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Report Shows Cost Benefits of Green Buildings Including Increased Productivity of Employees

Shattering the old myth that green buildings cost too much to construct and expenses are never fully recouped, the World Green Building Council (WorldGBC) has published a report highlighting just the opposite.

Image courtesy of arabianindustry.com.

The report explores the benefits of green building construction through looking at aspects of the industry including: design and construction costs, the perception gap, operating costs, green retrofits, asset value, and workplace productivity.

Jane Henley, CEO of WorldGBC, said in an overview of the report that, “Today, green buildings can be delivered at a price comparable to (or cheaper than) conventional buildings, and investments can be recouped through operational cost savings,” and with the right design features, can create more productive workplaces.

Most of the costs in the report related to architectural design and consultant fees, as well as construction costs, referring to building structures, not site acquisition.

Actual cost premiums have been taken from a wide variety of building types, including: offices, homes, schools, warehouses, banks, supermarkets, health centers, community facilities, academic buildings, and public buildings.

The report showed that increases in upfront costs have been found to be proportional to the increased level of environmental certification, with more aspiring projects, such as those that aim for ‘zero carbon’ performance, showing a 12.5 percent increase in design and construction costs compared to a conventional building.

But for the majority of green buildings, the cost typically ranged from less than zero percent to four percent higher based on studies published within the last ten years.

In addition, the report found that higher levels of certification (such as BREEAM Very Good, LEED Silver/Gold, and Green Mark Gold/Gold Plus) were shown to range from zero percent to 10 percent higher cost, while the highest levels of BREEAM Excellent, LEED Platinum, Green Mark Platinum, and ‘zero carbon’ ranged from two percent to 12.5 percent higher cost.

The report also suggests a number of ways to reduce the construction costs of green buildings, including hiring an experienced design and construction team and using an integrated design process, which goes from the pre-design phase through post-occupancy. This involves adopting green strategies and including them in the budget from an early stage to avoid more expensive bolt-on strategies.           

The research also showed that an increasing number of project teams were able to deliver “LEED-certified buildings within a budget comparable to that of non-LEED certified buildings,” but one of the biggest challenges to delivering cost-effective green buildings was the lack of understanding that green building design doesn’t mean bolt-on to conventional buildings, but is an integrated design discipline that “requires a different way of thinking.”

There’s still a large perception gap between expected cost of green construction and the actual cost, which is often lower. The difference in expectation was often found to be based on the level of knowledge the design professional had on green design.

“Those with experience believe the cost uplift to be up to 13 percent, whereas those without experience believe the cost uplift to be about 18 percent,” said the report.

Some of the reasons for the perceptions of high costs “may be due to an inability to forget historical data, or a lack of awareness that cost are coming down. Another factor could be that showpiece or demonstration buildings for sustainability may have additional costly finish upgrades, which are not related to green costs, and these are the buildings that are often featured in industry publications.

“They often feature highly visible green technologies such as photovoltaic and large building-integrated wind turbines that are used to reinforce a green image but may not be financially viable,” adds the report.

Keeping costs down also appeared to be highly dependent on how progressive the national or local building regulators were. The report found that green construction projects often experienced higher cost premiums in countries that had less emphasis on the green agenda embedded into their building regulations.

Green building construction is though becoming more globally prevalent due to the increasing costs of conventional energy markets. Henley said she’s seeing “this momentum growing globally where in more and more places, green is now becoming the status quo.”

The report found that, “Estimates for the reduction in a green building’s energy use compared to a conventional code-compliant building range from 25 percent to 30 percent (based on LEED-certified buildings in the United States).” Not surprisingly, it also found that higher levels of certification often corresponded to higher percentages of energy savings.

The report focused on reduced energy costs from heating, cooling, lighting, ventilation, and water consumption.

Savings on water were notable, resulting from strategies including water reuse and water-efficient plumbing, bringing savings to 39 percent over that of comparable conventional buildings.

With the increasingly visible energy saving benefits of green buildings, there’s also now a growing trend of conventional building owners that are green retrofitting.

The report also found that, especially in the United Kingdom, these improvements often had costs comparable to what would be considered a “market standard refurbishment” that a building would require for meeting regulatory requirements.

The report added that, “The quick wins comprised of a combination of improved controls, efficient boilers, airtightness improvements, variable speed pumps, and external shading – combinations of these measures led to refurbishment cost premiums within the range of 0.3 percent to 12.8 percent.”

“The higher premiums were associated with higher Energy Performance Certification (EPC) ratings that require the retrofit of LED lighting, heat recovery systems, air source heat pumps, and photovoltaic and passive chilled beams.”         

The improvements to energy efficiency have also contributed to increased asset value to green properties. The report cited studies from around the world that demonstrated that greener buildings are more able to command higher sales prices, as well as more easily attract tenants and command higher rents.

One of the attractions to greener buildings – beyond lower operating costs – is that these buildings also offer healthier indoor environments which have been shown to improve worker productivity.

The report found that, for example, employees with outside views and daylight showed 10 to 15 percent better memory function and an increase in productivity by more than 18 percent. In addition, those with better ventilation showed an increase in productivity by about 11 percent, and improved temperature controls improved productivity by about three percent.

The report also cautioned though that, “While these green design features have proven benefits, they must be incorporated into a holistic design of the whole building, or they can have unwanted results.” 

The most obvious example is daylight, which needs to be incorporated into the design correctly in order to minimize glare and eliminate unwanted heat – both of which can have a negative impact on productivity.

Reader comments and input are always welcomed!

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