Green Buildings - Problems, Solutions & Opportunities

Green Buildings: Problems and Solutions
Owen D. Pawson, Partner
opawson@millerthomson.com
604.643.1254
Miller Thomson seminar
May 18, 2011

Building “Green”
Green Buildings
TOPIC:
Drafting and Negotiating Design Agreements
and Construction Contracts for
Sustainable Buildings

Green Buildings
“NO LONGER A FAD, GREEN HITS MAINSTREAM . . .”
• ENR Magazine

Green Buildings
“Green Building for several years had been a novelty, an
extra, sometimes expensive, set of bells and whistles to
hang on signature buildings. But over the past two or
three years, concerns about the environment and global
warming have brought sustainable design to the forefront
of the construction industry. And with the proliferation of
green products and materials, and sudden surge in
energy prices, building green no longer is an expensive
luxury, but an often cost-effective alternative to traditional
design.”
- ENR Magazine; June 28, 2008

Green Buildings
Why Build “Green”?
Because “Built Environment” is major source of:
– CO2 (Greenhouse Gas) Emissions
– Energy and Water Consumption
– Conventional Water and Air Pollution
– Solid Waste Stream

Green Buildings
Impact of Buildings on Natural Resources
Green Buildings create opportunities for big
reductions - because buildings account for:
• 39% of total energy use
• 72% of electricity consumption
• 38% of CO2 emissions
• 40% of raw materials use
• 12% waste output
• 30% of potable water consumption

Green Buildings
Average Reductions by
“Green” Buildings
– Energy Use - 30%
– CO2 Emissions - 35%
– Water Use - 30% - 50%
– Waste Creation - 50% - 90%

Green Buildings
What is a “Green Building”?
• No universally accepted definition of “Green
Building”
• Therefore (for contracting drafting) term is
ambiguous:
– UNLESS it is tied to an objective standard
• Currently, the most common indicia of a
“Green” building is LEED certification

Green Buildings
LEED =
Leadership in Energy and
Environmental Design
• most widely recognized Green Building rating
system
• recognized benchmark for design, construction
and operation of high performance Green
Buildings

Green Buildings
– LEED - developed by U.S. Green Building
Council (USGBC) in late 1990’s
– Continually being refined through dialogue
with multiple construction industry parties

Green Buildings
LEED Rating Systems are:
–Voluntary
– Consensus-based
– Market-driven
– Based on accepted energy and
environmental principles
– Balanced between established construction
industry practices and emerging ideas

Green Buildings
Purpose of LEED Rating System:
Promote sustainability in the built environment
by:
- establishing consistent, credible standards
for what constitutes a “Green” building

LEED has Ratings Systems for different
types of buildings:
Green Buildings
– New construction and major renovations
– Commercial interiors
– Existing buildings
– Core and shell
–Homes

Green Buildings
What is LEED Certification?
• Register building with Canadian Green Building
Council (CaGBC), then project team prepares
documentation and calculations to satisfy LEED
design and construction requirements
• “LEED Certified” Building must get min. number
of ‘points’ under applicable LEED Rating System
• To earn Certification, building must meet certain
benchmarks within specified categories

Green Buildings
LEED Certification
• At completion of construction, registered LEED
Buildings can be awarded 1 of 4 designations
based on number of points earned:
Certified
Silver
Gold
Platinum
Green
Greener
More Green
Most Green

Green Buildings
LEED Certification
In Canada, LEED Canada NC-1.0 is derivative of
USGBC’s LEED System
- LEED Canada NC-1.0 (and companion LEED
Canada Reference Guide):
- intended to facilitate use of LEED Green Building
Rating System

Green Buildings
Contracting for Green Buildings
Implementing “The Green Building Revolution”
requires:
- careful planning
- design agreements and construction contracts that
address Green Building issues

Green Buildings
Guidelines for Green Building Agreements/
Contracts
Green Building LEED clauses should ALSO address
involvement by:
-sub-consultants,
-sub-trades and
-suppliers
Standard Industry Contracts need modification, e.g.:
•RAIC 6 – Client-Architect Agreement (long form)
•RAIC 7 – Client-Architect Agreement (short form)
•ACEC 31 – Engineer/Client Agreement
•CCDC 2 – Owner-Contractor Agreement

Green Buildings
Guidelines for “Greening”
Design Agreements and
Construction Contracts

Guideline No. 1:
Green Buildings
Standard form agreements and contracts do not
properly document a Green Building
Therefore either:
– modify existing standard form documents, or
– develop customized documents to address Green
Building issues

Guideline No. 2:
Green Buildings
• Clearly state Owner’s “Green Building” goals
• Require objective standards
– (e.g., LEED certification)
• If appropriate, tie Owner’s “Green Building”
goals to Project Schedule

Guideline No. 3:
Green Buildings
Identify objective standard to measure
achievement of Green Building goals:
– LEED Certification is appropriate
– construction documents should state level of LEED
Certification desired
– Even if LEED Certification is not required, LEED
standards can be used to define Owner’s
sustainability and environmental goals

Green Buildings
Scope of Architect’s Services and Work
TASK
1. Register Project with CaGBC
2. Evaluate Feasibility of targeted LEED Certification level
3. Develop LEED Certification Strategy
4. Document Design & Construction process on LEED Requirements
5. Seek Credit Interpretation Rulings (CIR’s) from CaGBC
6. Coordinate with CaGBC for Design & Construction Phase Reviews
7. Assist Owner evaluate Green Bldg credentials of potential contractors
8. Coordinate/facilitate the Green Building process
LEED-
Certified
Project
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Uncertified
Project
No
No
No
Yes
No
No
Yes
Yes

Green Buildings
Guideline No. 4:
Engage a competent / experienced Green
Building Team; coordinate “Green” provisions
into contracts of Team members
Building ‘Green’ involves design AND
construction, so - address Green Building issues
in each contract, e.g.:
–Owner / Architect; or Engineer / Client
–Owner / Contractor

Green Buildings
Green Building Team Contractual Configuration
Owner
LEED Consultant
Architect
(LEED AP)
Contractor
(LEED AP)
Civil
Engineer
MEP
Engineer
Interior
Designer
Subcontractor Subcontractor Subcontractor
(LEED AP)
(LEED AP)
(LEED AP)

Green Buildings
Guideline No. 4: (con’t)
• LEED AP for each Green Building Team
member should be “Key Employee” under that
agreement / contract
• Anticipate any issues created by introducing
independent LEED Consultant
• Contractually oblige all Green Building Team
members to cooperate / coordinate

Guideline No. 5:
Green Buildings
An experienced Green Building Team facilitates
collaboration
- Consider requiring early use of Building Information
Modeling (BIM) technology and/or collaborative
contracting methods
- BUT ensure its use is addressed in relevant
agreements and contracts

Green Buildings
Allocating LEED Certification Risks
Potential Risks for failing to achieve
LEED Certification:
– Inability to Benefit from Special Regulations
– Loss of Expedited Permitting Opportunities
– Loss of Increased Density or other Zoning Incentives
– Detrimental Impact on Project Financing
– Damage to Branding Opportunities or Reputation
– Loss of Competitive Advantage

Green Buildings
Allocating LEED Certification Risks
Types of Provisions
- Specify LEED Certification level sought
- Identify Green Building Team; make LEED AP’s “Key Employees”
- Architect/Contractor reps about prior Green Building experience /
expertise
- Professional Services and Construction Work to be consistent with
LEED requirements
- Specify Green Building incentives that are essential for Owner
- Use Performance-based remedies for failure to achieve LEED
Certification
- Consider creative ways to quantify Owner’s damages for failure to
achieve Green Building certification

Green Buildings: Contract Issues
Document LEED Certification level being
sought by Owner
Ensure clear provisions in design agreement and
construction contract that:
- Owner requires specific level of LEED Certification

Green Buildings: Contract Issues
Confirm Green Building credentials of
Architect and Contractor
- Representation of experience with Green Buildings
Confirm participation of LEED AP’s on
Green Building Team
- Representation that there are experienced LEED
personnel who will be “key employees”

Green Buildings: Contract Issues
Document Green Building
representations made by Architect or
Contractor
- such representations are material
inducements for the Owner to engage the
Architect or Contractor for the Project

Green Buildings: Contract Issues
Require performance of design
services in conformity with LEED
requirements
- Architect to develop plans and specs
consistent with:
- Green Building principles including LEED and
- Owner’s goal of LEED certification
- Architect to engage sub-consultants
knowledgeable about Green Building principles

Green Buildings: Contract Issues
Require performance of construction
Work in conformity with LEED
requirements
- Contractor to perform Work in a manner
consistent with
- Green Building principles including LEED and
- Owner’s goal of LEED certification
- Contractor to engage sub-contractors
knowledgeable about Green Building
principles (subcontracts to have similar term)

Green Buildings: Contract Issues
Establish performance-based remedies
for actions that threaten LEED
Certification
- Designer to take all actions reasonably necessary to
correct problem – including redesign at no cost to Owner
- Contractor (and Subs) to take all actions reasonably
necessary to correct problem - including replacing
materials and equipment that do not meet LEED
requirements and removing / redoing Work that does not
meet LEED requirements (including warranty period)

Green Buildings: Contract Issues
Assure continuation of Architect’s
Services until LEED Certification
- Obligation to provide design services
continues until issuance of certification -
includes any delay in issuance of certification
or any denial due to Contractor (or any Sub)
action / inaction (but services will be paid for)

Green Buildings: Contract Issues
Assure continuation of Contractor’s
Work until LEED Certification
- Obligation to perform Work as per Contract
Time and Contract Price continues until
issuance of certification - includes any delay in
issuance of certification or any denial due to
Architect (or any Sub-consultant) action /
inaction (but Change Order will adjust Contract
Time and Contract Price)

Green Buildings: Contract Issues
Architect damages relating to Green
Building obligations
- Architect liable for Owner damages due to
failure to obtain LEED Certification (to extent of
negligence)
- May limit liability to:
- redoing services
- insurance coverage then available
- an agreed fixed amount

Green Buildings: Contract Issues
Contractor damages relating to Green
Building obligations
- Contractor liable for Owner damages due to its
failure to obtain LEED Certification (to extent of
negligence) or any failure of Contractor or any
sub to conform with Contract Documents
- May limit liability to:
- an agreed fixed amount

Green Buildings: Contract Issues
Importance of Developing a Green
Building Contracts Strategy
“Green buildings are replacing traditional construction as
corporations and organizations become aware of the
financial and environmental advantages of sustainable
building development. Many anticipate that green
construction will eventually become the norm and that
non-green buildings will likely become functionally
obsolete.”
Greenbiz.com
January 2008

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