Defining Value in

Sustainability
Informing Design Through Economic Analysis
Speakers

Steph Larocque Jill Kurtz Shane Minckley

Chief Operating Officer Director of Building Sciences Economist
Autocase Inc. Page/ Autocase Inc.
Steph is an internationally Jill helps advance the Shane focuses on sustainability
recognized professional in the field multidisciplinary firm’s work to measures to improve the built
of triple-bottom line economic design for impact through higher environment, and the pain points for
analysis, with over 20 years of performance, health and practitioners in getting their designs
experience in the field resilience approved
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Learning Objectives

1. Learn about the changing sustainability landscape as it relates to buildings

2. Define why you need a business case for sustainable building designs

3. Identify when you should use the Informing Design LEED pilot credits

4. Understand the primary economic analysis methods supporting sustainable

building designs

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Roadmap for the Course

1. The Changing Landscape of Sustainability in Buildings

2. Why You Need a Business Case for Sustainable Building Designs
3. LEED Pilot Credits for Informing Design
4. The Indeed Tower Case Study From Page/
5. The Realities of the Business Case for Sustainable Buildings
6. Final Case Study - Studio City Gymnasium

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The Changing Landscape of Sustainability in Buildings

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 LEED Credit Categories

Innovation

Water
Efficiency Sustainable
Sites

Defining
Sustainability in
Materials
the Built &
Resources

Environment Energy &

Atmosphere

Location & Indoor

Transportation Environmental
Quality

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Buildings, Carbon & Climate Change
The urban built environment is responsible for 75% of annual global GHG emissions: buildings alone
account for 39%. - Architecture 2030

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The Carbon Story for Buildings

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 Federal Regulations & Building Decarbonization

Extensive action directed at

federally held assets through
Executive Order related to:

- Energy demand changes

- Retrofit mandates
- Energy efficiency in new
builds
- Electrification of transit
- Buy clean procurement
- Climate resilience
- Workforce enablement

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Regulations at the State, County, City Levels

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Green Certified Buildings in the Building Stock

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Why You Need a Business Case for
Sustainable Building Designs

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We Know Sustainable Buildings Improve

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So Why Do You Need a Business Case?

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 Business Cases Allow Teams to Compare & Justify
Options Throughout the Project

Design
Metrics Value
Data/Strategies

Justify & compare

Costs Identify | Quantify | Monetize investments

Energy
Financial Environmental Quantify as-built impacts
Water
Lifecycle costs Operational CO2
ROI, Payback, etc. Air pollution
Materials Utility savings Embodied CO2
Achieve 2 LEED points
etc. etc.

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Common Business Case Frameworks
• Life-Cycle Cost Analysis (LCCA)

• Cost-Benefit Analysis (CBA) or Benefit-Cost Analysis (BCA)

• Triple Bottom Line - Cost Benefit Analysis (TBL-CBA)

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Life-Cycle Cost Analysis (LCCA)

Evaluates the total financial cost of an asset by assessing initial costs and
discounted future expenditures, such as operations, and maintenance, and
replacement over the service life of the asset

Assesses stakeholder objectives in monetary terms across the project

alternatives, and answers the question “How does each project rank in terms
of cost?”

Not to be confused with Life Cycle Assessment (LCA) which is completely

unrelated and is a framework to quantify (e.g. in tonnes) the environmental
impacts of a product or service across all stages of its life cycle

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Cost-Benefit Analysis (CBA)

Also known as Benefit-Cost Analysis (BCA). The terms are interchangeable

and both are widely used even within the Federal Government

CBA is an assessment of alternative options which quantifies in monetary

terms as many of the costs and benefits of a proposal as feasible, including
items for which the market does not provide a satisfactory measure of value

Allows an assessment of both, project benefits and costs in monetary terms

to identify the project impacts that drive the project success and answers the
question “Which project alternative provides the best bang for the buck?”

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Triple Bottom Line – Cost Benefit Analysis (TBL-CBA)

A systematic, evidence-based economic business case framework that uses

best practice CBA and LCCA techniques to quantify and attribute monetary
values to the Triple Bottom Line impacts resulting from an investment

Facilitates the optimum use of scarce resources by highlighting impacts of

project design in terms of costs and benefits, while also identifying the net
impact on users, owners and the community

Answers the question “Which project alternative provides the best bang for
the buck, in total and by stakeholder group?”

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Financial Impacts: Tip of the Iceberg

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Economic Impacts: Below the Surface

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See the Whole Picture

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 Real World Example

Tropicana Field Redevelopment 7.5

M sqft

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Questions TBL-CBA Can Help Answer

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Business Case Metrics
Net Present Value (NPV)
➢ The net value of an investment, calculated as benefits less costs, with
both expressed in present-value monetary terms
➢ Gives scale of value for project alternatives
Benefit to Cost Ratio (BCR)
➢ The overall “value for money” of a project, expressed as the
ratio of the benefits of a project relative to its costs, with
both expressed in present-value monetary terms
➢ If BCR >1.0, then ‘value for money’.
Internal Rate of Return (IRR)
➢ The IRR finds the discout rate that would make NPV = 0, if
the current discount rate is lower than IRR the project has
an NPV > 0 24
LEED Pilot Credits for Informing Design

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Informing Design LEED Pilot Credits

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Informing Design by Major Credit Category Using Triple
Bottom Line Analysis - INpc122
INTENT:
To demonstrate the economic, social, and environmental value of LEED
design strategies related to major LEED credit categories, using empirical
evidence to inform the design process through TBL-CBA

REQUIREMENT:
Conduct a TBL-CBA on at least two LEED credits in two LEED credit
categories

Link to USGBC Page

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Informing Design Using Triple Bottom Line Analysis -
SSpc113
INTENT:
To demonstrate the economic, social, and environmental value of LEED
design strategies for specific LEED credits. Must include: Indoor Water Use
Reduction, Outdoor Water Use Reduction & Optimized Energy Performance

REQUIREMENT:
Identify the financial, social, and environmental value of at least six LEED
credits in aggregate, in any credit category

Link to USGBC Page

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Additional Information
● If applying for both pilot credits, you need to use 10 unique credits, the
overlapping ones will only count towards one

● Each of the credits selected for analysis must be be submitted for

approval for the project pursuing this pilot credit in advance

● Must also include the monetized value for at least five social or
environmental costs or benefits e.g. reduced air pollution or water use

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Sources of Information
● The White House – Office of Management and Budget
http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-
4.pdf (Pg. 14 onwards)
● US Environmental Protection Agency
http://www.epa.gov/sustainability/analytics/benefit-cost.htm
● Treasury Board of Canada
https://www.tbs-sct.gc.ca/rtrap-parfa/analys/analys-eng.pdf
● US Department of Transportation
http://www.dot.gov/tiger/guidance
● Federal Aviation Administration
http://www.faa.gov/airports/aip/bc_analysis/
● Federal Emergency Management Agency
http://www.fema.gov/media-library/assets/documents/18870
● US Army
http://asafm.army.mil/Documents/OfficeDocuments/CostEconomics/guidances/cba-
gd.pdf 30
The Indeed Tower Case Study

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Indeed Tower:
Pursing rigor to measure impact

Jill Kurtz, AIA, LEED AP, SEED

AP

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The Realities of the Business Case for Sustainable
Buildings

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Disconnect Between Business Case and Reality
Study Data Set Effect Effect Size

MIT Real Estate Compstak, GBIG, Fitwel 4.4% to 7% increase for

Rent per square foot
Innovation Lab (2020) and WELL provided data healthy buildings

4.6% rent increase

4.3% occupancy
Rental Income,
Leskinen et. al. (2020) 71 peer reviewed papers increase
Occupancy, Sales Price
14.1% sales price
increase

UK BCIS database
Chegut et. al. (2019) Project cost 6.5% cost premium
(~18,000 buildings)

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World Green Building Trends 2021

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 Business Cases In Application: Studio City Gym
Project Details

General Information
Client: City of LA + BuroHappold
Size: 12,000 sq ft
Building type: Recreation Center
Location: Los Angeles, California

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Business Cases In Application: Studio City Gym

Project Details TBL-CBA Outcomes

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Business Cases In Application: Studio City Gym
Key Metrics
TBL-CBA Outcomes

Financial Return on
229.3%
Investment

Simple Payback Period 10 years, 3 months

Discounted Payback Period 11 years, 11 months

Benefit to Cost Ratio 6.7

Net Present Value per

$224.14
Square Foot

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Business Cases In Application: Studio City Gym

Saving 5,503 tonnes CO2e is

equivalent to...

7,187
Acres of forest in one year
932
Homes of electricity use
for one year
$214,000
Societal benefit

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 THANK YOU

Defining Value in Sustainability

Informing Design Through Economic Analysis