Ask the Expert: Chris Corps, Life Cycle Valuation Specialist

 

Chris Corps

Chris Corps is CEO of Pivotal IRM with 30 years' experience in valuation, sustainability, economics and healthcare. He led the first international study of the linkage between value and sustainability, Green Value, published in 2005 and the Vancouver Valuation Accord, sponsored by BC's Premier and signed by 20 countries, to link sustainability and value.

Chris is also Past Chair of RICS Canada, the Canadian arm of the world's largest real estate profession, and has advised on or led projects as diverse as yacht marinas, London's Canary Wharf, Vancouver's False Creek and Coal Harbour, Victoria's Dockside Green, hospitals, clinics, jails, and a wide variety of institutional assets.

Mark your calendars! On February 18, he will be delivering a webinar entitled Life cycle valuation: Finding the hidden value in sustainable projects.

1) How did you become an expert in this industry?

It's nice that you call it expertise but that's others' call to make, not mine! Basically I got here after many years of hard work on two continents and some really good mentors. I trained and worked in the City of London's financial district,which when I came to BC, meant I had a different skill set that helped both government and industry draw extra value out of their projects. I have always been interested in sustainability – since the 1970's, well before it was in vogue – so applying my experience to sustainability was a natural fit.

2) What are some of the major projects you've worked on that have used life cycle valuation/sustainable valuation, and what has the value been to these projects?

I don't pretend to do rocket science, I'm just applying what I was taught but it has given me an interesting career and still does. I worked on Canary Wharf in London in the 1980's which used the life cycle valuation approach; Coal Harbour in the early 1990's; all BC provincial Crown developments used this methodology at one point; and of course multiple commercial projects. The largest project using this was applying it to changes to BC's seniors care system which was implemented and we projected would save $7 billion. It is now done and delivered and probably exceeding the projections. Some smaller ones with benefits in the $400 million to $3 billion range are in progress, but I'm also helping on some right down to a few million. It works right down to the light bulb scale.

3) What is life-cycle valuation/sustainable valuation and how does it differ from life-cycle assessment/life-cycle cost analysis?

Let's try and make this simple. The only thing you can tell me about the word 'profit' is that the revenues exceed the costs. Yet life cycle costing only looks at the smaller part of this equation: the cost. It has zero focus on profit, the very thing that drives the entire world.

Life cycle analysis might go a bit further but it also lacks the profit-centre focus demanded by developers, investors and financiers. Same for government, where they talk about "taxpayer value" – which you have to assume means a focus on value, not just today but over the entire life cycle, and certainly not just cost. So you end up having to do life cycle valuation, which is a super-set of the other approaches, but puts value at the forefront. Basically cradle-to-cradle but with dollars and risk attached and focused on value. Which is exactly how a good real estate investment firm works.

4) What is the value to the project when using life-cycle valuation/sustainable valuation?

One current project that's applying this approach should save (and make) the client about $409 million in savings alone. In a previous example, $1.2 billion, and in another we project about $3.2 billion. The numbers get bigger when you do this because you count over many years, which is why you do it: the benefits are much larger. In some instances it simply points out what decisions not to make before they turn into a catastrophe. But usually it also helps point the way to much better decisions.

5) Why is there confusion surrounding the "real" numbers when it comes to life cycle valuation/sustainable valuation?

I bet inscrutable financial lingo has probably trebled since I graduated many millennia ago, and I think the confusion has tripled in direct consequence. I often think this is to help the money minders keep the fees high, but in reality there are many ways that financials can be analyzed and the inevitable complexities do add to confusion. However it turns out there's a basic conflict between sustainability and some key financial models, which adds to the confusion and can result in expensive decisions. By contrast, knowing the pitfalls simplifies things and reduces confusion, while showing how extra value can be extracted. Triple win if you get it right.

6) You're delivering a webinar for CaGBC members soon. Without giving away any secrets, tell us more about what you'll cover and why people should sign up while there's still room.

A few years back someone told me this was the fourth time he had attended one of my sessions. I asked if he needed someone in a white coat but he said he was still getting more out of it. I think most people will get something useful from this, but there's a chance you might get some very large financial benefits from it indeed. Or maybe just be entertained: I don't charge extra or give refunds for the humour.


For more information about Life Cycle Valuation, contact CaGBC Education. Registration is now open for Chris' webinar on February 18, entitled Life cycle valuation: Finding the hidden value in sustainable projects. Be sure to register now to be enlightened on this fascinating topic, or click here to read the course flyer .