Healthy, Sustainable Buildings Shouldn’t Cost the Earth

By Nevin Sood

Having recently come across from the UK, it’s not difficult to see the difference that taxation and legislation on energy performance and carbon emissions has made, not only in the interests of companies to reduce their carbon footprint, but also the people involved in the conversations and innovations around healthier buildings and work environments.  The argument to reduce a building's carbon footprint is much easier made in the UK because of this, and although it is a controversial move for many, it seems to be driving the economy in the right direction. Am I suggesting that there be taxation imposed everywhere? I believe it could be a useful driving force, however, recognizing this is a tough battle in the United States, we must look for other ways to prove return on investment (ROI) for those involved with real estate that also resonates with CFO’s.

When assessing the long term costs of design, construction methods and materials specification, it is widely accepted that whole life cycle costing can demonstrate very clearly that cost and value are not the same. Many investors, owners and occupants, in both the public and private sectors, are prepared to consider a higher initial capital commitment today if an accurate whole life appraisal can show that this will create commercial advantages tomorrow. This is why clients need to be able to assess with greater clarity than ever before - a huge challenge which demands a new level of collaborative scenario modelling to calculate a far wider range of sensitivities well beyond the parameters of the past – the life cycle cost of a building, from building inception, through occupancy and well beyond.

Predicting future costs where carbon emissions are concerned has never been an easy task at the best of times, but recent energy variables and volatility have underlined how dramatically this cost can vary beyond the expected trends. The speed with which energy costs change – along with other utilities such as water - could play a major part in determining the commercial viability of new energy-saving technologies whose mainstream application has previously been purely academic. Then, beyond the energy savings, we can begin to look at the most effective spaces which people can operate in and be most productive. A better designed, adaptable and more engaging space has the ability to create more productive employees while attracting and retaining the right employees. 

While this may just seem like common sense to many, there is now a whole movement towards further proving this enabling those working for greener spaces to convince CFO’s of the ROI in the long term. When we consider the average building is 50 years old, it is easy to understand why looking at a buildings ROI can play a significant role in justifying the upfront costs when retrofitting or building new structures – they will be around a substantial length of time and changes now will ultimately pay off, well beyond the initial investment. As a result, a growing number of progressive companies and organization’s are applying whole life cost modelling to high performing property development, while also investing in research to establish the difference the space makes for employees - showing that these solutions are no longer the stuff of green dreams, but realistic possibilities which are commercially advantageous far sooner than previously expected.

Nevin Sood is a director at Turner & Townsend.

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