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Green Buildings - Problems, Solutions & Opportunities

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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

GreenBuildings

– 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


© Miller Thomson LLP, 2011. All Rights Reserved. All Intellectual Property Rights including copyright in this presentation are owned

by Miller Thomson LLP. This presentation may be reproduced and distributed in its entirety provided no alterations are made to the

form or content. Any other form of reproduction or distribution requires the prior written consent of Miller Thomson LLP which may

be requested by contacting mt_vancouver@millerthomson.com.

This presentation is provided as an information service and is a summary of current legal issues. This information is not meant as

legal opinion and readers are cautioned not to act on information provided in this presentation without seeking specific legal advice

with respect to their unique circumstances.

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