Monte Carlo simulation approach to understand the cost variance for energy retrofit projects: comparative study of Finland and the United States
Hu, Ming; Nippala, Eero; Kallioharju, Kari; Pelsmakers, Sofie (2022)
Hu, Ming
Nippala, Eero
Kallioharju, Kari
Pelsmakers, Sofie
Routledge
2022
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2022041228510
https://urn.fi/URN:NBN:fi-fe2022041228510
Tiivistelmä
Energy-efficient building is often characterised with higher construction costs. There is a large
variance in energy-efficient building construction costs, especially in retrofit projects. A lack of
understanding of cost variance and ambiguity of cost-optimal practices has impeded the adop-
tion of energy retrofit practices globally. To respond to such a knowledge gap, a comparative
study was conducted on energy retrofit projects on residential buildings in Finland and the
United States. A Monte Carlo simulation was used to determine the coefficient of variation for
construction costs and the potential reasons behind the variations. The specific aims of this
study are (a) to gain a deeper understanding of construction cost variances in energy retrofit
projects, (b) to identify the most influential cost items, and (c) to understand the correlations
among different cost items. For this analysis, a database including 10 Finnish buildings and 7 US
buildings was created, and actual construction cost data was collected. The results showed the
following: (1) US projects had a larger total construction cost variance with highly skewed distri-
bution, and Finnish energy retrofit projects had a cost distribution similar to conventional retro-
fit projects; (2) the two most significant construction cost factors for both countries were non-
energy related cost items and the building envelope, rather than the mechanical system (heat-
ing and ventilation) as commonly perceived; and (3) the larger construction cost variance in the
United States may be associated with the unfamiliarity of energy-efficient technologies and var-
ied construction methods in different regions. The insights and suggestions derived from those
findings are discussed in the conclusion.
variance in energy-efficient building construction costs, especially in retrofit projects. A lack of
understanding of cost variance and ambiguity of cost-optimal practices has impeded the adop-
tion of energy retrofit practices globally. To respond to such a knowledge gap, a comparative
study was conducted on energy retrofit projects on residential buildings in Finland and the
United States. A Monte Carlo simulation was used to determine the coefficient of variation for
construction costs and the potential reasons behind the variations. The specific aims of this
study are (a) to gain a deeper understanding of construction cost variances in energy retrofit
projects, (b) to identify the most influential cost items, and (c) to understand the correlations
among different cost items. For this analysis, a database including 10 Finnish buildings and 7 US
buildings was created, and actual construction cost data was collected. The results showed the
following: (1) US projects had a larger total construction cost variance with highly skewed distri-
bution, and Finnish energy retrofit projects had a cost distribution similar to conventional retro-
fit projects; (2) the two most significant construction cost factors for both countries were non-
energy related cost items and the building envelope, rather than the mechanical system (heat-
ing and ventilation) as commonly perceived; and (3) the larger construction cost variance in the
United States may be associated with the unfamiliarity of energy-efficient technologies and var-
ied construction methods in different regions. The insights and suggestions derived from those
findings are discussed in the conclusion.