The Business Case for Green Buildings

May 31, 2006
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im Moler, Manager, Engineering Systems, Turner Construction: In the early days of green building, we always tried to make the case for green based on how much energy we were going to save in terms of reduced operating cost. That didn't get a lot of attention in the hospital executive suite because the energy budget for a hospital amounts to less than 1% of the operating cost. Saving 20% of something that was less than 1% of the hospital executives' overall “headache” didn't get a lot of attention.

The exciting thing about what is happening today is that the issues relating to the things we care about—sustainable design, green building—are starting to become important to the people who occupy the hospital executive suite. Thus, if executives want to recruit and retain the best staff, a green facility is a way to do that. If they want to have better outcomes for patients, a green facility can contribute to faster and better recovery. If they want to avoid risks, a green facility can help avoid patient infections and staff illnesses and injuries. If they want to improve public perceptions of the hospital, a green facility can help do that. Lastly, if they want to balance operational costs against the revenue stream, a green facility can help improve that balance.

Another benefit: Building green has opened up new channels of capital infusion into healthcare design by philanthropy, by government participation, and even by utility participation in supporting certain features of the building.

Lisa Fay Matthiessen, AIA, Associate Principal, Davis Langdon: I am presenting the preliminary findings of a cost study that Davis Langdon is doing with the Green Guide for Health Care (GGHC). We are a cost planning firm, and we work with building projects around the country to figure their cost implications. We look primarily at first costs. Our task was to go through the GGHC and to try to understand point by point, prerequisite by prerequisite, what the cost implications might be for a given project sponsor trying to implement this system.

The GGHC has 42 different credits, which are broken down into 96 points. We know that no project is going to try to get all 96; the project will decide which ones make sense in its context and go after those. There are, however, 11 prerequisites that are chosen because they seem to be so basic, so elemental to the process that, indeed, if you didn't do them, you really couldn't claim to be doing sustainable design. There are also 7 “categories of concern,” which break down the bigger topic of sustainable design into individual items such as water use, energy, materials, and resources.

If a facility has achieved approximately 40% of the points, we would call that a starting level for GGHC, which should be achievable at little or no additional cost. To go higher for GGHC points can get a bit challenging. There will be issues of first cost, features that may add cost to the baseline and, with hospitals, certain other issues that can pose real obstacles, such as those relating to infection control, security, maintenance, and regulations unique to hospitals. Perhaps the biggest obstacles involve established, accepted practices—the “that is not how we do that” in hospital design and construction. I don't want to be critical, but I think the tendency to go with what we already know, especially when working on a hospital project, should be looked at critically.

The cost situation in hospital construction is complicated. We have been tracking costs for the hospital projects that we work on and, in Northern California during the past 10 years, costs have gone from about $200 per square foot to about $550 per square foot. Although construction costs may be the biggest problem confronting any hospital project today, that has nothing to do with building green. Green is a drop in the bucket compared to other cost issues a project will face.

Moler: To add a perspective from across the country, we are seeing projects on both coasts that are approaching $700 per square foot. Through the midsection of the country, costs are slightly above $300 per square foot on average. This relates to the kinds of clients that Turner works for—generally the larger projects for major suburban hospitals and urban teaching institutions. These costs are not a result of pursuing a green agenda.

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