Green Litigation: The potential pitfalls surrounding green construction

High-performance green buildings promote maximum resource and energy-efficiency, healthy indoor environments and the use of natural, renewable resources in their design, construction and operation. The green building market (both non-residential and residential) is projected to more than double, moving from $36–$49 billion in 2009 to $96–$140 billion by 2013(1). Despite the advantages of "building green," sustainable design and construction is still in its infancy, and this can lead to the emergence of new challenges.

Design challenges
Many of the challenges associated with green construction are rooted in the design phase, although oftentimes they may not actually surface until construction is underway. Green construction design failures can arise from the use of unproven or untested building materials. These materials have not undergone the same test of time as those selected for conventional construction projects.

An example of this type of issue and the potential for damages is a newly installed green roof. When implemented as part of a green building retrofit, there is increased potential for a structural failure of a green roof due to the additional loads that may be imparted to the existing roof structure from soil, vegetation and water. Similarly, in the case of an installation in a new green building, a green roof may increase the likelihood of water infiltration into the facility, leading to mold and other interior damage. Other areas for potential failure can revolve around the design of heating, ventilating and air conditioning (HVAC) systems, window placement and design. In the quest for a U.S. Green Building Council (USGBC) Leadership in Energy and Environmental Design (LEED) certification, achieving credit for 90 percent of the building's occupants having a view outdoors may affect HVAC loads, airflow and pressurization in the building. Obtaining the desired LEED certification may be jeopardized if the design fails to account for these interrelated elements.

Bidding challenges
A misinformed bid can arise from lack of knowledge about the true costs of green construction, resulting in the potential for a significant number of change orders and an inaccurate project schedule. Contractors who are unfamiliar with sustainable construction may not be aware of the hard and soft cost premiums associated with green construction, which, although now leveling off, can reach five percent or more(2). For example, sustainable construction materials, such as wood certified by the Forest Stewardship Council, may cost more than conventional building materials. Similarly, energy-efficient HVAC systems may be more expensive due to the temperature control features that are often necessary for attaining LEED certification. Also, if not properly accounted for, the cost of commissioning and meeting documentation requirements for LEED certification can be substantial. Of course, making mid-course changes can also impact the project schedule.

Bidding challenges may now be of particular concern in the public sector, in which federal officials have recently reported that contractors have submitted unusually low bids in order to win business funded by stimulus spending as a result of the American Recovery and Reinvestment Act of 2009 (ARRA). Low bidding or "underbidding" often leads to disputes and possibly litigation claims as contractors attempt to recover profits. Low bidding may cause a contractor to reduce build quality(3).

Construction challenges
The lack of familiarity or understanding of green construction may also result in problems during the construction process. For example, if contractors do not recognize the significance of specific sustainable products and materials, there is an increased chance they will substitute alternative products during construction, perhaps due to difficulties in obtaining the often-obscure sustainable materials. In doing so, the contractor may unknowingly jeopardize green certifications or accreditations.

Project delays may result from a limited supply of local sustainable materials, negatively impacting the project schedule. Material lead times must be anticipated and managed in order to keep the project on schedule. The registration, documentation and commissioning requirements of green certification, which can add significant time to the project, are often not properly accounted for in the schedule.

Finally, contractors and subcontractors may take longer to complete an activity due to the learning curve and lower productivity common in green construction, especially when working with unfamiliar materials.

Project closeout challenges
Another significant challenge centers on the failure to achieve one or more green performance requirements. A project that fails to achieve green certification due to a design error or omission, or due to unsatisfactory performance by a contractor, can have negative implications that may range from a damaged reputation or brand image to a potential loss of tax credits and other incentives. In Southern Builders Inc. v. Shaw Development, LLC (2006), Shaw made a claim against the contractor for its failure to deliver a LEED Silver certified building — a project requirement. The achievement of LEED Silver would have resulted in more than $600,000 in tax credits for the owner. Although the case was eventually settled out of court, it brings to light the possibility of litigation in green construction projects.

Failure to obtain building certification can carry additional concern in the public sector, where government funds are involved. Construction projects and substantial renovations administered by the General Services Administration (GSA) must achieve LEED Silver certification. Many of these projects are funded with ARRA funding, and failure to achieve LEED Silver could lead to significant scrutiny of the contractors by government oversight agencies such as the Government Accountability Office (GAO) or Inspectors General (IG).
It is essential that organizations adopt preventive measures with an eye to minimizing risk, cost overruns, delays and litigation. The following measures provide a framework to assist in meeting this goal.

Preventive Measures

Planning and design
The planning and design stage of a green project is critical, as it becomes more difficult and costly to incorporate sustainability considerations as the project progresses. Controls should be established early in the project when the project owner has the highest degree of governing ability.
The project owner could adopt the following measures during the planning and design process:

-Establish clear lines of authority and responsibility for sustainable elements in the contract documents. Explicit contract terms will help determine liability, facilitate negotiations and expedite claims.

-Architects and designers must perform the appropriate due diligence in selecting green materials, including the evaluation of technical data provided by the manufacturer. All parties must understand the benefits and risks associated with green design implications.

-Engineers should be engaged early in the design phase to analyze the impact of green elements, thus ensuring the integrity of the building and the safety of its occupants.

-Insertion of an external LEED accredited consultant into the design review with all key stakeholders will ensure that sustainable requirements are met. The consultant should facilitate the coordination of all design elements, including mechanical, electrical and plumbing (MEP). When approved, the design should be "locked" to minimize overdesign.

Bidding
In selecting the most qualified contractor, the project owner can implement the following measures to mitigate the risk of litigation:

-The pre-qualification requirements must specifically require contractors with past performance in green projects to demonstrate quantifiable achievements, results and performance. This will help project coordination and documentation, lower the number of requests for information (RFIs) and align stakeholders with sustainable goals.

-Pre-bid conferences should be mandatory and introduce prospective bidders to the project requirements.
Contractors must agree to train subcontractors in sustainable practices through formal training and project "on-boarding". Training will inform subcontractors not only of the project requirements, but also of the manner in which work must be executed in order to avoid waste and failure to meet certification.

-The LEED consultant should participate in the bid evaluation and selection process to ensure the right team is established. This also places liability on the consultant.

Construction
Implementing the following preventive measures can help limit change orders and delays:

-Change orders that relate directly to the certification process, such as green design elements and green material changes, must be approved by the LEED consultant to ensure they are outside of original scope, are fairly priced and conform to certification requirements.

-Monitoring and tracking of RFIs that pertain directly to green elements is vital. These can be a potential indicator of cost growth and delays. Doing this can help establish liability.

-The external LEED consultant should be responsible for gathering all project submittals and documentation required for certification, in order to ensure compliance with applicable USGBC credit, as well as limit any impact to the construction schedule.

Project closeout
Project success or failure is realized during project closeout. The following measures can help streamline the project's final push:

-In addition to a final review by the LEED consultant, a construction audit can help validate appropriate construction costs and compliance with the contract, limiting liability and the potential for litigation.

-The facility should undergo periodic operating assessments to identify and mitigate inefficiencies. This can reduce operating costs, waste and overhead.

Conclusions
All indications are that green construction is not just a passing fad, and the construction of high-performance green buildings is the new norm. During the entire lifecycle of the project, sustainable construction in both the public and private sectors faces an increased risk due to a variety of pitfalls. These issues often lead to the need for expensive and time-consuming litigation. Due to these potential challenges, increased diligence will be required by all of the relevant stakeholders, especially given that building owners in the current economic environment are particularly concerned about regulatory compliance, project costs, building lifecycle costs, return on investments (ROI) and/or return on assets (ROA). Implementing preventive measures may help contribute to true project success.

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