Page 147 - The Green Building Bottom Line The Real Cost of Sustainable Building

126 CHAPTER 4

has for focusing on such third-party work, etc. A company such as ours should con-
servatively be able to take on at least two such development projects each year, of
around $15 million each in scope Assuming a 4 percent development fee for each of
these projects, assuming further that 25 percent of that fee will go for expenses leav-
1
ing 3 percent of actual net income (4 percent less ⁄4 equals 3 percent), and assuming
that one-half of the resulting net income of 3 percent is owing to our reputation (1.5
percent) and the other half owing to our experience building LEED (1.5 percent), it
is safe to project additional business development income of 1.5 percent of $30 mil-
lion (2 projects of $15 million each), or $450,000 annually. We will be using that fig-
ure as part of our overall analysis of our fictionalized company, Green, Inc.

ATTRACTING REVENUE THROUGH
FEE-BASED CONSULTANCY
Depending on the capacity of a green bottom line company, there may be the oppor-
tunity to leverage knowledge and experience by providing green development con-
sultancy services to other companies. We’ve done a good bit of this type of work over
the years, ranging from pro-bono consulting to non-profit organizations interested in re-
ducing their environmental footprint in various ways to rather sizeable fee-based
work. In considering such work, my colleagues and I find that we are continually jug-
gling among several competing initiatives: the desire to spread knowledge of sustain-
able practices as quickly and as broadly and as deeply as possible, irrespective of the
potential generation of fee income (outreach and advocacy); the need to allocate human
resources to our own development projects (attending to our own core business and
avoiding spreading ourselves too thin); and the capacity to generate additional income
while also spreading the word through fee-based consulting (additional income).
Every business will address this balancing act differently. Our own strategy for
balancing these disparate initiatives is to consider fee-based consulting work 1) only
when it does not impede the delivery of our own development work; 2) typically in
locations that are in close proximity to our offices, to ensure good work/life balance for
staff; 3) in locations outside our area only if local expertise is not available, and only
if the nature of the project is likely to push our own learning further. Even with those
fairly stringent criteria in mind, we still face the potential of consulting on numerous
projects each year, providing us with the opportunity for significant additional revenue.
The important thing to note is that the market demand for knowledge of and expe-
rience with sustainable projects is quite high, and the potential for additional income
not insignificant.

PERSONNEL PRODUCTIVITY
Earlier in this chapter, we addressed the fact that a green company is likely to face re-
duced administrative costs as a result of being more successful than many companies
at attracting and retaining good staff members. There is also the value creation that
occurs through greater employee productivity. Because this is not something our com-