Value Beyond Cost Savings - Green Building Finance Consortium

Value Beyond Cost Savings: How to Underwrite Sustainable Properties• In many areas of the country, the contracting community has embracedsustainable design, and no longer sees sustainable design requirements asadditional burdens to be priced in their bids.• The cost of documentation remains a concern for some project teams andcontractors, although again, as teams become accustomed to the requirements, theconcern is abating somewhat.• There is such a wide variation in cost per square foot between buildings on aregular basis, even without taking sustainable design into account. . . comparingthe average cost per square foot from one set of buildings to another does notprovide any meaningful data for any individual project to assess what—if any—cost impact there might be for incorporating LEED and sustainable design.Perhaps the biggest cost barrier for sustainable property investment is not measured indollars, but in implementation time and risk. For example, you can show a developer thatstudies have shown that a sustainable building will only “cost” 2% more, but they still havelegitimate “cost” concerns. The sustainable building process will require new types ofcontracts, leases, insurance, subcontractors, and contractors, and will require a moreintegrated design and project management process, different than what the developer hasbeen used to. What is the cost of these required changes? Sophisticated discussions of costsand proper interpretation of the surveys that are done in the marketplace requireconsideration of this question.In answering the comparative cost question, it is important to understand the significantdifferences between existing buildings and new construction. Many of the most prominentstudies looking at comparative costs are based on new construction, and do not fullyconsider existing buildings. Comparative cost analysis for existing buildings is significantlymore difficult due to the wide variety of building types, the varying ways sustainability isachieved, and the significant underlying variances in the age, construction type, and othervariables that will affect comparative cost.2. Whole Building Performance StudiesThe three studies we summarize here offer evidence of building performance across anumber of categories including resource use, occupant performance and operationalefficiency. Expanded Chapter IV provides a more in-depth assessment of each study.a. “Innovative Work Places: Benefits and Best Practices,” GSA Office ofGovernment-Wide Policy, January 2006The US General Services Administration (GSA) has been one of the leading researchersand promoters of improved design and efficiency for federal buildings. The GSA describesthis publication as a “...milestone workplace publication.” The GSA’s findings and62