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When the real estate industry talks about building green, most agree that it is the right thing to do from a social benefits and environmental standpoint. But when the discussion inevitably turns to cost and just how much more it will take to get a green project built, there are many divergent opinions and some wonder if the benefits outweigh the costs. This concern has taken on even greater urgency in the current economy.

But going green is far more economical than most believe and its becoming more so every day. The average cost of a LEED certified project can be as much as 5% to 10% higher than costs associated with a traditional project, but these costs are coming down with time. The key to containing costs on a sustainable project is planning, planning and more planning.

The majority of these green building costs can be attributed to the increased architectural and engineering design time required on sustainable projects. While some aspects of design have little or no first costs, such as site orientation, others such as rightsizing infrastructure and mechanical systems can add considerably to a green project budget.

For example, design teams with LEED expertise often charge a premium. A commissioning agent, responsible for monitoring the HVAC lighting control, domestic H20 and renewable energy systems throughout the duration of the project to ensure they meet the certification process, must also be factored into a first cost budget. While hiring a commissioning agent is an added upfront expense, if performed properly, commissioning can save as much as 40% on the building’s systems expenses.

Information modeling, which utilizes computer-aided design to produce three-dimensional models of projects, allows owners and the design/build team to incorporate green elements at the start of the project, another element not typically associated with standard building. While an added expense upfront, this can help reduce material costs during the construction phase by minimizing framing needs and supplies.

Low emitting, recycled, locally manufactured and rapidly renewable materials that meet green building or LEED standards are generally more costly than traditional building materials. The same is true for energy efficient building systems such as HVAC and lighting. In fact, material costs for a green or LEED certified project can run as much as 15% to 20% higher than a traditional project.

However, material costs associated with green building are coming down because the market is more competitive. A comparable equivalent is the consumer technology segment. Beyond making the initial investment in sustainable materials, project owners need to take into account their entire life cycle and understand that the energy savings these materials often afford can lead to a real cost savings over time.

The financial benefits of green buildings include lower energy, waste disposal and water costs, lower environmental and emissions costs, lower operations and maintenance costs and savings from increased productivity and health. Cost savings can be achieved, too, not only in terms of their operations, but also with regards to maintenance, repair and replacement costs, as well as the environmental or social benefits (i.e., impacts on transportation, solid waste, water, energy, infrastructure, worker productivity, outdoor air emissions).

While market forces and benefits can mitigate some of the expense, there are purposeful steps owners can take to proactively contain the building costs of their green property:

• Pick your team as early as possible. Look for a design/build team that has a LEED accredited professional at the helm who will coordinate the team.

• Employ information modeling to derive a better understanding of the constructability of the building. This can ultimately save significant dollars by precluding change orders during construction, which can significantly impact the project’s bottom line.

• Seek input from your trade contractors. Additional input from the team on the front lines can help bring years of field experience and training into the equation. Their additional insights and foresight can help determine the most workable solutions for the actual building process as well as raise some possible red flags based on past experience.

• Make smart product selections. Look for materials that are specific to the criteria of your project, whether it is commercial, residential or institutional. Develop a checklist of materials that fall within LEED parameters. The more information you have, the better your negotiating power is when your team procures them.

There are many sustainable alternatives coming on to the market now as the demand for green buildings and products grows, thereby giving builders a wider choice of materials. Obviously, if the project owner wants a particular material, that product must be procured. But, if that is not the case, there are plenty of choices that will not only reduce costs, but also contribute “points” toward LEED certification. As choices increase, competition among suppliers brings costs down and increases your bargaining power. In addition, investigating the various alternative green materials that accomplish the same result also helps to keep costs down.

• LEED costs should be factored into a market initiative. The building sales/marketing team should demonstrate and educate potential tenants/buyers on the economical, social, health and cost savings benefits as a return on their investment. Financial institutions are initiating loan programs with a higher loan to value ratio for a green building due to the lower operating costs.

• Take advantage of government subsidies and tax credits that can help offset the higher costs of green building. This is especially true for lower income or subsidized projects.

While few would argue against the social and environmental benefits of green building, a cost benefit analysis of environmentally conscious development today would reveal that with careful planning and awareness, its costs do not outweigh the benefits and we are approaching a time when it will become more costly not to build green.

Angelo Del Russo is founder and CEO of Union-based Del-Sano Contracting Corp., a member of the US Green Building Council and a qualified builder of LEED-registered projects. The views expressed here are the author’s own.

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