American Society of Civil Engineers


Life Cycle Cost Analysis and Real Option Theory for Improved Sustainability in Existing Buildings


by Carol C. Menassa, A.M.ASCE, (M.A. Mortenson Company Assistant Professor of Construction Engineering and Management; Civil and Environmental Engineering Department; University of Wisconsin-Madison, Madison, WI 53706, USA. E-mail: menassa@wisc.edu) and Alexander J. Rexrode, S.M.ASCE, (Master of Science Student in Construction Engineering and Management, Civil and Environmental Engineering Department; University of Wisconsin-Madison, Madison, WI 53706, USA. E-mail: rexrode@wisc.edu)
Section: Sustainable Construction and Facilities, pp. 1477-1486, (doi:  http://dx.doi.org/10.1061/41109(373)148)

     Access full text
     Purchase Subscription
     Permissions for Reuse  

Document type: Conference Proceeding Paper
Part of: Construction Research Congress 2010: Innovation for Reshaping Construction Practice
Abstract: This paper investigates a number of challenges related to making existing buildings more sustainable to meet the increased demand for green office, residential and retail space. Some of these challenges include integrating the owner and user requirements, determining and prioritizing the required modifications to reduce the gap between the existing conditions and the required green standard, and finally aligning the alternative options for sustainably retrofitting the building with the available capital and resources. In particular, this paper will investigate innovative approaches to studying alternative greening solutions for existing buildings by augmenting the traditional life cycle cost analysis method with principles from financial and real options. These techniques are investigated because they provide the owner with the flexibility to value different alternative solutions for their buildings under conditions of uncertainty especially those related to demand for green space, fluctuating cost of energy and the perceived savings in the building operation and maintenance costs after sustainably retrofitting the existing building.


ASCE Subject Headings:
Life cycles
Theories
Sustainable development
Buildings