by Carl Smith

Even in the best of times, cost is a primary consideration for the great majority of construction projects – but in the current economic climate, concerns about cost have added urgency.

Although it is not yet mandatory in any jurisdictions, the newly-finalized International Green Construction Code (IgCC) is intended to provide the basis for codes that require green building techniques to be used in the construction and renovation of all commercial buildings, as well all residential buildings over three stories.

At the recent annual meeting of the International Code Council (ICC), the issue of cost was raised in both educational sessions and the hearings for IgCC, with some building officials offering accounts of past projects where green aspirations had been abandoned once cost estimates were received.

The truth is that there is no simple answer to the question, “Does building green cost more?” Many articles and reports have addressed this question, but the question becomes less rhetorical in view of the fact that building green, at least in some fundamental respects, is on the verge of becoming a legal requirement. The experience of one state—admittedly, a state with an atypical level of commitment to environmental protection—is of interest in this context.

Making Green Mandatory

In January 2010, California adopted the nation’s first mandatory green building code, the culmination of a process that had begun in early 2007, when the Schwarzenegger administration asked the California Building Standards Commission to develop green building standards for the State of California.

The 2010 California Green Building Standards Code, known as CALGreen, became mandatory in January 2011. CALGreen had been preceded by a voluntary green code, adopted in 2008 California and implemented in August 2009 with intention of making it possible for building industry and enforcement agencies to prepare for mandatory compliance.

In some areas, building professionals had been gaining relevant expertise for more than three decades – California’s rigorous energy efficiency standards, first enacted in 1978, have reduced per capita requirements to 40 percent below the national average. As long ago as 1990, the state began to develop guidelines for reducing volatile organic compound (VOC) emissions from building construction materials in newly-constructed or remodeled office buildings. This work resulted in the most popular U.S. standard for evaluating VOC emissions and reducing VOC content in indoor air.

Though it is hard to know exactly how, and in what ways, these and other factors account for the outcome, the coming of the mandatory code has not been accompanied by protests regarding increasing costs. This result is likely a reflection of both the long learning curve that preceded CALGreen and the effort by the stakeholders who developed the code to establish standards that were truly attainable for all projects.

Compared to What?

What of other states? Are concerns about cost misguided?

Among the most widely-cited works addressing this question are several studies from Davis Langdon, one of the first companies in the U.S. to build a consulting business focused on managing construction costs. A 2004 report, Examining the Cost of Green, compared 45 library, laboratory, and academic classroom projects that were designed with a goal of meeting some level of the USGBC’s LEED-NC (New Construction) certification to 93 non-LEED buildings with similar program types.

The study found that “there was no significant difference in the construction costs for LEED-seeking versus non-LEED buildings in any of the categories.” Does this mean, as some might want to conclude, that building green has no additional cost? The authors stopped short of this assertion, saying instead that “many projects can achieve sustainable design within their initial budget, or with very small supplemental funding.”

Peter Morris, a principal with Davis Langdon, and author of several of its most influential reports, offers a frank assessment. “Green buildings do cost more than the code-minimum non-green building, but not necessarily more than peer buildings,” he says.

“A lot of our work has been on the unspoken part of the question of cost,” Morris says, "which is ‘more than what?’" For example, comparing the cost of a green building to a peer non-green building will not give the same answer as comparing a code-minimum building to a hypothetical green building.

“If I am a developer comparing to my peers, the peer approach is the right one,” he notes. “If, however, I am building to the minimum, comparison to code-minimum is perhaps more valid.” The reality, he says, is that the coming of green codes will bring additional expense to some builders, and “to use different studies to prove otherwise won’t convince anyone.”

Know Before You Go

Exactly what “additional expense” might encompass can vary from building to building – but one thing that is clear is that projects where the participants “learn as they go” invariably incur costs that could be avoided. A report from the California State and Consumer Services Agency identifies “strength of project managers” among the cost factors for green buildings, and highlights cost-mitigating strategies that may not be common practices for all design and construction teams, for example:

  • Invest an additional 3% of total project costs during design to yield 10% savings in costs of construction through design simplifications and reduced change orders.
  • Set up a cross-disciplinary design team to encourage creative solutions.
  • Involve the contractor early in the design process.
  • Hire the mechanical electrical and plumbing firm (MEP) at the beginning of design and empower them to fully participate in the entire design process, resulting in savings equal to at least 10% of the MEP construction costs.

Changing Perspectives

A shift toward green construction practices also involves a shift in perspective regarding buildings themselves, and a view of “cost” that takes into account their long-term effects (good and bad) on both the environment and those who work and live in them. A growing number of builders and owners are embracing green building as the “right” thing to do, as reflected in a recent report from McGraw Hill Construction projecting that the nonresidential green building market will triple by 2015, and calling green building “the bright spot in an otherwise tough economy.”

This growth is fueled by more than idealism. McGraw Hill found that the primary drivers for the boom were: reduction in operating costs (an average 13.6 percent for new buildings and 8.5 percent for retrofits); increase in building values (10.9 percent for new buildings and 6.8 percent for retrofits) and increase in return on investment (9.9 percent for new buildings and 19.2 percent for retrofits).

Viewed in this way, additional costs begin to take on the character of investment rather than penalty – but, in reality, the return on investment can vary greatly from project to project, influenced by factors ranging from design and construction to training of building staff and equipment maintenance.

Reading the Future

Ultimately, the most important question could be what might it cost not to build green? The building sector is the largest source of greenhouse gas emissions. An analysis from San Francisco-based Next 10 found that for California alone, the economic damage resulting from inaction regarding climate change could range from $7.3 to $46.6 billion. Further, it warned that $2.5 trillion of the state’s $4 trillion in real estate assets is at risk from extreme climate-related events such as sea level rise, wild fires and extreme weather. 

Each structure built according to sustainable guidelines also plays a part in averting a range of other costs ultimately born by society (and taxpayers), from illnesses caused by toxic emissions from building materials to water and power shortages.

The fact is that the era of green building has been entered and there is no turning back. The best results—for builders, code officials and occupants alike—are likely to come when design objectives are the primary benchmark, and cost is engineered back from a clear vision of the structure and an understanding of why it is good that it should be built as designed.

When asked what would be required to bring about substantive progress in the green building world, architect Frank Gehry had a simple response: “Creativity and a will to do it. And a lot of it is common sense.”

Carl Smith is the editor in chief at Green Technology.

© 2011, Green Technology. All rights reserved.