Managing Risk in Green Building Projects
The green buildings boom has opened up a wide market for professionals of all kinds to begin working on sustainable projects, but with this boom comes a host of new risks ands expectations that must be considered and managed throughout the project.
Recent years have brought about a major boom in interest and activity in green building projects, and a parallel growth in interest in green building design. But within that boom comes increased risk and liability for design professionals.
Even though green building design takes as its approach the incorporation of design concepts with innovative products and construction methods to address the health and well-being of the buildings' occupants and the environment, a combination of preconceptions about green building projects and the use of new techniques and materials can bring increased risk to design professions.
There are many ways to begin managing the risk, but the first, critical step is to undertake in-depth documented discussions at the beginning of the project regarding the expectations by the owner. In addition, discussing actual costs that will be incurred, the benefits that can be potentially obtained as well as the risks inherent in using new or untested products and technologies will lessen the design professional's exposure to potential litigation.
Design Expertise for Green Buildings
Design professionals, with their knowledge and expertise, are in a unique situation to take a leading in the green movement. However, recent surveys of design professionals shows that most architects, engineers, and contractors have limited training, experience, or technical understanding in green building methodologies to properly design and oversee the construction of green buildings.
Design firms may run into trouble by underestimating the costs and expertise needed for green projects. "Business as usual" is not the direction when it comes to green projects. Key challenges and questions need addressing before jumping in:
Building commissioning (Cx) was developed from the selection, testing, adjusting, and balancing of the buildings mechanical systems. This is a relatively new service in the construction industry and added expense the owner on green buildings projects may not be aware of, or be willing to pay for.
During the design phase, commissioning primary duty is to clearly understand and document the requirements and expectations of the system; documenting design intent, reviewing design plans and construction documents and developing a commission plan. During the construction phase, ensure that commissioning equipment is installed per the design documents. The acceptance phase is verifying buildings components and controls are operating as designed and meeting with the owner's requirements and expectations. The quality of construction work is crucial when dealing with a sophisticated green building design.
To avoid the potential problem of a good design being installed with poor construction means and methods, building commissioning can act as a quality assurance component to ensure the building meets the design criteria. Cx can be particularly important if the design professional has limited experience with green building projects.
Design and Construction Costs
Green building design and construction is often promoted as a cost saving feature for the life cycle of the building structure and the owner original investment will be paid back within a period of time. The message must be clear that cost savings are related to the life cycle and saving may be minimal in the near future compared to the increased capital related to green building design and construction. Marketing material for green buildings at times indicates a big cost savings in energy and resources usage that may lead owners to believe that the savings will be significant and easily realized in the near future.
Depending on who performed the studies, initial capital outlay for design and construction over a typical project may range from 1 percent to 20 percent. These numbers vary based on the project type, size, level of certification and a host of factors. The higher the certification level, types of products and systems, services provided, independent analysis, and so forth, the higher the cost. These costs can climb even higher when inexperienced design professionals and contractors are employed in the green building process.
Risks from New Materials and Technologies
Green buildings incorporate to use of new and innovative construction technologies and materials. Every new material or application of materials should be tested to determine capabilities for the intended use. Surveys have indicated that minimal analysis testing is usually the standard, and the first projects to use the products are the beta tests.
The owner and design professional should evaluate new materials, technologies, checking other projects where the product has been used, and comparing it to the performance of similar products. Hiring independent testing laboratories is also a consideration, but one that comes at an additional cost to the project.
Design professionals should not accept a new product based upon only the manufacturer product data sheets and sales literature. The design professional should inform the owner of potential risks in specifying new materials and technologies, document discussions and the decisions made.
Contract Provisions
A good contract is the best line of defense when it comes to mitigating your risk. The contract is an excellent method for defining your scope of services; what will be offered well as what will not. Contracts are also an excellent method for qualifying clients and managing and establishing expectations.
Contracts should address the following:
Tim Corbett is the founder and President of SmartRisk, a Pasadena based consultancy providing risk management solutions to the design and building industry.
Even though green building design takes as its approach the incorporation of design concepts with innovative products and construction methods to address the health and well-being of the buildings' occupants and the environment, a combination of preconceptions about green building projects and the use of new techniques and materials can bring increased risk to design professions.
There are many ways to begin managing the risk, but the first, critical step is to undertake in-depth documented discussions at the beginning of the project regarding the expectations by the owner. In addition, discussing actual costs that will be incurred, the benefits that can be potentially obtained as well as the risks inherent in using new or untested products and technologies will lessen the design professional's exposure to potential litigation.
Design Expertise for Green Buildings
Design professionals, with their knowledge and expertise, are in a unique situation to take a leading in the green movement. However, recent surveys of design professionals shows that most architects, engineers, and contractors have limited training, experience, or technical understanding in green building methodologies to properly design and oversee the construction of green buildings.
Design firms may run into trouble by underestimating the costs and expertise needed for green projects. "Business as usual" is not the direction when it comes to green projects. Key challenges and questions need addressing before jumping in:
- How are the goals and project expectations defined, decisions made, and documented?
- Are client expectations consistent with the A/E's qualifications and capabilities?
- What is the experience of the Design Team, Contractor and Client on green projects?
- Who is responsible for identifying and the investigation of new products and systems? In addition, to what degree?
- What are the expectations of the end-users of the project?
- How is the Owner/Operator going to be trained on the operations and maintenance of the systems?
Building commissioning (Cx) was developed from the selection, testing, adjusting, and balancing of the buildings mechanical systems. This is a relatively new service in the construction industry and added expense the owner on green buildings projects may not be aware of, or be willing to pay for.
During the design phase, commissioning primary duty is to clearly understand and document the requirements and expectations of the system; documenting design intent, reviewing design plans and construction documents and developing a commission plan. During the construction phase, ensure that commissioning equipment is installed per the design documents. The acceptance phase is verifying buildings components and controls are operating as designed and meeting with the owner's requirements and expectations. The quality of construction work is crucial when dealing with a sophisticated green building design.
To avoid the potential problem of a good design being installed with poor construction means and methods, building commissioning can act as a quality assurance component to ensure the building meets the design criteria. Cx can be particularly important if the design professional has limited experience with green building projects.
Design and Construction Costs
Green building design and construction is often promoted as a cost saving feature for the life cycle of the building structure and the owner original investment will be paid back within a period of time. The message must be clear that cost savings are related to the life cycle and saving may be minimal in the near future compared to the increased capital related to green building design and construction. Marketing material for green buildings at times indicates a big cost savings in energy and resources usage that may lead owners to believe that the savings will be significant and easily realized in the near future.
Depending on who performed the studies, initial capital outlay for design and construction over a typical project may range from 1 percent to 20 percent. These numbers vary based on the project type, size, level of certification and a host of factors. The higher the certification level, types of products and systems, services provided, independent analysis, and so forth, the higher the cost. These costs can climb even higher when inexperienced design professionals and contractors are employed in the green building process.
Risks from New Materials and Technologies
Green buildings incorporate to use of new and innovative construction technologies and materials. Every new material or application of materials should be tested to determine capabilities for the intended use. Surveys have indicated that minimal analysis testing is usually the standard, and the first projects to use the products are the beta tests.
The owner and design professional should evaluate new materials, technologies, checking other projects where the product has been used, and comparing it to the performance of similar products. Hiring independent testing laboratories is also a consideration, but one that comes at an additional cost to the project.
Design professionals should not accept a new product based upon only the manufacturer product data sheets and sales literature. The design professional should inform the owner of potential risks in specifying new materials and technologies, document discussions and the decisions made.
Contract Provisions
A good contract is the best line of defense when it comes to mitigating your risk. The contract is an excellent method for defining your scope of services; what will be offered well as what will not. Contracts are also an excellent method for qualifying clients and managing and establishing expectations.
Contracts should address the following:
- New and innovative products and technology may be used; they may lack proven history of successful application. Owner understands and agrees that project objectives may not be realized.
- Ordinary skill and care will be used to achieve project objectives; however no warranty or guarantee the project will achieve LEED certification.
- Verify the level of investigation and analysis that will be performed for new material and technologies, with no expressed or implied warranty or guarantees of results.
- Client agrees to measure the potential risks related to incorporating the innovation product and/or systems and accepts the risks.
- Limit your exposure to consequential damages by including language in your contract.
Tim Corbett is the founder and President of SmartRisk, a Pasadena based consultancy providing risk management solutions to the design and building industry.
