Having effective scenario planning in place within a construction business is essential to developing effective forward looking strategies that protect the business into the future and provide resilience against change.
One of our current uncertainties is related to the price of carbon, and how once the price of carbon has been fixed, how that will impact your business and project costs. It is now only a matter of time before carbon costing becomes established as an indicator and ‘repayment’ cost for your environmental impact
As with the increase cost of waste management over the last decade or so, cost of carbon will, most likely be a supply risk and cost.
The concept of shadow pricing is not new, (based on the lifetime damage costs associated with greenhouse gas emissions) Applying a shadow cost to your carbon emissions now will enable you to action plan and reduce carbons, reducing exposure to future costs hitting your business.
A good place to start is through measuring and understanding your project construction carbons with Constructco2 and then applying a carbon cost of £10 per tonne. If you haven’t measured your construction carbons as yet (why not?) then use the ConstructCO2 benchmark of 96.7 Kg/£K project spend.
How would that cost affect your business? How would you manage projects with this additional cost, and importantly what actions would you take to reduce your project emissions?
Perhaps we should be asking the question will you start?
Useful Background Reading:
Based on recent Huffington Post article The Benefits of Carbon Shadow Pricing Tyler Elm and Jim Harris
DECC: Carbon Valuation