FINANCIAL AND ECONOMICAL RISKS IMPACTING COST OF LEED CERTIFIED PROJECTS

Abstract

Green buildings have benefits for the environment, which has been acknowledged by the vast majority of building professionals. LEED is one of the most recognized green building certification systems in the world. However, issues related to financial aspects of the entire process and LEED certification may be significant and constitutes new financial burdens to the cost of the projects. After a diligent literature research, main issues related to cost can be identified under four major categories such as; cost of the certification process, scarcity of insurance solutions, rental due to delay related to green construction procedures and conditions, and failure to use of financial incentives (tax/loan discounts, low financing rates) because of delays or lower certification levels than expected throughout the LEED certification. This study focuses on the assessment of professionals’ experiences about the financial and economical risks green buildings and their impacts on cost by identifying the most common drawbacks and evaluate relevant precautions against them. Analysis results show that high cost of certification process is one of the concerns for the majority of the professionals. Rental loss due to delay related to green construction procedures and conditions, costs related to certification, documentation, practices and design are found as the other risk factors in the study. Proper allocation of such risks in contract documents and special insurance products with appropriate endorsements could be used to mitigate related risks.