Economic Value of Building Faster

Abstract

Owners, developers, and engineers are often challenged with determining the value of accelerating the construction of a project. There is a cost for accelerating the construction of a project to reduce the time required to transfer a facility into the operational phase. Determining the cost of acceleration is a difficult challenge with the limited information typically available early in the project development phase. Many unknowns exist (e.g., future revenue, costs, etc.) and the owner, developer, or engineer often make best guesses to justify if building faster is worthwhile. A simple methodology is needed to assess the value of building faster. This paper derives a set of equations that will allow owners, developers, and/or engineers to estimate the percent increase of the baseline project costs to reduce the time to completion of a construction project. The equations were derived such that variables that are easily known or can easily and reliably be determined are required. After the value of accelerating a project is determined (as a percentage of the original baseline budget), owner, developers, and/or engineers can use this information to determine if a project should be accelerated.