters could fundamentally flaw the
research conclusions. Consequently, it was decided to use non-parametric statistics such
as the Kendall coefficient of concordance W, which is distribution free, and can deal
directly with scores while remaining valid, even when normality assumptions are
violated (Kumaraswamy & Chan, 1998; Keller & Warrack, 2000).
5.2.6 Observation and analysis
General background
Analysis of the returned questionnaires showed that 78 percent of the respondents work
in the private sector whilst 22 percent work for the government. Response from the
private sector predominated since more people are employed in the private sector than
in the public sector. Therefore, the opinions obtained through this survey tend to be
more representative of the private sector. The lack of public sector participants could be
improved by undertaking personal interviews with building professionals working in
the public sector.
Figure 5.1 shows the distribution of respondents by professions. The response rate of
engineers, quantity surveyors and architects made up 51 percent whilst the remaining 49
percent were distributed among contractors, project managers, building developers,
environmentalists, planners and others.
Gender distribution shows that 93 percent of the respondents were male. Female
respondents were architects, environmentalists, planners and quantity surveyors. There
were no responses from female engineers, contractors or project managers. Although
female participants in this survey are seriously under-represented, this is not an
astonishing result as construction has always been a male dominated field and female
building professionals tend to confine themselves to architectural and quantity
surveying companies. Therefore, the analysis of the survey results may predominantly
128
represent opinions from the male building professionals but will not have a significant
impact on the outcomes.
Figure 5.1 Distribution of respondents by professions (total = 152)
Environmentalists Others
10% (16) Architects
2% (3)
13% (20)
Building
Developers
5% (7)
Planners
6% (10) Quantity Surveyors
18% (27)
Project Managers
12% (18)
Contractors Engineers
12% (18) 22% (33)
The majority of the participants, approximately 66 percent, were aged between 36 and
55 years (see Figure 5.2). About 80 percent of this group have more than 10 years
experience in construction. A minority were aged over 55 and below 25. The survey
participants, therefore, are a group of relatively young and experienced professionals in
construction.
129
Figure 5.2 Distribution of respondents by age (total = 152)
Over 55 Below 25
11% (17) 3% (5)
26 - 35
20% (30)
46 - 55
31% (47)
36 - 45
35% (53)
Figure 5.3 shows that 80 percent of the survey participants have completed at least
undergraduate degrees and 45 percent have additional postgraduate qualifications. The
survey also shows that about 45 percent of the participants have experience in
environmental design or environmental assessment of projects with 25 percent having
more than 6 years experience working on environmentally sensitive projects. This
means that the outcomes obtained from the survey represents the opinion of a group of
building professionals with a good educational background and sufficient knowledge of
environmentally sensitive projects to provide a significant contribution in identifying
environmental criteria to be included in the decision-making model of a sustainability
index.
130
Figure 5.3 Distribution of respondents by education (total = 152)
Others
1% (2)
Diploma/Certificate
19% (29)
Postgraduate
Degree
34% (51)
Undergraduate
Degree Postgraduate
35% (53) Diploma
11% (17)
Environmental awareness analysis
One of the purposes of this survey is to investigate the environmental awareness and
attitudes of building professionals to the environment. Part Two of the questionnaire
forms the core of this study. The majority of the participants, approximately 98 percent
(149 participants), considered environmental assessment an important issue for building
development while approximately 99 percent (150 participants) agree that the impact of
environmental effects needs to be incorporated into the project selection process.
Most respondents (112 or 74 percent) indicated that the best stage at which to consider
incorporating environmental issues is the feasibility study, followed by the design
development stage. These results indicate without doubt that environmental issues are
important, they should be part of the project selection process, and they have to be
introduced at an early stage.
Respondents were asked to rate 14 environmental issues (Question 2.3) that relate to
construction on a scale of one to five where a score of one represents the least
131
importance and a score of five represents the most importance. The total weight for
each factor is calculated and a relative importance index (RII) is constructed reflecting
the level of importance of these factors using the formula (Olomolaiye et al., 1987;
Bubshait & Ai-Musaid, 1992, Shash, 1993; Chinyio et al., 1998; Kumaraswamy and
Chan, 1998; Tam et al., 2002):
n
Σ Wi
i =1
RIIs = (5.1)
AN
where: RIIs = relative importance index, W = weighting as assigned by each respondent

on a scale of one to five with one implying ‘least important’ and five ‘most important’,
A = the highest weight (5), N = the total frequency in the sample. The relative rankings
of the factors within each group are assigned on the basis of the factor RIIs. The
weighted average of the RIIs for each of the previously identified 14 factors from each
group is computed by combining all the RIIs. The combination of these RIIs to find the
weighted average for each factor is achieved by summing the products of the RIIs for
each group with the proportion of respondents from the corresponding group.
The rankings of these environmental impacts are summarised in Table 5.2. Respondents
rated water, air and noise pollution as having the most impact in construction. These
three issues received the highest ranking for consideration during the construction stage
of a development. There is no doubt that building construction is the main polluter of
air and water quality (Uher, 1999). The water run-off from building sites is one of the
main pollutants of underground water and rivers, and dust generation associated with
building work degrades the air quality (Uher, 1999). Building sites also generate noise
during construction, which seriously affects people living in the vicinity. More effort
needs to be undertaken to minimise these effects.
Table 5.2 Summary of relative importance ranking of environmental impacts

in construction
Relative importance index (RII) Weighted
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Environmental Arch Cont Eng Env Plan PM Bldg QS Others average

impacts Dev RII (%)
Water pollution 0.95 0.92 0.88 0.94 0.84 0.88 0.94 0.91 0.93 90.7 1
Air pollution 0.91 0.90 0.86 0.86 0.82 0.84 0.86 0.90 0.87 87.4 2
Noise pollution 0.83 0.88 0.84 0.84 0.86 0.77 0.80 0.83 0.93 83.5 3
Depletion of non- 0.88 0.82 0.75 0.84 0.72 0.78 0.91 0.84 0.93 81.3 4
renewable resources
Deforestation 0.87 0.74 0.76 0.79 0.72 0.74 0.77 0.83 0.80 78.4 5
Ozone depletion 0.87 0.79 0.74 0.73 0.68 0.78 0.83 0.81 0.87 78.2 6
Destruction of 0.78 0.77 0.80 0.80 0.72 0.73 0.80 0.75 0.93 77.4 7
historic buildings
Global warming 0.84 0.77 0.73 0.78 0.72 0.74 0.74 0.77 0.80 76.4 8
Population growth 0.81 0.69 0.65 0.71 0.80 0.77 0.77 0.76 0.93 73.7 9
Acid rain 0.87 0.71 0.70 0.68 0.64 0.74 0.80 0.76 0.60 73.6 10
Salination 0.82 0.62 0.73 0.74 0.70 0.73 0.77 0.76 0.73 73.5 11
Depletion of 0.70 0.71 0.65 0.74 0.70 0.70 0.71 0.75 0.80 70.6 12
renewable resources
Biodiversity 0.75 0.67 0.63 0.89 0.76 0.66 0.54 0.70 0.60 69.8 13
Desertification 0.77 0.50 0.66 0.63 0.64 0.60 0.63 0.71 0.60 65.0 14
Note:
1. RII for each profession is calculated as total score divided by the total number in the sample multiplied by the
highest weight (5). For example the RII of water pollution for architect was calculated as 95/(20 x 5) = 0.95.
Survey details refer to Appendix B.
2. The weighted average RII was calculated as:

0.95 x 20/152 + 0.92 x 18/152 + 0.88 x 33/152 + 0.94 x 16/152 + 0.84 x 10/152 + 0.88 x 18/152 + 0.94 x 7/152 +
0.91 x 27/152 + 0.93 x 3/152 = 0.907
As also indicated in the study, other areas such as depletion of renewable and non-
renewable resources, deforestation and ozone depletion are also considered significant
impacts in construction. Special attention is also required to minimise such effects in
project development.
Project appraisal selection criteria
With regard to project development, survey respondents agreed that environmental

factors should be considered during the decision-making process. Incorporating these
factors may take place at the feasibility study stage. Current environmental building
assessment methods (refer to Chapter Four, Section 4.2) are more suitable for use at the
design stage to provide guidelines or boundaries, but may not be of practical assistance
in the selecting the best option among the available alternatives (Crawley & Aho, 1999;
Cole, 1999a).
Developing a sustainability index as a decision-making model for project appraisal is at

the heart of this research. It is intended to fill the gap left by current environmental
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building assessment methods. The usefulness of such a model relies heavily on

identifying and incorporating essential and sufficient criteria to encapsulate the
principal objective of a project, while simultaneously satisfying sustainability goals.
Deciding which types of criteria to include is a significant step before a model can be
developed. From the literature reviews, 11 economic and environmental criteria were
identified as being important when selecting a project for development (see Chapters
Two to Four):
• aesthetics/visual impact—project image,
• energy consumption/conservation—embodied and operational energy.
• environmental impact—negative externalities e.g. pollution,
• functional layout—planning efficiency and flexibility,
• heritage preservation—preservation of existing requirements,
• maintenance/durability—low ongoing maintenance requirements,
• overall financial return—return on investments,
• project life span—projects that are long lasting,
• recycling/refurbishment potential—reuse of building materials,
• social benefits—positive externalities e.g. entertainment, tourism, and
• user productivity gains—efficiency of project users.
Assessing these criteria is an enormous task making the model too complex to be useful
in project appraisal. Also, as stated in van Pelt (1993b), the number of criteria should be
limited as research has shown that people can only assess a small number of criteria
when making meaningful decisions. In addition given that developments are time-
critical, if too many criteria are to be assessed before a decision to go ahead with a
development, its profitability may be seriously jeopardised (Bennett, 2003). Therefore,
expert opinion is required in the survey and is used to rank these 11 criteria and only the
top few will be incorporated into the model of the sustainability index.
A pairwise comparison matrix is used to rank these criteria where each criterion is
compared with all the other criteria in order to denote whether they are equally
134
significant, or whether one of them is somewhat more significant than the other (see
Question 2.6 of the survey).
Each criterion is assigned a letter starting from ‘a’ through to ‘k’ and respondents are
asked to compare two criteria at a time then place the letter of the more important
criterion in the corresponding cell, or both letters for equal importance. A point system
is used to arrive at the total score to reflect the final ranking. The more important of the
two compared criteria is allotted one point, and if the criteria are considered to be of
equal ranking, then a half point is allotted to each. The total score of each criterion was
computed for each participant. This was then repeated by combining the total scores for
all the participants for each building professional. The criterion with the highest total
score will be in the top ranking position. The final ranking of environmental criteria by
profession is shown in Table 5.3.
The Kendall coefficient of concordance W is used to consider the relationship amongst

the rankings expressed by building professionals in the survey. The coefficient of
concordance W is an index of the divergence of actual agreement shown in the data
from the maximum possible or perfect agreement (Kendall, 1970; Siegel & Castellan,
1988).
Table 5.3 Ranking of economic and environmental criteria by professions

Hypothesised Bldg
Arch Cont Eng Env Plan PM QS Others Ri Ri
environments criteria Dev
Aesthetics/
visual impact 5 7 11 9 6 11 2 7 6 64 7.11
Energy consumption/
conservation 8 3 7 8 7 9 3 4 4 53 5.89
Environmental impact 6 2 2 1 1 2 5 2 2 23 2.56
Functional layout 3 6 3 7 4 4 4 3 7 41 4.56
Heritage preservation 2 8 4 3 3 5 6 11 8 50 5.56
Maintenance/durability 11 4 6 5 9 3 7 10 9 64 7.11
Overall financial return 1 1 1 4 2 1 1 1 1 13 1.44
Project life span 7 5 10 10 8 7 10 6 10 73 8.11
Recycling/
10 9 8 6 10 10 11 8 3 75 8.33
refurbishment potential
Social benefits 4 10 5 2 5 6 8 9 5 54 6.00
User productivity gains 9 11 9 11 11 8 9 5 11 84 9.33
W = 0.5304
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In Table 5.3, the sums of the rank for each profession is denoted by Ri and Ri,
represents the average rank of environmental criteria. If all the participants had been in
perfect agreement about the ranking of the economic and environmental criteria, then
the criterion would have received a scale of 1 from each professional group and Ri
would equal to 9.
The Kendall coefficient of concordance W is computed by the following formula:

N
Σ (Ri - R)2
i =1
W= (5.2)
N(N2 - 1)/12
where Ri = average assigned to the ith object, R = the average of the ranks assigned
across all objects, and N = the number of objects being ranked. After calculation W,
which must be between 0 and +1, = 0.5304, indicating some consensus among the
respondents and that they are applying essentially the same standard in ranking the
eleven factors under study. The W was tested at a 5 percent level of significance. The
result with χ2 (χ2 ≥ 806.21) equals, or exceeds, the critical value from the chi-square
distribution and with 10 degrees of freedom, it is concluded that there is a high
probability of agreement among respondents in their rankings of the criteria for project
appraisal.
The final ranking (Table 5.4), of these economic and environmental criteria is in
accordance with the order of the various sums of ranks (i.e. Ri) as suggested by Kendall
(1970).
Table 5.4 Final ranking of economic and environmental criteria

Appraisal criteria Final ranking
Overall financial return 1
Environmental impact 2
Function layout 3
Heritage preservation 4
Energy consumption/conservation 5
Social benefits 6
Aesthetics/visual impact 7
Maintenance/durability 8
Project life span 9
Recycling/refurbishment potential 10
User productivity gains 11
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Given the earlier calculations and the resulting final ranking, the building professionals
are in some degree of agreement about the importance of these economic and
environmental factors in project appraisal. The financial return is in the top position
indicating that financial gain is the principal aim for a development. This is followed by
environmental impact, then functional layout, heritage preservation, energy
consumption and social benefits. These areas emphasise the environmental aspects of a
project and are also the performance-based criteria of a development. These are the
areas that can be incorporated into the model of the sustainability index. Detailed
discussion of these criteria is included in Section 5.3 of this chapter.
Part Two of the survey also included a question to explore the techniques that building
professionals use when selecting projects for development (see Question 2.9). Table 5.5
records the results when participants were asked to state how often they use the
techniques from the list.
Table 5.5 Project selection techniques used by building professionals
Project selection techniques Ri Ri Ranking

Simple payback or accounting rate of return 39.0 4.88 5
Discounted cash flow method (including CBA) 31.5 3.94 4
Feasibility studies (non-discounted) 20.0 2.50 1
Multiple criteria analysis (MCA) 51.0 6.38 7
Risk analysis 20.0 2.50 1
Energy analysis 41.5 5.19 6
Environmental impact assessment (EIA) 21.0 2.63 3
W = 0.5084
The results indicate that building professionals most frequently use feasibility studies
and risk analysis as a decision-making tool, followed by environmental impact
assessment. Feasibility studies and risk analysis are techniques that have been widely
used in project selection for a long time and they are largely used to examine
profitability as an aid for decision-making (Powell, 1996; Postle, 1998; Burke, 1999).
However, feasibility studies and risk analysis are not so useful when attempting to
evaluate environmental goods and services (Kohler, 2002). Only environmental impact
assessment (EIS) has any capacity to assess environmental issues and the results are, as
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a consequence, included as part of the decision-making process. However, EIS may be

mandatory to get planning approval but not a matter of choice.
The survey responses show that there are only a few participants who have heard about
multiple criteria analysis (MCA), as this method is mainly used for urban planning,
infrastructure and environmental assessments but is seldom used to help decision-
making in construction (Voogd, 1983; Nijkamp et al., 1990; Janssen, 1992). Most
project appraisal techniques focus on a single criterion, such as financial return or
energy usage, but MCA allows multiple criteria to be considered and combined to aid
decision-making. This powerful method is widely used in other areas for decision-
making e.g. environmental management and urban planning (Voogd, 1983; Nijkamp et
al., 1990; van Pelt, 1993b; Triantaphyllou, 2000). This approach provides the
methodological framework for the development of the sustainability index.
5.2.7 Summary
Most survey respondents were aware of the environmental problems caused by

construction and accept that the sector needs to take remedial action against further
destruction of the natural environment. Project developers and owners also realise that
their development should be less detrimental to the environment and ecosystems (there
is no doubt that their decisions may be caused by the compulsory requirements of
planning or market pitch). Many building professionals, such as architects and
engineers, have already incorporated green strategies such as energy efficiency and
recycling into the scope of their design work. Others, such as contractors and project
managers, are involved in collecting recycling building materials on site (Ofori, 1992;
Spence & Mulligan, 1995; Lawson, 1996b; Bourdeau, 1999; Uher, 1999).
Based on the discussion in this chapter, there is no doubt that some building
professionals are working together to protect the natural environment and their
contributions have been obvious in construction (Cole, 1999a; Uher, 1999).
Nevertheless, to only consider environmental issues during the design and construction
stages is inadequate. Environmental issues need to be considered as early as possible
during the feasibility study where development options are selected. In order to protect
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the environment, it is necessary for environmental matters to be included as part of the

decision-making process. However, current project selection techniques tend to focus
on a single criterion, that is profitability. But it is clear that decision-making models
need to embrace sustainability as well as profitability (Nijkamp et al., 1990; van Pelt,
1993b).
Survey respondents identified and ranked economic and environmental criteria
according to their importance in project selection. The findings in the study will provide
a foundation and a decision-making model will be developed as the main purpose of the
research to incorporate environmental issues.
5.3 DEVELOPING A SUSTAINABILITY INDEX FOR PROJECT

APPRAISAL
5.3.1 Introduction
As discussed in the previous chapters, in order to protect the environment, sustainable

development is essential for project development. The principal determinants in project
appraisal of sustainable development have been identified using a questionnaire to elicit
the opinions of professionals in construction (details refer to Section 5.2).
With reference to the survey analysis (see Section 5.2.6), the participants’ opinions are
significant as they represent the views of a group of practising professionals with
academic qualifications in building development, practical experience in construction
work, and specialist knowledge in designing and constructing environmental projects.
The survey results indicated that 45 percent of the participants have experience in the
environmental design or assessment of projects and about a quarter have over six years
work experience in constructing environmentally sensitive projects. Therefore, their
opinions have provided a broad spectrum of knowledge, experience and expertise in
terms of economic, social and environmental issues and will be valuable in developing a
multiple criteria decision-making model for project appraisal. This will challenge the
predominantly conventional economic view currently used in project appraisal.
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The opinions obtained from the questionnaire allow the criteria requiring consideration
in the sustainability index to be ranked. This section examines, in detail, the criteria to
be incorporated in developing the sustainability index as a decision-making tool for
project appraisal. The assessment approach and the benefits of using an index system in
project appraisal will also be discussed. Finally, the conceptual framework of the
sustainability index is presented and discussed. The framework of the sustainability
index developed in this chapter lays down the foundation work for the data collection in
Chapter Six.
5.3.2 The derivation of project appraisal criteria
Following the results of the survey in Section 5.2, the 11 criteria identified as being
important components of project appraisal are analysed and ranked according to
building professionals’ opinions as shown in Section 5.2.6. The ranking process showed
that financial return, environmental impact and energy consumption are in the top
positions and are, therefore, the key areas to be assessed in the model.
The remaining criteria are also important and deserve consideration in appraising
projects, but it will be inappropriate and too complex to assess all the criteria in the
decision-making model. Therefore, these criteria are integrated and evaluated as sub-
criteria of a criterion termed ‘external benefits’. Accordingly, external benefits consist
of both performance-based criteria and intangibles. The performance-based criteria
include functional layout, heritage preservation, maintenance/durability, project
lifespan, recycling potential, and productivity. The intangibles include aesthetic impact
and social benefits.
Consequently, the sustainability index includes the following criteria:

• financial return,
• energy consumption,
• external benefits, and
• environmental impact.
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These four criteria reflect the key criteria as judged by the survey participants and are
brought together in developing an index system to aid decision-making. The four
criteria in the derived sustainability index are measured by different methodologies and
in different units that are best suited to their quantitative assessment. Since these criteria
are derived from the survey through expert opinion, they symbolise the sustainable
determinants that promote joint economic and environmental consideration of a
development. Consideration of these four criteria in project appraisal will ensure
ecologically sustainable development in construction that emphasises the using
environmentally friendly building materials, sustainable construction methods and
efficient allocation of resources including the construction site to protect the
environment and encourage economic development in a community.
5.3.3 Rationale of project appraisal criteria
Since the essential components of project appraisal have been identified, it is important
to ensure that the decision-making model is not confined to evaluating a project’s cost
implications and environmental impact, but is used to aid decision-making in selecting
the best option from the alternatives. This section is devoted to discussing the nature
and boundary of these criteria in order to establish the methodological framework for
their assessment and the sustainability index.
Financial return
It is necessary to determine whether a particular course of action is of net cost or net

benefit to society. The most popular technique used to ascertain this is cost benefit
analysis (CBA) (Tisdell, 1993; Perkins, 1994). It is a powerful tool which assists
decision-makers in project selection, taking into account the efficient allocation of
resources, maximising return and maintaining sufficient protection of the environment.
The ultimate aim is to maintain economic development without giving up further
environmental quality. However it is not without its problems or critics (van Pelt,
1993b).
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Efficient allocation of scarce resources involves choosing between alternative projects;

such choice requires evaluating the options. The evaluation process is so pervasive in
economics that project appraisal has become synonymous with cost benefit analysis
(van Pelt, 1993b). Gilpin (1995, p.169) defines CBA as “the identification and
evaluation of all costs and all benefits attributable to a policy, plan, program, or
project”. Faced with conflicting objectives and limited resources, it is essential that
governments have a basic mechanism for determining whether a given use of resources
will maximise community welfare, and where alternatives compete for resource
allocation, which alternative will provide the greatest improvement. For private
developments, financial return is the important criterion, however the decision support
techniques are similar. The option with the highest net benefit will normally be selected,
whereas other options will be lower ranked, and those showing negative benefit will be
abandoned altogether.
Costs and benefits (excluding externalities) are quantified in monetary terms wherever
possible and are discounted to determine net present value (NPV). The accuracy of their
quantification depends on the significance of the project, data availability, cost of
obtaining missing data and the clarity of project objectives. At this stage, all
calculations are performed with varying levels of uncertainty. Therefore, it may be
possible to attach probabilities to impact, understand uncertain events and to calculate
an expected value (Hanley & Spash, 1993; Abelson, 1996).
Project costs comprise the total opportunity costs of resources consumed by a project
over its expected life. Life of a construction project can easily extend for many years
making most of the forecasting or estimations uncertain. The literature gives some idea
about the optimal length of a building’s life, and the economic life is often calculated by
maximising the capital value (Wübbenhorst, 1986). However, correctly identifying a
building’s economic life is critical to calculating life cost.
Apart from direct costs that may occur for a development, indirect costs, such as
theoretical environmental damage, may also be generated. Indirect costs comprise the
evaluation of environmental damage which includes the negative impact of a project
during its construction and over its operational life, such as air/noise pollution,
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stormwater runoff, deforestation and the like. These costs will not be included in
measuring project cost in the sustainability index. They are subjective issues and will be
dealt with using a multiple criteria approach as a separate criterion in the sustainability
index named environmental impact (see later part of this section).
Project benefits comprise the total benefits related to the positive impacts associated
with project implementation. Direct benefits may be revenue produced from the project
(as distinct from income earned by selling goods and/or services produced by the
project), or in the form of periodic revenue received by leasing the property to a tenant.
The indirect benefits generated by project implementation such as increased
productivity, employment opportunities, better living environment, improved leisure
facilities or better traffic arrangements, will be treated in the same manner as indirect
cost and included as a separate criterion in the sustainability index named external
benefits.
Measuring indirect costs and benefits in monetary terms is rarely complete, and so may
be undervalued in the final decision or completely ignored (Nijkamp et al., 1990;
Tisdell, 1993; van Pelt, 1993b). The complex nature of the environment and the non-
market characteristics of environmental goods and services are the major hindrance in
this respect. As highlighted in the survey, the unpriced impacts (or intangibles) are still
an important component of the final decision, and should be included separately so that
they are part of the decision framework.
Quantifying project costs and benefits may be relevant to private developments as a

decision to proceed with a project depends on project benefits outweighing the project
costs. However, this may not be applied to public projects. The decision to proceed with
public projects does not depend on project benefits outweighing the project costs, but
fundamentally on the needs of the general public.
The data needed to make the necessary forecasts of project costs and benefits often
involves uncertainty or is incomplete, because some elements are difficult to predict or
suitable data may be unavailable at certain stages. Even though the data may be
available or uncertainty reduced using historical data and statistical methods, the
143
uncertainty still exists of how to project those figures into the future (Woodward, 1997).
Technological advances can exacerbated these uncertainties and they may change a
building’s economic life. Future prices are also difficult to predict and can affect
potential alteration and maintenance costs. The uncertainty may also be caused by the
errors in estimates such as the price rates, the frequency of the maintenance factor,
variation of the asset’s utilisation or operation time, and variation of corrective
maintenance hours per operating hour (Woodward, 1997).
The sensitivity of particular key variables affects the relative desirability of the
alternatives. The outcome may change the accept or reject decision, or the ranking of
alternatives. For instance, it is difficult to forecast when major repairs will be required
for building projects. Therefore, the existence of this uncertainty often jeopardises the
reliability of an outcome.
Sensitivity analysis is often used to test the robustness of results with different
scenarios. It helps to analyse the economic structure of a project in such a way as to
identify those variables that have more or less influence upon economic desirability.
This sort of test gauges the effect of changes in assumptions on the ranking and
comparison of alternatives. It helps to derive a range of values within which an
alternative is economically desirable and the certainty levels that can be expected, and
requires considerable judgement and experience. Key variables typically include
discount rate, project life span, physical quantities and quality of inputs and outputs,
and investment and operation costs (OECD, 1994). Initially, alternatives are ranked on
the basis of the original NPV. If the recalculated NPV does not alter the accept or reject
decision, or the ranking of alternatives, then the original alternative is insensitive to the
changes and therefore has a low risk level. On the other hand, if project viability or the
ranking of alternatives is affected, then the risk attached to the project selection is much
higher.
There are more sophisticated methods of risk analysis that can be applied to NPV
calculations, but the ultimate purpose is to assess the likelihood of choosing a project
that might have problems. High returns are often associated with risky projects, but this
situation is often accepted by risk-seeking investors. In the case of social projects
144
however, governments are often risk-neutral or risk-averse and so would be looking for
projects that reflect stability and a reasonable level of confidence that they are in the
public interest.
Energy consumption
As discussed in Chapter Three, Section 3.3, energy consumption has a significant

impact on the built environment. Energy is the challenge in the search for sustainable
development because of the complex relationship between energy usage and
environmental degradation (Cole, 1998b). Energy is used in the form of fuel to support
all the activities and processes associated with building and construction creating a wide
range of quantifiable environmental effects including depletion of energy resources and
greenhouse gas emissions. However, in project appraisals total energy consumption
does not currently form part of the decision-making process and particularly not the
energy embodied in the building materials and components (Treloar et al., 1999; Tiwari,
2001).
The 1970s oil embargo brought energy to the economic centre stage, and many
environmental analysts and researchers have treated energy use as an important
indicator of environmental impact (Baird et al., 1994; Brown & Herendeen, 1996). In
the 1990s, the greenhouse implication of fossil fuel burning has again promoted
energy’s use as an environmental indicator, particularly in the context of global
warming, ozone depletion, and local and regional pollution (Cole & Rousseau, 1992;
Brown & Herendeen, 1996).
A variety of climatic conditions and system efficiency make the relationship between
energy use and a building system extremely complex and creates a problem estimating
building energy. Considerable attention has been focused on the problem of predicting
energy use in buildings (Baird et al., 1984; Howard & Roberts, 1995; Lawson, 1996b;
Adalberth, 1997a; Hui, 2001). In a building, various types of energy are used to operate
its engineering services such as heating, ventilation and air-conditioning, lighting,
vertical transportation and hot water supply. The purpose is to maintain a suitable
indoor built environment in order to sustain activities that may be carried out in a
145
building. However, even though energy is closely linked to the economic activities of a
building, its price rarely reflects the environmental costs associated with its use (Pullen,
1999).
Total energy consumption requires a comprehensive energy analysis to cover the full
spectrum of energy consumption throughout the building’s economic lifespan (Cole &
Kernan, 1996; Adalberth, 1997a; Fay & Treloar, 1998). As discussed in Chapter Three,
Section 3.3, a comprehensive energy analysis involves a life cycle approach of energy
use, which includes all the energy inputs from the start of a project through to its final
demolition. Indeed, energy consumption may start with the energy initially required to
extract materials from the ground through to the end of the building’s life (Adalberth,
1997a). In the sustainability index the lower total energy consumption the better.
Of the various energy inputs, the operational energy is often the most significant and is
traditionally measured as one of the financial costs of running a facility (Howard &
Roberts, 1995; Pullen, 1999; Stern, 1999). However, research has revealed that the
energy consumed in the extraction, manufacture and supply of the materials and
components of the building can also be significant (details refer to Chapter Three,
Section 3.3). When full life cycle energy analysis is undertaken, embodied energy may
also be extended to include the energy associated with maintaining, repairing and
replacing materials and components over the lifetime of a building (Treloar, 1994;
Pullen & Perkins, 1995).
In order to calculate the total energy of a building, embodied energy and operational
energy need to be dealt with separately. The operational energy is obtained via two
approaches. The first approach is based on a computer package, which simulates a real
building to estimate the energy use during its operational stage. A large variety of
software packages are available that can be used in different situations (Fay & Treloar,
1998; Department of the Environment and Heritage, 2001; Matthews & Treloar, 2001).
The second approach involves the collecting energy records for the building (Cole &
Kernan, 1996; Fay & Treloar, 1998; Pullen, 2000b). Energy records can be obtained
through the energy bills received quarterly and can also be categorised by engineering
services system using sub-meter readings. Records may be required over a period of
146
time in order to derive average energy consumption and to detect any variants due to
seasonal and climatic conditions.
Calculating embodied energy is considerably more involved as the type and quantities
of materials for the entire building are required. The embodied energy calculation can
be carried out in two stages. The first stage is to calculate initial embodied energy,
which includes all the energy incurred in extracting raw materials through to the final
completion of the building on site.
Calculating initial embodied energy involves using a measured bill of quantities, which
breaks down the building into different parts, or trades. However, a copy of the bill of
quantities may not be sufficient as some of these items are measured in bulk quantities.
It is necessary to break down these items into basic materials, so that embodied energy
intensity may be applied. In the future, the bill of quantities may be modified in such a
way as to accommodate the calculation of embodied energy. The process of embodied
energy calculation may be expressed a just data input. However, a bill of quantities of
such a format may be too time-consuming and too complicated to prepare.
Once the quantities of the materials have been derived, the initial embodied energy is
estimated by applying energy intensity coefficients multiplied by each type of material.
An energy intensity coefficient is the energy used to produce a building material or
component. It represents the indirect energy in unit items either expressed as
energy/mass (MJ/kg) or volume (MJ/m3) or energy/standard unit (MJ/sheet or block),
etc. Research on the energy intensity of building materials has produced reasonable
agreement on acceptable values for some of the materials (Cole & Rousseau, 1992).
The total initial embodied energy is obtained by totalling the embodied energy
associated with individual elements of the building.
The second stage of the embodied energy calculation is estimating embodied energy
consumption during the post-occupancy period of a building. The recurrent embodied
energy covers the energy used for routine maintenance, scheduled repair and
renovation, and replacing materials or components over the effective life of the
building. This stage involves estimating the building’s life span and the replacement
147
rates of materials or components. Recurrent embodied energy intensity will probably be

reduced if manufacturing technologies for materials are improved.
Building construction is a great consumer of energy and project development is

considered a major contributor to the depletion of fossil fuels, speeding climate change
and the depletion of the ozone layer (Spence & Mulligan, 1995; Uher, 1999).
Identifying total energy consumption of projects can help decision-makers to choose
amongst alternatives in an environmental context. Projects with high total energy
consumption may be ignored or redesigned to reduce non-renewable fossil fuel
consumption and overcome other related environmental problems.
Energy consumption, as similar to financial return, will be affected by time. However,

the literature offers no guidance on discounting of total energy consumption of
buildings. The requirement of discounting would be more important for the operational
energy of a building (energy used during its life span) than the embodied energy (that
used during the construction and manufacturing processes). In addition, discounted
energy consumption yields highly uncertain results as it relies heavily on the
expectations of improved technology, fuel types, building life span and new
construction methods. In addition, it is estimated that the community’s current energy
consumption will remain constant and there is no reason to suggest that its value will
increase. Therefore, the assumptions of discounting of energy become less crucial.
External benefits and environmental impact
With reference to the literature review, a decision-making framework is critical to the

success or failure of a project. In construction, making a decision on a project often
focuses on whether it will generate a return on investment. However, there is a growing
concern that there is too much emphasis on the investment return making these
decisions (Abelson, 1996; Joubert et al., 1997; Prato, 1999). A decision based on such
an approach may seriously harm the environment even though the investment may
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make a return. Thus environmental issues may have a place in the decision-making
framework in project development.
As discussed earlier, the reason for environmental issues not being considered in the
decision-making process is that they are public goods and services that cannot be traded
in the market (Tisdell, 1993). Therefore, placing a monetary value on environmental
issues hinders project appraisal, as the current methodology is insufficient to monetarise
these effects (Nijkamp et al., 1990; Hanley, 1992; Joubert et al., 1997). The relative
absence of adequate models for environmental systems in the market means that no
probabilities are available in relation to uncertain information. The differences in
measurement scales and certainty of the effects pose difficulties in comparing effects
that may easily result in excluding uncertain or qualitative information from the
decision.
In Section 5.2, it was demonstrated that the construction industry professionals

surveyed considered external benefits and environmental impact important criteria to be
incorporated into the decision-making framework. However, external benefits and
environmental impact cannot be adequately priced using a traditional market approach.
External benefits refer to the positive contribution of a project towards the natural and
man-made environment and consists of both performance-based criteria and intangibles.
They encompass issues which are largely subjective and community-centred. In
essence, they deal with value enhancement as measured by non-monetary indicators
such as efficiency, productivity, image and social welfare. These non-market goods may
be valued beyond an economic framework and a weighted criteria approach may be
used to assess social issues across alternatives (Nijkamp et al., 1990; van Pelt, 1993b;
RICS, 2001). High scores of external benefits in the evaluation process indicate that a
project contributes significantly in the sustainability index.
Environmental impact focuses on the judgement of long-term impact on the

environment. Often, during the project evaluation stage, the information available to
make the necessary forecasts of project costs and benefits involves uncertainty and is
incomplete because some elements are difficult to predict at the outset. In addition, the
complexity of both ecosystems and projects often extends well into the future,
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enhancing the degree of uncertainty. In the sustainability index the lower the level of
impact the better.
Due to limited knowledge and the complexity of environmental systems, non-monetary

evaluation techniques will be used to evaluate external benefits and environmental
impact. Non-monetary evaluation techniques originated in operational research and
developed in response to criticism of monetary methods (Nijkamp et al., 1990; Janssen,
1992; van Pelt, 1993b). Since the 1970s, a collection of evaluation techniques has been
developed under the area of multi-criteria analysis (Voogd, 1983; Nijkamp et al., 1990;
Janssen, 1992; Hobbs & Meier, 2000). These techniques aim to provide a method to
systematically evaluate different options for a project involving a series of criteria.
Multi-criteria analysis provides a powerful framework for evaluating environmental
effects (Abelson, 1996; Joubert et al., 1997; Munda et al., 1998).
In a project, decision-making processes using multi-criteria evaluation methods can

yield some extra insights into the ranking of a series of criteria such as resource
allocation, environmental consideration in addition to the financial aspect (Nijkamp et
al., 1990; Roy, 1996).
A non-monetary evaluation technique can generate different outcomes. It may result in

a complete ranking of alternatives (i.e. A>B>C>D) or the best alternative (i.e. A>B, C,
D), may be defined from a series of alternatives. The evaluation may also generate a set
of acceptable alternatives (i.e. A, B, C>D), or may end up with an incomplete ranking
of alternatives (i.e. A>B, C, D or A, B>C, D) (Janssen, 1992). No matter what results
are generated, the multi-criteria decision-making framework provides a broad and
flexible methodology for evaluating environmental effects.
Evaluating external benefits and environmental impact will follow a multi-criteria

approach, which is not a simple linear process but rather exhibits a cyclic nature. Each
stage can yield additional information and form part of the feedback loop to provide a
more precise consideration for the forthcoming stage or stages (Nijkamp et al., 1990;
Janssen, 1992; Bentivegna et al., 2002; Ding, 2002b). Once the development
alternatives are compiled, the sub-criteria of external benefits and environmental impact
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are defined. The sub-criteria have a measurable quantity whose value reflects the degree
to which a particular objective is achieved. These sub-criteria will reflect the degree of
external benefits and the level of impact associated with a development.
The type of criteria will vary in accordance with the type of construction. Some
construction may have more detrimental effects on the environment than others. The list
of sub-criteria for external benefits and environmental impact is generated through a
brainstorming workshop. Participants include members from the design team,
representatives of the developer and environmentalists, in consultation with the local
council and the general public. The list of criteria must be precise and sufficiently
comprehensive to cover the full spectrum of environmental effects should the project go
ahead and adequately indicate the degree to which the objective of the development is
met.
Detailed analysis of each sub-criterion is an important step in determining its score in

relation to its impact on a development. The analysis involves expressing impacts in
numeric terms. Each sub-criterion is scored to reflect its relative importance against all
the others. A criteria score may be determined by the personnel directly associated with
the project development. The representative from the local council and participation by
the general public may also be included in this process. Public participation is important
as the environmental effects of a development concern them more than they concern the
developer. Incorporating the public’s opinions into the decision-making process will
ensure that a development will not have detrimental effects on their well-being
(Seabrooke et al., 1997, Price, 2000).
Weights are assigned to each sub-criterion of external benefits and environmental

impact to reflect its relative priority. Details of how weightings are developed can be
found in Section 4.3.3 of Chapter Four. An appraisal score is calculated for each sub-
criterion by first multiplying each value by its appropriate weighting, followed by
summing the weighted scores for all sub-criteria and for all alternatives.
5.3.4 The conceptual framework of the sustainability index
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Background
The economic approach to decision-making has dominated project development in the

construction industry. In many cases, little or no allowance was made for current or
future associated externalities (Powell, 1996). Socially, the overall objective of a project
may be the development at the least cost to the developer with due regard to
environmental protection and minimal use of natural resources. It may no longer be
acceptable to make decisions about a project by only considering financial costs and
benefits. A range of social and environmental effects must also be considered and
encompassed within the appraisal process.
It may be difficult, or even impossible, to improve social welfare in a society if the

natural environment continues to be abused and depleted. Indeed, within the economic
evaluation framework, environmental assets are ignored or under-estimated as there are
often considerable difficulties in measuring all relevant impacts of a project in money
units (Abelson, 1996).
Furthermore, since the media and general public constantly focus on ecologically
sustainable development, intangibles and externalities have become major issues in
project developments (Joubert et al., 1997; Bentivegna et al., 2002). There is concern
about the potential impact of a project on the man-made and natural environments. The
externalities, risks and spill-overs generated by project development preclude a
meaningful and adequate use of market approach methodology (Krotscheck &
Narodoslawsky, 1996). When the analysis turns to such effects as environmental
quality, or loss of biodiversity due to development, it is rarely possible to find a single
variable whose direct measurement will provide a valid indicator (Mitchell et al., 1995).
Although many efforts have been undertaken to arrive at values for intangibles and
externalities it is, in practice, almost impossible to place anything more sophisticated
than subjective numerical values on such effects. The requirement for incorporating
environmental issues into project appraisal process becomes wider and wider; the
imputation of market prices more and more questionable.
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Alternatives have been researched and suggested to completely replace the traditional
market approach with techniques that not only identify environmental effects, they do
not require valuation since they are difficult, or even impossible to assess (see Chapter
Two, Section 2.4). Cost effectiveness analysis (CEA) and environmental impact
assessment (EIA), are leading in this respect (Abelson, 1996; Postle, 1998). Other
researchers have suggested supplementing CBA with a technique to measure
environmental costs in other than monetary terms (Nijkamp et al., 1990; Hanley, 1992;
van Pelt, 1993b; Abelson, 1996). Multiple criteria analysis (MCA) is also a widely
accepted tool to aid decision-making for environmentally sensitive projects (van Pelt,
1993b & 1994). Projects are better assessed by non-monetary techniques, which means
we can contemplate environmental costs in a more relevant manner. However, from the
methodological and practical perspectives, the debate on conventional versus modern
evaluation analysis has settled on CBA and MCA as complementary, rather than
competitive, tools (Watson 1981; Jones, 1989; Nijkamp et al., 1990; Gregory et al.,
1993; van Pelt, 1993b; Powell, 1996; Joubert et al., 1997; Mirasgedis & Diakoulaki,
1997; RICS, 2001).
The model of a sustainability index for project appraisal
Any alternative methods to a market-based approach are still problematic and do not
fully consider environmental effects (Curwell et al., 1999). It is necessary to consider
different components of a project and their long-term impact on the environment and
the people in the community. Simply using a non-monetary approach to replace or to
complement the monetary approach in project appraisals is inadequate. A new approach
is required to incorporate the strengths of both market-based and non-monetary
approaches that embrace the key elements of sustainable development in order to
choose the best option from competing alternatives (Munda et al., 1998).
A number of different approaches have been developed to measure sustainability.

Developing indicators has becomes one of the instruments to consider environmental
effects and to move toward more sustainable practices (Mitchell et al., 1995; Sands &
Podmore, 2000; Dale & Beyeler, 2001). It became an emerging research area in project
appraisal because developers prefer minimum information to tell a complex technical
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story to a non-technical audience (Bell & Morse, 1999). The obvious use and success of
economic indicators has led to a call for environmental and sustainability indicators.
The Organisation for Economic Co-operation and Development (OECD 1994) proposed
the following important environmental indicators for:
• climate change,
• ozone layer depletion,
• acidification,
• toxic contamination,
• urban environmental quality, and
• biodiversity.
These sustainable indicators help to protect the environment and provide direction for
future development. As Meadows (1990) states a set of sustainable indicators give the
decision-makers signals to identify whether the development is sustainable and whether
the environment is better or worse should the project go ahead. However, using
sustainable indicators may run into difficulty in deciding as to what and how to measure
them. Krotscheck and Narodoslawsky (1996) go on to suggest that indicators only
describe a certain appearance like desertification, but cannot be used as a strategic
measure.
Another way to protect the environment is to set standards for activities in society
which help to define and fix the strategic goals. However, it cannot also be used as a
strategic measure (Krotscheck & Narodoslawsky, 1996). Eco-labelling schemes are also
being used to provide information and evaluation of products’ and services’
environmental performance. However, as Ball (2002) states, one weakness of eco-
labelling is that it is over-represented by product manufacturers who may have
influenced the criteria set for achieving a required level. Further, the consumers
infrequently have any representation in the process. Finally, eco-labelling often over
emphasises politically driven value judgements, rather than scientific data.
So it can be seen that using a single indicator, standard or eco-labelling to assess an

environmental issue is insufficient. Curwell et al. (1999, p. 292) state that “it is
154
necessary to use composite indicators, that is, a small number of factors that are used to
indicate the performance over a whole basket of issues”. Indeed, the ultimate objective
for developing a decision-making tool is to provide a single tool that can demonstrate
the environmental performance of a development by looking at its sustainability while
not undermining the developers’ economic objectives. These criteria may be combined
together into a single decision model.
As discussed in Section 4.3.2, the single criterion methods such as the building energy
rating and economic evaluation methods are insufficient. Developing a more
comprehensive and holistic methodology will ensure that sustainability is taken into
account when evaluating all development activities and facilities that may affect current
and future generations (Woolley et al., 1999). Achieving sustainable development
requires the project appraisal methodology to take into account the full range of
economic, environmental and social issues raised.
Various types of environmental indices have been developed as tools to aggregate and
simplify diverse information into a useful and more advantageous form. The gross
domestic product (GDP) indicator of economic welfare has been frequently used as a
proxy measure of quality of life since the 1940s (Lawn & Sanders, 1999; Chambers et
al., 2000). GDP is an aggregate statistical measure that adds up different goods and
services so that they are expressed as a monetary unit. Since the 1970s, there has been
growing criticism as to the usefulness of GDP as an indicator for economic growth
(Stockhammer et al., 1997). It was argued that GDP does not reveal anything about
human welfare or unpaid services such as housework, community service and volunteer
work. Social activities and recreation are also excluded from GDP calculations
(Chambers et al., 2000). In addition, GDP does not take into account the depreciation to
the economy affected by the consumption of natural resources (Castaneda, 1999;
Chambers et al., 2000). High GDP growth is necessarily to have higher welfare when
unpaid services and the contribution of the natural capital are taken into consideration.
However, even though GDP fails to be used as a measure of sustainable economic
welfare, it is still widely used as the key indicator for economic policy (Stockhammer et
al., 1997).
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Since the late 1960s, many discussions have taken place about the links between
economic growth, social welfare and the environment as economic growth is restricted
by the availability of natural resources and the level of pollution in the environment
(Castaneda, 1999). Attempts, therefore, have been made to account for depletion of both
natural and man-made capital, and defensive expenditures. Daly and Cobb developed
the Index of Sustainable Welfare (ISEW) in 1989 as a better means of measuring
welfare changes in an economy (Lintott, 1996; Hanley et al., 1999; Chambers et al.,
2000). ISEW takes into account GDP and includes adjustments to value housework,
social costs, environmental damages, resource depletion and income distribution. In
addition, it also adjusts for defensive and non-defensive expenditure that does not
necessarily contribute to economic welfare (Herendeen, 1998). Nevertheless, Castenada
(1999) states that ISEW cannot be used for international comparisons due to the
methodological insufficiency. Calculating defensive expenditure is very limited to local
effect only, which lacks the proper approach to extrapolate for the rest of the country or
world.
In 1994, the ISEW was further developed into the Genuine Progress Indicator (GPI) to
document benefits and to distinguish between economic transactions that contribute to,
or diminish, well-being (Hanley et al., 1999; Chambers et al., 2000). It adds up the
value of products and services consumed in the economy, and subtracts those which dos
not improve well-being, such as defence expenditure and depreciation of the natural
world (Hanley et al., 1999). GPI aggregates everything into a single indicator that
facilitates international comparison. However, it fails because GPI attempts to translate
everything into a monetary unit, which ignores the complexities of assigning monetary
value to many social and ecological services (Chambers et al., 2000).
Rees and Wackernagel promulgated the ecological footprint in early 1994 by as a new
way to measure and communicate sustainability using an area-based indicator (Hanley
et al., 1999; Chambers et al., 2000; Roth et al., 2000). It deals with measuring human
demands in comparison with the demand on the land and everything is expressed as a
land area. Therefore, a footprint indicates an impact on the natural capital. A computer-
based footprinting tool, EcoCal, was developed to help household explore their impact
on the environment. However, as Hanley et al. (1999) describe, footprint measure fails
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to provide detailed advice to policy makers and does not provide any predictive ability
to indicate improvement in sustainable development based on the current ecological
footprint. In regards to using an ecological footprint to assess buildings, Curwell and
Cooper (1998) argue that the system boundaries make the developing a practical
assessment tool based on the footprint principle very difficult. On this basis, a
sustainable building can only be achieved when using the minimum of resources,
obtaining local resources, and minimising the generation of pollution and waste and
disposing of them safely within the confines of the site or the community.
In 1990, the United Nations Development Programme (UNDP) launched the Human
Development Index (HDI) which aims towards a more comprehensive measure of
human development. It brings the indexes for income, longevity and education into a
simple arithmetic average to measure human development. This system is appropriate
for comparing developed and developing countries, but it fails to investigate the affect
on the natural system by activities that potentially contribute to national income
(Herendeen, 1998; Neumayer, 2001).
In Malaysia, an index has been developed for the cabbage farming industry. The farmer
sustainability index (FSI) was developed to accumulate a series of scores assigned to
specific responses to questions from a survey in accordance with their intrinsic
sustainability, by looking at the organisational affiliation, self-identification, or key
practice such as use, or non-use of synthetic agricultural chemicals (Taylor et.al, 1993).
The FSI combines 33 different practices used to control insects, diseases, weeds and
soil erosion, and to maintain and enhance soil fertility, into a composite index to
measure sustainability. The higher the FSI, the greater the sustainability of the practice.
It has been proved to be successful, reflecting the degree of sustainable practice among
individual farmers (Taylor et al., 1993). The FSI as developed by Taylor et al. (1993)
has been extended to evaluate cabbage and potato farming in Indonesia (Norvell &
Hammig, 1999).
An index has also been developed to rank the sustainability of European cities. This
index involves 12 European cities, the goal being to develop a system of indicators that
can be used in cities throughout Europe. The European sustainability index describes
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the situation in view of the development of the city by means of a number of

representative elements and compares this with the situation in previous years. It offers
a compact index that is flexible, adjustable and intended for general application at the
local level, and for comparisons at the international level (Deelstra, 1995). A similar
type of index, based on the quality of life indices derived from investigating the
weighted mean of a set of amenities to rank cities in Canada, has also been developed
and used (Giannias, 1998).
Other similar index systems have been developed, such as the Sustainable Process
Index for measuring the areas needed to provide the raw materials and energy demands
and to accommodate by-product flows from a process (Krotscheck & Narodoslawsky,
1996). Other indicators or indexes used to indicate the performance of the economy in
everyday life include the bank interest rate, rainfall, temperature, unemployment figures
and the FT100 share index (Mitchell et al., 1995).
A sustainability index can also be developed to model the most significant criteria in a
construction-related decision. The sustainability index captures the complexities of the
ecosystem, yet remains simple enough to be used. A sustainability index can provide
direction to strategic planning and can make a process more understandable and help to
make the choice among alternatives more amenable to rational discussion in society
(Krotscheck & Narodoslawsky, 1996). The development of a sustainability index
combines objective factors, that is costs (financial return) and energy usage, together
with subjective issues such as external benefits and environmental impact.
Developing a sustainability index is a reflection of the integral concept of sustainable

construction that involves evaluating competing investment opportunities, investigating
their environmental impact and assessment of sustainability. The comparative
assessment of sustainability indicates which of the acceptable alternatives may be
selected by screening out the worst options. The sustainability index framework also
provides a means to aggregate information into a single indicator of relative
performance. The purpose of the sustainability index is to ensure that the important
aspects of the ecosystem, the economy and society are included, and that everyone can
find a measure that applies.
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These criteria comprise financial return, energy consumption, external benefits and
environmental impact. Both financial return and energy consumption are relevant to the
resource input in project development. This is very important today, as the supply of
natural resources is under serious threat (Winpenny, 1991b; Gregory et al., 1993;
Barbier, 2003). Financial return reflects the effective allocation of scarce resources by
measuring total project costs and benefits, discounted over time. This is the ratio of the
discounted value of benefits to the discounted value of costs. The greater the ratio the
more efficient the proposal. Energy consumption includes both embodied energy and
operational energy consumption over the project life span. When viewed simplistically,
resource usage needs to be minimised. Energy consumption can be measured as
annualised Gigajoules per square metre of floor area in the same way the building cost
is expressed.
The other two criteria (external benefits and environmental impact) focus on the effects
building development has on the natural and man-made environments. Due to the
complex nature of the environment and its non-market characteristics, there is no
problem-free technique to value the environment (Woolley et al., 1999; RICS, 2001).
External benefits refer to the positive contribution of a project in terms of improving
living standards, such as time saving and accident reduction arising over the operational
life of a project. These non-market goods may be valued beyond an economic
framework and a multi-criteria weighting approach can be used to assess social issues
across alternatives. High scores indicate significant external benefits.
Environmental impact measures long-term negative impact of a development on the

environment. Environmental impact is assessed using the same approach as described
previously for external benefits to reflect the level of environmental uncertainty. Lower
scores indicate that environmental impact is less significant and that therefore it is a
preferable development option.
The model of the sustainability index can be used not only to compare options for a
given problem, but also to benchmark projects. The model applies to both new designs
and refurbishment, and can be used to measure facility performance.
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Figure 5.4 shows the sustainability concept of a development. The sustainability index,
as based on this concept, has four main criteria:
• Maximise wealth: Profitability is considered part of the sustainability equation. The
objective is to maximise financial return. Financial return is measured as benefit-
cost ratio (BCR) and therefore includes all aspects of maintenance and durability.
• Maximise utility: External benefits, including social benefit and other performance-
based criteria, are another clear imperative. Designers, constructors and users all
want to maximise utility which can relate to wider community goals. A weighted
score can be used to measure utility.
• Minimise resources: Resources include all inputs over the full life cycle, and can be
expressed in terms of energy (embodied and operational). When viewed
simplistically, resource usage needs to be minimised as much as possible. Energy
usage can be measured as annualised Gj/m2 of floor area.
• Minimise impact: Environmental impact encompasses all pollution and damages
associated with the design and construction of a project. The aim is to minimise
impact. A weighted score can also be used to measure impact.
These criteria can be assembled to illustrate the performance of new projects and
changes to existing facilities using a multi-criteria approach. This investigation is a
design tool to predict the extent to which sustainability ideals are realised, and is also an
aid in ongoing facility management. Criteria can be individually weighted to reflect
particular client motives.
Value for money is defined as the ratio of wealth output to resource input and is
investor-centred. The higher the ratio the more attractive is the proposal. Quality of life
is more community-centred. It can be measured as the ratio of external benefits to
environmental impact. High ratios are preferred.
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When all four criteria are combined, an indexing algorithm is created to rank options of
projects and facilities on their contribution to sustainability. The algorithm is termed the
‘sustainability index’ Each criterion is measured in different units reflecting an
appropriately matched methodology. Criteria can be weighted either individually, or in
groups, to give preference to investor-centred or community-centred attitudes. Each
criterion is measured and combined to give an index score. The higher the index, the
more sustainable is the outcome.
161
Figure 5.4 The proposed sustainability index model
Investor-centred performance = maximise wealth a

(value for money) minimise resources
= financial return a
energy consumption
Community-centred performance = maximise utility a

(quality of life) minimise impact
= external benefits a
environmental impact
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Model implementation
The project appraisal model, as discussed in Section 4.3.3, provides a framework to

develop a sustainability index. The sustainability index utilises the multi-criteria
evaluation methods based on discrete problems to investigate a number of choice
possibilities in the light of conflicting priorities (Voogd, 1983; Nijkamp et al., 1990).
These choice possibilities can be plans or strategies, regions or areas and so forth. The
evaluation approach consists of a two-dimensional matrix (Voogd, 1983; Nijkamp et al.,
1990; Janikowski et al., 2000) as indicated in Figure 5.5, where columns express the
various alternatives and rows indicate the criteria by which the alternatives must be
evaluated. Weights are inserted in the last column of the matrix. In the evaluation
matrix alternatives i compares against decision criteria j with weights (W) attached to
each criterion to reflect the level of importance in the assessment.
Figure 5.5 Two-dimensional evaluation matrix

Alternatives
Weights
I1 I2 … Ii
J1 W1
J2 W2
J3 Criterion scores W3
Criteria
. .
. .
. .
. .
Jj Wj
The evaluation matrix as described previously may be denoted by the symbol E. This
can be expressed as:
e11 . . . . e1i
. .
E= . . (5.3)
. .
eJ1 . . . . eJi
This matrix has elements eji, which represents a measure for the quality of alternative i
(i=1, …….. I) for criterion j (j=1, …….. J).
163
Public opinion can now be used to identify the relevant criteria of, and alternatives to, a
development. The design team, together with the developer, may outline the essential
criteria and possible alternatives in accordance with the objectives and goals of a
development. Individuals in the community in which a proposed project is going to be
constructed may be invited to provide opinions or modification to the list in order to
reflect the level of impact that may be caused by the decision.
Once the alternatives and criteria have been developed, the criteria weights have to be
derived. The weights reflect the relative importance of criteria and criterion scores to
one another. In multi-criteria techniques, the weights can have a major effect in the
resulting ranks of alternatives (Voogd, 1983; Nijkamp et al., 1990; van Pelt, 1993b;
Hobbs & Meier, 2000). A slight variation of weights can yield another ranking of the
alternatives under consideration. Applying weights to criteria requires great attention
and should be approached with care because as the literature described, it can be a
source of bias or distort preferences (Hobbs & Meier, 2000).
There are numerous techniques developed in the literature to weight criteria. They are
used under different circumstances such as paired comparison, ranking, rating and so on
(Nijkamp et al., 1990; Janssen, 1992; Saaty, 1994; Hobbs & Meier, 2000) and public
participation can be included here too. This is particularly important as the weights for
criteria will reflect the level of impact of a development on individuals. Such a process
provides the public with an opportunity to participate in decisions that affect them. It is
almost impossible to arrive at a set of quantitative weights, as knowledge and the
willingness to express their opinions are usually rare (Nijkamp et al., 1990; Hobbs &
Meier, 2000). Therefore, the exercise may be regarded as approximations of weights,
which provide evidence as to the likelihood of a set of weights to criteria, and as a
representation of the relative importance of the criteria.
164
Weights (W) can be expressed as:
J
∑ Wj = 1 and Wj = (j=1, …….., J) (5.4)
j=1
where Wj denotes the weights assigned to the criteria j. From a decision theory point of
view, criterion weights must reflect the trade-offs among marginal shifts in the criterion
scores. It is just the same role as prices in the economic evaluation methods. It serves to
maximise wealth and utility while minimising resource use and impact.
Here the four criteria are measured in different units and are mutually incompatible. In
order to make these scores comparable it is necessary to transform them into a common
dimension or a common dimensionless unit. Scores can be transformed into
standardised scores using one of the available standardisation procedures for each
criterion. They transform the raw scores into an additive constraint, ratio-scale or
interval-scale property (Voogd, 1983; Nijkamp et al., 1990).
Once the criteria are standardised, they can be incorporated into a decision-making
model. The sustainability index (SI) model can be expressed as follows:
J
SIi = ∑ eji Wj (i=1, ………… I) (5.5)
j=1
eji = f { BCR, EC, EB, EI } (5.6)
The symbol SIi denotes the sustainability index for an alternative I; Wj represents the
weight of criterion j; and eji indicates value of alternative i for criterion j. The result will
indicate that higher values for eji and Wj imply a better score, and that alternative i will
be judged as better than alternative i’ if the score of SIi is greater than the score of SIi’.
The BCR is benefit-cost ratio where EC denotes energy consumption, EB external
benefits, and EI environmental impact.
They are obtained from the following formulae:
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n where:
∑ Bt a BCR = benefit-cost ratio
t=0 (1+r)t r = selected discount rate
BCR =
n t = period (t = 0,……..n) (5.7)
∑ Ct a B = benefit
t=0 (1+r)t C = cost
EC = Ee + Eo where: (5.8)
Ee = Em + Et + Ep EC = energy consumption
Ee = embodied energy (include initial &
recurrent)
Eo = operational energy
Em = manufacturing energy of building
materials and components
Et = energy for transportation
Ep = energy used in various processes
I where:
EB = ∑ Bji Wj EB = external benefits (5.9)
j=1 i = alternatives
j = sub-criteria
B = benefit
I where:
EI = ∑ Rji Wj EI = environmental impact (5.10)
j=1 i = alternatives
j = sub-criteria
R = impact
The sustainability index is calculated for each alternative by first multiplying each value
by its appropriate weight followed by totalling the weighted scores for all criteria. The
best alternative is the one with the highest sustainability index score. The amalgamation
method yields a single index of alternative worth, which allows the options to be
ranked. The higher the sustainability index, the better the chosen alternative.
The benefits of using a sustainability index to appraise projects
The development of a sustainability index framework provides a tool to enable the

decision-maker to integrate issues of sustainable development into the project
evaluation process. It uses a mixture of resources including economic, environmental
166
and social issues within a unified approach in a full life-cycle estimate for each option.
The broad range of topic areas covered in the model of the sustainability index still
permits the use of a composite index containing all the diverse criteria, allowing the
selection of the best option from the alternatives.
The sustainability index is a comprehensive methodology that includes the

quantification of both objective and subjective measures that gives a full life-cycle
analysis of buildings. The framework respects the importance and usefulness of
conventional methods of economic CBA. It recognises the need to use monetary values
as a unit of measuring resource efficiencies that it is readily understood by the decision-
makers and stakeholders. In addition, the energy consumption is quantified for both
embodied and operational energy. The calculations of absolute quantities of mass and
energy flow will allow the impacts created by the buildings during their life cycle to be
compared (Uher, 1999). The subjective criteria of environmental and social issues are
quantified using a multiple criteria approach. Uher (1999) argues that an environmental
assessment can be achieved by using absolute rather than marginal performance
indicators for life cycle assessment of physical facilities. The advantage of obtaining
absolute data is that the ecological footprint of buildings can be calculated, and that
large internal differences in impacts for comparable functional units will appear.
With regards to the environmental building assessment methods, BREEAM, BEPAC,

LEED and GBC use similar frameworks with a credit-weighting scale to assess
buildings. ENER-RATE is principally set up to assess multiple criteria in design.
BEQUEST is predominantly used for sustainable urban planning (details refer to
Chapter Four, Section 4.2). The sustainability index can assist in decision-making for a
project from as early as the feasibility stage. The survey revealed that professionals in
the building industry are of the opinion that buildings should already be assessed at the
feasibility stage in order to choose the best option that maximises financial return and
minimises detrimental effects to the environment. The concept of a sustainability index
is enhanced by the development of the comprehensive project evaluation (CPA) by the
RICS, which indicates that building performance assessment methods should move
away from relative scales into absolute measures (RICS, 2001).
167
Soebarto and Williamson (2001), when comparing environmental building assessment

methods, say that most methods exclude cost and in some schemes, only part of the
total cost is included. Curwell (1996) states that since they are not a life-cycle analysis
method for buildings these methods would not give a balanced assessment between a
development and the environment. Cooper (1999) further states that the methods
provide only a relative, not absolute, assessment of a building’s performance. Such
relative assessments conceal the specific impact of a development on the environment
and there is no guarantee that the buildings which score highly against the framework,
are making a substantive contribution to increase environmental sustainability on a
global scale. Rees (1999) continues, commenting that such relative assessments do not
reveal the global carrying capacity appropriated by the development, and therefore
cannot be used to measure progress for sustainability.
Due to the weakness of environmental building assessment methods of assessing

buildings using relative terms, Cooper (1999) states that the direction for assessing
building performance needs to be capable of providing absolute measures. Such
absolute assessment can reveal the global carrying capacity appropriated by the
development and be capable of measuring progress toward sustainability.
The sustainability index is used at the outset to appraise projects in selecting the best
option from the alternatives. The index helps to distinguish buildings with reduced
environmental impacts, and to induce design teams to incorporate holistic
environmental performance requirements, significantly reducing the potential
environmental impact of a new project at an early stage. It can facilitate the designer’s
iterative approach, where initial understanding of the problems and means of addressing
it are allowed to evolve even before the project arrives at the design stage. However,
environmental building assessment methods are rarely used during the design stage.
Soebarto and Williamson (2001) state that environmental building assessment methods
endorse the concept of a complete design rather than assisting the designer during the
design process. The environmental building assessment methods are apparently
providing guidelines in design development and offer some insight into the issue of the
comparability of design solutions. Nevertheless, they are, in general, inadequate as
168
assessment tools to be used in the design process. The time and effort that need to be
spent on verifying the compliance of building designs with the magnitude of current
energy and environmental regulations are enormous, both in the process of verification
and in terms of producing necessary documentation (Crawley & Aho, 1999).
According to Cooper (1999), Cole (1999a) and Todd et al. (2001), environmental
building assessment methods are predominantly concerned with environmental
protection and resource efficiency, with only limited ability to assess socio-economic
sustainability. The environmental assessment of buildings using methods such as
BREEAM and BEPAC are inadequate for addressing wider sustainability issues
(Curwell & Cooper, 1998; Lee et al., 2002). Curwell and Cooper (1998) go on to state
that these methods deal with environment and futurity only. The sustainability index, in
principle, embraces economic and social concerns as well as environmental aspects of
sustainability. It has provided a theoretical framework to consider potential
contributions in furthering environmentally responsible building selection and practices.
The evaluation of the four criteria over the life span of a building further enhances the
principle of futurity and equity in project appraisal.
The environmental building assessment methods based the assessment on the opinion of
a trained assessor to validate the achievement of building performance. Not only may
the outcome be subjective but also it is only larger projects that can afford external
expertise (Crawley & Aho, 1999). In addition, the assessment results are derived from
just adding up all the points to get a total score. Even if a building rates poorly on a few
key factors such as energy consumption, it can still achieve a high score from meeting
other, more marginal criteria (Curwell, 1996).
The inherent weakness of subjectivity and point systems in assessment methods will not
be a problem in the model of sustainability index. The composite index is obtained from
a methodology that involves the participation of not just the design teams, but also the
local council and people in the community that participate in assessing the social and
environmental issues of a proposed development. The methodology allows information
from heterogeneous qualitative sources, such as community questionnaires and surveys,
to form part of the appraisal. Besides, the sustainability index does not derive a result
169
from a point scoring system. Instead the resource usage and energy consumption are
quantified to provide an absolute assessment of building performance as opposed to the
relative assessment of most environmental assessment methods.
The sustainability index ranks projects using a composite index, but it is derived from
absolute measures of criteria using the most suitable methodology. Therefore the
outcome, whilst providing a ranking of developments with competing alternatives, also
reveals the resources consumption and the extent of environment effects in the
evaluation process.
5.3.5 Summary
Building developments involve complex decisions and the increased significance of

external effects has further complicated the situation. Society is not just concerned with
economic growth and development, but also the long-term affects on living standards
for both present and future generations. Certainly sustainable development is an
important issue in project decisions. Using a conventional single-dimension evaluation
technique such as CBA to aid decision-making is no longer adequate. A much more
sophisticated model needs to be developed to handle multi-dimensional arrays of data.
The development of a sustainability index is a way to address multiple criteria in
relation to project decision-making. Using a sustainability index will greatly enhance
the assessment of external effects generated by construction activity, realise sustainable
development goals and thereby make a positive contribution to the identification of
optimum design solutions.
The model of a sustainability index has been established and discussed in this chapter.
The next two chapters concentrate on evaluating the four criteria of the sustainability
index based on a sample of 20 government high schools. Data on each criterion are
collected and their relationships analysed and presented.
5.4 CONCLUSION
170
Following the development of a multiple dimensional model of project appraisals in

Chapter Four, this chapter presented the process of identifying essential criteria to be
incorporated into the decision-making model. It is based on an industry questionnaire to
ascertain how building professionals rank a list of economic and environmental criteria
identified in the literature review. This chapter also presented the methodological
framework of a sustainability index for project appraisal.
The model of the sustainability index is based on a multiple dimensional concept that
encompasses economic, environmental and social factors as well as energy
consumption in the evaluation process. The combination of these criteria into a single
decision tool is fundamental to decision-making. It provides a flexible and easy-to-use
evaluation instrument that represents a systematic and holistic approach to decision-
making.
The sustainability index will be examined by studying the four criteria over a sample of
20 government high school projects in NSW. Data of the four criteria as discussed in
this chapter will be collected and analysed. Chapter Six will present the detailed
research methodology, research design, hypotheses and data collection. Data analysis
will be included in Chapters Seven and Eight.
171
_______________________________________________________________________
CHAPTER
SIX
_______________________________________________________________________
RESEARCH METHODOLOGY AND

DATA COLLECTION
6.1 INTRODUCTION
This chapter’s objectives are to firstly present the research methodology used in the
study; to expand the research hypothesis introduced in Chapter One into seven working
hypotheses, and to present the research design. It also provides a background to the
selected case studies and data collection procedures for the variables. Finally, this
chapter includes descriptive statistics to highlight features of the data and provide a
general understanding of the data collected. Detailed statistical analysis of data is
included in Chapters Seven and Eight.
This is a significant introduction to the case studies as the work involves using various
methods of data collection and different measurement methods for the four previously
identified variables.
Case studies were chosen as the best means to explore sustainability relationships and
dependencies of criteria in the sustainability index, and to show how the sustainability
index works to rank projects. Data on the four criteria included in the model were
collected and the relationships between variables were analysed to test the model’s
robustness.
Chapter 6: Research methodology and data collection
The task of data collection included the following:

x financial return—quantifying construction and building life cost,
x energy consumption—undertaking building life-cycle energy analysis,
x external benefits—quantifying external benefits of projects, and
x environmental impact—quantifying environmental risk and damage from projects.
To achieve the stated objectives of the research, 20 government high school projects in
New South Wales were selected as a sample for the case studies. Many high school
projects were completed in the past few years in New South Wales, which provided a
potential database for analysis. This research project received assistance from the
Department of Public Works and Services (DPWS) (now the Department of Commerce)
and information was obtained from their Sydney office.
Government high schools were chosen for the case studies because the DPWS Sydney
office keeps records of high school projects either in the form of a bill of quantities or a
cost plan. In addition, the database had abundant information and could be accessed
immediately which reduced the time required for data collection, thus removing a
substantial obstacle given the amount of data required. A further benefit is that
government high school construction is based on the same set of pre-designed criteria,
providing an ideal platform for analysis and comparison. Given that building projects
are in many ways unique, these 20 similar school projects facilitated easier data analysis
and comparison and provided a good opportunity to test the sustainability index.
6.2 RESEARCH METHODOLOGY
This research involves developing a sustainability index for project appraisals. The
research questions posed in Chapter One include identifying the fundamental criteria to
be considered in project appraisal in order to ensure that a development conforms with
sustainable practice. Identifying the essential criteria for project appraisal, using an
extensive survey of construction professionals, was covered in detail in Chapter Five.
Therefore, the next research question will be to investigate how these criteria interrelate
173
with each other if they are to be combined into a single decision tool. There is currently
no such aggregation described in the literature and it has not been possible to locate any
previous research in this area. Hence, studying the interactions between various criteria
is new and exploratory research. In view of the complex nature of the research, case
studies were deemed to be the preferable method to generate the essential data for
analysis.
Case studies have previously been adopted as a relevant and adequate research
methodology in planning, economic and political science (Gillham, 2000; Yin, 2003).
They allow an empirical inquiry into the real-life context of research work. They are
particularly useful when the research context is too complex for surveys or
experimental strategies (Gillham, 2000).
Using case studies of a single unit is often suspect, because there may be many elements
that are specific to that particular unit but may not be relied on to draw conclusions
about the population (Yin, 2003). Because building projects are principally unique, it is
highly unlikely that conclusions can be drawn based on the findings from a single unit.
It was, therefore, necessary to use multiple case studies to investigate the research
questions and to generate more reliable data for inferences and to minimise
misrepresentation. The results generated through these case studies are considered more
compelling and more robust (Yin, 2003) and hence will be more useful in developing a
sustainability index for project appraisal.
The desired outcome from using these case studies is to develop pertinent hypotheses
and propositions for further inquiry. High school projects were chosen as the multiple
case designs using an embedded approach. The theoretical framework derived for data
collection is based on a multi-method approach and data were accumulated by different
methods, but bearing on the same issue (Gillham, 2000). Different methods of data
collection have been used for the four criteria of the sustainability index, and were
selected as the most suitable methods for the complex nature of these criteria.
The number of projects to be included in the case studies is restricted by various

constraints. The case studies involve quantifying the four criteria identified in Chapter
174
Five as fundamental for enhancing ecologically sustainable development in the

construction industry. The data collection to quantify each criterion required
comprehensive resources and the sample size needed to be a realistic and manageable
size. The type of project and comprehensive nature of the information also affected the
sample size.
The number of projects that are available for the study was also limited. Eighty-five
projects were received from DPWS, but after a screening process only 20 were found to
satisfy the stated requirements for the study as detailed in Section 6.5. Even though the
sample size may seen small, it will not significantly effect the analysis as almost all
relevant statistical techniques are applicable for samples of that size (Yin, 2003). A
bigger sample would have been expected to narrow the confidence limits, but would not
have changed the analysis.
6.3 RESEARCH HYPOTHESES
The working hypothesis presented in Chapter One has been refined and expanded into
seven working hypotheses in order to provide a clear framework and guidelines for
collecting, analysing and interpreting the data. The set of working hypotheses also
serves as a testing tool of the relationships between variables for the sustainability
index. Detailed analysis will be discussed in Chapters Seven and Eight, however the
working hypotheses with corresponding null hypotheses are as follows:
Hypothesis one (H1) is set up to explore the relationship between building cost and total
energy consumption. The purpose is to examine whether the increases in the total
building cost will affect the total energy consumption.
Null Hypothesis H0 (1)
The building cost will exhibit no relationship with energy consumption.
Alternate Hypothesis Ha (1)

The building cost will exhibit a relationship with energy consumption.
175
Hypothesis two (H2) is set up to explore the relationship between building costs and
external benefits. The purpose is to examine whether increased total building cost will
increase environmental benefits.
The building cost will exhibit no relationship with external benefits.

The building cost will exhibit a relationship with external benefit.
Hypothesis three (H3) is set up to explore the relationship between building cost and
environmental impact. The purpose is to examine whether or not increased total
building cost will increase environmental impact.
The building cost will exhibit no relationship with environmental impact.

The building cost will exhibit a relationship with environmental impact.
Hypothesis four (H4) is set up to explore the relationship between total energy
consumption and external benefits. The purpose is to examine whether increased energy
use will increase external benefits.
The energy consumption will exhibit no relationship with external benefits.

The energy consumption will exhibit a relationship with external benefits.
Hypothesis five (H5) is set up to explore the relationship between total energy
consumption and environmental impact. The purpose is to examine whether increased
energy use has an impact on the environment.
The energy consumption will exhibit no relationship with environmental impact.
The energy consumption will exhibit a relationship with environmental impact.
176
Hypothesis six (H6) is set up to explore the relationship between external benefits and
environmental impact. The purpose is to examine if increased environmental benefits
will affect environmental impact.
The external benefits will exhibit no relationship with environmental impact.

The external benefit will exhibit a relationship with environmental impact.
Hypothesis seven (H7) is set up to explore the complex relationship between energy
consumption and the rest of the criteria. The purpose is to examine whether energy
consumption is the function of building cost, external benefits and environmental
impact.
The energy consumption will exhibit no relationship with building cost, external
benefits and environmental impact.

The energy consumption will exhibit a relationship with building cost, external
benefits and environmental impact.
Data on each criterion were collected, analysed and interpreted in this chapter. Chapter
Seven further explores data properties and characteristics. The hypotheses developed in
this section will be tested, discussed and presented in Chapter Eight.
6.4 RESEARCH DESIGN
The multiple case studies have been carried out in three stages. The first stage is
transferring the information from the bill of quantities or cost plans to an electronic
format using a spreadsheet. The spreadsheet was used to calculate construction, initial
and recurrent embodied energy. The building life cost was calculated using the
LIFECOST computer program.
177
The second stage involved obtaining data to calculate operational energy for the case
studies. To obtain this data a questionnaire was designed and distributed to public high
schools to obtain records of energy bills for 2001. A copy of the questionnaire is
included in Appendix C.
The third stage involved evaluating each school’s environmental performance using a
multi-criteria analysis. As discussed in Chapter Two, multi-criteria analysis is a widely
used methodology for appraising environmental effects using a weighted scoring
method. A comprehensive list of environmental criteria pertinent to school projects was
compiled based on the school’s environmental reports and the literature review. Given
the highly specialised nature of the work and the potential for subjectivity, experts from
the construction industry were invited to participate.
Ten professionals were selected from the industry survey participants based on the
information completed in Part Three of the questionnaire (see Chapter Five). The group
included project managers, site managers, construction managers, registered architects
and engineers who have experience either designing or constructing environmental
projects. Each specialist was given from one to three schools to assess its environmental
performance. The specialists visited the school, completed an evaluation form and
prepared a brief description of the environmental performance. A copy of the evaluation
form has been included in Appendix D of the thesis. Further, detailed discussion can be
found later in this chapter in Section 6.6.
Finally, all the data collected for the case studies have been categorised, analysed and
presented in Chapters Seven and Eight.
178
6.5 OVERVIEW OF CASE STUDY PROJECTS
DPWS builds many high schools every year in New South Wales but there is no
information about the total number of school completed. However, in 2001, information
on 85 school projects completed within the past 20 years was obtained from the DPWS
Sydney office. The documents received were either in the form of sketch design cost
plans or bills of quantities. In addition, some projects also came with contract drawings,
specifications and environmental reports. The case study research required detailed
examination of construction cost, building life cost, environmental analysis and energy
usage. Therefore sufficient details of the projects were required for the study.
Since not all projects gave sufficient detail for the study, a screening process was
employed to examine all the projects in detail to select suitable projects. The selection
criteria included looking for projects that had comprehensive data for the analysis and
which represented different locations, sizes, completion years, specifications and
construction methods in an attempt to provide an adequate coverage for data analysis.
The screening process eliminated all but 20 projects that satisfied all the requirements.
Table 6.1 summarises these projects which varied in completion years from fairly
recently constructed to 18 years old, were located throughout New South Wales, sized
between 1,295 and 15,631m2, and ranged from a small school of 165 to a large school
with 1,076 students.
These projects were scattered around New South Wales. As shown in Figure 6.1 (see
next page) eight projects were located in the Sydney region and 12 projects were
scattered in country regions, the farthest located approximately 275km away from the
Sydney CBD.
179
Table 6.1 Summary of information for the 20 public high schools in

New South Wales
Project Student Year of
No. No. completion GFA (m2) Location
1 975 1989 9,800 Shellharbour
2 960 1986 13,519 Campbelltown
3 920 1985 8,092 Central Coast
4 1,009 2000 12,565 Campbelltown
5 1,076 1997 11,398 Liverpool
6 704 2000 15,344 Dubbo
7 846 2002 5,268 Dubbo
8 808 1990 8,610 Mt Druitt
9 851 1997 12,265 Penrith
10 956 2000 10,747 Lake Macquarie
11 1,000 2002 13,213 Campbelltown
12 900 1995 3,040 Bathurst
13 828 1994 9,220 Central Coast
14 184 1994 1,295 Dubbo
15 850 1990 8,864 Bondi
16 787 1997 8,500 Central Coast
17 979 2001 15,631 Central Coast
18 946 1997 4,066 Wagga Wagga
19 870 1986 7,516 Penrith
20 165 1999 3,524 Dubbo
180
Figure 6.1 Locations of the 20 public high school projects
(6,7,14,20)
(9,19)
Mt Druitt (8)
181
For the 20 projects, five bills of quantities and 15 sketch design cost plans were
received. Floor plans, construction details and specification were available for some
projects only. No data were received in electronic format. The initial step, therefore,
was to convert the documents into electronic format using a spreadsheet. The
spreadsheet was designed with rows for details about construction which were directly
transferred either from the bills of quantities or cost plans. The spreadsheet also
contained columns to calculate construction cost, initial embodied energy and recurrent
embodied energy. A copy of the spreadsheet is included in this report as Appendix E.
All projects were prepared in the elemental format in accordance with the Australian
Cost Management Manual (ACMM) prepared by the Australian Institute of Quantity
Surveyors, July 2000 (Australian Institute of Quantity Surveyors, 2001). The format
contained a list of standard elements and sub-elements then individual materials. The
gross floor areas (GFA) were also measured in accordance with the definition and
methods of ACMM.
A bill of quantities has advantages and disadvantages for use in the case studies. It
provides a comprehensive record of all the materials and workmanship for the project.
However, it does not always give quantities of the constituent materials used in each
item at the level of detail needed for this analysis. In addition, a bill of quantities is
arranged by trades (e.g. concrete and structural steel), not by elements (e.g. upper floors
and columns). Some trades are used across many elements and have to be manually re-
classified. To classify difficult items, the architectural and structural drawings were
consulted to determine where items were located in accordance with the ACMM
standard list of elements.
The 15 projects obtained in the form of sketch design cost plans were already arranged
by elements. Consequently, the effort of transferring the cost plans to an electronic
format using the pre-designed layout became easier and more efficient. The
disadvantage, however, was that most of the items were measured in ‘bulk quantities’,
which lumped several items into one. Further work was required to break the elements
down into basic materials.
182
6.6 DATA COLLECTION
6.6.1 Financial return
Financial return comprises measuring construction and building life costs. Construction
cost covers expenditure on labour, plant and materials used to construct facilities such
as the foundation, structure and finishes. It also usually includes development costs,
such as professional fees, land cost and agent fees. However, these costs were excluded
from the study as they do not apply to government projects. In addition, there is no
consistent way to measure them so to include them would introduce bias. As the
projects were completed at different times they were converted into current prices at
2002 using the Building Price Index of the Sydney region to facilitate comparison
(Rawlinsons, 2003).
The second part of the financial return involved undertaking a building life cost study of
each project. This cost is an economic assessment of a building over its economic life
expressed in terms of equivalent dollars. It includes expenses incurred during the
normal building operations such as labour, materials, utilities and related costs. It
typically accounts for at least 50 percent, and sometimes up to 80 percent of the total
project cost and usually is accounted for during the building’s in-service life (Griffin,
1993).
In physical terms, with the right kind of materials a building can last for a very long
time and is likely to become technologically and financially obsolete long before it falls
down. For simplicity, an arbitrary life cycle of 60 years was chosen for all 20 projects
as most research on life cycle costing has based the calculations on such a period
(Ashworth, 1993).
Estimating building life cost is a process of identifying the building elements or

components that may require regular maintenance, repair and scheduled renovation.
Building structure does not require too much work over the life span once it is
completed. However, other parts of the building such as building fabric, internal
183
finishes and furniture may require more frequent maintenance, repair and
refurbishment. Building life cost studies for the case studies was carried out using the
LIFECOST Version 2.1 software. This is spreadsheet-based software that helps to
calculate life cost over the designated life expectancy of building materials and
components. A detailed study and investigation were carried out to the cost plan or bill
of quantities of each project to identify building components requiring regular or
scheduled maintenance and repair. The items were then entered into the spreadsheet
together with specification and quantities to calculate the building life cost.
Another equally important step of building life cost studies is to distinguish the life
expectancy of components or materials in order to work out the number of times an
item is replaced, maintained or repaired over the life cycle. If the item is never replaced,
such as the structure, the replacement rate is zero. If the item is replaced once in the
building’s life, the replacement rate is calculated by dividing the building life cycle (60)
by the life expectancy (50) of the item, that is, once (1), in this example.
According to Langston (1994), Kirk and Dell’Isola (1995) and Australian Institute of
Quantity Surveyors (2002), the life expectancy of items varies in accordance with types
of building. Calculating building life cost relies on appropriate, relevant and historical
information and data. Most life cost studies have been focused on commercial
buildings; studies on high schools are rare. Therefore, the building life cycle data for the
case studies is based on Langston (1994), Kirk and Dell’Isola (1995) and Australian
Institute of Quantity Surveyors (2002). These sources of information provide the
required information on life cycle data for maintenance, operational demands and
replacement needs for selected building elements or components.
Discounting is important in order for project costs and benefits to be compared and
considered at today’s prices (Price, 1993; Harding, 1998). However, Langston (1994)
states that discounting is recognised as being applicable when comparing two or more
alternatives, but is irrelevant to specific measurements of a given design. Therefore, all
costs have been priced at 2002 and projected into the designated life cycle based on a
discount rate equal to zero. Table 6.2 summarised the life cost data used in the study.
184
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The development of a multi-criteria approach for

the measurement of sustainable performance

A thesis submitted in fulfilment of the requirements

Ms Carey Martin is gratefully acknowledged for her valued editorial assistance.

Chapter One - Introduction

1.1 Foundation for the research 1

Chapter Two - Economic development and the environment

2.4 Cost benefit analysis and multi-criteria analysis

Chapter Three - The construction industry and the environment

Chapter Four - Conceptual framework of a sustainability model for

Chapter Five - The development of sustainability index for project appraisal

5.1 Introduction 122

5.3.5 Summary 170

Chapter Six - Research Methodology and Data Collection

6.1 Introduction 172

Chapter Seven - Data Analysis and Discussions

7.1 Introduction 200

7.7 Analysis of relationships between building cost and energy consumption

8.1 Introduction 251

Chapter Nine - Developing SINDEX – A benchmarking tool in construction

9.1 Introduction 280

Chapter Ten - Summary and Conclusions

10.1 Introduction 295

1.1 Thesis structure 10

8.1 Regression analysis of external benefits (value score/m2) and

2.1 Summary of environmental valuation techniques 30

7.7 Summary of operational energy by fuel types over a 60-year

Building development involves complex decisions and the increased significance of

1.1 FOUNDATION FOR THE RESEARCH

Environmental economics and sustainable development have become central concerns

Project development potentially contributes to the economic and social advancement of

To harness project development positively, it can be used to contribute to the

1.2 PROBLEM DEFINITION

frequently cannot be successfully priced through the same conventional approach

Research on non-monetary techniques has been undertaken to search for alternative

Completely replacing a monetary market approach with non-monetary techniques has

1.3 RESEARCH HYPOTHESIS

This research focuses on identifying, quantifying and incorporating environmental

This requires a comprehensive examination of the existing decision-making

The industry survey to rank major sustainable development determinants comprises an

Hw: The use of a sustainability index in the decision-making process for

1.4 RESEARCH AIMS AND OBJECTIVES

The aim of this research is to develop a strategic decision-making model by objectively

i. identify, investigate and examine development impacts on the environment,

1.5 RESEARCH METHODOLOGY

It was decided to use an industry questionnaire to obtain data on professionals’ opinions

1.6 THESIS STRUCTURE

study also highlights the importance of energy consumption in achieving sustainable

Figure 1.1 Thesis structure

Identify impact of Investigate the Evaluate the monetary

Investigate the impact of building Undertake life-cycle energy study

ECONOMIC DEVELOPMENT AND THE

2.2 THE ENVIRONMENT AND THE ECONOMY

Economic growth and environmental protection have a two-way interaction. The

2.2.2 The role of the natural environment

Whilst the environment serves as a resource base, it also consumed by performing as a

Daly’s (1992) opinion is more acceptable as it is more realistic about maintaining a

2.2.3 Environmental problems

Environmental destruction is apparent everywhere, precipitating a crisis that is now of