Home Innovation Insights

Cost is always a consideration. But should it be the deciding factor on green home certification?

Is Green Certification Worth the Cost?

September 12, 2013

Every day more homes and multifamily buildings earn green certification. You can bear witness to the industry’s embrace of NGBS Green Certification through our real-time tally online of NGBS certified homes and projects in the certification pipeline. Yet I regularly hear the skeptic who pronounces, “I build high-performance buildings. Green certification is expensive. It is not worth the time, effort, or cost.” I would like to offer an admittedly biased, but alternative perspective.

Product certifications abound. It’s hard to conceive of everyday life without products bearing a certification mark. Certification provides consumers confidence that the products we purchase will perform as expected. For the construction industry, builders rely on product certifications to verify that testing has been done to prove a building product, component, method, or material performs at a level compliant with applicable codes, standards, and regulations. But is it enough for a product manufacturer to test their own products and assert that they meet the relevant specifications? Probably not for consumer confidence, and for many building products, it is not enough for code compliance. Consumers, code officials, and building professionals want unbiased, validated evidence from an independent, third-party certification agent.

Independent, third-party certification adds cost to any product — but is it not worth the cost? Hmmm, would you want your OSB’s structural performance untested? How ‘bout that R-value? Insulation “not far off from R-19” might be ok, or maybe not if you actually want optimal thermal performance. Most builders rightfully expect a little more precision and confidence from their building products.

But what about home/building certification? Are independent, third-party verification and certification necessary, or is it an unjustifiable additional cost? I believe building certification, when reasonably priced, is as essential as certification of any of the separate building products specified in a project. Building products are typically manufactured in a factory-controlled environment with stringent quality control procedures in place. On-site construction is a far messier process. Builders have significantly less ability to control many factors. Weather alone can wreak havoc on construction managers – a factor that building product manufacturers seldom have to worry about.

NGBS Green certification provides indispensable confidence, whether on behalf of the architect, builder, equity partner, home buyer, or renter, that the building complies with the rigorous National Green Building Standard. To be clear, I advocate for NGBS Green certification not because builders and developers are incapable of compliance without an independent, third-party inspector looking over their shoulder. Instead, I recognize that certification addresses three important factors. First, contemporary high-performance buildings are complex, often constructed with practices, products, technologies, and systems less familiar than their conventional alternatives. NGBS Green certification helps provide quality assurance for these newer innovations. Second, marketing a building as green understandably raises consumer expectations about a building’s expected performance. Indeed, the Federal Trade Commission admonishes that marketers are less likely to be deceptive or misleading when their green statements are backed up with an independent, third-party certification. Last, and perhaps most important, you can’t always have eyes in the back of your head like your mother. Insulation will get installed incorrectly. The wrong windows will get delivered to your construction site. A delivery truck driver will be unaware of a silt fence’s purpose and roll-over as opposed to going around the stormwater protection measures to access the site. Your accredited NGBS Green Verifier serves as on-site quality control for any project he or she is inspecting. Our verifiers visually inspect every single home and apartment to ensure the NGBS green practices that should be met, are met. Home Innovation not only reviews every verification report before conferring certification on a building, but also provides a depth and breadth of green residential construction expertise to back up our verification field force.

While I advocate for building certification, it is important to understand that among the different green programs they vary considerably in rigor and purpose. First, consider Home Innovation Research Labs as the certification agency. As an accredited third-party test lab and certification entity with nearly 50 years of experience, our objective is to maintain the rigor for which the Home Innovation certification mark is known. Accredited third parties are, by definition, held to a higher verifiable standard than their non-accredited counterparts. Our methods, materials, protocols, records, and administrative processes are regularly checked for compliance by outside entities — if we don't meet their scrutiny, we cannot continue to hold our accreditation and perform third-party services. For this reason, builders, product manufacturers, code officials, and consumers look to us to confirm compliance with code requirements and claims about product performance, from plumbing to insulation, and structural building components to green homes. Next, consider the rating system that is the centerpiece of our Home Innovation NGBS Green Certification Program. We certify green projects to the only ANSI-accredited residential standard for green construction, which was created under the strictures of ANSI's consensus process and is required to go through regular public review and updating. Finally, consider the rigor within the National Green Building Standard (NGBS). It is the only green rating system in the market today that requires higher baseline levels of achievement/performance in each of its six categories in order for a project to attain the next higher level of certification. In other words, a project cannot be just highly energy efficient and achieve our highest, Emerald, level certification. An Emerald-level NGBS Green project must achieve Emerald-level point thresholds in every category for us to bestow the Emerald certification to it. If just one category misses the mark, the whole project is likewise limited. We don't know of another green certification program with such rigorous requirements and I encourage all builders and developers to be educated consumers regarding the certification program they select.

Last, I would be remiss if I didn't at least touch upon cost. Building certification only provides added value until it costs so much that it doesn't. NGBS Green certification is affordable for all residential projects. Our certification fee is $200 per home or $200 per multifamily building plus $20 per unit. Verification fees are determined by the specific NGBS Green Verifier but are reasonable as a percentage of construction costs. Further, NGBS Green certification is an allowable attribute into consideration of the valuation of the property and therefore may more than pay for itself when the property is appraised.

When all these facts are taken into consideration, I believe the value of NGBS Green certification certainly merits the cost. Still skeptical? I'd love to talk with you about your particular business or residential project.



Gregory Frech
November 3, 2013 2:49 PM

posted on Tuesday, May 28th, 2013 at 11:52 am

An important tenet of New Urbanism is the concept of sustainability. Sustainability begins with the idea that neighborhoods should endure in one place for a long time, contributing to their identification as a place that is distinctly recognizable by visitors, as well as home to the inhabitants. Such a concept has everything to do with the weather, terrain, vegetation, architectural context and local industry. Currently sustainability extends to “building green” or Green Building.

Green Building is defined as a high-performance building: designed, built, operated and disposed of in a resource-efficient manner with the aim to minimize the overall (negative) impact on the built environment, human health and the natural environment. As a practical matter, two crucial questions are: ‘Can this be done affordably?’ and ’Will it sell in the marketplace?’

Coastal Style, Net Zero demonstration house_1
Upfront Costs

The costs of green buildings can imply a higher initial capital cost, compared to the cost of conventional buildings. However, careful planning and deliberate choices can minimize these upfront costs. It is expected that the costs of building green will decrease over time, thanks to experience and the development of products and services. For instance, using modular construction techniques and building components instead of traditional methods.
Life Cycle Cost

One of the main arguments for green home designs is that any higher upfront cost for construction/renovation can be mitigated by a lower operating cost over the life-time of the building, i.e. a lower life cycle cost. If the initial investment leads to lower operation costs and/or higher durability, the higher upfront capital cost needed for construction or renovation can be justified.

Green building benefits include environmental, economic and social benefits. The potential environmental benefits are enhancement and protection of biodiversity and ecosystems; improved air and water quality; reduced waste stream and conservation and restoration of natural resources. Economical potential benefits include lower operation costs; a market for green products and services; enhanced occupier productivity and the optimization of life-cycle performance. Social potential benefits include improved health and comfort for residents, minimizing the burden on local infrastructure and improved aesthetics.

Typical homes compete on price (comps), features and “sizzle” (such as granite counter-tops) whereas green homes compete on value (lower utility bills, less toxins). There are more options available and more opportunities to build value above and beyond a typical competing home.

Green building market share projections

Green homes represented $17 billion, or 17 percent of the overall construction market in 2011. This figure is double of what it was in 2008, which showed an 8-percent market share (valued at $10 billion). Green building’s market share is expected to sharply rise to 29-38 percent across a five-year forecast for overall residential construction – potentially an $87-$114 billion opportunity.

According to the report, the two key factors driving market growth are that green homes are seen as higher quality, and that they save consumers money on utility bills. “Homes that are not only green, but also offer the combination of higher quality and better value have a major competitive edge over traditional homes,” said Harvey Bernstein, vice president of industry insights and alliances at McGraw-Hill.

A “high performance” Green-built house need not appear different than its conventional counterpart. The design for a single-family or multi-family residence can be architecturally consistent with the historical precedent of a given neighborhood. There are development projects in many parts of the country that have successfully demonstrated that sustainability is achievable and marketable, regardless of the climate or the geographic/urban context."