Managing Risks in Sustainable Design and Construction
“Sustainable design” is a generic term which describes the design and construction of building features such as green roofs, daylighting, rain gardens, geothermal heating and cooling, and building enclosure systems that are energy efficient and environmentally responsible.
LEED is a rating system that has been established by the USGBC (Green Building Council) for the purpose of promoting environmentally responsible (sustainable) design and construction.1 The rating system, applied to both new and existing structures evaluates building performance in five environmental categories (performance criteria):
- Sustainable site development
- Water savings
- Energy efficiency
- Material selection
- Indoor environmental quality.
LEED can be characterized as a third-party certification program through the USGBC. An independent person appointed by USGBC is engaged to review the buildings performance. Question: Where are the inherent risks facing the design and construction professionals and what can be done to manage them?
The potential risks which may occur in the following scenarios:
- Decisions regarding the LEED rating and qualification is at the discretion of the third-party reviewer;
- Most LEED documents prepared and submitted for review contains language which “declares,” “affirms,” or “certifies” aspects of the sustainable design or construction (these are generally not insurable risks);
- Specified “green” building components may violate various city building codes. The ultimate replacement of these components may impact and/or void the LEED rating;
- Typical contract guarantees or warrantees promise that certain design and/or construction will achieve a specific LEED rating (Silver, Gold, Platinum);
- New, untested technology, materials and systems specified may impact project schedule and project costs;
- The designated building systems, as constructed, fail to achieve the designated LEED rating;
- The USGBC in their review of the design submission may require longer periods of time then that anticipated by the project schedule.
The third-party reviewer
There are few guidelines available to test the reviewers who pass upon the design or constructed system. Since neither ANSI nor any other established standards govern decision making by the design reviewers, the reviewer has total discretion to decide whether or not a particular specified item is appropriate when awarding points necessary to achieve a targeted rating, whether it be silver, gold or platinum. The USGBC is in the process of establishing an independent review board, to avoid any apparition with respect to conflict of interest.
Circumstances where inherent risks (may) arise
The design professional or contractor agrees to provide a building which will achieve a specific LEED certification and promise to achieve this certification on a date certain. A questionable ruling with respect to a particular item, product or system is received. This may affect the ultimate value of the property being constructed and potentially delay the completion of the project by the targeted date, particularly if the project must be redesigned and/or reconstructed in order to achieve the rating.
Owners of income producing properties market their projects by holding them out to the public as a LEED certified project, (silver, gold or platinum). The project design or construction system does not achieve the rating promised. This may lead prospective tenants to rescind their lease commitment based upon the failure to achieve a specified LEED rating. In addition, public and private enterprises may refuse to issue grants which may be available for green projects. Financial institutions may also refuse to provide additional capital to complete the project, based upon the same rationale.
The design professional or contractor selects materials and systems that comply with LEED mandates, which are not traditionally specified. These materials and systems tend to be untried and lack historical data in terms of performance. An untried product used in a particular application in the design of a school project. Tile adhesive with very low VOCs (Volatile Organic Compounds) is specified to achieve a certain rating number toward the target LEED. When applied to a concrete deck, the adhesive fails since it does not have the higher level of VOCs. The design professional in this instance may be required to pay for a new floor, and pick up the delay costs incurred in completing the project.
To mitigate or manage these risks, the construction and design professionals are advised to:
- Draft contract language to protect against the potential risks and educates the owner/developer with respect to these risks:
- Do not incorporate warranty / guarantee provision promising a certain target rating;
- Include a waiver of consequential damages in your contract, especially if the certification is tied to any funding source;
- Include language to protect against delays in the review process;
- Acknowledge that the review and rating process is outside the design or construction professional’s control;
- Temper the Owner’s expectations with reality
- Memorialize all communications between yourself and the Owner pertaining to work scope as it impacts sustainable design or construction
1The USGBC has been accredited as an official Standards Developing Organization by the American National Standards Institute (ANSI). Standard SPC 189.1P (Standard for Design of High-Performance, Green Building, Except Low Rise Residential Buildings) has been developed by ASHRAE, the IESNA and the USGBC. The purpose of this standard is to “provide a baseline for sustainable design, construction, and operations in order to establish a benchmark for building practices. However, please note the rating system for LEED qualification is not accredited.