The Business Value of BIM in North America 2007 – 2012

The Emperor is still naked!

Is the trend analysis of the Business Value of BIM in North America from 2007 through 2012  reality, or are many of us walking around with rose colored glasses?

I ask you, do you really believe the following statement ” Now in 2012, 71% of architects, engineers, contractors, and owners report they have become engaged with BIM on their projects …”.    If you define BIM as the life-cycle management of the built environment supported by digital technology, I can tell you that either the survey is flawed… a lot of people don’t know what BIM is… or we have a lot of folks inflating the truth.   There is NO WAY 71% of ANY of the groups are “engaged with BIM on their projects”…period, end of story.

Playing with Statistics?   The 71% average appears to have been calculated by taking a simple average of the “adoption rate” from architects, engineers, and contractors” from three size classes of firms “small, medium, and large”.   If I am correct, this is just plan WRONG.   Most firms in the U.S. are small business, thus a weighted average must be applied.   The “adoption rate” for small firms 50%… a number I also believe to be inaccurate.

I just came back from the NIBS Conference.   This is without question, the most valuable, authoritative meeting relative to BIM in the United States.  How many people were there you might ask?   A few hundred at most.

So, what does any of this matter?   Simple really.   Until our industry stops the hype and focus on important issues relative to BIM, we will continue to be mired in inaction.   The AECOO is the most unproductive business sector and also has the lowest rate of technology adoption.  These are facts….   if one wishes to be interested in facts that is.

Here some thoughts as to where emphasis must be placed:

  1. Greater adoption and use of collaborative construction delivery methods:  IPD – Integrated Project Delivery, and JOC – Job Order Contracting.  The later is a form of IPD specifically targeting renovation, repair, sustainability, and minor new construction projects.   Let’s face it, 80% or more of all funding for the built environment will be going in renovation, repair, and sustainability.
  2. Emphasis on business process, strategy, and standardized terms, metrics, and data architecture vs. technology.   Technology is NOT the problem, is the lack of clear, robust business strategy and processes, and domain knowledge… largely on the part of Owners that is the primary obstacle to progressive change.   Owners write the checks, they are “where the buck stops”.
  3. Focus upon life-cycle costs / total cost of ownership, vs. first costs.
  4. A bit more on data standards….   OMNICLASS, UNIFORMAT, MASTERFORMAT, COie, IFC, et al… all have there roll.  Some will survive, some may not.   The point is that unless we have standardized terms, definitions, detailed reference and actual cost information (localized materials, equipment, and labors), physical and functional condition metrics, etc. etc. etc.    …  we can’t collaborate or improve productivity!
  5. Participation by all stakeholders – Owners, AE’s, Contractors, SubContractors, Building Users, Oversight Groups, Regulatory Bodies, Building Product Manufacturers, Communities, ….






2013-WSP Group
2013-WSP Group

The Operational Side of Sustainability – Sustainable Landscapes

Any Owner with a significant portion of lawn, natural, and/or impervious surfaces – typically Educational, Healthcare, Government, Hotel/Lodging, Transportation, and Recreational organizations – needs to consider a  landscape management strategy.

Maintenance costs, energy/water usage, security, carbon footprint, and aesthetics are all directly linked to sustainable landscape strategies.

Initial implementation is, of course important, long term operational aspects and adaptation, however, are the keys to success.  Beyond initial design work (renderings, plant selection, overall strategies), a HANDBOOK OF BEST MANAGEMENT PRACTICES FOR THE LANDSCAPE (Ground Maintenance Handbook) is a requisite component.    The Ground Maintenance Handbook should include step-by-step strategies for installing and maintaining the landscape designs over time. It must be a living document that is updated as new discoveries and adaptations are made by the landscape crew. It is grounded in the concept of adaptive management, where the goal is to plan responses to multiple outcomes (e.g., deer eating the seedlings and invasion by bittersweet).

While this may be a lot to ask from a traditional landscape firm,  and is the piece that is often missing from landscape plan, the Ground Maintenance Handbook is a requirement for success.

Sustainable Landscape - Adapative Maintenance Strategies

Sure, everything might look great when it’s installed at full maturity for completion photographs. But what happens afterwards?

See more at ….

Why BIM should be renamed BIMM – The Value of BIM

BIM should should have been can BIMM – Building Information Modeling and Management. The emphasis upon 3D is silly, and the focus upon 3D replacing 2D is equally misdirected.

Products like Revit and Archicad are only relatively small components of a BIM solution.  BIM is a process embedded within and support by digital technology that enables more efficient cradle-to-grave management of the built environment.

Owners, contractors, A/E’s, oversight groups, and communities will all benefit from BIM relative to the management and usage of the built environment.

As many say, the “I” in BIM is the critical aspect.  Defensible, accessible, transparent, accurate and re-usable information is the true value of BIM.


While LEED is not for everyone, nor is it likely the “best” high performance building approach, it would appear that ROI can be significant for this and similar approachs.

The below is from –  Series: Green Corporate Climate, Source: – via


LEED For Commercial Interiors Can Result In Productivity Gains, Energy Savings

By Rod Vickroy and Rob Moylan

Green buildings have long been called high-performance buildings in Europe and in segments of the U.S. facilities market. The idea is that, while environmental responsibility is noble, sustainable design also should support better human comfort and business results.

Experience — and related research — bears out this thinking. The U.S. Green Building Council’s LEED rating system, for example, is widely seen as a way to improve a building’s environmental profile and energy use. Yet research indicates that it improves workplace effectiveness and return on investment (ROI). A 2009 Michigan State study, Life Cycle Cost Analysis of Occupant Well-being and Productivity in LEED Offices, found that groups moving to LEED office buildings missed less work and put in almost 39 hours more per person annually. According to the study, the total bottom-line benefits from gains related to fewer allergic reactions and reduced stress. The productivity boost ranged from $69,601 to more than $250,000 per year, the study showed.

Yet there are even greater returns. Today, leading companies and institutions are using LEED for Commercial Interiors (LEED-CI) — which certifies the sustainability of tenant improvements and interior renovations — as an opportunity to transform their business cultures and even enhance their brands. Add to that gains in energy efficiency and the market value of a space, and it becomes hard to imagine not building green.

The key to linking LEED to ROI and other valuable measures of organizational effectiveness is to plan early and strategically. The experience of several leading office tenants across the country demonstrates how implementing a LEED-CI-based plan can create measurable value through green interiors. What’s more, the following six tactical solutions are surprisingly achievable and economical when LEED-CI is viewed as integral to project planning rather than as an “add-on” to interiors projects (see “Debunking LEED-CI Myths on page 28). The examples show how these organizations thought performance could be improved, why they chose LEED-CI as part of the answer, and what it has delivered.

1. Corporate brand performance. Viewed as critical to competitiveness, branding has practically become its own industry in recent years. For many organizations, environmental stewardship is seen as central to brand identity: It’s the right thing to do, for their own people and society at large. So a workplace build-out to LEED standards simply reinforces these core values.

The power plant engineering firm Sargent & Lundy saw a 2008 relocation of their Phoenix regional office as a way to symbolize their expertise and forward-thinking attitude on global energy issues. Not surprisingly, the LEED-CI Silver build-out features energy-efficient lighting and systems. But more than that, the 14,000-square-foot open environment appears collaborative and interactive, reflecting the firm’s consulting approach. Wall-free clusters of sun-drenched workstations with mobile components encourage flexibility and communication, while designated “quiet rooms” allow privacy behind closed doors. Glass, light-toned wood and stone give tactile evidence of Sargent & Lundy’s green streak.

Similarly, health care software developer Burgess Group, based in Alexandria, Va., saw LEED-CI as another way to reinforce its image as a large, stable company — both for employees and for customers. As in the case of Sargent & Lundy, corporate goals intimately connected to the company’s brand drove project decisions as much as energy efficiency or workplace comfort. The result is a statement to the outside world and to employees that resonates with the tenant’s identity and mission.

2. Human performance. Among the benefits of LEED cited in studies like the Michigan State report are direct gains in overall health for office workers. These improvements come from better indoor air quality (IAQ), increased daylighting, and other changes seen to enhance morale or reduce stress. The bottom line: Happier, healthier, more relaxed employees tend to produce better work.

This thinking informed the planning of a 68,000-square-foot headquarters for an office furniture manufacturer. The company chose to renovate its 100-year-old former window sash factory, reaffirming its commitment to the local community and business line in the process. Using exposed brick and timber with new interior construction, the company created a clean, contemporary look in flexible and open loft-like spaces. The effect on employees working in the renovated space, who report gains in output and work enjoyment, quickly validated the approach. The facility, targeting LEED-CI Silver, was designed to be “open, productive and approachable,” according to executives.

The headquarters of Burgess Group (targeting Gold certification) was installed in a well-located new building with a green roof and bicycle facilities. Glass-walled offices and open workstations allow daylight deep inside office areas. Recycled materials, low-flow fixtures and GreenGuard-certified finishes are often touted by employees of this health care software developer. Beyond pride of place, Burgess Group workers are now more effective and efficient, says the company.

3. Organizational performance. By exploiting a LEED-CI renovation as a means for strategically reconfiguring the workplace, savvy occupants have improved organizational functioning, too. In this case, the bottom-line gains go beyond productivity to measures of work satisfaction such as reduced employee turnover and improved recruitment. Anecdotal and measurable improvements to organizational effectiveness include increased interaction, reduced e-mail volume, and shorter product development cycles.

For a Microsoft sales office in Chevy Chase, Md., LEED-CI strategies were integral to designing a space that would entice road warriors to spend more time with colleagues in the home office. The interiors needed a timeless aesthetic appeal that would suit a broad demographic spectrum, from retired generals to recent college grads. Company executives say the LEED-CI features — and the label itself — have helped galvanize the team.

One furniture manufacturer’s workplace offers similar conclusions. The company’s transparency and openness is reflected in open perimeter areas, sunlit atriums and light wells, and even a glass-enclosed boardroom. Employees — called “members” — enjoy casual meeting areas and a café during the workday.

4. Cultural performance. The precepts of green building have been shown to support such intangibles as customer relations, internal camaraderie and personal work satisfaction. The Michigan State study shows that IAQ, daylighting and views to the outdoors correlate with the highest post-move increases in employee satisfaction.

The law firm Bowman and Brooke took advantage of this cultural aspect in creating its Minneapolis headquarters. First, the firm takes pride in not seeming like a typical buttoned-down litigator, and it saw LEED-CI certification as a chance to be the first of its kind to differentiate from competitors. Second, the firm’s directors wanted a fresh, bright feel, not the dark, wood-paneled foxholes so common in the legal field. Third, LEED-CI would be another reminder that Bowman and Brooke does what’s right for their clients, employees and community. The resulting renovation — with its three-story open stair and innovative materials — ties into the firm’s brand identity while also supporting its personality and cultural uniqueness.

5. Energy performance. Another significant and highly tangible performance gain for LEED-CI projects is reduced utility costs. Energy savings can be reinvested immediately into the business, and the reduced carbon footprint benefits the community and environment as a whole. The power plant designers at Sargent & Lundy were especially motivated to showcase energy-saving technologies. From simple ideas such as passive solar daylighting integration to “seamless electronic interfacing with staff and resources” at their Chicago headquarters, which cuts travel expense and waste, the design spared few energy-saving ideas.

Similarly, construction and real estate development firm The Christman Co. in Lansing, Mich., transformed a former power plant into an energy-efficient headquarters, earning dual-Platinum LEED certification with CI and LEED for Core and Shell (LEED-CS). The building beats minimum requirements for energy efficiency significantly, cutting carbon dioxide emissions. A T5 fluorescent lighting system on occupancy sensors and daylight-regulated dimming are important elements of the energy- efficient design. According to Christman, a Web-based building management system tracks power use at the sub-tenant level to encourage conservation, but even the power is green: Every kilowatt-hour of electricity for the headquarters is offset by renewable wind energy certificates.

6. Facility performance. Add it all up, and the gains that accrue to the brand, to individual and collective work, and to operating costs speak to the multifaceted power of great facilities. The workplace is a platform for serving business needs on a daily basis, and LEED-CI makes it a stronger and more agile infrastructure. Leading organizations are jumping on this opportunity, including the charitable group Easter Seals for its low-cost, LEED-CI Silver headquarters in Chicago and the consultancy Deloitte for the firm’s global “workplace of the future” project.

The Deloitte office in San Diego encapsulates how LEED-CI will shape facilities as the United States climbs out of a recession.

Recognizing the need to balance cost and effectiveness, the firm targeted low to moderate build-out costs, quick turnaround times, and LEED-CI ratings as key components of their facilities strategy. The result combines space layouts using “neighborhood planning” with more open-systems furniture and more natural light to produce gains in productivity and employee wellness. LEED-CI, as it turns out, is a good model and a neutral checklist for developing progressive workplace criteria.

There’s one more thread connecting many of these case studies where LEED-CI led to so many performance rewards: Most came about as the result of a move. Clearly, there is no better time to reinforce one’s brand and revamp organizational performance goals than when the company is fitting out a new space. That’s the time to ask big questions and to remember one overriding idea that links LEED and business goals — that organizations are valuable because of their people, and LEED-CI helps make the most of who they are.

Rod Vickroy, IIDA, LEED AP is a principal and design director for Chicago’s workplace studio at SmithGroup. Rob Moylan, IIDA, LEED AP, Associate AIA, serves as one of SmithGroup’s sustainable design leaders specializing in commercial interiors. Vickroy and Moylan participate in the firm’s collaborative workplace practice. The firm specializes in the workplace, health, learning, and science and technology markets.

Construction Delivery Methods are Critical to BIM – JOC & IPD

Recent articles illustrate the importance of construction delivery methods relative to improving productivity, communications, collaboration, and quality for facility construction.

Whether new contruction or repair, renovation, or sustainabilty ( green ) projects, proven, consistent workflow and construction project delivery systems can significantly improve facility life-cycle management and ROI.

The recent artice “Measure Twice, Cut Once” identifies JOC / Job Order Contracting – Article  – as a superior method for facility renovation, repair, and sustainability projects.  Below are a few excerpts.

It’s time to stop thinking of BIM as Revit, ArchiCAD, “et al”, and as a method to improve facility life-cycle management.  BIM, aka prior sentence can be a responsitory of standardized information, however, CPMS, CAFM, CMMS, and contruction delivery methods and software (JOC, IPD) software and processes will feed into BIM.  It’s time to take a good hard look at your construction processes, whether you are an Owner, Architect, Engineer, Contractor, Sub-contractor, oversight group,  ….

The Associated General Contractors of America identifies four challenges to Qualification Based Selection (QBS), of which JOC is considered a key delivery method;

1) Team members must adopt a true “win-win-win” collaborative culture,

2) Different procurement methods, processes and contracts are required for success,

3) Everyone must understand that a timely, proactive and escalated dispute resolution process must be implemented, and

4) QBS requires the complete involvement and support of all key members of senior management.

By building a common understanding and learning the ‘ways’ of each other, the owner and contractor begin to develop a working relationship, one of trust and purpose.


Step 1:



Owner contacts JOC contractor with project that they would like to utilize the JOC contract as the means to complete.  A successful JOC contractor will have processes in place to track every contact made by or to the owner for each project, almost like a construction diary. When the owner’s project manager (OPM). 

contacts the contractor, the contractor’s project manager (CPM) will obtain a basic description of the project and schedule a site 



Step 2: Site Visit. Depending on the type of project and its complexity the CPM may require a superintendent and quality control officer to attend the walk-through, as well as key subcontractors.

Step 3:



Written Scope of Work. Once the site visit has occurred, the CPM will develop a written scope of work based on the information obtained and discussions had. The owner may also prepare a written scope to compare to the contractor’s version. Again, the time-frame for the scope is identified in the original terms of the terms of the JOC solicitation/contract.

Step 4:


Line Item Estimate. After the contractor receives the approved scope, it will develop a detailed line item estimate, identifying all aspects of the project, from any demolition, safety items, through construction. JOC construction software is utilized, as typically identified within the original solicitation or contract. The software utilized will determine the format of the estimate. Since the unit price books are based on national averages with adjustments to location, some line items may appear high to some owners and low to others, with the concept that over time the cost of the line items average out for both the owner and the contractor. As the contractor identifies the appropriate line items for each task to be completed, the software program categorizes them by the appropriate division, provides a subtotal for each and then atotal. Depending on the complexity and size of the project, the estimate could range from few to many pages.

Step 5:


Approval and Notice to Proceed. Upon approval of the final written scope of work and the line item estimate, the owner will issue a task order, purchase order or work order, along with a notice to proceed. At this point the contractor will work with the owner to schedule a pre-construction meeting. This meeting is probably the most critical meeting other than the initial site visit.






What’s the Value of BIM ?

BIM for Facility Management (BIM for FM) is the data and business processes that support building owner’s facility life-cycle decisions.

Owner, contractor, and A/E processes must be available to support cradle-to-grave decision support relative to the built environment.   Without these processes, BIMs is little more than 3D CAD.

Owners alone can drive BIM and it’s associated processes  to define the requisite data and internal processes to support specific and ever changing business and functional needs associated with the built environment.

Most owners do not have processes, systems, or the technology framework to supports this  need.  This, and the basic fabric of the AEC industry must change.

The Right Way to Invest in Infrastructure

Below is from the McKinsey Quarterly:

In the current debate about how to build a durable economic recovery, it’s welcome news that infrastructure spending is gaining attention. In a December 8 speech on jobs and economic growth, President Obama called for a boost in public investment in infrastructure—beyond what his earlier stimulus package included—to modernize the US transportation and communications networks.

The president’s proposal reflects a consensus among economists that investment in infrastructure is one of the most effective ways to use government spending to promote economic activity. The bad news is that when it comes to implementation, many of the methods revolve largely around the kind of short-term stimulus and Congressional earmarking that are making citizens increasingly impatient and distrustful. If America is really interested in fixing both its unemployment and infrastructure messes over the long term, then it should invest in infrastructure in a different way.

Infrastructure investment is an often-overlooked but crucial way to generate growth and jobs in the United States, even in a global economy with overcapacity in conventional manufacturing. Investing in infrastructure is the ideal way to shift resources and labor from the bubble sectors of housing, finance, and luxury services and into areas that have the potential to boost the long-run rate of American economic growth.

Public investment in infrastructure “crowds in” private investment: every dollar spent on infrastructure has a multiplier effect of $1.59, according to a widely-accepted estimate by Mark Zandi, the chief economist at Moody’s In addition, businesses in general benefit from reduced costs for transportation, communications, and reliable energy and water services. And while some inputs can be imported, most infrastructure activity can be performed only in the United States—creating jobs and strengthening industries at a time when the country and its politicians are struggling to find solutions.

Wisely chosen infrastructure projects that generate benefits to the economy over decades and generations represent the best uses of borrowed money, but the political attention they get usually takes the wrong shape. Much of the public discussion on infrastructure has focused on passenger mass-transit investments that are intended to reduce urban congestion costs, make American cities more pedestrian friendly, and decrease greenhouse gas emissions from automobiles. But if the goal is contributing to long-term economic growth, the focus of infrastructure spending should be on the movement of freight and on information technology, not commuters.

Along with advanced telecommunications, the low cost and reliability of freight transportation in the United States have been critical to the country’s economic success. But America’s failure to modernize its overloaded freight transportation infrastructure—chiefly the railroad network and highways used by trucks, but also inland waterways, ports, and airports—is imposing costs on American efficiency. As a result of congestion (highway delays, for instance), the penalty on American growth exacted by logistics costs rose from 8.6 percent of GDP in 2003 to 10.1 percent in 2007, even before the crisis. Meanwhile, emerging economic powers in Asia, such as China, are devoting vast resources to creating world-class transportation and information infrastructures.

To keep up, the United States needs to invest in new infrastructure of all kinds, from universal high-speed broadband to the modernization of transportation and energy systems. And it needs to make existing infrastructure far more efficient by using information technology to create “smart” grids and highways. We should think of different kinds of infrastructure as parts of a coherent system—synergies among different transportation modes, such as rail, trucking, and water, should be exploited, and rights-of-way for roads and rail should be used for new communications and power grids.

And even as infrastructure-related industries rebuild America for a new era of economic growth, they can contribute to rebuilding America’s exports. In the next half century, the poorest nations in the world will add between two billion and three billion people, who will need roads, utilities, and communications grids that could be built by US-based multinationals, with materials and technology sourced partly from the United States. Even larger foreign markets for US infrastructure industries might be found in developing giants such as Brazil, China, and India as these countries shift from a one-sided export promotion strategy to greater investments in growth led by domestic demand.

But to support such an infrastructure modernization in the United States and to strengthen its infrastructure industries enough that they might ultimately generate revenue beyond its borders, funding needs to be not only substantial but also sustainable. According to the American Society of Civil Engineers, the United States needs to spend at least $2.2 trillion over five years for deferred maintenance of existing infrastructure and investment in new infrastructure. Infrastructure is the kind of public capital asset—with high up-front costs and long-term, continuing benefits—that justifies public borrowing within the limits of a capital budget distinct from ordinary appropriations. For this reason, Congress’s short-term investment proposals deflate the important role infrastructure could play in a long-term recovery. The more effective solution would be to establish a national infrastructure bank, modeled on the European Investment Bank and some state-level economic-development banks.

A national infrastructure bank would serve two purposes. First, it would remove decisions about federally funded infrastructure projects from the pork barrel politics of congressional earmarking—a process that currently inhibits the United States from developing transparent, economically effective infrastructure priorities. Second, a federal infrastructure bank would be able to fund infrastructure in a massive and sustainable way by issuing federal debt, within limits, to fund infrastructure projects of national significance. By contributing to a higher rate of economic growth, infrastructure investment financed by government borrowing could make it easier to reduce the national debt and deficit over time. It would also spur long-term job creation in industries such as manufacturing and construction, currently two of the worst hit by unemployment.

But the hard facts in favor of a national infrastructure bank have led to an even harder political reality. Although President Obama indicated support for such a bank during his campaign, Congress so far has been unwilling to relinquish control of decision making over individual infrastructure projects to an independent agency—and isn’t going to do so anytime soon. And the creation of an infrastructure bank that would be a mere pass-through vehicle for Congressional appropriations would be pointless. So in the absence of firm plans for a national infrastructure bank, we must at least proceed with alternate forms of infrastructure investment.

One important vehicle for greater investment is the multiyear highway-spending bill that Congress is likely to pass in 2010. Other sources of spending are state and local infrastructure bonds that receive favorable tax treatment. As part of the stimulus package, the American Recovery and Reinvestment Act earlier this year included a new class of federally subsidized state and local tax-credit bonds called Build America Bonds, which should generate as much as $50 billion of new infrastructure spending this year. While an important start, programs like these remain a second-best alternative to federal funding and federal choice of projects of regional and national significance.

From the earliest years of the republic, the United States has undertaken massive infrastructure projects—in canals, in railroads, in interstate highways, and in electric grids—that have accelerated economic growth even as they created new industries and new communities. At a time when the country is looking to rebuild business and tackle the highest unemployment figures in decades, we have to turn to public infrastructure investment as one solid solution. Like previous generations, today’s Americans in the aftermath of the bubble economy must lay a foundation for sustained prosperity by creating the infrastructure a 21st-century economy needs.

ROI – Return of Investment , Sustainability & High Performance Buildings / BIM

While strong progress has been made, the real estate industry is struggling to quantify and articulate the value of sustainable property investment.  The vast majority of investment decisions, even by sophisticated investors, are being made based on simple payback or simple return on investment (ROI) calculations.
Most investors, and many tenants, today understand that sustainable properties can generate health and productivity benefits, recruiting and retention advantages, and reduce risks, but struggle to integrate benefits beyond cost savings into their valuations and underwriting.
The failure by property investors to appropriately incorporate revenue and risk considerations into sustainable investment decisions has led to underinvestment in sustainability.
Today, with increasing government regulations and incentives and rapidly growing tenant and investor interest in sustainability, failure to properly incorporate value considerations beyond cost savings will increasingly result in sub-optimal financial results for investors. As a consequence, society will not be able to achieve its carbon reduction goals.
In accordance with its mission and the needs of the industry, the Green Building Finance Consortium (GBFC) presents Value Beyond Cost Savings: How to Underwrite Sustainable Properties, a book designed to assist private investors in making better financially based sustainable property investment decisions.

While strong progress has been made, the real estate industry is struggling to quantify andarticulate the value of sustainable property investment. The vast majority of investmentdecisions, even by sophisticated investors, are being made based on simple payback orsimple return on investment (ROI) calculations.

Most investors, and many tenants, todayunderstand that sustainable properties can generate health and productivity benefits,recruiting and retention advantages, and reduce risks, but struggle to integrate benefitsbeyond cost savings into their valuations and underwriting.3The failure by property investors to appropriately incorporate revenue and riskconsiderations into sustainable investment decisions has led to underinvestment insustainability. Today, with increasing government regulations and incentives and rapidlygrowing tenant and investor interest in sustainability, failure to properly incorporate valueconsiderations beyond cost savings will increasingly result in sub-optimal financial resultsfor investors. As a consequence, society will not be able to achieve its carbon reductiongoals.In accordance with its mission and the needs of the industry, the Green Building FinanceConsortium (GBFC) presents Value Beyond Cost Savings: How to Underwrite SustainablePropertiesValue Beyond Cost Savings – FOR EDUCATIONAL PURPOSES ONLY, a book designed to assist private investors in making better financially based sustainable property investment decisions.

What is a Sustainable Property?

1. Financial Perspective

Proper financial analysis of a property requires explicit consideration of the potential benefits that will accrue through meeting regulator, space user, and investor thresholds for sustainability.

The definitions that matter for a property are those used by regulators, space users and investors.

Regulators typically have a whole series of required thresholds in building codes and ordinances in order to meet their regulatory requirements and/or obtain incentives, while space user definitions of “sustainability might incorporate an environmental rating such as LEED, internal company energy efficiency guidelines, or broader measures such as the Global Reporting Initiative or Carbon Disclosure Project

The specific certifications/definitions required by regulators, users, and investors will vary dramatically by country, government level, property type, property size, tenant mix and other factors. Fortunately, while evaluating sustainable certifications from a financial perspective can be complicated, analyzing regulator, user, and investor requirements at the property level is a core expertise practiced for decades by real estate underwriters and valuation professionals.

2. General Perspective

While this chapter focuses on financial analysis, it is important to understand the various ways sustainable properties are described to provide background and perspective for interpreting how definitions/certifications influence value.

A general consensus has emerged on the fundamental attributes of a sustainable property. One of the earliest general definitions of sustainability was adopted in 1987 by the United Nations World Commission on Environment and Development (WCED), which defined “sustainable development” as “development that meets the needs of the present without compromising the ability of the future generation to meet their own needs”.

Another good succinct definition from the website is:

A sustainable commercial building can be defined as a building with planning, design, construction, operation and management practices that reduce the impact of development on the environment. A sustainable commercial building is also economically viable, and potentially enhances the social amenity of its occupants and community.

Mass transit orientation, community connectivity, and related land-use and planning issues are a critical component of developing sustainable communities and regions, as well as buildings. Sustainable building research and certification systems have historically not adequately addressed these types of sustainable concerns and issues, focusing more on property specific and/or technological issues. Recent changes in LEED have put more priority on site related considerations and organizations like the Urban Land Institute, a leader in the “Smart Growth” movement for years, continue to push these issues to the forefront.

Although there is a general consensus on the range of environmental outcomes that asustainable building should strive for, there is no consensus on how such outcomes should be achieved, measured, certified, or valued. Fortunately, traditional real estate underwriting and valuation methods and practices are well suited to deal with these complexities.

C. Sustainable Property Features

One way to “define” a sustainable property is by its combination of sustainable features and attributes, as illustrated in the outline of the key sustainable building features of a typical office property shown in Exhibits III-1. Sustainable certifications like LEED®, BREEAM (U.K., Europe), GreenStar (Australia), CASBEE (Japan), or Green Globes™ (US, Canada) can be achieved through adoption of a wide combination of differen sustainable features, processes and outcomes.

Select Sustainable Elements — New Office Construction

Sustainable Sites

• Optimal daylight exposure through building orientation

• Reflective roof surface to reduce heat island effect

• Brownfield or urban in-fill location

• Habitat restoration or open space preservation

• Bicycle and carpool parking

• Light pollution reduction

• Storm water management/treatment

Water Efficiency

1. Water-efficient landscaping

2. Low-flow lavatory toilets and faucets

3. Storm water retention systems for landscape irrigation

Energy and Atmosphere

• High efficiency HVAC system

• High efficiency interior lighting with daylight dimming and occupancy sensors

• High performance window glazing

• Photovoltaics or other on-site renewable energy

• Additional insulation

• Commissioning of HVAC and other systems

Materials and Resources

• Environmentally friendly construction materials (regional

renewable, certified, etc.)

• Waste management plan for diverting construction debris

Indoor Environmental Quality

• Low-emitting paints, flooring and carpet adhesives

• Daylighting and exterior window views

• Zoned heating and cooling

• Under-floor ventilation

• Operable windows

• Air intakes positioned away from pollution sources

• Enclosed, ventilated mechanical rooms

• CO2 sensors

Innovation and Design Process

• Integrated design and construction approach

• Expanded design team including energy modeler, solar

design expert, and commissioning agent

High Performance Buildings – What EVERYONE NEEDS to Know.

High Performance Buildings (HP Buildings)

1. HP buildings cost little more (3%-5%) and sometimes no more build.

2. LEED Certified isn’t the answer for ALL…  all the LEED “requirements” are not appropriate to everyone and certification IS costly.   Lastly, if you do elect this route, remember, the key to any high performance building is professional, ongoing operations and management… NOT the certificate.

3. A high performance building strategy for new AND existing buildings can result in  20 to 50% operational cost savings.  Key areas to consider:  site orientation, light reflective materials, durable/low maintenance materials, natural daylight and ventilation, HVAC, and building automation.

4. Validate all business product manufactures claims and investigate Energy Star labels… all may not be what is appears.

5. Remember a safe, comfortable, efficient environment is directly linked to occupant health and  productivity.   Studies show associated productivity increases of up to 30% associated with facility improvements.

6.  Buildings are important to attracting personnel, students, etc.

7.  High performance buildings mitigate risk / liability; reduced accidents, workers compensation and other claims.   Remember the concentration of indoor pollutants can be several times that of the outdoors.

Why do we need BIM and High Performance Building Management Systems ( HPBMS ) ?

Owners and operators best understand the challenges of facilities life-cycle capital planning and management and information exchange due to their involvement in each phase of the facility life cycle.

Costs associated with lack of adequate information, interoperability, and optimal decision support tools during the design and construction phase are amplified exponentially during the operations and maintenance phase.

Inadequate as-built data, communications failures, lack of standardization, and poor oversight during each life-cycle phase create costly ineffeciencies.

As a result, substantial costs related to inefficient business process management and losses in productivity throught the facility life-cycle are the norm vs. the exception .

The technology and processes of BIM and the ” basics” of HPBMS can provide the following benefits:

Ensure a uniform cost-control framework throughout the building lifecycle.

Defines proper level of detail to set expectations from initial conceptual design through deconstruction.

Fully compatible and complementary with Integrated Project Design and Delivery ( IPD ).

Provide a “living checklist” to document and assure ensure synergy between the built environment, occupants, and environment.

Provide historical information library and encourage data reuse.

Enable multi-year price visibility and validation