Chapter 8 - Cost Premium, Performance and Improvement of Green Construction Projects

Abstract

This chapter investigates the current cost premiums of green construction projects, and identifies the main reasons for them. The cost performance of green and conventional construction projects are compared and feasible solutions that can reduce the cost premiums and improve the cost performance are proposed. It is shown that the majority of green building construction projects have a green cost premium of 5%–10%, with green residential buildings having the highest cost premiums, followed by green commercial and green office buildings. Furthermore, it is demonstrated that project type and project size are statistically significant variables that can affect the cost premiums. This chapter also identifies “high cost of green technologies and materials,” “higher research and development costs for green building products, systems, technologies etc.,” and “lack of required green expertise and information” as the top three reasons for the cost premiums of green construction projects. As for current cost performance, green construction projects are generally over budget by 4.5%–7%, which is worse than for conventional building projects, according to the conclusions of this chapter. Lastly, tax relief is identified as the most efficient solution that can have a significant impact on reducing cost premiums and improving cost performance of green building projects.