Green Building Costs

Green building market  in Vietnam has vast potential and opportunities for development. However, it has been hindered by several factors, in which the biggest challenge, accounting for 80%, is the inadequate understanding about initial investment. The majority of investors mislead that the additional cost of a green building is about 20% – 30%, which makes it costly to build green.

On the contrary, studies by international organizations have shown that the additional cost of green buildings is approximately 0.4 – 12.5% higher than that of conventional buildings. In Vietnam, it is estimated that the average additional cost is about 1.8% – 2%.

1 – What kind of costs will be affected when selecting green building?

Hard cost and soft cost are two primary parts of the construction cost. In particular, soft cost includes services and items that are crucial but not directly put the building up, such as design and architecture, monitoring and authorization, environmental impact assessment, taxes, insurance, marketing, project management, etc. Hard cost, on the other hand, involves equipment, facilities, and properties such as rental, materials, landscape, etc.

Design (including architecture, design and consultancy) and construction costs are influenced the most by the change to green building orientation.

To be specific, the following costs would change:

• Intensive analysis and design
• Proper fixtures and materials
• Green Building Certification Consultancy
• Rating and certification fees

2 – What is the average additional cost of Green Building?

Additional cost of Green Building is usually calculated on the basis of the difference between the cost to achieve Green Building Certification and the initial budget for a conventional building. Thus, the additional cost largely depends on the certification level that investors aim at.

The table illustrates the additional costs in accordance with the levels of certification. It can be seen that the additional costs to achieve Certified or Silver levels are pretty low.

Besides, some projects can gain Green Building Certificate with additional cost of 0% thanks to high investment rates.

3 – How to minimise additional cost of Green Buildings?

Effective methods to minimise additional cost:

• Early start: From the earliest stages, projects should follow green building orientation, develop strategies and take them into consideration in budget planning, reduce any costs of future addition and refurbishment.

• Experience: Collaborating with experienced designers and workers in Green Building sector.
• Applying Integrated Design Process: Applying integrated design from pre-design stages to commission and operation. Since the very beginning, projects should involve consultants and building users in the architectural design decision-making process. It is also considered an essential factor of Green Building.

Green building is not a conventional building that adds green features. It is a totally different concept requiring proper understandings and effective collaboration of stakeholders. Additional cost of green building should be regarded as a long-term investment that can help investors shorten the payback period by saving resources, reducing operating costs, enhancing occupants’ health and efficiency, and asserting the company’s prestige and social responsibilities.