A variety of cost studies have been published over the past decade (since BREEAM hit the main-stream) to determine a standardised capital expenditure (CAPEX) uplift for different BREEAM ratings and building types. These have taken account of capital cost for different technologies and materials, as well factors relating to site location, accessibility to public amenities (transport) and previous land use (greenfield v brown), all of which can significantly impact on a BREEAM score. It’s encouraging to find that there is a common trend the studies have uncovered across the key building sectors. They concur that achieving a BREEAM rating of Good or Very Good – putting aside work undertaken to assess and collate documentary evidence – takes little or no additional effort, let alone CAPEX uplift, for the vast majority of construction projects. This is something we have experienced, if the BREEAM assessment is managed properly. This is not surprising, since this represents the steady shift toward best practice, witnessed across the board both in design and construction management. This can arguably be credited as a key success of BREEAM and a measure of the influence it’s had over the past 25 years it’s been in operation.
It’s encouraging to find that there is a common trend the studies have uncovered...
However, the studies vary significantly in relation to the premium for achieving the highest ratings of Excellent and Outstanding. In our experience this has of late fuelled an uncertainty for clients – not helped by recent government interventions in a post financial crisis market – for what higher BREEAM ratings really offer. It appears a key factor in this variation of CAPEX uplift, has been how costs have been defined for the baseline building. For example some have based analysis upon current regulations, planning policy and design, where some on a notional building, built to previous building regulations.
Cost uplift figures in the studies, have ranged from as little as 0.5% for an Excellent rated building in a good location, to as high as 10%. Figures for achieving an Outstanding rating have been quoted as high as 20% for some building types. BRE Global published a report in 2014 which concluded that the highest BREEAM ratings can generally be achieved at no more than 2% cost uplift. It’s fair to say that one couldn’t be blamed for feeling uncertain on what figures to rely upon; especially during the feasibility stages of a project, that are critical to BREEAM.
Whether these figures are accurate or not, is missing the point; focusing solely on CAPEX costs doesn’t cover the whole picture and in our experience has been used to reinforce an ill-conceived status quo; that striving for higher BREEAM ratings is of little to no value and even a burden. The lifecycle benefits of adopting BREEAM (and associated wider sustainability principles), have begun to be quantified, not only environmentally and socially, but also economically. Recent research papers focusing on the overall business case for green buildings have been published from, among others, the World Green Building Council (WGBC).
The hard data from this research is compelling. A WGBC report in 2013, confirmed that green buildings have been shown to save significant amounts of money through reduced energy and water use and lower long-term operations and maintenance costs and that savings in green buildings typically exceed any design and construction cost premiums within a reasonable payback period i.e. 3-10 years. Furthermore a paper by the Royal Institution of Chartered Surveyors, 'Supply, demand and the value of green buildings' (PDF, 11.2MB), concluded that BREEAM certified office buildings in London from 2000 to 2009 achieved a 21% premium on transaction prices and an 18% premium on rents. The more recent WGBC report has put this latter figure as high as 19.7%. It therefore appears that the green premium vs brown discount concept is holding true.
Recent research conducted again by the WGBC has shifted focus, by quantifying the impact to enhancements in occupant health and wellbeing and productivity, BREEAM rated green buildings have potential to achieve. The work has concluded that buildings with better views out can increase memory by up to 25%, with workers being 18-23% more productive in offices that are well daylit and allow occupant control of ventilation, lighting and temperature; all features that BREEAM awards credit for. The benefits hold true for other building types, with schools experiencing increases in exam scores and learning rates and hospitals seeing a decrease in patient recovery times. The direct cost savings from these secondary factors are certainly clear for commercial property. On average, 90% of operational costs of a company is attributed to staff salary with 10% down to energy and rental costs. If a marginal 10% gain can be achieved in productivity for example, this has the potential to significantly impact profit margins, in turn justifying higher rental prices.
Figures for achieving an Outstanding rating have been quoted as high as 20% for some building types.
Finally, let’s not forget that the CAPEX for a BREEAM certified project, can also be minimised by simple project management related measures. These include considering BREEAM from the outset (RIBA Stage 1) through appointment of a BREEAM Accredited Professional (AP) and appointing an experienced team with a track record in designing and preparing documentary evidence for high BREEAM rated buildings. By starting BREEAM early applying a cost driven approach, will allow the cheaper cost critical credits to be claimed, also avoiding missing out on credits that are programme dependent. Not addressing BREEAM properly until even RIBA Stage 2 and certainly Stage 3 or 4, will likely incur expensive ‘bolt on’ credits to be sought that may offer little value. Going forward BREEAM should have a regular slot in design team meetings, in order to monitor progress against and communicate the requirements of - what can be at times a confusing – technical manual. In our experience, design teams and contractors can sometimes give the impression they have understood and accounted for all BREEAM requirements, but due to a number of factors once the building is certified, items are often left out due to a lack of communication. To take it a step further, clients could incentivise innovative good behaviour; this might be as simple as rewarding teams with kudos when they perform well. An example of this was seen during construction on the 2012 Olympic Park, where good ideas got a ‘green pin’ which were worn on jackets of both consultants and contractors. Choosing the appropriate contractor is also very important and the appointed BREEAM AP should advise on requirements to be included in contractor preliminary documents.
BREEAM itself awards projects that carryout out a lifecycle and service life planning study...
In summary, for BREEAM to be a success at a project level, it ultimately relies on a strong client that makes sustainability a priority. In order to bridge the gap and achieve their predicted performance, high-performing green buildings need to be backed up by robust commissioning, effective management, and collaboration between owners and occupiers. BREEAM should however be considered as a tool to achieving this and as an investment across the lifecycle of a project, that will yield a favourable return. This should be encouraged and communicated from within the project team from the outset. BREEAM itself awards projects that carryout out a lifecycle and service life planning study, which is aimed at demonstrating to the client the specific investments in their building are valid and justified. The problem we face currently is that this has yet to fully filter down to – most importantly – clients and end-users. By doing so will stimulate demand for BREEAM and green building in general further. The questions we should therefore be asking is not just how much does a high BREEAM rated building cost, rather how much can it save, is it already accounted for elsewhere and are we maximising its potential?