Elemental

A story in BD caught my eye last week:

A London architect is offering short-term staff an hourly rate of just £5.71 — below the minimum wage of £5.80

What BD had done was split the hours per week (70 in this case) to arrive at an hourly rate. Fair enough. How many of us do this ourselves? Do you work your contracted hours or slightly more? If you’re in the construction industry (and especially given the current climate) it’s likely to be more.

The poor architect who gets £5.71/hr in the example above is probably under no illusions as to how many hours they are expected to work, but if that same wage was translated to a typical 37.5 hrs per week, 48 weeks per year, it would equate to a wage of £10,278.  Still not great (!), I agree.

But let’s see what happens when, say, a BREEAM consultant on £28,000 per year on a typical contract starts to work a ‘few’ hours extra. At first glance, they are on £15.55/hr (almost 3 times as much as our poor architect further up the page!). But say they work an average of 40 hours per week rather than 37.5? The hourly rate drops to £14.58/hr. That extra half hour a night equates to a 6% drop in hourly salary!

Now this is not a rally to the workers to “work to rule”, but a cautionary reminder to not always take annual salaries at face value. This works at management level too – getting paid £75k a year, but expected to attend black-tie functions, networking events (say 10 hours per month) and on top working an average 55 hour week can drop a hefty £41.67/hr to say, £25/hr.

A long hours culture is still pervasive (in my opinion) in this industry and I think I have one explanation why. If most fees are fixed (rather than on an hourly basis) there should be an incentive to work smarter to reduce the number of hours (increasing the effective hourly rate).  However, projects still need to be delivered on time, and so people end up squeezing work into the time available. In the meantime, people still have some non-billable tasks to do which creep onto the end of their day. From a business point of view this could be a good thing, especially if it doesn’t show up on the books. Could this explain the increase in profitability seen on the RICS consultants KPI’s (full doc)?

Profitability (median) has gone from 8% in 2002 to 14.8% in 2009, with a corresponding increase in productivity from 31% to 37.5% (constant 2002 values).

Of course this is only one (rather cynical) view – we could of course all be working smarter and harder – I suspect there is a little of each involved.

If switching positions (or finding a new job after a period of redundancy) have a good hard think about how long you will be expected to work, travel time, the level of ‘billable’ hours you would be expected to meet, etc, etc. But I’m sure you know all this already.

That said, £5.71 is still appalling…

admin Economics, Productivity

One would have to be living under a rock (or at least, abroad) not to have noticed that there will be a general election in the UK sometime in the next 6 months. What will this mean for the construction industry? Plenty of speculation about, but not much talk about actual political and economic schools of thought, especially when it comes to sustainability.

First things first. There is no standalone discipline of sustainability. Basically, you have to be sustainable at something. Like sustainable construction. But even if you are committed to sustainable construction there is no ‘one correct way’ to practice sustainability. What is one man’s medicine is another man’s poison. Often what differentiates ‘flavours’ of sustainability is the economic and political beliefs and drivers of the actors involved.

Bill McKibben in a post about global warming says:

Most political arguments don’t really have a right and a wrong, no matter how passionately they’re argued. They’re about human preferences…

He does then state that we can’t afford to depend on current political processes to fix global warming, which I agree with, but I’m talking here about sustainability in it’s broadest sense rather than singly focussing on the carbon and global warming issues (the environmental leg, which we have broad consensus on). When it comes to sustainability, there really is no right and wrong. Looking at social and economic factors will inevitably bring in political beliefs.

To illustrate what I mean, and for those who haven’t come across it, there’s a lovely graphic called the Political Compass which plots both economic and politic beliefs on it. Below is the graphic for the main political parties in the UK in 2008.

The Political Compass owes more than a nod to the Nolan Chart which plots personal freedom against economic freedom. The idea of both of these is to expand the old fashioned political notions of left and right.

The usefulness of this when looking at sustainability (think of those 3 legs – social, economic and environmental) has to be huge? If we recognise this now, we will be able to have much more informed conversations about sustainability in construction over the next decade.

My hope for 2010 would be that economics and politics will no longer be neutral factors (or worse, taboo), but rather explicit within sustainability strategies. Any comments?

admin Economics, Opinion Bill McKibben, Political Compass, politics, Sustainability

I have a new geek-crush. For those who have not yet come across the inimitable Hans Rosling, I urge you all to head over to the awesome Gapminder website, whose strapline is “Unveiling the beauty of statistics for a fact based world view”.  An incredibly clear way of illustrating facts and figures.

Today, I’m going to look at Hans’ talk on Human Rights and Democracy Statistics. Watch it if you have time (9 mins 51 secs).

If you don’t, the central premise is that there is a weak statistical link between life expectancy, income and democracy. As Hans goes on to explain, this does not mean that human rights should not be pursued, but as a means to an end perhaps they are weak. Fascinating stuff (go on, watch it – he explains it much better than me).

This was interesting to me for a number of reasons. I read Fared Zakaria’s book The Future of Freedom: Illiberal Democracy at Home and Abroad about 18 months ago, and in it he poses a direct relationship between GDP per capita income and the emergence of democracy. Using the year 2000 as a base, when income >$6000 democracy is highly resilient and for those countries below that threshold he has some rules of thumb as to when democracy is likely to appear. Zakaria makes some important points between the differences in liberty and democracy (the two are not dependent on each other). Another book which offers similar threshold’s is Kenichi Ohmae’s The Borderless World which I read not long after Zakaria. He posits that (using a 1990 base) around GNP$5000 per capita, givernments still have control of information and the ability to mislead poeple. As GNP rises, the power of governments and religions fall and by $26,000 (i.e. Japan in his example) people have access to information and make choices on value and quality (cheapest and best).

Both of these observations have an effect on framing sustainability in different contexts, especially at a global level. In a  strategic, scenario planning sense, it is essential to consider social and economic factors – a technological solution which works in one country make not work in another, and not for purely technical reasons.

The second reason I’m intrigued by Hans’ work is that I’ve been cooking up a theory for a  couple of years now, which would compare a country’s sustainability credentials to it’s ‘cultural dimensions’ as defined by Hofstede (primarily the female/male aspect). I’m sure someone must have done a thesis on this – if anyone knows of a study, please let me know. I can’t find the Hofstede data in Gapminder, but as it isn’t (yet) a time series, I didn’t really expect to see it.

I’ve had so much fun playing with the graphs and animations, I’m sure I’ll come back to Gapminder another day. Enjoy!

admin Economics democracy, Economics, statistics

Sometimes it’s good to get to events which don’t have a construction or buildings focus. Thanks to the magic of Twitter, I heard that Nick Stern (aka Professor Lord Stern of Brentwood) was presenting a public lecture about his new book at LSE on 21 April. I couldn’t pass on the opportunity to listen to a celebrated economist talk on 2 of my favourite topics after buildings – climate change and economics!

It’s been 2.5 years since the Stern review catapulted Nick into the public consciousness. Since leaving the government shortly afterwards he’s been keeping busy, proposing green new deal’s and writing “Blueprint for a Safer Planet“.

An mp3 of the event (76 mins) is available from the LSE website or the Guardian if you want to listen to the whole thing. Unfortunately the slides aren’t available. James Randerson has a slightly more coherent take on the event in the Guardian here. The FT also did a review of the book when it came out at the beginning of the month.

The need for addressing carbon was covered with a swift dash through the Hadley/IPCC climate data. I suspect most readers of this blog will know the headline figures, so I’ll not regurgitate here.

Three actions

1. Energy efficiency
2. Develop low carbon technologies and activities
3. Halt deforestation

He illustrated many of the cost issues with McKinsey’s now famous abatement curve (first published in January 2007, revised this year and available here – the full report is 190 pages).

How much will it cost? 1.95% of GDP (unless GDP drops). Stern admitted some flab in this number and cost is likely to drop with technological progress. Think of it as an insurance premium for a few decades. Drivers of growth over the next few years will be technological, towards a low carbon economy. Why not strive for zero growth now? He believes we need a growth story to deal with world poverty. We don’t need growth forever, afterall forever is a long time.

As it turns out, Stern’s views on CCS were fairly prescient, given the post-budget announcement that potentially all new coal power stations will have to have CCS. Stern asserted that CCS was fundamental, as we need to know quickly if can we do it in (i.e. in the next 10 years). 50% of the world’s electricity is currently coal fired. If not we move to plan B, which will be much more expensive. Developed countries have to take the lead on this to ensure China, India and other developing countries do not have any excuse not to follow it.

Some more in the press re:CCS since I went to the event – according to The Week (can’t find a direct link to the article) coal still provides a third of the UK’s electricity. Proportions abroad are much higher: 50% in the US, 70% in India and 80% in China. Ed Milliband’s requirement for CCS on new UK coal stations only covers 25% of their emissions, rising to 100% in 2025.

In the Q&A, we discussed political will. Stern made the very good point that if we want things to change, it is quite within our own remit to lobby politicians and businesses for the change – they are humans after all, and ought to listen to reason.

admin Book Review, Economics, Events CCS, Climate Change, coal, Economics, LSE, Nick Stern

One of my favourite books of 2006 was ‘The World is Flat‘ by Thomas L. Friedman. It’s a long read at nearly 600 pages, but worth it. The guy can write (he’s got a Pullitzer) and puts forward a convincing case for the flattening of the world and some of the the benefits of globalisation.

Charles Lockwood has a great interview with Thomas here (pdf) where he explains the challenges he sees in ‘green going mainstream’ (my emphasis added):

The environmental movement. They got
wrapped up in green as a personal virtue—
“We are better because we are green”—
and they’ve put off a lot of people, I think.
That’s why my whole goal for this year is to
redefine green—to redefine it as not liberal,
tree hugging, sissy, girly-man, and unpatriotic.
I want to redefine green as
geostrategic, geoeconomic, capitalist, and
the most patriotic thing you can do. My
mantra is that green is the new red, white,
and blue. To name something is to own it.
Right now the opponents have owned the
word green. I want to retake it from them
and redefine it in geopolitical, geostrategic,
patriotic terms. Then it scales.

Capitalist greenery – the way forward?

admin Economics capitalism, Charles Lockwood, globalisation, manifesto, Thomas L. Friedman

The Stern Report has kicked off some of the most immature tit for tat I have ever come across. Monckton vs. Monbiot, Lomborg vs. Stern etc., etc. It’s like watching a playground tiff – fascinating to watch grown men getting their knickers in a twist, basically over semantics, politics and economics. I could loftily ignore it all, or I could weigh in and start nitpicking? What do you reckon?

This morning the (amateur) economist and uber-blogger I most like to agree and disagree with in equal measure has been criticising my new best friend (not really) George Monbiot. Tim Worstall thinks these two figures are pretty much the same:

Sorry Tim, you’ve got your maths wrong.

admin Economics Bjorn Lomborg, carbon pricing, Christopher Monckton, George Monbiot, Nicholas Stern, Tim Worstall

Mark Brinkley has bought a domestic wind turbine. If you don’t know who Mark is, he is author of cult self-build manual ‘The Housebuilder’s Bible’. I couldn’t resist running the numbers Windsave quote on their website to see how long Mark will have to wait to see a return on his investment of £1498.

I’ve kept things simple and ignored inflation.

For a saving of 1MWh per annum, assuming a cost of 8p/kWh, Mark would save £80 per annum, around 1/3 of his electricity costs. The simple payback for the wind turbine comes out at nearly 19 years. Of course if electricity costs are higher, the payback looks more attractive. If electricity cost 12p/kWh, payback would come down to 12.5 years.

The lifespan of the product is quoted by Windspan as being 10 years for normal operating life, with 15-20 years quoted as highly achievable.

There are quite a few assumptions in the calculation above, variables such as wind speed, location and electricity price will all play their part, as well as future inflation, but the numbers to me don’t look very enticing just yet – they’re just about breaking even (which is much improved on the situation a few years ago). I also haven’t looked at any tax benefits which may exist – comments (as always) are welcome.
More information on payback, cost benefit analysis and whole life costing can be found at BSRIA. They have published a useful article about Whole Life Cost Analysis. It’s not the most rivetting read but if you need to know about CapEx, OpEx, ECA’s, NPV and WLC, it’s a good starting point and overview and does a good job at explaining why ECA’s can result in a lower NPV for equipment.

**UPDATE** The man from Windsave, he say no. Mark makes the point on his post that a critical factor is the average windspeed. Average windspeed’s for the country can be found in CIBSE Guide A and also the BWEA.

A few formulae shed some more light on the feasibility of domestic windpower. Fan power is directly proportional to the air speed³. The table below shows the numbers taking the value of 100W at 6m/s and extrapolating out.

The graph illustrates the power law, and why low speeds are such bad news for power output.

The other factors which need to be taken into account are the roughness of the land and the surrounding topography. CIBSE use terrain coefficients, the effects of which I have shown below for the 12m/s example.

Terrain	k	a	speed (m/s)	Power (W)
Open, flat country	0.68	0.17	12.07	814
Country with scattered wind breaks	0.52	0.2	9.89	448
Urban	0.35	0.25	7.47	193
City	0.21	0.33	5.39	72

As you can see from the figures above (based on a building 10 metres high), what works really well in open country, is not much use in an urban setting. If you are contemplating a wind turbine, it is worth asking the questions:

• what is the average wind speed
• what is the effect of surrounding buildings and countryside
• can the building take the load

This will help you answer how much energy you are likely to save (if this is your primary reason for buying one).  Of course, if you just like the look of it and want to be ’seen to be green’, then go for it.  Most home purchases would never need to come under the detailed scrutiny I have inflicted on this poor wind turbine (although it is perfectly feasible to run calculations for dishwashers for example).

admin Economics cost benefit analysis, domestic wind turbine, Mark Brinkley, payback, power law, renewables, Windsave