The Logistics Management Institute study Incremental Costs of Meeting ASHRAE Standard 189.1 at Air Force Facilities (LMI, 2011) and this committee’s review of ASHRAE 189.1-2011 identified some mandatory requirements that may not be cost-effective or feasible in the DOD operating environment. Among those are requirements related to renewable energy, remote metering systems, peak load shedding, and maximum waste generation. Provisions for heat island reduction, minimum side lighting, indoor environmental quality management before occupancy, and the consistent implementation of operations plans could also prove problematic for design choices and in building operations.

Finding 3. Research studies indicate that the incremental costs to design and construct high-performance or green buildings typically range from 0 to 8 percent higher than the costs to design and construct conventional buildings, depending on the methodology used in the study and the type of building analyzed. The additional incremental costs to design and construct high-performance or green buildings are relatively small when compared to total life-cycle costs.

Several studies focused on the incremental costs to design and construct high-performance or green buildings when compared to conventional buildings. Those studies used different methodologies to calculate the additional costs of design and construction and applied them to different types of buildings. The studies indicated that the additional first costs for high-performance or green buildings would typically range from 0 to 8 percent higher than the costs to design and construct conventional buildings, although the costs ranged up to 18 percent higher in a few instances. The study with the largest sample size indicated that, on average, the incremental first costs of green buildings are within 2 percent of the costs of conventional buildings.

During the life cycle of a building, design and construction costs typically range from 5 to 10 percent of total costs, while operations and maintenance costs account for 60 to 80 percent of total costs. Thus the additional incremental costs to design and construct high-performance or green buildings are relatively small when considered as part of total life-cycle costs. If the additional up-front investment in a building results in long-term savings in energy, water, and other resources, as indicated by an NPV greater than 1, then the investment would be cost-effective.

Finding 4. The analytical approach proposed by the DOD consultant has merit as a decision support tool in the DOD operating environment if appropriate and verifiable data are available for conducting benefit-cost and sensitivity analyses.

The DOD consultant conducted a traditional benefit-cost analysis to calculate NPV benefits and adjusted rate of return on investment to determine the cost-effectiveness of the two ASHRAE standards and the two green building certification systems. The consultant also conducted a payback analysis as required by the National Defense Authorization Act of 2012. The consultant’s proposed analytical approach expanded on the traditional benefit-cost analysis to incorporate factors related to geographic location, climate conditions, and local factors for utility costs. Sensitivity analyses were also incorporated to test a range of scenarios that represented uncertain future conditions related to discount rates, water prices, and energy prices. To the committee’s knowledge, those factors are not required by DOD or by other federal regulations. The committee believes that the consultant’s analytical approach has merit as one of an array of decision support tools to be used by DOD for evaluating investments in new construction or major renovations.

However, the committee has significant concerns about the sources of data available and the application of those data in the consultant’s NPV calculations, including estimates of the incremental costs



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