A Project of Building a Green Building a Four Storey Office House - Case Study Example

Running Head: FEASIBILITY STUDY FOR GREEN BUILDINGS Student’s Name: Course Code: Lecture’s Name: Date of presentation: Contents Contents 2 Introduction 3 Sustainability of the site 6 Cost Savings 6 The present Business Case 7 Lifecycle Costing 9 Conclusion 9 Recommendation 9 References 10 Introduction Green buildings refers to those buildings that through design, sitting, orientation and general construction and operation make them to be extremely energy efficient, reduced operating costs, and finally conducive to the environment in both specific and broad terms, thus helping in promoting the general wellbeing of both occupant and other users with measurable margins (OECD, 2003). The criterion for the level of greenness of a building is somewhat objective as companies and individuals set their own standards to fit their level of compliance. However, LEED i.e. Leadership in Energy & Environmental Design council has defined four levels of compliance i.e. Gold, Silver, Platinum, or Certified. The feasibility study was anchored on the lead definition as it provides measurable yardsticks useful in policy decision mankind in a business entity (Chanan, 2003). The purpose of this feasibility is to analyze a project of building a green building a four storey office house. The Steering committee of the project composed of Green Energy experts, business experts and members of local authority who met from January to March 2012. The aim was to develop a feasibility analysis previously carried out by experts composing of engineers and economist who examined the suitability of a green building. The objectives of this feasibility report is to seek the way forward in implementing the sustainable goal of building a green building in a cost effective manner, while putting into consideration the externalities involved in such a project. This involves identifying both the environmental and economic performance criteria; evaluate the cost savings; apply the extensive life-cycle costing; and seeking the adoption of an integrated systems approach. Such approach aims at treating the whole green as a single entity while still recognizing that individual features in the building for instance cooling and heating systems, lighting and so on, are not unrelated systems (Edwards, (2003). A sustainable entity should satisfy certain factors for it to be successful; first the lifecycle cost analysis of the base resources should recognize the long term foregone costs; and should offer an improved measurement tools and systems that track specific and systematic objectives. The design of the building involves a two story office complex with an office space of about 150,000 square foot. The customer base is general public as the site is primary out of the city centre along the main highway towards Elizabeth farm. To approximate the cost benefit of the green building, this feasibility report analyses the building to be constructed in the City of Parramatta in Australia, certain checklist outlined in the LEED certification are intentionally omitted and assumed in order to simplify the analysis through comparison of the green building with a typical building of equal magnitude. The site of this building is near a tourist attraction site and proper plans are at an advanced stage to have minimal disturbance to both the landscape and the natural features. Architectural Representation of the Green Building Office Complex A CAD Drawing of the Green Building office Complesx The design and general architecture of the building has been significantly done to minimize the effect of the property and maintenance of the structure. This in turn helps to lower ecological impacts posed by the project during and after construction. The building aims at achieving these by using fewer construction materials, low emission of pollutants, offering a healthier environment to its occupants, and consuming less energy. Some of the items have been itemized and quantified to form part of the bill of quantities, but others have just been estimated to show the justification while dealing with variability. Sustainability of the site The design has incorporated the retaining of the existing landscape. There will be minimal trimmings and where possible mulching and compost manure will be used I conserving the trees. To conserve water and pumping energy; low flushing washrooms and shower heads have been incorporate. Hot water re-circulating and distribution system have also been incorporated in the plumbing design. Energy performance of the building has been boosted by incorporating passive design strategies. For instance, the use of natural lighting in majority of the peripheral rooms has also positively impacted on productivity and general employee well being. Cost Savings All potential monetary cost savings have been monetized in a standard parameter of cost per foot basis. This savings has further been discounted for 20 years to give the internal rate of return (IRR) and breakeven point owing to the higher capital cost needed. The table below shows the unit cost savings in terms US Dollar per square foot (psf) Water Savings $0.13 psf Power Savings $0.13 psf Employee productivity $0.69 psf Energy savings $0.13 Emission savings Carbon dioxide Nitrogen gas Sulphur compound gases $0.05 psf $0.06 psf $0.20 psf The present Business Case Roughly, an average green building is 21 percent costly that an ordinary standard building. This is quite discouraging since a property developer is quite concerned about the actual specific cost and less on the average premium price while analyzing a business proposal. However, for calculation purpose this will form the basis of for identifying the point at which benefits of this venture supersedes the cost to be incurred. The premium cost price is largely as a result of expensive construction materials and the learning and training costs associated with the green building construction processes. There is a level of uncertainty since there exists very little of catalogue on building materials and other associated features; thus putting us in a difficult position of near exaggerated budget. Some of the items that are quite peculiar with this type of buildings are ; non-glare window panes, thermal resistant paneling boards, highly efficient, earth energy heating systems like solar power, and heat, ventilation and air conditioning systems. The premium cost associated with the above items and systems is mainly due to their high quality, and low function of demand in the market. The prices are however, gradually coming down as more sustainable buildings rises up. So the question still remains; will this green building project be practical from a business point of view? To answer this we need to look at the extra cost required to for our 150, 000 square foot office space to the benefits likely to be accrued by the potential owner. The owner will benefit from low energy and power costs, waste diversion, fewer pollutants and more importantly higher productivity of the employees of the offices over the next few years. Ideally if the present value of several future benefits mentioned above, are higher than the high initial cost of the green building; a potential purchaser will more likely fund a developer to implement the project. Potential puzzling factors in this scenario is the possible or actual risk associated with the prospects of the calculated future benefits, the willingness of the company to explain the “near gambling” scenario to the potential purchases. This will ultimately depend on the average rate of return that the purchaser will be willing to accept and also the financial sophistication level and cost benefit understanding of the potential purchaser. As per the calculated rates, the unit construction cost of typical building will range from between $95 per square foot to $107 per square foot. For our 150, 000 square foot building, we have considered an average of these two extremes ($101), and then calculated with a 2.1 percent for a green building. Typical Building Sustainable Building with 2.1% Square foot size (psf) 150,000 Square foot size (psf) 150,000 cost 15,150,000 cost 15,468,150 Cost Difference = $318,150 The initial increase in the capital cost of $318,150 can be immediately cleared by government funding towards projects that are aimed at reducing the energy required and emission of gases by 25 percent. There is also the grant of $3,500 from the Ministry of Environment as a result of diverting the solid waste from the landfills (Property Council of Australia, 2001). This together helps to clear $83,037.5 of the total extra cost. The remaining $235, 112.50 needs to be recovered in the future years after construction from the continuous benefit associated with the green houses. In this feasibility report, the benefits and initial costs have been compared by applying a simple IRR metric theorem. In this method, we realized that the discount rate to be made in the future will be equivalent to the total present cost incurred i.e. $15,468,150. This value may change significantly depending on two character traits of the purchaser. First it will depend on the much that the potential purchaser considers realistic to recover his cost, and the capability of the purchaser to harness the fringe benefits that will obviously accompany this business entity. For instance a purchaser may not be willing to spend money if the energy cost savings will take longer that he had budgeted for (Edwards, 2003). Lifecycle Costing Lifecycle Costing will account for the capital investment to be incurred at the start of the project as well as all the future positive and negative cash flows from the investment. Lifecycle costing refers to the accounting method that discounts long term costs and benefits through the analysis of the net present value. In the new green building that is being proposed, lifecycle (Kirkwood, 2009)). Conclusion Preliminary feasibility has indicated that the project is feasible. However, certain crucial parameters have been ignored thus largely increasing potential error of omission. For instance, employee numbers and the productivity benefit are quite difficult or a times impossible to estimate. This means that the management will be hard-pressed to describe hard facts to a potential buyer in precise monetary value; such as cleaner air, employee productivity. Recommendation It is important to reserve on cost benefits data from already implemented and successful green building projects. Given the extent of uncertainties revealed, it is imperative for a thorough research to be conducted, the most convincing will need to hail from past projects that the buyers and develops can easily establish with. References Chanan V, S (2003) Sustainable water management in commercial office buildings, paper Edwards, B. (2003) Green buildings pay. London: Spon Press. Kirkwood, G. (2009) The Economic Value of Space, Golden Books Center: Sydney, Australia OECD (2003), Environmentally Sustainable Buildings: Challenges and Policies. A report by the OECD, presented at Innovations in Water: Ozwater Convention and Exhibition, Perth. Property Council of Australia (2001), Energy Guidelines on setting energy Targets and operation, maintenance issues Read More