Hard Facts on Soft Costs

As the director of business development for a green general contracting firm, I often hear the question, "... but what's it gonna cost me?". Of all the questions I regularly address, that is certainly at the top of the list. Right below "What is LEED?"

The biggest concern among those considering LEED is the costs, and specifically the soft costs. The costs above construction. The "vague" costs. The cost of the unknown.

My standard answer is, "Well, that really depends..." and I still argue that it does. Every project is different and unique like little snowflakes. And each snowflake requires different little snowflake systems and each has it's own little snowflake agendas and ROI expectations on overall snowfall.

The best way to determine what LEED is going to cost for your project is to gather your design and construction team to talk about goals and then talk about potential costs. Though my specialization is commercial properties, I know this holds especially true for residential projects.

Until you have that opportunity, though, let's talk about some historical data on soft costs.

Colorado is ahead of the curve in terms of Green Building and LEED-certified projects, so they have more data to provide. Peter D'Antiono, LEED AP and PE with PCD Engineering Services in Colorado wrote "Cost and Benefits of Commissioning LEED-NC Buildings" which was presented at the May 2007 National Conference on Building Commissioning. Included in this paper are facts from 11 LEED-certified buildings in his state. He detailed their square footage, construction costs, Energy cost savings, LEED cost premium and the net LEED savings. The average square footage was 98,365, with the largest project being 288,685 and the smallest at 10,000 square feet, all of which were commercial or institutional projects.

Here are some of the overall statistics:

• The cost premium for LEED NC certification ranged from 1% to 6% of construction costs.
• Two of the projects noted they were able to achieve LEED certification on schedule and under budget.
• Soft costs, including LEED registration and certification, documentation, energy modeling and commissioning averaged 0.8% of the total construction costs, or average $1 per square foot.
• Documentation was difficult to quantify as the basis for reporting was inconsistent across the projects and ranged from $3000 to $35000.
• Energy modeling averaged around $10000 across nine of the eleven projects. Eight projects fell at or below the $10,000 and one was nearly $35000.
• Small projects averaged higher costs per square foot for energy modeling.
• All the projects averaged 20% or better than ASHRAE 90.1-2004 energy saving requirements.
• The net present value of the energy savings offset all the LEED soft and hard costs in seven of the nine projects reporting energy savings.
• Commissioning averaged $0.55 per square foot and accounted for roughly 60% of the total soft costs. Commissioning costs between $0.19 and $1.50 per square foot

So, there's some unvarnished truth on the cost of building green. Remember, your mileage may vary and these should not be the 'baseline' to quote the price of green. I will point out, though, it's not the 15-25% cost premium often cited by many in the construction and design industry. Seems like we have a ways to go in terms of cost paradigm shift.

Lastly, sometimes it isn't as much about the "cost", it's about the "value". A "cost" for me might be another person's "value". Understanding your green goals and tailoring a solution provides value. The cost isn't an issue if the owner realizes value. That's Sales 101.

Let's start talking about the value of green building.