News + Ideas

Sourced from Commerical, Construction & Renovation Magazine (pages 32-34)
By MGAC’s Oliver Fox and Rick Lloyd – August 2024

It is a common misconception that green building practices translate to higher operational and construction costs. While it is true the path to sustainability presents challenges—such as the costs associated with green upgrades, carbon reduction and energy performance initiatives, and adhering to other regulations—best cost management practices offer the long-term potential of decreased costs, not to mention the environmental benefits.

While the public sector often is more enthusiastic about embracing cost management to achieve sustainability, the private sector also is increasingly seeing how it helps the bottom line of projects. It can be difficult to make the case for greener design, engineering and construction methods when they seem more costly.

If a project doesn’t pencil out, i.e., there is no clear path to profitability—even the most innovative green ones will not make it past the planning stage. Cost management then is crucial to sustainability and carbon reduction.

Even if sustainable materials or strategies entail a capital cost premium, cost management as a discipline can help owners mitigate these expenses by, for example, mindfully distributing other expenses. Rather than just focusing on initial construction expenses, cost managers look at the lifecycle cost for sustainability, considering the total cost of ownership over the building’s lifespan, including maintenance, operational and disposal costs.

By evaluating long-term financial implications, stakeholders can make informed decisions that prioritize sustainable solutions with lower overall lifecycle costs.

The concept of lifecycle cost analysis is becoming an increasingly valuable tool in the debate between retrofitting versus rebuilding. On one hand, the decision to knock down and replace a building may seem appealing, whether it be for functionality or aesthetics, though demolition comes at a cost to the environment, which cannot be overlooked in an era where sustainability is becoming increasingly paramount.

The alternative approach is refurbishing and reusing building materials and historic sitework, which can reduce emissions significantly when compared with a new build.

Against this backdrop of sustainable-forward solutions, cost management has become a cornerstone of success, particularly evident in academic renovation projects. One recent example of this includes a multi-faceted decarbonization project commissioned by George Mason University in Fairfax, Virginia.

With a goal of minimizing the university’s carbon footprint and overall environmental impact, the endeavor is driven by a dual vision: to honor the university’s storied history, while also underscoring its commitment to furthering a sustainable future for both the campus and community.

Cost managers at MGAC strategized to maximize cost efficiency and sustainability by identifying three key opportunities to minimize the campus’ carbon output. These renovations include enhancements to the central boiler and heating and cooling plants, along with a distribution of nodal heating plants and water conversion strategy.

By conducting an in-depth cost analysis, MGAC produced solutions designed to meet the needs of the project’s decarbonization mission, while also setting the stage for long-term sustainability.

By adopting a holistic approach that prioritizes both historical integrity and functional ease, the project not only minimizes its carbon footprint, but also reduces overall construction costs. This underscores a broader trend within the industry, where sustainability and cost-efficiency are no longer viewed as mutually exclusive, but rather as complementary objectives that can be achieved through thoughtful planning and execution.

In navigating the decision to renovate or rebuild, the implementation of carbon calculations and lifespan cost management plays a crucial role. By performing carbon calculations and considering the nuances of the building to determine choices, cost management practices are becoming increasingly integral as part of overall real estate and project decisions.

Traditionally, cost managers focused on financial measures, such as construction budgets and future revenues. But in the evolving landscape of sustainable building and asset management, this essential project function encompasses a broader swath of environmental concerns and is increasingly integral to the long-term viability of projects. Undergirding this is the understanding that project costs are just one component of a longer-term asset strategy.

Incorporating carbon calculations and lifespan cost management into the decision-making process means better-informed decisions that strike a balance between financial feasibility and environmental responsibility.