Page 57 - The Green Building Bottom Line The Real Cost of Sustainable Building

36 CHAPTER 1

ASSEMBLING THE DATA
Now let’s assemble the various data. We started with a fictionalized company, Green,
Inc., which closely resembles Melaver, Inc. We looked at the various first costs associ-
ated with shaping the company’s values as well as the carryover costs associated with
the development of various programs that support those values. We then turned our
attention to value creation. We limited this value creation to the last five years of a ten-
year analysis on the assumption that it would take a significant amount of time before
beliefs translated into practices that would accrue to the bottom line. We further limited
this value creation by including only those elements we could link directly to the values
orientation of the company—employee retention and additional development work. All
of the numbers and assumptions utilized throughout this analysis are based on actual
experience at Melaver, Inc. With that summary in mind, we can see the performance of
Green, Inc. in the ten years following its values-shaping process (Figure 1-8).
I realize that there are a lot of numbers to absorb in this analysis. First, the net pres-
ent value (NPV) is a positive number ($441,189), which indicates that the process
Green, Inc. has gone through makes financial sense. Indeed, its internal rate of return

Y Years 0 1 2 3
ears
REVENUES/SAVINGS
REVENUES/SA VINGS
Additional
Development
Additional Development 0 0 0
Reinvestment of Added Revenue fr om yr 1 0 0
Reinvestment of Added Revenue from yr 1
Reinvestment of Added Revenue from yr 2
Reinvestment of Added Revenue fr om yr 2 0 0
Reinvestment of Added Revenue from yr 3 3 0 0
Revenue
fr
of
Reinvestment
Added
yr
om
Reinvestment of Added Revenue from yr 4 4 0 0
Added
Revenue
fr
yr
of
om
Reinvestment
Reinvestment
of
om
Added
Reinvestment of Added Revenue from yr 5 5 0 0
Revenue
yr
fr
Reinvestment of Added Revenue from yr 6
Reinvestment of Added Revenue fr om yr 6 0 0
fr
om
of
Revenue
Reinvestment
Added
yr
Reinvestment of Added Revenue from yr 7 7 0 0
Added
Revenue
of
yr
Reinvestment
Reinvestment of Added Revenue from yr 8 8 0 0
fr
om
Added
om
fr
Revenue
Reinvestment of Added Revenue from yr 9 9 0 0
Reinvestment
of
yr
Retention
21,300
om
21,300
21,300
fr
Savings
Savings from Retention 21,300 21,300 21,300
Sub-total Revenues
Sub-total Revenues 21,300 21,300 21,300
21,300
21,300
21,300
Years 0 1 2 3
ears
COSTS
COSTS
Lost Opportunity
1)
(3,61
(3,375)
(22,500)
(150,000)
Lost Opportunity (150,000) (22,500) (3,375) (3,611)
Facilitator (16,000)
Facilitator
(16,000)
(40,000)
education
(40,000)
Continuing education (40,000) (40,000) (40,000)
(40,000)
Continuing
(34,500)
Lost opportunity from cont. ed.
Lost opportunity fr om cont. ed. (30,000) (34,500) (39,675)
(39,675)
(30,000)
Hybrids
Hybrids (12,000) (4,000) (4,000)
(12,000)
(4,000)
(4,000)
(10,000)
Employer match contributions
(10,000)
Employer match contributions (10,000) (10,000) (10,000)
(10,000)
14,500)
(91,875)
(97,286)
Sub-total Costs (166,000) (1 (114,500) (91,875) (97,286)
(166,000)
Sub-total
Costs
(75,986)
Total Cashflowotal Cashflow (166,000) (93,200) (70,575) (75,986)
(70,575)
(93,200)
(166,000)
Discount Factor
0.751
1.000
0.909
Discount Factor 1.000 0.909 0.826 0.751
0.826
(84,727)
(57,090)
Cashflow
(58,326)
(166,000)
PV
PV Cashflow (166,000) (84,727) (58,326) (57,090)
NPV 441,189
NPV
441,189
IRR
IRR 22.50%
22.50%
Figure 1.8 Projected discounted cash flow for Green, Inc.