VOICES FROM THE INDUSTRY: The cost of green building may not be extra after all

November 6, 2006

It is a question that comes up at every project kickoff meeting, the $64,000 question that every project owner wants to know from Day One-what is it going to cost to design a "green," or sustainable building?

Typically, that answer has been somewhere between 3 percent and 5 percent extra to obtain Leadership in Energy and Environmental Design, or LEED, certification, the industry's standard for measuring building sustainability.

Admittedly, it's not an answer based on years of experience building sustainable buildings or information collected from bona fide reports based on reams of data. Even a trip to the U.S. Green Building Council Web site (www.usgbc.org) does not readily provide an answer.

More often than not, it's an answer based on rumor, perception or a wild guess. The answer is usually qualified by saying that the percentage is based on the hard cost of construction and doesn't take into account offsetting savings realized over time by energy cost, operation and maintenance and water-usage savings. Of course, these are long-term savings and, as we all know, it is a facility's first cost that all building owners focus on.

State behind

Here are some simple facts: There are currently around 400 certified green buildings in the United States today, and an additional 3,300 green buildings under construction and in the works.

Indiana has one certified building in the new-construction category (the Isaac Ray Treatment Center at Logansport State Hospital), and a handful of projects awaiting final certification. There are an additional eight registered projects around the state. Compare this to our neighbor to the north, Michigan, where there are 22 LEED-certified projects.

Could it be that the cost issue is at the heart of the green building inertia within our state? It certainly isn't the lack of LEED-accredited professionals in Indiana. The U.S. Green Building Council counts nearly 140 such individuals around the state in all major population centers.

Few reports

When it comes to the cost of building green, there simply isn't a lot of data, nor is there one answer that fits all projects.

In an October 2003 report to California's Sustainable Building Task Force, it is recognized that while there seems to be consensus on the environmental and social benefits of green building, there is a consistent concern, both within and outside the green building community, over the lack of accurate and thorough financial and economic information.

The report admits that sustainable buildings generally incur a "green premium" above the costs of standard construction. But, prior to this report, no comprehensive analysis of the actual costs and financial benefits of green buildings had been completed. The report secured the costs of 33 green buildings and compared them to the costs of conventional designs for those buildings. The average premium for the green buildings was slightly less than 2 percent (or $3 to $5 per square foot), substantially lower than is commonly perceived.

The majority of this cost, the report concludes, is due to the increased architectural and engineering design time necessary to integrate sustainable building practices into projects.

Another recent cost study commissioned by the U.S. General Services Administration considered the premium cost of green building for a 262,000-square-foot courthouse. Its findings ranged from an average of 0.3-percent premium for a LEED-certified level to an average 4.75-percent premium for LEED Gold level.

Yet another report by Davis Langdon, published in July 2004, studied the costs of 138 buildings-93 non-LEED and 45 LEED-seeking. The report concluded that the difference between average cost per square foot was statistically insignificant for LEED-seeking projects versus non-LEED projects.

The report also concluded that many projects can achieve sustainable design within their initial budget, or with very small supplemental funding. This suggests that owners are finding ways to incorporate the elements important to the goals and values of the project, regardless of budget, by making choices and value decisions.

Therefore, the first question building owners need to be asking should not be "How much more will it cost?" but "How will we do this?"

Sustainability, as suggested by Davis Langdon, is not a below-the-line item. The choices made during the design process will ultimately determine a building's sustainability, not in the setting of the budget.

Hall is executive vice president of pre-construction for GDH. GDH is part of The Hagerman Group, a construction manager and general contractor.Views expressed here are the writer's.
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