News + Ideas

Sourced from REJournals
By MGAC’s Oliver Fox – September 2024

While owners, developers, and builders overall continue to adopt more environmentally sustainable practices, they still need to be proactive and vigilant about ever-increasing scrutiny from both investors and regulatory bodies. Sustainable and responsible practices are worthwhile in themselves, of course, but especially in an era of increased ESG mandates they are crucial for ensuring profitable and successful projects.

From conception, owners and developers can evaluate design, engineering, and construction options from a range of angles, such as building costs, scheduling projections, and difficulty of execution. This involves hard questions, including some fundamental ones.

It’s often said that the most sustainable building is the one you don’t build. However, is it better to build a new Net-Zero building and tear down a poorly performing building, considering its embodied carbon? Or is adaptive-reuse the answer? Or is it better simply to bring specific aspects of a building within local codes? Where a project lives will also impact priorities from cost and sustainability perspectives—which is to say nothing of individual organizational goals.

Ultimately, owners need to make decisions based on increasingly complex sets of data—and often need to navigate mandates that may appear at first to cross purposes, such as cost and sustainability. In other words, what is built and how it is built are one thing. How much it costs and how it can be done most efficiently are usually quite another. Long after owners, architects, and engineers determine the environmental impacts of a project, there continues to be project risks and pricing concerns that are tied to decisions related to sustainability. A transparent, cost-effective, long-term project and cost management approach is crucial.

Each project presents a distinct set of environmental challenges, and while sustainability considerations are undeniably important, the financial feasibility of a project or property also remains of paramount importance. If a ground-up or renovation project doesn’t pencil out, its sustainability goals become moot because the project won’t move forward. At the very least, a building won’t maximize its utility across its lifecycle, which benefits neither the people who use it nor the owners and investors. Similarly, owners need to be intentional about upgrades to older buildings to meet increasingly stringent and punitive codes, as well as to ensure they’re future-proofed to the degree that’s possible.

Challenges include the financial burden on property owners, the need for innovative retrofitting solutions, and the pressure to maintain property value while complying with regulations. After the design and construction considerations are planned, there is still a significant effort needed to ensure that all sustainability goals are met, the project team is built to address them, and the schedule and budget can accommodate them.

A project needs to have clear benchmarks in mind and ensure that materials, building practices, and the finished product are aligned to hit compliance goals or incentive targets. From a carbon perspective, one approach is to interrogate carbon quantities to look for potential changes at the design stage to reduce the impact. For example: How many times will an owner or occupier need to replace the material? What is the anticipated maintenance schedule and costs?

The focus isn’t just on minimizing costs; it’s about more involved cost-benefit analyses that assess the long-term financial implications of sustainable features. The approach should ensure sustainable options fit within the budget. This could involve evaluating construction methods that balance environmental benefits with cost-effectiveness, as well as lifecycle costing, which considers maintenance, repairs, and energy consumption.

Overall, resource and cost management are particularly important facets of managing projects compliantly and responsibly. This efficiency is crucial for property owners seeking to adopt sustainable practices without compromising the business side of a project. Ultimately, sustainability and project profitability are intertwined. By overseeing the alignment of the project’s environmental goals and diligently managing compliance, owners and developers can mitigate risks and enhance the outcome of a project.