January 1, 2009
By Dean B. Thomson
As Kermit the Frog famously remarked, “It’s not easy being Green.” Ignoring his warning, every developer, designer, and contractor in the construction industry is rushing to become “Green.” While environmentally advantageous or “Green” design and construction is in increasing demand, there are risks as well as rewards in the process. This Briefing Paper explores how to avoid the former and maximize the latter.
Before too much energy and cost is spent on delivering a Green project, it would be beneficial for all participants to define what they mean by or want from a Green or sustainable project. Just like the label “Organic,” the word “Green” can have many meanings. For instance, a designer may emphasize an element or facet of Green through use of recycled materials with a low environmental impact. The contractor may emphasize another side of Green by careful management of project waste. The owner, on the other hand, may expect cost savings in building performance from a Green project that will produce operational profit and improve or create user-healthy features which it can market for financial gain. These different definitions of a Green or sustainable project can lead to different expectations, and unmet expectations can lead to disputes.
To avoid a disappointed client, it is important for the designer and contractor to determine what the building owner or developer wants or expects from its Green building. In a surprisingly broad proclamation, the American Institute of Architects is promoting a 50% reduction from the current use of fossil fuels used to construct and operate buildings by 2010. While this is an admirable social goal, the cost of this design philosophy should be presented to and approved by the project’s owner. If the owner’s desire is to decrease operational costs, then the designer should first assure the owner that its Green design will achieve operational savings that exceed the potential increased costs of the Green construction components. Unless the designer has presented these costs and benefits to its client and literally received the owner’s “buy in”, the designer’s design philosophy may be at odds with the owner’s stated need for low operational costs.
This definitional problem is not necessarily solved by reference to or incorporation of LEED’s point system as part of the project’s specifications. The LEED rating system measures a building’s performance and capability in six areas: (1) sustainable sites (i.e., issues relating to transportation, stormwater management, construction pollution, etc.); (2) water efficiency; (3) energy and atmosphere; (4) materials and resources; (5) indoor environmental quality; and (6) innovative design. Within each core area, there is a list of specific topics that can be considered for the project to achieve the desired certification level. The LEED certification levels for new construction are as follows:
Certified 26-32 credits
Silver 33-38 credits
Gold 39-51 credits
Platinum 52-69 credits
Certification levels are awarded based on the cumulative number of credits earned. Thus, merely specifying a certain LEED certification level can still lead to frustrated expectations. For example, a designer may attempt to achieve that certification level by supplying relatively easy items such as bike racks or car-pool stalls, while an owner may be interested in a certification level that is based on operational savings.
While specifying a certain LEED level is vague guidance for the project participants, the LEED point system can provide a useful outline for collaborative discussion among the owner, designer, and construction team. Creating a LEED cost/benefit score sheet in regard to each LEED point can help the project team organize its design choices and construction means and methods in order to achieve the most points for the lowest cost. Some LEED points can have a direct pay-back for the owner, while others have a more general societal or project benefits which may require more conversation before the owner is convinced that it makes sense to pay for them. Only clear discussions about needs, options, and costs among all participants can avoid misunderstandings.
Assuming that the parties have agreed on which specific LEED points should be pursued, which party should bear the risk of achieving them? LEED points are performance based. Some points are based on construction means and methods (e.g. reducing construction waste) and it is logical to assign the risk of achieving those type of points to the contractor. Other points are more design based (e.g. the specification of waterless urinals), and it makes sense for the architect to be responsible for achieving those points. Of course, the designer can effectively delegate that responsibility to the contractor through the use of performance specifications, but that can blur the responsibility of achieving the LEED point in question. Contractors or suppliers may not know what products meet LEED requirements, and they could unwittingly supply a nonconforming product in response to a generalized reference to a LEED performance standard. The better practice is to identify at the beginning of the design effort what points are being pursued and explicitly assign contractual responsibility for attaining each point to the party best suited to achieve it. Often this is most reliably done when the design team specifies the product or design that they expect will satisfy the desired standard.
One of the less known risks of LEED certification is the cost of documenting compliance with LEED standards. It is one thing to specify that a certain standard be met and another to record and prove that it has been achieved. The responsibility and costs of LEED’s stringent documentation requirements should also be contractually allocated. As the cost and time of LEED documentation is not insignificant, this is a contractual term that should not be ignored.
To make sure documentation is being kept as the project progresses, the project team should consider creating a monthly scorecard tracking documentation compliance with advisory reviews at certain design and construction milestones as well as a documentation file for each LEED point.
Building owners may demand a certain LEED level be met hoping it will produce good marketing, tax credits, higher rents and lower operating costs. If those standards are not achieved, some owners may seek to have their expectations met through a lawsuit. How can designers and contractors avoid this risk in a way that fairly respects the desires and expectations of the owner?
The first step is to manage expectations through a transparent and candid discussion of what can and cannot be promised. The pursuit of certain LEED points will not always be successful as design is still an art and not a science, especially in the emerging and early development of Green design. Moreover, the decision to award certain LEED points resides in the subjective judgment of the U.S. Green Building Council, and there is little effective appeal to a higher authority. Unfortunately, despite the uncertainty about what is obtainable, designers and contractors often promise certain LEED outcomes that they ultimately cannot deliver. For example, energy savings are desirable, but those savings can vary due to many environmental conditions that are difficult to anticipate and measure. The way a building is operated by the owner has a direct correlation to energy consumption costs, and that operational risk should not fall back to the designer or contractor.
In addition, the data supporting operational savings or environmental benefits from Green systems is still being collected. Thus, it is risky to promise to meet performance standards for operational savings when the performance history of the new systems chosen or specified is not yet fully known. The risk that new, cutting edge environmental design or construction may not completely achieve desired performance should be discussed and memorialized before the project starts so that the owner has no cause to sue for breach of contract or misrepresentation. In these circumstances, a promise to use “best efforts” to achieve a certain LEED point is more appropriate than a contractual commitment to meet a certain standard. It is helpful to remember that achieving LEED points involves tradeoffs, and if you don’t control the design and budget, it is difficult to guarantee success.
All project participants should be careful about what they promise not only to each other, but also to the public. Claims of healthier or more productive environments from a LEED certification are not yet reliably quantified. The types of damages that could be claimed due to failure to achieve LEED certification are limited only by the imagination of the plaintiff’s attorney: loss of investment cost, tax credits, rents, etc. If liability is an issue during negotiations, one way to limit those risks is to agree to liquidated damages for failure to achieve either a certain LEED certification or certain LEED points. Limitation of liability clauses are important to consider not only for the designer and contractor, but also for the contractor’s surety who guarantees contractual performance. Designers must also be careful that the certificates that they sign for LEED certification do not constitute design warranties that are beyond the coverage for professional negligence provided by their E&O policies.
Some of the unique risks in a Green project are illustrated by Green roofs, which are becoming more frequently considered as part of a Green or sustainable design. First, the Green roof can turn into an “attractive nuisance.” In other words, an open and planted roof can attract pedestrian traffic as an urban meadow. Many planted roofs are designed to be left alone and not used for picnics or sunbathing.
Second, the seasons in Minnesota have been known to be unkind to plants, and designers have to be careful that the plantings specified can withstand the harsh August sun as well as bitter January blizzards. In addition to fluctuating weather, certain roofs often create their own micro-climate either by being in the shadow of other buildings, baked by adjacent glass windows, or buffeted by urban wind flow. All these rooftop environmental factors should be considered in the design of the Green roof and its plantings.
Third, despite their name, perennials often have to be frequently replaced in a Northern garden, so the capital cost of replacement plants should be included in the owner’s budget as well as annual weeding, cutting, and watering costs. The types of desired plants also determine the necessary depth of the growing medium, and the weight of the growing medium (which is sometimes saturated) can have structural and cost implications for the supporting substrate. Many roofs can have ponded water and plantings with aggressive root growth. The designer must take these factors into account when specifying the waterproof roof membrane as some roof systems are better suited than others to handle root growth and standing water.
Finally, roof leaks are especially a concern on green roofs because the membrane is covered in growing medium and it is difficult to identify the source of the leak. This problem means it is essential to specify a stringent quality control program for roof installation (e.g. monitors and flood tests). A prudent design that segregates the roof membrane into segmented waterproof grids can also aid location of the leak source.
Those who have been successful in Green construction emphasize the benefits of collaboration among the project team. Creating a green building or achieving a certain LEED certification is not simply the domain of the design team. Contractors have to know the purpose and benefits of specified procedures and methods in order to understand their importance and devote resources to complying with them. It is helpful to have project management who are LEED trained and accredited so that they know how efforts are scored.
Certain delivery systems are more conducive to the collaboration necessary for a successful Green project than others. For example, Construction Management at Risk, Design-Build, and Quality Based Selection Methods all involve the contractor in the design development process earlier than other delivery methods. If involved early, contractors can help vet whether a green design is practical or cost efficient and help owners better understand the Green program in order to support it financially.
There are many reasons to go Green. On a policy level, Green design and construction can help reduce climate change; improve our nation’s energy security, decrease air and water pollution, and enhance the general health of building occupants. On an economic level, private owners want the operational savings, tax credits, and marketing benefits that Green design and construction can provide. On a business level, going Green can also benefit designers and contractors as public owners are increasingly specifying experience in Green construction as a selection criterion in their “best value” selection process. Designers and contractors that want to differentiate themselves and be responsive to these market demands are striving to become Green to make another kind of green — money. There is, however, one kind of “green” that no one wants to be, and that is naïve and inexperienced. Before you jump into this new market, seek good risk management advice so that you land where the grass is truly greener.
This discussion is generalized in nature and should not be considered a substitute for professional advice. © FWH&T