Cost vs. Value - Implications for Green Building Rating Systems

This book is a “must read” for people in the green building industry. It is well written, with good references and a clear message, certainly one of the most useful green building texts available. You hit the nail on the head!
— Eric T. Truelove, PE, GGA, LEED AP BD&C, Madison, Wisconsin

In Reinventing Green Building, I argue that we live in a society driven mainly by economic concerns. Companies and organizations don’t want to pay for something that doesn’t deliver far more value than what it costs. Green buildings are no different. People want to pay only for value received, and in many cases, value is more perceptual than actual. LEED, BREEAM and Green Globes certifications validate sustainable achievements, to be sure, but that plaque or certificate has value only in context.

The lesson everyone learns in the building industry is that costs matter—a lot. Return on investment, “payback” and “total cost of ownership” are nice concepts for sellers, but for most buyers upfront costs matter most. In the US economy for the past 30 years, sellers have relentlessly worked to cut costs and improve product quality. Why should buildings and building certification systems be exempted from the same logic?

Based on my experience as a management consultant, in Reinventing Green Building, I advance “Yudelson’s Green-Building Value Theory”: Anything that we ask building owners and operators to buy (such as certification) that isn’t essential to their project construction or ongoing operations should be prepared to demonstrate a 3-to-1 first-year return (i.e., a four-month “payback”). Otherwise, we’ll have to rely solely on individual commitments from “enlightened” owners and policy measures from government agencies, but market uptake will stay small, certainly below 10 percent of all buildings.

The market’s judgment is brutal, immediate, and broad; that’s why green building certification must get far less expensive and far more inclusive, to move beyond its currently well-defined but narrow (and ultimately self-defeating) niches.

User experiences, overall social benefits, and cost-effectiveness must be central elements in any green building certification system that expects to gain widespread market acceptance. For a product or service to gain traction in the market, benefits must be immediate and tangible and they must be significantly greater than upfront costs.

By these standards, as well as by the dramatic reduction since 2010 in LEED project registrations in its major market, the US, the market has already rendered its verdict: “This is not for us.” Rather than take these concerns seriously, LEED and USGBC have decided to “double down” on a risky bet that an even more complex, more prescriptive LEEDv4 will entice more building owners to use it. It is likely that LEEDv4 is likely to be a costly disappointment, one that may very well set back the cause of green building that it seeks to advance.