How to combat rising construction costs.

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How to combat rising construction costs

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Lately we keep hearing a lot about labor shortages in the construction industry and rising costs, which are cutting into the profits of developers. The answer is often times a cost cutting exercise "Value Engineering", which really means scope reduction and often scarifies indoor comfort or energy efficiency and therefore operational costs.

"Costs have risen. It's tough to underwrite new office and residential development today," Block said. "It's important to create something uniquely different where tenants want to be, because rents are going to have to be very high to justify new development today." http://bit.ly/2GkM6FH

curve-of-influence-mar-2014-6-638

This is from just one recent article. So if reducing the quality of the building does not provide the answer, what does?

Category:
Energy Efficeincy, LEED, Construction Costs

Early Energy Modeling.

Look at the Cost /Influence Relationship Curve above. The answer is right there. In order to reduce construction cost we need to put more analysis into the planing and design of a project. That includes the energy systems of the buildings and the building envelope. Early Energy Modeling is a tool to help owner teams understand the impact their decision is having on costs for construction and operation. If you want / have to ask for higher rent, due to construction cost increases, you'll have an easier time justifying that, if your space uses less energy. In a typical lease the leasee's cost are rent + utilities and may just be the same as in their older space with leaky windows. Even in gross lease buildings this means the owner/developer gets to keep more money and pay less to the utility companies. That's not all. Early Energy Modeling can:

  • Analyse and optimize building orientation - Turn the building sightly to get a little less sun in the atrium and reduce cooling loads.
  • Compare different locations when selecting the right property - It starts with utilities. Does the location have gas available, lends itself to solar or geothermal
  • Compare different envelope constructions and different insulation materials. They all perform a little different and costs can vary a lot.
  • Optimize window to wall area and thickness of insulation versus better windows. Knowing how much insulation you'll need and how the envelope construction will therefore look like OR what you can do to avoid the extra inch of insulation which now requires a different more expensive mounting system.
  • Analyse HVAC system selections and stand-alone versus district /campus heating/cooling systems. If you don't go through the exercise of comparing systems, your decision to us one versus the other is not more than an educated guess. A guess that might just have you miss a savings opportunity. Or the design will dictate the systems selection for you without you realizing it.
  • Reduce system size by optimizing lighting power and control systems. This is just one example of Energy Modeling being able to look at the interactions of lighting, envelope and HVAC systems and optimize it.
  • Provide an alternative path to code compliance. Provide an overall energy efficient, code compliant building, instead of following prescriptive, rigid requirements.

You can have the same utility cost with a little less insulation, optimized lighting and a smaller HVAC unit, than compared to a building with more insulation and code minimum lighting and a larger HVAC unit. Both buildings meet code, but one is saving you real construction dollars. While lighting can be replaced easily, changing the envelope construction or windows after the fact is almost always not cost effective and comes with huge delays, because the project is already too far along in design or construction.

To use Early Energy Modeling effectively you would want to get us involved in early design. Remember the picture above, the earlier we are involved in project the better our chances to optimize costs and save you money.

To learn more about "How Early Energy Modeling saves construction and operational cost" go to our On-Demand Webinar

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