A Smart Approach to the Green Construction Marketplace

Source: Construction Business Owner, December 2011
By: Robert J. Connor, New Day Underwriting Managers LLC

Establish expectations and carefully assess sustainable products to successfully complete LEED projects.

The eco-friendly construction movement has become a powerful force that has spread throughout the world at an incredible speed and forced designers and contractors to either go green or risk becoming irrelevant in this expanding marketplace.

With this growing movement, general contractors face more exposure to risk. To add to this, building owners expect general contractors to be the single entity responsible for projects in most situations.

As a result of this expanded exposure to liability, contractors must understand every area that can affect their businesses when working on green projects.

Understand the Client’s Expectations

The increase in liability exposure starts well before any design or construction phase. It begins with the project owner’s expectations and motivations. When bidding on a project or prior to accepting a bid, a contractor must ask detailed questions about the client’s goals and gain a thorough understanding of the specific project. Three examples demonstrate why this step is necessary:

The first green lawsuit, Shaw Development vs. Southern Builders, involved a 23-unit condominium project in Maryland that was completed in 2006. The contractor did not file the necessary documentation for LEED certification to the Maryland Energy Administration within the established time limits. As a result, the developer was denied the desired tax credit, which was a driving force in his decision to initiate the project.

Consequently, the owner sued the contractor for the lost $635,000 in tax credits. The case was eventually settled out of court, but this litigation could have been avoided if the contractor had taken more time to fully understand the owner’s goals and the importance of the tax credit.

On a more recent note, the Los Angeles Unified School District (LAUSD) has started applying green building principles developed by the Collaborative for High Performance Schools (CHPS). LAUSD’s principles include increasing student performance by as much as 25 percent, lowering operating costs by as much as 40 percent and improving student and teacher health. Since other school districts in California have considered or adopted similar principles, contractors must be aware of these when bidding, designing and completing projects.

The same awareness of these principles applies to commercial projects. This is especially true when owners expect to charge above-market rents and higher occupancy rates because of LEED-certification levels and the promise of improved employee performances from green work environments.

Many contractors have not faced the challenge of occupant performance in the past. We do not know if these occupant performance issues will result in future lawsuits, but the contractor involved in a project will most likely be a part of any litigation if it arises.

Exercise caution with products

With the desire to achieve the highest possible LEED certification, contractors have started using new or innovative products and materials that may not have been tested in a project’s actual environment. It is not always a bad idea to use these products, but keep in mind that product failures create ramifications that contractors must deal with, including potentially losing LEED certification points.

For example, suppose a project specified the floor should be constructed with sustainable wood (bamboo), but a new adhesive containing very low-volatile organic compound solvent is used instead. The vendor touted the adhesive as environmentally friendly. However, it did not work with the bamboo. As a result, the floor separated and ultimately buckled.

In the book, How Buildings Learn: What Happens After They’re Built, author Stewart Brand says “New materials are unproven by definition. Like most experiments, they tend to fail. If the experiment is the whole exterior of the building, they fail big.”

Innovative products produced in exotic locations or custom-made can be difficult to obtain. A contractor must plan far in advance and order hard-to-get products early in a project’s life to ensure the products are available when needed. The contractor must also consider suitable alternatives in case the delivery is delayed. But this could also pose a problem if the alternatives do not offer the same LEED points as the original selection.

Discuss potential pitfalls of new products and materials with the owner to gain the owner’s trust and set realistic expectations that minimize any potential exposure if problems arise. Owners hate surprises that cost them time and money. Never start a project without detailed up-front discussions, and continually follow up with a lot of communication.

Existing building product manufacturers constantly repackage and remarket products to share in the tremendous popularity of the green movement. The term greenwashing was coined to describe this practice and highlight false or misleading green marketing claims.

While greenwashing can occur with all products, it can also be argued that even greater dangers lie with the use of established products. This is simply because we tend to accept green marketing claims when dealing with familiar items and materials.

The green movement is here to stay, and as a result, builders and contractors must understand their customers’ goals and carefully assess the products they use.

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