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home news index the cost of building green

The Cost of Building Green

March 31, 2009 - RSMeans Engineering Staff

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When “Green Construction” is discussed the focus inevitably turns to cost. How much additional will the green project cost? Some organizations are opposed to any additional first costs while others have some tolerance for additional expenditures.

The most prominent standard for green buildings is the USGBC (US Green Building Council). The USGBC LEED (Leadership in Energy and Environmental Design) program has four levels of green certification: Certified, Silver, Gold and Platinum. These levels represent increasing levels of sustainability. There have been numerous studies aimed at comparing the cost of a USGBC LEED certified building to traditional designs. The average additional cost quoted is in the range of 2% to 5%. Based upon commercial building costs of $150/sq.ft. to $250/sq.ft., this is equivalent to a $7.50 to $12.50/sq.ft. premium for building green. The majority of this cost is due to the increased architectural and engineering design time necessary to integrate sustainable building practices into the projects. Another additional cost is for commissioning. Commissioning is the process of ensuring that the systems are designed, installed, functionally tested and capable of being operated and maintained to conform to the design intent. According to Lawrence Berleley National Laboratory commissioning can save as much as 40% of the buildings utility bills for HVAC.

As more buildings are being designed to address the green initiatives the additional design as well as construction cost is decreasing.

Now let’s examine the advantages of owning a “green” building. The obvious advantage is the reduced impact on the environment through waste recycling, reduced water and energy consumption, and better indoor air quality by reducing VOCs. In addition to these environmental advantages there are marketing and tenant retention benefits to owning a green building. Organizations want to locate and stay in a healthy building. Finally there is a productivity and health value associated with “green” buildings. Greg Kats of Capital E published an analysis that projects the 20 year NPV (net present value) savings of a Certified or Silver building. The cost savings are attributable to reduced water, energy, waste plus commissioning O&M and productivity and health value. Savings of $52.87/square foot for Certified or Silver buildings and $71.31/square foot for a Gold or Platinum buildings are projected. Of these amounts $36.89/square foot and $55.33 respectively are attributable to productivity and health value. Even if the productivity and health value is reduced or eliminated the 20 year NPV savings ($52.87 - $36.89 = $15.89) exceeds the cost premium stated above.

In light of the above who can afford not to build green?

Member Comments

» View all comments (10 total comments)
04/01/2009 - posted by CMinWPA

It would be nice to see someone other than the USGBC issue data on the cost of “going Green”.  I disagree with the statement in this article that the majority of the additional cost is for A/E design time and commissioning. It is apparent that the cost of higher efficient & oversized HVAC components, daylighting clerestories, renewable resource materials and contractors’ general conditions to address the construction waste management and indoor air quality requirements yield inflated building costs.  While I do not argue the advantage of sustainable design, I feel the USGBC/LEED approach to cost reporting is misleading, if not self-serving.

04/01/2009 - posted by jonathan morschl

CMinWPA,

why would a sustainable design have “oversized HVAC”? any system that is designed should not be oversized, usually that is the result of a contractor designing a system as opposed to an engineer.
yes, sustainable materials MAY raise the cost of construction, but cost arises more with the amount of documentation required for LEED certification, by the A/E and Contractor.  Also, commissioning MAY be a big factor. Depending on your facility size, you may not have even used commissioning if not for certification.

04/01/2009 - posted by CMinWPA

To J. Morschl…

The HVAC systems need to bring in more outside air (increased ventilation), thus more air volume to condition, then you need to address have to handle that volume AND conserve energy.  Or the added heat loading from more glazing due to daylighting…again, more conditioning required.  If documentation costs are of a concern, then you have not educated the staff/contractors properly, imho.

04/01/2009 - posted by jonathan morschl

why do you need to bring more air in with HVAC? isnt that what windows are for? why more windows? you dont have any windows in the bldg to start with? which costs more, documenting LEED certification or not going for LEED?

04/01/2009 - posted by Brad Miller

Here is a report done by Rutgers University regarding the Life Cycle Cost of building to LEED standards:

LCC Final Report 5/21/08

They found that the difference in cost was $2.29 per sq. ft vs. a conventional building for a savings of $2.17 - $2.79 per square foot.

04/01/2009 - posted by CMinWPA

Why not just incorporate smart sustainable design principles in the first place and not spend dollars documenting and chasing points so you can get a plaque from the USGBC ?  If the intention of LEED certification is for good and not for profit, why such an elaborate scheme for testing/accrediting/certifying ?  Again, I believe in sound sustainable/conversation measures - I don’t believe in chasing points in a monopolized system.

04/01/2009 - posted by jonathan morschl

CMinWPA,
i totally agree with the chasing points comment.  LEED is a marketing too for owners to sell to potential’s (clients, consumers, etc…) it’s a way for them to show a piece of paper that says they are green.

04/01/2009 - posted by LEED/EnergyAuditor

LEED is a “voluntary” standard. From an investor or leasee perspective wouldn’t you want to clearly know all LEED claims have in fact been implemented since you are supposedly paying more per square foot than another similar building?

Who is auditing the post certification implementation activities of developers/owners who have certified LEED? The commissioning agent (CxA’s as they are known are only partially looking at such systems but not LEED certification). Moreover, wouldn’t claims that affect on-going common area maintenance and utilities be ones that lessee and investors would want to know on at least an annual basis? Is this a potential coase of the fox guarding the hen house?

07/16/2009 - posted by ValJD

Brad, this appears to be a report about the possible savings relating to building use. I could not find your cost difference quote within the report, although I only previewed it quickly. Would you be so kind as to point out where this cost difference is documented? Additionally, is this cost difference proposed after the “discounts” or perks given to achieving LEED certification?
I am researching this very topic at present as a student, however I have to say that from almost two decades working within the construction field, I have also experienced what CMin WPA is alluding to. Perhaps it is because I hail form this area as well. “Green” has become like “organic” in many respects. Suppliers know we all want efficiency and so the prices are invariably higher.
Also with regard to the above conversation pertaining to HVAC “oversizing”...perhaps CM in WPA could have used a better choice of words here. But the reality is that often what looks good on paper does not work in the field. This is why Architects and Engineers with hands on field experience should be considered more valuable. If a piece of equiptment were to function well on paper, but not in the field of course this leads to unhappy clients at best. “Proper sizing” is what we all are looking for, and maximum “bang for the buck” I am not yet convinced that the initial cost of indulging in these amenities is within the percentages quoted within your post, but I am open to being convinced. Green is wonderful and our responsibility to employ as stewards of the planets resources. Still, I am with CMinWPA. I believe the actual cost increase is much higher than is being cited by USGBC.

07/16/2009 - posted by Brad Miller

In their report, “the net present value analysis uses the annual energy consumption in addition to the construction cost of the building, and projected energy prices to determine the lifetime cost of operating the building.”

You are correct in that is not just simply the construction costs, but those costs were still included.

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