The Economics of LEED®-EB

An understanding of the costs of certifying a building as LEED-EB, and what you can do to achieve LEED EB in your facility.

Michael Arny, President, Leonardo Academy

What is the cost of implementing LEED®-EBcertification for a building? Because the U.S. Green Building Council (USGBC) LEED®-EB(Leadership in Energy and Environmental Design — Existing Building) certificationhas become an important benchmark of sustainable building operations andmaintenance, it is important to building owners and managers to have an answerto this question. Leonardo Academy’s 2007 Survey of the Costs and Benefits of LEED®for Existing Buildings begins to provide an answer. We know that LEED®-EBgives buildings a good start on the journey toward sustainability. This surveyshows that the cost of LEED®-EB implementation should not be abarrier to beginning the journey because there are many low/no cost creditsavailable that can be implemented right away. The environmental benefits of thelow/no cost measures can be accumulating while plans are made to implement thecostlier actions.

The survey, sponsored by Johnson Controls, invitedparticipation by the owners and managers of all 53 buildings that were LEED®-EBcertified at the time of survey distribution in 2007. Buildings were certifiedLEED®-EB under the pilot project or under version 2.0. Responseswere received through 2007 for 23 buildings, a 43 percent response rate.Information was gathered in three areas: the cost of certification, the ratingof the cost of each LEED®-EB prerequisite or credit as low/no costor significant cost, and the cost of building operation.

Cost of Certification

The costs of LEED®-EB certificationwere received from 13 buildings. Building size ranged from 20,000 to 1,600,000 square feet, with a mean of 359,667 square feet. Building dates were reported for 7 of the buildings, and ranged from 1955 to 2004. Ten of the buildings were office buildings, two were partly office, and one was a manufacturing facility. Soft costs included the USGBC LEED®-EBregistration and application fees, and the cost of consultants, if applicable. Softcosts were analyzed with and without the cost of staff time, as staff time isoften incorporated into normal staff activities. The hard costs included thecosts of building and equipment improvements required to meet the LEED®-EBprerequisites and credits. The costs were analyzed as costs per square foot ofbuilding floor space.

The costs of LEED®-EB certification are shown in Figures 1 and 2. The analysis in Figure 1 includescost of staff time as part of the soft costs. The mean total certificationcost for all buildings was $1.59 per square foot, with a range of $0.02 to $5.00.The mean soft cost was $0.86 per square foot, with a range of $0.01 to $1.89.The mean hard cost was $0.73 per square foot, with a range of $0 to $3.14. Themean total certification costs for the different certification levels show atrend for increased cost for higher certification levels, with the mean total costsfor Platinum ($1.84/sq ft) and Gold ($1.73/sq ft) certification being higherthan the mean total costs for the Silver ($1.22/sq ft) and Certified ($1.60/sqft) levels. The same trend is shown for mean hard costs, with the mean hardcosts for Platinum ($0.87/sq ft) and Gold ($1.19/sq ft) certification beinghigher than the mean hard costs for the Silver ($0.31/sq ft) and Certified($0.58/sq ft) levels. The mean hours of staff time required for LEED®-EBcertification for all buildings is 0.013 hours per square foot.

The analysis in Figure 2 excludes the cost ofstaff time as part of the soft costs of certification. The mean totalcertification cost for all buildings was $1.00 per square foot, with a range of$0.01 to $4.68. The mean soft cost was $0.27 per square foot, with a range of$0.01 to $1.54. As when staff costs are included, mean total certificationcosts for the different certification levels show a trend for increased costfor higher certification levels, with the mean total costs for Platinum($1.29/sq ft) and Gold ($1.43/sq ft) certification being higher than the meantotal costs for the Silver ($0.49/sq ft) and Certified ($0.77/sq ft) levels.

LEED®-EB Prerequisites and Credits Rated as Low/No Cost or Significant Cost

Survey participants were asked to rate thecost of achieving each LEED®-EB prerequisite and credit from theirperspective as low/no cost or significant cost. Ratings were received for 23buildings. Eighteen of these buildings are office buildings and three more havesignificant office space. The percent of respondents rating each prerequisiteor credit as low/no cost is used as a measure of the cost feasibility of thataction. Please be aware that prerequisite and credit numbers used in this articleare those for LEED®-EB v2.0.

Prerequisites The results forprerequisites are shown in Figure 3. Because the LEED®– EBprerequisites must be met by all buildings achieving certification, it is significantthat most of them were rated as low/no cost by a high proportion of respondents.Ten out of the 14prerequisites were rated as low/no cost by more than 80% of the respondents. Allbut one of the prerequisites were rated as low/no cost measures by at least than68% of the respondents. The exception was building commissioning, with only43.5% of the respondents indicating that this was a low/no cost measure. It isimportant to note that in LEED®-EB versions Operations &Maintenance (O&M) and 2009, commissioning has been moved from being a prerequisiteto being one of the credits that may be chosen to earn certification. Otherprerequisites rated as significant cost by about 30% of the respondents were minimumenergy performance and adequate ventilation.

All Credits Figure 4 showsparticipant cost rating of LEED®-EB credits. In this figure all LEED®-EBcredits are represented in order of the percent of respondents rating thecredit as requiring low/no cost. The figuredemonstrates the availability of many low/no cost credits. Out of 50 credits tochoose from, 42 (85%) were seen as low/no cost by at least 50% of respondentsand 32 (67%) were rated low/no cost by at least 60% of the respondents. This is a great boon to users because LEED®-EBprovides multiple pathways to earning the certification credits. Each buildingcan choose to earn the credits that are most cost effective for the particularbuilding. In addition, 42 of the 63 (67%) innovation credits achieved wererated as low/no cost.

Sustainable Sites Credits Ten out of the 11 SS credits wererated low/no cost by at least 50% of the respondents (Figure 5). Six creditswere rated low/no cost by at least 70% of the respondents. All of the Alternativetransportation credits except for Alternative fuel vehicles fall intothis category (SSc3), as do Location of the building in a high density area(SSc2), a Plan for green exterior management (SSc1), and Reduced sitedisturbance (SSc4).

Water Efficiency Credits Two out of three WE credits were ratedlow/no cost by at least 50% of survey respondents (Figure 6). Water use reductionby at least 10% (WEc3) was seen as low/no cost by over 80% of respondents. Water efficient landscaping (WEc1) was less often seen as a minimal cost.

Energy & Atmosphere Credits Five out of eight EA credits were seenas low/no cost by at least 50% of survey respondents (Figure 7). The creditsidentified as low/no cost most often (over 80%) were Building operation andmaintenance: Staff education and Building systems maintenance(EAc3.1-2). Performance measurement & emission reduction reporting(EAc5.4) was reported as low/no cost by almost 70% of respondents and Additional ozone protection (EAc4) by almost 60%.

Materials & Resources Credits All six MR credits (Figure 8) wererated low/no cost by at least 65% of survey respondents. From highest per centrespondents (95%) to lowest (67%) these credits are Occupant recycling(MRc5), Construction, demolition & renovation waste management(MRc1), Sustainable cleaning products & materials (MRc4), Optimizinguse of IAQ compliant products (MRc3), Additional reduction in mercury inlight bulbs (MRc6), and Optimize use of alternative materials(MRc2).

Indoor Environmental Quality Most of the IEQ credits (18/21) wereseen as low/no cost by at least 50% of survey respondents (Figure 9). Nine ofthese were identified as low/no cost by at 76% to 96% of survey respondents. Inthis group of credits are four of the five green cleaning credits, entrywaysystems, low environmental impact cleaning policy, pestmanagement policy and cleaning equipment policy (IEQc10.1, 2-6). Theother credits in this group are a Construction IAQ plan (IEQc3), Controllabilityof lighting (IEQc6.1), Daylight for 50% of spaces (IEQc8.1), Viewsfor 45% of spaces (IEQc8.3) and Thermal comfort compliance(IEQc7.1).

Effect of LEED®-EB Version Updates

The USGBC continues to work to make LEED®-EBever more practical to use without reducing the achievement requirements. Thismeans that these survey results are in general conservative in how theyidentify user views on the ease of implementation of LEED®-EB. Itis important to note that the one area where requirements are rising is in theEnergy Prerequisite. Required Energy Star scores have risen from 60 in version2.0, to 67 after June 2007, to 69 in versions O&M and 2009.

Economic Benefits of LEED®-EB
Cost of Building Operation The benefits of LEED®-EB were investigated by comparing the 2006 operatingcosts per square foot of floor space of each building with the average operatingcosts of buildings in the same region, as reported in BOMA’s 2007 ExperienceExchange Report. All of the 11 buildings included have significantcomponents of office space. The total operating costs of the buildings as wellas components of the building operating costs were analyzed. Components ofoperating costs included cleaning, repair and maintenance, roads/grounds, security, administrative and utilityexpenses.

Sixty-four percent (7 out of 11) of the LEED®-EBbuildings had operating costs per square foot that were below the BOMA averagefor their region (Figure 10). The total mean operating cost for all buildingswas $6.68 compared to the BOMA average of $6.85. The utility costs of 64% ofthe LEED®-EB buildings were also below the BOMA average. The meanutility cost for all buildings was $1.76 compared to the BOMA average of $2.09.

Other Economic Benefits of LEED®-EBCertification Many othereconomic benefits of LEED®-EB certification are becoming apparent. Amongthem are increased occupant productivity, increased ability to recruit highquality employees, reduced employee turnover, reduced insurance costs, and potentialfor reduced health care costs.

What Commercial Buildings Are Suited to LEED®-EB
Leonardo Academy firmly believes that all commercialbuildings are good candidates for LEED®-EB, and that moving allbuildings as far along the LEED®-EB path as is practical has bigpositive environmental benefits. The survey demonstrates that many of themeasures in LEED®-EB are low and no cost to implement. Eachbuilding owner and manager should identify the low cost and no cost measures fortheir building and implement these measures right away. Sustainability and LEED®-EBare both journeys, not destinations, so the important thing is to GET STARTEDand KEEP MOVING in the direction of sustainability. The three areas most likelyto present significant costs are minimum energy performance (Energy Starscore), commissioning and ventilation. While implementing the low/no costmeasures, building owners and managers can make plans to meet theserequirements in the near future, or to upgrade the efficiency of their systemsas they wear out and require replacement.

All buildings that have earned LEED®-NC (NewConstruction) certification are prime candidates for LEED®-EB. Theywere all designed with the potential for sustainable ongoing operation. LEED®-EBis a great program for assuring that this potential for sustainable operationis actually delivered. All building owners who have a five-year-old LEED®-NCbuilding that has not yet started regular recertification under LEED®-EBshould think about how they would feel entering a restaurant that has only afive-year-old review posted in the entryway. This is how people view a five-year-oldLEED®-NC plaque with no LEED®-EB plaques to follow it!

Survey Update

The number of buildings that are LEED®-EBcertified has increased more than three-fold since this study was carried out. LEED®-EB O&M is in use and LEED®-EB 2009 will be soon.In addition, there are a few buildings that were first certified LEED®for New Construction and recertified LEED®-EB, including the JohnsonControls Brengel Technology Center and the William J. Clinton Presidential Center.To increase our knowledge of the costs and benefits of LEED®-EBcertification, an update of the study is underway. Building owners andmanagers wishing to participate in the LeonardoAcademy 2009 Survey of the Costs and Benefits of LEED® for ExistingBuildings can find more information on the Leonardo Academy website at www.leonardoacademy.org/2009LEED-EB.

Michael Arny,president, founded Leonardo Academy in 1997 and has worked on energy andenvironmental issues his entire career. Michael is a registered professionalengineer in the State of Wisconsin and a LEED Accredited Professional.

Leonardo Academy is a nonprofit organization that develops sustainability solutions through consultation and certification services in the LEED Green Building Rating System and the Cleaner & Greener sustainable event program. Leonardo Academy also provides sustainability and continuing education training, including training for the LEED Green Associate credential for individuals who support green buildings in their profession, such as building owners and facility managers.

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