Integrating Sustainability Programs into the Capital Planning Process
By Susan Buchanan, Senior Director, Assessment Services
With detailed information about the costs and benefits of potential green investments, companies can effectively evaluate which initiatives will ultimately provide the greatest results over the short- and long-term. Based on its overall business goals, each company will have different values and, therefore, different strategies. For instance, one firm may focus on investments to improve the quality of the indoor work environment, while another may focus on reducing the impact of carbon emissions.
The many potential greening initiatives a company can undertake compete with a myriad of other capital and operational investments. These include systems renewal, building renovations, and new construction. While companies may analyze opportunities to improve building sustainability, ultimately these investments will need to be assessed in relation to other building requirements.
Short- and Long-Term Deliverables
Companies that are just beginning the process of integrating green programs into their capital plans may choose to initially focus on relatively low-cost initiatives. These can deliver short-term paybacks by reducing energy and natural resource consumption — with the priority based on cost savings and other desired benefits.
By combining this information with detailed data about overall requirements across a building portfolio, companies can get a holistic view of facility needs — allowing them to improve operational conditions and maximize efficiency, while promoting a sustainable built environment. Finding this data and making these decisions can be a daunting task, but here are a few simple steps to follow when considering facility and sustainability upgrades.
Questions to Ask
The first step in identifying the best investment strategy for sustainability is an objective evaluation of a company’s current state of sustainability and its options for change — including estimated costs and potential benefits. Company management should determine the answers to several questions before establishing a sustainability framework. Consider the following
- What are the company’s strategic business goals and real estate objectives, and what is its corresponding sustainability commitment? Is there a balance between them?
- Once the company’s objectives are decided, it is time to determine the starting point, i.e., what types of assets and equipment are already in place? Where can sustainability be improved easily? And where is the most work needed?
- The location of a facility — rural, suburban, or urban — will also play a role in determining sustainable technology needs. Urban buildings might contain more equipment, and assets are compressed and configured in a smaller space; rural buildings, on the other hand, are less densely occupied.
Financial metrics will obviously have an impact on how a company evaluates its sustainability initiatives. When a firm looks at its deferred maintenance, maintaining facilities, and keeping them going through their lifecycle, it would normally look at an in-kind or conventional replacement. If there are green alternatives, companies should consider several financial metrics while evaluating each option.
One easy way to evaluate the cost of green alternatives is to determine the cost as a percentage of current asset replacement value. If the cost of making a facility sustainable starts approaching the value of the facility itself, it obviously is not a financially viable alternative.
A company should also consider “the triple bottom line.” A capital plan that includes green initiatives that hit the financial impact on the company, the facility’s impact on the environment, and the company’s social responsibility may be the best alternative.
This blog post is derived from Susan Buchanan’s article, “Integrating Sustainability Programs into the Facilities Capital Planning Process,” which originally ran in the March/April 2011 issue of Facilities Manager, the official magazine of APPA. To read the full article, visit here. To learn more about APPA, visit appa.org.