The other day an architect we’ve worked with on and off for years, Stu Stovin of Harthorne Hagen Architecture (HHA) , called me to prep for a discussion with a client about the cost of LEED. As I was answering Stu's question with an answer I have used many, many times before, it occurred to me that no matter how routine this was for me, “the cost of LEED” was still not commonly understood. So, here’s a shot at raising further awareness about the costs and associated benefits of LEED Certification. This conversation is specific to the rating systems in LEED BD+C and ID+C reference guides. We will continue this series in the coming months with the cost of LEED for Homes and the cost of LEED for Existing Buildings.
There are three kinds of costs associated with LEED:
Direct Costs for a Green Building
It is not uncommon for project teams to get distracted by the idea of earning “points” for LEED and call those additional “LEED Costs,” forgetting that they are actually earning points for implementing green building strategies on the project, which may be a requirement of the project outside of LEED certification. If a project is exclusively pursuing LEED for the sake of certification and would otherwise not build green, then green building costs are LEED costs. However, we at O’Brien & Company contend that, if you focus on achieving a good, green building with an integrated process, you’ll be able to earn a LEED certification with little to no substantive design changes or increased construction cost.
Most projects are somewhere in between, where sustainability or green building is a goal mixed in with a lot of other project priorities and perhaps not fully executed. In this case, there may be increased design and construction costs moving the project to a level of green performance that qualifies for the desired level of LEED Certification. It is important to realize, however, that the expenditures may be on different things (cost shifting), rather than cost increases.. For example, spending more on the building envelope and less on HVAC, or specifying the many recycled content, local, and low-emitting building products that cost the same as their alternatives.
For any green project that will also qualify for LEED Certification, there are three areas we recommend focusing on for their direct bottom line benefits, most significant environmental benefit, and strategic advantage in earning points in LEED. Fortunately, these benefits align. The areas are:
- Site selection for access to transportation and community amenities.
- Energy efficiency – Plan for high level of energy efficiency, beyond code and at least 20-30% better than ASHRAE 90.1 2007.
- Water efficiency and reuse.
Consultant and contractor costs
An important place to look at some cost shifting to assure both the best green building performance and most cost-effective pathway to LEED is to invest in earlier involvement of project team members in an integrated process for sustainable design. We would also generally recommend the use of early energy modeling in the process and quality control through enhanced commissioning. These are two requirements for LEED as well, but that’s because they are critical for effective building design and construction.
Let’s assume a good process to begin with and that green building is a project goal, so associated process costs are part of the main project budget. Then we will separate out the direct costs for the management of LEED implementation and documentation, adapting an energy model for LEED, earning the LEED commissioning credit, and the additional consultant costs for documentation. We’d predict the range of those costs to be $20,000 to $200,000, with typical projects costing between $70,000 and $100,000, spread among several project team members and possibly a LEED consultant. There is a minimum base cost just to complete the LEED documentation that increases with project complexity, but levels out after a reaching a certain point. This is one reason why our office is leery of stating percentage increases for the cost of LEED. On a small tenant improvement project, the cost increase may be 10% of total project cost, on a large development project, it is fractions of pennies on the dollar.
A couple of tips for controlling these costs are:
- Owners of multiple buildings or properties should explore the LEED Application Guide for Multiple Buildings and Campuses and the LEED Volume Build program
- Hire an experienced team. Although we love being hired to help new players and build capacity in the market place, it is amazing what an experienced green/LEED team can accomplish in same level of effort it takes to bring a project team new to LEED through basic certification.
No matter how you may have addressed the costs discussed above, there will always be registration and certification costs due directly to the Green Building Certification Institute (GBCI) for administration and verification of the LEED system. Fortunately, these are reasonably small costs. The costs for members (it is hard to do a LEED project without a member on your team, so take advantage of it) are:
- Registration – $900
- Certification – minimum of $2,250 for projects up to 50,000 sq. ft. doing a single review, up to $25,000 for projects over 500,000 sq. ft. doing a two-phased review. In between these square footages, the cost is $.045 to $.050 per sq. ft. cost depending on the number of reviews. You can find the latest costs at the GBCI.
- You should probably also budget for a few miscellaneous support items, such as $250 for reference guides, $220 for credit interpretations and possibly, $500 for an appeal.
So, that’s what we at O’Brien say. What do other people say about the costs of LEED? I think some of the most telling work are the regular studies done by the Co-star Group which published an update in 2010 showing continued significant rental premiums and sales price premiums for LEED and Energy Star certified buildings, and the “Cost of Green Revisited” study by Davis Langdon which showed no significant difference in average cost for green buildings as compared to non-green buildings across many building types. Their study and several other good papers can be found on the USGBC website.
Elizabeth Powers, LEED AP BD+C, LEED AP ID+C, CSBA, is Owner-Principal of O'Brien & Company and has consulted on over three dozen LEED projects. She is a regular contributor to Building Capacity Blog.
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