Why should we still embed sustainable building solutions with the pressures of value engineering?
- Becci Taylor
- Nov 8, 2024
- 7 min read
Truly sustainable and resilient buildings last longer, are used more, and look after both people and planetary health
Sustainability has often focused on environmental, economic and social dimensions. Modern thinking looks towards regenerative design, which broadens thinking to: responding to local context and integrating to optimise; systems thinking to capture wider benefits; connecting to resource flows; optimising life cycle value; and, creating healthy and resilient communities. At present, some of your projects may be facing cost challenges that require a value engineering approach to ensure their affordability.
In this blog, we present a few reflections on how sustainability solutions can be embedded into buildings without having to be value-engineered out.
Achieving more with less
A truly sustainable and resilient building is one that might offer more amenity, longer life, more income, more value and deliver this with less materials, lower emissions, and less cost. There is growing evidence that the most sustainable buildings can attract higher rents as more occupiers seek buildings with credentials that align with their corporate ESG commitments. A recent report on Green Governance by CRREM (Carbon Risk Real Estate Monitor) referenced research by JLL showing that three quarters of leading investors strongly agreed that sustainable strategies in buildings drive higher occupancies, higher rents, better tenant retention and overall higher value.
Whether new build or retrofit, the early stage thinking and brief setting is key to delivering the best project outcomes from lowest capital and running costs to lowest carbon emissions, while at the same time delivering safety, well-being and resilience. Capturing all requirements in the project brief and embedding into the design from the outset allows for a holistic, integrated approach – every element of a design can achieve multiple objectives, and interventions into existing buildings can achieve multiple outcomes.
When done well, a ‘sustainable’ design should often be less about adding but be more about taking things away. Some examples could include:
Simpler facades – having simpler facades cost less to build, are easier to insulate and result in lower embodied carbon impacts;
No heating infrastructure – highly insulated facades can be so efficient that you don’t need any significant heating;
No air conditioning – reducing the heat from equipment and the sun, alongside correctly sized opening windows for ventilation, can remove the need for air conditioning. This can lead to further capital and operational costs savings. Simply painting a roof white can be a cheap and easy way to improve comfort;
Designing out systems – the Macfarlane Place social housing block (for Stanhope/Mitsubishi / Peabody)[1] features an integrated, resident-operated external blind system which allowed the removal of cooling systems that would have otherwise been required to meet comfort criteria on the noisy site.
Less stuff – focussing on demand reduction means fewer M&E systems in the building, which can lead to a higher percentage of usable floor area. Stripping back the aesthetic with minimal additional finishes can reduce the building’s cost and embodied carbon. A new 12-storey office development has been designed in Salford [2] with an upfront embodied carbon rate of 664kgCO2/m2 – compared with over 1,000kgCO2/m2 for a typical office scheme that also aims to achieve a 5.5-star NABERS UK Energy Rating [3] for the design – meaning less carbon emissions from construction and operation.
Achieving multiple benefits e.g. green roofs or spaces can support sustainable drainage and reduce cooling demand alongside amenity and biodiversity.
Trees both provide shade but also reduce flood risk.
Thinking like this doesn’t have to cost more and can instead:
Increase financial value, for example by reducing asset stranding and financial risks, increasing access to green finance, increasing investor appetite, and responding to more demanding tenant expectations;
Increase social value (e.g. health and well-being);
Increase resilience by managing risks of hotter, drier summers and more intense and increased winter rainfall events.
Whole life cost and carbon reduction
Economic value is also achieved through whole life cost reduction – reducing running costs should be a key consideration both from an energy, but also management and maintenance perspective. We recommend that whole life cost is used as a value engineering metric alongside whole life carbon. This will often support more sustainable decisions and require consideration of the relationship between capital and operational budgets to avoid perverse outcomes in the long term.
In York, the average home costs 10.9 times more than the average income, the city has seen a 10% rise in rents over the past year, and tenants are facing escalating energy costs. Here, the need for affordable, energy-efficient housing has never been more vital. As part of the City of York Council's net zero by 2030 pledge, the Council has launched an ambitious housing programme: to build 600 new homes across the city that are Passivhaus-certified [4].
Passivhaus is a certified solution that gives a range of proven approaches to deliver net-zero ready new and existing buildings, optimised for a decarbonised grid and augmented for occupant health and wellbeing. Passivhaus does often require additional upfront costs for labour, materials, design and the certification itself, but this uplift is considered less than 8% when factoring in other savings delivered through reduced heating equipment needs. Critically, the high quality of installation results in long-term energy savings providing an increasingly powerful business case for implementing Passivhaus. In Perth, the running cost reduction from Scotland’s First Passivhaus school, Riverside Primary saved so much on running costs that this has become the standard for all future schools. The contractor reported a learning curve on the first project that is now business as usual [5].
Moving away from a mindset of sustainability always ‘costing more’ is important. A 2021 assessment by Arup and cost consultant Alinea (now Turner Townsend Alinea) considered the costs of achieving net zero carbon performance on a recently completed central London building as almost neutral. The article reinforced the idea that prioritisation of design interventions and measures that challenge the brief to reduce carbon and cost is key.
Some developers have set themselves a carbon price on their own projects, which helps to address the disconnect between the costs of measures that deliver net zero outcomes and the benefits of these which are harder to measure. A good example of this is seen from the London-based developer Great Portland Estates, who have adopted an internal carbon pricing metric on their projects which covers operational and embodied carbon. This effectively incentivises schemes to reduce both operational and embodied carbon on their projects to reduce the price of carbon they need to offset to get to net zero emissions. Projects pay costs of residual emissions into a fund, which is then re-invested into proposals which fund retrofit improvements across their portfolio.
Carbon reduction investments can reduce bills and even generate income. Photovoltaic arrays, for example, provide a means to reduce operational energy and carbon in a year while also reducing costs from grid supplied electricity. Excess electricity generated at times of lower building demand can be fed back into the grid to generate income. Designing systems to respond to changes in future electrical prices will reduce running costs and carbon.
Optimising for value
It is important that project teams understand and are aligned on project sustainability. This helps drive a consistent approach where all members of the team are aiming for the same outcome and recognise the benefits, as well as the capital costs, of measures designed to achieve these outcomes. When projects come under cost pressures, this approach means there is a consistent understanding of the underlying intent of many decisions taken measures adopted.
The challenge with buildings that are not designed to support occupiers’ needs and expectations is that they lose value in the market compared with competitors, and they may also be less resilient to the challenges of climate change. The result is that these buildings may require earlier and costlier upgrades and interventions simply to keep up with the market.
The more a building is used the more sustainable it is too. You are reducing future need for more buildings and ‘sweating’ your asset – think of sustainability in terms of carbon emissions per building visitor or user, or per unit happiness. In practical terms, this might mean flexibility that will also support the resilience of the building to changes in future needs, as well as changes in future climate (e.g., heat risk, flooding, flexibility of use, energy/ infrastructure resilience).
If everything can’t be achieved in the initial project, having a deliverable plan for the future (so there are no regrets) is recommended.
We recommend thinking about sustainability and value as early as you can in project development. If you would like some support in setting your brief to achieve value though sustainability, reach out to your Delivery Associate or drop us an email to deliveryassociatesnetwork@arup.com. We can also provide support later in the project process if required, but the impact may be less.
Becci Taylor is Arup UK's residential business lead with a strong background in Building Services Engineering & Building Physics delivering sustainability in the built environment. She leads work to deliver decarbonisation, resilience, and social value through influencing across scales from detailed design to master planning principles. She also leads Arup’s Retrofit at Scale business which takes a whole-system approach to decarbonisation and delivers beneficial outcomes for place and people.
Michael Edwards is a chartered building services engineer with particular skills in low-energy design, refurbishment, and multi-disciplinary design team leadership. He has led teams delivering engineering and specialist design for a wide range of building types and has gained an extensive knowledge of London, UK and international codes and standards.
Faye Hargreaves is a Manager within Deloitte’s Real Estate Advisory, Climate & Sustainability team, working with real estate clients to advise on current and emerging ESG issues as they impact their assets. Faye also carries the Practitioner level of the IEMA Certificate in Environmental Management, as well as a degree in Geography and Business Management.
If you have any questions on this topic, or would like support, please contact your Delivery Associate, or email DeliveryAssociatesNetwork@Arup.com
Links to useful information:
[3] NABERS UK aims to enhance energy efficiency in commercial buildings by measuring and verifying actual in-use energy performance, ensuring real running cost reductions are achieved.
