Is green certified building more costly than normal building and by how much?

World over, Green building movement has gained ground rapidly and has become the need of the hour from sustainability point of view.

Today, most of the countries have given priority to incorporating green building products and processes in construction industry. Governments of most of the nations have appointed accrediting authorities to monitor and certify this incorporation. Many benefits are being given for promoting certification of the green buildings.

This institutional push has become necessary for some good reasons. There is a general perception that Green building design and construction process is costlier than a conventional construction, which has prevented a faster growth of Green building movement. An early 2003 article in the New York Times was entitled “Not Building Green Is Called a Matter of Economics.”

This perception has changed over the time, but still endures enough to be a bottle neck in faster embracing of sustainable design and construction.

A survey in 2007 by World Business Council for Sustainable development found it is a common perception that Green Homes cost up to 17% more than conventional buildings, while an actual analysis of green construction found that the figure is merely in a region of 2%. In a book by Greg Kats, “Greening Our Built World,” 170 LEED-certified buildings were studied against a data base of similar buildings. The average construction premium, notwithstanding their level of certification, was just 1.7 percent.

This figure of 2% may, however, be found varying under different situations. And there is some truth in perception of increased costs.

A major factor contributing to this cost as well as its variation is the increased architectural and engineering (A&E) design time, modeling costs and time necessary to integrate sustainable building practices into projects. This cost varies along with the learning curve of the architects and the builders for incorporating design, Green building products and processes in the construction. This input cost factor reduces drastically over subsequent projects.

Further, use of some materials which are green may cost a little more than convention material, which is bound to happen as these materials have to be more rugged, have better life cycle, have better technology or may have better and more responsible (higher cost) manufacturing processes.

Given that these materials are so much better for environment as well as health of the occupants, it is astonishing that the total cost variation remains in a region of 2% to 5%.

So, in conclusion, the design management process may incur some extra cost which however is managed effectively over time with the learning curve. There is bound to be some cost increase due to use of better material and processes, however, which usually doesn’t exceeds 5% or thereabout of project cost. But, any building project cost takes into account OPEX cost along with CAPEX.

In fact, Green buildings provide a wide range of benefits both direct and indirect that makes them a very good investment.

Green buildings are by their very nature supposed to save on operation and maintenance costs. As per the World Green Building Trends 2018 SmartMarket Report published on World Green Building Council website, a new green building would save almost 8% of the operational cost in the very first year. With a substantially lower operational cost, a still lower maintenance cost and better health of the occupants, the net costlier factor of green building over a conventional building is almost null.

There are a host of other factors to be considered in costing exercise. The asset value increase of the real estate is reported to be almost 7% while the business benefits from government subsidies or enhanced floor area ratio, makes it a complete indisputable win case for Green building design and construction.

Therefore, Green Buildings are not really costlier than conventional buildings but they do require more rigorous and professional planning & construction. They, in fact, provide financial benefits over conventional buildings not just in form of net construction cost but also recurring like energy & water savings, reduced waste, improved indoor environmental quality, greater employee comfort/productivity, reduced employee health costs and lower operations and maintenance costs.