Thursday, May 24, 2012

The Cost of Building Green Part II

Part one of this three-part series addressed the initial design, budgeting and actual construction costs of green buildings. To read part one, click here. Part II will address the 2nd step in What is the Cost of Building Green with the introduction of Life Cycle Costing (LCC) of the building’s energy saving performance.

Life Cycle Costing (LCC)

LCC compares different building systems performance (exterior envelope materials/orientation, mechanical systems and electrical systems) over a given lifetime cycle.

The six major factors influencing the LCC system comparisons of a project are the following:
M.C. Dean Office Building in Baltimore, MD
  1. Building Physical Characteristics: size, occupancy type and location (economy of scale for larger projects)
  2. Proper selection of building systems and components for energy saving comparisons
  3. Building material and equipment system maintenance costs, expected lifecycle and future replacement costs
  4. Federal & state tax incentives (especially for solar systems & historic buildings)
  5. Interest rate projections for calculating net present value cash flows
  6. Energy source and utility price increase projections over the lifecycle
The key focus for the AEC integrated team is to educate building owners in the early planning and budgeting phases to be committed to performing LCC analysis. Kinsley offers the expertise and tools to assist owners in determining the payback and ROI for a building’s energy saving performance..

Here are some LLC examples:
  • The Greening America’s 30 Schools program helped administrators make the decision to increase the initial construction budget an average of 1.7%. That generated an average 33% energy savings (or a three-year payback.)
  • A LEED® Gold hotel in Baltimore, MD performed LCC and discovered that increasing the construction budget 1.9% generated 18% annual energy savings (or a six-year payback.)
  • A rule of thumb is a 20% return on investment yields a five-year payback. This also equates to $1 per square foot of energy savings to $5 per square foot increase in construction costs for a five-year payback in today’s real estate economic climate.

Kinsley Construction is motivated to showcase sustainability. During the certification process of becoming a national ABC Certified Green Contractor, Kinsley performed LCC as part of an energy audit on its company’s office facilities and found the following energy savings:

Replace T12 fluorescent with T8
Replace standard switches 
  • Replacing T12 fluorescent lamps with T8 fixtures yielded an initial cost of $7,800 and produced a payback in five years.
  • Replacing all standard lighting switches with occupancy sensors in key common spaces cost $9,000 and produced a payback in two years. 

Kinsley is actively performing life cycle costing on upgrading existing building systems and adaptive reuse transformations of “old buildings – into new buildings” by upgrading the performance of the exterior envelope and energy saving systems. 

Gunther Square @ Brewers Hill in Baltimore, MD
Part three, which is is the third and final step of the What is the Cost of Building Green, will discuss measuring and monitoring existing building systems performance.