Main Elements of Soft Cost in Green Buildings

Green buildings have been commonly cited to be more expensive than conventional buildings. However, limited research has been conducted to clearly identify elements that contribute to this cost differential. The construction cost of buildings can be typically divided into “hard" costs and “soft" cost elements. Using a review analysis of existing literature, the study identified six main elements in green buildings that contribute to the general cost elements that are “soft" in nature. The six elements found are insurance, developer-s experience, design cost, certification, commissioning and energy modeling. Out of the six elements, most literatures have highlighted the increase in design cost for green design as compared to conventional design due to additional architectural and engineering costs, eco-charettes, extra design time, and the further need for a green consultant. The study concluded that these elements of soft cost contribute to the green premium or cost differential of green buildings.

Authors:

• Nurul Zahirah M.A.
• N. Zainul Abidin

Keywords:

• Green building
• cost differential
• soft cost
• intangible cost.

References:

[1] Armitage, L. (2010). Performance & Perceptions of Green Buildings.
Green Building Council Australia: Institute of Sustainable Development
and Architecture, Bond University.
Green building
Active design strategy Passive design strategy
Hard Cost Soft Cost Hard Cost Soft Cost
Commissioning Energy
modeling
Insurance Developer-s Design cost Certification
experience
[2] Bond, S. (2011). Barriers and drivers to green buildings in Australia and
New Zealand. Journal of Property Investment and Finance, 29(4), 494-
509.
[3] Bradshaw, W., Connelly, E. F., Cook, M. F., Goldstein, J., &Pauly, J.
(2005). The costs and benefits of green affordable housing: opportunities
for action. New Ecology and Green CDCs Initiative.
[4] Build My Own Cabin. (2012). Construction Hard versus Soft Costs.
Retrieved September 15, 2012, from Build My Own Cabin:
http://www.buildmyowncabin.com/budget/construction-hard-versussoft-
costs.html
[5] Chalifoux, A. (2006). Using life cycle costing and sensitivity analysis to
sell green building features. Journal of green building, Volume 1,
Number 2 , 39-48.
[6] Davis Langdon. (2007). Cost of green revisited: Reexamining the
feasibility and cost impact of sustainable design in the light of increased
market adoption. Davis Langdon.
[7] Gabe, J. (2008, 9-12 December). Design versus Performance: Lessons
from Monitoring an Energy-Efficient Commercial Building in
Operation. Paper presented at the 9-12 December 3rd International
Conference for Sustainability Engineering and Science, Auckland, New
Zealand.
[8] Hart, S. L. (1997). Beyond greening strategies for a sustainable world.
Harvard Business Review, Vol. 75, No. 1, 66-76.
[9] Issa, M. H., Rankin, J. H., & Christian, A. J. (2010). Canadian
practitioners' perception of research work investigating the cost
premiums, long-term costs and health and productivity benefits of green
buildings. Building and Environment 45, 1698-1711.
[10] Kats, G. (2006). Greening America's schools costs and benefits.
Massachusetts: Capital E.
[11] Kats, G. H. (2008). Green building costs and financial benefits.
Massachusetts: Capital E.
[12] Kats, G., James, M., Apfelbaum, S., Darden, T., Farr, D., & Fox, R.
(2008). Greening buildings and communities: costs and benefits.
Massachusetts: Capital E.
[13] Klinger, M. S. (2006). The Construction Project: Phases, People, Terms,
Paperwork, Processes. United States of America: American Bar
Association.
[14] Kneifel, J. (2010). Life-cycle carbon and cost analysis of energy
efficiency measures in new commercial buildings. Energy and
Buildings, 333-340.
[15] Kubba, S. (2012). Handbook of Green Building Design and
Construction: Leeds, Breeam, and Green Globes. Herndon, Virginia:
Butterworth-Heinemann.
[16] Means, R. S. (2010). Green Building: Project Planning and Cost
Estimating, Volume 24 of RS Means Series. John Wiley & Sons.
[17] Molina-Azorin, J. F., Claver-Cortes, E., Lopez-Gamero, M. D., &Tari, J.
J. (2009). Green management and financial performance: a literature
review. Management Decision, Vol. 47, No. 7, 1080-1100.
[18] Morris, P. (2007). What Does Green Really Cost? Davis Langdon.
[19] Collier, C. A. (2007). Construction Funding: The Process of Real Estate
Development, Appraisal, and Finance. New Jersey: John Wiley & Sons.
[20] Nelms, C., Russell, A. D., and Lence, B. J. (2005). Assessing the
performance of sustainable technologies for building projects. Canadian
Journal of Civil Engineering, 32(1): 114-128.
[21] Northbridge Environmental Management Consultants. (2003).
Analyzing the cost of obtaining LEED certification. Arlington, VA: The
American Chemistry Council.
[22] Ochenkowski, J., and Schinter, J. (2008, January 8). Insurance for Green
Buildings. Retrieved October 27, 2012, from Buildings:
http://www.buildings.com/tabid/3334/ArticleID/6354/Default.aspx
[23] Paumgartten, P. (2003). The business case for high performance green
buildings: sustainability and its financial impacts. Journal of Facilities
Management 2 (1) , 26-34.
[24] Rodriguez, J. (2012). Construction. Retrieved September 15, 2012, from
About.com: http://construction.about.com/od/Cost-
Control/tp/Understanding-Soft-Costs.htm
[25] Ross, B., Lopez-Alcala, M., & Small, A. A. (2007). Modeling the
private financial returns from green building investments. Journal of
Green Building, Volume2, Number 1, 97-105.
[26] Taylor, S. R. (1992). Green management: The next competitive weapon.
Futures, Volume 24, Issue 7, 669-680.
[27] Turner, C., & Frankel, M. (2008). Energy performance of LEED for new
construction buildings. Massachusetts: New Buildings Institute.
[28] Yudelson, J. (2009). Sustainable Retail Development: New Success
Strategies. New York: Springer.
[29] Zhang, X., Platten, A., &Shen, L. (2011). Green property development
practice in China: Costs and barriers. Building and Environment 46 ,
2153-2160.