Sustainability & Risk / Green Building / Scoring - Track

Associating Financial Data with your Self-Scores

When self-evaluating how your building matches against the certification standard's credits, you can optionally enter the estimated Capital Cost and estimated Annual Savings associated with implementing each credit. With this information, the system can calculate the Payback Period in years for each credit. Knowing how quickly you can recover the cost of implementing an environmental improvement can help you justify the expense of making this change, or prioritize a series of required changes.

When determining the projected annual savings, you may need to consult the manufacturer of the new materials that you are installing, consult green advocacy agencies for data on typical savings, or monitor the improvement yourself and determine the savings over a period of months. How carefully you research this information will determine the accuracy of your payback period.

Not all capital improvements or green-related costs will result in annual savings. The following are a few scenarios of green building costs, anticipated savings, and how to record these situations when self-scoring.

• Capital Cost and Increased Annual Savings: Suppose you are following the BREEAM standard and have reconfigured your building so that it meets the HEA1 standard of having 80 percent of the building's areas lighted by natural daylight. In this case, you can enter the cost of reconfiguring your building in Capital Cost. You can then assess the savings in electricity of using fewer lights and enter this amount in Annual Savings. The payback period will show the number of years required to recuperate this cost.
• Capital Cost and Increased Expenses: You may encounter situations in which you pay for the capital cost of a building enhancement but the change does not actually provide a savings. For example, under LEED you can earn a credit for Reducing Particulates in Air Distribution. Suppose that you spend $5,000 to upgrade your air-filtering equipment, but this new equipment actually requires more electricity to run so that your annual electricity bill increase by $1000. In this case, you could enter $5000 as your Capital Cost and you can enter $-1000 as your Annual Savings. When the system calculates the payback period, it will determine it as -5 years.
• No Capital Cost and Increased Expenses: Some improvements have no payback period but are still important for increasing your score and for being a good corporate citizen. For example, you may offer your employees subsidies for using public transportation. Since this is not an improvement to your building, it is not a capital cost and you would not complete the Capital Cost field. However, it is a green-related expense that you want to track. In this case, you could record as a negative value in the Annual Savings field the amount that the subsidy annually costs you . When the system calculates payback period, it will calculate it as zero.
• Capital Cost and No Change in Savings or Expense: Consider an improvement that you make to your building that does not positively or negatively affect your expense line. For example, suppose you improve your site to restore open habitat, a credit under LEED. Record the cost of making this improvement in the Capital Cost field. However, if the increased open space does not result in savings, do not complete the Annual Savings field. In this case, the payback period will be zero.

If you choose to enter financial data, be sure to review the Rating Project Payback Period report and chart. See Analyzing your Certification Scoring Efforts.