Now is the time to push the throttle forward and seize on a range of construction opportunities, especially “green” ones. Businesses and the government are offering a range of lucrative deals in the form of sales, rebates and tax incentives to get us to conserve energy and spend money. What’s more, building material costs are down approximately 20 percent across the board and available labor is at a surplus. It is a prime time for retrofitting and refurbishing properties in the green market.
Going green comes in many shades. You can opt for the premier in environmental standards and notoriety and achieve LEED® certification through the United States Green Building Council. Or you can start more modestly and still dramatically cut costs by upgrading outdated windows and replacing inefficient light bulbs. Whichever direction you take, the result is the same: substantial savings and a more satisfied clientele.
According to Nancy Johns, PMP, LEED AP and LEED project manager for Perini Building Company, where to start is often the hardest part. The first step, she says, is to undergo an energy audit. This sounds more ominous than it really is. An energy audit entails reviewing everything on paper: What kind of systems do I have? How old is each system? How are they rated? What are my annual operational costs? What is the annual energy consumption? The second part of the audit is to physically walk through the facility and objectively evaluate how the building, your customers and employees consume energy.
As the green movement grows, so does the list of qualified people who can assist with an energy audit. For starters, contact your local energy company or the local chapter of the United States Green Building Council and get a list of qualified consultants, including general contractors with expertise in retrofitting energy efficient buildings.
“Being aware and understanding your facility’s energy consumption is a must,” Johns said. “Investing in an audit before any retrofit changes are implemented will ultimately save money. Often facility managers can make incredible reductions in energy usage simply by changing operational functions that require minimal costs while providing fairly significant results.”
An example of a lost cost, relatively easy retrofit project is the NV Energy Sure Bet Project (NV Energy is Nevada’s largest utility provider). According to Frank Del Toro, general manager in facilities administration for NV Energy and published NV Energy case studies,the program’s objective is to work with casino and hotel operators, as well as other businesses of all sizes to reduce energy consumption. On a small-scale project, NV Energy worked with Rampart Casino in Las Vegas to retrofit lighting in the casino’s three-story parking garage. Rampart replaced its 175-watt metal halide lighting fixtures with 80-watt compact fluorescent lamps (CFL). By installing 468 CFL fixtures, Rampart Casino saved 383,064 kwh in the first year and has realized an overall annual cost savings of approximately $30,798. In addition, the company received incentives totaling $15,000 from the Sure Bet Project.
On a larger scale, the Reno Hilton, which has approximately 2,000 guest rooms, installed a new variable frequency drive (VFD) air compressor. By replacing two 30-horsepower Sullair air compressors with one 60-horsepower Atlas Copco VFD air compressor, the Reno Hilton’s annual energy savings are 169,067 kwh. Annual cost savings are $15,475 and the total cost of the project was only $24, 356. “Through the energy and peak demand savings realized as result of the retrofit, NV Energy’s customer incentive payment to the Hilton was $6,972. The project payback period was just over one year,” Del Toro said.
Casino owners can realize even greater savings through more comprehensive retrofit projects and by taking advantage of grants and tax incentive programs offered by federal, state and local governments. Like any tax plan or technical contract, at first glance the rules and regulations required seem daunting and excessive, but if you are working with an experienced team, developing an energy retrofit plan can proceed smoothly.
An experienced general contractor can assist with budgeting, planning and scheduling a retrofit project around ongoing casino operations. With an audit in hand, your energy team can assess what is worth repairing or replacing, the costs associated with upgrades and repairs, and a timeframe in which to perform the work. Your team can also make sure that the improvements implemented are in line with tax incentive, grant and rebate requirements.
Moving forward, let’s say the building audit is complete and it has been determined that the greatest savings will be realized by retrofitting the building envelope (walls, window, doors, floors, roof and foundation). Here in Las Vegas where temperatures can soar into the hundreds, the efficiency of the building envelope can make a dramatic difference in energy savings. To plan any retrofit project, the general contractor needs to work closely with the facility’s operation’s management to ensure that construction does not impinge on the flow of revenue. For example, if the hotel room windows need to be replaced, construction needs to be scheduled so there are always enough rooms available to maintain revenue. In public areas, the general contractor and management need to work through the pros, cons and economic consequences of how much work to do at once and how much of the property to partition off from guests.
Like any casino rehab project, the objective is to work around casino guests, not vice versa. The key to a successful project in any 24-hour atmosphere is planning, planning and more planning. Expect planning to take at least three to four months. The more involved casino management is, the better. Make sure materials are ordered and inventoried before onsite work begins. Subcontractors and vendors should also be lined up and ready to start on specified dates. Meticulous coordination eliminates surprises once the actual work begins.
Safety is another piece of the project. Gaming properties always have people in them. All precautions need to be taken regardless of the scope of the project.
“In addition to being the absolute most opportune time to undertake a green retrofit based on labor availability, reduced material costs and a flowing spigot of money for green improvements, it’s good for business and for the health of your employees and customers,” Johns said.
According to a report by McKinsey & Co., “Unlocking Energy Efficiency in the U.S. Economy,” improving energy efficiency in residential and commercial space offers a host of nonfinancial benefits. One of the most important is the positive impact on comfort and health. According to the report, people spend up to 90 percent of their time indoors, which contributes to chronic allergies, asthma and other illnesses. Sick Building Syndrome (SBS) is associated with poor indoor air quality and is yet another negative impact on a building occupant’s health. SBS can cause irritations of the throat, eyes, nose and skin. Contributors of SBS are inefficient HVAC systems, emissions from some types of building materials, inadequate exhaust systems and volatile organic compounds used indoors. The report states that while quantifying the impact of higher indoor air quality on health is difficult, research shows that the benefits of improving air quality on health are significant.1 Improved indoor air quality can reduce symptoms of SBS by 20 percent to 50 percent, asthma by 8 percent to 25 percent, and other respiratory illnesses by 26 percent to 75 percent.2
The McKinsey & Co. report also says that implementing energy efficiency upgrades will increase worker productivity directly, as well as indirectly through reduced sick leave. The report cites a study by Lawrence Berkeley National Laboratory, which states indoor air quality alone can increase worker productivity by as much as 5 percent.
A paper published by the Center for the Built Environment at the University of California Berkley, “Occupant Satisfaction with Indoor Environmental Quality in Green Buildings,” states that there are certain design decisions and operation practices that are generally known to affect Indoor Environmental Quality (IEQ) and are commonly used in green buildings. These strategies include, but are not limited to, improving ventilation; removing indoor pollutants; using green materials; giving occupants personal control over operable windows, task air conditioning or under floor air distribution systems; employing daylight; and reducing ambient light levels by using task lighting.3
The greening of a property can also be an effective marketing tool. It differentiates your property and is increasingly important to a growing number of customers. If two hospitality properties offer similar room rates and other amenities that up sell a property, the hook may be the facility that boasts being green, clean and healthful.
Another reason why the time is now: While new construction starts are at a low, projects that were in progress during the recession are coming online—and there are some large ones, including CityCenter in December 2009, which has already received LEED Gold certification for three of the development’s buildings.
The green movement is here to stay. It’s not a fad or trend, it’s the new reality. According to the United States Green Building Council, under consideration in the House and Senate are elements of the economic recovery package for retrofitting public buildings that “represent an important recognition of the transformative potential of existing buildings,” including modernizing schools and federal buildings with green improvements. Although still under development, the fact is the current administration and Congress have thrown their weight behind the greening of outdated, inefficient buildings and are committed to a more sustainable America. With that said, “green” money is abundant now, but the flood won’t last forever. The time is now.
Footnotes
1 Hannah Choi Granade, Jon Creyts, Anton Derkach, Philip Farese, Scott Nyquist, Ken Ostrowski, “Unlocking Energy Efficiency in the U.S. Economy,” McKinsey&Company, July 2009.
2 William J. Fisk, “How IEQ Affects Health, Productivity, “ASHRAE Journal, May 2002.
3 S. Abbaszadeh1, L. Zagreus, D. Lehrer and C. Huizenga, “Occupant Satisfaction with Indoor Environmental Quality in Green Buildings,” Proceedings of Healthy Buildings 2006, Lisbon, Vol. III, 365-370.
Dick Rizzo is the vice chairman of the Perini Building Company where he is responsible for new business development and company growth with particular emphasis on developing national clients.
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