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Green Economics: Small Price for Environmental Gains

By Charles Vaciliou - July 2004 - Green


As the number of buildings using green design strategies grows, so do questions about the initial cost of designing and constructing a facility with sustainable features. Green buildings have had a reputation for costing more up front, with long- or short-term payback coming directly — for example, from reduced operating costs — or indirectly, from improved productivity. And some sustainable elements do carry a higher price tag, sometimes significantly higher. But first costs are far from an overwhelming obstacle to green design. Although trade-offs may be required, and some sustainable features may not be affordable, the first-cost premium can be managed.

A good example is the Environmental Protection Agency’s New England Regional Laboratory (NERL), in Chelmsford, Mass. NERL is a federally leased building that houses 30 laboratories used for environmental research and testing. Construction on NERL was completed in 2001. Although the U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) rating system was only in its infancy during the building’s design phase, the construction project was able to use LEED version 1.0.

LEED was formulated to encourage the development of more sustainable buildings through a universal measurement on how green a building really is. It is designed to reflect the best practices of new buildings. Owners of LEED-rated buildings can state that their properties are environmentally superior to at least 75 percent of contemporary buildings. Some LEED points can be earned quite simply, while others are more complex, requiring creative thinking and planning. The investment, value and cost of green buildings vary with each facility.

LEED is organized into five areas:

  • Sustainable site planning

  • Energy efficiency

  • Conserving materials and resources

  • Indoor environmental quality

  • Water efficiency

LEED points can also be earned for design excellence. A building can be classified as certified, silver, gold, or platinum depending on the number of points earned under the rating system. The General Services Administration now requires all its new construction to seek at least LEED silver status. Other federal agencies and major corporations have also embraced LEED and sustainable design practices.

Comparing Costs

EPA was committed to a green building from the beginning. Building occupants, mostly scientists, were eager to participate in planning their new facility. They contributed by identifying key design features, many of which fit into LEED standards. The occupants continue to maintain conservation and recycling programs.

The total building cost for the 68,000-square-foot NERL facility was $18.5 million, or $272 per square foot. The original design used green design strategies but was not based on LEED guidelines. Compared to the cost of the original green design, the incremental cost of meeting LEED gold criteria was $264,913, or an additional $3.89 per square foot. This figure translates to a 1.4 percent increase in building costs.

The costs associated with a LEED-rated building usually are higher than a traditional building. Costs vary depending on the level of the targeted LEED goal for the project (certified, silver gold or platinum) and the specialty energy-saving items chosen for the project. To make an exact cost comparison, one would need to start out with two identical buildings and then apply green features to one and traditional features to the other. An experienced architect and construction manager can help a building owner control costs by identifying which LEED points to target — those that make most sense for an individual building.

What accounted for the incremental $264,913 LEED cost? Here’s a breakdown by LEED categories.

1. Earning points for sustainable site planning cost EPA $11,200. The agency incurred costs such as landscaping for erosion control ($3,500), adding trees to exterior landscaping design to reduce heat islands ($2,000), adding bike racks for alternative transportation ($700), and installing alternate fueling facilities for electric cars ($5,000). Items that earned points, but cost nothing more than what the EPA would have spent anyway, included awarding preferred parking spaces for people who car pool, stockpiling topsoil, preserving and protecting trees during construction, and reducing habitat disturbance.

2. Enhancements under the energy efficiency category cost an additional $119,000. Awnings with integrated photovoltaics were installed on the exterior windows. At the time, the awnings were the first of their kind in the New England region. The photovoltaics collect solar power, supplying approximately 2,000 watts daily into the regional electric grid and supplementing the facility’s electric power. They provide shade, reduce glare in offices, and help with heat gain and natural cooling.

Included in this category is the additional cost of purchasing six, small, modular, high-efficiency, gas-fired boilers with variable frequency drives.

3. Measures that earned points for conserving materials and resources actually reduced costs by $1,050. Recycling-bailer equipment cost $3,000; however, there was a savings of $4,050 for efficient waste management; several dumpsters were set up on site, separating construction waste by paper, plastic and metal, which eliminated expensive bulk disposal costs.

In addition to these calculated savings, a number of items had no additional costs associated with earning points. These included adding some flyash for cement; setting up rock crushers on site for existing ledge and reusing that material, which eliminated costs to truck the materials off site; and building a retaining wall by reusing boulders that would have ordinarily been shipped off site. Other point-earning items with no additional costs associated with LEED were using 57 percent local materials, restricting the use of CFCs and halons in building materials, and providing storage areas for employees to recycle paper, cans and bottles.

4. The total indoor environmental quality category cost an additional $47,500. LEED points earned for this category included using alternative daylighting windows and ceiling systems ($20,000) and using low-VOC materials, including adhesives, sealants, paints and coatings ($17,000). The setup of permanent chemical storage areas cost $8,000. This system provides a separate hazardous materials building to store bulk chemicals with a floor grate system to contain spills. Providing permanent aluminum entry mats at the building’s main entrance cost an additional $2,500.

Increasing the outdoor/filtration air ratio, with duct moisture control and cleanable air distribution systems, was not an added cost because it was in the original design of the building. But it is a bonus for the indoor environmental quality and it earned EPA another LEED point.

5. The safeguard water category cost an additional $35,800 for features including water-conserving fixtures with electronic sensors and waterless urinals installed in restrooms ($6,800); and a surface runoff filtration system ($25,000) that pipes rainwater from the parking areas to a stormwater treatment system that removes contaminants and replenishes on-site wetlands.

EPA adopted a water-efficient landscaping approach called xeriscaping that uses native plants. The plants require little watering, are well-suited to the climate, and are pest-resistant, reducing the need for pesticides. That cost an additional $2,000.

Other LEED points were gained in the water efficiency category by installing water-conserving cooling towers with integral drift eliminators — heat exchangers that dissipate large heat loads into the atmosphere. This heat transfer system is also designed to divert potentially polluted water droplets from the atmosphere, resulting in cleaner air emissions.

6. Design excellence cost $20,000 at the time NERL was built. This meant hiring a LEED accredited professional — a mandatory LEED point. Today, more than 4,000 professionals are LEED-accredited, providing a more competitive market for design excellence consulting.

Benefits of Green Design

A project’s payback rate varies with the kind and amount of green products and efficient equipment used. Some energy-efficient building systems have greater out-of-pocket costs. However, a life cycle cost analysis may show lower operations and maintenance costs that yield significant savings over time.

NERL facilities manager, Bob Beane, along with his colleagues, was convinced that the green way was the right way for this facility. “First of all, you have to have the right mindset to build green — not only on the human factor but for the financial factor. I believe there is a huge payback for both factors.”

A report by the Heschong Mahone Group on a study analyzing consumer spending shows that green retail stores with added daylighting enjoy higher sales compared to their traditional counterparts.

A study of the West Bend Mutual Insurance Co. compared the productivity of clerical workers in a new building, which had improved work environment features, to the performance of workers in an old building. The outcome was improved morale and health. This kind of human benefit can give employers payback with easy recruitment and retention of employees.

A LEED rating may also increase property value and offer a marketing advantage.

The NERL project also included some features that brought benefits without adding to traditional costs.

  • Carpeting that has been “off-gassed” so that VOC gases are released before they are installed in the building results in a healthier indoor environment.

  • Park benches made of recycled materials instead of wood last a long time and require little maintenance, but cost the same.

  • Environmentally responsible, low-toxicity construction and cleaning materials deliver one-third less energy consumption and nearly one-fourth less water usage.

  • Wastewater generated in laboratory portions of the building and piped to a state-of-the-art acid neutralization system prevent any contaminants from entering the regional wastewater facility.

The growing recognition of the direct and indirect benefits of green buildings is leading an increasing number of facility executives to examine green options. Understanding the size of the first-cost premium for those facilities and the ways in which that premium can be managed will spur wider adoption of sustainable design strategies.

Charles Vaciliou is vice president and director of operations with Burlington, Mass.-based Erland Construction, a construction management, program management, design/build and general contracting firm.





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