Cost Benefit Analysis

COST BENEFIT ANALYSIS OF GREEN BUILDING
SEMINAR REPORT I
AKASH SINGH
BEM/631
DEPARTMENT OF BUILDING ENGINEERING & MANAGEMENT
SCHOOL OF PLANNING AND ARCHITECTURE

NEW DELHI - 110002

AKASH SINGH| BEM\631 | SPA, New Delhi.

TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION, SYNOPSIS & OVERVIEW OF TOPIC
1.1 INTRODUCTION
1.2 BACKGROUND
1.3 ISSUE OF COST
1.4 NEED FOR STUDY
1.5 AIM
1.6 OBJECTIVE
1.7 METHODOLOGY
1.8 SCOPES AND LIMITATION
1.9 OUTCOME OF THE STUDY
CHAPTER 2: LITERATURE REVIEW

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2.1 INTRODUCTION
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2.2 UNPUBLISHED THESIS AND SEMINAR

2.2.1 COST BENEFIT ANALYSIS OF GREEN HOUSING PROJECT FROM A DEVELOPERS PERSPECTIVE
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2.2.2 COST BENEFIT ANALYSIS OF GREEN BUILDING
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2.2.3 COST BENEFIT ANALYSIS OF SPRCULATIVE GREEN OFFICE PROJECT: CREATING INCENTIVE FOR THE 8
THE DEVELOPERS
2.2.4 GREEN BUILDING PROPOSITION FROM A DEVELOPERS PERSPECTIVE
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2.3 PUBLISHED BOOKS
2.3.1 COST OF GREEN REVISITED
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2.3.2 GREEN BUILDING COST AND FINANCIAL BENEFITS
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2.4 JOURNALS AND PAPERS
2.4.1 GREEN HOUSING REVIEW, RATING SYSTEM AND INCENTIVE
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2.4.2 CLIMATE CHANGE, SUSTAINABLE DEVELOPMENT AND INDIA
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2.4.3 ENERGY EFFICIENCY IN GREEN BUILDING- INDIAN CONCEPT
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2.5 CODES AND STANDARDS
2.5.1 LEED 2011 FOR INDIA
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2.5.2 ASHRAE STANDARD 90.1 2007
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2.5.3 ENERGY CONSERVATION AND BUILDING CODE (ECBC)- 2007
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2.5.4 GREEN BUILDING RATING SYSTEM- GRIHA
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2.6 SUMMARY
CHAPTER 3: SUSTAINABILITY AND GREEN BUILDING RATING SYSTEM

3.1 INTRODUCTION
3.2 GENERAL DESCRIPTION
3.2.1 SUSTAINABLE CONSTRUCTION
3.2.1.1 ATTRIBUTES OF SUSTAINABLE CONSTRUCTION
3.2.2 GREEN BUILDING
3.2.3 NEED OF GREEN BUILDNG

3.2.4 IMPACT OF GREEN BUILDING ON THE ECONOMY
3.2.5 GREEN BUILDING IN INDIA
3.2.5.1 THE POLICY FRAMEWORK
3.2.5.2 CERTIFICATION AND RATING SYSTEM
3.2.5.2.1 GRIHA

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3.2.5.2.2 SVA-GRIHA
3.2.5.2.3 LEED INDIA
3.2.5.2.4 ECO-HOUSING
3.2.5.2.5 STAR RATING PROGRAMME FOR BUILDING
3.2.5.3 MARKET UPDATE
3.2.6 GRIHA
3.2.6.1 CONTEXT
3.2.6.2 BENEFITS
3.2.6.3 CRITERIA OF EVALUATION
3.2.7 SELECTION OF GREEN BUILDING RATING SYSTEM
3.3 INTRODUCTION TO THE OBJECT OF ANALYSIS
3.4 SUMMARY

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Chapter 1:
INTRODUCTION, SYNOPSIS & OVERVIEW OF TOPIC

1.1 Introduction
The first wave of high-performing, green building arose as a response to demand for energy
and resource efficiency. Times have changed, and strengthened by the advent of green
building rating tools, the industry now recognizes that green buildings deliver much more
than energy efficiency alone. It also understands that green buildings must be viewed
holistically - that energy efficiency cannot come with a price of reduced fresh air and poor
indoor environmental quality, or high water consumption. Buildings must be examined in the
context of their impact on the local, natural and built environments - and their neighbors.
While green buildings have well- documented environmental benefits, we have made a
conscious decision to focus this report on the economic and social benefits of green building.
The green building movement has matured over time, and a deeper understanding of the
triple bottom line value of green buildings has emerged, shifting the emphasis from planet
to people and profit. Consequently, the conversation is now geared around how green
buildings deliver on economic priorities such as return on investment and risk mitigation and
on social priorities such as employee productivity and health.
1.2 Background

Green or sustainable buildings use key resources like energy, water, materials, and land
much more efficiently than buildings that are simply built to code. They also create healthier
work, learning, and living environments, with more natural light and cleaner air, and
contribute to improved employee and student health, comfort, and productivity. Sustainable
buildings are cost- effective, saving taxpayer dollars by reducing operations and maintenance
costs, as well as by lowering utility bills.
1.3 Issue of Cost

While there seems to be consensus on the environmental and social benefits of green building,
there is a consistent concern, both within and outside the green building community, over the
lack of accurate and thorough financial and economic information. Recognizing that the cost
issue was becoming more and more of a prohibitive factor in the mainstreaming of green
building not only within California but across the country, several members of the Task Force
funded an Economic Analysis Project to determine more definitively the costs and benefits of
sustainable building. Sustainable buildings generally incur a green premium above the costs
of standard construction. They also provide an array of financial and environmental benefits
that conventional buildings do not. These benefits, such as energy savings, should be looked


at through a life cycle cost methodology, not just evaluated in terms of upfront costs. From a
life cycle savings standpoint, savings resulting from investment in sustainable design and
construction dramatically exceed any additional upfront costs.
1.4 Need for the Study

As recently as 15 years ago, the environmental impact of business decisions barely registered
in the boardroom. The environment was regarded by most businesses as at a best a fringe
issue. Today, the environmental concerns are front and center in the boardroom, reflecting a
radical change in priorities in society as a whole.
It is no secret that green is big hit in the building sector. Over the last ten years, green
building has moved from a fringe concept to a powerful force for market transformation. The
success of green building is due, in parts, to an increasingly well-understood value
proposition: Green buildings can deliver higher occupancy rates, lower tenancy turnover,
higher rents, greater occupant comfort and productivity, and lower total cost of ownership. In
many situations, it may also be possible for real estate portfolio managers to use green
building practices as a cost-effective part of their firms risk management strategy.
Consumers have shown that they are ready and willing to pay for these features, particularly
when claims of builders and developers are backed up with independent certification such as
LEED India and GRIHA. These factors have repeatedly been shown to make sense for
individual building, and a no. of progressive firms are beginning to consider green building
opportunities for entire real estate portfolios.
Green is not a niche, but a future way of doing a business but most commercial market
participants are driven, not by culture, but by economics. Technology and management have
continued to advance and so it is in this context of a changing world that we provide an
update on research into the pay off from greener building for owners and tenants.
Thus there lies a real need to look at the feasibility of the green building projects, not only at
the economic benefits of saving on energy costs, but on higher rent returns, sales offers, lower
operational costs, secured greater occupancy, international recognition as well and moreover
impact on environment. We need to recognize the many unique and tangible benefits a green
building might offer.
1.5 Aim
The aim of the seminar will be to perform comparative Cost-benefit analysis to evaluate
financial feasibility, capital cost premium and operational cost saving of speculative
green office project.


1. In this regard, the research aims at obtaining the incremental capital expenditure of
making a building green for achieving 5 star rating of GRIHA certification.
2. This seminar work, thus, will also develop a business proposition for the developers to
make them more interested for investing in green buildings
3. It will also take into account the incentives already available in the Indian Context for
builders and developers and will provide recommendations for further modification and
additions to the same.
1.6 Objectives

The objectives of seminar are as follows:
1. To identify, explore and validate entrepreneurial advantages and disadvantages of green

building Incremental capital expenditure reduced operational expenditure, payback
period calculation, higher rental value, improved productivity and better occupant health.
2. To identify and quantify tangible and Intangible benefits of Green building .
1.7 Methodology
1.
2.
3.
4.
5.
6.
Define the need and requirement of green building.

Advantages of green building
Literature study of green building.
Identify a building, applying for a green rating system.
Cost escalation due to green nature.
Develop a business model for the developers so that they dont suffer any loss due
to induction of green practice.
1.7 Scope and Limitations

The scope of the seminar is defined as follows:
1. Comprehensive study of sustainable construction and green building.

2. Detailed study of GRIHA-TERI building rating system.
3. Detailed study of financial components of a green project based on the following
environmental categories:
Site planning
Building envelope design
Water and waste management


Selection of ecologically sustainable material
Indoor environmental quality
Analysis of incremental cost of making a project green.
4. Study of cost-benefit analysis of the above mentioned system for conventional office
building and speculative green office project.
5. Comparative study of capital expenditure, operational expenditure and payback period for
different level of GRIHA certification.
1.8 Outcome of the Study

The seminar aims to achieve the following outcomes:
1. Generic understanding of the cost-benefit analysis concept and methodologies with
special emphasis on major subheads of GRIHA rating system.
2. Cost analysis of a conventional commercial building segregating the same into specific
subsystem which fall under the scope of the developer.
3. Implementation of the cost-benefit analysis method to analyze cost of the similar specific
subsystem for different categories of GRIHA rating and comparison with the respective
conventional system in terms of economy to derive the payback period and annual cost
saving.
4. Derivation of thumb rules in the form of recommendation for developers to adopt green
building technology to achieve environmental and cost-benefits.


Chapter 2:
LITERATURE RIVIEW

2.1 Introduction

This seminar chapter contains the brief summarization of the references that have contributed
to this seminar work. The references include both published, un-published as well as e-journal
from different websites. It also includes several standard and guidelines of green building
sustainable construction and energy efficiency.
2.2

Unpublished Thesis & Seminars
2.2.1 COST BENEFIT ANALYSIS OF GREEN HOUSING PROJECT FROM A

DEVELOPERS PERSPECTIVE. (Joshi, 2011)

The thesis explains the financial viability of the Green housing Project and aims at identifying
the benefits of these to validate the entrepreneurial advantage from a developers perspective.
This thesis formulates an integrated business proposition for green housing projects to
maximize the benefits from the developers standpoint.
INFERENCES
This thesis critically analyzes the additional cost requirement for various green building
proposals (LEED Platinum, Gold, Silver and Certified) for a green housing project.
Relevance with Respect to this Seminar
This thesis is relevant to collect information regarding the methodology to evaluate the
environmental and economic aspects of green building from a developers point of view.
2.2.2 COST BENEFIT ANALYSIS OF GREEN BUILDING (Vishwakarma, 2009)

The seminar explains the financial cost benefit feasibility of a green office building. Firstly
this seminar explains the different pros and cons of different project evaluation criteria and to
decide the appropriate technique for the financial feasibility calculation of a green office
building. It also quantifies the cost and benefit of a particular case study.
INFERENCES
The seminar helps in deciding the most optimum method of project evaluation and the
appropriate technique for determining the financial feasibility of a green office building.

Relevance With Respect To This Seminar

This seminar is a good source of relevant data related to cost of different rated green building.
The cost data of several green building components with respect to LEED Green Building
Rating System can be used to compare it with GRIHA cost component.
2.2.3 COST BENEFIT ANALYSIS OF A SPECULATIVE GREEN OFFICE
PROJECT: CREATING INCENTIVE FOR THE DEVELOPER (Dutta, 2014)

The thesis has two parts, the first part investigates and evaluates green Strategies as a
separate investment within a construction project. A comprehensive cost analysis is
undertaken for each level of LEED certification. The second part explains and evaluate the
tangible financial benefits from the developers standpoint, such as reduced energy and water
consumption, higher rental value etc.
INFERENCES
The thesis apart from cost component calculation also summarizes a list of green features and
strategies that can be adopted in commercial office building by potential developers to reduce
the green cost premium of green building and receive substantial amount of operational cost
saving over the life cycle of a building.
This thesis defines a good methodology for the cost benefit analysis plus it deals with cost
component of green strategies and architectural & civil component as a separate entity, which
can be used, in this seminar for comparative analysis

2.2.4 GREEN BUILDING PROPOSITION FROM A DEVELOPERS PERSPECTIVE
(kundu, 2010)
This thesis is a detail study of green building development in India. In this paper green
building concepts and different green building rating system are explained in the earlier
chapters. In subsequent chapter four office building are critically appraised and different
solution to get LEED rating from the Platinum to Certified for each building case is proposed.
Finally the research work proposes a business model for green office buildings from a
developers perspective and analyses the sustainable strategies to develop a green building
rating system relevant to Indian context.
INFERENCE
The thesis helps to calculate the cost of different component (civil, electrical, plumbing,
HVAC, civil and consultancy fees) per sqft. Of build up area. Apart from the cost calculation
it also helps in comparison of additional cost requirement for making a building LEED

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(Platinum, Gold, Silver or Certified) rated.
This thesis is relevant for collecting data related to cost of different rated green buildings. The
cost data of several green building components can be used in the current thesis work. The
component of green building can be studied from this thesis
2.3 Published Books
2.3.1 COST OF GREEN REVISITED (Langdon, 2007)

In this book its proved that there is no significant difference in average cost for green
building as compared to non-green building. Many project teams are building green building
with little or no added cost, and with budgets well within the cost range of non-green building
with similar programs. This book starts with cost analysis of similar building where LEED
was not considered during design. The building types analyzed included the three previously
evaluated academic building, laboratories and libraries and two new types community
centers and ambulatory care facilities.
Cost analysis of academic building: A total of 60 academic classroom building 17 LEED
seeking and 43 NON LEED were analyzed. It can be said the Gold projects by and large
seemed to have kept costs low by using simple approaches to sustainability, rather than
adding technology to achieve green.
INFERENCES
Four key conclusion drawn from the analysis of construction cost for LEED seeking versus
and non-LEED seeking projects:
There is a very large variation in cost of building, 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.
Relevance with respect to this Seminar
This book helps in re-examining the feasibility and cost impact of sustainable design in the
light of increased market adoption. How to achieve the credits and what could be tentative
cost of achieving those credits and points can be used in the present thesis work.
2.3.2 GREEN BUILDING COST AND FINANCIAL BENEFIT (George Cats, 2006)

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This report was prepared I partnership with the USGBC and California sustainable building
task force for 40+ California state agencies. As per this report, green building provide
financial benefit that conventional building do not. These benefit include energy and water
saving, reduced waste, improved indoor environment quality, greater employees
comfort/productivity, reduced employee health costs and lower operations and maintenance
costs. This paper focuses on two of these benefits: lower energy costs, and health and
productivity benefits. In the most comprehensive analysis of the cost and benefits of the green
building conducted to date, this report finds that the minimal upfront investment of two
percent of construction costs typically yields life cycle saving of over ten times the initial
investment. The benefits of building green include cost saving from reduced energy, water,
and waste, lower operation and maintenance cost: and enhanced occupant productivity and
health.
INFERENCES
This report uses a life cycle costing (LCC) approach to evaluate and integrate the benefits;
costs associated with sustainable buildings and thus calculate the current value of green
buildings and components on a present value (PV) or net present value (NPV) basis.
Relevance with respect to this seminar

The study is relevant to this thesis as it compares green building with conventional buildings
and intends to derive the feasibility and cost impact of these buildings compared to the
conventional ones and thus derives at a minimal upfront investment using Life Cycle Costing
approach.
2.4 Journals and Papers

2.4.1 GREEN HOUSING REVIEW, RATING SYSTEM AND INCENTIVES (Shah,
2007)
This article explains various issues and the rating system for the green developments. The
current evaluates the concept of the sustainable construction and raises the issues related to
promote the sustainable development. This work will help to form the strategies for
promoting sustainable development and analyzing the green issues raised by various agencies.
2.4.2 CLIMATE CHANGE, SUSTAINABLE DEVELOPMENT AND INDIA (jayant

sathayal, 2009)
This paper describes about the climate changes and its implication on food production, water
supply, healthy, energy, etc. Climate change, and raises the issues related to promotion of
sustainable development and analyzing the green issues raised by various agencies.

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2.3.3 ENERGY EFFICIENCY IN GREEN BUILDING-INDIAN CONCEPT (Khan,

2013)
This technical paper discusses the role of energy efficiency in green building in Indian
scenario to reduce the energy consumption and environmental degradation through green
house gas (GHG) emission. The possibility and benefits of harmonizing governmental and
private-sector schemes are also discussed.
2.5 Codes and Standards

2.5.1 LEED 2011 for INDIA (council, 2011)
This code mainly covers the scope of a developer to design and construct the structural shell,
building envelope, services and circulation cores and common facilities (excluding interior
works which is designed and constructed by multiple tenants after occupancy)
2.5.2 ASHRAE STANDARD 90.1-2007 (American society of heaing, 2007)

This code is a good source of information to understand the health and environmental benefits
of green building over conventional ones
2.5.3 ENERGY CONSERVATION & BUILDING CODE (ECBC) - 2007

(energy conservation code for residential and commercial building, 2007)
The code helps to understand the local and state government initiatives to be taken in green
building design.
2.5.4 GREEN BUILDING RATING SYSTEM- GRIHA (TERI, 2011)

The code helps to understand the basic components of the rating system, the categorization or
subheads for credits accreditation and Similarities & differences with other rating system .

2.6 Summary

The literature review facilitates to develop the framework for the research works of this
seminar. It helps to acquire the knowledge about the cost-benefit analysis and its various
effective tools and techniques to be applied in green building technologies in order to derive
at effective environmental, social and financial benefits.

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Chapter 3:
Sustainability &
Green Building Rating System

3.1
Introduction

Green building (also known as green construction or sustainable building) refers to both a
structure and the using of processes that are environmentally responsible and resourceefficient throughout a building's life-cycle: from siting to design, construction, operation,
maintenance, renovation, and demolition. In other words, green building design involves
finding the balance between homebuilding and the sustainable environment. This requires
close cooperation of the design team, the architects, the engineers, and the client at all project
stages. The Green Building practice expands and complements the classical building design
concerns of economy, utility, durability, and comfort.
3.2
General Description

Sustainability is one of the worlds most talked about but least understood words. Its
meaning is often clouded by differing interpretations and by a tendency for the subject to be
treated superficially. For most companies, countries and individuals who do take the subject
seriously the concept of sustainability embraces the preservation of the environment as well
as critical development-related issues such as the efficient use of resources, continual social
progress, stable economic growth, and the eradication of poverty.

3.2.1 Sustainable Construction

Sustainable construction aims to meet present day needs for housing, working environments
and infrastructure without compromising the ability of future generations to meet their own
needs in times to come. It incorporates elements of economic efficiency, environmental
performance and social responsibility and contributes to the greatest extent when
architectural quality, technical innovation and transferability are included.
Sustainable construction involves issues such as the design and management of buildings;
materials performance; construction technology and processes; energy and resource efficiency
in building, operation and maintenance; robust products and technologies; long-term
monitoring; adherence to ethical standards; socially-viable environments; stakeholder
participation; occupational health and safety and working conditions; innovative financing
models; improvement to existing contextual conditions; interdependencies of landscape,
infrastructure, urban fabric and architecture; flexibility in building use, function and change;
and the dissemination of knowledge in related academic, technical and social contexts.
3.2.1.1 Attributes of Sustainable Construction

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Hill and Bowen have identified four attributes of sustainability social, Economic,
Biophysical and Technical.
o SOCIAL SUSTAINABLITY
Improve the quality of Human life, including poverty alleviation.
Make provision for social self-determination and cultural diversity in development
planning
Protect and promote human health through a healthy and safe working
environment
Implement skill training and capacity enhancement of disadvantaged people
Seek fair or equitable distribution of the social costs of construction
Seek equitable distribution of the social benefits of construction.
Seek intergenerational equity.
o ECONOMIC SUSTAINABILITY
Ensure financial affordability for intended beneficiaries.
Promote employment creation and, in some situations, labour intensive
construction.
Enhance competitiveness in marketplace by adopting policies, and practices that
advance sustainability.
Use full-cost accounting and real cost pricing to set prices and tariffs.
Choose environmentally responsible suppliers and contractors.
Invests some of the proceeds from the use of non-renewable resources in social
and human-made capital, to maintain the capacity to meet the needs of future
generation.
o BIOPHYSICAL SUSTAINABILITY
Extract fossil fuels and minerals, and produce persistent substance foreign to
nature, at rates that are not faster than their slow redeposit into the earths crust.
Reduce the use of the four generic resources used in construction, namely, energy,
water, material and land.
Maximum resource reuse and /or recycling
Use renewable resources in preferences to non-renewable resources.
Minimize air, land and water pollution at global and local levels.
Create a healthy, non-toxic environment.
Maintain and restore the earths vitality and ecological diversity.
Minimize damage to sensitive landscapes, including scenic, cultural, historical and
architectural.
o TECHNICAL SUSTAINABILITY
Construct durable, reliable and functional structures.
Pursue quality In creating the built environment.
Use serviceability to promote sustainable construction.
Humanize larger building.

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Fill in and revitalize existing urban infrastructure with a focus on rebuilding

mixed-use pedestrian neighborhoods.
3.2.2 Green Buildings

Green Buildings- subset of sustainable building: Designing, constructing, operating and
maintaining buildings involve large amount of energy, water, and other resources and create
significant amount of waste. The building process also impacts the environment and
ecosystem surroundings the building site. Even after buildings are constructed, occupant faces
a host of challenges as they try to maintain a healthy, efficient and productive work
environment. Green buildings address these challenges by promoting energy and resource
efficiency, waste reduction and pollution prevention practices, indoor air quality standards,
and other environmental initiatives for both new construction and existing buildings.
Green building, also known as green construction or sustainable building, is the practice of
creating structures and using processes that are environmentally responsible and resource
efficient throughout a building life-cycle: from sitting to design, construction, operation,
maintenance, renovation, and deconstruction. This practice expands and complements the
classical building design concerns of economy, utility, durability and comfort.
Although new technologies are constantly being developed to complement current practices
in creating greener structures, the common objective is that green buildings are designed to
reduce the overall impact of the built environment on human health and the natural
environment by:
Efficiently using energy, water, and other resources.
Protecting occupant health and improving employee productivity.
Reducing waste, pollution and environmental degradation.
Indian Green Building Council defined the term Green Building as:
A Green Building Is one which uses less water, optimizes energy efficiency, conserves
natural resources, generates less water and provides healthier space for occupants, as
compared to a conventional building.
The Energy and Resource Institute, green rating for integrated habitat assessment (TERIGRIHA) defines Green building as A green building depletes the natural resources to
the minimum during its construction and operation
A Green Building should create delight when entered, serenity and health when
occupied and regret when departed. Natural Capitalism
3.2.3 Need of Green Buildings

The construction industry in India is one of the largest economic activities that contributes to
the nations development. India has been witnessing tremendous growth in building and

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construction sector for past 5 years. As it is healthy trend, it is putting enormous pressure on
the resource demand. Buildings annually consume more than 20% of the electricity used in
India. Development shifts land usage away from natural, biological-diverse habitats to
hardscape that is impervious and devoid of biodiversity. The far-reaching influence of the
built environment necessitates action to reduce its impact.
The stakeholders of the industry have a vital role to play in protecting the environment. Green
building practices can substantially reduce or eliminate negative environmental impacts and
improve existing unsustainable design, construction and operation practices. As an added
benefit, green design measures reduce operating costs, enhance building marketability,
increase worker productivity and reduce potential liability resulting from indoor air quality
problems.
Studies of workers in green buildings reported productivity gains of up to 16%, including
reductions in absenteeism and improved work quality, based on people friendly green
design. In other words, green building design has environmental, economic and social
elements that benefit all building stakeholders, including owners, occupants and the general
public.
3.2.4 Impact of Green Building on the Economy

If green building were to become widespread, they would impact the economy in a substantial
way. In fact, due to huge resource savings, such as energy, materials, waste, and labour, green
buildings would probably provoke a restructuring of the present Indian economy. However,
the results are far too complex to study and analyze. The economy could be affected by so
many factors, that the association of the impact of green buildings and economy ups and
down is impossible to establish. It goes also without saying that any positive impact on the
economy by green building will result in lower taxes and better value for money for the
consumer.
However, another way to approach this issue is relating the impact of green building to the
Indian Federal budget. For instance, if the size of energy consumption decreases by 20% we
could assume that the same proportions would also decrease the budget of the Bureau of
Energy Efficiency (BEE). This is of course just an assumption based on estimations; however,
it would give an idea of the direct savings the taxpayers would enjoy. This could also be
applied on many others Indian department. The total savings on the budget would then be
reflected by lower income and property taxes.
This approach would represent the perspective of the government in promoting green
development. In other terms, looking at the problem at the macro scale, the Government could
implement incentives programs for developers, using federal funds, to save on the annual
federal expenditures. This would also be followed by huge social benefits.
3.2.5 Green Building in India

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When the Indian Green Building Council (IGBC) was established in 2001, one green building
with a floor area of 1,858 sqmt. Marked the beginning of green building in the country.
Today, more than 2,100 IGBC-certified green buildings occupy almost 140 million m2
(IGBC). The IGBC has 1,413 members and around 20,000 professionals in the construction
sector have been trained in its rating system. In 2011, the total floor area of green buildings in
India was higher than in Brazil, Canada, China and South Korea (Watson, 2011), although
green buildings account for a small proportion of the total building stock and a small share of
the Indian construction market.
According to industry analysts, the market for green building in India is expected to grow
three-fold from $10 billion in 2011 to $30 billion in 2014 (Iyer, 2011). The key elements of
this expanding market are outlined in this section, which ends with a discussion of the main
drivers of and barriers to green building in India.
3.2.5.1 Certification and rating schemes

Green building rating systems have become a popular means to encourage the construction
sector to adopt sustainable practices by stimulating market and consumer interest. They
measure the environmental performance of a building throughout its lifetime. The total score
is determined according to the number of measures adopted. Developers are using these
voluntary rating systems to advertise green buildings. National and local governments can
also build upon voluntary rating systems to encourage green building practices through fiscal
and other incentives.
Rating systems are designed to evaluate the performance of buildings over their lifetime, i.e.
from the pre-construction phase to operation. The basic parameters usually considered fall
into three main categories: sustainable site selection, planning and construction and the
buildings operation and maintenance (O&M). A rating system usually consists of a set of
criteria related to the various parameters of design, construction and building operation. Each
criterion has pre-assigned points, and the final rating of the project is decided on the basis of
the total number of points awarded.
The two main rating systems in India are the Green Rating Integrated Habitat Assessment
(GRIHA) and Leadership in Energy and Environment Design (LEED). The LEED India
Programme was the countrys first such initiative and is operated by the IGBC. Both GRIHA
and LEED follow a point- based evaluation system. The IGBC also has other rating systems
for homes, towns, special economic zones, factories and the landscape.
3.2.5.1.1
Green Rating for Integrated Habitat Assessment (GRIHA)
Green Rating for Integrated Habitat Assessment (GRIHA) is a national rating system jointly
developed by The Energy and Resources Institute (TERI) and the Ministry of New and
Renewable Energy (MNRE). GRIHA is a five-star rating system for commercial, institutional
and residential green buildings ranging from 2,500 m2 to 150,000 m2.

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One of the unique features of the GRIHA rating system is that it consolidates all the relevant
codes and specifications, such as the NBC, the ECBC, the BEE energy-Labelling Programme
for appliances, environmental clearance norms for large construction projects, and others. It
therefore helps in enforcing these regulations even if they are not mandatory, making it more
suitable in the Indian context. It also distinguishes between non-air-conditioned and partially
air-conditioned buildings in the countrys five different climatic zones, and emphasizes
energy-efficient techniques such as passive solar heating. GRIHA also looks at the embodied
energy in the materials used, in addition to operating energy-efficiency, design and siting
parameters.
The GRIHA system has slowly gained popularity due to awareness-raising programs and the
promotion of GRIHA in government buildings. During the 11th FYP period (20072012),
2
117 projects with a total built area of 4.98 million m , including 81 projects from government
2
departments with a 3.22 million m total built area, were registered for GRIHA certification.
In all there are 350 GRIHA-registered buildings, amounting to a footprint of approximately
2
11 million m .
The Central Public Works Department of India has adopted GRIHA as its official Green
Building Standard (Kumar, 2010b). Under this Programme, all new central government and
public-sector buildings will be constructed to meet the GRIHA three-star rating (Kumar,
2010).
3.2.5.2.2 Small versatile Affordable GRIHA (SVAGRIHA)
A TERIADaRSH initiative, SVAGRIHA, is an off-shoot of the GRIHA system designed for
small stand-alone buildings like houses, commercial offices, motels and dispensaries, with a
cumulative built area of 2,500 m2 or less. It is currently in its pilot phase. An example of a
SVAGRIHA-rated building is in Nasik, the first rated building in Maharashtra, built by the
residential developer Green Spaces.
3.2.5.2.3 Leadership in Energy and Environmental Performance (LEED)

India
This market-driven rating system is designed for new and existing commercial, institutional
and residential buildings. Specific LEED India programs include LEED India for New
Construction and LEED India for Core and Shell. LEED India certification is centered on
building design as opposed to building operation and therefore does not determine whether
green design actually results in better energy performance.
To date, 2,029 buildings have been registered under LEED India with certification granted to
362. The Confederation of Indian Industrys Godrej Green Building Council, Hyderabad, was
the first LEED-certified building in India.
3.2.5.2.4 Eco-Housing

19

The Eco-Housing rating system was initially developed for the city of Pune in 2004. It is now
being modified to address the variable requirements of Indias five distinct climatic zones.
This five-star rating system is specifically designed for residential buildings. Similar to
GRIHA, it also focuses on efficient building materials.
Currently, Eco-Housing assessment is being used by a number of developers in Pune, such as
Nyati Developers, Deepa Housing Society, Gera Development Pvt Ltd. and K. Raheja
26
Corporation. Four residential buildings in Pune are in the process of complying with the
27
Eco-Housing certification.
3.2.5.2.5 Star Rating Programme for Buildings

The BEE Star Rating Programme for Buildings aims to create a demand for energy-efficient
green buildings by giving them public recognition. This is the only rating scheme that grades
buildings only for their energy efficiency if they have a connected load of 500 kW. The
scheme has five categories of building offices, hotels, hospitals, retail malls and IT Parks
in the countrys five climatic zones. This scheme is currently invoked for air-conditioned and
non-air-conditioned buildings in two categories office buildings and business-process
outsourcing buildings in three climatic zones: warm and humid, composite and hot and dry.
2
The Energy Performance Index (EPI) in kWh/m /year will be considered in rating the
building.
So far, only 123 commercial buildings have been labeled since its launch in 2009. However,
this scheme is currently in its pilot stage and will subsequently be extended to other climatic
zones and building types (Shnapp et al., 2013).
3.2.5.3 Market uptake

Despite the availability of several labelling programmes, uptake remains slow. This is
illustrated by the fact that there are only 594 LEED-certified buildings in India since its
inception in 2001. Most of the labelled buildings belong to a branch of government or large
corporations, indicating a lack of demand for labelled buildings in the residential sector. Due
to the governments active endorsement of GRIHA, a large proportion of certified buildings
are government-owned. LEED-certified buildings range from large corporate to office spaces,
factories and hotels. This lack of demand from residential buildings is illustrated by the poor
response of developers to the Government of Maharashtras project to fast-track planning
approval for certified property development projects by 18 months. Developers have applied
for certification for only 15 out of 300 projects since the announcement of this scheme in
2011.
Another critical issue is the actual performance of certified buildings. As these rating systems
are backed by government schemes and incentives, close monitoring of post-construction
performance is required. LEED does have a self-reporting data-collection system, but the
reliability of the data is uncertain. Accountable, reliable and transparent information about the
performance of the buildings is necessary.
Finally, the multiplicity of rating programmes can be confusing for consumers. There is a
need for greater awareness among consumers so that they can make intelligent choices with
regard to the rating systems and certified buildings. Competition among labels increases the

20

need for supporters to spend significant resources before the real-estate market can match the
value that labels offer.
3.2.6 GRIHA (Green Rating for Integrated Habitat Assessment)

3.2.6.1 The context
Internationally, voluntary building rating systems have been instrumental in raising awareness
and popularizing green design. However, most of the internationally devised rating systems
have been tailored to suit the building industry of the country where they were developed. In
India a US based LEED rating system is under promotion by CII Green Business Centre,
Hyderabad, which is more on energy efficiency measures in AC buildings. Keeping in view
of the Indian agro-climatic conditions and in particular the preponderance of non-AC
buildings, a National Rating System - GRIHA has been developed which is suitable for all
kinds of building in different climatic zones of the country. The system was initially
conceived and developed by TERI (The Energy & Resource Institute) as TERI-GRIHA,
which has been modified to GRIHA as National Rating System after incorporating various
modifications suggested by a group of architects and experts. It takes into account the
provisions of the National Building Code 2005, the Energy Conservation Building Code 2007
announced by BEE and other IS codes, local bye-laws, other local standards and laws. The
system, by its qualitative and quantitative assessment criteria, would be able to rate a
building on the degree of its greenness. The rating would be applied to new and existing
building stock of varied functions commercial, institutional, and residential.
3.2.6.2 Benefits
GRIHA- the National Rating System will evaluate the environmental performance of a
building holistically over its entire life cycle, thereby providing a definitive standard for what
constitutes a green building. The rating system, based on accepted energy and
environmental principles, will seek to strike a balance between the established practices and
emerging concepts, both national and international. The guidelines/criteria appraisal may be
revised every three years to take into account the latest scientific developments during this
period.
On a broader scale, this system, along with the activities and processes that lead up to it, will
benefit the community at large with the improvement in the environment by reducing GHG
(greenhouse gas) emissions, improving energy security, and reducing the stress on natural
resources.
Some of the benefits of a green design to a building owner, user, and the society as a whole
are as follows:
Reduced energy consumption without sacrificing the comfort levels
Reduced destruction of natural areas, habitats, and biodiversity, and reduced soil
Loss from erosion, etc.
Reduced air and water pollution (with direct health benefits)

Reduced water consumption

Limited waste generation due to recycling and reuse
Reduced pollution loads
Increased user productivity
Enhanced image and marketability
3.2.6.3 Criteria Of Evaluation

The criteria have been categorized as follows:
21

22
3.2.7 Selection of Green Building Rating System

The following subheads have helped to determine the benefits of GRIHA over other
rating system in India and proved crucial in selection of the rating system.

PROCESS: The GRIHA rating system uses an offline questionnaire-based approach. Once
the questionnaire has been completed, a report is generated that provides ratings, a list of
sustainability achievements, and recommendations for improvement. An independent thirdparty verifier (known as a Green Globes assessor) completes the task, which eliminates the
need for binders or templates, and is more adaptable to specific project requirements. LEED,
on the other hand, is very documentation-intensive, more complex, time consuming and
(ironically) is still a mostly paper based system.

TRANSPARENCY: GRIHA use prerequisites or minimum performance requirements.
However, what some might consider a disadvantage can actually mean that a building could
have better all-around performance, even if it is disqualified by LEED for not meeting a
minimum requirement. GRIHA awards points for implementing strategies, as well as for
outcomes, whereas LEED primarily allocates points for achieving a certain performance
level. Additionally, USGBC has come under growing criticism recently for keeping its LEED
process more closely held and internal than many stakeholders would like to see, especially
when it comes to adoption of LEED by governmental agencies.
COST: GRIHA has free associate membership, no appeal costs, and fewer registration costs.
It also reduces the costs of billable hours for LEED consultants on documentation. Therefore,
it is possible to certify under GRIHA for a lower cost than under LEED.
CRITERIA: GRIHA better integrates life-cycle thinking into its rating system through
sourcing of materials and the durability and adaptability of the building itself. Some
categories are emphasized differently in the two systems. For example, GRIHA emphasizes
energy use above all other categories while LEED allocates comparatively more points to
materials. This difference in emphasis may begin to shift somewhat, since LEED vision
(formerly LEED India-NC) incorporates more life cycle thinking than previous versions.

23
3.3
Introduction to the Object Of Analysis

An analysis of GRIHA certified projects shows that out of 675 registered projects most of the
buildings are either offices or commercial in nature, only a small percentage goes into
registration of residential projects.
Commercial real estate sector is in boom in India. Currently the total square footage of
commercial building in India is 659 million sq.mt. Which will increase to 1900 million sq.mt.
by 2030. In short, only 34% of the commercial sector is built till now, and the rest 66%
building stock is yet to be constructed which in turn will consume more energy and hence the
need to move towards green development will reach its peak in the next 15 years.
Its evident that most of the buildings that are going for green buildings are office
building.
Office building consumes consistent energy throughout the year and the pattern of
energy consumption is quite predictable.
Office building generally consumes lot of energy for lighting and ventilation which
can be addressed through making it green.
Office buildings generally have air conditioned space within it where energy savings
can be of substantial quantity if built as green building compared to its base or
conventional case counterpart.
Hence, commercial office building is considered as the object of study and analysis of the
seminar work.
3.4
Summary

This chapter contains the basic overview of green concepts and green building rating system
available in India. Based on the analysis of all rating system it selects GRIHA to serve the
purpose of this seminar and considering the current construction boom in the Indian
commercial sector, seminar selects Commercial Office Building as the object of further
research.

24
Chapter 4:

Tools to evaluate Cost and

Benefits of Green Buildings

4.1 Introduction

This chapter of the seminar report explains various methods to be adopted for analyzing
the cost and financial benefits of Green Building Projects. Cost benefit analysis involves
comparing the total expected costs of each option against the total expected benefits, to
see whether the benefits outweigh the cost, and are adjusted for the time value of money,
so that all flows of benefits and costs over time are expressed on a basis.
4.2 Need for Cost-Benefit Analysis

Cost benefit analysis is an economic decision making approach, used in the assessment of
whether a proposed project, is worth undertaking, or to choose between several alternatives
ones. Every owner wants a cost-effective building. In many respects the interpretation is
influenced by on individuals interest and objectives.
4.3 Methodology of Cost Benefit Analysis

General description of the project

Scope of the project
Possible Alternatives
Quantify costs
Quantify the benefits
Quantify Present Value (PV) for costs and benefits.
Find Net Benefits (NB = B-C) and cost benefit ratio (CBR = B/C)
Comparison of alternatives
If CBR> 1, project is financially viable.
4.4 Methods/Criteria of Project Evaluation

4.4.1

Project
25


A project is an investment activity where we expand capital resources to create a producing
asset from which we can expect to realize benefits over an extended period of time. Or a
project is an activity on which we will spend money in expectation of returns and which
logically seems to lend itself to planning, financing and implementation as a unit. A project
should have the following characteristics.
It should have a specific starting point and specific ending point.

Its major costs and returns are measurable
It should have a specific geographic location.
It should have a specific clientele group.
It should have a well-defined time sequence of investment and production
activities.
Methods for
Project
Evaluation
NonDiscounting
Criteria
Discounting
Criteria
Net Present
Value
4.4.2

Cost Benefit
Ratio
Internal Rate
of Return
Accounting/
Simple Rate
of Return
Payback
Period
Accounting/Simple Rate Of Return
The SRR is a commonly used criterion of project evaluation. It basically expresses the
average net profits ( Net Cash Flows ) generated each year by an investment as a percentage
of investment over the investments expected life. It is as
SRR = Y/I
Where Y= the average annual net profits ( after allowing depreciation) from the investment;
I= the initial investment
The calculated SRR should be compared with the investors Required Rate of Return (RRR) to
judge the profitability of the investment. The investment will be accepted if SRR= RRR,

26

otherwise it will be rejected. When the SRR of all the investment opportunities is greater than
the RRR of the investor, then the investment yielding the highest SRR should be selected.
4.4.3

Pay Back Period (PBP)
Payback Period is the length of time required for an investment to pay itself out. It is
computed as
PBP = I/E
When the projected net cash flow (E) are uniform or
nPBP = I/ En = 1
t=1
When the projected net cash flow are non-uniform,
Where I= the Initial Investment.
E= the projected net cash flow per year from the investment.
PBP= Pay Back Period expressed in numbers of years.
Individual investment are ranked according to their relative Pay Back period with the shortest
being the most favored. The acceptability of the investment is determined by comparison with
the investors Required Pay Back Period (RPP). Accept the investment when the PBP<RPP,
otherwise reject the investment. Although it is simple and easy to use, the PBP method has
two major weaknesses as a measure of investment worth.
(1) This method fails to consider earnings after the pay back period is reached.
(2) It fails to consider the differences in timing of cash flows.
4.4.4
Cost Benefit Ratio (CBR)/ Saving to Investment Ratio (SIR)
It is the ratio of present worth of benefits stream to present worth of cost i.e.
BCR = sum of the present worth of benefits / sum of present worth of cost.
Mathematically, it can be shown as
BCR =
Where,
Bn= Benefit in each Year
Cn= Cost in each Year
n= number of year.
!
!!!!"
! !"
!!!
(!!!)!
(!!!)!

27

i= interest ( discount ) rates.
The investment is said to be profitable when the BCR is one or greater than 1. This method is
widely used in economic analysis and not in private investment analysis.
4.4.5

Net Present Value (NPV)
Net present value is compared by finding the difference between the present worth of benefit
stream less the present worth of cost stream. Or it is simply the present worth of the cash flow
stream since it is a discounted worth of cost stream. Or it is simply the present worth of the
cash flow stream since it is a discounted cash flow measure of project worth along with
internal rate of return.
4.5 Quantification of Costs of Green Buildings

Cost of green buildings can be divided into three main categories:
Social cost
Environmental Cost
Economic Cost
However, for the ease of availability of data the major cost components of green Buildings
are divided into two main categories i.e. Capital Expenditure Components and Operational
Expenditure Components and benefits are analyzed based on these categories only.
4.5.1 Capital Expenditure Components

It is considered as the initial expenditure incurred at the early stage during the planning
construction phase of the project. These cost components are the major costs to bear by the
building developer.
4.5.1.1 Loan Cost (Interest Amount)

The cost of the loan is a combination of a number of expenses which may include an
application fee valuation fee and the interest to pay to the financial instates at a certain % rate
on Loan Amount.
Note: Independent of whether the building is green or not.

4.5.1.2 Land and Development

When buying a piece of raw land, there are several considerations, contingencies, and cost
associated with developing a property, clearing of site from trees, shrubs and ground cover .

28

i.
ii.
Cost of Land: It is the raw cost of the land, it dependant on the area the land is located.
It varies constantly. It included the cost of Registry and any other shadow price related
to the land.
Land and Site Development Cost: It is the cost of developing the site by clearing the
site creating road access, survey costs etc.
Note: Depends on whether the building is green or not.For sustainable site credits
Protect or Restore Habitat may cost extra.
4.5.1.3 Certification and Sanction Charges

i.
ii.
Authority Charges: The charges paid to the authority for registration of the land.
Sanction Certificates Charges: The charges paid to the authority for obtaining the
sanctioning of the design/plan.
iii.
Project Completion Certificate Charges: The charges paid to the authority for
obtaining the completion of the building, done after completion of the construction of
the building.
iv.
Horticulture Department Fees: The charges paid to the Horticulture department for
cutting any tree from any location of the site. The deforestation also costs.
Note : These charges are generally independent of whether the building is green or not.
v.
LEED Certification Charges: LEED India certification provides independent, thirdparty verification that a building project meets the highest performance standards. The
charges paid to the LEED Authority India (IGBC) for Certification of the Green
Building for achieving desired rating- Platinum,Gold,Silver,Cerified rating
4.5.1.4
Services Consultancy Fees
The charges paid to the consultant for rendering their services in the project at varios
Pre-Design, Design and Construction Stages.

i.
Planning and feasibility studies: The charges paid to the consultants for
rendering their services for judging the feasibility of the project.
ii.
Project Manager Fees: The charges paid to the Project Manager Firm for
rendering their services for managing the Construction of the Project.
iii.
Architect Fees: The charges paid to the Architects for designing and planning
the building and generating various drawings such as plans at different
lvels,elevation,sections,views etc. They are also paid for coordinating various
services drawing with their architectural ones.
iv.
Engineering Consultation Fees:The charges paid to the Engineers for
designing and planning the services in the building and generating various
drawings.
Plumbing
HVAC
Fire Fighting

29

Electrical
Interior Designer Fees: The fees paid to the interior designer for designing
and planning the interiors of the building and generating various drawings.
Landscape Architect Fees: The charges paid to the landscape Architect for
designing and approving the landscape for the exteriors of the building.
Urban Planner Fees: The charges paid to the Urban Planners for designing
and planning the services of designing the fabric of the building coordination
with other urban spaces. The townships required by Urban Planners.
Fit Out Fees: The charges paid to the Fit-Out officers for making sure that the
design is applied in accordance with the original planning after the building is
occupied.
Contractor Fees: The charges paid to the Contractor for his involvement in the
project. This is kept as contractors profit varying from 10-15% of the Total
Project Cost.
Overhead Expenses: It refers to an ongoing expense of operating a business
(also known as Operating Expenses rent, gas/ electricity , wages etc).The
term overhead is usually used to group expenses that are necessary to the
continued functioning of the building, but do not directly generate profits.
Overhead expenses include accounting fees, advertising,depreciatiom,
insurance, interest,legal fees, rent , repairs, supplies, taxes, telephone bills and
travel and utilities cost.
v.
vi.
vii.
viii.
ix.
x.

Note: Depending on the type of green certification these consultancies cost may
vary.

4.5.1.5 Building Cost

From detailed Bill of Quantities of a building project this cost can be derived directly. These
are the actual; costs of the materials, equipments and labor charges to execute the work.
i.
Construction Cost: Expense incurred by a contractor for labor, material,

equipment, financing, services, utilities, etc., plus overheads and contractors
profit.
Civil Work Cost: Cost of undergoing Civil Works.
Plumbing Work Cost: Cost of undergoing Plumbing Works.
Electrical Work Cost: Cost of undergoing Electrical Works.
HVAC Work Cost: Cost of undergoing HVAC Work.
Landscape Cost:Cost of undergoing Landscape Works.
ii.
iii.
iv.
Interior Cost: Cost of undergoing Interior Works.

Commissioning cost: Cost of Commissioning of the Building and its parts.
Inspection and testing: Cost of Inspection and Testing of the Building.

30

Note: Depending on the types of green certification these costs may vary. Use of high
efficiencies irrigation technologies, water efficient chillers, cooling towers, several
equipments will cost more for making building green. For HVAC to cater to better
indoor environmental quality, fresh air requirement, increased ventilation the cost will
be higher than conventional system.
In order to determine the cost of building green compared to conventional design, Greg Kats
studied several dozen building representatives and architects were contacted to secure the cost
of 33 green buildings from across the United States compared to conventional designs for
those same buildings.
The average premium for these green buildings is slightly less than 2%, or $3-5 / ft2,
substantially lower than is commonly perceived. The majority of this cost is due to the
increased architectural and engineering (A & E) design times modeling costs and time
necessary to integrate sustainable building practices into projects.
Generally, the earlier green building features are incorporated into the design process, the
lower the cost. The cost of green design has dropped in the last few years as the number of
green buildings has risen.
4.5.2 Operational Expenditure Components

It is considered as the annual operational expenditure incurred during the lifecycle of the
building. In case of green building these components can also be referred to as cost saving or
benefits, which provide return-on-investments to the developer or builder owner.
4.5.2.1 Annual Energy Cost Savings

A wide range of building design approaches and commercially available technologies can
help effectively minimize a buildings energy coasts. An important concept is energy-efficient
design is integrating the buildings architectural and mechanical features to minimize energy
use and reduce cost while maintaining comfort. This integration is best done during the very
early stages, when the cost effective holistic system can be designed. Although some energy
efficiency strategies result in slightly higher first cost, the resulting annual cost saving results
in lower lifecycle costs.
4.5.2.2 Annual Water Cost Savings

Water efficiency can be achieved using a number of technologies that lower indoor water
consumption (compared with the standard technologies available in the market), such as ultralow-flow showerheads and faucet aerators, waterless urinals, composting and dual- flush
toilets. Facilities can also lower potable water consumption by using non-potable water for
productive uses (e.g. using technologies that harvest rainwater or treat wastewater for re-use
in various other applications in the buildings or on the site), better energy systems,

31

recirculation water systems (instead of once-through cooling), leak detection are repair, and
sustainable landscaping.
4.5.2.3 Lower Costs Of Facilities Maintenance And Repair

Sustainable design aims to increase durability and ease of maintenance. For example, the
service areas within sustainable building should be designed with enough space to allow easy
access to mechanical equipment. Easy access will reduce the cost of scheduled maintenance,
repair, and eventual reduce the cost of scheduled maintenance costs using sustainable design.
4.6

Quantification of Benefits
Green Buildings provide financial benefits that conventional buildings do not. These benefits
include energy and water savings, reduced employee health costs and lower operations and
maintenance costs. Building owners and developers have very different approaches to valuing
greed buildings, which includes both tangible and intangible benefits, both for the building
itself and for the organization. Examples of tangible benefits includes the life cycle savings in
energy and water consumption from improved building energy performance, as well as an
improved market positioning resulting from building a green building non market measurable
benefits include intangibles such as public relations benefits to an organization or the prestige
of locating ones own business in a certified green building.
Following are the components of benefits that are available in making a building green.
4.6.1 Tangible Economic Benefits

Sustainable building typically have lower annual costs for energy, water, maintenance /
repair, churn (reconfiguring space because of changing needs), and other operating expenses.
Theses reduced cost does not have to come at the expense of higher first costs. Through
integrated design and innovative use of sustainable materials and equipment, the first cost of
sustainable design building can be the same as, or lower than that of a traditional building.
Some sustainable design features have higher first costs, but the payback period for the
incremental investment often is short and the lifecycle cost typically lower than the cost of
more traditional buildings.
4.6.1.1 Lower ( or Equal) First Costs

Sustainable design must begin at the conceptual stage of a project to realize the full benefits.
The first step is to form a design team including the owner ; architects; engineers;
sustainable design consultants; landscape designer; O & M staff; health , safety and security
experts; the general contractor and key subcontractors; cost consultants and value engineers;
and occupant representatives. This team needs to work together from the start, seeking an
integrated design. The team develops innovative solutions that meet energy, environmental,
and social goals while keeping costs within budget.

32
4.6.1.2 Reduces Cost For Site Development

As per sustainable site (SS) category, project site to be selected on a previously developed
land which will reduce the site development cost.
4.6.1.3
Reduced Cost For Air Conditioning By Reduced Heat Island
As per sustainable site (SS) category, Reduced Heat Islands Effects (both roof and non roof)
will contribute to reduce cooling load (Air conditioning cost) in building.
4.6.1.4 Reduced Transportation Cost For Low-emitting Vehicles, Cars

& VAN Pools
As per sustainable site (SS) category, building owners and occupants should be encouraged
to use low emitting vehicles, car pools and vans pools in order to reduce emission from
vehicles. Car pools and Van pool also helps in reducing the transportation cost of buildings
which can be converted into monetary values in the following ways:
TRANSPORTATION DEMOGRAPHICS
Car
-
30-40 %
Cycle -
00-05 %
Two wheeler - 15-25 %
Public Transport - 20-30 %

COST REDUCTION METHOD
90% of the staff using car should switch to Car Pooling,

Out of total 40 % Car users, only 10% Top Management people use Private Vehicles

COST CALCULATION
Assume Cost of using Car / km
= 8Rs
Assume the average Car user travels
= 50 Rs (round trip)
Total No of staff x .04 x 8 x 50 x 0.9
= Cost of Travel by individual Car
When 90% of the car users start using Car Pool,
1 car can hold 4 people conveniently from the some vicinity
Therefore, No of Car / Cabs = (Total No of Staff x 0.4 x 0.9) / 4
Assume Cost of using Car/ km (CNG)
= 2Rs
Assume the average Car user travels
= 60 km (round trips)
(Total No of staff x 0.4 x2 x60 x 0.9)/4
= Cost of Travel by Car Pool
Cost saving/ day via Car Pool = Cost of Travel by Individual Car Cost of Travel by
Car Pool
4.6.1.5 Reduced Cost for Water Consumption

33

As per Water Efficiency (WE) category, water efficiency landscaping will reduce the
amount of potable water consumption for irrigation, which in turn reduces the cost of water to
be taken from municipality. As storm water discharge is controlled, less installation and
maintenance cost will be required which results in Reduction in cost of laying and
maintenance of storm water lines. Use of water efficiency chillers reduces the make-up water
consumption. Use of treated waste water further reduces the potable water demand for AC
make up water. Water efficient fixtures reduce the potable water consumption resulting in
savings in potable water drawn from municipal lines.
4.5.1.6 Reduced Cost for Operational Energy Consumption

As per Energy & Atmosphere (EA) category, building system are designed, installed and
calibrated to operate as intended, increased level of energy performance reduces the energy
consumption. Use of renewable energy also reduces the electricity demand from grid.
Green buildings will save an operating costs for energy for years to come; with the increasing
price of oil and the prospect of peak period electricity prices zooming up again, it just makes
good sense to design the most energy-efficient building possible. An example can be an
technological introduction of a new material that will enhance the quality and quantity of the
production process and thereby reducing the energy consumption. Even with leases in which
the tenant pays all operating cost makes sense for landlords to offer tenants buildings with the
lowest possible operating cost.
Many green buildings are designed to use 25% to 40% less energy than required by current
codes (depending on the credit points achieved by it); some buildings even achieve higher
levels of efficiency.
4.5.1.7 Reduced Waste Generation

As per Material & Recover (MR) category, construction, demolition, and land clearing
debris from landfill disposal. Use of recycled materials reduces demand for virgin materials.
Reusable material are redirected to appropriate sites resulting in monetary gain. Use of local
and regional material will be cheaper and will reduce the environmental impact due to
transportation.
4.5.1.8 Savings in Light Energy Consumption By Using Day lighting

As per Indoor Environmental Quality (IEQ) category, use of increased day lighting reduces
the usage of artificial lighting, which consumes electrical energy resulting in savings.
4.5.1.9 Savings in Light Energy Consumption By Innovative Design

As per Innovation in Design (ID) category, passive innovative measures adopted in the
design reduce the energy consumption resulting in savings. Innovative design also reduces the
resource consumption which is also directly reduces the cost.

34
4.5.1.10 Increased Building Value

Increased annual energy savings will also create building values.It has been estimated that in
this country it is possible to design and construct a building that saves Rs 2,633,263/- ( source
AECOM Building Engineering group) per year in energy cost versus a comparable building
built to code ( this might represent savings of Rs 8/- per year per square foot, for a 3,00,000
sq. ft. building for example). At a capitalization rate (effective discount rate) of 7.5%, this
would add Rs 35,110,173 to the value of the building ( Rs 2,633,253 / .075 = Rs 35,100,173/) For a small upfront investment, an owner can reap benefits that typically offer a payback of
three years or less and an internal rate of return exceeding 20 % for what is nearly a sure bet:
energy cost will continue to rise faster than the general rate of inflation and faster than rents
can be raised Moreover, depending on the location (e.g. Noida) of the project green buildings
are also liable to use extra 5% FAR which provides additional building value and benefits to
the developer.
4.5.1.11 Lesser Insurance Premiums for Green Buildings

Reduced likelihood of moisture damage and other factors are enhancing workplace safety. A
range of green building technologies reduced by facilities that derive their energy from onsite resources and or have energy-efficiency features. These may lead to a lesser premium for
commercial insurance premium .A number of forward- looking insurers (in Canada) have
supported energy- efficient and renewable energy technologies, including 52 insurers and
reinsurers, 5 brokers, 7 insurance organizations, and 13 non insurance organizations. While
the list is impressive, it should be stressed that it reflects a small fraction of insurance
companies.
4.5.1.12 More Competitive Product in the Marketplace
There is a dawning realization among speculative developers that green buildings can be more
competitive in certain markets, if they can be built pretty much on a conventional budget.
Whether for speculative or build to-suit purposes, green buildings with lower operating costs
and better indoor environmental quality should be more attractive to a growing group of
corporate, public and individual buyers. Greenness will not replace known attributes such
as a price, location and conventional amenities, but green features will increasingly enter into
tenants decisions for leasable space and into buyers decision to purchase properties for the
long haul.
4.5.1.13 Other Economic Benefits To The Building Owner & Developer

Sustainable building owners in the private sector, are likely to accrue economic benefits as a
consequence of a sustainable facilities environmentally and socially conscious image and its
positive impacts on building occupants, prospective employees, the community surrounding
the facility, and society as a whole.

35

Research has been conducted on a few important topics related to sustainable buildings, from
which inferences can be drawn about the building owners economic benefits, which are
sometimes less direct and/or longer term than the benefits such as :
Better worker retention and recruitment
Lower cost of dealing with complaints
Decreased risk, liability, and insurance rates
Greater building longevity
Better resale value
Strategic and economic value of an improved image
4.5.2 Intangibles Social Benefits

The social benefits of sustainable design are related to improvements in the quality of life,
health, and well being. These benefits can be realized at different levels- buildings, the
community, and society in general. At a building level, research on human benefits of
sustainable design has centered on three primary topics: health, comfort and satisfaction.
The building environment can have both negative and positive impact on the occupants
quality of life. Negative impacts includes illness, absenteeism, fatigue, discomfort, stress and
distractions resulting from poor indoor air quality, thermal conditioning, lighting and specific
aspects of interior space deign (e.g. material selections, furnishings, and personnel densities).
Reducing these problems through sustainable design often improves health and performances.
Improved indoor air quality and increased personal control of temperatures and ventilation
have strong positive effects. In addition to reducing risks and discomforts, buildings should
also contain features and attributes that create positive psychological and social experiences.
Although less research has been done on health promoting environments, emerging evidence
show that certain sustainable building features, including increased personal control over
environmental conditions, access to daylight and views, and connection to nature, are likely to
generate positive states of well being and health.
There are several social and environmental benefits that are coined with green building.But as
the main concern of the thesis is to analyze the costand benefits from a developers/owners
perspective, only those benefits are considered which are beneficial for developer/end user
and can be converted to monetary form.
4.5.2.1 Better Health Of Building Occupants

Studies of the health benefits of sustainable design focus primarily on indoor environmental
quality especially air quality. Health effects result from environmental stimuli interacting with
the bodys physical systems, especially respiratory, skin neural, and visual pathways. Illness
symptoms occur because environmental agents (such a chemical as airborne microbial) affect
the operation of the bodys physical symptoms in vulnerable person.
4.5.2.2 Improved Comfort, Satisfaction and Well- Being of Building

occupants

36

Psychological effects (e.g., comfort, satisfaction and well-being) are generated through
perceptual and sensory processes that interpret environmental information in terms of its
effect on current needs, activities, and preferences. The psychological interpretation of the
environment has consequences for work performance and productivity, stress, and well being.
Because of the inherent variability in psychological, the same environmental conditions can
affect different people in different ways as well as affect the same person differently over
time, depending on the context.
4.5.2.3 Improved Productivity

Sustainably designed buildings enables social interactions that stimulate collaboration among
workers, As per LEED 2011 for India- Care & Shell projects green buildings help to
improve workers productivity by 16%.Publish literature documents direct linkages of
worker performance with air temperature and lightning conditions without apparent effects on
worker health . Many but not all studies indicate that small differences in temperature can
influence workers speed or accuracy by 2% to 20% in task such as typewriting, learning
performance, reading speed, multiplication speed, and word memory.
Surveys have documented that indoor air temperature is often poorly controlled, implying an
opportunity to increase productivity. It is estimated that providing +- 3C of individual
temperature control would increase work performance by 3% to 7%. A smaller number of
studies have documented improvement in work performance with better lightning, with
benefits most apparent for visually demanding work. Increased day lightning was also linked
in one study to improved student learning. Based on these studies and recognizing that
performance of only some work task is likely to be sensitive to temperature and lightning, the
estimated potential direct productivity gain is .05% to 5%, with the factor of ten range
reflecting the large uncertainty.
Another literature says: Productivity gains for healthier indoor spaces are worth anywhere
from 1% to 5% of employee cost, or $3.00 to $30.00 per sq.ft. of leasable or usable space,
given average employee costs of $300 to $600 per sq.ft per year (based on $60,0000 average
annual salary and benefits, and 100 sq.ft to 200 sq.ft per person). With energy cost typically
under $2.50 per sq. ft per year, it appears that productivity gains may easily equal or exceed
the entire energy cost of operating a building.
4.5.2.5 Stakeholder Relations/ Occupant Satisfaction

Tenant and employees want to see a demonstrated concern for both their well being and for
that of the planet. Savvy developers and owners are beginning to realize how to market these
benefits to a discerning and skeptical client and stakeholder base, using the advantages of
green building certifications and other forms of documentation, including local utility and
industry programs.
4.5.2.6 Community and Societal Benefits


37

The effect of sustainable building practices on occupants are the primary social benefits that
have been researched; however, various secondary and indirect quality-of-life benefits, for
which anecdotal evidence exists, can accrue to other societal groups.From a public health
perspective, quality of life at a community level can include such issues as environmental
quality, aesthetic, educational and recreational opportunities, accessibility an quality of public
services, and even psychological characteristics such as community satisfaction and pride.
-
Occupant who experience increased job satisfaction, health, and productivity will
carry these experience increased job satisfaction, health, and productivity will carry
these experiences back to their families and friends in the community, thus influencing
overall well-being.
Occupants may also enjoy more pleasant and productive commutes to work and less
traffic congestion in their communities if public or alternative transportation methods
are made available at their workplace.
Benefits can potentially diffuse beyond the workplace and lead to increase use of
sustainable design practices and behavioral change in the community at large.
Behavioral changes might include increased recycling, purchasing green products, and
investing in energy-efficient technologies.
A building that includes sustainable features also becomes models for other to follow.
For example, the Herman Miller Green House regularly provides tours and outreach
programs for local and national design and construction professionals as well as for
businesses that are planning their own sustainable buildings.
Environmentally conscious construction practices will tend to generate lower amounts
of dust, pollution, noise, traffic congestion, and other community disturbances. These
improvements will likely contribute to improved public health, safety, and well being.
Use of locally produced and manufactured product in sustainable building bolsters the
local economy and provides jobs in the community (as well as reducing energy use
and emissions caused by long range transportation of goods).
If sustainable design involves cleanups and use of a brown field site, the community
may benefit from the improved environmental conditions associated with the cleanup.
It may also experience economic development associated with productive use of a
previously unused site and the presence of a new set of workers who make financial
transactions in the community.
4.5.3 Intangible Environmental Benefits

Building consumes a significant amount of our natural resources and has a wide range of
environmental impacts. These environmental concerns are a key driver behind the
sustainable design movement. Considering what building s are made of steel, concrete,
glass and other energy- intensive materials- building have a high level of embodied
energy. Producing these materials depletes non-renewable resources and has
environmental effects, and these impacts intensify the more frequently building are
demolished and replaced.

38

From a complete lifecycle assessment perspective, construction, operation and demolition
or reuse of building involve a chain of economic activities that provides the goods and
services necessary to build, maintain, and eventually retire or convert the asset. Each of
these activities carries an implicit ecological footprint of resource consumption and
waste generation. For example, the footprint associated with a ton of steer includes
impacts of mining, transportation, and manufacturing operations, including a considerable
amount of energy consumed in converting iron ore to steel and transporting the steel to its
point of use. Applying sustainable design principles can significantly reduce these
impacts.
Lower air pollutant and greenhouse gas emissions to the atmosphere
Reduced volumes of waste
Decreased use of natural resources
Lower impacts on ecosystem

4.5.3.1 Lower Air Pollutant and Greenhouse Gas Emissions
Buildings produce more million tons of municipal solid waste per year, consisting of paper,
yard waste, plastics, metals, etc. which includes construction, renovation and demolition
waste. Builders produce includes wood (27% of total) and other materials such as cardboard
and paper; drywall/plaster; insulation; sliding; roofing; metal; concrete,
asphalt,masonary,bricks,and dirt rubble; waterproofing materials; and landscaping materials.
As much as 95% building related construction waste is recyclable and most materials are
clean and unmixed.
In addition, building occupants produces municipal solid waste every day, in the form of used
paper, plastic and glass containers, food waste, etc, much of this can be recycled.
Decreasing energy use through energy efficient design, use of renewable energy, and building
commissioning reduce emissions. Several sustainable design principle reduce waste, which in
turn reduces the strain on landfills. In addition, using recycled materials in building
construction encourages development of new industries that produces recycled products;
further reducing waste disposal needs the use of virgin materials.
The main sustainable design principles that reduce waste include the following:
Storage and collection of recyclables: The building design should provides space for
collecting and storing materials such as paper, glass, plastic, and metals that will be recycled.
Construction waste management: During construction, the contractor can recycle or
productively use construction, demolition, and land-clearing wastes and divert these wastes
from landfill disposals.
Recycled content: Designers can select environmentally preferable materials that includes
recycled materials.( Designer should use standards developed by government agencies or
other reliable sources.)

39

Waste prevention: Designers can eliminate unnecessary finishes and make choices that use
standard-sized or modular materials. In addition, designers should consider product durability
in the design process. When product s need to be replaced less frequently, less demolition
waste is produced and fewer virgin resources are needed for replacements.

40

Chapter 5:
Cost Analysis of GRIHA

Rated Office Building
5.1 Introduction

While there seems to be consensus on the environmental and social benefits of green building,
there is a consistent concern, both within and outside the green building community, over the
lack of accurate and thorough financial and economic information. Recognizing that the cost
issue was becoming more and more of a prohibitive factor in mainstreaming of green building
across the world, hence economic analysis of project to determine more definitely the costs of
green building has become a necessity.
5.2 Object of Analysis

This seminar paper aims at analyzing the cost of Green building in Indian context. But the
cost of the building varies widely depending on the level of certification, usage, purpose and
functionality. Amongst all the parameters the level of Green building certification becomes
the most important factor when developers tend to invest in green features. The object of
analysis is a 5 star rated GRIHA office project.
The cost of building green is also dependent on the area of project to be developed as green
saleable space. In India, a typical multi-storied office-building complex generally covers a
built up area of 30,000 sq.mts. To 70,000 sq.mts. hence the cost and benefits analysis for
investing in green buildings will be judged based on the same area in order to get a judicious
outcome. Considering this fact, Indira Paryavaran Bhawan, a GRIHA 5 star multi-storied
office complex with a total built up area 31000 sq.mts. Comprising of 2 towers, has been
taken as a case study to calculate the overall costs and benefits of building green from a
developers standpoint.
5.3 Project: Indira Paryavaran Bhawan

5.3.1

Overview
Indira Paryavaran Bhawan is a five star GRIHA rated project located in Aliganj, Jor Bagh
Road, New Delhi. The project has a site area of 9,565 m2 and the built up area of the building
is 31,400 m2 ( 18726 m2 superstructure & 12675 m2 basement) . Building has 2 blocks
and contains G+7 floors and has 3 basement.

41
5.3.2
Features and Area Details

BLOCK
Block A
Block B
NO. OF FLOORS
3 Basement + G+7 floors
3 Basement + G+7 floors
BLOCK AREA (SQ.MTS.)
Sustainable Building Features

Sustainable site planning:

o The IPB office building for the ministry of environment and forests has been
planned in 2 parallel blocks facing the north south direction, with a large linear
open court in the Centre. The Building blocks create a porous block form to
optimize air movement throughout the site and the N-S orientation allows for
optimum solar access and shading.
o The large no. of trees on site have mostly been preserved to preserve the
relatively cooler microclimate of this relatively green segment of the city.
Greenery has augmented by creating hard green spaces all around.
o A full Solar Panel Cover on top covers the building; the court and the edges to
further create a shaded microclimate. The Building is planned as a Net Zero
Building producing as much energy onsite through solar energy, as it
consumes over the year. This is the first govt. building in the country to
achieve this landmark and one of the very few full fledged multifunctional
office buildings in the world to do so on a tight urban site.
Reducing water consumption:

o All water has been recycled to create a zero wastewater discharge building by
utilizing an STP with FAB/MBBR technology.
o Low flow fixtures have been used to reduce the water consumption of the
building by 64%
o Usage of Native plants/trees and a judicious usage of sprinkler and drip
irrigation help reduce the water requirement further.
Reducing energy consumption (compared to GRIHA benchmarks) while

maintaining occupant comfort:
o For achieving Visual comfort:
direct line of sight to the outdoor environment to vision glazing for
building occupants for more than 90% of the occupied space.
Avoiding deep floor plates to create maximum daylight spaces.

42
Landscaping planned with native species and water body features in

central court and all around the building.
o For achieving thermal comfort:

All circulation spaces or passages were naturally ventilated/shaded/not
conditioned
Energy efficient chilled beam based cooling system proposed together
with condenser water cooling through ground pipes.
Openable windows were proposed in conditioned areas to be able to
utilize favorable outdoor conditions.
Insulate walls through using an integrated AAC + Rockwool
combination together with high efficiency DGUs and UPVC frames
for the windows.
o Renewable energy technologies installed on site:
Its planned as an energy positive building, where both the blocks and
the whole central courtyard is covered with efficient solar PVs of 930
kWp.
o Use of Low Energy materials:
The terrazzo flooring combined with local stones, jute bamboo
composite internal doors, UPVC windows and sandstone jaalis.
Location: Indira Paryavaran Bhawan, Aliganj, Jor Bagh road, New Delhi.

43
5.4 Methodology for Project Specific Cost-Analysis

This chapter analysis the capital expenditure to be incurred during construction and before
construction of the structure if its designed as a Non-green or Conventional commercial
Office Building. Now as it is already mentioned in the object of analysis that the extra cost
required of making the object a green building is calculated.
The next chapter will cover the benefits of these additional Green features that will be
achieved in this commercial office building in the long run i.e. during the Life cycle of the
project.
Building Systems and components
Step 1
Step 2
Study the following Building System and components of the Conventional

office building as per the norms:
HVAC system
Electrical and Lighting System
Plumbing and Water Supply System
Fire fighting system
Architectural, Civil & Finishing System
Cost analysis of the above mentioned project specific building component
to estimate the Total project cost of Base Case.
5.5 Identification of Building System for Cost Analysis

For detailed project cost Analysis of Indira Paryavaran Bhawan as a conventional office
building cost of the following majoe building system are taken into account:
1.
2.
3.
4.
5.
HVAC system
Electrical and Lighting System
Plumbing and Water Supply System
Fire fighting system
Architectural, Civil & Finishing System

Elemental cost analysis of each of these system have been done to calculate the cumulative
cost of the project. A comprehensive list of elements considered under these system is shown
below:

44

45
5.6 Benefit Analysis & Calculation of Operational Cost

Savings
Green buildings are operationally very efficient compared to similar conventional building.
They also provide better air quality, natural light and an optimal and pleasant indoor
environment. Enhanced IEQ for occupant can be achieved by initiatives such as:
Using less toxic interiors, low emitting adhesives, paints, carpets and composite
woods
Illuminating 75-90% of the space with natural light.
Thermal comfort due to local control over air conditioning and better ventilation.
These factor are most important in improving the quality of work life and the efficiency of
occupiers. It directly translates into improved productivity and decreased ailments for
occupants. The productivity loss due to the lack of IEQ is estimated to be USD 250 billion for
US commercial buildings. However, green buildings tend to reduce the absenteeism rate by
40% and increase productivity by 5%.
However, the scope of the seminar includes mainly Direct economical benefits such as
Energy cost savings, Reduced water consumption, Higher rental Value and Carbon credit
trading. Operational cost savings from these benefits are undertaken in spread sheets attached
later.
5.6.1

Reduced Energy Consumption
Green buildings are around 25-30% more energy efficient, with 5 star buildings as much as
50% efficient. On an average, green buildings obtain 2% of their energy from renewable or
green sources. This energy efficiency proves beneficial during peak periods, when energy
costs rise due to higher demand. This reduces the demand for fossil fuel-generated electricity
and reduces pollution and the emission of GHGs.
The energy reductions in the IPB can be primarily be attributed to improved envelope,
lighting power density as well as daylight sensors in perimeter spaces, along with reduction in
cooling loads due to improved glazing specification, better exterior lighting design and better
system.
5.6.2
Reduced Water Consumption
Green buildings use 20-40% less water compared to similar conventional buildings. This
reduces the operational water expenses and the pressure on civic amenities. Moreover, 70100% of used water is treated and reused for landscaping and air conditioning. This reduces

46

the load on an areas sewage system. Through these measures of conservation and the reuse of
water, green building save as an operational costs and simultaneously promote sustainability.
Water efficient fixtures with the following Low-flow rates are adopted in IPB. These lowflow fixtures cost almost equal to the conventional sanitary fixtures and fitting and have no
additional cost premium, but has resulted in substantial reduction in the total water reduction
of the building.
5.6.3

Higher Rental Value
Incorporating additional energy efficiency measures into the building increases the rental
value of saleable square footage of the building resulting in direct saving. In fact, according
to the new Building Institute, increasing net operating income increases a buildings appraised
value by ten times the annual cost savings. And according to a McGraw Hill Construction
study, building green leads to an increase in rental rate- 21% to 35% for new construction and
11% for existing building projects.
5.6.4
Carbon Credit Trading

Carbon credit trading are key components of national and international GHG emission trading
schemes that have been implemented to mitigate global warming. They provide a way to
reduce GHG emission on an industrial scale by capping the total annual emission and letting
the market assign a monetary value to any shortfall through trading. Credits can be exchanged
among businesses or can be bought and sold in the international markets at the prevailing rate
1300/- per Carbon credit. Credits can be used to finance carbon reduction schemes between
trading partners and around the world.
1 tonne of CO2 = Rs. 1300/1 kilowatt of electricity is equivalent to 0.229 kg of CO2 emission

47

Chapter 6:
Determination of Financial
Feasibility

6.1
Payback Period Calculation

Payback is a method to determine the point in time at which the initial investment is paid off.
Various methods are used to calculate payback. The payback period can be calculated using
either the present value amounts or cash flow amounts.
Cash flow amounts do not take the time value of money into consideration and only calculate
on non-discounted INR amounts. In this approach the payback period are for IPB is calculated
as the ratio of the cumulative Investment to annual operational cost savings.
Another approach is to consider only the initial Investment and not include annual operating
costs in the calculations. In this case, the time value of money( that is, the discount rate) is
considered and use Net Benefits ( that is, benefits minus the operating cost). This year when
this value becomes positive is the year in which payback occurs.
The first step in calculating the discounted payback period is to decide on the discount rate to
use. The discount rate is the annual percentage rate that an amount of money is discounted to
bring it to present values. It equates future values to current values. As recommended by
Energy department , that the Discount rate has been considered to be 7% for the payback
period calculation.
Present Value = amount received in future / ( 1+ discount rate)^no. of years

Payback period =

6.2

Return on Investment ( ROI )
The objective of the Return on Investment is to calculate a percentage return (like an interest
rate) so that the cost and the benefits are exactly equal over the specified time period. The
time period can be the expected life of the investment i.e. the productive life of the system
(assumed to be 15 yrs.), or it can be an arbitrary time period. The equation to calculate is
ROI =
!"#$%&#'( !"#$ !"#$%& !"#"$%&'!!!"#$%"&' !"#$ !"#$%& !"#$#

!"#$%&#'( !"#$ !"#$%& !"#$

48
6.3
Savings to Investment Ratio (SIR)
Savings to Investment ratio (SIR) is a dimensionless measure of performance that expresses

the ratio of saving to costs, recommended for establishing priorities amongst investment
proposals. The numerator of the ratio contains the operation related savings; the denominator
contains the increase in investment-related costs.
SIR =
49


Chapter 7:

Conclusion and
Recommendations

7.1 Conclusion

The growing global crisis has created the need to adopt the concept of sustainability. Real
estate activity, being one of the significant contributors to energy consumption and usage of
resources, is working towards the development of green building to reduce enrgy
consumption and the environmental impact.
The key challenges for the development of green buildings in India are mostly in the lines of
awareness on the benefits of green buildings, materials and technology. Many professionals
are working towards addressing these challenges to enable developers to operate with ease.
Although there is an additional investment involved in the development of green buildings,
they are certainly ideal development due to many benefits, which can be seen once these
buildings are operational.
7.2 Summary of Findings

7.3 Constraints and Challenges

The first and foremost constraint for the proliferation of green building is the lack of
information and incorrect perception. It is generally believed that the green buildings cost
more and have long gestation periods. Although from the above findings its clear that this
belief is a myth.

Secondly, any turbulence in the real estate industry will directly affect developers propensity
to invest in additional cost centres such as a premium on green building.
Third, stand alone green building dont fulfill the larger goal of sustainability. The current
green building criteria must be modified according to the local requirements. In the Indian
context, green real estate must also include town planning, sanitation and relevant social
infrastructure. Hence, standalone green developments dont fully adhere to the overall green
concepts.

50
However, the lack of available materials might also discourage developers to pursue green
buildings developments.
Fourth is the lack of professional support for facilitation of GRIHA certification and
consultancy services for earning carbon credits. However with the growing awareness on
sustainability within India, competency among consultants in the construction and real estate
industry will increase. This will in turn facilitate developers with the professional support.
As the green building phenomenon grows in India, concerns about the availability of
information and local material will eventually improve. However, the prospect of a recession
in the real estate sector and the need to modify the green building criteria to suit local
standards can still cast a shadow of uncertainity over the development of green buildings. The
concept of developing green buildings is envisaged as a voluntary action. Hence, the
government is unable to take any proactive action to make the development of green building
mandatory.
7.4 Recommendation for Strategies & Government

Initiatives.
Its mentioned above that Indian government can state some strategic guidelines/
recommendations some could be mandatory some optional, to drive the building construction
industry towards a green construction. While there are several initiatives to promote
sustainable building development, these initiatives are yet to make an impact in the building
industry. Some of the suggested outlines for further initiatives are given below:
The energy-action zones or green zones on the existing land as the government can define
examples of sustainability. The building set up in this zone would have sustainability features
and would get incentives and exemptions. This awareness would be there with the private/
public developer at the time of Investment / development.
Additional funding / grant for development in energy-action zones can also be

provided.
Introduce lower % age rate of interest on loans for Green building.
Modify and Implement changes in the building bylaws and planning processes.
To promote change in design procedure: extensive use of passive measures than to
implement active measures by using equipment.
Showcase and demonstrate sustainable building concepts in all new and existing
government buildings.
Promote all forms of electricity production that provide additional energy and environmental
benefits in comparison to conventional electricity demand through the renewable energy,
providing direct access to the grid ( which can act as an energy storage for renewable energy
systems), and providing additional guaranteed income for selling electricity to the energy
distribution company.

51
Quicker approval / sanction of green building ( developers will be able to save six to
seven months on going green)
Construction materials industry adopts life cycle approach to improve the
environmental performance of the products.
To promote the use of recovered materials, recycled materials.

7.5 References
Joshi, A. (2011). Cost Benefit Analysis of a Green Housing Project from a Developers
perspective. masters thesis, School Of Planning And Architecture, New Delhi, Building
Engineering and Management , new delhi.
Vishwakarma, S. (2009). Cost Benefit Analysis Of Green Building. Seminar II, School Of
Planning and Architecture, New Delhi, Building Engineering and Management, New
Delhi.
Dutta, S. (2014). Cost Benefit Analysis of Specultive Green office Project. Masters
Thesis, School Of Planning and Architecture, New Delhi, Building Engineering and
Management, new delhi.
Kundu, S. (2010, may). Green Building Business Proposition From A Developers
Perspective. Building Engineering and Management . New Delhi, India .
Langdon, D. (2007). COST OF GREEN REVISITED (Vol. 1).
George Cats, C. E. (2006). Green Building Cost and Financial Benefits. Massacheusetts,
USA.
Shah, N. D. (2007, june). Green Housing: review, rating system and incentives. Indian
construction Bulletin .
Jayant Sathayal, P. a. (2009, may). Climate Change, Sustainable Development and
India. Global and National Concerns .
Khan, R. S. (2013). Energy Efficiency In Green Building-Indian Concept. International
Journal Of Emerging Technology and Advanced Engineering , 3 (3), 329-336.
Council, i. g. (2011). LEED India 2011. delhi, india.

American society of heaing, r. a. (2007). ASHRAE standard . 90.1. USA.

Energy conservation and building code. (2007). INDIA.
TERI. (2011). Green rating for integrated habitat assessment-GRIHA. New Delhi,
india.
52

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COST BENEFIT ANALYSIS OF GREEN BUILDING

DEPARTMENT OF BUILDING ENGINEERING & MANAGEMENT

SCHOOL OF PLANNING AND ARCHITECTURE

NEW DELHI - 110002