By Patricia Lloyd, Sustainability Manager, Leopardo Companies, Inc.
When the push for sustainability in buildings kicked into high gear about a decade ago, the main focus was on energy efficiency and reduction of greenhouse gas emissions. Business leaders considering new facilities at the time looked at the cost premium of green construction and the number of years it would take to recoup that investment via reduced energy costs.
Energy efficiency measures that paid for themselves within three years were viewed as cost-effective, while those with long payback periods generally were not implemented. That cost-benefit analysis still affects new construction and redevelopment plans, but two things have changed: The energy equation now tilts more heavily in favor of green buildings and considerations beyond energy drive design and construction decisions on sustainability.
An estimated 40 to 48 percent of all non-residential construction in the United States this year is classified as green building, up from 1.4 percent in 2005 and 41 percent in 2012, according to the U.S. Green Building Council (USGBC). More than $120 billion is spent annually on sustainable buildings in the U.S. Owners of green buildings report operating cost savings averaging 13.6 percent for new construction and 8.5 percent for existing building projects. A study conducted by University of Notre Dame professors Edward Conlon and Ante Glavas in 2012 found that green buildings reduced utility costs by $675.26 per employee. Sustainability increases an asset’s valuation by an estimated 4 to 5 percent, and tends to increase sale prices by 7 to 11 percent.
Over the past decade, the incremental cost of sustainability and high-performance in construction projects has decreased or even disappeared. As green building materials, equipment and construction practices have become more widely available, cost premiums have diminished. Retrofitting high-efficiency systems may add more than 5 percent to the cost of a rehab or redevelopment, but in new construction projects, the cost premium over traditional construction may be negligible.
In fact, using green building practices, materials and systems can actually cost less than conventional building and provide immediate and long-term savings. When projects follow an integrated design process (combining design, construction and facility management expertise from the outset), high-performance features often result in overall construction cost savings.
For example, a design that specifies energy-efficient insulation and windows may discover during the integrated project design process that they are able to meet energy load requirements with a smaller HVAC system, resulting in lower overall construction cost. Integrated design processes are still the exception rather than the rule, but the popularity of this approach has increased dramatically in recent years as more owners and construction industry experts see positive results—not only in terms of green design but in overall project quality, cost and speed to completion.
As the cost premium for building green has declined, the rationale for utilizing materials and practices that reduce energy and water usage has become stronger. That’s not the only motivation for owners to consider sustainability, however. Other reasons include higher perceived asset value and enhanced reputation for corporate responsibility.
In addition, some cities and states require new commercial buildings to build to green standards, while others mandate measurement and public disclosure of energy usage, as measured by the EPA’s Energy Star Portfolio Manager benchmarking tool. Some jurisdictions also offer incentives for green construction. For example, Chicago offers fast-track permit processing for projects in line for LEED, the most widely recognized certification for sustainable buildings. That may be one reason why Illinois has more LEED certified and registered square footage than any other U.S. state, according to USGBC, who created and developed the rating system.
The productivity benefit
More and more, business leaders are realizing that the true benefit of green buildings lies not in operational cost savings or corporate reputation, but rather via enhanced worker health, well-being and productivity. A McGraw-Hill survey found that 55 percent of firms consider employee health and well-being the most important reason for focusing on sustainability in buildings.
That’s not surprising, given the mounting evidence that environmental factors have a major impact on worker productivity. Various studies have shown incremental productivity gains from a variety of factors, including indoor air quality, exposure to natural light, and minimizing chemical cleaners. Smart business-people realize that even a small increase in productivity and a reduction in absenteeism equates to a financial benefit many times greater than that from energy savings.
Furthermore, office workers report greater job satisfaction at companies that encourage sustainability in the workplace via recycling and other environmentally friendly programs. At a time when companies compete for talented knowledge workers, the goodwill of a sustainable facility can make a big difference.
This recognition of worker well being and health has led to the formation of the International WELL Building Institute and WELL Building Standard. This was officially rolled out last year at Greenbuild, the nation’s largest green building conference. The standard sets performance requirements in seven categories: air, water, nourishment, light, fitness, comfort and mind. Developed to help fulfill the Clintian Global Initiative commitment to improving the way people live by developing spaces that enhance occupant health and quality of life, the standard also applies to commercial, residential and institutional projects.
Best green construction teams
According to USGBC, about 63 percent of construction firms worked on green projects over the past three years. Given the speed that the world of green construction is evolving, it’s imperative that owners choose designers and contractors with recent expertise in sustainable and high-performance building. One reason is that LEED standards change over time—Version 3 is in the process of being replaced by Version 4, so contractors right now must be familiar with both standards. Design and construction teams also need an in-depth knowledge of current best practices as well as the cost, availability and effectiveness of new green materials.
Many construction firms lack experience with integrated design-build processes, and opportunities can be lost while teams climb the learning curve. Plus, design technology known as building information modeling (BIM), or virtual design and construction (VDC), has been increasing in importance as a way to design and build facilities more effectively. A team with experience in both BIM/VDC and integrated processes can produce a facility with the optimal balance of high performance and low cost.
At Leopardo Companies, Inc., one of the nation’s largest construction firms, around 30 percent of employees are LEED accredited, and many clients demand that buildings meet LEED standards even if they don’t intend to seek certification. Leopardo and other contractors are seeing an increase in projects that are designed to be sustainable, but aren’t necessarily seeking a third-party certification.
Sustainable and high-performance building has brought a fundamental revolution to how we design, construct, operate and maintain buildings. For any new construction or redevelopment project, these issues need to be a key part of the discussion throughout the process so that the end product furthers the company’s strategic goals on sustainability and employee attraction and retention.
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Patricia Lloyd, LEED AP BD+C, serves on the U.S. Green Building Council (USGBC) Illinois chapter board of directors and is sustainability manager at Leopardo Companies, Inc., one of the nation’s largest and greenest construction firms.
