Monday, August 2, 2010

Buying Green

First published in August 2010 by Project Management Institute

Recently the project I am managing acquired new software and services. Purchases made during a project provide a great opportunity to deploy more sustainable solutions.

A compelling reason to make a green purchase is to save on the operating costs. This can include reduced natural resource use, but also a green purchase can reduce spending on toxic disposal and reduce overall risk.
A compelling reason to buy green is to save green.
Even if green features are less important than other criteria, they can be used as a tie-breaker. They can be a good indicator of operational excellence and innovation.

Including green criteria will also signal to vendors that sustainable products are important. There is likely to be a green champion at provider companies who can use the “voice of the customer” as evidence to continue to improve products.

The first step is to include green criteria in the RFP (Request For Pricing). Your company may already use a standard RFP format, but most are easily augmented with additional green criteria. I have found sourcing, purchasing and project team members are supportive of including green.

The goal of the RFP is to uncover the environmental impact when operating the product, but also in building, acquiring, deploying and disposing of the product. The specifics may vary by type of product [Note 1], but the topics to consider for any RFP include:

Lifecycle – Has an end-to-end lifecycle analysis been completed for the product or product family? What areas utilize the most natural resources? Any certifications or eco-labels received?

Materials – What toxic materials are used? What are the plans to reduce and eliminate toxic materials? What recycled materials are used? What are plans to increase use of recycled materials?

Manufacturing – How much energy, water and other natural resources are consumed during the manufacturing process? How much waste is produced? How is waste handled?

Packaging – Is packaging right-sized to avoid excess while ensuring product arrives undamaged? Are manuals available electronically? What recycled materials are used in the packaging? What are plans to increase use of recycled materials?

Transportation – Can products ship together to avoid extra miles? Can more efficient modes of transportation be requested (water/rail). What are carriers transportation efficiency rating (energy used per ton-mile)

Operations – What is energy consumed during operations? Does product use variable energy depending on its load? Is there a hibernate mode? What is planned life? What other natural resources are consumed in operations? What waste is generated during operations – solid, water, atmosphere (including indoor air quality if applicable)? What is recommended use for optimal energy efficiency? How should configuration be tuned for different loads?

Disposal – Is an end-of-life service provided to properly dispose of product? Is the product easily recyclable? Is there an active market for the recycled materials?
Selection Process
Comparing the various candidates across these criteria can be complicated and a few key items that support your company’s eco goals may be more appropriate. For example, my company participated in the EPA’s Climate Leader Program that emphasizes energy savings and consequently our team placed a higher priority on energy use during operations.

One other way to simplify the environmental selection criteria is to rely on certification or eco-label, should the product segment be supported actively. Energy Star is a well established eco-label that provides simple metrics to compare energy use among products. [Note 2]

When comparing candidates, the total-cost-of-ownership (TCO) will provide the most comprehensive financial analysis. What appears to be the better deal when considering just purchase costs could become less attractive when operational and end-of-life expenses are taken into account. For example, a less expensive computer that uses more energy during its operations is a poor choice, both financially and environmentally.

Total Cost of Ownership (TCO) analysis exposes the complete costs to avoid sub-optimal decisions.  

To improve the return-on-investment, there may be grants, tax rebates, utility and other incentives available to defray the capital costs. Federal, state, local government and utilities should be checked to determine if any programs are available. [Note 3]

Although we selected the product primarily due to its functionality and commitment to innovation, we were pleased to find it required fewer computer resources than the current solution or some of the alternatives. We estimated that a 50% reduction in computing resources can occur.

Rather than acquiring a product, it may be greener to receive it as a service; especially if the incentives are aligned to make the provider behave greener to be more profitable. It may also be easier to negotiate green practices with a third party then with your colleagues, given priorities and workload.

It can be greener to receive the product as a service

In my case, we decided to host the new software at a third party for one of the business groups. We found that a third party hosting service is incented to run its data center as efficiently as possible since the data center is its primary cost of operations.

During the project, it is prudent to establish regular tune-ups to ensure that the product is being used as efficiently as possible. For example, a building’s environmental system (HVAC) should be tuned by season or when significant change in occupants. Paying for these tune-ups upfront during the project will ensure they occur and make the change sustainable.


Note 1: Green Criteria

Image and green tutorial on life cycle assessment at EcoDesign Guide

Check with industry organizations for more specific criteria for a particular segment.

One other source is governmental agencies since they are mandated to support greener purchasing. Since 1995, the Federal Government’s Comprehensive Procurement Guideline (CPG) program promotes the use of recycled material. Buying recycled-content products ensures that the materials collected in recycling programs will be used again in the manufacture of new products.

For more details on packaging best practices, check-out an earlier post

Note 2: Eco-labels reference

Check out certification information

Note 3: Grants, incentives

Government website sharing info on grants and other incentives.

Businesses may also want to use Property Assessed Clean Energy (PACE) funding.

1 comment:

  1. Could not agree with you more. Many companies do not consider environmental costs in the TCO. Energy consumption, space utilization, heat dissipation, reclamation must be added to the purchase price. Pat O'Donnell