Costs of Green Buildings

As we showed earlier, a main barrier to implementing green buildings has been the perceived cost increases for green measures. It is true that many of the earlier green projects in the 2000 to 2005 period were more costly. This is largely because the transition to new methods of design and construction involves a lot of social learning that is accompanied by construction mistakes, poor designs, unproven new products and a myriad of reasons leading to extra costs. By 2005 and especially in 2006, however, many design and construction teams had done enough green projects to start lowering costs to more conventional levels.

In 2006 the developer of a large LEED Platinum project in Portland — a very complex, 412,000-square-foot, mixed-use medical facility — reported a cost premium (net of local, state and federal incentives) of about 1% on a $145 million project.30 Now, this developer had designed and built 30 prior LEED projects and used a very experienced architect and engineering team, already well-versed in green building methods. But their success does point to the fact that future green buildings can be built without any initial cost premium, once design and construction teams garner enough experience.

What determines the cost of a green building?

• First and foremost, it depends on what the design team and owner are trying to achieve. If it's a LEED Platinum building, they most likely will use green roofs and photovoltaics, two expensive additions to a project that may not be included in a LEED Silver or possibly even a LEED Gold project.

• Second, it depends how early in the process the project decides to pursue sustainable design and construction. As we show in the section on integrated design, it's best if that decision is made as early as possible, even during the site selection process, so that a building can be properly oriented, with a rectangular shape that allows for good daylight-ing and efficient passive solar design measures.

• Third, it depends still on the experience of the design and construction team with green buildings; the more experience, the less the cost premium based on both fear of the unknown and lack of knowledge about sourcing green products, for example. Less-experienced teams often use green building consultants to help them out with their first project, to accelerate the learning curve.

Integrated design often leads to creative solutions that allow teams to "tunnel through the cost barrier" and design a more energy-efficient building at a lower initial cost.31 Typically, this is done by having the architecture do some of the work of cutting energy use, as well as heating and cooling a building with daylighting, shading devices, highly efficient windows, orientation and heavy mass construction. Green buildings can also cut other project costs by saving on infrastructure investments and connection charges for storm drainage and sewage connections through total water system management. Often, by thinking strategically in the first 30 days of a project, you can influence 65% of total costs by assessing a broader range of options, making choices among key cost drivers and having a clear vision of results. This puts a premium on thinking (vs. doing), a concept that many Americans may find challenging.

One of the most widely cited studies of the costs of green buildings was done by the international cost-consulting firm Davis Langdon in 2004 and updated early in 2007. Using their own proprietary database of actual building costs, and comparing 45 LEED projects with 93 other non-LEED projects, Davis Langdon discovered that green building costs (for three types of common projects — libraries, academic classrooms and laboratories) were statistically no different than conventional building costs when normalized for year of completion (taking cost inflation out of the analysis) and location (reflecting the variation of building costs by locality).

Their work showed that the major cost driver is the building program, that is, what the building is designed to achieve. A simple branch library in the suburbs might be fairly cheap to construct, but a downtown main library will likely be much more costly, on a dollars-per-square-foot basis. You can find a large big-city downtown library by a name architect that costs $500 per square foot, as well as one that serves the same function and costs only $230 per square foot.

The figure below shows the results of the most recent Davis Langdon study for ambulatory care facilities (one of five categories with enough data from which to draw firm conclusions).32 The 2007 update included additional project types and more cost data, all standardized to Sacramento, California, mid-2006 costs. The conclusions of the study were unchanged: certified green buildings don't cost any more than conventional buildings, on a per-square-foot basis. What matters most: the building's design objectives.

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Cost of ambulatory care facilities., green vs. non-green.

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