• About this site|
• Site index|
• Contact us|
• Jobs

Value Case for Green Star-rated Fitting Out of Central Government Office Accommodation

Executive Summary

1 Introduction

2 The Motivation

3 Green Star New Zealand – Scope of Building Features Assumed in the Value Case

4 Green Star New Zealand – Environmental Key Performance Indicators

5 Value Case Assumptions

6 Value Case Results

7 Conclusions

References

5 Value Case Assumptions

5.1 Fit-out scenarios

Three scenarios have been assumed for this value case analysis. Scenario 1 considers the four possible levels of Green Star fit-out and assumes that the base building is new and has attained the following associated ratings.

Table 4: Scenario 1: 4-, 5- and 6-star, and 4-star with energy, focus fit-outs of new 4- and 5-star rated base buildings

A 6-star rated office base building has not been considered because no building in New Zealand has attained this rating and it is not currently mandated for government accommodation.

Scenario 2 assumes that the base building exists and that some upgrading is included to address the principle environmental features that affect the fit-out. These include upgraded lighting and on-floor heating, ventilation and air conditioning (HVAC) systems; new ceilings; new shower facilities for cyclists; and waste-recycling facilities.

The upgrading is assumed to meet a 4-star base building standard for all four levels of fit-out, as indicated in Table 5. The 4-star minimum rating has been chosen to reflect the potential difficulties of upgrading an existing building.

Table 5: Scenario 2: 4-, 5-, 6-star, and 4-star with energy focus, fit-outs of upgraded minimum 4-star rated existing base buildings

Scenario 3 assumes that the base building exists and that no upgrading (and hence no rating of the base building) has been achieved, as indicated in Table 6.

Table 6: Scenario 3: 4-, 5- and 6-star, and 4 star with energy focus, fit-outs of existing unrated base buildings

5.2 Fit-out and building location

It has been assumed that the fit-out and base building are centrally located in a major New Zealand city with good public transport links. This should be the situation for the vast majority of the larger government accommodation solutions.

5.3 Building fit-out size

For the purposes of this value case, a fit-out of 3000 m² has been assumed. For fit-outs below this size the economics are likely to be marginally worse, and for fit-outs above this size the economics are likely to be marginally better. Given the costs of full Green Star accreditation, it would be advisable to limit application for accreditation to fit-outs greater than 2000 m². This cut-off is consistent with other limits on the application of government property guidelines.

5.4 Capital cost investment

5.4.1 Typical ranges of cost for interior fit-outs

Based on data obtained from a number of interior architects and designers, the fit-out costs for offices vary depending on the standard to which the interior is fitted out. Typical ranges of cost are given in Table 7.

Table 7: Typical range of costs for office interior fit-outs

The base building costs are assumed to include flooring, ceiling and HVAC costs. Hard fit-out includes internal walls, small power and data wiring, base building HVAC modifications, and built-in joinery. Soft fit-out includes workstations, chairs, storage, and meeting-room and reception furniture. The above fit-out costs exclude GST, audiovisual equipment, IT equipment and moving costs. It should, however, be noted that some Green Star points are awarded for the energy efficiency of IT equipment. Allowance for energy-efficient IT equipment has also been made in the key performance indicators included in section 4.

For the purposes of this value case, the lower range of a medium-quality fit-out has been assumed, consistent with a government tenant giving an average fit-out cost allowance of $750/m², assuming reuse of suitable workstations and general office furniture. Reuse of furniture is encouraged by the Green Star interiors rating system.

5.4.2 Capital cost investment for Green Star 4-, 5- and 6-star, and 4-star with energy focus, fit-outs

The following capital cost investments, expressed both in monetary terms and as a percentage of the total fit-out cost, have been estimated.

Table 8: Scenario 1: capital cost investment for 4-, 5- and 6-star, and 4-star with energy focus, fit-outs of new 4- and 5-star rated base buildings

Note: NLA (net lettable area) = the area for which a tenant could be charged for occupancy under a lease.

Table 9: Scenario 2: capital cost investment for 4-, 5- and 6-star, and 4-star with energy focus, fit-outs of upgraded minimum 4-star rated existing base buildings

Note: NLA (net lettable area) = the area for which a tenant could be charged for occupancy under a lease.

N/A = not applicable.

Table 10: Scenario 3: capital cost investment for 4-, 5- and 6-star, and 4-star with energy focus, fit-outs of existing unrated base buildings

Notes:

NLA (net lettable area) = the area for which a tenant could be charged for occupancy under a lease.

N/A = not applicable.

5.5 Energy and water cost savings

Energy and water costs of $0.18/kWh (based on predominant electricity use) and $4.5/m³ (based on Auckland data) have been assumed.

5.6 User satisfaction, health and staff retention savings

Improved workplace environments in well-designed, new, sustainable government buildings will offer soft benefits and cost savings to organisations as a result of increased staff satisfaction and retention, and improved health. A building’s workplace environment can affect:

• time staff waste complaining

• sickness

• absenteeism

• length of time working

• staff turnover, and thus recruitment and training costs

• mental and physical performance of base activities (typing, reading, etc)

• errors and repetition (efficiency of tasks)

• wasted time (due to waiting, or unnecessary extra work)

• document access (finding papers, archive retrieval)

• interaction versus distraction

• work style and team working

• attitude to the organisation – feelings of belonging, loyalty

• motivation

• costs of regular internal office moves/re-arrangements or ‘churn’

• impression on visitors and the general public.

Various post-occupancy studies from around the world have identified productivity effects due to workplace environmental factors of approximately 5 to 15 per cent. What this means, however, is open to some interpretation. More specific studies on ‘green buildings’ have confirmed a positive correlation between these buildings and workplace environmental quality and user satisfaction. The Kats report on the costs and financial benefits of green buildings for the Californian Sustainable Building Task Force (Kats and Capital E, 2003) suggests that a 1 per cent productivity and health gain could be attributed to silver LEED-rated buildings (equivalent to a 4-star New Zealand rating) and a 1.5 per cent productivity and health gain to gold and platinum LEED-rated buildings (equivalent to 5- and 6-star New Zealand ratings respectively).

For the purposes of these value cases, the productivity and health gain effect has been conservatively limited to the non-productive proportion of the average annual staff salary costs related to sickness and staff recruitment and training. Based on a previous assessment of government accommodation (Inland Revenue) by eCubed Building Workshop Ltd, these
non-productive costs are estimated to be approximately 10 per cent of the annual salary cost. On this basis, a soft-cost benefit of 0.5 per cent is derived for a 4-star building and 0.8 per cent for a 5- or 6-star building.

The relative contribution of the base building and fit-out to this soft-cost benefit has been assessed at 55 per cent and 45 per cent, respectively. This gives a fit-out soft-cost benefit of 0.225 per cent for a 4-star or 4-star with energy focus fit-out, and 0.36 per cent for a 5 or 6-star fit-out. These percentages have been applied to the annual average salary cost. An average salary of $75,000 and occupancy of one person per 15 m² have been assumed for a government central office-type tenancy. The resultant soft benefits are half those assumed by the Californian Sustainable Building Task Force Report and are therefore considered to be conservative.

5.7 Workplace efficiency

A number of sustainable building principles are closely associated with improvements in workplace efficiency and their potential impact on workplace performance. Factors such as increased building floor-plate efficiency and more open-plan office space offer opportunities for increased occupancy density from the current typical government accommodation densities of one person per 18–20 m² to more typical industry averages of one person per 15 m². Occupational cost savings of $35–60/m² are achievable by more efficient building designs and increased occupational densities.

Similarly, greater flexibility in building services systems, partitioning and workplace furnishings can offer opportunities to reduce staff relocation, or ‘churn’, rates. Office churn can typically cost $20–35/m² pa, and savings of $6–10/m² are achievable by more flexible designs.

Increased workplace efficiency allied to more sustainable fit-outs can therefore result in operational associated savings of $45–70/m². These potential cost benefits have been excluded from this value case.

5.8 Workplace expression

Workplace design and culture can be used to reflect or express the values of an organisation such as a government department. This has no direct or tangible operating costs or benefits, but it will reinforce and demonstrate a department’s role and accountability both to staff and to the wider community. A 2003 survey by Management Today magazine found that 94 per cent of respondents regarded their place of work as a symbol of whether they were valued by their employer, yet only 39 per cent thought their offices had been designed “with people in mind”.

Values that could be expressed by the fit-out of a sustainable government office building include:

• sustainability

• connectedness

• openness and accountability

• professionalism and authority

• modernity – being in touch and forward-looking.

No financial value has been included in this value case for workplace expression.

5.9 Fit-out life

Office fit-outs have a typical life expectancy of six to nine years, consistent with the termination of typical lease periods. Given the nature of a government tenancy with longer lease periods and the aim of a sustainable fit-out to be more durable, this value case assumes a fit-out life of nine years.

5.10 Discount rate

The value case uses a discount rate of 6 per cent per annum. This is in accordance with the public sector discount rate for general purpose office and accommodation buildings given in Treasury Circular 2008/13. The New Zealand Energy Efficiency and Conservation Strategy (EECA, 2007) recommends a public sector discount rate of 5 per cent for assessing the costs and benefits of energy-efficiency programmes.

5.11 Carbon dioxide emission factor

The value case assumes an average carbon dioxide emission factor of 0.165 kgCO₂-e/kWh (Ministry for the Environment, 2007).

5.12 Cost of carbon

The value case uses the New Zealand Treasury price estimate of carbon of €12.50/tonne at 30 June 2008, converted to NZ$30/tonne (December 2008).

[ Previous| Next