Champagne on a Beer Budget

Sept. 1, 2008
Editor's note: Following is an excerpt from The Green Building Revolution, the latest book by Jerry Yudelson, PE, MBA, LEED AP, who will serve as keynote

Editor's note: Following is an excerpt from “The Green Building Revolution,” the latest book by Jerry Yudelson, PE, MBA, LEED AP, who will serve as keynote speaker for HPAC Engineering's fifth annual Engineering Green Buildings (EGB) Conference and Expo Oct. 21 and 22 at Mandalay Bay Resort and Casino in Las Vegas. To register, visit

A 2003 study by Gregory Kats was the first rigorous assessment of the costs and benefits of green buildings.1 Drawing on cost data from 33 green-building projects nationwide, the report concluded that Leadership in Energy and Environmental Design (LEED) certification adds an average of 1.84 percent to the construction cost of a project. For Gold-certified office projects, construction-cost premiums ranged from 1 to 5 percent over the cost of a conventional building at the same site. Figure 1 shows results of this early study (2001-2003).

Green-building advocates frequently resort to rhetoric (“green is good”) when promoting their point of view. For owners and developers, however, justifying additional costs traditionally rests on the economic payback, or return on investment, for energy- (and sometimes water-) conservation measures. Green-building standards, such as LEED, incorporate requirements beyond energy and water use, including indoor environmental quality, daylighting and views of the outdoors, use of recycled materials, and sustainable-site development, so it is often difficult to justify green-building investments on the value of utility savings alone.


A large, developer-driven, build-to-suit project in Portland, Ore., completed in the fourth quarter of 2006 exposed flaws in the notion that higher levels of performance always must lead to significantly higher capital costs. The 400,000-sq-ft, 16-story, $145 million Center for Health and Healing at Oregon Health & Science University received a LEED Platinum rating early in 2007, the largest project in the world to achieve this highest green-building rating. The developer has reported a total cost premium, net of local, state, and federal incentives, of 1 percent. With a full commitment to integrated design and an experienced development, design, and construction team, the total costs for the mechanical and electrical systems were about $3.5 million below the initial budget estimates from the general contractor. At the same time, energy and water modeling indicated a 61-percent savings on future energy use and a 56-percent savings in water consumption. In other words, from a performance standpoint, this project delivered “champagne on a beer budget.” This project demonstrates the benefits of an integrated design process and an experienced developer and design team willing to push the envelope of building design to produce a high-performance building on a conventional-building budget.

The more often developers engage experienced green design and construction firms, and the more often they require their consultants to produce high-performance results (without excuses), the more likely it is that overall project costs will be about the same as the costs for a conventional project that lacks the beneficial characteristics of a high-level certified green project.

Many of the green-building measures that give a building its greatest long-term value — for example, on-site energy production, on-site stormwater management and water recycling, green roofs, daylighting, and natural ventilation — often require a higher capital cost. Many project teams are finding that these costs can be paid for by avoiding other costs, such as stormwater and sewer connection fees, or by using local utility incentives, state tax breaks, and federal tax credits.

While it is possible to build a LEED basic Certified (and, sometimes, LEED Silver) building at no additional cost, as building teams try to make a building truly sustainable, cost increments often accrue. This is especially true when a building owner or developer wants to showcase his or her green building with more expensive (but visible) measures, such as green roofs or photovoltaics for on-site power production, or when there is a strong commitment to green materials, such as certified wood products.


  1. Kats, G. The costs and financial benefits of green buildings. (2003). Retrieved from

Copyright © 2008 by Island Press. Excerpted by permission of Island Press. All rights reserved. No part of the preceding excerpt may be reproduced or reprinted without permission in writing from the publisher.

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Jerry Yudelson, PE, MBA, LEED AP, is principal of Yudelson Associates. Chair of the 2008 Greenbuild International Conference and Expo, he has trained more than 3,300 building-industry professionals on the LEED rating system. He is the author of six books and many research studies, white papers, and articles on green buildings. He can be contacted through his Website,