As healthcare designers plan, program, and design advanced healthcare facilities, they must consider all the ways in which those facilities can help patients heal, allow nurses and physicians to provide better care, and help facilities work more effectively and efficiently. This daunting task is made even more complex when sustainable design initiatives are integrated into investment and operating decisions. Government entities in particular are faced with this dilemma as the result of recent federal sustainability mandates that place an emphasis using metrics to provide a full accounting of the social, economic, and environmental effect of federal projects. This task is particularly challenging because traditional life-cycle cost tools look only at direct cash benefits, ignoring social and environmental benefits.
Two Department of Defense (DoD) projects—the recently opened Fort Belvoir Community Hospital in Virginia (see "Research and Rehabilitation," profiled in ECO-STRUCTURE's January/February 2012 issue) and the Fort Bliss Replacement Hospital currently under construction in Texas—turned to a sustainable return on investment (SROI) analysis framework to help make these necessary sustainable-building decisions based on knowledge regarding the full effect of their choices.
SROI originated from a Commitment to Action by Omaha, Neb.–based HDR to develop a new generation of public-decision-support metrics for the Clinton Global Initiative (CGI) in 2007. The process was developed with input from Columbia University’s Graduate School of International Public Affairs, and was launched at the 2009 CGI annual meeting. Since then, the SROI process has been used by HDR to evaluate the monetary value of sustainability programs and projects valued at over $10 billion.
The SROI process monetizes social and environmental impacts related to projects. It also provides the equivalent of traditional life-cycle cost metrics, or financial return on investment (FROI), in its analysis. FROI accounts for internal cash costs and benefits only, while SROI accounts for all internal and external costs and benefits of the triple bottom line in dollar terms (i.e., greenhouse-gas emission effects or the social cost of water saved). Other relevant incremental social and environmental impacts include air quality, water quality, waste reduction, human health, and labor or productivity costs. The process follows a transparent methodology that obtains data, validates alternatives, assigns risk and probability, and communicates decision rationale. The modeling framework compares the social and financial benefits of the alternatives in relation to their costs for design, capital, replacement, and operating and maintenance. Additionally, SROI is fully compliant with federal sustainability mandates.
As an example, the SROI analysis for the 1.1 million-square-foot, LEED-registered Fort Bliss Replacement Hospital resulted in a decision-making tool that evaluated and assessed sustainable-design and evidence-based design alternatives during each design phase so that only the most efficient, synergistic combination of initiatives would be included in the project.
During the project kickoff, the integrated project team developed a master sustainable-strategy tracking list with 75 sustainable-design alternatives across the categories of site, energy, water, indoor environmental quality, materiality, evidence-based design, regionalism, and innovation. These design alternatives supported the project’s sustainable vision, focusing on long-term goals for 2020 and beyond to meet federal sustainable mandates and LEED requirements, and crossed design phases from concept through construction documents and into construction and operations. The project team then narrowed the list to those sustainable-design alternatives that were necessary to inform the schematic-level design to ensure that decisions were made early and would reduce energy consumption, reduce potable water use, support the transition to renewable energy, divert waste from the landfill, and improve health outcomes.
At a two-day visioning workshop, the team focused on measuring the design alternatives from a life-cycle cost perspective rather than the typical first-cost perspective. The team then determined data inputs and calculations for the SROI model, such as utility rate-pricing structures. The design alternatives were presented in a detailed financial analysis to guide the team in its decision making. Derived from the financial analysis, a “dashboard” was created to summarize the data and provide a snapshot of decisions that needed to be made. The tool, modeled after financial and investment dashboards, demonstrated the economic costs and benefits, architecture and engineering analysis, and recommendations in a straightforward manner with green for “go” and red for “stop.”
The Fort Bliss hospital results demonstrate that SROI ensures greater rigor in the decision-making process and creates a defensible position for the project. The SROI process monetizes cash and noncash benefits alike, allowing for a more holistic view of the sustainable elements being considered and replacing emotional discussions with an objective and structured process that is quantifiable and transparent.
Additionally, by involving all stakeholders in the SROI process, each team member is an integral part of the process, resulting in improved collaboration, increased transparency, and a greater level of consensus achieved earlier in the project.
Stephane Larocque is the practice group Leader for HDR’s sustainable return on investment (SROI) process. He can be contacted at email@example.com.