complete study of constructing and leasing ten condominium buildings that meet the LEED building standard in Montreal and other locations in Quebec

1. FEASIBILITY
STUDY
AN INVESTIGATION
ON LEED
CERTIFICATION
BENEFITS
AND COST
IMPACT
Bassem Eid ID# 6448208
Fady Halim ID# 5543444
Karim El-Halaby ID# 6399266
Rida Mortada ID# 9463305
Samel Rofail ID# 9758283
Sherif Hafez ID# 9787143

2. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
INTRODUCTION
THEORETICAL BACKGROUND
CASE STUDY
• Project Overview
• Green Building Design
• Analysis Methodology
• Alternatives
• Assumptions
• Cash Flow Diagrams
• Cost and Revenue Distribution
• Evaluation
o Incremental analysis
o Annual Present Worth
o Sensitivity Analysis
CONCLUSION AND RECOMMENDATIONS

3. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
INTRODUCTION
OBJECTIVE
To conduct a feasibility study on a recent LEED certified construction project in the Montreal
region where a review of viable range of options – being different levels of LEED certifications -
is studied. The analyzed options are then evaluated against a set of agreed upon criteria to help
the investors make the best possible decision.

4. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
THEORETICAL BACKGROUND
FEASIBILITY
STUDY
• The feasibility study is an assessment of the viability of any business venture, evaluating advantages and
disadvantages of the project
• Has an essential impact on the quality of the investment decision-making process
• Highlights the motives behind project selection as well as improves investment efficiency while maintaining
sustainable and healthy development
• The construction industry utilizes various procedures and techniques to determine the economic viability of a
project and measure the worth of an investment. The most notable of these measurements are the Net Present
Value (NPV) and the Internal Rate of Return (IRR)

5. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
THEORETICAL BACKGROUND
FEASIBILITY
STUDY
• Cost benefit analysis is one of the processes for calculating benefits and costs of non-profit projects.
• The benefit–cost ratio (BCR) is another indicator that attempts to summarize the overall value for money of a
project or proposal. It compares the present value of an investment decision or project to its initial cost. In other
words, it is the ration of the benefits of a project or proposal in monetary terms relative to its costs.
• Cost-Benefit analysis steps:
1.Establish the project and its alternatives
2.Collecting Cost and benefit elements
3.Predicting the outcomes of costs and benefits over the planning horizon of the project
4.Denoting the costs and benefits with their respective dollar value
5.Using the appropriate discount rate, calculate the present value and cost benefit ration of the project
6.Perform the sensitivity analysis
7.Recommendations

6. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
HABITAT
FOR HUMANITY
• Non profit organization
• Clean, decent ,stable and affordable housing
• Building energy efficient and sustainable housing
Duplex; comprising of two apartment units of 1600 square foot
each, one occupying the top floor and the other on the ground
floor with access to a backyard

7. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
GREEN
DESIGN
• Gained remarkable interest during the past few years as a response to the exponential growth of environmental
awareness around the globe
• In the late 1990’s, a green building certification system was introduced to the building construction market;
Leadership in Energy & Environmental Design (LEED). It is internationally recognized, with the aim of providing a
third-party certification system for building projects by evaluating their sustainability.
LEED CERTIFIED
LEED SILVER
LEED GOLD

8. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
ANALYSIS Identify Alternatives
METHODOLOGY
Data Collection
Assumptions
Select Method
Of Evaluation
Certified Silver Gold
Incremental Analysis Result
Certified
Incremental Analysis
Result Certified GOLD
Sensitivity Analysis To GOLD initial
Applied to GOLD Assumption
Investment
Recommendations

9. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
PROJECT
ASSUMPTIONS
• Habitat for Humanity will build 10 similar buildings around the Montreal region
• Investment cost & Financing
 A detailed cost estimate was developed using RS-Means Cost Data manual for the Silver LEED building
earlier and was used as a reference for the purposes of this study
 An initial investment of $4.5M is assumed to be invested upfront by the organization while the balance is to
be covered by a loan from a financial entity (being a bank)
 A loan with the amount of the balance between the available $4.5M and the initial construction cost will be
borrowed from the bank at the rate of 6.5% compounded annually for an amortization period of 30 years
Alternative Total Initial Loan
Initial Cost Investment Amount
Certified LEED $5,172,776 $4,500,000 $672,777
Silver LEED $5,247,290 $4,500,000 $747,290
Gold LEED $5,232,387 $4,500,000 $732,387

10. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
PROJECT
ASSUMPTIONS
• MARR
 The MARR was decided to be 8% keeping in mind that an iterative process will have to be applied later in
the study to identify the most suitable value.
• Inflation
 For the past year the average inflation rate was 3.1%. Although this value is found a bit high if compared
with the historical information of the past 15 years (fluctuating between 2% to 2.5%), it was retained since
it’s the most recent available information and given the current global economic situations
• Taxes
 Given that the project is realized for non-profit purposes, the Canadian government will not impose any
taxes as long as all legal constraints are respected. This information is confirmed on the “Habitat pour
l’humanité” official website
• Depreciation
 Double Declining Balance (DDB) for depreciation was chosen for the project since it is one of the most
common methods used in the Canadian market Alternative Project Salvage
• Planning Horizon Amount
Certified LEED $664,765
 The planning horizon was assumed to be 40 years
Silver LEED $674,341
Gold LEED $672,425

11. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
PROJECT
ASSUMPTIONS
Alternative Regular O&M Annual
Cost
Certified LEED $32,000
Silver LEED $32,000
Gold LEED $24,000

12. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
PROJECT
ASSUMPTIONS
Alternative Major Repairs Salvage Value
Cost (Every 5 years)
(Every 5 years)
Certified LEED $32,000 $640
Silver LEED $30,400 $608
Gold LEED $28,800 $576

13. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
PROJECT
ASSUMPTIONS
Alternative Annual Benefits Gradient
A G
Certified LEED $72,000 $7,200
Silver LEED $73,800 $7,380
Gold LEED $75,600 $7,560

14. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
CASH FLOW
DIAGRAMS - CERTIFIED

15. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
CASH FLOW
DIAGRAMS - SILVER

16. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
CASH FLOWS
DIAGRAMS - GOLD

17. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
COST & REVENUE
DISTRIBUTION

18. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
EVALUATION
• Incremental Analysis
 The incremental analysis starts by comparing the Silver to Certified alternatives where the Certified
scenario is found to be better. Therefore, the second comparison takes into account Gold versus Certified.
And in this case the Gold alternative is found to be the best between the studied scenarios.
Comparison Present Worth Result
Silver vs Certified ($ 90,022) PW [Silver-Certified] < 0 SELECT
Certified
Gold vs Certified $ 123,709 PW [Gold-Certified] > 0 SELECT Gold

19. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
EVALUATION
• Annual Present Worth Evaluation
 the Present Worth calculations were carried out at each year of the life of the project. This study provides a
reasonable comparison of the alternatives at each year and confirms the findings in the previous sections.

20. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
EVALUATION
• Sensitivity Analysis
 The sensitivity analysis is performed to determine the impact of the measure of economic worth when
value of one or more parameters varies over specified range
Initial Cost Annual Salvage Value Planning MARR AW (8%)
Revenue Horizon (n)
($ 5,172,777) $392,937 $664,765 40 Years 8% ($38,286)
 Assuming an error range between -50% to + 50 % the AW is calculated by applying each Percent on a
specific variable while fixing the other variables.
Planning
% Error Initial Cost Annual Revenue Salvage Value MARR
Horizon
-50% 191,482 (232,053) (29,210) (109,955) 150,999
-40% 147,603 (191,225) (28,950) (78,609) 117,497
-30% 103,724 (150,396) (28,691) (58,139) 82,705
-20% 59,846 (109,568) (28,431) (44,285) 46,776
-10% 15,967 (68,740) (28,172) (34,682) 9,858
0% (27,912) (27,912) (27,912) (27,912) (27,912)
10% (71,791) 12,916 (27,653) (23,085) (66,406)
20% (115,670) 53,744 (27,393) (19,614) (105,511)
30% (159,549) 94,572 (27,133) (17,102) (145,126)
40% (203,428) 135,400 (26,874) (15,278) (185,164)

21. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
EVALUATION
 Based on the slopes of the sensitivity curves the MARR and initial investment are more sensitive to errors.
It is assumed that the initial investment is reliable and could not be changed since it will be based on a
lump-sum contract. Therefore, in order to reach the breakeven point, the focus will be on the MARR value.

22. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
REITERATION
 The breakeven point is found at -7.39% error for the MARR. This translates into using MARR value of
7.56% where the Present-Worth of the project will equal 0; and therefore, fulfill the main objective

23. FEASIBILITY STUDY
An Investigation on LEED Certification Benefits and Cost Impact
CASE STUDY
CONCLUSION
 The analysis conducted explores the feasibility of three different LEED certifications and provides a
comprehensive analytical study that could help the decision makers. The pursuit of a LEED Gold
Certification is highly recommended to provide a win-win situation for the environment and to maximize the
benefits of the occupants.
Highlights:
1- Pursue a LEED Gold certification to maximize the benefits
2- Invest the total of $4.5M available today
3- A loan of $732,387 to be borrowed from the bank and paid back on 30 years amortization period
4- MARR of 7.56% is to be targeted by the investors

24. FEASIBILITY
STUDY
AN INVESTIGATION
ON LEED
CERTIFICATION
BENEFITS
AND COST
THANK YOU
IMPACT
Bassem Eid ID# 6448208
Fady Halim ID# 5543444
Karim El-Halaby ID# 6399266
Rida Mortada ID# 9463305
Samel Rofail ID# 9758283
Sherif Hafez ID# 9787143