Focusing on Life Cycle Cost (LCC) and Life Cycle Assessment (LCA) in GPP Green Public Procurement (GPP) - Lead the change National Conference George Jadoun, 02 July 2010 Valletta, Malta - PowerPoint PPT Presentation

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Focusing on Life Cycle Cost (LCC) and Life Cycle Assessment (LCA) in GPP Green Public Procurement (GPP) - Lead the change National Conference George Jadoun, 02 July 2010 Valletta, Malta

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Focusing on Life Cycle Cost (LCC) and Life Cycle Assessment (LCA) in GPP Green Public Procurement (GPP) - Lead the change National Conference George Jadoun, 02 July 2010 – PowerPoint PPT presentation

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Title: Focusing on Life Cycle Cost (LCC) and Life Cycle Assessment (LCA) in GPP Green Public Procurement (GPP) - Lead the change National Conference George Jadoun, 02 July 2010 Valletta, Malta


1
Focusing on Life Cycle Cost (LCC) and Life Cycle
Assessment (LCA) in GPPGreen Public Procurement
(GPP) - Lead the changeNational
ConferenceGeorge Jadoun, 02 July 2010Valletta,
Malta


2
Outline
  • LCC (Life Cycle Cost) and WLC (Whole Life Cost)
  • LCA (Life Cycle Assessment)

3
What is Life Cycle Costing?
  • Definitions in the BS ISO 156855 is
  • Life cycle costing is a methodology for the
    systematic economic evaluation of the life cycle
    costs over the period of analysis, as defined in
    the agreed scope. Note life cycle costing can
    address a period of analysis which covers the
    entire life cycle, or selected stage (s) or
    periods of interest therein.
  • Whole life costing is a methodology for the
    systematic economic consideration of all the
    whole life costs and benefits over the period of
    analysis, as defined in the agreed scope

4
LCC vs. WLC
ISO addresses the confusion over terminology
regarding the difference between whole life cost
(WLC) and life cycle cost (LCC)
Note Occupancy costs included in non
construction costs in BS ISO 15686-5
5
Why should we use LCC?
  • The most common misconception about GPP is that
    green products cost more
  • However, upon closer inspection, this may not
    necessarily hold true
  • The higher initial price of the greener product
    is more than compensated by the much lower usage
    and disposal costs

6
Using LCC
  • Use of LCC is not mandatory under the EC
    procurement Directives, however if contracting
    authorities wish to ascertain which product,
    among alternatives, is the most cost effective
    then they need to apply LCC approaches in their
    procurement award decisions.
  • This means comparing not just the initial
    purchase price of a product, but also the future
    costs
  • Usage costs (energy/water consumption,
    consumables such as ink or paper)
  • Maintenance costs
  • Disposal costs/resale value

7
Examples of LCC
  • When the environmental authorities in Hamburg,
    Germany, substituted two old inefficient lamps
    with one energy-efficient lamp in 300 public
    buildings, they reduced the annual electricity
    consumption by approx. 4.5 million kWh (an
    equivalent of approx. 2,700 t of CO2 emissions).
  • Assuming a price of 5 cents per kWh, this equates
    to an annual saving of 225,000 on Hamburg's
    electricity bill.

8
LCC in Construction
  • Running costs may constitute up to 85 of total
    costs
  • On same scale, design costs are likely to be 0.3
    to 0.5 of lifetime costs
  • It is through the design process that the largest
    impact can be made on the 85 figure
  • So LCC should be a standard procedure for
    construction work

9
Clean Vehicles Directive 2009/33/EC
  • Aim
  • Market introduction of clean and energy
    efficient vehicles to improve the environmental
    performance of transport
  • Approach
  • Inclusion of life-time impacts in vehicle
    purchase on energy consumption, CO2, pollutant
    emissions
  • Scope
  • Road transport vehicles purchased by contracting
    authorities and entities, and operators under
    public service obligation for passenger transport

10
Monetisation of Emissions
Cost for emissions in road transport
CO2 NO2 NMHC Particulate matter
0,03-0,04 /kg 0,0044 /g 0,001 /g 0,087 /g
11
How can your organisation use LCC?
  • Identify types of procurement for which LCC is
    appropriate (e.g. buildings, energy and water
    consuming equipment)
  • Create a nucleus of specialist staff who will be
    responsible for procurement of equipment/construct
    ion where LCC award methodology is appropriate
  • Incorporate a requirement for LCC into your
    procurement policy so that it becomes a
    systematic part of the procurement process
  • Provide training in the use and advantage of Life
    Cycle Costing as a tender evaluation method
  • Gain experience in using LCC, and adapt it for
    your needs

12
Benefits of using LCC
  • There are many benefits for organisations in
    using Life Cycle Costing on a systematic basis
  • Greater transparency of future costs
  • More effective evaluation of competing options
    (best value for money)
  • Better forecasting of future expenditures
  • In summary, life cycle costing supports your
    responsibility to the community to use public
    funds wisely and sustainably

13
Introducing Life-Cycle Assessment
  • LCA provides a systematic set of procedures for
    compiling and examining the inputs and outputs of
    materials and energy and the associated
    environmental impacts directly attributable to
    the functioning of a product or service system
    throughout its life cycle.
  • (adapted from BS EN ISO 14040, 3.2)

14
Life-Cycle Assessment methodology
  • Underpins the development of eco-label criteria
  • Scientific basis - can be complex
  • Often carried out by specialised firms or by
    consultants on behalf of companies
  • LCA is the basis for Product and Service
    prioritisation which are thereafter incorporated
    in the NAP taking into consideration, the scope
    for environmental improvement, the market
    readiness, the political context, affordability,
    etc.
  • ISO Standards
  • BS EN ISO 140402006 Environmental management
    Life cycle assessment Principles and framework
  • BS EN ISO 140442006 Environmental management
    Life cycle assessment Requirements and
    guidelines

15
Life-Cycle Assessment
  • Example
  • Life cycle assessment of a detergent
  • Includes impacts of
  • Raw materials
  • Manufacturing
  • Use
  • End-of-life

16
Thank you for your attention!
  • http//ec.europa.eu/environment/gpp
  • http//www.itcilo.org/gpp

Please visit
  • George Jadoun
  • Sustainable Development Governance
  • ITCILO
  • g.jadoun_at_itcilo.org
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