Exploring the Economic Viability of Sustainable Building

December 12, 2012   |   Platinum Builders
An invasion of armies can be resisted... But not an idea whose time has come... -Victor Hugo

The time has come for a paradigm shift in the way buildings are designed, built, and operated- the time has come for sustainable building design. Our world population is sky rocketing, our cities and community centers are becoming denser at a harsh rate, and ecological impatience is reaching critical mass. It is now more important than ever to incorporate sustainable design techniques into our urban and rural communities. More than 1.8 million residential buildings and approximately 170,000 commercial buildings are constructed annually in the United States alone.1 Buildings consume an immense amount of energy and play a large role in our ecological nightmare. Modern buildings alone demand 2/3 of all electricity globally, and are responsible for 1/3 of all greenhouse gas emissions.2 The sustainable design movement, a design philosophy that allows us to meet the needs of the present without compromising the ability of future generations to meet their own needs, aims to drastically reduce these statistics by redefining the ways in which buildings are designed and constructed. Sustainable building design is a “philosophy that seeks to maximize the quality of the built environment, while minimizing or eliminating negative impact to the natural environment” (The Philosophy of Sustainable Design McLennan). With sustainable design, we see our buildings come alive and our livable spaces become, well, livable- breathable- desirable.

Designers and clients are consistently asking, “How much does it cost to build green?” – most with a perception towards sustainable design alternatives: that they are more expensive than traditional methodologies. This perception is founded in a great deal of historical truth. In the beginning of the movement, sustainable design alternatives were almost always more expensive. Design teams were very inexperienced with using sustainable strategies, and green materials were always more expensive due to smaller economies of scale. The economic benefits of sustainable design were conceptual and qualitative – lacking the ability to provide interested parties with an accurate cost-benefit analysis. This economic uncertainty created concern for contractors and investors as they weighed the possibilities of incorporating sustainable design techniques into their projects. Many would shy away from sustainable design because of a perceived added cost. This is now considered, by many, to be a misperception.

Over the past decade, it has become more evident that sustainable solutions are no more economically cumbersome than the methods they replace. Researchers are developing new ways of measuring the economic vigor of sustainably designed buildings and the materials and techniques incorporated within them. More and more, studies are showing that sustainable buildings provide financial rewards for investors, owners, operators, and occupants. It is possible for carefully executed sustainable design techniques to reduce the “first cost” of green building, and provide direct annual operating savings – ultimately producing buildings that are, at the very least, as economically viable as their traditional counterparts. Additionally, these “green buildings” can offer indirect benefits to owners, occupants, and society as a whole that traditionally constructed buildings cannot.

Typically, investors are most interested in up-front cost, and the general consensus is that green buildings cost more up-front. However, design teams have found ways to drastically offset higher initial costs, and it is inaccurate to make such a generalization. The most important step in reducing first cost is forming an integrated and all-inclusive design team including owners, architects, engineers, sustainable design consultants, landscape experts, health and safety experts, general and sub-contractors, cost consultants, and occupant representatives. Everyone must be involved from the start in order to realize the full benefits of the project and develop innovative solutions. Because of this integration, sustainable design teams are able to use an interdisciplinary analytical approach that is often not achievable for teams using traditional strategies. When the Pennsylvania Department of Environmental Protection ran a case study on the sustainable methods used in the construction of its Cambria office building, it found that team integration was key in reducing first-cost:

When designers of this building first proposed an upgrade to triple-glazed, double low-e windows, the developer balked at the $15,000 increase in cost. However, the developer was won over when it was demonstrated that this upgrade would allow the perimeter-heating zone to be eliminated for a savings of $15,000, the heat pumps to be downsized for an additional $10,000 savings, and additional space to be gained because of the smaller equipment and ducts for additional rent of $5,000.3

Tradeoffs like this are constantly occurring within sustainable design teams at the conceptual level, and it is never hard for a team to convince a developer to incorporate additional green techniques if they will put money in the pocket up front. Focusing on integrated solutions and explicitly evaluating tradeoffs can result in a sustainable facility built for the same (or an even lower) cost than a more traditional building. In essence, this system of tradeoffs is the lifeblood of the movement. Since sustainable design firms can do nothing without investors, furthering the possibilities of tradeoffs that reduce initial cost, which is such an important factor in winning clients, is essential to the health and progress of the movement.

Luckily, there are other ways in which sustainable design firms can work to reduce upfront cost at the design and conceptual levels in order to attract investors. Exploiting site and orientation to take full advantage of natural heating and cooling can reduce or eliminate the size of HVAC systems, and can drastically lower first costs. Re-using and “re-skinning” existing buildings can completely eliminate the initial site planning and permitting costs. Reducing project size and increasing space efficiency can drastically reduce total cost. Maximizing engineering design efficiency can help avoid structural overdesign and minimize construction waste and debris. Hiring a firm to recycle construction waste can reduce waste disposal costs, which can be extremely high, especially in dense urban environments. In New York City for example, it can cost up to $75 per ton to dispose of non-toxic construction waste.4

Although first cost is important to investors and designers alike, sustainably designed buildings become much more economically viable when examined through a long-term lens. This allows direct annual cost savings to add up and provides more flexibility in deciding which designs are truly economical, since first cost cannot always convey the quality of the investment on its own. Long term, direct economic benefits include annual operating cost savings from energy efficiency, water reduction, and lower maintenance cost.

Perhaps equally as lucrative are the indirect economic benefits green buildings can offer owners, occupants, and society as a whole. Here lies both controversy and promise – risk and reward. On one hand is a fear of the unknown – these indirect economic benefits seem too esoteric for many investors who are determined to make decisions based on proven links between cause and effect. On the other is an expanse of possibility- a new, holistic way of assessing economic viability in which new areas of indirect economic benefit are being discovered and justifiably quantified. The latter hand will soon be raised.

Cool companies are very interested in this potential. Adventurous companies are experimenting with these ideas. Smart companies are noticing that small investments in the quality of the workplace can dramatically improve worker productivity – a very quantifiable benefit.

A five percent increase in profitability is entirely reasonable according to numerous studies done on productivity and the work environment in Green Buildings. In fact, ten to fifteen percent improvements are not unrealistic according to the Rocky Mountain Institute which documents that green buildings show “consistent gains in labor productivity of around 6 – 16 percent when workers feel more comfortable thermally, when they can see what they’re doing, and when they can hear themselves think” (The Philosophy of Sustainable Design, McLennan).

These findings are allowing organizations to further experiment with workplace landscape and find solutions that, in the past, would have been considered preposterous. The correlation between human health, the workplace, and productivity may soon lead the march in the sustainable design movement. How will various companies choose to act as the data on these phenomena mature?

A great deal of research is being focused in defining, and ultimately quantifying these benefits. Sustainable design creates buildings that are livable – breathable – desirable, and researchers have linked them to positive effects on human health and productivity. Physical comfort factors such as ergonomics, acoustic comfort, and indoor air quality are being investigated to see how they correlate with productivity. More surprisingly to some, psychological comfort factors such as connection to the outdoors, daylight, beauty, and personal boundaries are also being investigated and clearly linked to productivity levels.

One thing is clear...

“We cannot continue for long down the current path we are on, each year breaking records for the amount of energy, water and materials used and the pollution and waste created, without widespread social, economic, and environmental upheaval.” (The Philosophy of Sustainable Design, McLennan)

Let’s not wait for that..