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The liability implications of sustainable design

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in Columns

By Jeffrey W. Cavignac

It seems everyone wants to go “Green.”  Almost every major public project and a significant percentage of private projects are seeking some type of environmental certification.
The Leadership in Energy and Environmental Design (LEED) Green Building Rating System was developed by the U.S. Green Building Council (USGBC) in 1998. Since its inception, more than 14,000 projects have been “LEED Certified” in the United States and 30 other countries, encompassing more than 1 billion square feet. It is estimated that the green building market is worth $30 billion to $40 billion annually.
LEED was created to accomplish the following objectives:

The Issues
The advantages of a LEED certified building are numerous. They should use resources more efficiently than conventional buildings and should also provide a healthier work and living environment. Benefits range from improved air and water quality to reduced solid waste.
However, these benefits are offset by some additional costs inherent in green construction. Since sustainable construction principles are not fully understood by many design professionals or contractors, extra research is often needed and the confusion can lead to disagreements. Availability of building components that meet LEED standards can be another problem. Add to this the cost of spending time corresponding with the USGBC, employing LEED design-aid consultants, hiring the required commissioning authority, and having the building certified.
The USGBC will point out that these higher initial costs will be more than offset by lower operating costs over the life of the building, and employee productivity gains incurred as a result of working in a healthier environment.  In addition, there are potential tax credits for developing a green building as well as possible variances from local building codes.
Whether or not green buildings will generate the savings owners are looking for remains to be seen.
Rob Watson, editor of GreenerBuildings.com, is well known for developing the USGBC’s LEED rating system. Recently Watson issued a report that identifies market trends, water efficiency and energy use for LEED projects. The data is discouraging. “Some LEED buildings are not performing as expected given their design and technology elements,” states Watson.
Another report released last fall by USGBC’s Chicago and Partners evaluates efficiencies of LEED certified buildings in Illinois. What they learned was LEED buildings were performing only five percent better than non-LEED buildings throughout the region. Platinum and Gold LEED structures were found to be “no more efficient” than Silver or basic LEED certified buildings.
How does this impact project team members? It means increased risk and potentially disappointed building owners. Many clients are expecting to recoup increased costs for design and construction of a LEED building through better performance and energy savings.  If these expectations are not met, there could be finger-pointing.

The Solutions
The solution lies in architects and construction firms better managing owners’ expectations and being their reality check. They should review their contracts carefully – specifically guarantees, timelines and indemnities – to make sure they don’t promise something contractually that they can’t provide. They should perform appropriate research to make certain they understand what they are designing and building. They need to have an experienced project team, and only pursue LEED certified projects if they know what they are doing. Last, they should perform a “commissioning process” to educate the owner on how their building works, and what their responsibilities will be to maintain and operate their facility.
Sustainable design and accreditation are moving targets, and problems will arise during the course of green construction.  This is a risk, however, that lends itself to being managed.
Particular attention should be focused on fee, construction budget, and scheduling aspects of the contract. Designers and contractors should be sure the client understands that designation of a certain level of LEED-certified building is outside their control. The project team can make reasonable efforts to achieve the LEED objectives on the project, but they cannot guarantee a certain level of LEED certification. Nor can they guarantee actual performance of the building or dollar savings.
The green building boom appears to be here to stay, and this will create opportunities and challenges. Proactive risk management not only can help project team members identify the challenges, but manage them as well.

Jeff Cavignac is president and principal of Cavignac & Associates, commercial insurance brokerage firm at 450 B Street, Suite 1800, San Diego. More information about the company can be found at cavignac.com.

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