The Real Cost of a Building: Harmonizing Sustainability, Energy Efficiency, and Life Cycle Costs

The Real Cost of a Building

HARMONIZING SUSTAINABILITY, ENERGY EFFICIENCY, AND LIFE CYCLE COSTS

BY ROHIT SOOD, AIA, LEED AP

So, you want to build a building! After much deliberation and anxiety, you have decided to move forward with constructing a new facility for your growing business. However, before pulling the trigger, you seek advice to better grasp the process, and more importantly, determine how much your new building will cost. After all, your investment must make sense, and affordability is of the utmost importance for your organization’s bottom line.

After much discussion, you soon realize there is no simple answer, as many variables will impact building costs. Undeterred, you decide the investment is worth the risk. Therefore, you obtain financing, set a budget, purchase property, hire an Architect, and eventually a General Contractor to turn your dream into reality...without realizing that every decision you made during design will significantly impact your operating costs for the life of your building.

Ask yourself these questions...Beyond the initial cost of construction, how much money will I spend operating and maintaining my new facility...and will these costs affect my organization’s bottom line? You may be surprised to know that the operation cost far exceeds the initial cost.

Life Cycle Cost of a Typical Commercial Building

This diagram represents a proportional comparison of the initial cost of a building (design & construction) in contrast to the cost of operating and maintaining that building for its life.

Understanding Building Life Cycle

So, what exactly does the term “Life Cycle Cost” mean, and why should it matter to you? In short, it is the total amount of money spent over the life of your building, including not only your initial investment but also your ongoing expenditures related to operating and maintaining your building over time. The amount of money spent varies significantly depending on several factors, most of which are out of your control.

1. Professional fees (architectural, engineering, specialty consultants, surveying, etc.).

2. Financing cost at the time of construction.

3. Construction cost (varies due to market conditions, building size, building complexity, & interior finishes).

4. Permits & impact fees.

5. Maintenance practices implemented over the course of operation.

6. Renovation and building upgrades performed during the life of the facility.

7. Sustainability and energy efficiency measures implemented during design.

All of these factors combined will ultimately influence the Life Cycle cost of your building and determine how much money you actually spend.

While most factors are out of an individual’s control, an investment in high-quality design is determined by you and you alone. With the current volatility in the energy sector, the threat of rising energy costs, and the life span of a typical commercial building (30+ years), implementing energy-efficient strategies into building designs represents a critical opportunity for long-term cost savings, and long term value creation, while promoting responsible use of building materials. While these strategies may lead to slightly increased upfront costs, if done properly, they can be balanced with the owner’s budget, resulting in lower operational expenses for the life of your building.

• design

• engineering

• surveying

BeyondBuildingLife

• property acquisition

• financing

• construction

• installation

• transportation

Strategies to Improve Energy Efficiency and Reduce Life Cycle Costs

Research

According to the U.S. Department of Energy, commercial buildings account for 93 billion square feet of real estate in the U.S. In 2023, this building type was responsible for 18% of the country’s overall energy consumption (equating to more than Canada’s energy consumption entirely) and cost $190 billion. Of the total energy consumed, 35% was attributed to electric power.

In 2022, the Commercial Building Energy Consumption Survey (CBECS) conducted a study of a typical office building typology. While it’s important to understand that many contributing factors affect energy consumption, including building size, orientation, site location, energy efficiency measures implemented, etc., the survey determined that office buildings in the United States were

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expending an AVERAGE of $1.44/S.F. on electricity and $0.30/S.F. on natural gas. Studies show that most energy use for a typical office building will result from building cooling, heating, ventilation, plug-loads, and lighting, resulting in approximately 20% of an office’s total expenditure.

With the cost of energy expected to rise year over year, future expenditures will only increase, placing an additional burden on businesses. See the graph below by the U.S. Energy Information Administration, which represents energy cost increases experienced since 1960.

Using the data referenced above by CBECS, an example of energy costs over the 30-year life cycle of an average commercial building is as follows:

In summary, the energy-related costs alone of operating the AVERAGE building described above for a period of 30 years will cost you +/- $8,877,175, or...25% of your initial investment. This begs the question: How much money could you save if your building is considered above average and was actually designed with the intent of being energy efficient? And does this above-average status really come at a significantly higher cost?

Conclusion

On June 22, 2022, Louisiana Governor John Bel Edwards executed House Bill 803 into law requiring statewide adoption of the 2021 International Energy Conservation Code for both commercial and residential buildings. The new code, which has been in effect since July 1, 2023, is leaps and bounds above its previous version. Its adoption sets Louisiana on a path to a more sustainable future and, if implemented properly, will significantly impact the life-cycle costs of future buildings. Even with the emergence of a more robust energy code, it’s important to note that building codes set and define only minimum requirements that very well can be exceeded. It’s up to us as Designers to find a proper balance for each project while considering the client’s desire, cost-effectiveness, and feasibility to ensure that our work represents the highest-performing product possible.

Stay tuned for Part 2 of this article, where we will continue this discussion and provide answers to the abovementioned questions. Our office is collecting post-occupancy building performance data for several of our buildings that are currently in operation. The analysis will display how sensible design coupled with costeffective energy-efficient strategies can provide real and measurable energy cost savings for the life of your building. ■

UPCOMING H/S PROJECTS

All of which are designed with energy efficiency in mind.

H/S EXPERIENCE As human beings, we spend our personal and professional time within the built environment. As Architects, we are privileged to create spaces where people can gather, live, learn, work, eat, sleep, and worship. Therefore, it is incumbent that we design spaces that enhance the quality of life and nurture a greater passion for living. Our design approach is influenced by the environment, culture, and community in which architecture exists. To take it further... We Design for Life.

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Rohit Sood is Director of Sustainability at Holly & Smith Architects, APAC. Rohit is dedicated to merging innovative design solutions with environmentally conscious practices. Rohit believes in the power of collaboration and fostering strong working relationships with clients to understand their vision fully. By embracing their aspirations, he endeavors to unlock the full potential of each project ensuring that every detail aligns with the client’s goals. With Rohit’s leadership, H/S aims not only to create visually stunning spaces, but also to leave a positive impact on the environment.

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