2014 1013 AIA Demystifying the Costs and Benefits of Green ...

SUBTITLE

DEMYSTIFYING THE COSTS AND BENEFITS OF GREEN HEALTH CARE FACILITIES

PERKINS+WILL

Robin Guenther, FAIA, LEED AP BD+C

Breeze Glazer, LEED AP BD+C

CENTER FOR MAXIMUM POTENTIAL BUILDING SYSTEMS

Gail Vittori, LEED Fellow

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Certified USDA organic Spanish peanuts

No hydrogenated oils

No added sugars

No artificial ingredients

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$4.00 $4.05



No added sugars


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$4.00 $4.05



No added sugars


Demystifying First-Cost Green Building Premiums in Healthcare

Study Authors:Adele Houghton

Gail VittoriRobin Guenther

“So…does building a green hospital cost more?”

“Hmm….cost more than WHAT?Do you mean…”

“…cost more than the exact same building without the sustainable features?... “…cost more than the capital budget or available funding?... “…cost more than other hospitals of comparable size and complexity?...

“…cost more to construct or to operate over its life span?...

Costing Green: A Comprehensive Cost

Database and Budgeting

Methodology

July 2004

Davis LangdonLisa Fay Matthiessen

Peter Morris

There is a very large variation in costs of buildings, even within the same building program category.

Cost differences between buildings are due primarily to program type.

There are low cost and high cost green buildings.

There are low cost and high cost non-green buildings.

Factors that influence feasibility and cost:

•Demographic location•Bidding climate and culture•Local and regional design standards, including codes and initiatives•Intent and values of the project•Climate•Timing and implementation•Size of building•Point synergies

“Sustainability is a program issue rather than an added requirement….

Perhaps the most important thing to

remember is that [it] is nota below-the-line item.”

12

473,000

336,000

400,000

208,000

72,000

28,000

0

100,000

200,000

300,000

400,000

500,000

Acute Care Crossover Facilities Outpatient

RANGE OF PROJECT SIZE AND TYPE

2008 LEED CERTIFIED HEALTHCARE COST PREMIUM STUDYProjects by Size

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0%

1%

4%

5%

0.5%

3%

3.8%

2.0%

1.0%0.5%

5%

3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Certified Silver Gold Platinum

First Cost Premium by Level of Certification – BEFORE Grants + Incentives

2008 LEED CERTIFIED HEALTHCARE COST PREMIUM STUDY

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0%

1%

2%

0%

0.5%

3%

3.8%

0.5% 0.5% 0.5%

0%

2%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%


First Cost Premium by Level of Certification – AFTER Grants + Incentives

2008 LEED CERTIFIED HEALTHCARE COST PREMIUM STUDY

“….It’s telling us that all these things we hoped would happen—that we would have higher

employee satisfaction, higher patient satisfaction, better retention of clinical employees and nurses, better physician

recruitment—have scored higher due to the nature of this building.”

Richard Beam, Director of Energy Management ServicesProvidence Health & Services

The workplace supports health and well being

“Because of the integrative design process, elements of the project were incorporated if they met several criteria: they might be green, but also low maintenance or met criteria for infection control, etc.”

“The ‘first-cost premium’ inherently presents an item as a premium when it isn’t an add to the budget—in a process where we often don’t analyze the subtractions or synergistic savings. If orienting a building to optimize passive solar gain in winter reduces heating load with no impact on construction cost, where is that ‘savings’ tracked?”

The Challenges ahead…..

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=

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LEED HOSPITALSPerspectives on Cost Premiums and Operational Benefits

Research update to 2008 study

15 LEED certified hospitals completed 2010-2012

Identified capital cost construction premium of achieving LEED certification

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2012 COST PREMIUM STUDY

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RESEARCH FRAMEWORK / METHODOLOGY

Gail Vittori, LEED FellowCo-Director Center for Maximum Potential Building Systems

+

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RESEARCH FRAMEWORK / METHODOLOGY

Intent: For respondents to provide hard data and responses in the most efficient way possible

45 questions

1-2 hour time commitment

Summary

SUBJECT HOSPITALS – 15 TOTAL

15 subject hospitals - 9 design firms

NBBJKahn AssociatesESAShepley Bullfinch

Stantec (Anshen Allen)HKSHealth Facilities GroupMahlumPerkins+Will

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0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000


Square Feet

Mercy Medical Center West Lakes Hospital

Yale New Haven Smilow Cancer Hospital

Johnston Memorial Replacement Hospital

Boone Hospital Center

Hughes Spalding Redevelopment

Rockingham Memorial Hospital

Rush University Medical Center Tower

Kiowa County Memorial Hospital

St. Elizabeth Hospital

Texas Health Presbyterian Flower Mound

Tradition Medical Center

West Bloomfield Hospital

Laguna Honda Hospital Replacement Program

Ahuja Medical Center

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COST PREMIUM PERCEPTIONS

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WHAT ARE THE BIGGEST BARRIERS TO CONTROLLING FIRST COST GREEN PREMIUMS ON A PROJECT?

Cost Control Barriers

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WHAT ARE THE BIGGEST BARRIERS TO CONTROLLING FIRST COST GREEN PREMIUMS ON A PROJECT?

When did the project team decided to pursue LEED?

Concept Design – 26%Schematic Design – 60%Design Development – 7%Construction Documents – 7%

Yes – 47%No – 53%

Was LEED included in the original project budget?

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COST CONTROL BARRIERSLEED Overachievement

LEED Level Achieved?

2 Certified

5 Silver

7 Gold

1 Platinum

1 underachieved

5 achieved target

9 overachieved

LEED Level Targeted?

2 Certified

11 Silver

2 Gold

0 Platinum

“Hmm….cost more than WHAT?Do you mean…”

All projects that declare zero cost premium define the cost premium as an increase to the budget

There is no consistency to the construction features that are included in a capital cost premium

There is no standard method for calculating a premium

Components of a green construction premium are continually evolving as hospital baselines change

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LEED HOSPITALS: PERSPECTIVES ON COST PREMIUMS AND OPERATIONAL BENEFITS

Defining a Capital Cost Premium

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COST PREMIUMS

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CAPITAL COST PREMIUMS

LEED CERTIFICATION LEVEL

PREMIUM

ALL SUBJECT HOSPITALS – 15 TOTAL

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PREMIUM

ALL SUBJECT HOSPITALS – 15 TOTAL

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PREMIUM

LARGE SUBJECT HOSPITALS > 100,000SF – 13 TOTAL

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PREMIUM

LARGE SUBJECT HOSPITALS > 100,000 SF – 13 TOTAL

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CAPITAL COST PREMIUMS, 2008-2012

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LEED HOSPITALS: PERSPECTIVES ON COST PREMIUMS AND OPERATIONAL BENEFITS

Hard cost premiumsSoft cost premiums+

CAPITAL COST PREMIUM

=

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SOFT COST PREMIUM COMPONENTS

56% Commissioning

66% Energy modeling

53% LEED Fee - contractor

72% LEED Fee – architect / engineer

91% LEED Registration and review fees

TOP 5 SOFT COSTS

Most cited as contributing to LEED cost premium

regardless of

impact to budget

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SOFT COST PREMIUMS COMPONENTS

SMALL HOSPITAL EXAMPLE – 100,000 sf

= .15 - .3%

56% Commissioning

66% Energy modeling




BEST PRACTICE / NOT LEED SPECIFIC

LEED SPECIFIC

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SOFT COST PREMIUMS COMPONENTS

LARGE HOSPITAL EXAMPLE – 500,000 sf56% Commissioning

66% Energy modeling




BEST PRACTICE / NOT LEED SPECIFIC

LEED SPECIFIC

= .1 - .2%

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36% Stormwater Management - Quality

44% High Performance Roofing

50% Low Flow Bathroom Fixtures

50% Optimized Energy Systems

62% Bicycle Storage

HARD COST PREMIUMSTOP 5 HARD COSTSMost cited as contributing to LEED cost

premium regardless of impact to budget

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HARD COST PREMIUMS

0

2

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6

8

10

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100%

50%

In total, 40 different hard cost components were noted by at least 1

LEED Credit / Compontents

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Your LEED Cost Premium Definition = Mine

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36% Stormwater Management - Quality

44% High Performance Roofing

50% Low Flow Bathroom Fixtures

50% Optimized Energy Systems

62% Bicycle Storage

HARD COST PREMIUMS

OPERATIONAL PERFORMANCE+MUNICIPAL BENEFIT

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OPERATIONAL PERFORMANCEEnergy and Water Savings

-20%Energy Cost

Savings Reduction

LEED Gold

0% Reported Cost Premium

=

SUBJECT HOSPITAL

$7 million Operational Savings

2012-2022

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-20%Energy Cost

Savings Reduction

LEED Gold


=

SUBJECT HOSPITAL

49,000 tonsCO2 Avoided2012-2022

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-20%Energy Cost

Savings Reduction

LEED Gold


=

SUBJECT HOSPITAL

37,000 acresof forest offset

2012-2022

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-20%Energy Cost

Savings Reduction

LEED Gold


=

SUBJECT HOSPITAL

37,000 acresof forest offset

2012-2022

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MUNICIPAL / COMMUNITY BENEFIT

Stormwater, 4

Energy, 2

General, 1

What Kinds of Benefits?

ROCKINGHAM MEMORIAL HOSPITALLandfill Gas Project

LEED NC Gold / Reported 4% Cost Premium

Yes – 47%No – 53%

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FINANCIAL INCENTIVES

LEED projects in the 2008 study received green building related financial grants / incentives

– Local Utility– Private philanthropic– municipal

LEED projects in 2012 study received green building related grants

“no respondents reported that the lack of a grant or incentive prevented them

from achieving a desired LEED certification level”

62%

20%

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Rush University Medical Center• Chicago, IL• 806,000 sf• 386 patient beds• 2012 completion• Perkins+Will

0% reported capital cost premium

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• LEED was included in Basis of Design but didn’t inform a budget increase

• Targeted LEED Silver, achieved LEED Gold

• Largest LEED Gold hospital at the time

• LEED costs were never isolated because the project stayed within original budget

• Hospital was provided substantial financial benefits/ incentives to achieve LEED

• Direct Incentive tied to LEED Silver min.

RUSH UNIVERSITY MEDICAL CENTER

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Green Roof required for

Chicago Green Permit Process

(fee waiver and expedited) + staff/patient amenity

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Comprehensive Stormwater Management system

informs municipal benefit and cost savings

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Kiowa County Memorial Hospital• Greensburg, KS• 50,000 sf• 15 patient beds• 2011 completion• Health Facilities Group

5% reported capital cost premium

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KIOWA COUNTY MEMORIAL HOSPITAL

• 2007 - Original Kiowa Hospital was destroyed by tornado w/ 95% of the town

• Town dictated all municipal buildings were required to achieve LEED Platinum

• Hospital was not required, but decided to meet the same standard

• Public infrastructure destroyed = opportunities for project synergies

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KIOWA COUNTY MEMORIAL HOSPITAL

• LEED was included in Basis of Design

• Targeted LEED Gold, achieved LEED Plat

• LEED costs were never isolated due to special nature of the project

• Received substantial grants, incentives and corporate sponsorships for “green materials”– FEMA 75%– Kansas DOE 10%– USDA 15%

• Team estimated cost premium of 5%

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On-site Wind Turbine provides 40% of base load electricity,

new town wind farm provides remainder. Reduces energy load

on municipal electricity generation

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On-site bioswales treat stormwater and greywater, solves

significant sewage and drainage problems for the town

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BENEFIT VALUE PROPOSITION

Regulatory Requirement

Funding Requirement

Occupant Health&

Safety

Operational Efficiency

Community Benefit

Environmental Perf.

Civic Leadership

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WHY DID THE OWNER DECIDE TO PURSUE LEED?

Occupant Health&

Safety, 23%

Operational Efficiency /

Reduced Costs, 8%

Community Benefit, 23%

Funding Requirement,

8%

Environmental Performance,

8%

Civic Leadership,

31%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1Sustainable Design Drivers

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Occupant Health&

Safety, 23%

Operational Efficiency /

Reduced Costs, 8%

Community Benefit, 23%

Funding Requirement,

8%

Environmental Performance,

8%

Civic Leadership,

31%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1

WHY DID THE OWNER DECIDE TO PURSUE LEED?

Sustainable Design Drivers

MEASUREABLE

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MEASURING OPERATIONAL BENEFITS

POST OCCUPANCY EVALUATIONS

OPERATIONAL SAVINGS

STAFF BENEFITS

PATIENT BENEFITS

Energy

Water

Retention

Absenteeism

Satisfaction

Satisfaction

Length of Stay / Recovery Time

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MEASURING OPERATIONAL BENEFITS


OPERATIONAL SAVINGS

STAFF BENEFITS

PATIENT BENEFITS

Energy

Water

Retention

Absenteeism

Satisfaction

Satisfaction

Length of Stay / Recovery Time

design firm

hospital

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29 %No, 71%

Post Occupancy Evaluation

Yes

70

OPERATIONAL UTILITY SAVINGSWhat’s Being Measured?

80%

53%

0.00% 50.00% 100.00%

Energy Savings

Water Savings

% Selected by Respondents2013 Sustainable

Operations Survey

41%

69%

Healthcare Facilities Management MagResearch Survey

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IMPROVED HEALTH OUTCOMES

IMPACT OF VIEWS TO NATURE

LESS

• Intakes of pain medication

• Recorded Pain

• Anxiety

• Fatigue

BETTER

• Satisfaction with their rooms

• Physiological responses

– lower blood pressure and heart rate

“Effects of Flowering and Foliage Plants in Hospital Rooms on Patients Recovering from Abdominal Surgery ” Seong-Hyun Park and Richard H. Mattson

IMPACT OF DAYLIGHT

• 1/3 Day Shorter Hospital Stay

o (all patients)

• 1 Day Shorter Hospital Stay

o (women only)

• 4.5% fewer mortalities

o (all patients)

“Dying In The Dark: Sunshine, Gender And Outcomes In Myocardial Infarction.” K M Beauchemin and P Hays 1998

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EVALUATING OPERATIONAL BENEFITSWho’s Measuring What?

% Selected by Respondents

53%

33%

60%

40%

33%

0% 50% 100%

Patient Satisfaction

Length of Stay /Recovery Time

Staff Satisfaction

Staff Retention Rates

Staff Absenteeism

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Dell Children’s Medical Center• Austin, TX• 170 patient beds• 2007 completion• Karlsberger

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STAFF RECRUITMENT

75

STAFF RETENTION

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Employee Engagement 5%

Health and Well-Being 5%

Frequency of Undesirable

Health Outcomes 4%

From: Debra D. Harris, Ph.D. RAD. Return on Investment of a LEED Platinum Hospital. 2014

RESULTS FROM DELL CHILDREN’S POST-OCCUPANCY EVALUATION

Dell Children’s Medical Center of Central Texas Healing Garden – ©Mark M. Swedner, Seton

Healthcare Family

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Turnover Rate:

3.57% vs. national average

6.53% vs. original hospital

Each Percentage Point

= $331,800 IN SAVINGS

Total Annual Savings $2.17M




Healthcare Family

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Injuries + Illnesses:

7% vs. original hospital

3% vs. other new hospitals in

Seton Network

Savings from original to

new hospital: $4.5M/year




Healthcare Family