The “S Word”

With a new survey showing more than 58% of projects in the US will be green by 2018, contractors need to stop thinking about sustainability as a bad word.

A new survey, conducted by the US Green Building Council (USGBC) and Dodge Data & Analytics, predicts that the global green building market will more than double by 2018. In the US, nearly half (44%) of the respondents to the study report that they are currently doing more than 30% of their projects green, and 58% report that they will be building green at that level by 2018.

That means that green building isn’t just a nice thing to do anymore. It’s an expectation. And not just so property owners can hang a plaque on their door. In fact, branding/public relations and internal corporate commitment have seen notable drops in response between 2012 and the current 2015 study.

“Sustainability is now the norm,” says Ryan Prime, project engineer at Skanska. “Whether it’s because of public opinion or the legislation, this is where society is going.”

Still respondents said that higher ­first costs is one of the top three obstacles in 11 out of the 13 countries featured in the study. It is particularly prominent in the US where contractors focus heavily on the immediate ROI of a project and not the future benefits of investing in sustainable construction. In fact, more than any other country included in the survey, respondents in the US are concerned about higher ­first costs, with 70% regarding this as one of the top three barriers to the growth of green, compared with 50% of global respondents

“There is a perception of things being more expensive when you bring in the ‘S Word,’” Prime says. “When you bring up sustainability, there is automatically this negative reaction. People perceive it as being ultra-green and an additional cost and burden. When it fact it's really just about being efficient in your design and efficient in what you're building." 

Demand Driving Sustainability

Whether contractors want to participate in sustainable construction or not, the demand for it is continuing to grow. While client demand has consistently been an important trigger in the studies conducted in 2008 and 2012, it takes a significant leap in 2015 as one of the top triggers driving future green activity, from 35% in 2012 to 40% in 2015. Clearly, recognition by owners of the benefits of green is critical to sustaining green market growth globally.

The biggest growth since the 2012 study has been among those reporting that environmental regulations are also important triggers for green. In 2015, 35% of US respondents notated this was important, up from 15% in 2012. The push of regulations is more important among those who are not otherwise committed to green.

Green buildings also offer significant operational cost savings compared with traditional buildings. To this effect, respondents expect a 14% savings in operational costs over five-year savings for new green buildings and 13% savings in operational costs over five years for green retrofit and renovation projects. Building owners also report that green buildings— whether new or renovated—command a 7% increase in asset value over traditional buildings.

This is also a hurdle as US respondents lag behind their peers globally in tracking business benefits, with 43% reporting that they do not use metrics to track building performance, compared with 25% who report not tracking metrics globally. This may explain why making the business case is one of the biggest challenges in the US, and it may also hamper market demand for green.

 Top Sectors for Growth                        

This demand for green building, coupled with contractor reluctance to venture into the sustainable construction market presents many opportunities for those ready to get in the game.  

The top sector for green building growth globally is commercial construction, with nearly half (46%) of all respondents expecting to do a green commercial project in the next three years.

Generally strong expectations about new institutional green projects globally lead this sector to rank second in the global average of respondents. The United States lists this sector as the highest percentage of growth under institutional construction projects. 46% of contractors in the US expect to do green projects in the next three years. This is likely due to certification requirements for many public buildings on a federal and state level and schools on a municipal level.

While there is a relatively high number of countries where over 40% of respondents believe that they will do green retrofi­t projects in the next three years, there is also a relatively high number of countries with less than a quarter expecting to do green work in this sector. Although not the highest percentage in the US, over 40% of respondents predict they will work on retrofit projects over the next three years.

"The biggest drawback to sustainability is perception," Prime says. "You're basically just asking people to do one more thing. They need to know why by them doing these things, it's going to make their lives easier or their work better or that a better product will be produced. People don't necessarily want to do things outside of what they've normally been doing for years and years. We need to overcome that." 

How can we help contractors overcome their reluctance to break into the green building market? Contact me at [email protected] and let me know.