Over the last decade, higher education institutions have faced criticism following practices such as hoarding wealthy endowments, political bias and providing insufficient economic returns for its students. In light of this, several institutions have turned their attention to public interests, such as social pressures in making various financial decisions, consequently resulting in delivering or failure to provide lasting values to their students. Furthermore, higher learning institutions' projects must consider multiple factors, including diversity, the community, technological integration, and expectations. An example of a social change is the green movement common in colleges across the U.S. While implementing sustainability through such green projects in colleges, not everyone is optimistic that it will be a boon, mainly due to the financial constraints involved. Central Michigan’s University education building is an example of a green LEED project being undertaken for sustainability. Abbreviated as LEED, the Leadership in Energy and Environmental Design, at its core, is the accepted benchmark for the design, construction, and operation of high green buildings in the U.S. The agency has transformed numerous buildings. Besides, there is societal pressure to go green and embrace sustainability, which LEED is enforcing. Colleges have been a central target for LEED green projects. As mentioned above the Central Michigan University is one of the Mid-west institutions, where due to the pressure to go green, the institution has undertaken a project of constructing the green building. One of the impacts of the projects is that it has saved resources after the construction was completed. According to (Sustainability is Central, 2018), the CMU energy budget has gone down over the last five years. CMU's actions in the green education building include conservation of water and energy, recycling, and reusing of materials. Reports indicate that significant economic savings have been experienced at the institution. Currently, the energy budget does not surpass an annual budget of over $2million (). Over the years, the project has saved approximately $10 million for the institution. Another financial implication of the project was the increased costs of maintenance. The construction of green buildings generally requires more complex equipment and advanced technologies to achieve the energy and water savings requirements. This implies management and maintenance costs went up at the institution. Besides, the institution will incur more charges for the renewal of equipment in the future. In a recent study in Taiwan on commercial buildings, research reveals that going green higher maintenance costs will be incurred (Sun et al., 2019). Similarly, the Central Michigan University is not an exception of high maintenance costs on the green buildings. Also, the institution’s decision to put up the green education building came with increased staffing costs. Before the construction, the institution had a standard staff who easily maintained the institutions' general structures. However, after the building was put up, the facility was forced to employ more staff who would manage the building. Besides, the team had to be trained on running the water and energy systems in the building. This increased unanticipated costs for the institution. Notably, the staff is trained frequently and annually to ensure they are conversant with the latest trends and technologies used in running the green building. Therefore, the construction of the green building has resulted in increased operating costs for the institution due to increased staff members. Another effect is the increase in the operational budget directed towards the project. When the education building was in the proposal stage, it attracted numerous investors. Furthermore, environmentally responsive projects attract funding through grants and donors who have environmental interests at heart (Hayter & Cahoy, 2018). However, the institution failed to look at the core hidden costs of putting various units. The construction required the latest technologies and tools, yet these costs were not included in the initial grants. Also, the constant environmental changes in weather prolonged the construction time as, during winter, the construction had to be stopped. Therefore, this increased the supplemental budget and funds initially allocated for the green building project. The consequences of prolonged building time resulted in changes in labor and designs, resulting in overall increased construction costs. Based on these implications, the institution could have made numerous decisions and alternatives that would have reduced the increased costs. One such alternative would have been the right timing for the construction of the building. As mentioned above, the increase in construction time resulted in increased costs that surpassed the initially set budget. Therefore, the committee involved should have considered the timely commencement of the project. Another potential alternative the institution would have considered is factoring in the hidden costs that are likely to arise in constructing the green building. According to Barr & McClellan (2018), the capital budget should factor in hidden costs regardless of whether it is from grants or donors. Furthermore, construction can be affected negatively by implication such as changes in weather and changes in labor prices, among others. As in the institution's case, the failure to incorporate such hidden small costs is what resulted in exceeding the allocated budget for construction. A final alternative that the university would have considered is renovating the already existing buildings. Instead of conforming to societal pressure of having recent and modern facilities, the institution would have done mere renovations and included the green and sustainability aspects. This would have significantly cut on the costs of operation and sequentially impacted positively from a financial standpoint. Besides, the mere renovation would not need a new set of employees to manage the building. Instead, the existing ones would have been trained on how to run and manage the new systems. Based on all these implications on the project's capital budget, the Central University of Michigan stood a chance to make better decisions and consider alternatives as opposed to conforming to social pressures. In conclusion, social pressure has negatively impacted higher learning institutions from a financial perspective, especially where costs of structures and projects exceed the allocated capital budgets. An example of such an institution is the University of Central Michigan that undertook a green project for constructing the education building. As discussed, the construction negatively impacted the institution's finances due to increased maintenance costs, more staff members, and wrong timing that increased hidden costs. To avoid social pressures and the consequential financial negative implications, the institution should have considered potential alternatives such as renovation instead of putting up new buildings. Another viable option is keying in hidden costs in the capital budget of a project. Higher learning institutions should consider the significant impacts of such projects before undertaking them due to social pressure.
References
Barr, M. J., & McClellan, G. S. (2018). Budgets and financial management in higher education. John Wiley & Sons. Hayter, C. S., & Cahoy, D. R. (2018). Toward a strategic view of higher education social responsibilities: A dynamic capabilities approach. Strategic Organization, 16(1), 12-34. Sun, C. Y., Chen, Y. G., Wang, R. J., Lo, S. C., Yau, J. T., & Wu, Y. W. (2019). Construction cost of green building certified residence: A case study in Taiwan. Sustainability, 11(8), 2195. Sustainability is Central (2018). Central Michigan University https://www.cmich.edu/diversity/PublishingImages/Pages/Sustainability-Reports/Sustainability_is_Central_2018.pdf
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