The cost of going green

Developers that go green are cast adrift in a sea of acronyms, such as: BEAM, BREEAM, CASBEE, DGNB, LEED, ECB, HQE - to name but a few. However, most rating systems fail to provide any form of international certification. So when it comes to globally recognised standards, the choice is more limited. Developers have a practical choice of just three: British-based BREEAM, US-based LEED and German-based DGNB. Which one is the most expensive and which offers the best value for money?

Comparing chalk and cheese?
It is difficult to compare the three schemes, but the most popular in the CEE is BREEAM (Building Research Establishment's Environmental Assessment Method) with 77 buildings registered in Poland, 18 in the Czech Republic and 17 in Hungary. But it is also the oldest, having been launched in 1990. LEED (Leadership in Energy and Environmental Design) was established in 2000 and has around 50 registered projects in Poland. DGNB (Deutsche Gesellschaft fűr Nachhaltiges Bauen) only appeared in 2008. Unsurprisingly it has even fewer buildings, with one in the Czech Republic, two in Bulgaria and one in Hungary. All three claim a holistic approach to sustainability; but each uses different criteria. DGNB, for example, rates a building on the ease with which it can later be disassembled, something not considered by LEED or BREEAM. Which standard is the best depends on who you talk to.
From a cost perspective the three systems are also hard to compare directly. With LEED, the organisation's fees depend on whether you are a member of the US Green Building Council. For projects larger than 50,000 square feet (4,645 sqm), members must pay USD 0.045 per square foot (app. USD 0.48 per sqm), while non-members pay USD 0.055 per square foot (app. USD 0.59 per sqm) for a combined design and construction review. Therefore LEED certification fees for a 10,000 sqm office block could total between USD 4,800 and USD 5,900 (EUR 3,685-4,530). For the impatient, there is also an expedited fee of USD 10,000 (EUR 7,678) regardless of floor area. For BREEAM the fees have not been made publicly available; however, we have been informed that for a similarly sized office building there is a GBP 900 (EUR 1,072) registration fee, the design stage certificate comes to GBP 1,800, the final certificate costs GBP 900 and a fee of GBP 1,500 is charged at both stages of the registration process totalling GBP 6,600 (EUR 7,923). Like LEED, DGNP charges different rates for members and non-members. For projects of over 4,000 sqm and less than 20,000 sqm, a fee of EUR 2,000 plus EUR 0.35 per sqm is charged to members, whereas non-members are charged EUR 3,000 plus EUR 0.75 per sqm. Therefore, the developer of our 10,000 sqm office building would pay between EUR 5,500 and EUR 10,500 in fees. But Rafal Schurma, president of the Polish Green Building Council, says that one of the largest expenses incurred by developers of green buildings are the consultancy fees. Here prices are hard to guage, depending on factors such as building type, size, floor plan repeatability, desired certification level, the amount of competition on the market and the experience of the consultant - and prices vary widely from country to country. BREEAM holds a clear advantage in the region. For example, in Poland there are 30 companies each with multiple BREEAM assessors to choose from. This compares with 65 LEED accredited assessors, of whom 38 are accredited LEED AP's and only 32 are active, while a developer brave enough to choose DGNB certification would be left with a wide choice of just one, namely Rafal Schurma himself

Calling for the consultants
The complexity of the rating system that is chosen also affects costs. Here again BREEAM has the edge on LEED, being more in line with EU regulations. Also developers can decide to apply for BREEAM certification at a later stage of the project than they can for LEED (although, the later you choose to adopt BREEAM certification, the more points will be lost, and the more the ultimate rating will suffer). With LEED, the absolute deadline for consultant involvement is one month before site work begins. LEED also entails a process called commissioning, whereby a commissioning agent certifies that the ecological solutions applied actually work. Rafal Schurma claims that this process is poorly conducted in Europe. "Commissioning draws owners' attention to the problems and allows the building to work as it was designed. Everything should be checked," he explains. Neither BREEAM nor DGNB place so much importance upon commissioning, although they are both evolving. Mr Schurma was reluctant to place an overall generic cost on consultancy fees for the various rating systems; but he confided that most developers put the expense of implementing LEED at around 1.4 times the cost of BREEAM, while applying for a DGNB rating is roughly twice as much as BREEAM. The overall cost of going green is based on many variables, but Mr Schurma hazarded a guess of around 0-4 pct of the cost of a building when the developer applies for certification from the outset of the project.
However, cost does influence a developer's choice of green certificate. "Basic BREEAM is less complicated with fewer costs, and that's definitely one of the market drivers," says Mr Schurma, but the costs are similar for each scheme when you want to apply for the highest ratings. Nonetheless, other factors are taken into account, one of which is nationality. Unsurprisingly the first building certified under the DGNB rating system in the Czech Republic was built by an Austrian developer. CA Immo has been awarded DGNB 'Gold' for its Amazon Court building, which offers 19,800 sqm of office space as well as a retail and service area of 2,200 sqm. But going green was not cheap: "We decided to put the project into certification after the building had been completed, and therefore we had extra administrative costs which wouldn't have occurred if we had planned to certify the Amazon Court earlier, in the planning phase of the project," says Alois Vyleta, CA Immo's managing director in the Czech Republic. CA Immo chose DGNB partly because it is well known, especially in Austria and Germany, where CA Immo is very active. He also pointed out that CA Immo's projects in Germany and Austria were either certified with LEED or with DGNB, explaining that "this approach attracts German and Austrian as well as international clients and investors from overseas." Clearly DGNB benefits from a home-turf' advantage in Germany, where it has 277 certified buildings compared to LEED and BREEAM, which both have 25 certified buildings apiece. Now it appears that it is currently extending this advantage to the rest of continental Europe. Indeed, Rafał Schurma believes that despite the added complexities of applying for DGNB, the system confers a little extra recognition. "Among specialists, DGNB is considered to be a second generation certificate," he says.

LEED united
As for LEED, Eelko Korteweg, commercial director of SwedeCenter, explains that the complexity need not add excessive extra costs. Indeed, with every additional project, the expense decreases. "Initially you have a lot of R&D costs but later they evaporate," he explains. The company is currently developing a number of mixed-use facilities in Poland and for each it hopes to obtain LEED certificates. Business Garden Warsaw is to offer around 90,000 sqm in seven buildings, while Business Garden Poznań, which is to be completed in Q2 2013, is to comprise 80,000 sqm, to be followed by the first stage of Business Garden Wrocław in 2014, offering around 100,000 sqm. The decision to choose LEED was taken at the corporate level and has allowed SwedeCenter to master the rating system. "We have a very cautious approach to costs, but we don't look at the?one-off costs - we look at a project from the long term?ownership perspective," emphasises Mr Korteweg. Working closely with LEED consultant WSP, SwedeCenter has integrated the certification procedure with the company's development process in such a way that it is no longer able to separate out the costs imcurred by a project being LEED compliant. According to Dean DiPietro, the operations manager of certification at the Green Building Certification Institute, the problem of cost is not an issue at all: "Many project teams are reporting that they're able to build a LEED building for not a penny more than it would have cost them using traditional practices. The rapid market-uptake of green buildings has resulted in technologies becoming more affordable and accessible. When you factor in the efficiencies of an integrated design team, and the lifetime operational savings possible because of green building strategies, LEED is a financial win." He also stresses that LEED standards represent "a healthy mix between what can be done and pushing the envelope."

Harder-to-catch BREEAM
Martin Townsend, director of BREEAM, is similarly upbeat about the British certification standard, but he stresses that BREEAM certification must truly be earned: "BREEAM is always the hardest certificate to achieve at the 'Outstanding' level. The standard is there to challenge designers. We are pushing the market into using innovative techniques." He also states that BREEAM is a standard that is tailored to local markets and developer Ghelamco agrees. According to Jarosław Zagórski, commercial and business development director of Ghelamco Poland, BREEAM is the most comprehensive system for assessing a building when energy use and the working environment are taken together as a whole. "Such a holistic approach is what we focus on in our projects, and this is why BREEAM suits us best", he says. Ghelamco Poland has developed three buildings that have already been BREEAM certified, all at the level of 'Very Good': Trinity Park III (over 32,000 sqm) as well as Crown Square (16,000 sqm) in Warsaw and also Katowice Business Point (17,000 sqm). He categorically denies that price played a part in Ghelamco's choice of BREEAM and he does not believe it to be the easy option. "Developers might wish for the procedure to take less time, but it could result in a less accurate evaluation of a project. We prefer to stick with this rather lengthy procedure, but at the same time be sure that the evaluation is complex and reliable and constitutes a benchmark for us while implementing subsequent projects," he states.
The reasons for choosing one rating system over another are varied and cannot be simplified to merely a question of price. However, the longer the various rating systems coexist on the market, the more their standards converge. LEED is updated every three years with the next review due this year. BREEAM, on the other hand, was updated in 2011. Rafał Schurma believes that the competition between the standards is healthy, pushing them to reflect the needs of the market. There was a consensus among the developers we talked to that such standards are required and that green certification is no optional luxury. "In the near future buildings not complying with sustainable building standards will be in the minority and they won't be able to compete with eco- and worker-friendly facilities on the market," predicts Ghelamco's Jarosław Zagórski. But, which of the certificates is the most cost effective? This is just something you have to weigh up for yourselves.