ICC eNews

Sifting through the Ambiguity of Green Building Costs

By Allan Bilka, RA, International Code Council Senior Staff Architect

The green building cost debate encompasses two extremes, from “It is very difficult to determine any cost difference whatsoever between green and non-green buildings,” to claims of astronomical costs such that “The market cannot bear the costs of green building.” Depending upon your perspective, as well as the specific project you are analyzing, each of these – as well as many positions in between – may be true or false.

However, a little research, common sense and reading between the lines can shed some light on the vagaries of green building costs.

The Folly of General Comparisons
Some studies claim green building has no real overall cost implications because square footage costs for green buildings are typically in line with the range of square footage costs for any particular building type. However, that is much like saying there is no real cost difference between marble and vinyl floors, simply because both can be used in either high- or low-cost-per-square-foot projects. Such logic is neither realistic nor responsible.

It is very difficult to make general statements regarding green building costs, primarily because most green projects implement significantly different green features. This stems from the fact that most green building rating systems – including the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) programs and the ICC 700 National Green Building Standard (NGBS) – have few mandatory requirements and instead offer a multitude of choices.

Most green rating systems have point thresholds at each of their performance levels (Platinum, Emerald, etc.), but those points may be achieved by complying with any of a multitude of different provisions, each with their own corresponding point values. Thus, even within the same rating system, buildings that appear on the surface to be similar may not be, because buildings that qualify at the same performance level of a rating system often achieve their performance ratings by incorporating significantly different green features and practices. One project may concentrate on water conservation while another excels in energy conservation, and the ways in which projects achieve their water or energy conservation goals may be quite different.

The particular performance level of the rating system chosen can further complicate general cost comparisons, because higher performance levels will require more and/or more intensive green features. When we hear of green building costs estimates, are we talking about the highest or the lowest performance green buildings? And what about buildings designed and constructed under differing rating systems? Cost comparisons of such projects present much greater challenges. Disparities are multiplied and the level of uncertainty is raised because you increase the sheer number of variables by exponential amounts.

Lastly, just because a green building contains a feature that could be constructed in a green manner does not mean that it must meet the provisions of the green rating system for that feature. Unlike codes, wherein a project that includes a concrete foundation must comply with the code requirements for concrete foundations, in green building rating systems, the designer, contractor and/or owner have the freedom to choose which provisions of the rating system with which to comply. Even though a project may incorporate a concrete foundation, compliance with the provisions of the green building rating system for concrete foundations is a choice– not a requirement. Unless the green building provision is mandatory – and few are – the provision does not become a requirement unless the designer, contractor and/or owner choose to comply with that provision, which is typically a function of their intent to qualify for points in that area of a particular rating system. Just as the green practices implemented in these buildings vary, so will the associated green building costs.

Specific Comparisons
Although generalizations regarding green hard costs can be very misleading, it is possible to calculate green costs for a specific green building project and compare it to a theoretically similar building model that incorporates “standard” or “conventional” building features and practices.

The first step in this process is to determine which project features were likely to have been “green” even if the building was not built in accordance with the provisions of a green rating system. For example, many low-rise buildings use a wood structural system. Since wood is a renewable resource, it is often awarded points in green rating systems. So wood construction in many cases is not an added cost and, correspondingly, you should not consider it an added green cost.

After determining the features in the project which are inherently green, the next step is to determine the cost of the added green features (those not likely to be inherent in a non-green version of the project), or the difference in cost between the added green features and the standard features which they might replace. When these steps have been completed, you can determine the actual green cost of the specific project by totaling the costs to comply with each provision of the green rating system – as chosen by the designer, contractor and owner – and subtracting the cost to implement those provisions that likely would have been incorporated in the project anyway.

In theory, this may seem rather simple. In reality, it is anything but. As construction documents are costly, they are not prepared for green and non-green versions of the same building. Because construction documents that reflect accurate green and non-green versions of a project are not provided, construction estimates of these cost differences are typically nothing more than an assemblage of educated guesses. Still, these results are likely to be much more representative of actual green building costs than generalized approaches.

The Value of Experience
Whether it is the design team or the contractor that is estimating the cost of going green, inexperience can be costly. Estimators who are unfamiliar with green building tend to pad numbers in an effort to address uncertainty, prevent losses and cover the cost of their learning curve. The only thing one can be sure of in such scenarios is that the cost of going green is not likely to be accurate. Anti-green designers and builders who have no green building experience may quote outrageously high costs for going green which have no basis in reality, while pro-green designers and builders with no green building experience may not charge additional fees for their first green project, or try to keep fees at a minimum, seeing their first green project as one that may open doors in the future.

Initial and Long-Term Costs
A green building subject we often debate is initial versus long-term or building life cycle costs. In some cases, these are valid considerations. But in the real world, most construction costs are financed over the long term. As a result, these so-called “initial costs” actually become long-term costs. For example, since green buildings incorporate many conservation principles, an owner may significantly reduce his or her monthly energy and water costs . The net result is that the difference between the added monthly financing costs related to green building may be more than offset by the cost savings in monthly utility payments. This is a win-win scenario for the owner and is one of the primary reasons that green building makes sense for many project types, including affordable building and low-income housing projects. In addition, because green buildings encourage the use of durable and low-maintenance materials, real long-term costs are further reduced.

Small vs. Large Projects
Small versus large projects present yet another set of variables. The main factor here is the cost of administration. Green building typically requires more third-party verifications, and these verifications may be quite costly, dependent upon the particular rating system used and the particular green practices implemented. Yet the cost may not differ substantially from small to large projects. Therefore, the administration-related costs of going green, when evaluated as a percentage of construction costs, tend to be greater in small buildings than large buildings. Indeed, some small projects that may qualify as green are never evaluated due to administration costs.

What “Green” Cost Generalizations Can We Safely Make?
Despite the reservations that have been noted, it is safe to say that, for both green and non-green buildings, within any particular building type, both high-cost and budget-minded projects are possible. Some non-green buildings have marble floors and walls, while others have less expensive finishes. Greening a building can be expensive, affordable or anywhere in between. If the desire is to be cutting edge and as environmentally friendly as possible, such a building may be at the high end of the price spectrum as compared to buildings of similar use which incorporate conventional construction practices. But the fact that green building principles have also been applied effectively to affordable and low-income projects indicates that green building can be cost effective for most projects. In many ways, costs for high-performance green buildings are not much different from costs for high-performance cars: there are both high-end and budget options available. The real question is, which particular options are you comparing? Green and sustainable building principles are primarily based on water, materials and energy conservation.

Conservation means using less. If we use less, it is certainly possible to save. Are all green features affordable? No. In reality, the answer to that should be evaluated on a feature-by-feature and project-by-project basis, with consideration given to the rating system you are applying and the performance level you are seeking. Are all green buildings affordable buildings? Absolutely not. A building that incorporates green roofs, the most efficient cutting edge active solar collectors and a significant number of other innovative features is more likely to be cost prohibitive at some point.

Applying Theory to Practice
Working together, the designer, contractor and owner have the ability to control green costs and keep them in line with the project budget. Does this mean that every low-budget project should be able to attain the highest performance levels of a rating system? Maybe not. But as all involved parties gain experience in this process, the cost of implementing many green features will continue to come down in price, be more accurately estimated, and green costs in general will become less and less a mystery. If current trends continue, the perception that green and sustainable building practices must be implemented in order to ensure a reasonable quality of life for present and future generations will increase. We virtually never calculate the costs to make a building code compliant, and at some point in the future, green practices and their associated costs may be looked at in much the same way: as a standard practice that comes at a reasonable price for doing business responsibly.