Sustainable Developments Start with a Solid Budget: Here’s Why

By: Daniel King, Regional Director of Cost Management at AESG

Date Published: February 5, 2025

Sustainability is no longer a “nice to have”—it is a business imperative. From local regulations to global net zero targets, environmental factors now shape how we plan, build, and operate. In this changing landscape, setting a robust capital budget at the very beginning of any development project is critical. It not only ensures the client’s design ambitions are met, but also accounts for the evolving sustainability requirements that can significantly affect both costs and long-term performance.

Why Capital Budgeting and Sustainability Go Hand in Hand

The capital budget sets the financial groundwork for all subsequent phases of a project. If it overlooks sustainability aspects, developers risk dealing with unplanned expenses later—either through retrofits or compliance penalties. Conversely, incorporating green initiatives from the start can result in:

Reduced Operating Expense
Energy-efficient systems and sustainable materials often deliver lower day-to-day running costs.

Long-Term Resilience
Developments designed with climate goals in mind are better prepared for future regulatory changes and environmental pressures.

Strong Investment Potential
Increasingly, investors, tenants, and buyers prioritise sustainable buildings, adding value and broadening market appeal.

The Critical Role of the Cost Consultant

A Cost Consultant is indispensable in balancing these elements. By thoroughly analysing benchmarks, regulations, and project-specific conditions, they ensure:

Accuracy
Establishing a budget that fairly reflects the client’s vision and meets all relevant design and environmental criteria.

Forward Planning
Accounting for upcoming legislation and industry-wide shifts towards net zero, both regionally and globally.

Lifecycle Thinking
Evaluating not just the initial build costs but also the operational and maintenance requirements that follow.

This holistic perspective is particularly vital as climate-related expectations tighten, requiring developers to show tangible reductions in energy consumption and greenhouse gas emissions over a building’s entire lifespan.

Climate Targets and Lifecycle Costs

Many local authorities now require developers to show how a project’s operating and maintenance costs will be affected by capital decisions. This aligns with overarching goals, such as the World Green Building Council’s call to reduce embodied carbon by 40% by 2030 and achieve 100% net zero carbon in buildings by 2050. As construction currently generates approximately 37% of global emissions, the stakes are high.

World Green Building Council’s call to reduce embodied carbon by 40% by 2030 and achieve 100% net zero carbon in buildings by 2050.

Why Lifecycle Costs Matter

Initial Build
Often just 2%¹ of a building’s total cost over 25–30 years.

Operational & Maintenance
Approximately 6%¹ of lifetime costs—but can be greatly influenced by design decisions around energy and water usage, system durability, and waste management.

Staffing and Other Costs
Sometimes up to 92%¹, showing that efficient building systems can have a profound effect on wider expenses.

With so much at stake beyond the initial construction, prioritising sustainability features such as LED lighting or advanced HVAC technology can yield considerable savings over time.

Examples of Sustainable Budgeting

LED Lighting & Smart HVAC
Although these may cost more upfront, they significantly reduce energy consumption. Over the building’s life, the savings often outweigh the initial investment.

High-Quality Lift Systems
A more durable and efficient lift may lower maintenance expenses and downtime, representing better value in the long run—particularly where occupant comfort and operational continuity are paramount.

By incorporating these elements into the budget from the outset, developers avoid the unpleasant surprises of retrofitting or scaling back features to meet sustainability criteria at a later date.

Reference

National Institute of Building Sciences (NIBS) (n.d.) ‘Life-cycle cost analysis (LCCA)’, Whole Building Design Guide. Available at: https://www.wbdg.org/resources/life-cycle-cost-analysis-lcca

How AESG can help

At AESG, we recognise that cost management and sustainability are intertwined. Our multidisciplinary approach ensures that your capital budget is shaped by both rigorous financial analysis and a deep understanding of environmental drivers. We offer:

Lifecycle Cost Analysis
Pinpointing the longer-term implications of different materials, technologies, and systems.
Informed Benchmarking
Incorporating up-to-date data to accurately forecast expenses.
Tailored Guidance
Addressing unique site constraints and sustainability credits (e.g. BREEAM, LEED, Estidama, Mostadam).

Developers who integrate sustainability into their initial budgeting process not only protect their projects from regulatory and financial risks, but also position themselves as forward-thinking, responsible market leaders. By working closely with a trusted Cost Consultant, you can be sure your capital budget reflects both immediate goals and the demands of a rapidly evolving industry.

Reach out to Daniel King and the AESG team to discover how robust capital budgeting and integrated sustainability strategies can help ensure your next development meets both financial and environmental goals.

Daniel King

Regional Director of Cost Management, AESG

Daniel King joins AESG as Regional Director, Cost Management. He has over 20 years’ experience as Cost Consultancy Director across KSA, UAE, Qatar, and the UK. He has been responsible for managing multimillion USD business operation in KSA and has delivered multibillion USD portfolio of projects globally.

He has a strong track record in driving new client leads, increasing revenue and margin. He is Commercially biased with the ability to diversify into project management. He is a strong advocate of inclusivity and knowledge sharing to build collaborative culture. His approachable and engaging communication style helps him establishing long-standing business relationships.

With an MSc Construction Management from Sheffield Hallam University, UK and as a member of the Royal Institution of Chartered Surveyors, UK he brings with him a wealth of knowledge and expertise in commercial and cost management.

For further information relating to specialist consultancy engineering services, feel free to contact us directly via info@aesg.com

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